Mailbag, incl: How do we get out of this debt hole? October 19, 2025

25:31And I don't spend enough time in small cap land to know for sure. The reality is the smaller the company, the younger the company, the greater the directors and the executives input make a difference. Very, very hard to kill Woolies. Very, very hard to get Woolies sales to double. If you're a director, just really stupidly hard to do. I mean, you know, you could literally, if you want to, you take a lot of debt and invest in stupid. I mean, but realistically in the, you know, other than the Six Sigma kind of really, really outlying events, very hard to kill Woolies, very hard to double-sail the Woolies, just really hard.

25:59If you are a small company director raising money and you're paying yourself a lot of money in salary and you are doing related party transactions and you are trying to hype the share price so you can make an exit, much more opportunity for those people to do the wrong thing. And, by the way, so I'm not imputing small caps, heaps of opportunity for them to do the right things. A smart director who can influence it because they're on the ground, hands in. They know the people they're working with. A lot of CEOs and directors know the suppliers and customers personally because they're just small bootstrappy things.

26:30They've worked in the industry that struck out on their own. They have a huge upside impact. So yes, absolutely. But my broadest point is probably just that we assume causality way, way, way too often in both directions. And I think there's just some value in not assuming too much because once you find a connection, we want to believe as humans. We hate uncertainty. We love certainty. If I can look at it and go, ah, that must be because Joe Bloggs did that. That must be because Jane Bloggs did that. Really easy to do. Makes us feel bad because we feel like, oh, we've solved that puzzle. Let's move on.

27:04Generally speaking, in my opinion, I have not avoided something because of a bad director. I have an important thing because of a good director necessarily. Maybe the kind of Solpats Brickworks thing might, I used to own Brickworks. I always have. other saltpads. Maybe that combination might be an example where I've gone for a decent, even then, it's kind of culture more than individual people. So no, haven't done it. In terms of getting ready directors, it's really hard. Excuse me. Shareholders can effectively vote against it. That's how it tends to happen.

27:40Removing a director, it depends on the constitution of the company as well. Sometimes boards may have the authority to remove a director. sometimes shelves may be able to call it extraordinary general media and vote against the director so it depends on the company is the answer happens really really really really rarely largely for those reasons it's hard to prove causality even if you suspect it going to the point of removing someone just in case is really tough and to be fair most decently sized companies are not going to appoint bad people out of the gate unless they don't know what they're getting yeah I'm more likely to favour a company who there's a executive or director there that usually associated with past success.

28:18I mean, I always think that there is no investment out there that is all positive. And it's really just trying to balance things up. As I've often said, you get a piece of paper, draw a line down the middle, pros and cons. You know, there's something on both sides. Yeah, exactly. And if there's not, you're not doing it right, by the way. Exactly. You're not looking hard enough or you're looking at only what you want to see. But it's where the balance lies. And if there is someone that is, I think is not only capable, but honest, that's on the pro side, right? It's one of the things that I'll put there and I'll actually put some weight behind.

28:56But the other things, you know, I've got to think about this, but I'd almost prefer a few dodgy operators in a business with incredibly strong competitive dynamics. Right. As opposed to a genius, honest saint who's just like, you know, a maestro. But pushing it uphill. But yeah, just a really terrible business with horrible economics. So there's all trade-offs. That's a great example. Victor has a second question. So I've got a further question. I've been investing in shares for close to 15 years. However, I've never really thought to attend an annual general meeting. Having followed Stephen Main on Twitter, sorry, it's a good follow, I find it fascinating the questions he fires into management that really keep them honest.

29:35and has been a great source of entertainment and education. Victor says, with two young kids, it's either that or the Wiggles. Especially in small cap land, it feels like AGM could be a great chance to ask some questions and get a feel of the business by speaking to management, given it's less likely to have huge attendances. Have either of you guys attended AGM and found it valuable? Regards, Victor. Apologies. I forgot to add, of course, I'm loving what you guys are doing with the pod and hoping you guys do a live pod in Sydney so the fans can meet you both in person. Maybe we will. Thank you.

30:06We should do that. Yeah. AGMs, mate. Definitely. So I've been to a Woolies AGM, an entire waste of time. Just absolutely pointless. A big PR fluff exercise with, you know, old biddies there complaining about the sandwiches not being very good and how someone was rude to them at the checkout. I'm sorry to be a little bit derogatory, but that was exactly the experience. It was like an auditorium of 10 million people. And, you know, just every question was staged and rehearsed. And it was just a waste of time. And I've been to AGMs where once you take out the investor relations people and the one fund manager that's tracking, I'm the only other person there.

