 Deal with reality as it is. Don't fake reality. Don't pretend it's something different than it is. Don't evade. Don't ignore data that's important for your decision-making. All of that, right? But once you have that principle, you don't have to redo it every single time you encounter a situation. It makes all those decisions much, much easier. So at the end of the day, if you adopt the right principles, then living a good life is not hard. It's very easy. If you adopt the right principle, making the right choices is not that hard. It's actually quite easy. It's adopting the principles that in the society we live in today is hard because they go against everything that we are taught. You know, look at what just happened. I don't know if you're following the news. What happened in New Zealand? I just saw this morning. That is their rhetoric. That is their kind of shtick, right? It's get those Muslims out of here. Let's kick them out. Let's kill them. They are infesting us. It's racist, awful language. And that attack on the synagogue in Pennsylvania a few months ago, those are the kind of consequences of the kind of rhetoric we're seeing out of the ultra-eights. And of course Charlottesville was an alt-right event. It gets a lot of prominence and unfortunately it has a significant following. I don't think it's trivial. I think a lot of people trivialize it. I don't think it's trivial. Really? You don't think so? No. And I think, and this is how we get into trouble, right? Because I think that Donald Trump doesn't, I don't think he's an alt-right. But he in a sense embraces it because he knows that some of his support comes from that direction. So to say during Charlottesville or right after Charlottesville, there are some good people on both sides. When they've just marched the night before and blood and soil and we won't let the Jews take over or something like that, something about Jews and taking over and that's what they were chanting. And there were some good people among them, really? So there's a certain sanction that he gives them that is very, very powerful and emboldens them and I think allows them to grow and gives them a certain sense of legitimacy. We're okay, we're legitimate. So I actually think they're much bigger and more significant force than most people think. Do you know any numbers? Like where they are, how many there are? There's no way to tell because who knows on Twitter how many accounts are fictitious and how many accounts are real and how many accounts represent actual people. So no, I don't think anybody knows numbers. But you know, you saw Charlottesville, it's not huge numbers but for every person there, there's certainly some people at home who are supportive and you just see the change in the tone. I mean the way I see it, certainly on social media but I think you see it everywhere, just a change in tone and how people talk about immigrants. Put aside what you think about immigration but just, I mean I had people saying, and I saw this all over Facebook, you know, when the caravan was coming, right? The caravan was going to invade the United States. They were like, yeah, we should put machine guns on the wall and just mow them down, you know, things like that. And that kind of language, that kind of description, that kind of attitude didn't exist a couple of years ago. Yeah, we were against illegal immigration, people were. But they weren't about shooting them, you know, and the idea that that's a legitimate thing to say on Facebook or that's okay to put your name on and sign, these are people with names, right? These are not anonymous accounts. But saying that, I think a whole culture has changed in terms of rhetoric and our willingness to talk about hate and to talk about violence and to talk against them over there. And I, you know, I blame Trump. I think it's, I mean I don't blame Trump because people responded to something but it's their fault. But Trump has changed what's acceptable and what's not acceptable to say and to think and to how to process information. And I think, I don't know how the country comes back from that. It's going to be, it's going to be very, very difficult to come. When, you know, Trump ran, Trump ran a classic authoritarian campaign. Now again, I don't think he's an authoritarian partially because he can't get away with it because we've got, we've got a system in place that won't let him. But he ran a campaign that is classic authoritarian in the sense that he did basically three things. The first thing he did was say, this country's in deep trouble. I mean, really horrible. There's carnage in the streets of America. Spoke to the fears. Yes. So, so like we live in the safest time, maybe in all of American history, certainly since, you know, in over the last 50 years, I think crime rates are the lowest they've been. And then factories are closing all over America. There are no jobs and employment's been going down for quite a long time. And we manufacture more stuff today than we've ever manufactured just with fewer people because we have technology. Our productivity is quite high. So all of these, now there are problems in America not to mitigate that, but the idea of you should be afraid. Things are really, really bad and you should be really afraid to fear. And then who's, who's to blame for this? Right? This is the key, right? It's the other. It's not you. It's not you people who elected the politicians who were screwing everything up in Washington. No, you're innocent. You're Americans. You're good guys. The blame is to be placed on the other. It's illegal immigrants or immigrants more broadly. It's Mexicans. It's Chinese. It's Koreans and Japanese and anybody who trades with us and have us as a, we have a trade deficit with. So it's the other, you know, in Europe, it would have been the Jew. Here it's the other and we've got lots of categories to fill in the other. And of course it's the elites. It's always the intellectuals. Now, and there's truth to that, right? The elites do bear a lot of responsibility for the state of the world, but the way it's phrased and this hatred. And then of course, what's the solution? The solution is trust me. I know what I'm doing. I'm a businessman. I build buildings. I know how to fix problems. So trust me. That combination is scary and in the hands of somebody more competent than Trump, that is leading us down a road to, to bad stuff in this country, to authoritarianism in this country. Do other politicians campaign differently? And I asked because I just saw, I think it was Beto O'Rourke who just announced his candidacy for the presidency. He was giving an interview and a couple of people were making fun of him because in the interview he was saying, we've never lived in a more economic tumultuous time and they're like, what are you talking about? I mean, I think this is going to set the stage for that. But think about the other Republicans who ran against Trump, right? Many of them ran on, we want to reform entitlements because entitlements are bad. Or many of them ran on, we can do better on this or we can do better on that. Nobody said there's carnage in the streets of America. There's crime rates and everything. They all ran on anti-immigration platform, but not with the viciousness and hatred that kind of Trump projected, right? So he took classical conservative Republican issues and he just toned them up and put them in a style of rhetoric that I think is so damaging. And look, and I think that the fact that the Republicans who run such viciously anti-immigration campaigns basically explain why Hispanics don't vote for them and it basically explains why California's dead to Republicans to a large extent. So it's not good. Again, I don't think Trump invented anything. He's capitalizing on a lot of stuff, a lot of foundations, but he took it to the next level. And I think you're going to see more of that rhetoric. So the left now has basically taken that rhetoric and ramped it up from their side. So now, and you saw a little bit from Bernie Sanders last campaign, but you're going to see much more and much more vicious. So now it's billionaires, right? It's not intellectual elites that at fault. It's economic elites that at fault. And we're going to see this ramped up and it's going to get very vicious. It's going to get very bad. You're seeing it on American campuses. So I think this is all playing off of each other, right? It's not right or left. It's right and left playing off of each other and making each other worse, not better. So even the alt-right, I don't think the alt-right would exist if not for the identity politics of the left. So I think the identity politics of the left is so the alt-right is saying, you want to play identity politics? We can do it in politics. We can do it from the right. We can do it about being white. You've called this privileged all these years? All right, here's what privilege looks like. You know, we don't like you guys. So these two are playing off of each other and you're seeing that on campuses. You're seeing that, I think, in the electorate and you're seeing that among politicians. So the response to Trump is Alexandria Ocasio-Cortez and then Elizabeth Warren, the radical lefty, is not positioning herself as a centrist. Well, so then I was going to ask, speaking in economic terms, with an over-saturated market of these extreme candidates, everyone is trying to be more extreme than the other. Does that leave room for more moderate candidates to take up market share, if you will? You would think, but the problem is that the way our political system works is that, and I think Trump proved this, is even though Trump, when he started out the campaign, certainly had a minority of Republican voters interested in him, and maybe even at the end, when he was winning, had a minority of Republican voters, the primary system does not work to support kind of, if you will, centrist candidates or moderate candidates. It works to support those candidates that managed to get the most passion out of people. So that even though Trump was winning early on, he was winning with minority votes, he was winning, let's say, 20 to 15 or 30 to 25 or whatever, right? Because there were so many other candidates. So many other candidates. So you didn't have to win a majority. And I think even at the end, a majority of Republicans would have said, he's not my favorite candidate, I hear that all the time. People say, I voted for Trump, but I never really liked him. On the other hand, his approval rating among Republicans right now is close to 90%. Is it really? Yes, it's something like 87% of Republicans like Donald Trump. So at this point, he has become their candidate even though you never, it's actually very rare to meet somebody who says, yes, I'm a huge Donald Trump fan. They usually say, well, he's better than Hillary. Okay, but there were other candidates you could have chosen from and you chose him. So I think the same thing is going to happen on the Democratic side. I mean, we'll see the Democratic field is actually bigger now than the Republican field was two years ago or three years ago. And that was a big field. That was like 17 candidates were well over 20, I think over 30 now on the Democratic side. Yeah. And so lots of candidates, lots of big personalities. And it's going to be really interesting how the Democrats sort it out. And are they going to sort it out in a way that, you know, because somebody like Bernie Sanders has a certain percentage of people who are going to vote for him no matter what. Is that enough to kind of wipe out all the other candidates and it might be. You think so? I don't know if it's going to be Bernie, but I think there's a good chance you get a Bernie like candidates on the left who is somebody who's not palatable to most Americans because they're too far on the left. And then they're stuck with this choice of we don't like Trump and we don't like, let's say it's Bernie, what do we do? And I'm not sure what they do. I'm not sure how the election goes if that's the case. So I think if you got somebody who is a true centrist right now, I'm not sure who that would even would be. Then they could take on Trump and maybe even beat Trump. But I think the more left they drift, the less likely it is that they can actually beat Trump. What do you think about Joe Biden? Not much. I mean, I think the guy's not particularly smart, not particularly stands for anything, not particularly anything. He's just done nothing. But do you think that that could help him? He's never won anything, right? He's run for president three times. He couldn't win anything. Oh, I never knew that. Yeah, he's run. He can't win. He's not a winner. He doesn't have a personality. He's pretty old now. So is Bernie, but Bernie has charisma. Biden has no charisma. He's like, he appeals to the supposedly to the intellect, but I don't think he's that smart or has any really interesting ideas. So I don't see where Biden can really be successful or really go anywhere. I think he, I think he, there's a lot of splash when he comes out. But I think I don't think he does well in the primaries. You know, so I think somebody like Beto or work from Texas, who is probably going to position himself more as a centrist, I think we'll see. He, you know, he has the option of doing whatever he wants because he's not exactly has no experience. He's young and he's, he's not on record saying a lot of stuff other than in the Texas election against, against Ted Cruz. But he did very well in that election, right? In Texas, he got a big, a big vote. So, I mean, Beto is going to, is going to walk all over somebody like Biden. I mean, Biden's, he's, he often says just stupid things. I mean, he just miles off and says dumb things. And he's just not impressive. And it's kind of, it shows how desperate Democrats are that they would put out somebody like Biden as their big hope. And I think it is, it's that center within the Democratic Party, the people who are afraid of Alexandria, who are saying or afraid of Elizabeth Warren or Bernie Sanders, and they're looking out of desperation for candidate they can get behind and Joe Biden's all they can get. I mean, that shows how pathetic the Democratic Party is right now in terms of the talent and that they have. They just don't have it. So it's, it's going to be, it's going to be really interesting to watch a Democratic primaries. And it, and it's going to be interesting to see if anybody is willing to challenge Trump on the Republican side. Other than Kasich, who I think