Is there an AI ‘employment ice age’ coming? January 30, 2026

[Music] A list-snap production. [Music] Cheers, Marka. The S&P, the ISEX stocks. This is Motley Fool Money. Welcome to Motley Fool Money, the podcast that is still worth more than an ounce of gold. I've got Philips from the Motley Fool, he is Andrew Page. Speaking of ounce of gold, he measures his gold hoard in tons just quietly. And even that has to be rounded down because that's just, you know, there's a lot of it. The straw man vault is full to overflowing. I've gold or there's other sort of gold digital gold thing. Anyway, Mr Page, how are you? Good mate, very good. Yes. Yes, we like the shiny yellow metal, don't we? I don't. Can I say, you and I both, he did, it's when I haven't bought some about two years ago. Well, I bought some. I did. We talked about it on the pod. Yeah, not as much as I should have. Did I find out how to do this that? I noticed that what sort of wrong I thought. On the straw man's portfolio a little bit because we've got a 20% waiting on certain things. So I was just, it was all part of the broader quote unquote debatement training. Yeah, okay, okay. But yeah, and it's interesting. It's like, I remember this is, this is a lesson in this, I think, for a lot of things outside of the specific asset classes that it is one of the most difficult things as an investor to buy something that's already gone up a lot. Yeah. And at the time, I mean, it's up like 28% or something since I got my allocation again. I wish I had more than I did. But it felt very high at the time relative to where it had been trading for the longest time as well. And I would do it was only a week ago, people would go, "Oh, will it go 5,000 US an ounce?" You know, I would 5,300 or really, just blown through it. We'll talk about it later, but I mean, potentially could run a lot harder as well. It's just all not interesting, Tony. All not. Yeah. Do you want to go to yourself though? We're just in the straw man portfolio. Just in the straw man portfolio. Yeah, yeah, yeah. I prefer for the digital stuff, my friend, as you well know. There's no ceiling on your allocation. There's really not. There's a stack that's as long as you want. That big sense is only 20 million off the mic here. Exactly. Different thing. Mate, so straw man, I am reliably informed. This is a straight-ass Premier Online Investment Club. I was asked about that last week and I just thought I wanted to confirm with you that's actually either case and be still the case. Is there anything to say to the case? It's a case. 2026? Yeah, it can be only one, my friend. If you come at the king, you're best on me. No one's even trying. They're starting words. Is this our mantle? There is no second. It's straw man first, daylight second, third and fourth. Exactly. Are we going to feed them? Probably there's going to feed them. No, none worth mentioning. Fair enough. Fair enough. It's been a week. Every week. Every week. Every week so week. Well, that's here right. Every week so year. January's been a hell of a decade. Yeah, it's really. I've used that joke before. It's just true, right? It works. Well, this time last week, we're kind of talking about the result, the impact of the Greenlands stuff and a kind of just. It's like, man, I don't do predictions as you well know and I listen as well know. What I have said a couple of times is I reckon 2026 is a bit doozy of a year. We've got so much stuff going on. Again, probably won't be right now. That's who knows. Because things peter out because they do. We've talked before about the Greenland stuff comes with a big deal and it's like, oh, turns out we've moved on again. Yeah, we're hurt. You know, you and I mentioned the Evergreen thing. I mentioned that during the week. The China's property collapse that was supposed to be the end of the world and the collapse happened and we kind of went, huh, oh well, let's get on with it. It's just funny, the kind of, you know, the things that, that's the black one thing all over again. The things you think are going to happen, don't know. The things you don't know happen. And so who knows what 2026 is going to bring. But let's go. Just on that as well. Yeah. The other thing I very deliberately try and remind myself as often as I can is that, I mean, you need a little bit of cognitive dissonance for this one. But things can be really bad and dire and you can be pessimistic and negative on the world when you look through sort of a financing, investing, economic kind of lens. But what you've always got to remember is like, well, it's not our first radio. We've got like, my gosh, the world has been through all the number of sort of calamities on those fronts. And we endure. So it's sort of like, I think that's worth keeping in mind. These can be bad. Things can get worse. And it's very depressing. But you, you know, it's, I think we're a long way away from any mad max kind of scenario. Like even when you look at the worst kinds of collapses, it's sort of, it's a complicated picture. And within that picture, there are, there are people and entities that relatively do rather well. And there are lessons in all of that. Maybe we can touch on some of them today. So you can be pessimistic and yet not terrified at the same time. That's what I'm saying. And frankly, you know, some of them will get into some of the scenarios, but some of those scenarios, many of those scenarios, shares actually do really well, for example. So it's kind of, there's still like question of, you know, bad for whom. And again, we don't be silky about necessarily, although I'm happy when my portfolio goes up. But it's also, you know, there was just that idea of when a thing happens, there are almost always winners and losers. Sometimes there are no winners. But more often than not, someone's winning, someone's losing or at least, you know, some of worse than other, some are better than others. That's just the nature of nature of the beast. Oh, if I can just add on that, I would say as a general rule, there can be winners and winners. Yeah, I've got to know. I think that it's one of the fun, I mean, you're not sort of, you weren't going down this angle, but I think it's one of the fundamental misunderstandings for a lot of people in society is they view the economy as a zero sum game. And it's really not, it's really not. It's, it's positive sum. The pie can get larger. Like, it is absolutely mathematically and practically possible for you to have a smaller portion of the overall pie but be richer. Like, it makes a lot of sense when you think it, and not that you should want that. I mean, ideally, we would like, as equal as share, etc, etc, as that we can all have in the rest of it, but it's just, it's really, it's a really, I actually argue, a rather dangerous thought to think that if, if someone's winning, I am losing. And I think it's a dangerous path to go down. I've never thought this before. We talked about it with house prices and other things, just living standards in general, that idea of, you know, some are, some are winning, some are winning less than others. There's very, very few loses in the modern economy in the Western world. And that's kind of, it feels, it feels, some people are listening, not many, because most of them get us, but that, that, in that sentiment feels kind of dismissive, right? It's kind of like, what's your saying? We shouldn't say, no, I'm not saying that. And then this, you know, binary thing is, is really unhufflunch. I'm glad you raised it. You'd rather be in the bottom 10% today than the middle 20% 100 years ago. Yes. And by a very, very long way. For all the reasons, right? Everything from, if not, which are the economy, even more broadly than that, right? Health care or pollution. Or, you know, and again, climate's getting worse, but, but air pollution is massively bad. I mean, there was a lead in petrol when we were kids, mate. I mean, you know, so it's so easy to lose. I mean, the people complaining about the smell of exhaust, it wasn't as good as unlearned like, what? Give me the good stuff. You can smell unlearned cars. It's horrible. Like, yeah, because the lead and stuff, snow, and parade. Yeah, just give me, give me some of that brain destroying lead. I love it. Oh, but no, I mean, and that's, you know, so things are improving. Economic, these things are still improving. The standard of living. Again, things like, so you mentioned kind of equal, you know, the quality are otherwise. It may be unequal, but the hell's a lot more safety nets now than they were this time 100 years ago. I mean, the welfare system was barely invented. It might have even been invented. I don't think in any meaningful sense back in 1926. And here we are in 2026, like, well, care for what you wish for. Now again, as you've said before, as we regularly say, that does not mean for a second, we shouldn't try and prove these for everybody and work out where the right way of structuring this is, because, you know, there is a broad and a growing inequality. And that's, that's worth talking about. It's worth thinking about. And I'll be sharing fairly and equally. That's a really good question. But, but you're right to say that, you know, it is a positive, it's like a share market. It's why, it's why, and just to kind of take it to investing for a second, it's why long-term investing in my mind, I'm pretty sure, and yours beats short-term trading. If you, if you, if I'm betting with you about where the market's going to go next week, I say up, you say down, we both throw a dollar on the line, one of us gets $2, we get nothing, right? That is your sum. Trading is almost always your sum. Yep. The, I mean, I'm sharing it up over time. But broadly speaking, if you're betting, you get somebody, someone wins someone loses. Yep. Over time, the market goes up at 90% of the year, for the, over the very, very, very long term. And so that number is that that's the positive expected value, if you call it, or the positive sum game, whichever you want to refer to it, that's the beauty of investing, that's a beauty, and that's also the beauty of economic growth. There's no surprise, those two walk in lockstep, and we talked before about productivity, you know, I won't be sorry, go in that path, I should particularly want to. But that, you know, that's why productivity, that productivity is the answer, that's the why, for all of the things we've been able to do in the meantime, is we've been, we've got better at using our resources, and not to miss the same resources, but per unit of input, whether that's, I mean, we mentioned petrol, right, one of the things we don't talk about, not for, not so we get to get here today, but one of the great reductions in carbon emissions has actually not been the reduction of car use, it's been the incredible growth in the efficiency of car engines, for example. So again, there's a lot more than that. Go on. You know, there's a lot of spare axioms and raises, and more so. You must have been written down somewhere. I would ask, I'd ask CHET GPT if I was fast enough, but there is a, there is a, it's called the something paradox, which is increasing efficiency leads to increase usage. Yes. So, I did a paradox because you would think that, well, we know, we can, we can extract oil so much more efficiently, we won't need to use, sorry, we can, we can, we can use our fuel so much more efficiently so we won't need to use as much, actually, more efficient usage increases usage. It's a really kind of weird thing. It's because of how the economics change, I guess, as a function of that efficiency gain. I mean, that's your economy in general, by the way. I've never done the numbers, and I've never got to do the numbers, because I'm boring, but I'm not that boring. If we maintain 950 living standards, standards, we could all work a day a week. Yeah. And so for all of the, you know, some of the, some of the future will all work a day a week because everything would be so much more efficient, productive, we're going to work as much. And it was absolutely true. But to your point, we kind of went, huh, we're more efficient. So we couldn't do even more and spend even more and want even more. And so that kind of, that, that idea exactly plays out across the broader economy, right? Yeah. And there's, there's something really, I don't know, it's, it's, it's, it's pretty soft-deferting, I think, on balance. I mean, there's, there's good and bad parts to it and the drive for better and the drive for more is, is a sometimes healthy, sometimes unhealthy drive, depending on what it's used, or put, what, what, what, what you used to put. But that idea of kind of like, so we chose, you know, we're not, no one actually chooses, but as a society, we've all made those incremental choices, iterative choices, to say, so we could all work a day a week. Let's not, let's work 40, 50, 60 hours a week so we can get the new stuff, the bigger stuff, the more expensive stuff that whatever. And again, totally logical people make their own choices, but there is something, if you're, if you're an alien from outer space, they'd kind of, we do not have 50 and come back in 20, 20, 26 and gone. You guys say, what? Do you like work? No, not really. I have to. Me, don't, you know, I do, I do, I do, I, I, I, I, we'd blow their minds, I'm sure. Completely natural, completely human. It's who we are, what we do, but there is something kind of a bit, a little bit self-deferting, a little bit, for the, for the top of the food chain, smarter species on the earth, you know, dogs don't, dogs don't stop while, you know, extra bones, right? They just, they, when they're hungry, they do their thing. They rest the rest of the time. We're like, I can have a rest. Oh, I could go and, you know, find another thing, you know, the hedonic treadmill, but the Joneses, I have the holiday by the car, by the house. No, I don't know, there's something a bit bizarre. I, I, I, I, I totally get your point. I might push back a little bit in terms of, I, like, I know it's just like an off the cuff thing, but a one day a week, I don't think so, because we've had this discussion before, it's just like, you know, the fact we've got smartphones in the internet, I mean, that's where the advanced, it's more of in the IT sphere. That's where the advances have largely been made. The, if you just sort of said, listen, I'm not going to have a smartphone. I'm not going to have home internet. I'm not going to have a TV. I still don't think you could support yourself on one day a week, just because of the, the proportional increase in the essentials, like housing, education, healthcare, those kinds of things. There's a bit of a chart that circulates every now and again that you see, which talks about different category, long-term price inflation. And you see consumer electronics TVs, those kinds of things, just plummet over that period, ridiculously cheap, but housing, healthcare, all services, based kind of stuff where there's sort