MM#317--How The World Works: America on the Brink Navigating the Economic Precipice

Transcript

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Welcome to the Theory to Action podcast, where we examine the timeless treasures of wisdom from the great books in less time, to help you take action immediately and ultimately to create and lead a flourishing life.

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Now here's your host, david Kaiser.

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Hello, I am David and welcome back to another Mojo Minute.

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The headlines screeched across the airwaves as something from a dystopian novel was read.

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One verdict for the US economy, it said debt danger ahead.

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Another headline blared US national debt rising by $1 trillion about every 100 days.

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The next headline US large firm CEO says, quote $34 trillion national debt pushing the US off a cliff.

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The next headline the US debt stands at $34 trillion and counting fast.

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And if you want to see how mind-boggling this debt is, you can just check out the US debt clock.

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We'll be sure to leave a link in the show notes.

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It might just blow your mind.

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And did you know, at that same debt clock, that you can click on the time machine button and go back in time?

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So go ahead, go do that.

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Go back and see where the US national debt was.

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I don't know, say the year 2000,.

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Or perhaps even better, go back to the 1980s.

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It will blow your mind even more.

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It's staggering how far we've come.

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And what is even more staggering is we have US politicians that don't bat an eye.

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They simply shrug off the United States federal debt as it's no big deal, just no big deal.

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Huh, does that sound right.

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Does that sound true?

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Well, as that pastor on the south side of Chicago once said and was often telling his congregation, the chickens are coming home to roost.

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And even though I don't subscribe to any of that pastor's theology, I will have to say that that phrase the chickens are coming home to roost is absolutely correct, which brings us to our book of the day.

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It's a fascinating book Ray Dalio's Principles for Dealing with the Changing World Order why Nations Succeed and Fail.

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Now, this book has been out there since 2021, and I have been meaning to get to it, but there was always something that got in the way.

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Well, we have cleared the space, we have set everything off to the side and we are tackling as we speak, and I cannot read and listen to this book fast enough.

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In fact, it's my favorite book that I've probably read in the last two years, for sure.

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Now, before we begin, I want to share what is completely unique and I've never seen before in a book, and I just love how it was written.

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So let me share this great nugget of wisdom because it's fantastic, and so I don't spoil it.

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Let's actually go to our first pull quote how to read this book.

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In writing this book, I wrestled with whether to make it a complete or concise, and decided to try and make it both by bolding passages to create a quick read version.

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If you want to read the concise version, read what is in the bold letters, and if you want more, it's available to you as well.

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I also wanted to convey some principles that are timeless in universal truths for dealing with reality well, which I denoted by a red little circle, a little red dot.

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So putting a red dot in front of various sentences and italicizing them will convey these timeless and universal truths.

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For some subjects I had embellishments that I thought would be interesting to some, but not all, readers, so I chose to present them as an addendum to the respective chapter.

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Feel free to read or skip as you like, and at the back of the book you can find a glossary that explains the abbreviations you see in some of the charts.

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And finally, to keep this book from becoming much too long, there's a lot of supplemental material available at economicprinciplesorg, including reference material, citations and more data on the indices etc.

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Holy smokes.

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Oh yes, I mean, hold on, that deserves.

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We've never done this before, but that deserves another.

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Holy smokes.

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Hit that button again.

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Holy smokes, folks, did you get that?

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Let me just go back and recap it real fast.

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If you want to read the concise version, read what is in the bold letters.

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If you want more, it's available to you when you read and I'm reading off the Kindle along with the audible version but when you read on the Kindle, there is a lot that's bolded and you can literally.

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It's like reading the author's highlights.

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This is fascinating.

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I wish every writer would write this way, because there are some readers who want all the information, all the supplemental material, all the citations that's me raising my hand but there's many folks that just want the highlights.

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In fact, that's part of the reason why we even started the Mojo Academy with our Academy reviews.

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Be sure to check that out at teammojoacademycom if you haven't.

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But this is fascinating.

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I hope this trend catches on.

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I hope more authors do this.

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I think it's a wonderful value, especially in this digital age age.

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This is very, very good stuff.

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If you're a Pat McAfee fan, we can go ahead and replicate what he does all the time on his show, we can go ahead and say well done, ray Dalio, well done.

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You indeed know how to write a book, and I wish we could get all authors to write that way.

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That bold printing is just magnificent.

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What a fantastic idea.

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Whoever came up with that ought to be applauded overwhelmingly.

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And the good thing is, like I said, if you want more information, you just keep reading past the bolded print and you get supplemental information, and if you're bored with that particular point by the author, you can move on to the next bold point.

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And in fact, let's do that.

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Let's go back to the book.

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The times ahead will be radically different from those we've experienced in our lifetimes, though similar to many times in history.

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How do I know that?

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Because they always have been.

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A few years ago, I observed the emergence of a number of big developments that hadn't happened before in my lifetime, but had occurred numerous times in history.

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But had occurred numerous times in history.