might do it, but doesn't have a chance. What do you think about Howard Schultz? Look, I don't think about, you know, I don't have a positive opinion about anybody in politics, anybody like this. Well, they might be two people. Because he's a businessman first. So, you know, obviously he's a great businessman. He's had enormous success. Starbucks is a phenomenon. It's the success of Starbucks. There are very few franchises that have succeeded as well as Starbucks has. It's changed our culture in many ways. The way we view coffee, the way we deal with coffee is changed because of Starbucks. So obviously the guys are a brilliant businessman. And I have a huge amount of respect for him and admiration for him as a businessman. That doesn't make you a good politician. It doesn't mean you have good ideas. It doesn't mean you know anything about economics. It just means you know how to run a business, which is great. I admire people for knowing how to run a business. But that doesn't, for me, translate immediately into he's a good politician. I mean, a lot of people said, oh, you got to vote for Donald Trump because he was a real estate developer and he was a businessman. No, I mean, you know, I know a lot of businessmen are socialists. I mean, I know businessmen who have really, really crappy ideas. So now how it shows is, I guess, less offensive than a lot of other people. He's kind of trying to position himself as a centrist. I don't think he's going to go anyway. I don't think he has the charisma that a politician needs. I don't think he has a base. Who exactly is going to vote for him? I mean, Starbucks consumers? No, probably not. So who's the appealing to? And again, I mean, the energy today on the left is not in the center. The energy today on the left is with AOC and he ridicules AOC and he ridicules the Green New Deal. I mean, justifiably, right? So who's going to get excited about his campaign? Who's going to volunteer? And as a third party candidate, I mean, there's never been very successful third party candidates. Ross Perot in modern history is the closest we've come. And Perot, I mean, he didn't have charisma. I mean, you guys are too young to remember what's Perot. I remember. It's so funny. I actually remember the elections, but I didn't know what was going on. I just remember the name Ross Perot. I mean, he did this amazing thing, which actually worked great for him. He presented himself as a geek, right? And so he did these TV ads where he would basically sit in front of a camera and for half an hour and show people graphs of how terrible life was, right? And it wasn't a powerpoint, fancy powerpoint. It was literally graphs. Here's my graph. Look at what's happening. And he would talk about the debt and he would say, you know, like, you know, he would scare people and he would say, you know, the debt is going to destroy America. This is really bad and I can save it. And he had these wacky ideas and how he could save it. I mean, they were a little crazy, but there was a certain percentage of the population that was looking for somebody who was not left or right, clearly defined and was willing to be honest with them, actually sit down and talk to them. And it was amazing how that geekiness and that honesty appealed to people. I don't think that would work today. And I think people's fears and anxieties are not around economic issues like they were. This was 1992 and it was coming out of a recession. It was during a recession really and coming out of the 80s, which were very volatile economically, very volatile times, much more than what appears to be now. Now things actually, things have been, we haven't had a recession since 2008. And yes, things haven't been great, but they haven't been bad and unemployment's been steadily going down. Growth, economic growth has been steadily flat to going up. I mean, things are kind of stable. So this idea of huge volatility and huge changes is kind of ridiculous given what's actually going on in the world. So there's a guy on the Democratic side, I think Andrew Yang. So he's kind of a bit of a geek, right? And he's out there talking about UBI, universal basic income, and he's talking about all kinds of wonky ideas about how to deal with stuff. And he has no chance, right? He has no chance of getting any votes. And he's also wrong in everything that he says. So that's a bad combination when you're wrong and you don't have a chance of getting any votes. Because that's not what people want. People want radical left. People want at least the people who are going to energize the campaign want a Green New Deal and to bankrupt the country or they want to build walls and to protect us from the other. They want big trade barriers and they want big walls. So to protect us from the danger that the other poses to us. And that's where the, I think that's where the dialogue is happening. That's where the energy is, unfortunately. And these geeky ideas are not going to go anywhere. The bad geeky ideas, but at least they're worthy of discussion. Right. I have said that about Andrew Yang and Tulsi Gabbard, as I think how you pronounce her name. She's another candidate, I think, from Hawaii. Okay. Oh, that's right. I've said about those two candidates, even though I know very little about their policy, I at least respect the fact that they seem to be making the rounds on these long-form shows. And they're willing to sit down and hash out their ideas for a couple hours. Because that's not something that a lot of other candidates are willing or able to do. No, I don't see a lot of candidates going on Joe Rogan. Right, exactly. And submitting themselves to two hours of that. But, you know, Joe treated from what I saw. I haven't seen the whole thing. I just saw bits of it. He treated Andrew Yang very respectfully because Yang is kind of an entrepreneur and he speaks the language. He's young. He's energetic. And he's got these ideas that are in Silicon Valley where the cool people live are considered cool ideas like UBI, Universal Basic Income is a Silicon Valley thing. So I can see the fit with somebody like Joe Rogan. But whether that fit then matches up with voters out there, I just don't see it. So then that brings up the rise of Alexandria Ocasio-Cortez and what she represents. Yes. Where do you think this is coming from? Because she happened very quickly. She did happen very quickly. But again, I think she's come at the right time, at the right place. Everything's clicking for her in a sense. It's the era of social media and she knows how to do social media. And she's done social media from the beginning of her campaign. And she tweets. She videotapes. She videos herself as she's walking through the halls of Congress. And she's everywhere. And she's willing to be everywhere. And other than debate me, she's willing to because we've approached her and she said no. She's willing to do anything except actually debate with somebody. So she's young. She's very energetic. And she looks good on camera, which I think is important. And then I think most importantly is she's willing to be radical. I think the world is fed up and I think you can see this all over, not just in the United States. People are fed up with the center. They're fed up with mealy mouth politicians saying, oh, we can do a little bit of this and a little bit of that. Yeah, global warming's real and the world might end. So we're going to we're going to limit carbon a little bit. And the scientists are saying, scientists, some scientists are saying, well, that's not enough. If you do that, the world's still going to end. And yeah, but we're going to do it in the middle. Or, you know, we don't we don't we think capitalism sucks. And we think capitalism is awful. And we think Wall Street all crooks. But we're not going to end Wall Street, which is going to regulate them a little differently. We're going to know people are fed up with that. If you really believe Wall Street or crooks, why do we have Wall Street? If you really believe the globe is going to world is going to end because of global warming. Why aren't we doing something dramatic? If you really believe capitalism is evil, why are you sucking up to capitalists? Right. If you if you really believe that billionaires are bad guys, why do we have billionaires? You know, why don't you propose something and get rid of billionaires? And I think I think the rhetoric of the center left and right, right? Republicans and Democrats has always been we don't trust Wall Street, but we need them. Yes, the world in the environment is getting bad, but we can't really do anything about it. Yes, this other stuff is happening, but we can't, you know, so let's let's be moderate. Let's be and Trump has proved that people are fed up with that moderation. Yes, we don't like illegal immigrants. Everybody says that Democrats are Republicans. We don't like illegal immigrants. But, you know, what can you do? Well, Trump says, let's build a wall. We can do something about it. You know, let's let's let's force, you know, we don't like Mexico. Let's do something about it. We don't like NAFTA. Let's renegotiate it. Now he hasn't he hasn't done any of those things, but he says it, right? He says stuff nobody was willing to say and people go, well, that's refreshing. That's pretty cool because we know everybody thinks NAFTA is bad. Now somebody finally is saying we know trade deficits are bad. We hear that from all these economists, although I'm not sure which economists to hear that from. But, you know, it's in the vibe of the culture. The trade deficits are bad. Finally, as somebody who says, I'll do something about trade deficit. By the way, the trade deficit, the last quarter was the highest it's been since 2007. So he's not doing anything about it, but it doesn't matter what you do. What matters is what you say, right? It's the posturing is what matters. So now the left is saying the same thing, right? You said all this stuff is bad. We want somebody who will actually do something about it. So, Alexander Ocasio-Cortez comes out and says, yeah, I don't want Wall Street. I don't want billionaires. Billionaires? A society where you allow for billionaires is an immoral society. And people go, finally, this is what everybody's been implying for the longest time. What was the whole occupying Wall Street, right? That was the implication. Finally, somebody actually has the guts to say it. She says, according to the UN, the world's going to end in 12 years. Well, if the world's really going to end, if we really, all of us believe that the world was going to end in 12 years, yeah, I'm willing to do something really dramatic to stop the world from ending it. It would kind of really suck if the world ended in 12 years. So let's do something really radical to stop it. So she is leveraging off of all this stuff that's been said and being talked about. And she's saying, she's taking it seriously. And she's saying, let's do something. Let's actually act on all these implicit biases that we have. The other thing, she's very good at. I mean, I am one of the few critics of AOC who actually thinks she's smart. I don't think she's a dummy at all. I think she knows exactly what she's doing. She's got great advisors and she's really smart. So what does she say? So people say, how are you going to pay for this? Which is like the dumbest response possible. The Green New Deal. Or anything. All of her proposals. People say, how are you going to pay for it? Like Medicare for All or single payer. All of these things that she, she proposes a, you know, government guaranteed employment. So if you're unemployed, you get a job with a government, I guess, digging a ditch and filling it in for 15 bucks an hour. Right. She get a job. So everybody says, how are you going to pay for it? And she says, what do you mean? This is the right thing to do. This is really, really important. This is going to save the planet or this is getting help. All of us get phenomenal healthcare. We'll get the best healthcare in the world. I mean, we're the richest country in the world. Of course we'll be able to pay for it. Why won't we be able to pay for it? Pay for it is easy. This is, what are you saying? You're saying you're about economics. I'm about morality. I'm about what's good and what's right and what's just and what's virtuous. Not about this greedy money stuff. We'll print the money if we have to. We'll find a way to pay for it. Pay for it. Look at Europe. They have universal healthcare. They have all this stuff. They're living pretty good lives. So of course we can afford to pay for it. And then what are the people on the right say? Nothing. Because they have no answer to that. And now I would argue everything you're proposing AOC is immoral. It's wrong. It's disastrous for human life. It will cause the death and destruction of the world as we know it. But the right is not willing to say that. They kind of like socialized medicine. Who on the right opposes socialized medicine? They certainly like it for anybody over 65. Medicare is good if you're old. It's just young people shouldn't have it. Like how does that work? If Medicare is good, then why shouldn't young people also get Medicare? Which is what AOC is saying. So the only way to argue against that is say no. Medicare is bad. Period. We have to do away with Medicare. But nobody's willing to say that. Because that's political suicide. And because they don't believe it. Which I think is a perfect segue into why you think the financial industry, a lot of these worlds and industries that these people are against, that a lot of people are against is actually moral. But while we're on this note, I just want to ask you about modern monetary theory. Which is essentially what they're proposing to pay for all of these socialistic programs, right? It's a very new theory that I don't think a lot of people know about yet. Yes, it's complicated, right? Like most macroeconomic theories, it's complicated and they're trying to basically simplify it. So modern monetary theory has a lot of right things to say about how the world runs. About what's actually happening in the world. So a common perspective is perception is the government taxes us. And it takes that tax money and it spends it. And if it lands up spending more than what it brought in taxes, it goes on and bothers some money to fill in the gap. But that's not how the world actually works. And this is what modern monetary, this is the truth in modern monetary theory and this is why they get some credibility because they say something