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Speaker 3Hey, everyone. Welcome back. To another episode of the Julia LaRoche Show, where I am pleased to bring to you a returning guest. We are joined today by Raoul Pal. He is the co-founder and CEO of Real Vision, also Exponential Age Asset Management, the founder of GMI, the author of the new book, The Everything Code. In this episode, we get Raoul's latest macro update. We dive into the thesis that he explores in this new book, The Everything Code. We look at the exponential age. We talk about the AI trade and why he is not worried about that sell-off that we saw on November 5th. He also explains why he doesn't think we'll see a recession, a systemic recession, rather, ever again in our lifetimes and how to get ready for the coming economic singularity, which he thinks will happen in 2030. It was so great welcoming Raoul back to the show, catching up with him. Really enjoyed this conversation. Hope you all enjoy this one as much as I did. Raoul Pal. Founder and CEO of Exponential Age Asset Management. Founder and CEO of Real Vision. Founder of Global Macro Investor and also author of the brand new book, The Everything Code: Seizing the Opportunities at the End of Economic History and the Dawn of the Exponential Age. Congratulations on the new book and great to welcome you back to the show. Great to see you, Raoul.
Speaker 4Always great to see you, Julia. It's been too long.
Speaker 3It's been too long. It's been two years and I went back and started listening to our episodes. And you nailed it, Raoul. At the time, you were talking about we were coming out of macro summer into macro fall. And you said 2025 was going to be an epic year for markets and nailed it again. So we got to start where we are today. We always start with the big picture. We're definitely going to dive into the book. But I imagine that the framework for you today is going to be especially important for setting the scene for the book. So what is the macro setup for you today? The macro setup
Speaker 4right now is, Yeah. According to the Everything Code thesis, liquidity is pretty much everything, right? It's how we run the world these days and liquidity right now is restricted and that's why markets have been choppy. Crypto has been not good. The Nasdaq topped out five, six months ago. It's because liquidity has been restricted. So what's restricted? Liquidity has been in the Iran war. So rates went up, the dollar went up, and those things with the increase in oil, tight and financial conditions, which lowers liquidity. So that means markets don't have as much money around, which is why you're seeing these rotations that keep happening violently in markets. And now the markets themselves are stagnant and kind of, they've sort of lost their bid for the time being. Now, the good side of that is that forces rates to come lower and the dollar to weaken a bit anyway. And so we're starting to see the unwinding of these tight financial conditions. But it means that it's going to knock onto the economy a bit into Q1 of next year. So the economy is going to be a bit weaker than people expect potentially. But markets should get their footing as soon as the dollar and rates start easing off a bit, which I think we're in the process of doing now. So we're in this phase where I would call it a mid-cycle pause, where things are digesting all of the moves. Liquidity is not flooding the market yet, but when it comes back, everything kind of reignites.
Speaker 3As you point out, and even in the everything code, liquidity really explains pretty much all of the returns. So how does one actually look at the liquidity cycle, understand where it comes from, forecast it? Can you kind of give us some insight into how liquidity actually works?
Speaker 4So it's how much money is in the system. Now, that's the nice way of describing it. The other way is debasement of money because you're increasing the amount of money there, so it lowers the purchasing power. You're increasing the purchasing power of money, which is why we get the issue that house prices go up faster than incomes. You know, these scarce assets go up more and people can't afford them. So everyone's like, what's happened? Why is this happening to me? And that's the process of debasement of currency, and that is driven by liquidity. We got into this mess because of an aging population. An aging population generates less economic growth, and they started aging out in the early 2000s. And what's happened is economic growth fell. And to offset that growth, we increased debt. So I call this the magic formula. So GDP growth is driven by population growth, productivity growth, and debt growth. So we had two engines failing because old populations are less productive. And so then what we did was paper over the cracks with debt. And the chart of the labor force participation rate and the debt as a percentage to GDP inverted are almost entirely perfectly correlated, which I call the greatest chart in all of macro. And the one that so few people understand is like population aged, we increased the debt exactly to offset it. Okay, fine. Then we realized we couldn't pay these debts, and that was the whole 2008 issue. So we reset interest rates to zero, and everybody refinanced their debts in this kind of three to five year thing, the debt rollover. And now they pay for the debt, the interest payments on the debt. And then we're going to have to pay for the debt. As I said, we've got financial conditions, which allows the liquidity to flow. Will banks lend more money? And that's driven by things like the dollar and interest rates. So these things all work in connection with each other. And it drives the return on assets in two ways. One is the straight debasement of currency means that the value of equities goes up over time by the amount you debase. So the S&P goes up by about 11% a year. And the rate of debasement globally is about 8% a year. So you've got 8% is just driven by this lowering of the denominator. And about 3% being driven by improvements in the company's earnings, et cetera. But then, so when you filter the whole world through this lens of liquidity, you find there's only two assets that actually outperform liquidity over time. And they're technology, because technology compounds over time. And so you've got the NASDAQ and all of technology sector and crypto, because it's a technology. And that's basically how I kind of collapsed the world of macro down into two things that matter and one instrument to measure. And that and that became the everything code.