of human labor and time that's more directly related has gone up. So it's a little, there's a little wrinkle there. Can I share something with you? Yeah, yeah. Because you know what I talked about this before, actually, you know what I talked about the share of household income on certain things. And I think you're right, some degree. But this kind of, and you're, you're joking on the other housing number. The ABS in 2023 published in data, and I found it this week, completely, I wasn't looking for it. I'm not coming, I wasn't looking for it. Anyway, I found it at an old CPI table, which compares the weight of each sector as a proportion of household spending over time, right? So it doesn't, it's not saying the dollar of value because that increases, as income's increase, but the percentage of our incomes that go towards certain things. Wait, wait, wait, wait, wait, wait, wait, just to make sure on the same page, is that a statistical measure of what we do or is it a hedonic adjustment on how a basket of figures are created? It's the ABS's, it's their best guess of how, of the proportions of the economy as a portion of our income. Okay, there's a distinction there. A little bit, I suppose. Yeah, okay, that's back to that. Okay, alright, alright. In 1960, food and non-accompanied beverages were 32% of our spending. Yeah. I think that probably were, but we can argue about it. Now 17%. So food as a proportion of our total spending has almost halved over that period of time. Alcohol and tobacco, interestingly enough, is down from 8 to 7.7. That's despite all the excising increases. That's just reduced usage, so do what you want with that one. Clothing and footwear, this is going to blow your mind. If I tell you it was 16.9% in 1960, so I think we're two or three, right? Yeah, three point two percent. I believe that. I get to explain that perfectly. Farming and clothing, you know, we are very, like the productivity gains have gone through the roof. That's automation, it's machinery, it's supply chain optimise. All of that kind of stuff. That's actually the natural. You're going to get me on a rant here, dude. This is actually the natural state of a free market economy with a hard money. They say, "Exactly what should happen, right?" Like, we're getting better. If you get better at making stuff, if you can make more stuff with the same input, of course it should get cheaper. You better ask yourself the flip side is more than interesting. You're like, "Why hasn't everything else gotten cheaper?" We've gotten into and we won't revisit. But anyway, I just make the point. But again, this is share of income still though, right? So it's not absolute. I get it. There's nothing wrong with what you said except this is a share of income rather than absolute dollars. They have fallen as well and probably absolute dollars are suspect or maybe not with inflation, which again, we'll get back to the rant. Furnishings from 12 to 9, transport from 11 to 11, which is interesting. I think that's. Actually, we went up from 11 to 9 and 60 to 16.6 in 1980. I suspect that was the boom in car usage and all that kind of stuff, maybe second cars and all that kind of stuff. Then we come back down to 10.7. Here's what's fascinating, mate. Recreation and culture from 3.2% to 11.8%. So we're spending three times as much as a share of our income on the stuff that we enjoy. That's the. As much as I just said, we can work a day a week. Part of it is actually we're doing more stuff. We're going to more places. We're going out. We're seeing shows. We're seeing kind of stuff that's kind of captured in that. Two new ones, education, was not measured in zone of 60s, now 4.4%. Of our total spending. Insurance of financial services, you'll have a rant on this one. Nothing in 96, or not measured actually. Yes, because it wasn't meaningful. Well, let's go to 1980, it was 2.4%. 2001.5%. 2023. 5.6%. That's a surprise at all. Now, he's. Sorry, I'm. How? How? Well, I don't know how, but you know. You know. So, I think you're right for an installation of everything. But I also want to. I think that's absolutely right, except the other part of it I think is, and I thought it was because I. That was my first thought as well. And I thought, the financial service is a bit. Absolutely. They don't break up the decision insurance and other financial service. I don't really know what that is. But there's something kind of about a growing wealth in a society that makes insurance more necessary and worthwhile. Right? If you've got a clapped out car and a crappy house, you might ensure you might not bother ensuring your life or your income. I suspect part of the growth, and I don't really have any view about what proportion, is actually just. We insured more stuff. And the stuff was worth more. And so, you're kind of getting this feedback loop. Now, so speaking of stuff worth more, the one you're going to lose your stuff over. Housing. 1960, 14.9%. Now, 22.4%. And now that was 2023. And I think I'm going to make up a number, probably 70% of all of you, and it's just when bull poo. I spend 22% of my. I reckon anyone between the age of 30 and 50, I reckon the proportion of. I mean, you don't even have to guess. I mean, these figures are published, right? Like the proportion of income spent on housing is well above 80% of discretionary post-tax income. So again, these are necessarily averages. You said about 80% of discretionary post-tax income. Can I just fact check that? I don't think 4.25 of money coming in is being spent on mortgage or rent. I'll Google while you check. But I think it is for those who have been. Who have bought within the last 10 years, I think it's up there. Unless you've decided to go live in Cooper-Pedi or somewhere like that. I think it's. Again, you're 35. You've got your first mortgage five years ago. And you haven't been bestowed with. In a generational wealth from Mum and Dad. I think the massive will make it. Okay, maybe 70% in age 22%. But that's where you get numbers. This is where these are aggregate numbers. So I didn't actually mean to bring this up. We kind of. The conversation went there. I was always fascinated. Just to the point of productivity and that kind of stuff. Yeah. I do think there's a conversation to have. And I haven't really formed a final thought on this. We kind of alluded to it or mentioned it before. I still am not sure. And this will annoy you, I suspect. I'm still not sure that. We were probably humans being humans, right? Working five days rather than one day. Whatever the number of things I've been, you're right about technology. So whatever that kind of directionally is. If you've got money left over at the end of the day. You're using it, right? I mean, most of us should save it. And individuals will be probably. That is using it. Just to be pedantic, sure. I've been. I've been. There's a real canes. You're going, "Oh, if you're saving it, you're somehow being selfish." No, no, no, no. I know you're not. But mainstream does. And so it's just. It's worth killing it, whatever it surfaces. Let's say, "Smen rather than use that, okay?" I have a working theory that housing and probably recreation just end up being the roundup of whatever's left. In other words, it has been with still 14.9% of our incomes. We could save that 7% increase over that period. 9% increase over that period of time, right? So we could. And we should. I just. I have a suspicion that because of the way competitive markets work when it comes to buying housing, it kind of is like, "Well, if I did say that, if we all say that, that'd be great." But it's kind of like, "Well, I. I'm not going to." And you go, "Well, if you want to go to Phillips, I've got to be at the same auction for a house because we've tried housing issues before." But we limited supply and access demand. You're like, "Well, I guess I have to bid the same price." And I just. I wondered to be. Supplying that you're being the key part of that sentence. And Adam, the man from. other reasons, but yes, without going too far down that path. I just, I suspect, and you're, look, so here's the thing, if there was nine households and ten houses, this doesn't happen because it doesn't need to. So there is, the imbalance is the problem fundamentally, but I also think in that circumstance, I'm not surprised to some degree, the housing captures every spare dollar because of the competitive nature of whether it's an auction or whether it's private sale, either way, the price to get ratcheted up to the marginal buyers affordability. And so I don't know, if food was more expensive and clothing was all expensive, I'm not wishing for it. I suspect housing is cheap, I'm just almost by definition because you've got to pay a certain amount for half for food and I can't go without food. So my ability to afford housing is less. Again, it's not, it's not a core, it's not a core directly, it's not a justification. I just think it's interesting to think through what would happen if there was less income for the other essentials. I suspect, yes, recreation would absolutely get smashed, but I suspect housing would actually be cheaper ironically, just because we had less money to capitalise into those houses. It takes the demand out. It takes your purchasing power out because you've just got less discretionary spending and even if you factor in leverage and fractional reserve banking and there is a lot of deposit to leave her up on. So yeah, it must be that way. I mean, yes. I guess what I would say is that's probably itself downstream of the fact that you have to at least see. Well, no, you have to invest your savings because keeping your savings in the money is just a guaranteed way to bleed value. So there's also a forced investment that's adding to that demand as well. And I don't, that counterfactual would, I don't know, would be the same if there was just an easy way of just holding my money and not having it lose value, right? We still get in that conversation. The only other point I wanted to make was that I actually agree with pretty much everything you said there, but where what makes me bristle is not that observation that, if you things have generally gotten better, but where credit is attributed for that rise because you'll generally, it'll be, it will be the bankers, the central bankers, the politicians go, see, we did that. You're welcome people. No, you didn't. You didn't. You could, you obviously didn't do that. Like, yes, you play a role in it all and you sort of, but the reason for all of that was because scientists made discoveries. Engineers made them practical. Entrepreneurs turned them into products and created jobs, author, or is that like that? That is the mechanism. Yep. And yes, these other actors have a role in all of it, but you're not, you're not creating, you're defining boundaries, you're acting to redistribute, but you're not in the act of creation. You can have the most efficient, well-meaning, accurate institutions in the world, but with that or that other stuff, that quality of life is not improved. So I know it seems extupertly obvious sort of point, but again, too often people will get up there, particularly, you know, central bankers will get up to you. That's why you need us. Like, yeah, but was it you? I mean, was it you? Was it really you just like? He got to be here at the time. It's like we're getting up before dawn and shouting to the east. Rise, son. I command the two, look, look what I did. I said rise and it rose, you know, it's like that's the exact analogy as to what they're doing. You have uncharacteristically missed the Simpsons reference with the rock and the tiger, which I've heard is appointed in you for. The tiger, um, uh, banishing rock. Yes, correct. Yes. Yes. Yes, that's a curious reasoning. Correct, correct, correct. No, that's really right. Hey mate, we're at 23 minutes, should we start the podcast? Uh, yes, I think we should do that. So like, actually, that's probably only for us to get on the agenda. Not only about 35, 40 minutes in by the time we find our way, somehow back to what we were going to talk about. But it's irrelevant though, right? I think it's going to dub tell nicely and do our topics, which starts with inflation and this. And this inflation, we love the inflation, don't we? Ah, the inflation. 3.3%. So percent was the inflation number. We all know that by now. I'm sure, uh, up to 3.4% in November back to the level in October, which is also 3.8 super transitory. Marks the sixth month of the inflation rate being above 3%. And so, so, who would have called that? Oh, wait a second. We did. Repeatedly. I just have a long period of time. I, I, you know, you're a central bank, so I understand that. Um, I am. Well, it's got the right framework. You can see it. I mean, you get, it's very, how do you make sense of that? If you've got the wrong mental model and the wrong framework, it's very hard to. Once you've got the right framework, it's like, yeah, it's obvious. It's the obvious. You know, it's like trying to explain gravity without being able to do calculus or something like that. It's like, you can't really grapple with it unless you've got the language and framework to make sense of it. Sorry. So that's, that's why it's not that web, not stradamus or anything like that. It's, it's just sort of like once you understand the mechanisms behind it, it's a bit like the specifics are impossible, but the general trend is, I mean, dude, I'm sorry to catch you off, but I mean, we increased the money supply by 54% or something since pre-COVID levels. Now GDP hasn't grown that much. I mean, right. You can bring it, bring it 12 year old on set. Let's look at my hate. We made this much extra stuff. We increased the money by that. What do you think is going to happen to prices? Are they going to go up? Like, obviously, right? It's obvious. Yeah, and I'm kidding, Charlotte. And yet, and yet, there is, I don't know that I'm, as you actually made other ones, this may explain it. What I, for the first two or three years of COVID, the impact was kind of global. And maybe because it's also interracered the same thing at the same time. So maybe, I'm not just against only a global issue, but we've kind of now got a case where our inflation rate is not miles off double the US. Yeah. And so it's kind of like there's, and there are always layers, ogres have layers and puffy has layers and inflation has layers. And in the short term, so money printing over the long term you already agreed is impactful. In the short term, though, I have argued and will continue to argue. I think you might agree me at least in the short term. Because in fiscal balance, ad or subtract demand on top of that. And I can't help but draw a line at least in that short to medium term back to the absence of fiscal policy on inflation. Yeah. Because at the end of the day, inflation was kind of the same issue around the world. Now, maybe the Australia is pretty more money than the States. I don't believe it