true. The fact is, and this is true of Republicans and Democrats, it doesn't matter. And again, Alexandria Ocasio-Casino is very good at this. Because she says, wait a minute, there's not enough money to pay for healthcare. There's not enough money to save the planet, but you can increase defense spending all you want and somehow the money just appears and she's right, right? So when Donald Trump came in, he said, I'm going to grow defense spending. Where are you going to get the money from? Doesn't matter, right? I'll print it. So the point is that the way the world really works is first you spend the money and you spend as much as you want to spend. That's politics. You spend as much as you want to spend. And then some of that is covered by taxes, but a lot of it is not. You're basically printing the money and then you're sucking that money out of the economy through taxes. And then the rest, you're borrowing. You're sucking the money in a sense out or you're creating money through borrowing. But either way, you're spending first and you're not really worried about where the money is going to come from. That's the world in which we live in. That's the world in which we've lived in really since the 1970s since we went off of a gold standard. The only thing that politics is about really is about the spending. And then we have this mixture of debts and taxes that, you know, when Republicans come in, they lower taxes. Every single Republican administration has done that. And then when Democrats come in, they raise taxes. But the spending doesn't change. We still spend the money. These things are played around. And they argue, modern monetary theory argues that, look, since the early 1980s, we've spent all this money. In other words, we printed all this money. We haven't really, we've never had a balanced budget except for a short period of time under Clinton. And yet there's no inflation out there. In other words, we printed money, we circulated the money and there's no inflation. So why not do more of that, right? So if that's the case, then why can't I just stop printing money and spending government money even more and not worry about inflation and not worry about all of that. So there's a certain appeal to that. And a lot of people on the other side, like the deficit hawks, have been saying, oh my God, deficits, they're going to destroy the economy. When you have large deficits, interest rates will go up. Well, interest rates are the lowest they've ever been. And we've got a trillion dollar deficit and we've got $22 trillion of debt. And yet interest rates are the lowest they've been, you know, other than a few years ago in memory. Interest rates generally are being very, very low for the last 10 years and maybe even 20 years. So it can be the deficits are raising interest rates because they don't seem to be. And so let's just, so the deficit hawks don't seem to be right. And then the other thing the deficit hawks have always said, and a lot of economists say, I remember in 2008, 2007 and eight, I did a lot of Fox business news. And I used to be on with a guy named Peter Schiff, who is a well known kind of Austrian investment advisor. And he was constantly, gold is going to 10,000. We're heading in towards hyperinflation, right? That was a shtick. And I would always say, well, I'm not sure. I have his book, The Real Crash. I was always trying to hedge and because I didn't know exactly what was going to happen. But that doesn't make good television. You know, on television, they like when you say, bold predictions. And I'm like, well, it's not clear because and the fact is we go never win a 10,000 and the inflation hasn't appeared. It might still, but it hasn't for 10 years now. 11 years, it hasn't come. And the economy hasn't gone to hell in spite of all the gimmicks and games that the Federal Reserve has done. So it turns out that all these inflation warriors maybe are not, you know, are exaggerating. And that leaves this opening for modern monetary theory to come and say, we haven't had inflation. The dollar has not crashed. Gold has not gone to 10,000. The deficits have exploded. Why not increase them even more? Why not spend five trillion dollars on a Green New Deal or whatever it takes? All the evidence since early 1980 suggests that there's no effect by the government just spending these money. So that's the theory. And that's what they're saying. And again, modern monetary theorists who are kind of on the free market side, they're the minority. Really? Yes, they are. And they would argue that what you really need to do, and again, I think they're all wrong, but this is what they argue. They would argue that given fiat money, given that we can print money, what you really need to do is lower taxes to zero. And just fund basically the government completely with that, which you never have to repay. I don't know how that works. But anyway, I know them because I know some of them and this is what they argue. And then you've got them on the left who say, no, forget about taxes. Taxes will use or raise taxes when we need to suck money out of the economy because inflation is picked up. But in the meantime, let's spend like crazy until we reach what they call full capacity of the economy. And the idea is only when you reach full capacity of the economy, which means everybody's working. Every factory is at full capacity. Everything's churning along fully. Only then does more money create inflation. That's the theory. And then the way you deal with that inflation is you suck money out of the economy by raising taxes, which is an interesting approach because it kind of takes the Federal Reserve out of the equation completely. It really makes physical policy, the policy of government, what the government is completely central. Now, there are a lot of problems here, but maybe the biggest problem is that government is an awful allocative capital. Government is an awful investor. Government is awful at central planning. And when you've got government spending all this money, it means it's misallocating that investment. It's suboptimal. It's actually long-term. It's disastrous. You're literally paying people sometimes to dig ditches and fill them up. There's no productive activity. The standard of living is not going up. So maybe in the short run inflation doesn't pick up, although even that I think is dubious. And I'll say something about that in a minute. But you're just wasting resources. You're wasting people's time. You're wasting people's energy. Capital is not going to where people have ideas. Capital is not going to entrepreneurs. Capital is not going to what really can increase our economic growth, what really can create sustainable long-term productive jobs. It's not going to where there's really economic activity. It's going to where politicians want it to go, which is not optimal. There's a nice way of saying it, but which is disastrous for the most part. Financial markets, and you're going to ask me about this, but financial markets are genius at allocating capital to its most productive use. Government is not, if we've learned anything from the 20th century, government allocation of capital is a disaster and it's awful, and we should stay away from it. So to me, what's the problem of the economy today is not taxes. It's two things. It's government spending and government regulation. It's government trying to manipulate the economy through regulations and through controls and government trying to spend money as if they know what they're doing and as if they can allocate capital in a sensible way. And the reason that the US economy is doing reasonably well is because we still have some semblance of freedom in our financial markets so that some capital is going to venture the venture community. Some capital is being allocated based on the profit motive and based on productivity and based on financial perspectives. So it's the spending which I see as a problem and that's exactly what they want to grow. It's exactly what they want to do of. I don't worry about taxes as much as I do about the misallocation and the waste of resources that's going on on the spending side. But I also think that people don't understand inflation. So in a truly free market, I believe that prices would actually be declining. So we'd have what people call deflation but not the bad deflation where credit contracts and nobody wants to do business and nobody people are shutting stuff down. But just the fact that you've got more and more and more goods, more and more innovation. Competition. Well, competition, but it's that the supply of money is not changing fast enough. It's not growing fast enough to keep up with productivity. Productivity is growing so fast in a free market. New goods are coming out so fast. Think of the iPhone, right? So the iPhone price is a fairly stable or even better. Think of your laptop, right? Laptop price is a fairly stable, right? Laptop you buy today costs about the same as a laptop 10 years ago. But it's like a hundred or a thousand times better, right? So even though the prices stayed the same, you're getting much more for the dollar you bought. So really the price of a unit of computing, which is the right way to think about it, has gone down dramatically. And so you've had this downward pressure on prices because of the unbelievable amount of productivity that's gone into making computers better, right? So whether the screen is better, the Moore's Law with regard to the chip, every aspect of that laptop is better. And the price per unit of computing has gone down dramatically. And if you look at most unregulated industries in the United States or less regulated industries in the United States, prices go like this. They go down. The only thing the prices go like that are education, right? Higher education and healthcare, right? The two most heavily regulated industries, they go up. You're not housing. Housing goes up. And you think that's why? It's all about regulation, yes. The cost of education, higher education is going up because the government will subsidize it no matter what. So if you want a student loan, the government doesn't say, can you pay it back? It doesn't adjust your interest rate based on your risk. It doesn't ask you what degree you're going to get and whether there's a job at the end of the rainbow. It just asks you how much money you want. Oh, you want $100,000 to go to Harvard or whatever. Here's a check. You have to pay it back. But there's no risk adjustment based on whether you can or what degree you're getting. Imagine a free market and student loans. Like you'd walk in a bank and the bank would want to know you're going to Harvard. Okay, what are you going to study? What is the job prospects? How much the graduates of Harvard get given that they get? Okay, here's the risk profile. If you're going to MIT and getting an engineering degree, you're probably very low risk. So we're going to give you a very low interest rates, but you're going to study women's studies at Harvard. It's still Harvard, so it's not a huge risk, but it's a low risk. So the interest rates are a little bit higher. If you're going to study women's studies at California State University, the risk is much higher that you'll have returned the money and therefore the interest rates will be higher. And the banking sector in a sense would impact what degrees people got based on the economic prospects. That's not a bad thing. And would you say that's because back to what you're saying about the government not being resourceful, because it's just too big and it's trying to control too many things? Would you say that this is because this is more of an expertise? Well, I'd say the government is doing something it has no qualifications to do. And this goes to my theory of government, right? Government is force, government is a gun, government is coercion, government is violence. That's what government does. That's what it's good at. It blows up stuff. It's good at that, right? If you take that skill set and apply it to student loans, take that skill set and apply it to healthcare, you take that skill set and apply it to K through 12 education, what you get is crap. Because that skill set doesn't adapt, right? What you need in all those things, what you need are robust competitive markets. And I don't know how the market will solve the problems that exist in the markets themselves, but that's the beauty of markets. They solve problems. They know how to solve problems. Markets are excellent at figuring out what consumers need and providing them what they need or figuring out what consumers don't even know that they need and providing them something that consumers then discovered that they need, right? Nobody knew they needed an iPhone before the iPhone came out. I remember the critics of the iPhone when it came out. This was terrible. Steve Jobs had lost it. It was going to be a disaster. And look what happened, right? Steve Jobs knew more about what we needed than we knew. I thought that with the iPad. I was like, I don't get it. What's the point? I thought that was cell phones. I mean, I remember the first cell phones that came out and I was like, I've got a phone at home. I've got a phone at work. I like commuters half an hour. I can probably manage without being on the phone for half an hour. What the hell do I need a cell phone for? Right? And it took me a long time to adopt cell phones. I was probably a late adopter when it came out. Usually I'm an early adopter with technology, cell phones. But when I got one, that was it, right? I suddenly discovered, yeah, I actually do need to talk on the phone while I'm in the car. And I do need to have my phone everywhere when I travel. And there's a huge... So you learn. One of the roles of business is to teach us why we need their products. That's what advertising and marketing is for. It's to teach us that we actually need this stuff. And then we discover we need it and we get hooked. And that's beautiful because our lives are better and they've made money. But so markets are really good at solving the problem of how to provide health insurance and how to provide health products that are suitable to what we need and priced appropriately and figuring out an array of different products that is appropriate for different people, different ages, different income levels, different levels of susceptibility to disease and all this stuff. That's what markets are good at. That's the genius. What is a government? A government is a big hammer that, boom, we're going to do it one