Speaker 3Gold has had an extraordinary run, but with prices at these levels, investors are asking what's next? Well, here's a question worth considering. What has waiting to earn a yield on your gold already cost you? Monetary metals is changing that equation, offering investors a way to turn physical gold from a passive investment holding into an income generating asset through its gold yield marketplace. It connects investors with vetted businesses that use gold in their operations, allowing gold owners to earn yield on their gold paid in physical gold. Right now, there are opportunities to earn up to 4% annually in gold. That means accumulating additional ounces every month without having to sell your gold. With gold commanding so much attention, the conversation shouldn't just be about how high prices could go. It's also about how much more gold you could be accumulating while you wait. You can't go back and earn the gold you missed, but you can decide what your gold does next. Visit monetary-metals.com/Julia to learn how you can start earning a yield in gold. There's so many threads I would love to pull on there. And just for folks, you said the greatest chart in macro, that's the US labor force participation versus government debt percentage of GDP inverted, right? That's figure 11 in the book. Yes. Yeah. And then you talked about this like annual debasement rate, you put it at 8% annual debasement hurdle rate. So I imagine that's going to have some implications for folks to understand that. What does that mean about how they might be invested, the traditional 60/40 or cash that bonds even, do they need to think about how they're allocated if that's the case?
Speaker 4Well, think about it on the simple level and people understand this is like house prices just become impossibly expensive. However hard you work, your earnings don't go up as much as the house prices do. And that's been happening for a long time. And it's because debasement of currency changes the denominator on scarce things. Earnings are not scarce, they're cyclical. So what you find is they don't go up. This is the exact same reason why price earnings of the stock market keep going up. Because the price of equities goes up because of debasement, earnings go up with GDP like wages do, because that's economic activity. So equities get more expensive, houses get more expensive. Everybody's future is going to change. And that's why the stock market keeps going up. Your future self is getting poorer, right? Because you want to own assets, you own asset to reward your future self with savings. And you try and get excess returns on owning a house or whatever it is, your investment in the stock market. But it's not doing that because you can't buy enough of it. So this is why everybody feels like their future is a bit fucked. And nobody really understands how am I going to get out of this trap? And everyone's now working two jobs. Everyone's doing three different things because you can't get there. And this is this whole process. So debasement is the servicing of the debt. So you can get rid of the debts two ways. You can either let the entire thing blow up in one go, but then you get everybody takes a 70% haircut on everything they own. Or you do it over time, which is 8% a year. So it's a mutualized cost to everybody to pay the debts of the nations. I think you're like
Speaker 3heading on something that a lot of us probably feel. And I've probably talked to you about wanting to buy a house for ages. So yeah, and it's, you know, it's really hard.
Speaker 4So not only are people having to move to areas where it's more affordable. But even then, it's harder to get the right job. But now everyone's more mobile. So you can get, you know, because of the internet, we can now have jobs where we don't have to work in an office. Great. But it still requires people to hold
Speaker 1two or three jobs.
Speaker 4And that whole process is you kind of know you're told you need to invest. But you can't, you can't seem to get ahead, which is why everybody starts now investing. So that'll be the Nasdaq. Because technology, we're going through the largest technological revolution humanity's ever gone through. And it's hyper accelerated, which we'll talk about in a bit. And we've got crypto, which is like the infrastructure layer for all of this. It's not been a great market for the last year and a half. But over time, it's been the best performing market in all of history. And so that's what's attracting people's capital, because it's the only way to get ahead. Because real estate doesn't go up faster. than debasement. Gold doesn't go up faster than debasement. The S&P 500 doesn't really go up faster than debasement. So you can't own most of the stuff. So all the traditional 60-40 portfolios and all of this stuff doesn't get you ahead. So you don't get any richer. You don't actually generate wealth by tying up your money for a long period of time in these assets. You end up with the same relative wealth that you have today.