probably, I don't suspect it is, but maybe it isn't, if it is, tell me. But other than that, I would leave Empire I think. Yeah, right. So what's the difference? I am happy to work politics at any time that I deserve it. We've said this before, but I just am getting, I don't know, I probably should just stop. But the Jim Charmers again tweeted about how unfortunate, but not unexpected. And that's why I've cost a living relief for some important. And I just want to jump up and say, Jim, what the hell are you actually doing to help deal with the cause? You're throwing some band-aids around and maybe they're useful and frankly, if you're on fixed income or low incomes, you need the band-aids, right? Because you bleed and like buggery. So I know the saying that's a bad thing to do in the context of where we find ourselves. But man, dude, come on, like I just, some borrowing and spending, dude. That's it. Right, or text more, whichever way you want to do it. Or just accept the consequences. We're going to do all this, but and it's going to feel good, but everything's going to get more expensive. Don't just quit. They're not going to say that. That's just true. Right, and so I just, I don't know, I, I, I know, I don't know, you feel it's about, about, you know, monetary policy, money, printing, and stuff. I just kind of like to the holiday of like, but I can see it. Why can't you say it? What frustrates me and this is where I get a lot of replies on social media, which is like, oh, the government's stupid, they don't get it. It's like, no, they, they get it. It's worse than that. And it's worse than that. Right. And if they don't get it, Treasury gets it. So if they're not asking the question in the negligent, if I are asking the question, or they, or they know the answer and don't ask because they don't have to say that, or tell it, one of the two, right? They don't know. You get to your point. So your point, you're right, to all of your odd notes, you know, Jim Charmer's not a career economist, that's fine. People say, oh, I got a PhD in Paul Keating and I'm like, fine, I got your cares, right? You look treasurer, right? You've got the entire Treasury at your disposal. You're reading the Secretary of Treasury and go, dude, come over the office for a minute. I just want to go cut the questions for you. And the Treasury Secretary goes, actually, Treasury, it's there. So go, oh, cool. Thanks. Okay, I'll do that then. In a sane world, that's what happens, right? Or maybe it is sane because they, self-interest is always paramount. I don't know. But, bang on about it, we've mentioned it before, but I just get so incredibly frustrated. And maybe what's even worse is the opposition. We had a election recently and there was zero mention of any fiscal responsibility or restraint whatsoever from either of the major parties. Are they both the same? The Greens want to spend even more. Yeah. But it is just so incredibly maddening that we are getting what we, as you said, who's surprised? Nobody. Because it's what you expect. And I think, you know, you can, no one's going to, I get that it's hard, right? The Treasury was going to stand up, so we're going to tax you more. So, oh, no, I don't like that. We're going to come. The goodies. Or we're going to spend less money on you. We're going to come back there either. Could you do something else? Yeah, yeah, we'll give you energy subsidy and that'll blame Michelle. So, oh, yeah, let's do that. Like that is genuine. By the way, billions that we spend on that. Six point eight. I know exactly because of what we get for it. And what do we get for it? Like nothing, really. We've got a temporary relief that's come back and slap this in the face full force. And the absolute underlying structural issue has not changed. Our trajectory has changed at all. And that money that was given us pay for electricity, we didn't use the money, we would have had to pay for it as you'd pay for other stuff anyway. So, it didn't even fix the inflation problem that was supposed to fix it. Where did the money come from? From us. Right? You taxed this and you gave it back to it, right? What? Well, actually this guy's just increasing the debt, which is even worse. Which is like, where are we at? Where are we at? We had a trillion net. We're just on the door of the trillion net. Yeah. Gross debt, I should say, just for this, like, we've come, has a cash well. So, the net debt is less than that, but yes, we're not far from returning it all much. I think it's, I think it's a decent amount, but even if it's 750 billion of net debt, still stupidly larger than this. Oh, yeah. Plus, we have to factor in household debt, we have to factor in state government debt, do you know? So, do you drop out state government debt recently? No. So I looked at an article recently and I think it was an article, maybe a few months old, we may have talked about it at the time. State government debt combined and I did, quick back to the envelope, by 2030, basically AFR article, I think it was the AFR, something like $800 billion in total of state debt. Now, yeah, it's four years away, but they can be rifling the feds at some point. And I'll go say that's one of those things that you've got. They don't have money, printer either, the states. Exactly. Exactly. And that adds to demand as well. So as much as the feds have to pull the, you know, pull the built in. If they do it, the states don't. Don't worry, exactly the same situation. I'm not, I don't just do get in a policy. I wouldn't necessarily abolish the states. I don't, I don't love the idea of, there's not enough media coverage of councils. It's for it to have me believe that if you've got to the states that we can avoid to let council X do their thing with no media oversight. Like, no, I don't do that. But there is, there's something you're ever saying. Well, some can climb on pretty much daylight, but yes, there's something going on. But I mean, the broader idea of just that, that idea of imagine even less than that. Whatever we have, imagine less. Yeah, because you devolve some responsibilities to councils that states currently have. So you make councils more powerful and they say, knock yourselves out guys. You might take them out from developers, will you? Okay, good, good, that's good to know. So there's that, I just, yeah, I don't, I'm not going to, I don't think it's going to happen. So I don't want to draw to draw, it's from a line. But the state's not having the money, printer, or even necessarily the money printer, just control of the, of the national currency more broadly, managing policy more broadly. And again, I know you'd rather not have it, but to the extent they, they don't, it's kind of like the eurozone. Yeah, you know, you, your own budget, but you can't control the currency. Well, that's right. Like, it's always been the case in Australia and I wouldn't change it other than if, if you were half decent federal treasurer, you would say to the states, guys, you get no more money until your debt to GDP is under a certain, gross state product is under a certain amount. And then you just use the big stick. Of course not, but you'd use the big stick and say, you can't, you have got your own monetary policy, your own currency. So I'm going to have to give you some very, very specific constraints, which is you get this much money in no more. Yeah. Nockie solves that. But once it's gone, it's gone. Yeah. Yeah. The, the taps turned off. You deal with it. That's the only way you can responsibly do it. But of course, as you say, no one's ever going to do it because it's too much. Now is that going to do it? Yeah, yeah. Yeah. Now it's, it's crazy. I mean, not, not that having a money printer is an excuse to do it, right? Like, as we've discussed adding for nicer. Correct. In either case, living well beyond your means is just shoveling your problems under the future generation, right? Which as I've said, like we are the future generation. These were debates that were happening at the turn of the century. That's cool. We're the future generation. Like, here, it's happening right now. Yeah. And it's just going to be even worse for the next. So it's depressing, dude. It's depressing. It really is. Well, where are you going? Where was the leading here? What we talking about? Oh, I'm just in your flesh and right. The inflation rate. So 3.8%. Right? Right? That's up there and it's sticky. And as I said, it's absolutely no surprise whatsoever. Here's the thing. So the big, the big so what? Right. Let's just pull the bandaid off and get this. So we interest rates going up, right? Again. Probably, yeah. Probably. I think the market's pricing is 70% chance of a 25% basis hike. That's what, $2.5 billion extra in federal debt servicing obligations. But let's put that to the side. Yeah. The reality is is that when you look at what's the current cash rate at the moment, 3.6% something like that. So we're at negative real interest rates. Yeah. That's right. And just what? What? I'll just back up there a little bit. So in real terms, in inflation-adjusted terms, you're basically being paid to borrow money. As long as you're getting in. In an environment that is inflationary. There's something called the Taylor rule in economics, which is, it's meant to be this rule of thumb that basically says, you know, when things are too hot, you want a positive real interest rate and et cetera. You just help sort of correct things. And so they're abs. I mean, I would have to take a lot of issue with a lot of things there. But just within the framework within they operate in, they're actually not even, they're not even logically and rationally consistent within their own framework there. Hey, inflation's a real problem, but interest rates, real interest rates are negative. Yeah, it's good. Anyway, so they're going to, they're probably, as I've said, many, many times. They'll maybe this year we'll put up once, maybe twice. And they'll talk a good talk and they'll shake their fist and they'll be very, very serious and stern. And at the end of the day, this first sign of an any economic wobble that I'll fold like a cheap suit. And it's interesting, actually somewhat heartened to hear a lot of the analysts in response to yesterday's CPI, I don't actually be saying the same kind of thing because it's the elephant in the room. It's actually not even on the fringe anymore. It's just sort of like, yeah, they should do this, but they can't. What do you mean? Well, they'll literally collapse the economy. So what do you want? You want a bit of inflation or do you want unemployment at 12 percent? We'll take the inflow. Like, is it, it has to be? And anyone who says, I think that's where a lot of the purists go wrong and they look at these figures and go, well, the RBA needs to do this, like, yeah, probably, you know, but they won't. They can't because there's no good outcomes here, particularly when, as you're excellent point, that the feds are spending, you know, well beyond their means, it's pushing on a string here. So it's, so now what do you expect my inflation, folks? Expect a little bit of an increase in your mortgage and then if things get really bad, expect that to wipe back again. But frankly, if you've got access to credit and interest rates are negative in real terms, I mean, do it. That information, what you will, right? And don't tell it also, don't be, it's not, it's, it's, it's, it's, it's, it's, it's, it's not evenly spread. So I just want to, it's easy to kind of go, you know, some of the real ways and other things. Like the, the aggregate number is absolutely right. Yeah. But you have to get the benefit of that inflation to pay for those that borrowings because if you don't get it and we've seen, for example, the discretionary retail business is really strong because no one's spending. Because even though they're borrowing cheap and even though inflation is higher, there's no discretionary retail inflation right now because it's just, you know, margins are getting crushed. And that's kind of what's supposed to happen right in this sort of situation. It's kind of the idea. But that's the problem. If you can get that returned, you're okay. That, that, I think that's part of the mechanistic rationale for all of this stuff is demand is too hot. Well, let's take demand away and that will cause prices to come down. It assumes that there's a phantom margin that would otherwise be the case that a, again, in consumer land, a lot of these retailers are enjoying exceptionally high margins because demand is just, supply rather is unable to keep up with demand. And that's just patently false. I don't think there's any retailer at the going, "Well, we're just running hot here. The tools are just out of control." That's not the case. In fact, our margins are already raised a thin. So we can only cut, it's not going to solve prices, right? Because we can only cut so much. And then at that point, it's like we're unprofitable in which we're out of business and which there's not even anything to price at that point. So it's sort of like, I think that it's that mechanistic part that I really have struggled with. And the other component of it as well is that when you look at the breakdown of where the spending is happening, I have people, quote unquote people, the aggregate is spending too much. Well, is it the 43-year-old with a massive mortgage? Are they the ones? Or is it an older demographic who's largely mortgage free who owns lots of assets who's actually done incredibly well in an inflationary environment who are off living their best life? It's not the point blame here, but it's just sort of like higher interest rates to that cohort actually assist in their spending. And they're already arguably probably the bigger determinant of discretionary spending. So the person on up to their eyeballs in debt just trying to have a house and raise a family is like, I am not the cause of inflation, bro. Like can you stop blaming me? And my demand is to, I'm barely covering the basics here, which report after report show, but you're going to punish me because that's the only, that's who gets punished here. When interest rates and mortgage rates go up, it's these people who are also, by the way, the productive members of society, almost axiomatically, if you've got a mortgage, it's because the bank thought you had the capacity to service it. They thought you had the capacity to do service it because you've got a job, you've got a job because you're contributing to the economy. Let's punish those people. Let's punish those people for too much demand, according to whatever we decide in mutton places, too much demand. Whereas the other people who have the discretionary income, who benefit from higher rates, we're going to give them even more discretionary income and getting them to allow them to spend even more, it's, it, it, it, it, draw me a line, dude, between how they, I know they have to do it because that's the world they live in. They've got one