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Most importantly, I was seeing the confluence of huge debts and zero or near zero interest rates that led to massive printing of money in the world's three major reserve currencies.

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Big political and social conflicts within countries, especially the US, due to the largest wealth, political and values gap in roughly a century.

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And the rising of a new world power, china, to values gap in roughly a century.

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And the rising of a new world power, china, to challenge the existing world power, the United States, and the existing world order.

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The most recent analogous time was the period from 1930 to 1945.

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This was very concerning to me, very concerning to me too, as we continue on.

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I knew that I couldn't really understand what was happening and deal with what would be coming at me unless I studied past analogous periods, which led to this study of the rises and declines of empires, their reserve currencies and their markets.

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In other words, to develop an understanding of what is happening now and might happen over the next few years, I needed to study the mechanics behind similar cases in history IG, the 1930 to 45 period, the rise and fall of the Dutch and British empires and the rise and fall of the Chinese dynasties and others.

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I was in the midst of doing these studies when the COVID-19 pandemic struck, which was another one of those big events that had never happened in my lifetime but had happened many times before.

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Past.

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Pandemics became part of this study and it showed me that surprising acts of nature ig, diseases, famines and floods need to be considered as possibilities, because those surprising big acts of nature that rarely come along were, by any measure, even more impactful than the biggest oppressions and wars.

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Now, folks, that's fantastic writing.

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And why is all this even important?

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Because the United States just passed a brutal, brutal and horrific benchmark.

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Headlines from just this past week.

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The CBO now changes estimates of the US government will pass the grim and once unimaginable milestone that the federal debt is so large it will exceed federal spending on defense alone, not in 2028, as expected, but in 2024.

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In fact, we just passed that milestone in March and we blew past it like the roadrunner running away from Wildy Coyote.

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We have now banked some $870 billion on interest payments this year and we will spend roughly $822 billion as a nation, on defense, as a country.

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Let me repeat that again because it's so staggering we have now banked spending $870 billion on interest payments alone this year and we will spend roughly $822 billion as a nation, on defense, as a country.

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And how does Washington react?

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Both sides of the political spectrum, both parties, how do they react?

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Like a bunch of drunken sailors Give me another beer?

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They shout at the bartender as they slur their words and fall over, barely catching themselves to stay upright.

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Catching themselves to stay upright.

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This country needs to sober up, and sober up real quickly, because, as Ray Dalio points out in the book, the trend lines are menacing.

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Going back to the book, my most recent study, on which this book is based, came out because of my need to understand three big forces that hadn't happened before in my lifetime and the questions that they prompt.

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Number one the long-term debt and capital market cycle.

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At no point in our lifetimes have interest rates been so low or negative on so much debt as they are as of this writing.

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The value of money and debt assets is being called into question by the supply and demand picture for them.

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In 2021, more than $16 trillion of debt was at a negative interest rates and an unusually large amount of additional new debt will soon need to be sold to finance those debts.

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Number two actually, let's stay on that because, as I looked as I turned the page, we have some more bold writing.

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So let's hit that as a reserve currency.

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So let's hit that as a reserve currency.

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A reserve currency is a currency that is accepted around the world for transactions and savings.

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The country that gets to print the world's primary currency.

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Now, the United States but, as we'll see, this has changed throughout history is in a very powerful position, and debt that is denominated in the world's reserve currency, ie the US dollar denominated debt right now is the most fundamental building block for the world's capital markets and the world's economies.

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Number two the internal order and disorder cycle.

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The internal order and disorder cycle Wealth and values and political gaps are now larger than in any other point during my lifetime.

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And number three the external order and disorder cycle.

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For the first time in my life, the United States is encountering a true rival power.

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The Soviet Union was only a military rival, never a significant economic one.

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China has become a rival power to the United States in most ways and is becoming strong in most ways at a faster rate.

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Now, all this is to say that we need to study the past so we can learn from it and we can anticipate where we're going, and to plan for those times.

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And to plan for those times is what we call prudence.

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It's a virtue, it's the way the world works.

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That's important because it can help us.

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We should exercise this virtue of prudence and study the past so we can learn the future.

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So in today's Mojo Minute we should apply that virtue of prudence to our individual lives Because, based on all accounts, washington DC is never going to learn that virtue.

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So we must anticipate how our world is going to be changing, and changing drastically.

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And the first way to help you ask and answer those questions is by reading this fantastic, fantastic.

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I cannot recommend it more recommended Analysis by Ray Dalio in this book because it is going to indeed change the world order.

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In fact, like I said in the beginning, it's my new favorite book.

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So let us begin today to study our past, to learn about our future, and that study can begin today with this book.

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It's a fast read, it's an enjoyable read.

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It gives some dire predictions, gives some dire trend lines, but I think we would all rather know the truth than be sold a bill of lies.

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Thank you for joining us.

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We hope you enjoyed this Theory to Action podcast of lies.

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Until next time, keep getting your mojo on.

MM#317--How The World Works: America on the Brink Navigating the Economic Precipice

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