Speaker 3Raoul, I'm so glad to have you, especially just for folks who are watching, listening. We're recording this on Friday, November 6. But Raoul, I got to ask you about yesterday. Remember, remember the 5th of November. What did you make of the significant sell-off that we saw in the NASDAQ? What was, I would love to get your perspective. I haven't had anyone really weigh in on it. So what's your picture here?
Speaker 4Firstly, remember, there's not much liquidity around. So markets are wobbly. There's not enough money coming in. So there's not enough capital. Also, the markets were quite leveraged. So people have borrowed money to drive their returns. And then you get a catalyst, which was the US midterms. And the US midterms is from the Democrats is coming that they're very anti-AI and data centers and other stuff. So they're like, oh, shit. And that was the freak out in the market. Is it anything meaningful? I don't think so. I don't think anybody can stop AI and will stop AI. So it's a narrative. It's liquidity driving it because it always is. So once you understand the liquidity has been diminishing, then you understand why markets get messy like this. But also in the process of that, as I said, rate expectations come down because people realize the markets are dodgy. And that helps stabilize the markets. So overall, noise, but messy. Now, we've had three 10% sell-offs already this year. This one is now one of the larger ones. Some of these really big stocks got smashed, but they've been getting smashed for a while now because people are getting nervous about the build-out and who pays the debts on the data centers and can the world deal with this amount of debt issuance. And I think that's all a red herring. But most of this is being driven by the most cash-generating businesses in all of history, the hyperscalers. They have more money than God. The amount of leverage they have is so negligible, it's irrelevant. So their inability to pay for any of this stuff is zero. They're producing a good intelligence that is the only good we've ever created that has infinite demand. It never stops. Because the more intelligence you build, the more intelligence it requires. So your agents that we're all now using are demanding even more intelligence, and it keeps going forever. This is also unlike, people get freaking out about, like, this is like 2000 all over again. Now, 2000, like the railroads, like the phones, like all of those, somebody came up with a great idea of, hey, here's this new thing, technology, the railways. They then built the tracks. You have to borrow tons of money to do it. It's speculative. And then what happens is, you have to expect everybody to use it. So there was no demand for it yet. And the demand came over time. So a bunch of people went bust in that process, because they've borrowed money to build these railroads, and the returns didn't come. This is 180 degrees opposite. They can't build this stuff fast enough, because there is so much demand. This is the fastest ramping of revenues in history is anthropic. Nobody's ever scaled revenues this fast in history. They went from zero to what, a run rate of $70 billion in three years? It's staggering. When you break down the AI companies, everybody involved in this stack, everybody's making supernormal profits. Everyone's making between 30% and 65% profit margins. That's TSMC, who make the chips, NVIDIA, who kind of program the chips. Then you've got the hyperscalers, and then you've got anthropic. Every single person is making a fortune of a good with infinite demand. We've never seen anything like this. And so the market wants to worry about people who borrowed money to build data centers, the neoclouds, they're called. And yeah, fine, a bunch of those will go bust, but a bunch of these assets will just get bought by the hyperscalers, who have more money than God, and they can't stop this race. Because also, intelligence is being produced. The output of intelligence per unit of data doubling every 4.6 months, right? So we've never seen anything like this. We've talked in the past about Metcalfe's law. This is Reed's law. This is a double exponential. This is why everything feels crazy, because everything's like this on a log chart. On a log chart, things look like that, but everything has gone crazy. And so nobody can stop this race. Because if you slow down, if intelligence is doubling every 4.6 months, it triples in a year, and it compounds. So if you slow down, let's say you're Meta, and you say, well, we're not going to spend money on CapEx this year to increase our build out of data centers, you've lost the entire race. You'll never catch up. And so they're all in a race that can never stop. And the same race is happening at nation level. The US is in a race with China, and it can never stop. Nobody can afford to win. Nobody can afford to lose, and nobody will win.