30:47It's brilliant, right? Like you really get to, again, there's no inside information there. And if there is, run a mile. Because if you feel as though you're getting information that no one else has got, you can believe that they have been out there at their golf club or wherever these people hang out, telling everyone what they want them to hear. But yeah, you really do get the chance to sort of, I just get a measure of the person, I suppose, if you want to be subjective about it, but just ask some good faith questions on how the business works and how they're thinking about it. I think it's incredibly valuable.

31:17Just be mindful of your bias. And I say this for my own sake, because I said to you off air in regard to a company we spoke to recently, literally almost without exception every CEO interview I do at Strom and I come away going oh that sounded interesting I'm just these people know the business far better than you they've answered these questions before that you know that they're usually articulate intelligent people otherwise they wouldn't have that job in the first place most often not always but you know often so it's very easy to sort of be seduced and particularly you're probably there because course, you're already interested.

31:56And subconsciously, you want to be told, yes, this is good. So you have to be on guard for that. But I still think it is valuable, but not for the big companies, just for the small ones. Yep, agreed. I am a little more skeptical than you, maybe unnecessarily, maybe necessarily. You'd very, very rather come over the management meeting less impressed than when you walked in. I mean, if you do, that's great because you get a chance to discard some stuff. Yep. But these people are persuasive people. If I'm being cynical, if I'm being Pollyanna, they care a lot about what they're doing. They really want to do it.

32:34They want you to know how great they're doing and hoping to do. And that's, you know, when was I supposed to be able to chat with someone who had a view, Bitcoin maybe? Who had a view on something, so, you know, this is why it's one of you going, huh, maybe they're right. You very rarely walk away going, idiot, they don't know anything. Or they don't seem to care. it's always that spark of oh that's interesting and so I maybe one in ten meetings you go away going I come away feeling worse about it than I used to and eight out of ten going oh that feels positive I can reconfirm my bias if I already own the shares I can see good reasons to buy the shares if I want to the stars in my eyes lit up like oh if I get that right I could make some money okay I'll do that I reckon if you interviewed a hundred companies or went to a hundred AGMs you'd find 85 of them worth buying right and those math don't necessarily track with the the reality of the the chance of success of those businesses or those those share prices in terms of market betting potential which is not say don't do it um just keep be really really not even not cynical definitely not even skeptical just be aware of your own biases right so i i do ceo interviews um i do i have attended agms I just tend to I tend to just be careful and I probably on balance lean away from them or if I do I just try and make sure that I don't get carried away it's one of those memento mori the slave whoop behind this Roman general say you are mortal you are mortal just remind myself A.

34:05I want to believe B. I'm likely to come away feeling better about it than worse so just do it in that context use it for information just try to keep yourself grounded when you do it. Nice. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

34:25Question for... You'll like this one, Ram. Jack. Dear Scott, Supreme Leader of Australia's premier online investment podcast, The Motley Fool, and Ram, a once humble scarecrow who broke free from his eternal struggles shooing crows away in the straw fields and now leads a daring life of white-collar crime, taking people's money and their ideas in one fell swoop and putting them to better use, fighting an uphill battle against the oligarchy. You've got white-collar crime. I don't know how to take that. Fighting white-collar crime, maybe you might have meant, Jack. I'm going to assume that's what you meant.

35:00No, I've... Yes. Shall we move on? Let's go with the positive interpretation. Let's do that. I hope you're both keeping well. He says, I've been a religious listener of the pod machine since stumbling across it only a few months ago. Where have you been all our lives, Jack? And enjoy spending my drives to and from work listening to the rants. Must be long drives. I'm chasing some personal advice, but hear me out. Yeah, not a good start. All right, let's see what Jack has to say. I heard the other day from a friend of a friend who heard on the news that we as a species have found ourselves in a small and fairly insignificant debt crisis.

35:33And they were quite confused who it was we were all borrowing this money from. I have a decent understanding of the way in which countries find themselves in debt but not to the level of someone with a fancy economics degree so please correct me if I'm wrong basically those in charge borrow money from the common folk you and I at a rate of interest which is determined by a man in a suit with a fancy title I won't use the government because I believe the word government should only be used to represent members of parliament who uphold the collective views and beliefs of the governed not the collective views and beliefs of those of the houses and holes oligarchy I'll take that as a comment Jack Once the vast gold reserves of the common folk run dry, the voices crying, build me hospitals, build me schools, build me roads, can still be heard in the streets.

36:14Our elected leaders have a choice, says Jack. They can raise taxes in a variety of ways to cover the costs. Please, and for the love of God, tax resource royalties. Yes, sir. Or they can borrow from the only place left that has any cold, hard cash. The RBA, said in a sarcastic tone, says Jack. There's an international element to this, Jack, which we may not get to. So the RBA weighs its wand and dollar bills appear on the Treasurer's screen ready for the spend. As this new money enters circulation, it is noted down as debt owed to the RBA. Since you can't create wealth out of thin air, if you could, I'm sure Gina or Twiggy would have figured out by now, where did the wealth come from?