lever in front of them. It's all they can do, which is a really bad justification for it. It's a really dumb thing. It's going to be ineffective. It's, it's, it's not very, it's proven not to, but we're going to do it anyway because we have to. It's like, I get that within that tiny, myopic sort of framework, but broader, it's like, none of that makes sense and maybe help me understand it, dude. No, it's, it's from the led sheet. Well, now it's why I started talking about the government because that's, you know, I, I've used the analogy a million times, like the, the HBA is the gold keeper on a soccer field, right? And the planning game of soccer, and really, the HBA kind of looks down at the grass, like that was like, fellas, fit, they're off of Abyn orange, and the game's still going. It's like, well, you give me a job and my job is just to stop the ball and you forwards to supposed to go and forward and you back to supposed to help me out and you've bugged off. And you've said, we're helping, we're helping, we're doing everything we can to help. We really, we really are. We're overhear helping. And it's like, I, you've given, you've tasked me with a mandate, which is full employment and price stability. You know, we can argue about all that stuff and I know, you know, you have very strong views and that's completely reasonable. But at the end of the day, it's like, my job is to, if there's too much inflation, put right up because that's, I've got one tool. I mean, money printing, I go, but you know, I got one tool and so it's kind of the same tool. Lower it straight because it's in gender. It's more money printing, the commercial, like that. Yeah, into the plumbing of it all but yeah, no you're right. I just I just want to make the point There were people there's pen saw say no no it's more than just great But yeah, they've kind of gone well I guess I'm the goalkeeper. I'll do what you told me to do because that's what the coach gave me the instructions It won't work because it never ours, but we'll do it anyway Because we have to do because that's something we can do something Yeah, you saw And we'll hit those people playing more. I mean think about I haven't done the numbers because I'm again Don't that much research for this podcast, but they I don't know how much money gets taken out of the economy within Equation of rates of 0.25% but to whatever degree that is the federal government has a million Okay, a couple of dozen different levers they could pull to do exactly that in a way that was more appropriate And you can define a property however you want if you're a liberal voter if you're a labor voter You've got different views on what appropriate is I don't care my point is governments the parliament That's the other way my little hobby horse to a government all the time. It's like there's a whole lot of people in parliament And so the parliament where is the where are the votes from the opposition where are the policies from the might of party saying Hey guys, um rather than making the RBA smash borrowers Why don't we actually Just cancel that bit of spending or raise taxes on those people or whatever else we have to do to actually help the RBA Not have to completely smash mortgage pass and that's the the great trick It is that they and again on what we know this I know this now listeners know this the great trick They pulled is inflation is somehow disembodied and just kind of happens and that one really to blame for it So but but rates but rates we have someone to blame for rates. Yeah, so when when Michelle bullet puts rates like who that lady Michelle will she made me hurt I can someone please go and rouse on that naughty lady because she's very mean to me Yeah, and inflation meanwhile government spending meanwhile say oh by your vote Don't give you some cost of living life here's $6.8 billion for electricity Here's spending on this and that here's the other thing made a bit of a rant on government, but hey, why not? I have no Ideological philosophical issue with things like the NDIS right as a concept looking after people who need to be looked after Where a wealthy nation or a caring nation like what's your turn to live on the street right? Yeah, same here So two things firstly the structure is absolutely abominable and we've talked about that before I don't for a while So very quickly you've got a three-quartered market. You've got the payer government you got the provider one of the service providers and you got the client Who has the incentive to argue for lower prices? Absolutely nobody the service providers got over services to buy If they get away with it the clients gonna get as much as they can possibly can because someone else is paying and the government sits down goes I don't know why this I don't want this so expensive. This is this is really bad I wish I could find out why this was a problem. So that's the end of this thing my broader point is actually in the real world for a second And so put for a lot of philosophical ideology aside and even you might have a justify inflation if you want to maybe the reality is that The NDIS is not adding to and is almost certainly reducing removing lowering productivity Why because those people are not making a thing that are providing a service which has not much economic benefit a little bit Because some of those recipients will be able to participate in the economy. So it's not nothing But you think about productivity and again, I'm not saying we shouldn't do it necessarily I think we should do it much better My point simply is I wonder to what extent the difference in inflation between Australia and the US for example is that we just we threw a whole lot of Unproductive and again economic the unproductive and if you want to at me knock yourself out But that means you're not listening to me. So I just stop and have a think well I talk and most people get it But if you're getting harder to call right now just just cool your cool your jets It is unproductive spending to the to a large degree now is it right? Is it appropriate? We can argue about that As I said, it should be less because the system is just sucky, but it must we're adding we're adding demand We're adding no productive about very little productive capacity So the whole idea of supply and demand is kind of like are we surprised? So not only are they are they spending deficit spending which is stimulating the economy But they're doing so in areas that are not adding to productivity and so you've got the same amount of output and More inputs economically speaking It's not it may not be I'm not sure I want to draw a straight directed unbroken line there But I suspect that's a contributor to some degree now. Oh, it's definitely should we do it? Arguably we should do something But also if we you know again, this is the but what they did was they added money they didn't cut back spending anywhere else So they use debt say well, we want to fund the end of yes Let's just increase the debt and increase the deficit and stimulate the economy by doing so as opposed to it's been on the end of yes and We only Chris the debt so what we're going to do is cut spending here and here and here and here to fund it Because that's the right thing to do for the economy and they didn't do that. There's went massive amount of increased costs Hope the economy can absorb it surprise at least in part. I suspect the difference in inflations because of that Oh, it's a big part of it big, but we've seen the I think actually take away public sector jobs and unemployment would be much higher I suppose all of the job creation post-COVID is pretty much sort of happy bloodshanker Just to pull on the thread that you you're going with there I think you're right. So it's people get triggered a little bit when you say things like unproductive spending Like also everything's about the economy is a like no no no no no no no no no no no no no so yeah Look at me as an individual most of my spending is unproductive Right like you know, I'm on the things that I consume watching some Netflix or you know buying yeah and experience not It's not productive spending the difference is is that I have funded it myself through work and contribution that I have made To the wider society not even I hate the term economy because it just it obfuscitates what really matters here I'm I'm contributing to other people who for some reason value whatever And they willingly sort of pay for it My and then I'm from your own investment club. You can't be surprised who want to pay you money come on I mean, let's let's not hide your light under a bushly So so whether I spend whatever I spend on who cares like it's my business and can be productive I'm a it doesn't matter where it does matter just to again bring it back to the individual level is if I borrow a bunch of money And then use it to take on a holiday well again, I can do that But I'm going to get myself in trouble because now I'm I'm going to find it more difficult to service that debt I'm probably going to have to borrow more debt to service the old debt and that's the problem with government It's not that they want to spend on things that have incredible social value and adjust what I reach and caring society should do which I'm very much with you Don't think anyone in this country should be homeless or hungry or anything anything like that But we have to we have to recognize that the provision of those services comes at a cost And and the great tragedy of the modern age is to think that we can have our cake and we can eat it too And we do it with a giant shell game and a lot of very financial sort of sophisticated sounding things But basically just we just borrow from the future and when the market doesn't provide us the money We print the difference that and then and then we have all these other second third order sort of consequences down there So it's it's just to round out your thought there It's not it's and again, you're so right to be careful there because you know from experience that people take the wrong message in that Yeah, it's not to you know Middle class white men talking about how productivity is important and we shouldn't care about people who need you know Social services. It's not that. It's just about having a mature conversation about do we want this? Okay, we do okay. How are we going to fund it? That there's a cost to it. It's just it's not not good or bad. It just it just is and we and we we must recognize that fact same with the military same with same with you know, the Even even even federally sponsored entertainment budgets and there is it's all the same Well, we can have whatever we want we we've just got to account for it It's as simple as that and we can have we can have various sort of special situations and emergencies where we we perturb from that in small Temporary kind of ways, but what is just structural and ongoing like low and behold we find ourselves in an environment where In real time the world super power is collapsing and their currency is the basic way to like how did this happen? Oh right exactly because of all the things we're talking about just running for a very very long time and on a much larger scale Which is a lovely segue to exactly that mate over the last So I read read this in the paper this morning and they said oh gods up this much this year. I went okay, and I thought The year's 29 days old. Yeah, so it's the numbers gold is up 22% in the last 29 days It was like a lot in your 30 trillion dollar asset to this isn't some mean because it's not game stop That's increased by that percentage. I mean like this is gold is like amazing silver Is up 60% over the last 29 days And you know I broke it's a little bit off here. So I'll just I'll set it up and I'll let you go Um, there's two well. There's three different possibilities There's two separate ones and one that might be mixed up the other two but You've got a situation and you mentioned you mentioned you as the base and other things maybe investors in gold are seeing the world clearly I think I like man when this thing collapses. I at least want to have some gold left over right that's There's no I've said before there's no fundamental basis for the increasing gold over the last couple of years It's not like there was X The sample people or gold became more expensive to mine or the money supply went up even by that amount over that last 14 15 months these things did not happen to the extent the price has gone up So this is the this is a rushed trade for and again We can never tell exactly what's going on because you kind of impute or or assume based on the kind of the talking and the action You can't well, what's the most likely and so maybe we're wrong, but it seems like people are rushing to get the hell out of the US dollar At the same dollars up to will talk about the second as a result of the US dollar falling So you've got you got that going on so either either they're right about the Impending oh, it's a collapse, but potentially significant devaluation maybe of the US dollar And if that's the case you don't want to be in dollars you want to be in something else maybe it's gold maybe it shares maybe it's digital currencies of one description or another. - Maybe it's anything except these empty promises that it fits all they are, right? - Now, the other possibility, and I'll get to the blend, the other possibility is they have all drunk the cool aid, and they are panicking like Lemmings, and speaking of mem stocks, they're doing the game stop thing. It's like, but, but actually, we may look back at this in 2027 and go, oh man, remember when Gold went for $5,300 bucks down to $3,000? Oh man, wasn't that a collapse, right? But everyone really overreacted, it was stupid, and they got silly, and the trade just kind of fed on itself. And the third option is some combination of both. That maybe the underpinning reality is real, but when they're lemming start running, everyone's like, well, they're running, I bet they're run too. So, you've probably got some combination of, you know, genuinely held, maybe then accurately held, views about the challenges for the US dollar, and then a whole lot of piling on top of that. So, it's impossible to know until other hindsight, what is a reasonable price. By the way, here's the other problem. Over time, there is no justification in my world for Gold to be selling for much more in the cost of production, as long as you can mind more Gold at that price. 