Speaker 3We've had a lot of conversations on this show about gold. And after lately, there's a natural question. Is it too late? It's understandable, because when an asset moves this significantly already, price tends to become the focus. But one of the things that I've learned from the many investor conversations I've had is that price isn't the first question they ask. They want to know why they should own something, the role it should play in their portfolio, and what they are trying to accomplish by owning it. And if you're exploring these questions yourself, Augusta Precious Metals, is an educational resource for exactly that. Their experienced education team offers personalized one-on-one web conferences where you can ask questions, learn how owning physical gold and silver works, and understand how a gold IRA differs from purchasing precious metals directly. It's really about getting educated before deciding whether any of it makes sense for you. To learn more, visit juliabysgold.com or text Julia to 35052 for Augusta's free guide. Because ultimately, the question isn't whether or not the price of gold has changed, it has. The question is whether or not the reasons for owning gold have changed. And based on everything I've learned through these conversations, I don't think they have. Can I ask you this? Is there a possibility or a risk that we could F it up from maybe a policy level or from a political standpoint?
Speaker 4I think it's, yes, that's the fear. But I think it's too big and too powerful to stop. Governments can't move fast enough compared to what's happening. Government's intelligent. Government doesn't double every 4.6 months. It doesn't at all, in fact. Government doesn't get smarter, but this thing does. I don't think there's any way anybody's going to stop it, but it will create societal issues because people are mistrusting it. You can see that narrative building already. It's all going to kill us, or it's going to ruin your water, or it's going to ruin your data center.
Speaker 3What was your. I had a great time to have you. What was your take on that when you saw the. The young researcher with his. We're all going to die. What was your read there?
Speaker 4So you always have to ask why these narratives come, right? And that was. If you pull apart the thread from that, it feels like it was paid by Anthropic and others, and it was done to try and get government regulation. So you get regulatory capture for monopolies. And it got pushed back very quickly by Scott. Scott Besson and a few others, David Marcus and stuff, just said, no, this has to be an open technology that everybody has to build because if you slow it down by regulation, China will win. And nobody can afford to lose, and nobody will win. So I even don't think the Democrats can hold this narrative long. They might do it to scare people to get votes. But if you stop it, you're going to destroy the future. I mean, the whole thing. And you will end up with China having superintelligence. Yeah, artificial superintelligence is the next phase beyond this. And then you've got a system that is more powerful, more knowledgeable, more intelligent than anything ever created. And that's it. That's a one-party world, a one-ideology world. You can't have it. And the Chinese don't want the US to do it either. And anybody in the middle doesn't want either of them to win. You'd rather have two systems. So you have an open and fair fight for the whole thing.
Speaker 3We just had Jordy Visser in studio, who's great. I think you've interviewed him before.
Speaker 4Oh, tons. We're good friends.
Speaker 3Yeah. So it was his first time on the show in studio, which was fun. And he was debunking the bear case. I'm sure you've seen the bear case. A lot of folks, well-known investors, who think we're in a bubble. I'd love for you to debunk the bear case.
Speaker 4Well, the fact that it's not a bubble is, A, we have infinite demand. B, this is funded by the most cash-generating businesses in all of history. And they're not very levered. And every single component part is making money in this whole process. So there's no way that this is a bubble. We haven't got going yet. And if you look at the price-earnings ratios or anything of these companies, they're all low right now because the market's so skeptical of this being a super cycle. But for me, it's the most obvious super cycle that we've seen. And it's the most obvious super cycle that we've seen. The only thing could really stop it is a massive withdrawal of liquidity. But the government doesn't want to stop this either because they can't. Because this is the biggest CapEx boom in history. This is jobs. This is real work for real Americans. And they can't stop that. So the mid-90s economically was very similar. So Greenspan just refused to raise rates. He raised rates once in '96 or '97 and then did nothing and said productivity is going to take care of this. And productivity will lower the rate of inflation. And he was right. And they just left it and let the banking system lend as much money as possible. And we're going to do the same this time. So I think there is almost no way this is a big bust because the leverage, even the hidden leverage in the system is so big. I'm small compared to the cash flow powers of these companies. And that doesn't stop. Even when you go through the inflation of 2022, or you go through COVID collapse, or you go through 2008, these companies' earnings don't go down a lot, that they couldn't pay their debts. So I just don't see a world that that happens. But can a bunch of neo-clouds and other weaker borrowers go bust? Yeah, sure, they should. That's capitalism. If you're not in the strongest hands, then you may lose the game. And that's okay. But it's not going to unwind the whole thing. There's just no way.