36:51As we know, it comes from you and I, as our spare change is now worth less today than it was yesterday. I'm just guessing this is going to be a comment rather than a question, Ram, although it's been posted. I mean, I'm nodding. You can't see me, Jack, but I'm furiously nodding here. So in reality, says Jack, this process has stolen wealth from the population but kept a record of it as debt owed to the RBA. In reality, this stolen wealth is used in a completely uncorrupt and fair system. There's a lot of cynicism here dripping, Jack, sarcasm, to build schools, hospitals and roads. So in reality, it wasn't stolen at all.

37:21It was simply acquired from the population without us realising and then spent on things we didn't know we needed. the problem with this system is it leaves a big scary amount of quotes debt behind end quote as opposed as opposed to a slightly higher tax rates or vastly less spending and while some is actually debt owed to real people andrew's argentinian bonds he says the other portion is only the wealth that should have been taken as taxes anyway rather than take it as inflation some of the wisest among this would suggest this system is broken and we should replace it with a system of sound money god jack um i don't disagree by the way i'm just i'm imagining the rant that's building up while i'm talking this would obviously require higher tax rates to compensate for the wealth actually i'm not sure ram didn't write this our leaders would no longer be stealing from us if we were to continue enjoying our current quality of life my question is this and here is the personal advice i'm seeking if i were the treasurer and i wanted to change our initial uh this is our our official currency to a sound money system, how would I repay the debt?

38:20My current solution would be to slowly repay the debt to real people while not repaying any debt to the RBA and slowly stemming the borrowing, just slowly enough that my voters don't notice I'm not spending all the government's money on them anymore. Once people actually exist are no longer owed any money, I would wipe the debt to the RBA and introduce my brand new sound money system and all would be prosperous. Is there another way we can get ourselves out of this debt crisis morally without inflating the hell out of the place. So for the long question, please feel free to trim some of the fat while keeping the spine intact.

38:51All the fat came, Jack. P.S. Please feel free to use my name and tax file number. Regards, Jack. Tax file number 159365021. Thank you, Jack. No, I'm kidding. You didn't really say that. No, I didn't really say that. That's a nice diatribe slash monologue slash rhetorical question, but it's a good question. I mean, you and I have talked about this before. Moving to sound money, moving to sound money would be kind of catastrophic for a while, even if the outcomes were justified, or is there a better way to get there? Oh, man, where do I even start? I mean, one thing I'll say is that I think it's a really sensible question to ask.

39:32One of the things I think you should always ask, just as an investor before getting into any of this stuff, is where does the yield come from? It comes from somewhere. Whether it's in a bank, like when I put money in the bank, where does that yield come from? If I buy a bond, where does that yield come from? Now, there are answers. The interest of those that are thinking at home, just in terms of trying to get in context. Just the interest. Like, yeah, I'm going to give you some money and you're going to give me more back. Where does that come from? Here's$100. I'm going to give you$101 over the next year.

40:01Now, when you ask an economist, they give you these answers that are so convoluted and complicated and they tie themselves in knot and like no one understands what they're talking about, which to me just basically says you don't understand what it's talking about. And I think it's like a lot of things in high finance. It is complicated. It is hard. And you feel as though if I was to ask this question, everyone else seems, it's the emperor's new clothes, right? Like everyone else seems to get it. I don't get it. But if I say I don't get it, then I'm just like saying I'm an idiot. Like, because everyone else seems to get it.

40:34So it's just better to go, yeah, and nod along and go with it. But these are probably some of the more important questions of our time. And it's, as anyone knows on this podcast, it entirely fascinated me in recent years and I've gone right down the rabbit hole. But here's the thing, right? Clark and Dorr did a sketch on this years ago, which is like, well, Australian government's in debt, US government's in debt, the Chinese government's in debt, the Japanese government's in debt, all of the Western world's in, like, who's in surplus here? Luxembourg? Like a country of 3 million people? Like everyone is in debt to everyone else.

41:07So what is that? How does that actually work? And that's when you, well, for me, you reach a very mathematical conclusion that, I mean, it is a debt-based system with the mechanics of which very much require, not is desired or tends to go this way, but must go this way, is that the money supply must grow. Because if it doesn't grow, it falls under its own weight. I mean, it has to, right? So when I say things like, you know, that's why anything's that, I mean, look at, bring up the price of gold recently, or I'll avoid the other thing just because to not distract the conversation, but it's up and to the right.