way. This is how we do it. And it's a disaster. It's a disaster. Every time it tries to intervene in the private personal decisions of individuals, in the thinking of private markets and private people, in the trade that people engage in, when government comes in, it is basically using brute force because that's all government knows. What government knows is a gun. I mean, George Washington, I think in the first or second inaugural address said, government is a gun. Government is force. Government is coercion. And that really is. I mean, you pass a law. If people don't follow the law, they go to jail. That's coercion. That's force. So the question then is, when it comes to the world of government is, what is force good for? Because if that's what the government is, then what is force good for? And the only thing force is good for is self-defense. It's to protect us. It's to do a police. It's to do a military, to do a judiciary, arbitrary disputes between us. But leave us alone, otherwise, because everything else, voluntary transactions between human beings is the appropriate, pro-freedom, pro-individual way of doing stuff. And it actually produces the best results for pretty much everybody. So given the government is a gun, then it should stick to places where guns are useful, wars, police, and arbitrary disputes. And that's it, right? So that, to me, is the role of government. Everything else should be left to the market. Everything else should be left to the market. And the market's very well suited to do that. But again, to go back quickly to end on MMT, the problem with inflation is most inflation we don't see. CPI is not a good measure of inflation or whatever it is that they're using. The fact is that in a truly free economy where there's massive innovation, where there's massive progress, prices would decline. So the fact that we're growing inflation at 1% to 2% is too much. Why are we even doing that? And more importantly, what MMT would do is because the government isn't a mechanism by which money circulates into the economy, there's distortions in terms of where it goes. And therefore, you get high prices in some places, healthcare, education, housing, and low prices elsewhere. And it hurts some people, people who want to consume housing, people who want to consume education, people who want to consume healthcare suffer. And other people benefit. And so there's a redistribution of wealth that is not even observable. It's not taking from someone giving to others. It's just the way you manipulate prices because of the government, the way it's allocating capital is going to manipulate prices. So there are massive distortions at MMT that the idea of MMT creates, even if the basic idea that, yes, government prints money, it doesn't have to tax in order to spend. And indeed, it spends without taxing. First it spends, then it taxes. It's all true. It still doesn't change the fact that the government's spending is evil. The government's spending is distortive and counterproductive. And it does huge economic damage. On the topic of inflation, how does an economy reach hyperinflation? Well, it reaches hyperinflation when it prints money like crazy. And the money is going primarily for consumption and is not going for any kind of productive activity. So if you think about it, if you have X number of goods in an economy, and that number doesn't change, right, you've just got the X number of goods, but you're printing more and more and more money. So more and more money is chasing the X number of goods. It's bidding the price of those goods up. So the more money you print, the higher the prices go. And that's in that spiral because the higher the prices go, the poorer people feel. And the more they demand that you print more money. So you print money to put in their wallets, but when they go to grocery store, the prices are already adapted upwards. So they demand more money for you to print. And this goes on and on and on. And it gets into cycle, which is very, very difficult to exit. I mean, the exit is very painful. The exit is stop the printing presses. And when you stop the printing presses, there's a period in which nobody knows exactly what to do. Prices are still going up because they're expecting inflation, but people suddenly don't have any more money. So they can't buy this stuff. So the economy goes into like a massive recession, and then prices start adapting. So prices start coming down. People start realizing, OK, this is the amount of money I have. This is what can afford. And everything kind of reaches a new equilibrium. But that is painful and it's hard. It's what the United States went through, even though we didn't have hyperinflation. We had high inflation. But it's what we went to in the recession of 1982-83. And it's what other countries in Latin America. I grew up in Israel. And in Israel, we had in the early 1980s, we had a thousand percent inflation. And basically it got paid every week, and you took the money, you spent it. Because if you kept the money within a week, it was worth a lot less than what it was at the beginning of the week. You wanted to spend it on Monday, or Sunday in Israel, because by Friday, it was worth a lot less money. But you got into the cycle where you demanded a raise from your employer constantly. The employer demanded that the government print more money. So the banks is the way in which the money entered the economy. And then they had to figure out a way of how to suck this additional money out of the economy to stabilize prices. And they did that towards the end of the 1980s. But it was very painful. Through what taxation? No. In Israel, they did it through a combination of things. One, they just stopped printing the money. So you just stop the printing process. That's the easy way to defeat inflation. The other way is that they encouraged the banks to offer people very high interest rates on saving. So they encouraged people not to take their extra money and spend it, but to take their extra money and put it in a saving account. Now the banks couldn't ultimately pay you back that saving because they promised an above market return because the government was incentivizing them just to suck the money out of the economy. And the banks basically all went bankrupt. And then the government bailed all the banks out. So it was this multi-step, crazy kind of system. I don't think anybody actually planned it out because the government is very bad at these kind of things. They just did stuff and there were really bad consequences. But coming out of the whole thing, the result was that inflation was killed. Banks or bankrupt were nationalized and then privatized again. And so the banking system is marginally a little healthier. So they solved the problem. They managed to get out of the inflation. But there were huge short-term pains and probably huge long-term consequences to it. But they did it. Other countries, I mean Ecuador is probably a good example where they had thousands of percent inflation. And one day they just said, and Zimbabwe did this, right? There's no local currency. Like if you go to Ecuador, there's no local currency. Use dollars. Really? Yeah, so they've dollarized the economy. Panama is the same way. Panama use dollars. There's no Panamanian peso or something like that. You just use dollars. So they basically took away the printing press. Printing press disappeared. And they said, we're going to discipline ourselves with dollars. And so they did a one-time exchange of all the local currency into dollars. And then they stopped printing. So Ecuador doesn't print any money and Panama doesn't print any money. They're putting their faith in the Federal Reserve, which for most Latin American countries is not a bad deal. The Federal Reserve behaves much more rationally than does a local central bank. There was actually a proposal in Israel to do the same. Treasury Secretary came out one day and said, we should dollarize the economy that would get rid of all the inflation. And he was absolutely right. He was fired, I think, within a couple of hours. Because it was anti-nationalist. Israel should have its own currency. We have to have our own currency. This is a big deal. So it's nationalism often is the barrier to actually dollarizing an economy. And one of the benefits of the euro, although the euro obviously has a lot of critics out there, one of the benefits of the euro is that Greece doesn't have a central bank. And therefore it can't just print money like crazy like it did in the 1960s and 70s and drive itself into hyperinflation. Spain can't do the same. They're actually disciplined by the fact that there's this common currency run basically by German bankers who are afraid of inflation and therefore don't make sure that there's no inflation in the euro. And now there are other problems that the euro creates. But in terms of inflation, Europe, you don't see inflation because of that. What role has hyperinflation played in the state that Venezuela is in now? You know, hyperinflation is a symptom more than it's a cause of the state of where things are. I mean, what happened in Venezuela is that the economy spiraled out of control. People couldn't buy the stuff because the stuff wasn't being produced. There just wasn't food. There wasn't toilet paper for a long time. A lot of consumer goods were just disappearing. And the way the government dealt with that. So first, the economic collapse happened. Do you mind explaining what happened in Venezuela? Sure. So, you know, Venezuela used to be 30, 40 years ago. Venezuela was the richest country in Latin America on a per capita GDP on average. It was a very wealthy country. Now, it wasn't exactly a capitalist country. It wasn't a free country. It was like most Latin American countries had clear distinction between those who had and those who don't have. And that wasn't necessarily based on how productive you were, how innovative you were. It was based on the family you were born into and the political pool you could have. So I'm not advocating the system Venezuela had when it was the richest country in Latin America. Just in spite of how bad it was, it's just better than the system they adopted later on. And one of the reasons they were so wealthy, well, two reasons. Venezuela has the largest oil reserves in the world, more than Saudi Arabia. Now, to be fair, it's very expensive to get the oil out of the ground in Venezuela because most oil is in the ocean and it's expensive and requires massive investment in technology to get the oil. In Saudi Arabia, you basically have to poke the ground and oil comes up. I mean, it's very shallow. It's very easy to get the oil in Saudi Arabia. So Venezuela had a lot of oil and had a semi-free economy and you had a lot of businessmen investing there. You had a lot of factories they were producing and Venezuela has very fertile land. So you had farming that was producing a lot of food. They were actually exporters of food. You had a very productive farming sector. So generally, it was a relatively wealthy country although it did hold people. The poor were held down as poor and there was definitely this class system in Venezuela again, like a lot of Latin America, almost feudalism where some people controlled the economy because they had economic poor. And of course, the solution to that is more capitalism, more freedom, getting the government out of the business of allocating resources and benefiting some at the expense of others and letting the economy just flow. So if you're young and ambitious, you can rise up and become poor. The problem with feudal societies is they hold the young and ambitious down. So there were a number of steps that Venezuela took even before Hugo Chavez was elected. The government at some point nationalized the oil, the oil company, the oil fields. They reneged on contracts with U.S. producers and other producers. So they started doing bad things even before Chavez and as a consequence of that, the economy was not doing well before Chavez was elected. Chavez was actually part of a coup. He was a colonel in the military. He tried to overtake the Venezuelan government. It was repressed. He ended up spending some time in jail. But he did it in the name of the people and he did it in the name. And the military government actually kind of deal with or the government, not the military government, the government kind of deal with him because they didn't want to alienate his supporters. They didn't really punish him. And he became this popular hero of the common man because he was fighting against this corrupt government that was holding back poor people. So he got elected president and he got elected president basically on a very socialist platform, a very populist platform. And he got a lot of support from Cuba and there was this trade going on between Cuba and Venezuela. Venezuela would send Cuba money that it would generate from the oil fields and Cuba would send Venezuela intellectuals, doctors and kind of military experts. So in the background, even today, there are a lot of Cubans in the background. The Cubans all over Venezuela, they're really the people pulling the strings. They're pulling the strings of Maduro. They're pulling the strings behind the military. They're the reason why this hasn't collapsed completely and Maduro's out and there's been a replacement in government. So Chávez and the Castro's were very close. Chávez brought in these Cuban experts and the things they did was they collectivized farming. So they did land reform and I'm all for land reform in Latin America because again, I think they're these distortions of the past. But I'm for privatizing the land and giving farmers ownership over their own land instead of letting in a sense their feudal lords own all the land. What Chávez did is he collectivized it. He created these collectives and gave them so-called ownership of the land and he basically did massive land reform all over Venezuela, giving collectives these farms. Now, we've run this experiment before, right? Collective farming is an absolute unmitigated disaster. It led somewhere between 20 to 30 million people dying of starvation in Ukraine in the 1930s. It led to something between 40 to 60 million people dying of starvation in China in the 1960s. And it led in Venezuela to the fact that they can't produce food and they don't produce food. But it wasn't just the farming. He then landed up nationalizing almost the entire supply chain with regard to food. So all the different food manufacturers all the different