Speaker 3Yeah. I want to talk about the economic-
Speaker 4And also just another thing on that is, I don't think, and Geordie has the same opinion as me, that we can have recessions. Explain that. So it really dawned on me in 2020, when we shut down the entire fucking world for a year. The market went down for three months, and we had a one-quarter recession. Okay, that was inconceivable, right? Inconceivable. What did they do? They printed money. What did that do? So a big bust is when the value of the collateral falls, and your loan is still here, and the collateral is here. And then it all unwinds. That was 2008. In 2008, they learned if you debase the currency, the price of the assets goes up. So every time assets look in trouble, they print money. And that takes the entire sort of left tail out of the economy. It can't go bust. Because they know the game. And so they know the game for this too. If everything starts looking like it's going to fall apart, it's very simple. You just pump liquidity into the market, debase the currency, all the assets go up, and everyone's debts are okay. So we can't have a big credit cycle. Sectors have- Credit cycles. But at systemic level, you won't do it. And for that, to remove the entire left tail, we basically pay 8% a year for a put option. That's what the debasement is. It's a put option that we all pay to stop the economy falling apart, which is the more positive way of looking at what this means. So if you do have assets and stuff like that, you realize that they've taken that away. So every time the market, let's say the S&P gets down 20%, they print money. And they're never going to let these hyperscalers go bust. How? They'll lose the race to China. So they're government guaranteed, basically state-backed. In fact, the whole economy is state-backed.
Speaker 3This is fascinating. Do you think we'll never see a recession again? Like the playbook has been completely altered.
Speaker 4We will all see recessions in things that our businesses or our hometowns or whatever, but the economy won't have the wipeout. Not the systemic. Yeah. Not the big old school recession. We didn't get a recession in 2022 when rates went up and inflation was at 9%. We didn't get a recession. Why? Because the moment anything started wobbling, they printed money. So we didn't get a recession really in 2020 when we shut down the entire world. We didn't get one in 2022 when we had inflation rates went up. So then when did we last have a recession?
Speaker 32008. Is there a point, Raoul, that it breaks then? I think it's probably not a great thing to not have a recession. Recession's probably healthy at some point, right?
Speaker 4Well, we get them, but in sectors, right? Okay. So you see it all the time. Some whole sector starts failing, going by the wayside, and that's fine. At the whole systemic level, because the biggest borrower, is the government. So that's what they do. They can't allow it to go bust. So that whole thing that people worry about, the dollar's going to collapse, the US economy's going to collapse in some big debt crisis, can't happen. Just simply can't happen. And we pay via debasement for that. So we all get screwed in the end, right? But you just get screwed slowly. You're the frog boiling in the water.
Speaker 3Yep. That 8% annually where you intuit it, but you might not exactly realize
Speaker 4Yeah. Yeah. And 8% annually, you look at that over 10 years, it's 100 and whatever percent. So you've lost 50% of your purchasing power within 10 years. So that house you're trying to buy, keeps going up.
Speaker 3I guess it sounds to me like you used to have a different point of view and this shifted for you and changed.
Speaker 4Yeah. Yeah. And that was the discovery of the everything code, is when I found this, I realized as a macro guy, we always looked for blowups. Yeah. And we made our money from that. And 2020, changed my entire understanding because I now saw what I didn't understand, which is that actually you make more money on the upside because the whole system is rigged in your favor now. So then once you realize that, you stop looking for blowups and looking for markets that are weak and you want to buy them because they go up over time, particularly if you're investing in technology, which massively outperforms everything else.
Speaker 3That is fascinating. And so it completely changed.
Speaker 4I never invested in technology. In fact, I didn't really like equities. I know.
Speaker 3I never thought of you as being more of a bull. I always kind of thought he was like a macro bear.
Speaker 4And now I'm just like, oh no, the entire system is rigged in this way. And therefore you play it. And we're going through the largest technological revolution of all time. So you've got the double kicker. They've taken the left tail out of markets. And so they've taken the big risk out. So you've still got the risk of picking the wrong stock. And so you've still got the risk of picking the wrong stock. And so you've lost the kind of 2008. And I've lived that. And I've seen that many countries in the world before in the past as well. That's all gone. So now we've got, yes, you understand the liquidity side, and then it's just about what is going to outperform.