'Cause what commodities tend to do, we're saying lithium, a million times, well, a million, a few times. Price goes up, lots of mine start up, lots of supply comes on, the price goes back down, lots of mine's close. And commodities tend to trade about the cost of their production give or take, because you incentivize more people to produce more, spree of supply and command, when the price is high. So, over time, there is even, even if they're right about this, at some point, we'll see a stabilization back closer to the cost of production. The question is what that will be, based on the demand. And we don't know what, you know, cost of it, it's probably about three, three and a half grand, I suppose, to get a answer Gold out of the grain these days. And maybe go to the point, - That's an average two, 'cause some mines are much more viable. - But it's all marginal, marginal costing. So, maybe the price goes up, 'cause the new mines come on, are less efficient, 'cause that's why they're not operating now. And so, I'm not saying we'll go back down to the current cost, but I suspect that unless the cost moves up to the current price, then over the medium and long term, you're probably still gonna have someone hollering the baby. Doesn't mean, though, that the rationale isn't right. Over to you. - Yes, I said the difference with Gold is special. Whether we want it to be or not, it's special. - With airquites or actually special. - Well, it's hard, right? It's really hard, because the thing with Gold is, it's very easy to derive. And I often do, right? It's a shiny yellow metal. - There's nothing. - Yeah. - I guess the, why it is special, though, it has a 10,000-year track record. Right? Like, it's just Gold. That's pretty good. - It's very hard to displace that. - Which is about a century of the stock market. This thing's got 10,000 years, right? - It is the underpinning of everything humans have ever done in any sort of financial and monetary sense. Up until 100, 100 years ago, frankly. So, it's massively, massively important. And unlike Lithium or Copper or other industrial metals, the vast majority of Gold's value is monetary. It's a monetary premium. In other words, it has, it's utility is not in, oh, I can make a satellite with it, or some electronic circuitry, or I can make some jewelry with it. If that was the only thing that we use Gold for, the price would be a fraction of what it is, because most of the vast majority of it just sits in bars underground. That's what it does. - Literally, literally, literally electronics, but the vast bulk is, yeah, just sitting around somewhere. - You take, I mean, that's where a lot of the Gold bugs go wrong. They go, "Wow, the good thing about Gold is it's got a use." And it's like, "Yeah, but no one's buying it for its use. No one buying Gold today has, "I'm gonna make some lovely jewelry with this." No, I'm gonna keep it, and I'm gonna exchange it for value somewhere. I'm gonna use it to store value. Why? Why would I use, why of all things? And why was it that Gold without any central authority or dictate from upper-bub? Why did it assume that role? It just had all the properties it needed to, right? It was scarce, it was verifiable. It was all of the things that you needed for a good money. And so, it can trade well above its cost of production for a very long time, as long as people recognize and subjectively value that utility. Now, we can talk, all day long, whether or not that's rational or not, but what we can say with absolute certainty is that people do value it for its monetary utility. And that utility is indirectly a function of fear, because fear has got so many advantages over gold, right? Like, I can teleport it over the internet. I can, you know, it's just, it's so much better in so many different ways. Gold is heavy, you know, I made to really understand the purity of it. I've got to do all this chemical assaying and all of this, at least there's, it's sort of, there was a reason why we're not using gold coins anymore. But you can't proof it out of thin air. And that's the, that's the Achilles heel of fear. So the only reason that people are seeing increased utility, whether they ride or wrong, is because it is a direct reflection of the lacking confidence of the US dollar, essentially. Now, let's talk about whether or not that is, that is a valid reason in a moment. - What the hell is, but yes. - But that's the point. And so what you can say is, and it's different if it was like, even something like Bitcoin is less than $2 trillion in value. It's a very, it sounds like, wow, it's a lot of money. It is, it is, it really is. There's something that only existed 17 years ago. But in the global scheme of asset values, it's sort of, it's tiny. So to take an asset that prior to this massive pump was what, 15 US dollars trillion, 15, sorry. US 15 trillion dollars in value, which is, you know, it's done what it has done. It requires not just a few weirdos to go and buy some gold, but it needs very significant capital inflows. But beyond what you can account for with retail. And we see it, we see it on the reported stats, you know, it says like places like Japan and China, which have historically been big buyers of US that are not buying in the same quantities, they're letting that stock run down, and they're buying gold. A lot of the central banks are increasing it. Why? Because they've lost faith in that, right or wrong. Doesn't matter whether it's right or wrong, but there's no other explanation for it. Then when you get to a point where these massive capital rich institutions go, I would prefer the shiny yellow metal, as opposed to your promise. It sells you everything you need to know. They have lost faith. And it has gone parabolic this thing. And so there's signal that you're dead right in a year's time we might look at it in laugh. But I think for that to happen, we need to see, we need to see our fiscal and monetary house get very, very rapidly in order. I don't know if you saw Ray Dalio. For those that don't know Dalio is the founder of Bridgewater, who's like the biggest hedge fund in the world, very successful investor. He's in Davos recently talking about upcoming US Civil War and the collapse of the monetary order. He's like, this is not like some scam-unga, like, you know, YouTuber that's out for clicks here as well. So, and he's got a point. He's got a point. So to your question, will we look back on this in laugh? Yes. If through whatever actions, the authorities and institutions are top, largely the US, but also the Western sphere, if they do not get things in order, there's not many alternatives, right? I'll go the metal. As dumb as it is in so many ways, the one thing I know is that, at least to this point, we can't make it, not like diamonds, right? We can make diamonds now, right? We can't produce more. Yes, but that's limited. So the thing is, when there's, however, what is it, Olympic swimming pool size, worth the gold that we've mined in the in 40,000 years? That's how much we've mined, right? So, yeah, it's really scarce. So, yeah, what is this price action done? It's every gold miner in the world is now scrambling to produce. And they will, but that takes time. And even then, relative to the existing amount that's already above ground, long term, the supply of gold, the stock to flow type thing, you tend to see it grow by two to sort of 3%. So, even if everyone, assuming no massive technological breakthrough or Elon starts mining asteroids or something, you're right, there will, there will, and there is going to be a supply side response. But just the very physical constraints and realities of the situation is even if we go full tilt and we just devoid everything to gold mining, we're still not going to increase the supply of gold at a much slower rate than we're increasing the supply of paper promises. And that in that, that is the value proposition in the nutshell. Yes, my point is just I suppose over time that there will be a price which may well prove, even if those things are right, may well prove too high as the supply comes on stream. And potentially, right? So at some point, the difference between the supply and demand, of any commodity, of any product, you know, or also a great example, right? And I know it's different and it's different. $20,000 an ounce. No, $50,000 an ounce. Well, you just keep going until we hit the point. Yes. Or $4,000 an ounce because the marginal cost of the new production is cheap enough, and it just simply drags the price back down over time. So, my argument is just, I'm not going to say the price can't go from here or work out from here. So, stay above this. Just that the supplier response will moderate the price. And at some point, I suspect someone's that's holding a baby of some size when they get too over their skills on paying any price, even when there's a supplier response and/or when other people will be like, that's a big deal, but that's a bit of an overreaction. So, I just, this way I want to separate the functional underlying reasons why people might want to own goal as an idea. and then what the right price is. for that based on that sentiment, based on that supply and demand interaction. Mark Dois, I was often overshoot. I'm not so over there. Maybe it's $4,000 a year end, maybe $10,000 a year end, maybe it's gone through 10 to four, maybe it goes to four than to 10. Just because what I don't want people to do is say the US dollar is going to be devalued therefore any price okay to pay for gold because it's going to happen. Maybe it's the right price, maybe it's not. I actually don't have a view. I don't have any sort of working model or mental model on where this net's out or how it tops out. Just that kind of, anything that goes parabolic, either there's a break somewhere or a new set where you mentioned me, stocks again, there's been plenty of Australian companies have had that. Look at the graph, like up and then all the way back down again and there's just be careful is my point. Even if you're right. You're right to be nervous of parabolic moves in asset prices. You're a very, very justified. I'm just trying to prop it in, which is different. It doesn't obey the same laws of economics. By the way, I shouldn't say this but I'm off topic. For years all London prices are down 30% from a few years ago or something. There's another mechanism at play too. There is the supply response. I think you're right. From what I'm not a gold expert, from what I understand is that like a lot of commodities we've got all the lot hanging through. The Yenkes got the stuff that was on top of the ground. We've now gone much deeper and we've got much better technology and leaching capacity, et cetera, et cetera. While technology gets better and while the margins get better, it's harder and harder to find. There is a natural meaning. The cost will increase as a result because the more accessible, less accessible stuff is improfable until you get a certain price. Absolutely. I mean, that's what gives gold. Allure is that even a very dramatic supply side response is unlikely to radically improve the total above ground pool of gold. Lithium, we had very little of it and all of a sudden, I can't remember what the figures were, but we radically increased the amount that we had. It's huge reserves. It's going to be around that we know. Everywhere. Just not profitable to extract at the current price, but at some point it's a turn on. Absolutely. I think if you were go full tilt with gold, you might in a years time have 5% more. The question is on a relative basis, well, two things. How is that compared to the increase in the paper stuff or the digital representation of the paper stuff or end confidence? And it's all, as we've said, and I just keep banging the table on this. We love to think that these laws written in the universe that determine how these things are valued. It's all monkeys deciding what they subjectively value. 100%. People subjectively value it, even if it's insane, it's like, well, it is what it is. And I don't even think it is that insane. When you kind of think, well, what are my choices? I've got to, and that's why when the, it's why domestic is such a panicious kind of thing, is like when the money dies, anything is better than money. It's like I'll buy property, I'll buy land, I'll buy, you know, beanie babies, you know, stock, stock, any of that. Yeah, like, oh, but, but, but Woolies has got a very high peak. Yeah, I'll take it. Yeah. I'm going to, I'm going to leave it in the, I'm going to buy a bond. I'm going to leave it in the bank. Like, no way am I going to do that. So there's, there's that as well. But the other, the other mechanical dynamic that is interesting is that as the price goes up, so there's two ways to bring supply onto the market that one is the dig it out of the ground, which we've talked about, the other is to convince someone who holds the goal to give it to you. Yeah. Now, I'm holding my goal. I'm very happy with my goal. I don't want to sell it. I'm not interested in selling it. I've bought it for whatever subjective reason right or wrong, they decided to buy it for. And the new turnaround, I go, okay, $10,000, I was like, no, $15,000. At a point, I'll go, yes, not necessarily because my view is changed on debasement or the currency or anything like that. It's just like, wait a second. I can, I can take this, this is the raise on debture of store of, it's what it means to store value, right? I have stored value. That value has increased because of a supply demand imbalance and the subjective opinions of millions and millions of people. I can now get my, everything is a trade, right? I can now take my shiny metal and I can have a mansion or a Ferrari or give it to charity and people will do that, right? And people will naturally do that. So it's another thing that sort of, Lewis supply onto the market, which is why you get these moderating forces and it's why nothing's a straight line, right? It's like trying really hard not to talk about another version of Gold, which I think there's a very important dynamic that's at play here. But do you get where I'm coming at here? It's sort of like that will mitigate it. But where it goes, if we were having a chat now and we were observing Gold at 5,300 US and OUTS and that had been a very gradual slow decline since 1971. It's probably tracks relative to the money supply and everything else. The fact it's gone virtually parabolic in a very short space of time with all of these considerations out there just screams to me loud and clear that and not weirdos in their tinfoil hat like very large, massive holders of capital, big pools of capital, the biggest pools of capital in the world are going, yeah, no. And that, can I give you a book recommendation, mate? I don't know how, I think I sort of, I'd tweet a thread or something and I'd, I'd actually listen to the audio book on Spotify. It's called 1931, "Deck Crisis and the Rise of Hitler." Right? I thought, oh, that sounds up my alley. You mean spending time productively? Oh, man. Shout out to Tobias Strahmann, the author. He's a historian and economist. I got to attribute these things a lot of work in it. Oh my God. Read this book. Right. It's not a huge book. It's very, very well written and it just, it's a bit of confirmation bias for me, which I love a bit of confirmation bias. So, you know, maybe it won't resonate for other people. But the argument in all of this was that the great depression was really not