food suppliers, you know. I mean, food is a whole supply chain from when the farmer all the way to grocery store. There's a lot of people in between. All of that or a lot of that was nationalized by Chávez and as a consequence. And by the way, given a lot of the economic profits that were generated from that were given to the generals and that's another way that he gets the army in his side is that the military commanders in Venezuela are also the people benefiting the most from the economic system that exists today, they get the profits. Same exists in most authoritarian countries. You need the generals to be happy. So you give them a lot of money. He nationalized the entire supply chain around oil. So it's one thing just to nationalize the oil company and the oil fields. But now he nationalized all the supply chain and again, reneged on a bunch of contracts with the Western companies. And then any company that he deemed really, really important to the Venezuelan economy was nationalized, was taken over by the government. And as a consequence, the economy just started to decline and decline. Now he was doing fine up until around the financial crisis. But you remember right after the financial crisis, oil prices plummeted. And it was when oil prices plummeted that suddenly the little oil they were getting, they weren't investing in technology, they weren't drilling new oil wells. So there was no, but the little oil they were getting, when it was at 120 bucks a barrel, there was money. They could give to Cuba. They could bribe, in a sense, people with that money. But as soon as the oil price collapsed, suddenly the true nature of the Venezuelan economy was revealed for what it is. And there is no production going on. They're not producing food. They're not producing anything of value. And most of the businessmen during the 2000s and the early teens have left Venezuela. Most of the talent has left Venezuela. The government invested nothing in the industries that it nationalized. The government invested nothing in electricity, the grid. 80% of all the electricity in Venezuela comes from one source, a hydroelectric plant, and a big dam. And this week, the entire country... Is in the dark. It's been in the dark for five, six days now. It hasn't gone back. They don't have the skill set. The people, I mean, this is right out of, if you've ever read Atlas Shrugged, this is right out of Atlas Shrugged. The people with the skill set have gone because they're not going to stay in Venezuela. They've gone either to another Latin American country or they've come to the United States. They're talented people. The most productive people have all left. The people who know how to fix the electric grid have left. So they're stuck with the power outage. It's very difficult to bring out, particularly given the size of this, to bring it back up. The people who could actually do it are not there in the country anymore. They don't have the funds to bring experts from overseas and a lot of countries are boycotting Venezuela anyway. It's an unmitigated disaster. Imagine what it's like to live for five days without electricity in the modern world in which we live. And on top of that, there's no food. There hasn't been food for years in Venezuela. People have eaten their dogs, eaten their cats, and no pets in Venezuela. The zoos are completely empty because people have eaten the zoo animals. There's literally no food. And there's no basic things that we take for granted. It's basic. So not just the wealthy and the educated and the skilled have left, now other people are leaving. So there's at least a million refugees in Colombia, not exactly a super rich country that can handle a million refugees. There's hundreds of thousands of refugees in Brazil, in the northern part of Brazil, the poor part of Brazil. Again, not exactly a country that can handle this number of refugees. And the entire society in Venezuela is basically collapsing. Now, in order to make people feel better about as all this collapse is happening, the government starts spending money. It starts handing people money because we think in terms of if I've got a lot of money, I've got wealth. It's what the money can buy them in. But suddenly people discover there's nothing to buy and the stuff that they want to buy because everybody's got more money goes up in prices faster than the money they have. So they had a million and a half percent inflation last year, a million and a half. It's hard to contemplate what that means. I have bills from Zimbabwe where the same thing happened. And again, Zimbabwe was the breadbasket of Africa. It was a massive food exporter. And because of the same kind of economic policies, basically Zimbabwe's were starving. They had millions of percent inflation. And I have these banknotes of a hundred trillion Zimbabwe dollars, a hundred trillion. But Zimbabwe fixed it in the end, in a sense, fixed it by basically ending their currency. So there is no Zimbabwe currency. You said they dollarized? They didn't dollarize. They basically stopped using their own currency because it was worth... Nothing. Nothing. So it was easier to use it as wallpaper than it was to actually buy stuff. So what they use in Zimbabwe, what they have been using is South African Rand US dollars, euros. They'll use other currencies. So they don't even have a currency? No. So the central bank basically shut down. So there's no currency. Which is great for Zimbabwe because they were doing such an awful job. They still have bad policies with regard to farming and with regard to these other things. And as a consequence, the Zimbabwe economy is not doing great, but it's doing better because at least the inflation is out. Venezuela would have to do the same thing. They would have to either convert a new currency and eliminate the existing currency or just eliminate all currencies and do like Ecuador, go in the dollar or something like that. But the problem in Venezuela... I mean, this is the deeper problem. This relates a lot of what's going on in the world. The problem in Venezuela is that the opposition is not that much better. So this guy who is claiming to be president... Nicolas Maduro? No, Maduro is the president, right? There's the opposition guy who's announced that he is president now and that's the kind of the internal fight. He's the head of the equivalent of the House of Representatives in the United States. And he declared the previous election as fraudulent and therefore he constitutionally becomes president. He's a socialist, too. So nobody's challenging socialism and in a day when Venezuela is doing what it's doing because of socialism, collectivizing farms, nationalizing businesses, classic socialism. In America, socialism's never been more popular. So socialism's on the rise everywhere, including in some countries in Latin America in spite of Venezuela, capitalism's on the decline in terms of popularity, even though everybody can see right before they rise the consequence of socialism and everybody should be able to see, or if they know a little bit of history, if they know something about the world, the outcome of capitalism. And yet everybody chooses socialism instead of capitalism. They choose poverty, starvation, and eating their pets over the kind of world that is possible of great prosperity, great life expectancy, great quality of life, great standard of living. They don't want that, it turns out. Why? Why the rise of socialism? If capitalism is so great and socialism is so bad, why the rise of socialism, especially in the United States? Well, I'd say first, the first thing to understand is that we don't live under capitalism. The left is being very good at defining every problem that exists in the world today as a problem caused by capitalism. But we don't have capitalism today. What is a mixed economy? We have elements of private property and freedom and lots of controls and regulations and taxes and massive government spending. So lots of statism, lots of socialism, if you will. So it's a mixture of capitalism and socialism. And the left has been very good for 100 years, really, in the United States, blaming every problem we have on the capitalist piece of it and claiming that the solution is always more state, more state. And the capitalist side, the people who believe in capitalism have been terrible. I mean, you know, gross negligence is, you know, at defending capitalism and explaining what it is and why all these problems are not caused by capitalism. I mean, one example from recently is 2008 financial crisis. Everybody thinks it's capitalism. You know, capitalism in 2007 in the banking sector and the mortgage sector, they would explain the collapse, right? These are two of the heaviest regulated industries in the United States. Heavy, heavy regulations. That's what caused the financial crisis and we can talk more if you want about what caused the financial crisis. And yet nobody went out, except me and Peter Schiff, maybe, and said, no, no, no, capitalism didn't do this. Even George Bush, who was Republican supposedly, right? He said, no, this was caused by capitalism. We need to bail out all the banks and to save capitalism. I mean, a mishmash of nothingness, right, and in complete capitulation. So, so you've got, you've got the left being very good at blaming every problem of capitalism and the people who advocate for capitalism not standing up for capitalism. Part of the question is, why don't they stand up for capitalism and why did the people buy into the left's propaganda? Because they do and they bought into it for over 100 years now, since the progressive era, since 1914 with such, you know, it's a hundred and something years since Woodrow Wilson at least, if not even before that. And the reason is, you know, that fundamentally we all grow up with a well-taught, a moral code, an ethical code that is consistent with socialism. So what did our mothers teach us is good? Share. Share. Think of others first. Think of yourself last. Now they don't believe this. No mother actually believes any of this. But that's what we say. That's what we present as the moral ideal. Be selfless. Being selfish is bad. Thinking about yourself is bad. You've got to always share it. You've got to always think about other people. And sacrifice, we are told it's the most virtuous thing. I mean, they tell us how much they've sacrificed for us, how much we owe them because of all the sacrifices they've committed to. Sacrifice is like a noble word. I mean, to me, it's the essential evil in our world is the idea that people are sacrificing. Why sacrifice? But put that aside, to sacrifice, to be selfless, to share, that's good. Well, what do socialism want? What wants us all to share? It wants us to think of others first. From each according to his ability to each according to his need. There are people out there who are suffering. There are people out there who don't have as much as we have. It's our moral duty to help them. And if we're not helping them, then all the government is doing is helping us be a little bit more moral by taking stuff from us and giving it to them. So that's one piece is this depiction of morality as otherism, altruism. We all think altruism is fantastic. But altruism is about placing the well-being of other people above you. But there's a second twist to this. So that's one piece of it. The second piece of it, we've been taught since we were very little that self-interest is what? It's about what? It's about exploiting other people. It's about being nasty to other people. It's about lying, cheating, stealing. It's about whatever it takes to get you away. Whatever it takes. That's self-interest. So think about what that means. We've got a file folder in our mind in a sense. Our mind, our concepts are like files, file folders. And into that file folder we've put in, so the file folder at the top says self-interested people. Well, selfish people. And in that file folder we have lying, stealing, cheating, back-stabbing, doing whatever it takes to get you away. But what else do we have in that file folder? We all know that what business is about is making a profit. We all know that when Steve Jobs got up every morning, he was like I want to do something for myself. I'm going to make something that makes me happy. I'm going to build something beautiful for me. Yeah, everybody else benefits too, but business has been self-interested. Business is about doing what they love doing, what they enjoy doing, what they have fun doing, and what makes them a lot of money. Capitalism is about self-interest. You go shopping. When you go shopping you're thinking constantly in your mind this is great, I'm helping my fellow man. I'm making sure people have jobs. Yeah, exactly. Nobody thinks that. Now I'm buying shoes because I know that salesperson needs a job and I'm contributing to their ability to have a job. Nobody thinks that. We buy shoes, we buy iPhones, we buy whatever it is because we're trying to make our lives better. We're being selfish. We're being self-interested. So you've got this far forward in our mind which has line-cheating, stealing, SOB and businessman, capitalism, markets, all in the same file. Financiers, like you talk about? Certainly financiers, because they're after-profit. They can't even hide a product. I mean Steve Jobs can say, look, I've made your life better. I gave you the iPhone, so I deserve the billions. What does the bank or city bank do? Well, city bank's a bad example because it's a bad bank. But you know, Goldman Sachs, what does he do? What does he present the world? Yes, I financed Apple. I made Apple possible but that's an abstraction. That's hard to get. So all of these things go into this file folder of selfish and they mix up. So implicit assumption, our instinctual assumption, our immediate assumption is businessman equals crook. Capitalism equals a system of exploiting lying, cheating, SOBs that are going to do bad things. You know, why do we have ... You walk into an elevator, here in LA or anywhere in the country, and you walk into an elevator and there's a little diploma on the thing that says, a government bureaucrat has inspected this elevator. It won't drop and kill you. Why do we have that? Because we're convinced that those greedy, selfish profit-seeking businessman would build elevators that killed us if not for the government inspector. Right? Because the best way to make money in business is to kill your customers. We believe that. We truly believe that. Right? If there were no food inspectors restaurants