Speaker 3Fascinating. Okay. I want to talk about the economic singularity. I would love for you to explain what that is exactly. We hear the term singularity, especially if you follow AI, the economic singularity. And you put that at 20, 30. Yeah.
Speaker 4So when I first developed this idea, I said, if this exponential age plays out like I think, and when I started talking about the exponential age, everyone's like, what the fuck is this macro guy talking about exponential technologies and everything's changing? And I think I've been proven pretty right on that. When you follow it through to its logical conclusion, you realize that nothing we understand about the economy will work again. And that sounds scary. It's not necessarily. So let me explain. So we go back to that magic formula, productivity growth, population growth, debt growth. Now, there's nothing we can do about population growth. We tried to import people and people didn't want it. We couldn't digest it in society. And that happened in every nation. And nobody's having kids. So it's kind of baked in the cake for the next 30 years. There is no growth. So suddenly, we build synthetic humans, AI, and robots. And we're going to have infinite numbers of these things. Right now, most of them are not economic actors. So most people aren't getting their AI to, they might use it to pay for something using your own credit card, but AI is not generating yet its own revenue streams. But we're starting to see some of that. Over time, they'll become economic actors. And we're going to see some of that. They have, as opposed to food, for their energy, they use electricity. And they need compute. So they have demands, which is why I have to build all these data centers, because that's what they have. We have to build agriculture for humans so we can feed ourselves. We have to feed these new population with energy and compute. Their compute is basically their housing and their electricity is what they eat. And then we're going to build robots. We're going to put these AI brains into robots, which people aren't ready for. You know, we're going to put AGI brains into fucking robots that are stronger, cheaper, faster than us. So they're going to be smarter, stronger, cheaper, faster than us. And we're going to make infinite numbers of them over time. So that changes what the economy looks like. Because economic growth, because the productivity starts going up, and we're already seeing the productivity numbers are rising. And so economic growth goes up. So debt to GDP. Start shifting, because GDP starts growing faster than debt. That's what the government wants. Okay, great. But the next part of this is, well, once you've got super intelligence in everyday life, how does the economy work anymore when they are economic actors? What does it mean for GDP growth? And Elon talks about this, as do Nick Bostrom and a whole bunch of other people talk about this and say, GDP growth could be 20% a year, 30% a year, 40% a year. Why? Because we can create infinite workers. Now, if you think about that, we had no agents at the beginning of the year, and now there's more agents than humans on the internet. That's one year. What is it next year? I don't know. Let's say the number is 10 billion agents now, random number. Well, at a single exponential, we might say it's a hundred million. At a double exponential, that's a hundred billion, a double exponential, it could be a trillion. We have no idea. We have no way of understanding how many agents will be operating in the economy next year. And so just all numbers break apart. Then you think about, okay, what is a business? A corporation or a business is a group of people that forms this entity that gives it legal rights like a human being. Nick Bostrom: And it's really slow. You set up a business, you have to file this stuff, you have to do your taxes, you have to do all of these things, and you have to hire people and contracts, and it's expensive, lots of friction. Now we can have 10 agents and your AI can build a business instantaneously. It can have employees instantaneously. It has no contracts, it has no registration, it has no nothing. And so businesses can form immediately, they can raise capital immediately. We've seen that in crypto markets, stuff like mean coins capture attention and instant capital raising. You can raise a billion bucks in an hour. So an agent can raise money, can build a business, hire employees for zero cost, apart from the compute and electricity costs, which is very low. And it can collapse the whole business once it's taken advantage of an opportunity a week later and return money to its investors, whoever they are. Nick Bostrom: And so it's changes the nature of markets. Also, who's in markets? Well, it's not going to be us investing. If the agents are much smarter than us, why would we be doing it? So in which case it changes the nature of markets as well. So all I get to is, we don't actually know what this world looks like we're going into. And that's the intellectual honesty of it, is like by 2030, because things are accelerating so double exponentially right now, by 2030, imagine how smart the AI is going to be. Think of it now, right? It's now pretty much smarter than any human ever. Pretty close in every subject known to humanity. So what's it like in four years time? Because it's the rate of intelligence per unit of energy is doubling every 4.6 months. So we don't know. We don't know what it means. So what I get to is we're going into a world that we do not understand that even the study of economics is unlikely to work. How markets work, may not work that way anymore. And it won't have all changed by 2030, but we'll start to see everything breaking apart. Things like wage growth won't ever go up again, but productivity will explode because it's not us doing the work. Where does the money accrue to? Who makes the money? If your agent is making money or an agent that's spun up another agent that's making. Where does this money go to? It becomes this hidden machine economy of which we don't even know what it is. We can't even measure it. So I get to the point where we've got about four years for this to happen. So how do we deal with the uncertainty? So the uncertainty is invest in it in your own demise. Invest in the robots, invest in the AI, invest in it. You'll make money from it.