so much a consequence of the Wall Street 1929 crash, but more the sovereign debt crisis that was started in 1931. Germany had to pay huge reparations after World War I to the other allied forces in Western Europe, Western Europe had borrowed a bunch of money from the US to do all of this kind of stuff. And bottom line is the German authorities were living well beyond their means. They just didn't have the productive capacity to supply the debt. And back then, believe it or not, they operated under a gold standard so they couldn't just print the difference. And at some point, the whole thing collapsed and that's what led to populism and the rise of Hitler. That's the very short version of it. But as we like to say, and as everyone knows, I think history doesn't repeat, but it rhymes and I'm not talking about it necessarily, God forbid, a new Hitler on the rise in the 21st century. But it reiterates the point that you and I have made again and again and again and again is that all kinds of social disruptions are economic at their root and their cause. And what we are seeing at the moment is a massive loss of confidence in these institutions, reflected in the money and the rise in the flight to gold. And the exact same thing happened in 1929 to 1931 in Germany. Everyone just broke up until they put capital controls, which is another topic we can get into later. Places like China and I like love to do that because they recognize without it, then things get very real. But my point is that actually there's so many good nuggets in this book. Sorry mate, it's a long way. But where I'm going, if this is one of the really interesting things to start out in that book, he's talking about the commentary of the time. From the elite, from the, for one of the better, to be elite, I don't really like that term. But those in a position of power, the wealthiest people, the policy makers, the decision makers, civil society, the academics, it was without doubt across the board, except for a few sort of weirdos, basically saying, this is fine. There's nothing to worry about. You're like this. John Maynard Keynes very stringently argued there's nothing to worry about it. The US has flushed out its problems with the 1929 crash and Germany's well-position to be one of the strongest economies going forward. And he said this like a year before the whole thing collapsed dramatically. And ultimately we had World War II as a consequence of that. But what did we see? And I saw this recently on Twitter as well. Some put it the price of gold up in Marx at that period and overlaid it on today's late. You and I have talked a lot about sort of, you know, pattern mass-productions, serious correlations in the rest of the day. So I don't want to read too much into it. But where the dynamic is interesting is that people smelled it, gold smelled it first. They say, I will hold this shiny yellow medal because it's just better than this other currency. And virtually every expert out there poo-pooed and laughed at it. Which is something that we saw in 2007 before the GFC, which is something that we saw in the wake of COVID and how every expert said how it was going to go. Which is exactly what we saw in 1999 and how it was in you normal with the internet technology. This isn't just saying, just means anything that an expert says, I'm not saying that. But I'm saying that consensus view on these big things are almost always wrong. At least wrong enough and proportion that you use. Anyone who's like, all I am going to do is go with the consensus view from civil society has been a very, very, very bad move historically. So where I'm going with all of this is to sort of agree with your point in that, yes, we will see what will happen. But I just think history offices, a lot of examples, is to be at least very careful in dismissing this out of hand as nothing. Because the unimaginable is always unimaginable right until it happens. And I honestly think I'm with the internet. Dali on this man, I think the US is a slow motion car crash and you know it's not going to happen tomorrow but you know they're in they're in they're mathematically in a quagmire they can't get out of it unless there's some miracle AI productivity boom they are we were seeing history of it from 100 years ago to today so many scary similarities sorry sorry for the long run. There's some political modifications to that maybe you're already playing out with the current president. I do hear one nation's overtaken the liberal party. Yeah. The second they're the second choice according to the electric. Yeah. So the one but I want to make us pose is not to do the Australian exceptionalism thing in the slightest but also we kind of talk about we or it's going to happen and I think it's worth kind of separating out by whom to whom and where because I think there is you know we're not going to well if there is if there is US fallout we are not going to avoid it frankly but also and we have a structurally similar directional problem as they do. But we know we're new I mean give us a choice. I'm saying Australia is Australia's situation 99 times at 100. Now that's a GDP is 34% which is 125%. Exactly. Yeah. It's it's reminds me the reminds me the thing about batting batting first in Brisbane. Not 9 times out of 10 you bat first the 10th time you think about it you bat first anyway. It's kind of like you know I'd happily have Australia's problems every day of the week which again a bit like we talked we started about well you know equality and growth and stuff. It doesn't mean we shouldn't address our problems we absolutely should because the best thing to be in a situation with US in trouble is bullet proof. So let's let's do that right let's prepare ourselves so that. No. Correct. And that's not even close to it. That's my point. So we should be you know that having having the firepower not having the debt having reasonable spending decent productivity all that kind of good stuff but that's all you know that's all really really important. No it's a it's a vision of it actually Japan is a vision of the future for the US and the US is a vision of the future for us I'm as I'm as we call it correct again it's mass is not a you know. Yeah my hope is that the US goes through it we actually might learn those lessons. Hopefully because you say it happens like oh what could happen here we should fix it and if that I try to cross the bow would be lovely for Australia I don't want to I don't want it for the yanks but it's going to happen to all she's I hope we learn from it. Motley full money for more subscribe to the free newsletter at full.com.au/listener You mentioned AI and productivity. Hamish Douglas. He used to run Magellan yes. Now now a private investor because basically Magellan went to had troubles at Hamish said I'm out of here and fair enough to. He's his can I share the quote with you it's a long quote quote and employment is quote of the Australians I assume it's a direct quote quote and employment ice age is coming at us. This isn't a typical recession that's coming where there's a cyclical event you throw credit at it and then you can't be recovered. Mr Douglas told the Australian quote this is going to be a profound structural dislocation of the labor market where the jobs do not come back for a very for a long time a very very long time end quote. So he's basically saying employment ice age he records that when jobs are lost because of AI it will take a very long time for that to structurally change sufficiently to absorb those workers who I dislocated over the next and by the way 2030 now only years away. I look predictions are worth exactly what you think they're worth and just because a famous person says I think doesn't mean they're right about by plus Dalai was well applied to Doug with any miles just just because it's near your Rebeni right exactly exactly so just just just just just a famous and well known and quoteable and and you've got a reputation doesn't mean we should go oh he's right then here because unemployment could be as high as 10 to 15% by 2030 with the with the move of AI and I don't know that I have a so what may other than thinking about investing portfolios other things ironically productivity will probably improve because it less inputs and the same or more outputs I mean that's the other part of productivity you only careful how you get it right because you go hey we productivity unfortunately 15% of people out of work yeah not sure that's not sure that's the productivity we want but it's going to happen I this other thing is governments pretend and unions pretend you can somehow negotiate this away so I guess my first one was the other lesson with the 1931 book they all these all these treaties and conferences was like all these back slapping is like we had a conference we made a decision problem so let's go to the bar I like come more complicated than that come I find you some happy people sorry I feel like I'm letting you down if I don't get you out of that particular kind of you know I don't think it's I think it was a very sober objective just historical account it wasn't it wasn't trying to forecast the future I think I think we we we deserve to arm ourselves with the lessons of history right it's not I'm not I'm not seeking out do I just think it's relevant and interesting reading so here's where Douglas goes on quote when you start taking out knowledge based workers there's our lawyers accountants advertising executives journalists you name it that is going to have a massive effect on the consumption in the economy as they get taken out I think it's I think it's really really interesting here's the last quote I'll share with you it quote if you look at the agricultural revolution it took 100 years in the US to 50% of the workforce are farms where talking about disliking maybe 10% of the workforce in three or four years in quote I don't know that I know what to do with that now first I'm not going to do anything with the prediction just a prediction but if I job as investors to prepare and not predict I mean if there's a risk that that calls the recession just does like you can't fit to a certain point that causing a recession right so he's basically saying there will be a session turning out in 2030 and theory people with decent incomes and decent borrowing and spending capacity are those affected by this I don't know that I have a view other than I'm probably going to be a little more mindful of the potential range of outcomes over that next time period maybe how expose my portfolio is to that sort of stuff but again it's a recession to you kind of we said many times more money is lost in preparing for the crash on the crash itself so if it comes in 2030 and the markets are 80% between now and then and I'll say will be and then it falls 30% so okay so I should have stayed where I was I don't know about it or what are your reflections on Douglas's comments and the implications for investors if you have any I mean the logic is sound if you treat certain assumptions as a given that's right that's the that's the I mean it's the same with a DCF cash flow analysis of a company is like if you get the forecasts right then you're probably right but if you don't it's all right garbage in garbage out is the old so if you grammar that we all should be a bicycle right it's exactly that yeah so we discussed recently that AI I just think anyone who's used that you just get a sense that there's something big oh yeah right like it's it's either an incredibly clever trick with no substance but I've used it enough now to realize that while far far from perfect with lots of foibles and just downright undesirable kinds of things it's still a bit of a game changer but we really haven't seen much of an impact yet that doesn't mean it won't come but he is assuming of a continued acceleration of capabilities and and we'll see a lot of the there's been many AI winters in the past where we make these big breakthroughs and they're really genuine breakthroughs and they sort of pushed the field forward and then a thing stagnate for a decade so that could happen we may find that we've already seen I think with some of the more recent models like yeah they're definitely better than what we used to have but they're not they're not massively better I'll give another gaming analogy it's like you know when the Xbox came out it's like wow this is great the Xbox 360 whoa so much they kind of all like smartphones right like the first Apple brilliant wow second one oh the resolution so much better so much more now it's kind of like when I get a new phone it's like I can't really tell the difference like things sort of plateau it's that idea of everything in the long term becomes a toaster so I was about that one well I it's great it's great it's great line so what I'm saying is it may be that this is as good as AI gets for the next 10 years in which case I think he's predictions you know a little little hebristic it may be that we crack a GI in next two years and it looks it looks quaint in fact overly conservative so it's a big if in all of that the other thing that the agricultural revolution taught us is that we we lost a lot of agricultural jobs but we created all manner of other jobs as well right and that was the same with the tech boom I lived through it right like now if you were told me you go back 26 years and say you know some of the best paid people on earth just shoot into a into a basic camera and upload it to the internet until they make them run and you know I like Mr. Beast and paste like this is not actually he's a fascinating guy super interesting anyway I'm an entrepreneurial I guess yeah anyway it's it's just no one predicted right it's almost beyond prediction so so such predictions are always headline grabby and then I take it seriously I actually think there is a decent chance that that that kind of happens but I ain't selling nothing I'm not doing anything massively different to your point I think I made this mention on I mentioned this on the strong and just yesterday actually it's just sort of like because there's a very macro conversation I think what you do is you adopt the Charlie Munga sort of tell me where I'm going to die so I don't go there now I don't know if Dalio is right you know I don't know if Douglas is right but I don't want to be excessively exposed to financial oriented organizations whose assets rest entirely on paper promise that just seems that seems silly I don't want to store my wealth and look to grow my wealth in organizations that have very uncertain demand profile and that are very highly levered, such as discretionary retail stocks, which is, I don't think that's, for me, a place that I want to go. I don't also want to pivot to 100% gold and 100% utilities and ultra defensive stocks because being early is the same as being wrong. You mentioned before that we could have this really terrible economic outcome and the market could go to the moon. It's actually such