would poison us all the time like McDonald's. Every time you'd go and get a hamburger at McDonald's you would get food poisoning and some of us would die. So we need food inspectors to make sure that doesn't happen because those greedy, selfish SOBs we know. Business equals selfish equals lying, cheating, stealing. They're going to lie, cheating and stealing. So we regulate them. We control them. If you're in business, if you're selfish and you're in business and I know you have the potential to be a lying, stealing SOB, what am I going to do? I'm going to put a government bureaucrat right behind you watching everything that you do and making sure that you don't do it. You don't die, steal or cheat. So this moral framing of sacrifice, sharing taking care of people, frames everything everything that we think about in the world out there and that selfishness is bad and lying, cheating, stealing. That's the behavior. That way of framing the world has to lead to socialism or it has to lead to some statism and it leads away from capitalism because capitalism no matter what you think of it, capitalism is a system of self-interest. It's a system where people pursue selfish interest. So if selfishness means truly lying, stealing, cheating then capitalism is a system of lying, stealing and cheating and we have to regulate and control it and then we have to help those other people because that's our moral duty and the only way to help them because you're too selfish to help them yourself is for me to tax you and to give the money to them. So I think everything everything we experience today in the world can be explained in terms of this moral view and unless you have an alternative to this moral view you can't fight socialism. You can't fight socialism. You can't fight AOC on the basis of how you're going to pay for it because there are sophisticated economic economists out there whether they're modern monetary theorists or they're Paul Krugman who is anti-modern monetary theory but pro-Keynesian economics he can fight a justification for people who justify the economics of it they find a way to pay for it. You have to challenge on morality but what's the alternative? The Republicans have exactly the same morality more code as the Democrats that's why the Republicans have drifted left every year they're more socialist. I mean if you take the Republican party of after the New Deal FDL's New Deal Republicans swore that when they got into power they would undo the New Deal. They got into power in Eisenhower they didn't do anything contrary they protected the New Deal. The New Deal was massive regulation of financial industry massive every aspect of finance became regulated every aspect of banking became regulated the New Deal was entitlements the first kind of real entitlements primarily social security social security ensued the beginnings of a welfare state the first time America really engaged in industrial activity the big Tennessee Valley projects and building dams and building these things so it was big government projects where the government is directly involved in the economy did Republicans undo that? No, did they undo social security? No, did they undo the financial regulations? No, in spite of what some on the left would claim and then we had the Great Society so the Great Society was now a big step towards full welfare so it's Medicare and Medicaid it's real welfare actually giving people at the federal level giving people who are poor money, food stamps food stamps were introduced I think in the New Deal but direct cash payments were introduced in the 1960s during the Great Society and then Republicans swore at the time as soon as we get into power we're going to undo all this never happened and the contrary now somebody like Donald Trump runs and says we will not touch social security and Medicare make them stronger we're going to make the welfare state work better but we're huge advocates of the welfare state all Republicans hold that so what you have is a complete shift to the left of both political parties but it's inevitable because how are you going to say you're going to do away with Medicare I mean old people you're not going to take care of old people what's going to happen to old people I mean the heart starts pounding I mean you start feeling bad and markets you're going to let those greedy you're going to let those lying, stealing SOBs do healthcare for old people they're going to exploit them they're going to take advantage of them they're going to cause these old people to die we know that because that's what markets do because that's what selfishness does so unless you challenge the fundamental underlying moral premises you can never get rid of the policies and nobody is willing to do that nobody is willing to do that and there's even ideas deeper than that because you know statists socialists others always claim one of their basic claims is that most of us don't know what's good for us we're too stupid there's one way to think about it but more importantly they would argue philosophically they would say it's not so much about stupidity it's about the fact that truth what's really important what's really true it's just not accessible to simple things like us you need to be you need to kind of commune with the spirits to really discover what's true this is Plato only the philosopher king knows the real truth only the philosophers see the sun we all live in a cave, we see shadows we don't really know what's good for us we don't know how to live so the philosopher needs to tell us how to live and it's okay for him to force us it's better for us so we should embrace the force inflicted on us and if you think about every authoritarian regime it's always well we know what's good for you you don't know what's good for you so again how do you challenge that philosophically you have to change the terms of the debate so what Inran does what Inran why Inran I think is the most important philosopher of the last 2,000 years and I think the most important thinker in all of these realms is because she challenges that assumption that you can't think for yourself she challenges the idea that you can't figure out what's good for you and then she challenges the whole morality of sacrifice, of selflessness of other people and she's the first philosopher in a comprehensive systematic way to actually challenge the conventional wisdom the conventional approach which I think conventional is stateism, conventional is socialism conventional is other people making decisions for you because correct me if I'm wrong but the idea of capitalism or just a free market and individualism had never really existed before like modern day no so it's actually existed in well modern depends how you define modern I would say as long as you know civilizations and so there's never been capitalism until about 250 years ago capitalism is a modern phenomenon and capitalism is a direct consequence of the enlightenment and the enlightenment is a period of time let's say from 16 I don't know 70 until 1800 something like that is a period in which people are saying thinkers are saying two fundamental things one is individuals have the capacity to reason to think for themselves and all of us have the capacity to know the world with our own minds if you think about the attitude before the enlightenment before the enlightenment the attitude was truth is to be found in ancient books interpreted by priests right there were no real philosophy it was all about religion and it was all about revelation truth was to be revealed very platonic in that sense in the sense that truth is in a different dimension and you need somebody to reveal to you the truth Protestants have a slight modification to that in the Reformation they say every one of us has access to the truth through God but it's still the truth is revealed to us through an ancient book and through the word of God if I can't I don't know what I do right and so the Catholics say only the pope can speak to God so you have to follow the pope and the Protestants say no you can all speak to God but that's problematic because a lot of people don't nobody does so right some people pretend some people some people are better at pretending I guess than others but the point is the truth is not to be found in reality truth is not to be found through the use of reason and then you get the scientific revolution and you get the enlightenment and suddenly Isaac Newton tells us no you can figure out how objects move we can understand the world we can understand what's going on we can explain it in these relatively simple mathematical equations we can show you why things act the way they do in the physical world and this is this is huge maybe you know one of the most important things ever right and because people then go wow you mean it's not in a book it's reality it's I have the capacity using my mind to figure these things out well wait a minute if I can understand the movements of objects and the movements of planets why can't I choose more in profession can I use that same tool reason to figure out what I'm good at and to go and pursue that and how about I choose who I marry that's new because again before this our lives were completely dictated can I choose I have my own values I can figure out what my values should be I can figure out what my life should be and how about I figure out who my political leaders should be how about I just live my life and you leave me alone and that's the American Revolution the American Revolution is leave me alone I want to live my life right to life, liberty, property and the pursuit of happiness don't interfere let me live my life free of coercion because I have this tool to do it so the enlightenment's a period where we rediscover a reason and then because we rediscover a reason we also then say who reasons there's no collective reason any more than there's a collective stomach we don't eat for one another but we can't think for one another either so every individual is what matters so you get two ideas coming out of the enlightenment the efficacy of reason the importance of reason all knowledge comes from reason and what matters of the individual not the group not the tribe not the state not something outside of the individual not even God what matters is the individual and now you've got capitalism capitalism is the merger of those two ideas capitalism is basically the political system that says that the only role of government is to protect us from force from coercion the role of government is to protect us from force that cripples our minds that makes it impossible for us to act on our own judgment capitalism is a system that leaves us free to pursue our own values what we choose to do with them what we choose to invent what we choose to start businesses what we choose we can marry anybody and in economics capitalism is a system of freedom and that that idea of freedom freedom being the absence of coercion is brand new it's 1776 in a sense and from there you get this era of an increased dominance of capitalism now capitalism never fully manifests because it's never been completely unregulated well I mean if you think about America you've had slavery in the first you know 70 years right and so that's not capitalism that's the opposite of capitalism that's worse than feudalism and then you've always got the government dabbling in stuff from day one they were regulating banks then they regulated railroads so they were always trying to because see part of the problem with the Enlightenment is I mean it's hard to say problem because the Enlightenment is such a huge achievement but they didn't get it all right they didn't get morality right so what they got the sense of morality in the Declaration of Independence it says you all have an inalienable right to the pursuit of happiness not other people's happiness our own happiness so that's that's pretty close to my vision of morality but they couldn't challenge Christian morality Christian morality was just that was the prevalent morality that was everything nobody challenged that and nobody knew where to go with challenging it which was sacrifice giving Jesus dies on a cross he suffers immense the worst kind of death right not because of sins he committed but because of sins other people committed I mean that is the ultimate sacrifice giving up your life for something other people did I mean to me that's one of the most horrific injustices right and that's why I consider Jesus a bad guy what's he doing you know if he didn't commit any sin why is he suffering right why is God letting him this happen but the point that God is letting this happen is to teach us that sacrifice is noble sacrifice is good Jordan Peterson calls him a superhero really superhero because he died for other people's sins I don't consider that particularly heroic I think it's stupid but that's the culture that views Mother Teresa as a superhero what did she do she suffered she had a horrible life she was in pain and agony and misery and she never enjoyed her life but she helped other people so she's a saint no she's a wasted life what a waste of a life I mean I want people to be happy to enjoy life and she was miserable that should be a measure of whether you lived a successful life or a failed life but we elevate suffering that's what this morality demands to the saints are always people who suffer people who have a good time of enjoying life even if they change the world even if they help their fellow man in enormous ways are never going to be saints because they didn't suffer so a moral code this Christian moral code is a disaster from the perspective of freedom and yet the founding fathers John Locke the thinkers of the Enlightenment with the exception of the French people like Voltaire and people like that who who are willing to give up on religion so Voltaire was certainly an atheist the more dominant strain of the Enlightenment the Scottish and British Enlightenment weren't willing to give up on Christianity the founders weren't completely willing to give up on Christianity even though they were more deists than Christians so Thomas Jefferson for example takes the Bible and he cuts out all the parts he doesn't like and what doesn't he like he doesn't like miracles he doesn't like mysticism he's a man of reason so he takes out all the miracles imagine a president of the United States getting elected when we know he just cut up and sliced up the Bible and he kept the parts he likes imagine that today you couldn't that suggests to me that today we