Speaker 3Un-F your future.
Speaker 4Yeah. Yeah. It's unfuck your future by doing this. And that's the way of doing it. And then you think, okay, what's going to hold value on the other side? We don't know. Okay. So that's the honest answer is we don't know. But one thing I do know is if I'm right, which is that agents become economic actors, which they're already doing, then that's what crypto rails were built for.
Speaker 3I have a question to that point. The agentic era, is that the savior for crypto? Not that the crypto was built in mind for agents, but it's the perfect infrastructure, right?
Speaker 4It's almost freakishly Freakishly perfect for this. Freakishly perfect. And also for agent identity and permissioning of agents. What can that agent do? Well, that's a smart contract. And so it sends a message. The other smart contract, it's allowed to do it and not allowed to do it, which is a big problem with agents right now because they can do things that you don't want them to do because they can go rogue. Smart contracts are really good for this. They're also good to identify what the agent is and what it's doing, but it's also absolutely necessary for the payment structure. Why? All intelligence and everything we've built around us as human society is built on putting electric energy through carbon substrate. We're carbon substrate. Trees are carbon substrate. Everything we know that generates intelligence is carbon. And we've just shifted substrates to silicon and it's a million times faster. That's why we're going through this. At the simplest level, we've to switch substrates for intelligence. So silicon is a million times faster. And so everything can operate at machine speed, which is why computers are so much faster than humans. None of our systems, our payment systems, our stock markets, nothing operates at that speed. But stuff like the crypto rails was perfectly made for it. So that's why crypto becomes, I think of it like a universal basic equity. It's like, if you want to participate in something, here's this infrastructure rail that's going to be used by these unseen agents in this unseen economy, and it accrues the value to the rail and everybody can buy it. It's a global homogenous good. You can buy Ethereum, Solana, wherever you want. And everyone has access, anybody with a good thing. So I like that. It's an easy underlying bet. Yeah, it's a volatile market. It's difficult to hold on to, but that's a great bet. The other side is, okay, what has value? What is real value? I've been buying a lot of digital art, NFTs. People think this is bizarre, but it's not. Art jumps substrates all the time. It went from canvas and physical, and then it jumped to the streets, the walls, graffiti. That's Basquiat. That's Banksy. And now it's jumped substrate again to the internet. That's where we live our lives. So of course the art's on the internet. And now with blockchain, it allows you to make. So anything digital goes to zero in value over time, because you can produce infinite amounts of it. But blockchain makes digital scarcity. And in a world where we're going through societal changes, upstream of all of that becomes culture, and culture gets captured into art. So if you think of the '60s and '70s, the art of that period, Warhol. That was the revolution of that baby boom generation in their youth and all of that. And it becomes immensely valuable. Then it became Basquiat. It was the streets of New York. It was black artists. It was rap music. It was all of this. Massively valuable. Banksy, where the streets, societal unrest, all of that stuff happened. And it becomes Banksy. It becomes super valuable. So it's always the same. It's at every single period. The only thing you can actually own in culture is art, because the records that you own, those concert tickets you went to, the bars that you went to, they're not valuable. They're valuable as memories. But if you want a memory, it becomes art. So the art of the internet becomes immensely valuable, because we're going through the largest period of change humanity's ever going to go through in the shortest period of time. Of course art's going to be valuable.
Speaker 3It makes me think of the fourth turning. You were probably one of the earlier folks who turned me on to the whole Neil Howe, William Strauss, the fourth turning book. Neil's been on the show many times. How does your framework, how does it tie into the fourth turning? I take it there's a relation.