melt ups are not uncommon in history. Like, how can that happen? If the economy is so bad, why would that happen? You've got to remember everything is relative. We always tend to think of things in terms of the numerator, but it might be the denominator. It might be everything's going up because the money is losing value. I think a big part of the reason we're seeing gold, silver, equities, property, all of the assets are going up in tandem, which is quite unusual in and of itself. It's like, why? What's going on? I don't know. I want to the money. And so you could very much find a situation where going to an Uber defensive sort of portfolio stance is actually counterproductive. Now, someone would write me, so yeah, but in real terms, you're not really making that much right? Yeah, true. But I'm still preserving my purchasing power, which is a massive win. If there's ever a massive deflationary bust, I'd say, no, I'm not holding cash. I'm not holding bonds and I'm not holding highly levered banks. Like that is, which predominantly exposed to residential property itself being excessively geared. It just seems like you don't have to be right in your forecast. You just need to know that these things are not tail events, you know, one in a million type things, like the probabilities we can discuss, but they're not insignificant. And they're asymmetric in a bad way. In the sense that, look, this isn't a 0.1% odds of happening. You can debate what you think it is. You know, maybe it's 5, 10, 20% something like that. And if it happens, WestPak goes to zero. You're like, well, but what if it doesn't happen? You might get a 4% or 5% fully frank yield and maybe 2% or 3% capital gains really. Yeah, no, no, I'm not going to do that. That just seems silly. So, what do I do? I keep it on the radar. I take these threats very seriously. And I continue to look for opportunities where should the worst happen? I'm not wiped out. And if it doesn't, I've still got a reasonable upside potential. It's kind of like very unsatisfying as an answer because people want the, oh, this is definitely what's going to happen. And this is definitely the best move. And there's plenty of people shilling that kind of stuff out there and you'll find them and some of them will by luck be right and most of them will be wrong. But you can be sensible about this stuff, right? And just kind of think it's the alert but not alarmed. It's the prepared don't act kind of mentally that you're talking to. Sorry for the word, Salah. But that's how I'm handling. I don't just miss that out of hand but I certainly don't take it as gospel. And then I just game it out. Like, okay, what if it is true? What does that look like? And they're, okay, what do I do in that scenario? Okay, if it doesn't happen, what do I do? And then I look for those, I try and overlap those Venn diagrams. Like, is there anything that kind of is okay in both scenarios? That's right. That's the hardest part. Even business critical software is potentially at risk or some risk of AI. I mean, it is a potentially, I'm pretty certain already, it's a massive potential revolution. And I mean, probably, the industrial revolution we kind of use as a term these days. I was in industrial revolution, we move on. I think we missed the revolution bit. And I don't mean any political sense. I can't imagine the way before you have our revolution. Right? It's not a scientific revolution. That was so dramatic. So imagine that, but compressed into a number of years, which is Douglas's kind of point, is if this does happen as quickly as we expect. The chance that the AI revolution is so incredibly dislocating is huge. I mean, I think about the stuff we're using at Ford the Foole. Everything from content creation, marketing creation, editing, evaluation, analysis. And it's not perfect, but so stupidly useful. I love that. You're not using it because you feel some hype to build compulsion. Oh, everyone's using it. That's what I'm using anyway. Oh, this makes my life so much easier. I'm going to keep doing this. And we are. And we've actually lost some staff in the last 12 months. And that's been horrible for those people, but we've been able to do the work. Like that's kind of so when I look at this, and I think, you know, our knowledge workers brand, your knowledge brand as well, the chance that AI continues to borrow into those things that can be done more easily, more simply, more quickly. I say almost every time we talk about it, I'm using it more than last time we talked about it. It's damn bright. I'm using it a lot. I'm right now having discussions with my developer, the integrated indistramant. Right? What wouldn't you? Yeah. Yeah, exactly. Have you used Gamma yet? No, I've heard about it. It's fine. So we've used it. We do what we call a foolish lesson. So the only one about our endless presents the rest of the team once a week. And you write your article, you write your idea, and then you drop it in a Gamma and it presents, creates a 10 page PowerPoint presentation, the images, headlines, summary, dot points, the whole lot. It is just, it was, it did a really terrible job with my research. Once again, it was not perfect. But the other ones, the other ones that I was done have been fantastic. And I think I really had enough of this last week. AI Slop was the word of the term of the year last year, right? And I get it to some degree because it's a crap AI. But if that's your focus, if you're like, oh, it doesn't crap. It's like, man, are you missing the point? Are you missing the point? So dramatically. It's like, you could be naaki and it was not perfect. And that was all full of, yeah. And the other 99 things that are spectacularly brilliant. And the one thing you don't like is going to be improved out of sight in the next 12 months. Like, it's not perfect, therefore I rejected. Right. What? Again, you and I lived through this. I distinctly remember people saying, oh, so I can get onto a Yahoo chat forum and we can debate where the Kirk or Picard was the better staff fleet captain. Like, there was so much derision around the internet. Yeah. You just missed it, right? You just need to put a pretty card in the internet. That's never going to work. All right. Well, Comsik was the first online broke. I was my first real sort of post university job and people laughed about it. There was a very big phone operation there because most people prefer to just like, and you would say, I, that's right. That's where I started. I was on the phones and like, someone rang, I want to put a trade on. I was like, yeah, absolutely. You know, if you just jump on our website, the brokerage is much cheaper. I was like, no, I don't trust. I'm not doing that online. Yeah. Yeah. Do I remember when I was in the country, right? I remember how old I am. I remember when ATM machines came. Like ATM machines. I remember the first F-Post per share. It was the disposal store of all places in my local, because I was a scout as a kid to kind of ages me. And I walked it. It was like this massive big thing. It must have been. It's kind of the size of a telephone. Maybe it later on. Yeah. It's like this. And the guy was like, what she was just like, oh, that's amazing. And this is how I went. You know, I, again, speak of the aging ourselves. You pay for a picture with cash. Yeah. Yeah. And again, because it was true. You have coins in the, you know, coins in the, in the asteroid. And you have, you know, 20 bucks in the, in the cash decation to pay for. So you get across the harbor bridge. You had to throw a piece of middle into a tree. I'm too. That's right. Not that long ago. Not that long ago. Yeah. So you know, that is the point. And this is where is that there's a, there is a. Again, there's a degree of cognitive dissident. You want to, you want to hold these two almost competing ideas in your head, which is, it's probably not going to one, it's almost certainly not going to unfold in the way that everyone predicts because these things are almost impossible to predict. At the same time, you don't want to dismiss groundbreaking new technologies. Is that all saying, I think it comes from the Bible originally. It's like, there's nothing new under the sun. If it's almost everything in human, in the human sphere, that's true. But the same time, every now and again, there is something that is actually genuinely new and genuinely, genuinely changes everything. And what they usually do is they usually arrive. They get ignored. They get laughed at. They get fought. Then they just become the thing, right? And you know, I'm trying very hard to not bring up another comparison here. But, but it is. We all know. We all know. Well, it fits, right? And it's just, it's just like, I think what? What wrong? What what people get. Even the, even the advocates get wrong with it, we all get the timing wrong. So even I, I just, if I was to, if I was to put my personal view out there, acknowledging that it's definitely wrong, I would probably say that Hamish is directionally right, but it would probably be a lot longer than, than what he thinks to that kind of thing. But just because that's, that has been the lesson of, sass of smartphone, of internet, of telephone, of whatever, it's just sort of like, you have that, what teal calls that zero to one moment. It's like, we just didn't have it now. We have it. You know, the, the, the Henry Ford and the, and, well, actually didn't invent the internal combustion engine, but that was sort of like the first, yeah, the production line, right? Like, it's like, how long did that take to roll out? Did it took 30 years for electricity to reach 70% adoption in industry? Electricity, right? And it just sort of like, and everyone at the time, including people like Thomas Edison, got it wrong. Got it massively wrong in terms of the timing and the implications and the rest of it. I think you need to be humble in the face of that. Particularly, these are just like mechanical technologies. Essentially, I, we don't matter technology that thinks, or at least emulates. And things are going by the way, right? So any electricity to industry means you've got to run the lines, connect the piles, do that sort of stuff. This one's like, you, you jump on the, the road vacation you've already got. And it's literally already available for you. You just start typing. Like, that's hard to do. There's a spare adoption there. And the other thing is, it's not, you have to install it either. Now, you know, you have to take it online, CRM or accounting software and go, oh, I'll transfer everything over. It's like, you can just open the browser and start typing. And it is there and there for every body as quickly as you need it as much as you need imperfectly but bloody brilliant. I hope I hope Douglas is wrong mate. Amazon's lying off another I don't. I don't hope he's wrong. You don't want to chiptemp something employment by 2030? No no no I hope he's right. Look we should never we don't want to be troglodytes where it's like oh do we want to be the amish? I mean no but I don't want to be a little bit of a fan of the amish that are out. Well they're not listening to you say what I like. So it's like we should not shun very powerful technologies that have a potential to improve our life radically. That doesn't mean we just charge on in without any any concern as to the to the ramifications. I hope he's right that these I mean I'm very excited. I mean we could have drug discoveries here that you know energy breakthroughs like there this is this is exciting stuff and it's just like you know because blacksmiths aren't going to be a thing in 20 years is that a reason not to advance. So I so just to tease that out. I do not hope for mass unemployment. I do not hope for that. Yes. But I hope that we do have this new technology and that new technology you know births a whole new range of industries and occupations and we all just become insanely wealthy. That's pretty cool right? I mean we're not going to start a new topic but the all become is the key question of it. Yes sure and we'll have universal based income or some other way of recognising and can't assume the savings and whatever's if more money accrues to capital than labour then firstly has capital so there's a hint but also plenty clean. Right type of capital too. Can I go back to I forgot. So here's one here's one way to play this and this is I'm just putting that out there for your consideration. There is I'm pretty sure there's a disclaimer thing at the start or end of this pod. Listen to that it's there for a reason but the one thing that that no matter how advanced technology gets right energy is at the base of everything. Yeah. I think I think and commodities right so everything that we want or value. Even if it's things that we can't imagine it's probably going to take energy to create and it's going to take commodities to make. Yep. It's just going to. So I think I think companies that have that capacity. I think there's going to be an energy boom. There's all these data centres. I think actually I've really changed my mind on data centres. I really I've got it so wrong. I thought I just just commodity. There's no money in that. Not recognizing the insane amount of demand and no matter what all of this brings. You need to run the AI on something right. It needs it needs land and needs a warehouse and needs a bunch of racks and needs a bunch of chips and needs a bunch of electrons running through a couple wires like it is that's what has to happen. And so that's a really nice sort of if that's a big word. If you are very bullish and you think this stuff is inevitable in your term that would be one way to play it. I don't know any single energy companies. What are the companies right now? So I'm really not trying to be cute here and trying to give and sound like I'm trying to sort of give these subtle hints. But that is a very interesting way to play to answer your earlier question. We're miles through the podcast. We need to wrap it up at some point but I can't help but ask you the question. That's always been the case. Still mills were a thing in the 1950s and you need steel and iron ore and courses of carts needed whatever. I mean oil has been needed through the 20th century. 