live in a more religious society than the founders did because Thomas Jefferson won an election in spite of the fact that he was accused of being an atheist and he cut up the Bible but the point with Jefferson was he kept all the parts that were about mysticism because he was a man of reason but he kept all the parts about sacrifice about the moral code of other people so in spite of his statement in the Declaration of Independence about the pursuit of happiness at the end of the day his morality was a Christian morality of sacrifice and suffering and a moral code of serving others your moral purpose in life is to serve others so America was founded on a contradiction on the one hand pursue happiness but not really because if you want to be a good person then you should be sacrificing you should suffer and you should share and you should do all these things and that contradiction was not sustainable so what happened was the further way we got from the original documents the further way we got from the spirit of enlightenment the further way we got from capitalism the further way we got from economic consequences because the altruism the Christian morality came to dominate more and more and more and of course intellectually in the 19th century the enlightenment was attacked it was attacked by German philosophers Kant, Hegel, Schopenhauer a whole string of them ultimately Marx, Nietzsche they attacked the enlightenment they repudiated the enlightenment so the whole intellectual world turned against the enlightenment against reason so when you go into the humanity state it's not about reason it's about what group do you belong to it's about what are your genes telling you to do evolutionary psychology which all these guys Sam Harris and John Peterson and almost all of them are advocates tells us reason doesn't matter because you can't choose anyway Sam Harris gives reason lip service in a sense but he denies free will if you don't want a free will it's the process of activating your mind it's the process of activating your mind and engaging with reality but if you're not activating it if it just goes on and off automatically then there is no such thing as reason I think I heard someone ask you about if you thought people were the way they were because of you know, biology or their genes or if it was because of environment and you said neither I mean both play a role so there's some role both in the environment certainly if you have really lousy parents and they treat you really badly I mean that's going to have an impact on you right and yeah your genes have some role I mean you know if only because physically you're born in particular ways that I think have psychological implications you know I don't think I don't think you can separate the psychological from the physical completely right but at the end of the day but there's a third option and that is your choices what you chose to do the conclusions you came to given the experiences you have and given the genes that you have what choices did you make and to me that is the most important thing and now a lot of people choose not to choose they choose just to drift in life and if you choose not to choose then yes you're going to be shaped by your environment and your genes because you chose to be shaped that way but if you take your life seriously then you take control of your own life which means you take control of the process of choosing and you shape I mean I meant I think talks about shaping your own soul you make yourself you build yourself given what you get from the environment given your genetic makeup which might determine aspects of the IQ and your intelligence and your skill set, talents and so on but given those things you then choose how to use them and what to do with them and what kind of person you want to be your character is something you either defaulted on or you chose to create sometimes you choose to create something really bad a lot of people out there are really bad people because they chose most people just drift most people don't engage in it but you can also choose to create a good character a good soul and that's what I think happiness requires happiness requires that we work on making the right choices in life that are actually going to create the right kind of character the right kind of soul, the right kind of human being that is efficacious in the world out there and can actually be happy but you're on that's hard that takes a lot of effort yes, yes and that's why I think a lot of people drift but it's worse it takes a lot of effort, I always tell people to be truly selfish is hard work so people think of selfishness as I'll just do whatever I feel like doing but what you feel like doing is not necessarily in your self-interest what you feel like doing is often self-destructive what you feel like doing usually gets you into trouble we can all think back on things that we did that we regret and almost always it's because we didn't think about them in advance we just did it and they weren't in our self-interest well if you suffer from them it probably wasn't in your self-interest now you can make mistakes sometimes you can think something is in your self-interest and it's not but usually when we get into trouble when we do bad stuff it's because we didn't think about it so for In-Rand morality is about thinking it's about using your mind to figure out what's good for you and that's not easy to figure out what's good for me is not easy I'm going to live until 90-something what do I need to do today that won't screw me up in 10 years I'm going to actually enhance my life if you're young what career should I choose who should be my friends who am I going to marry all these are hard decisions yet what's the alternative you either make your own decisions or you let other people decide for you or you just let your emotions guide you and we know where that leads and we know where other people's choices are I won't decide on profession I'll just ask my mother and she'll decide for me now are you going to be happy if you've read The Fountainhead basically one of the key characters in The Fountainhead becomes an architect because his mother wanted to become an architect he wanted to be a painter so he went in architecture lousy architect he became very famous but he's a lousy architect he never got the self-esteem the pleasure the self-confidence of building something that was worthwhile he just got praise from other people but that's not worth that much and by the time he realizes what he's done and wants to return to painting he's too old and he's wasted his life and he's miserable on the other hand there's another character who says no I'm going to do what I believe I'm not going to pay attention to other people my mother the society my university professors anybody I'm going to do what I think is right and I'm going to build the kind of buildings I want to build and even though he fails in terms of a big part of the novel from getting praise from other people he's the happier one and he ultimately is a successful one in every respect so you've got a choice in life you can either do the work turn yourself into the kind of human being you want to be achieve happiness, achieve success achieve a life worth living or you can default on that and you can just live like everybody else and most people are you know I wouldn't say they're miserable but they're not exactly happy they're not exactly embracing life they're not at the moment and they're not seeking new challenges and new wonderful things so everybody has that choice but they're never taught to do it we're not taught to do it we're not taught to think for ourselves we're not taught that the purpose of life is your own happiness we're not taught that the purpose of life is to live the best life you can live for yourself we're not taught that reason is the way to achieve that we're not taught any of that the opposite so it's not surprising that 90% of people don't embrace it because they've never been told it's good they've never been shown how to do it they've never been encouraged to do it they've been slapped in the face when they try a lot of people try just to do something interesting to do something original and they're slapped in the face even when they're young you can see parents where the kid is going why, why, why oh just shut up I mean that's how you destroy your mind that's part of how you destroy your mind so we have an educational system that at best is boring and at worst is actually mind-numbingly crippling I mean instead of making knowledge exciting interesting, fascinating, you look at little kids you put them in a Montessori classroom where they can explore and they want to learn they're like sponges of knowledge and then you take them into first grade and you kill it you kill that sponge you kill their their excitement about knowledge that was exactly my experience I was a very, I was a very good kid I was very well behaved, kind of a teacher's pet loved learning but once I got into about like middle school age I had a really hard time with classes I mean I wasn't, I didn't like I mean some of my classes I failed and it was very frustrating because I wanted to learn everyone thought I was a straight-A student because I was a good kid but that system just did not work for me and now that I'm a little bit older and I've tried different methods now I think the kind of self-employment entrepreneurial type route of being in action and trying things firsthand that works for me But imagine a private educational system where entrepreneurs are entering the field constantly with new ideas on how to improve education and new trials and different schools appeal to different types of learning styles if you will and different approaches and where you can experiment we can try different schools and you can go and find where you're going to thrive that's what we're missing I think there's an interview you can find on YouTube with Steve Jobs from the early 90s before he went back to Apple and he's saying isn't it interesting that you never see a billboard advertising a school there's no marketing of education we spend more time thinking about I don't know what shoes are in my mind because we're wearing them you spend more time thinking about what shoes to buy all of us spend more time thinking about what shoes to buy and where to get the best deal for those shoes and what style we want to have and how many shoes we're going to have then we spend on which school to send our kids to we spend zero time on that because the government has told us we've got it, don't worry and they get a lousy product but imagine a world in which there's marketing for schools they're competing for our attention they're telling us what they do that's different from other schools they differentiate each other they're competing whether it's competing on test scores or competing on happiness scores or whatever the score ultimately happens to be or on innovation we get our graduates are entrepreneurs whatever don't you see that with private universities because you do see advertisements for those for USC yes and universities I think are as bad as universities are I think they're much healthier than schools because they're less conformist although they're becoming more and more conformist because they're depending more and more on government so that's changing over time but they at least used to be much more variety than there's in schools much more you know an appeal to you as a customer much more treating the student as a customer and therefore higher education in the United States is much better than K-12 education in the United States because there's basically no competition in K-12 and there's no entrepreneurship in K-12 education and even in higher education I think if the government got out of financing it got out of regulating it got out of controlling it we could reach much higher much better levels than we have today in terms of success but you know it all again comes down to this idea of you can't think for yourself I mean when I say this people say oh but parents can't choose what school to send their kids but the government can't but a bureaucrat can somebody else can do it for you I have a friend who works in education and we were having this conversation and he said he was like I think I asked him about school choice or charter schools or something like that and he said he didn't think that was right because parents don't know what's best for their kids and that was but he the platonic philosopher knows and the next question was well then who does and I didn't ask that because the elites, the educated, the philosophers the politicians at the end of the day the majority the majority right that's democracy the majority gets to tell you where to send your kids to school to decide what kind of economy we should have the majority gets to decide whose right should be violated whose freedom should be to be restricted that's democracy and democracy is just mob rule it's the mob making decisions about what's good and bad what's right and what's wrong so I mean that's another one where you know you have to be careful but democracy is unbelievably corrupt I mean democracy is an awful as pure majority rule is an awful awful system it's what sent Socrates basically the death chamber right because he was corrupting the youth and the Athenians and like that so they voted to kill him is that okay I mean that's why we have a first amendment to say it doesn't matter how many people think you should shut up you have a right to speak So in this discussion of free markets capitalism I have to ask you about the criticisms of capitalism and more specifically the financial industry before we were talking about financial crises and you said that you can go into more depth about that well first I've got an eight hour course on the causes of the financial crisis which is on YouTube on my channel so everybody should subscribe to my channel on YouTube you know there's just a lot going on in the financial crisis and to untangle it all requires a lot of time it's not simple but all you have to know is that going into the financial crisis housing market mortgage market financial markets were heavily heavily heavily regulated they were because a lot of people say that they weren't no everything a bank does everything it has to get permission from do you know that a JP Morgan the bank JP Morgan Chase 150 government employees bureaucrats regulators go to work every day at JP Morgan's offices they sit next to JP Morgan employees