Speaker 4It's so fucking obvious that we were all looking for a system. Is it going to be a change of political system? No, no, no. We're changing the entire thing because of AI. The system is going to be AI. It's going to make better decisions than us. This is where government is going. This is the fourth turning. This whole change of substrate is maybe the biggest fourth turning we'll ever go through, humanity will have ever have gone through. And it's becoming increasingly clear what it is now. So for a long time I was looking for the signs of what it is, but now it's obvious it's this. It's a complete substrate shift for intelligence, how we govern, what humans do, everything. So humans, you know, let's talk about humans in this. I guess people say, well, I'm going to lose my job or whatever it is. I'm like, no, right. One thing humans can do that AI can never do and will never be able to do is be human. Okay. And humans, their real currency is attention. Attention and experiences. Those are these weird human things. And when you think about that, you start looking at evidence, and the evidence is that attention, human attention and experiences are immensely valuable to humans. More so maybe than wanting to pay for an accountant or a lawyer or something else. So what does that mean? Sports teams, they do this every year in value. You look at music tours, do this in value. You look at chess. Chess. Why is Ralph talking about chess? Because no human has beaten a computer at chess for 35 years. Chess industry is the biggest it's ever been, because we like to watch humans, flawed humans compete with flawed humans. Think about the massive rise in podcasts and content creators. It's us capturing attention from other humans and entertaining them or informing them, but it's human attention. Experiences. Look at the holiday and leisure sector. Just keep going vertical because everybody wants experiences. So there's so much to do that's actually more enjoyable. Being around humans is what humans actually enjoy doing. And also having experiences. And there's plenty of money to be made because humans find that immensely valuable. So I don't worry about the economy losing all of the jobs. It's just, we're going to do different things. And what was fascinating was a friend of mine mentioned, he's like, "Fucking hell, all of our kids." This was a few years ago when their kids were like 13. He's like, "All the kids, they just want to be content creators or YouTubers." And the parents were like, "What happened to being doctors and stuff?" You know what? They were dead right. And look at the young generation of gamers now. I mean, the world is going to be pretty much a game by the time
Speaker 3they're older. They're using the AI and coding. These kids are using AI to code. It's incredible. Yeah.
Speaker 4And they're also using it in Roblox and Fortnite and all of this stuff. They're already prepared for this world. They kind of adapt almost before it happens. It's bizarre, but it's there.
Speaker 3It's kind of amazing though. Okay. We have to wrap, unfortunately, but I want to ask, I'm going to ask one final question and then we'll do some parting thoughts. Kashrao, what is something right now that you believe, it's not consensus, maybe it's a bit contrarian, but if you and I are having this conversation at least a year from now, maybe a little further out, we've had like a two-year gap between our episodes, what is that? What is that belief you have right now? It's not very contrarian, not consensus, but in a year out will be much more widely accepted.
Speaker 4I'm going to go for that the entire process of the universe is converting units of energy into intelligence at every single level. From subatomic level to universal level, it's all one process. And I'm writing a book about all of this now, and I kind of fell into this by mistake via the everything code and realized that everything does this. And I think people, Elon talks about it a lot. You start seeing people talking about output of intelligence per unit of energy. We didn't really understand it because now with AI we do, but then we realize, oh, AI is just an extension of everything that's always been happening around us. It's just part of
Speaker 1the whole process.
Speaker 4So that's a slightly far out thing, but I will cover it a lot more in time. I love that.
Speaker 3Well, we will certainly look forward to it. Before I let you go, let folks know where they can find and support the work. Also pick up a copy of the everything code. I will link it in the show notes as well. And I know it's like a culmination of 30 years of work in macro.
Speaker 4I know. And you know, so far it's been selling very well, which is great. So the easiest way to find me, obviously I'm always on X, so you can find me there. If you want to find out more about stuff, ralpel.com. Or if you want to just continue chatting with me, just go to ralpel.ai and there's my AI in my voice and it's training all my stuff. So you can say, well, what the hell is he talking about the universal code? It's all there. So you can just continue the conversation without me. Oh, well with me, but on ralpel.ai, it's free to use as well. So it's fun.
Speaker 3And we have the real ral today. Just so everyone knows. Ralpel, thank you so much for being so generous with your time, all of your knowledge, your wisdom, helping us get better and learn. Really, really appreciate you. Thanks again and congrats on the new book.
Speaker 4Thank you for being part of my journey for the whole way as well.
Speaker 3Of course. Thanks, Ral.
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