100% is there actually a step you say there's a step change here? Are you saying that's an offensive way to play it because they can't afford it. So Australia look at our wealth. They came from iron ore demand. There's no shortage of iron ore out there. Right? Like they so so yeah so so that may not happen. What happens if the mills change? But is there a step change? What happens? What I'm asking? Like from you're saying in future energy and resource are required I agree. Yes. Are they already are? So are we are we only describing the current circumstance or are you saying you've got to compare some sort of now great question. You've got to compare flows. So again it's not that in in isolation if our current commodity extraction rates and energy production rates don't change but the demand for those things do change. As investors you're going to do insanely well. Do you think they're right? Well supply and demand right? It's like well everyone wants this stuff. There's going to be a competing bid for it. Whoever pays the most gets the copper. You want copper? Pay out. You want jewels? Pay out. Right? Like I just I think that's I'm not sure I'm expecting a step change of the salt. You just thought you were expecting from where we are now and resource in general. Maybe I'm wrong obviously but I'm not sure the the growth is going to happen but we've built more skyscrapers over the last 50 years as well and the prices where the price is. I'm not sure. I don't disagree with it. The things are required. An incredible wealth was created around those that had the stuff right? Despite despite the supply response. So the point is the comparison of the flow. So you're right. It's already happening. They're building power points like power plants like power points. They're building power plants like like nobody's business in China and now in the US as well. It's about nuclear you know like everything is happening at a pace so it's not that there is any supply side response there. It's just that Kenny keep up with the increase in demand. So even if supply increases, if it doesn't increase at the same rate the demand increases that is going to push prices up right? And so I just think that I'm not saying as I just told you what I'm holding but well not holding but but I think that's the way of thinking through your right. So there is another reality where it's like all of like electricity demand and commodity demand grows. We just get increasingly better at extracting and producing that stuff to such an extent that any supply any demand increase can be more than met with a supply side response. But what do we know about power stations massively expensive? Take a decade to build like not in China but in the West where we've got 1200 layers of bureaucracy. It takes well you know it takes forever to build. How easy is it to set up a new mind? Like I don't my guess and that's all it is. My guess is that we and that's already being flagged as an issue. We do have a supply side response just not to the extent that demand is going. Now it could be that the things correct on the demand side in terms of like we go oh we over invested massively which is very real risk by the way. That's the other side of question. The chip computer chip question. A lot of you say many of you are throwing a data center's AI right now for exactly that reason. So all of a sudden all of a sudden the demand calls at the same time that supply come and then it comes out to be a bad investment. But I'm just saying if Douglas is right and we see these trends continuing I think that is a sensible way to play and it's also something that is difficult to disrupt. I mean we could have a dysent sphere but we're still using electricity. We still need energy right and we still need metals and all the kinds of materials that we need to sort of build stuff. So I don't know I think it's fascinating to think through all of these kinds of things. I just again I go back to rather than what do I do, what don't I do. So I've sort of talked about financialised assets and the rest of the hard assets. Good like gold is actually got more of a place in the current world as we say it. But I think productive enterprise is also a great place. I think it's you and I will very much agree on this point where it's like you want a business that has a let's go with the all-time favourite. Let's go to Berkshire right? You got railways. They've got big industrial kind of companies that they're never going to shoot the lights out but they're always going to be pretty much in demand. And in here's the key thing they've got to balance sheet the size of Christmas. It's a fortress. That type of assets that you want even if they're overvalued because whatever the world brings you're probably going to need to move stuff by rail and all the various other things that Berkshire's got its toes in. And you'd never want to be beholden to to a counterparty that could call your debt due. So aside from things like the golds and the utilities and the land and that kind of stuff, productive enterprises with relatively defensive characteristics and low levels of leverage, I think it's pretty smart play. And that also fits into that nice area of companies that will probably do okay even if the worst doesn't happen. But on a relative basis we'll absolutely do really well if the worst does happen right? What are you doing? What are you doing? I'm going to ask him yet. And that's kind of why I'm curious to the question, I don't have a working model on how significantly I expect those flows to increase on resources. So so far I'm not doing anything in that space. I grew there on data centers. I've been looking at those more closely recently. The only problem with data centers is I still think it's game of chicken or at least a game of timing because at some point you're right, everything's a toaster. These things have no competitive advantage whatsoever. The only benefit they have is that a man is going faster than the supply. Now you could play that for a long time and get rich as long as it goes for a long time and as long as you get out before everything goes to pop because in theory these things are they should be being property margins. And properties are other Australian residential property. Probably not a great investment right? Because it's going to grow over time at GDB plus a bit of something, maybe get a price or something. So probably industrial property to be fine-ish, but the data centers have been priced like they are to the moon stuff. Now, and why I've looked at them again is exactly what you said, which I've been wrong for years too, because I misunderstood the imbalance. But my only question of myself, I mean wrong absolutely because the price went up and I didn't own it. So that's wrong just from that perspective. Wrong enough, I don't know. Wrong in the sense that the party stops, the music stops at some point. Someone takes the punch ball away on data centers at some point. Now, if it's 25 years into the future, there's a lot of money being made. I'm like, well, I should have played that game. If to your point we overbuild and all of a sudden the rag gets pulled tomorrow or next year and I've played 85 times earnings for data center business, like, oh, that's kind of worth 12 times earnings. Now I've got my backside handed to me. So I don't, I'm not yet prepared to take that risk and play that game. I'm not a trader generally. So I can I'm kind of having done that. Where I, which is always the right move when I end out. - Yeah, you true, true, true. - Sit it out, true. - Yeah, I can move on rhymes. So I'm not playing, I haven't taken a view on AI. What I'm, and there's also the two different time periods, right, there is, if we have a recession, things will suck for a bit. But in 10 years time, post recession, what do I want to own? So even then, it's like a timing, I could avoid the stuff that's going to be hurt by a recession. But if in 10 years' time, it's with a whole lot more than it is today, then it's actually, I'm not going to try and time a recession, or as we said before, lose more money, try to avoid the recession than actually in the crash itself. So I'm not going to be thinking, - Yeah, I'm not going to be thinking if it's not where the upside is, or where I would argue with something like the banks is like, okay, Mr. Dema, the worst doesn't have is like, okay, but they're still only getting like a sub. I'm not going to double digit total return. I don't think, right? - So I'm avoiding leverage, your point, I'm avoiding debt like the plague. Because you could lose money for a couple of years if you got a lot of cash in the bank and you're fine. - Yeah, that makes it a good thing. - If you can't make the interest payments, then you're screwed. And so that sell in a down market. - Or unless you're issuing shares, or something like it's just ugly across the board. So I'm avoiding meaningful debt. I'm not yet avoiding discretionary retail. For the reason I talked about about timing and all that kind of stuff that comes with it. Douglas is right, but it's 2030. Maybe the market's up by then. If he's wrong, maybe the share's a lot higher, all that kind of stuff. So I don't know. What I do think is, I'm leaning away from businesses that are more likely to be disrupted in their business models. So that's kind of like, do I think, how, you know, I don't know if all he shares, but what is a selling grocery store's in 10 years time? Right? Maybe more online or certainly more online. They're going to be the world, the Australia's largest grocery store. They're going to have the brand, have all that stuff. They're going to do their thing. And that's going to be, so that, yeah, you're fine. Yeah, so I think leaning towards businesses that are less likely to be disrupted is a safer way to play it. I'm still going for growth by the way, 'cause I don't want to get a 2% return for the next 10 years 'cause I'm trying to avoid the downside. No one inflation is 3.8%. You're losing something. You're losing 2% a year. Right. So even if it wasn't, even if it was zero, you're still getting two, see, like the market will be better than that. So you've got to mix your portfolio accordingly, I think. So I'm looking for growth, look for quality businesses, looking for no or very little debt. And I'm looking for businesses that have business models that are reasonably not defensive, but protected because of their nature from disruption. Nothing. Everything's a social issue. Everything can be disrupted eventually by someone. That's kind of how I'm approaching it. Yeah, no, I like that. One thing I'm doing is, like again, 'cause the smaller cap earlier, growth stage and kind of companies, I'm absolutely holding stuff that probably doesn't fit into those buckets I described. But it's also, as I think I've outlined before, where it's a strategy where you expect to only get four, five or six out of 10 right. But the one that goes right goes 10, 100 X up. And it's just, so I'm very much a big believer. And you would, I think, avoidance of risk is the most certain way to get really poor returns. Right? You never blow up. You'll never blow up. But you're also never gonna make a, I think you can be sensible about it, where you can sort of like lean into the risk, knowing that you're not gonna get it all right. But those, as long as that upside-down symmetry exists and is real, you know, you only need one of the more romanticists in your portfolio to change everything, you know. - I'm gonna go back to that actually very quickly. We need to wrap this up at some point. The growth covers a lot of sins in a lot of different areas, value-ocions sins, but also when we come to it, now disruption is different, right? If AI is massively disrupted, I'm not saying it's gonna cover all that necessarily because you have a growth business that just gets smashed by AI. We've talked about, happened before, the business that was doing the transcription and it's like, well, you don't need that. That's got some, if it was a growth business, it's got smash by disruption. So that's an example that you gotta be careful of. But also, I've used the example for Flexi Group, who did the original Buy Now pay later, it's the 48 month interest free thing with Harvey Norman. They grew really nicely during the GFC. - Are they called Hum or something now? - They are now, yeah. And much more than they used to be. But they, I'm not saying it was a great investment overall, but the point was, they grew during the GFC, even though there was a recession. And we didn't have one here, but it was almost closed. Either way, why? 'Cause they were small and growing. And so they were providing a solution and what they did was grew their market share, even if the market was stagnating and going backwards slightly. And so again, you don't wanna go to every small company and you know, I've talked about risk and small. And other things, small is necessarily risky, it can be. And I'm not saying small is the only way to do it, but there are business-- - Execution counts. - Well, but it's a cool sort of opportunity, right? So if you've got a growth runway and you can execute that, and I can go from 5% of my market to 15% of my market, even the market goes backwards at 10%. I'm still making out like a bandit, right? And so there's just that kind of, think about those kinds of businesses. Again, be careful of disruption, careful of debt, all the stuff, but if you can find a company to grow wing, it can actually not be subject to, or at least entirely a victim to, the economic circumstance it finds us off in. - About one quick thing and then we definitely will wrap it up. And I just refer back to that book again. There was so many nuggets in there. One of them was this. You like it, you like it. - Okay, okay. - One of them was this, was that despite the absolute economic calamity, Germany was an absolute power. It didn't actually have any conflicts on home turf during World War I, as well as not much, so its industrial base was largely untouched. So they had very big operations in things like steel manufacturing, a lot of big industrial processes. And the companies within that sphere that didn't have excessive debt actually did well, which just follows on from our conversation here, right? Like things can go very bad in aggregate, but even equity, even risky shares, even volatile risky shares in a market that itself is not doing great overall. Can still do really well. And this is what, it's the whole buffer thing. You don't know who's swimming naked till the tide goes out. They're all share prices and tickers and charts and that until like, (laughing) who gets real. And then it's like, oh no, there is actually something behind this. And the thing that's behind this has a mountain of cash, has very reliable demand. And it's one of the biggest producers of X on the planet. They're gonna be just fine, right? And so again, cognitive dissonance, you can have all of these thermary, kind of position, outlooks and be proven right. And still do well in things that are not simply not the kind of thing you should invest in according to accepted wisdom. There you go. Let's definitely. I'm just, I'm just, yeah, if you're still here, God love you. I really appreciate it. You obviously fall asleep this year to the podcast. So well done when you wake up and wonder what the hell went on. Just go show it to them all they get. So which is coming this Sunday, I know Andrew will be here. So until then, full on. Cheers. (upbeat music) - The Motley Fool and people appearing in this program they had positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at full.com.au/listner. The Motley Fool operates under financial services license 4.00691.