and have to sign off on their decisions nothing in the banking sector gets done without regulatory approval not the type of loans not the type of investments not the type of book shenanigans everything that they do has to be approved by some government official so this idea that we have a financial industry that's unregulated it's just bizarre it's just weird nobody's ever worked in a bank nobody's ever looked at a bank nobody's ever studied banking in the United States everything is regulated there are a few decisions that are not so and then on top of that you've got things like too big to fail for the big banks so government has basically told the big banks and this has been in existence at least since 1984 when you make a lot of money you get to keep it all if you lose it will bail you out all right that creates weird incentives that creates perversion right and so and then then the government decides we want more Americans to own their own homes like it was always 63% we want it to be 70% this was under Bill Clinton this is under George Bush it goes even further back homeownership is both a liberal and conservative big issue right so we subsidize it we have Freddie and Fanny Mac Freddie Mac Fanny Mac and they subsidize it through lowering your mortgage costs subsidizing the mortgage how did they do that low interest rates yeah I mean basically so I'm Freddie Mac I buy mortgages from the banks so I buy them I pay a lot of money for the mortgages so that provides an incentive so I overpay if you will higher than what the market would typically pay the banks then to issue lots of mortgages and they're willing to issue lots of mortgages even if people who maybe cannot pay because they can sell them to me and I don't really care if people can pay or not because my goal is to get 70% people into the houses I don't care if they can pay for it ultimately that's somebody else to worry about I'm just a bureaucrat who's getting compensated based on how many people are getting into homes the bank doesn't care because the bank doesn't keep the mortgages it's telling them to me so I keep buying the mortgages and I keep subsidizing them at a higher and higher rate for them and I keep telling the bankers oh we need you to go into poor neighborhoods we need you to go into neighborhoods where people cannot afford to buy their own home and convince them to buy their own home in spite of that because otherwise we won't meet our goal of 70% and by the way the government has told me that I have to buy X number of junk bonds of really poor quality loans and by the way the reason I can afford to overpay is because me Freddie Mac I have a government guarantee that I can't go bankrupt so I can overpay I can lose as much money as I want because the government is going to be on me out and the government did bail them out Freddie and Fannie today are bigger than they were before the financial crisis really they buy more of the mortgages they have they're much larger so because the government bailed them out the government basically they could issue debts they could raise money at interest rate as if their bonds were risk free because they were because the government had a guarantee and that's a government Freddie and Fannie Mae private public private partnership so this is a kind of a composition entity it has shareholders but the government guarantees all their debt so it's not unattached it's not free and regular people like Dodd and Frank we've got this bill called Dodd and Frank which is this and they were huge critics of capitalism huge critics of the financial industry they won the payroll of Freddie and Fannie I mean I'm not making this is not stuff that is a conspiracy theory if you look at who Freddie and Fannie were donating large amounts of money, whose campaigns it was all first they paid everybody off so Republicans and Democrats everybody got money and they still do that's why they haven't shut them down because it's a cash cow for politicians but then Dodd and Frank in particular got particularly high amounts of money and they were the guys who protected Freddie and Fannie no matter what happened in the early 2000s there was massive fraud in Freddie and Fannie they couldn't even come up with a balance sheet and income statement for years nobody actually knew and nobody cared nobody went to jail and they continued to do everything that they did and when financial crisis happened nobody blamed them no no no it's Wall Street because they, I mean thinking in terms of moral terms to bring it back to morality they're public servants you know this is why we never blame bureaucrats we never blame the regulators we never blame the bureaucrats they're just doing it out of the goodness of their heart they're not in it for any self-interested reason they're just trying to make the world a better place they don't make a lot of money they don't get bonuses they're just altruists who work for the government in the common interest in the public good now none of that is true but that's how we perceive them oh but those businessmen they're in it for themselves they're in it for money, they're in it for profit therefore they must be the bad guys you know when we established a Federal Reserve we gave one bank and one guy, the guy who runs the Federal Reserve this unbelievable power over the entire US economy we didn't trust markets because markets are full of these self-interested people but we trust one banker Alan Greenspan Ben Bernanke, Powell today to make these decisions that affect every single life in the United States and maybe every single life on planet Earth is affected by the decisions the Fed makes and yet we have no problem with one guy making that decision making 12 of them making those decisions, why? because they're not making any money doing it if they were profit-seeking enterprise then we'd be suspicious but no, they're all good public servants we love public servants because they're servants and because they're not in it for themselves so even the way we think about the financial crisis is framed in terms of self-interest of Wall Street versus those wonderful government-run entities just there to help the common man and to help people and to do the right thing one other aspect of financial crisis just for completion Federal Reserve kept interest rates below the rate of inflation for two and a half years in other words this is the MMT kind of thing they printed a lot of money that money went some way and it went into housing primarily and that's why you got this huge bubble in housing during the late 2000s and that had a collapse Federal Reserve and you can look this up on Google Paul Krugman in 2002 actually in an op-ed in the final paragraph in an op-ed says now that the dot com bubble is burst in order to prevent a future recession what I suggest is that the Federal Reserve create a housing bubble period 2002 New York Times, op-ed just look New York Times, housing bubble, Paul Krugman and you'll get the op-ed that's what people Keynesians think this is you know so the Federal Reserve created a housing bubble it's exactly what we got and the bubble burst and that's what we got none of that has to do with capitalism there is no capitalism in those markets there is no freedom in those markets there is no choices in those markets above and beyond the bad choices created by bureaucrats and politicians so no I mean the fact is that that's true of all the complaints against capitalism it's truly is a great system there are no such things as what people call market failures markets go down, they go up some products work, some products don't work but there are no systemic market-wide failures because nobody has that kind of power in capitalism because it's diversified it's hugely diversified and it relies on the individual decisions of hundreds of millions of individuals and hundreds of millions of people don't all behave in the same way suddenly they don't all choose the same thing they don't act in the same way so you just don't get the kind of problems that you get when the Federal Reserve dictates interest rates for everybody has to be this way or when the Federal Government decides 70% of Americans need to live and house it need to own their own home why? who made that decision? why is the government interfering in my decision why is it any of their business? and they do, for example, even today if you pay taxes you get a deduction on the interest you pay on a mortgage you don't get to deduct your rent why? why is the tax code benefiting home ownership at the detriment of rent why is it any of their business how I use my money? there are millions of little subtle ways in which the government is interfering in my decisions and your decisions relating to economic behavior and that is ultimately what leads to problems and crises and disasters and conflicts so could you summarize it as saying artificial versus organic supply and demand? I mean that's one way to think of it but I also like to think of it in terms of freedom versus control capitalism is about freedom freedom in individuals to live their own life for their own purpose based on their own values to pursue their survival and their thriving as human beings based on their own values and that's what capitalism is capitalism is a system that leaves individuals free to pursue their values to pursue their lives to try to make their lives the best lives that it can be and we never really discussed the morality of egoism but we discussed that a little bit but the idea is that that's virtuous that's what we should be teaching kids that's good, what's good is to live the best life that you can live it's to pursue the values that are most important and most going to contribute to your long-term thriving as a human being that means to use your mind it means to be honest, it means to be productive it means a bunch of different things you know which I know writes about in essays like the book The Virtue of Selfishness and Other Places but it's those kind of ideas we need to teach young people to live full lives for themselves not to sacrifice for others not to think of themselves they own lives so little as to say their lives of other people are more important in my life no, your life is the most important thing to you and you should live it that way it doesn't mean exploiting other people indeed exploiting other people destroys your life lying, cheating, stealing not good strategies for living not good strategies for success in relationships or in business or in any part of life I mean I always tell the audience just try lying to your best friend for a week see how the father gets you it's awful try lying in business you're not going to do business for very long and stealing is the same thing you steal stuff, you're basically admitting to yourself that you're incompetent that you're not capable of producing the values necessary for your survival you're undercutting your self-esteem you're saying I need I'm dependent on other people in order to live but to really have self-esteem to really be happy you have to be independent to survive by yourself for yourself stealing is a way of expressing dependence so a morality focused on that is a morality I think the result is people who have strong self-esteem who are happy who want to pursue their lives who want to make the hard choices of how to shape their character and shape their soul and shape their life but it was also who don't want other people to live, what to do or they don't mind advice but they don't want to be forced they don't want to be cursed they don't want a gun pulled on them they want to be left free so you need that kind of moral code in order to bring about real freedom and real capitalism but that's what it is control breeds disaster freedom breeds success I feel like we could talk for so much longer about so many other things playing to catch is there anything else that you feel like you want to get out there that we haven't gone over yet no I mean I think we've gone over the most important points again I encourage people to read Rand to read for themselves the ideas that she presents are incredibly self-empowering and yes living a good life is hard but the rewards are unbelievable right you only have one life one and every second the passes you'll never get back I mean this is all obvious right you'll never get to live this moment again don't you want to make the most of it don't you want to live the best life you can don't you want to be as happy as you possibly can well you need tools to do that you need principles to do that it's not easy and that's that's a logic to why we need morality so the point about it being hard is why we need morality morality provides us with the principles make the right choices and we need to we need to prove that those principles are right to ourselves we need to know that they are the right principles but once we know that so I don't have to think should I lie or shouldn't I lie every time I engage in a conversation with somebody because I've already proved to myself that lying is a bad idea it generates huge negative consequences for my life so I have a principle called be honest primarily to myself what does that mean? it means don't lie to yourself and don't lie to other people deal with reality as it is don't fake reality don't pretend it's something different than it is don't evade don't ignore data that's important for your decision making all of that but once you have that principle you don't have to redo it every single time you encounter a situation it makes all those decisions much much easier so at the end of the day if you adopt the right principles then living a good life is not hard it's very easy if you adopt the right principle making the right choices is not that hard it's actually quite easy it's adopting the principles that in the society we live in today is hard because they go against everything that we are taught but the problems we have in the world today are consequence of that fact the consequence of the stuff that we're taught is not good it's bad well thank you so much for coming on we have to have you back I'd love to do it we'll do a whole day yeah we can do a whole day next time I won't schedule a flight thank you for coming yes we will talk to you soon good thank you so much hey everyone thanks so much for watching the episode if you're interested in contributing to the conversation and supporting the show there's two easy things you can do one click subscribe and click on page where you get exclusive access to the Exploring Minds community