41:53Like, and everyone, I think we confuse this and like, actually properties up and to the right, equities are up and to the right. Actually, every single asset on the planet is up and to the right. And I think what we miss is that it's not so much that these assets are going up, but that the denominator is going down, right? Because people realize that the money supply just keeps on growing. And if the rate of productivity is growing at a lower rate, we're getting inflation and we're going backwards in real terms, which is the lived experience. Really, you could go back to the dot-com. In fact, you can go back to the 70s, really, when we got off the gold standard and, you know, we just lurched from one crisis to the next.

42:37And rather than taking our medicine, we just print up a bunch of money and pretend that it's solved. And it clearly doesn't solve anything. Like, it clearly doesn't solve anything. So, you know, where does the money come from? The money comes from a keystroke that someone at the RBA presses a button and new money comes into existence. Characterization is not 100 % right there, Jack. It's actually, it's not the RBA that holds most of the debt or the central banks. They own a bunch of it. Interestingly enough, Powell over in the US has just signaled this week that they're going to stop quantitative tightening.

43:11So what they did, they bought an ungodly amount of assets from the free market back in the GFC and also in COVID. And then they just let that run off. So it like naturally corrects just by they let these bonds mature largely. and then they just zero off the freshly created money that they had. Actually, when you look at it on a quantitative basis, most of the money is held by institutions such as pension funds, such as we talked about insurance before, insurance companies, which is just an abstraction away from us. Us, you know, like my super balance, my super fund, my insurance company, you know.

43:53You know, it's all back. It's all back to us, which is why in the GFC, the people who ultimately held the can were all these poor people whose money was directed there and they allocated on their behalf for their best interests. And absolutely it didn't happen. And so it's not intrinsically evil, but it does require a recognition of how fundamentally important it is to prudently manage things such as the price and quantity of money. Because when you don't, you get Zimbabwe, you get Argentina. Structurally, they're the same system as we've got. They're not as judicious. I mean, we're terrible as well.

44:37We're just the least ugly, you know? And so, you know, I can say with 100 % certainty, the prices will continue to go up because of this dynamic. And it's not even a conspiratorial thing to say. It's on the RBA's website. We are targeting it to go up. Like we're trying to make it go up. We're just trying to make it go up at not such a high rate that you will notice. And we're going to cloak it around an ideology that says, if we don't do that, then the world will collapse. And it's all muddled up. And the only explanation you'll get from any of these people is some hand-wavy thing that, well, we just have to do it this way because even though it feels like it really sucks and you're being stolen from, it's actually good for you.

45:22Because if we didn't do this, you wouldn't spend any money and the economy would collapse. It's clearly patently absurd. So, yeah, it's a pickle. And I genuinely think that we are living through a very interesting time right now where we are probably heading toward a monetary reset. It's such a it's such a almost a hyperbolic thing to say. But until you remember, go back three or four generations, go back to your grandfather. Right. We had a monetary reset after World War Two. Right. We went to the petrodollar system at some point. Then we went off the gold standard at another point. Like this has happened multiple times in history, not in some weird economic backwater, but at the very, you know, the strongest economies in the world on historical time scales, like all the time.

46:12And we're going, and I don't know how people think you're crazy when you say it, but it's like, explain to me why this is not happening. Right now, the US government is so much in debt. It's at a higher rate of debt to GDP than it was after the World War II. Like, and we're not in a war. Well, ostensibly, we're not in a war at the moment, right? And that is our level of debt. You've got Trump telling a so-called, you can't even say it with a straight face, an independent organisation what to do with interest rates and policy. And just as he is with the high court, he's putting his cronies in there that will do his bidding, which is let it run hot, which is just another way of saying print a bunch of money.

46:53And if you can get any economist to explain how putting extra zeros in a database or extra bits of paper in the economy does anything, they can't do it. They just can't. They can't do it. And it's a big deal. And that's why when you look at Martin Place out the gold exchange, there's a line two kilometres long. And generally speaking, these are people who are probably first, second generation Australians. For them, it's not a weird abstract economic concept. They have come from countries where this has happened eight times since they were 12 years old, right? And they get the purpose of buying Shell and Yellow Rock because it's just like, well, the government can't conjure gold out of thin air and in every other regard it's stupid except that one.

47:34So, yeah, I think it's a problem. And, again, if the best you can do is go, ah, we'll grow out of it, which is the answer. If you had Michelle Bullock right here, if you had the treasurer right here, they would say, yeah, we understand it's a problem but it's not a problem yet And don't forget, all this money is being put to incredibly productive use. It's not that we're putting at least three quarters of it to just housing. No, no, it's all very, very productive use. And all of those, the return on capital will be wonderful so that the rate of productivity that comes out the other end will justify all the excess money printing, and then we'll grow out of it and it won't be a problem.

48:12That's the bet. And if it happens, then okay, maybe we get out of it. But if not, I mean, you can talk me back off the ledge, mate, but I would love to have an explanation as to how we avoid it without some miracle productivity enhancing thing. And people point to AI and robotics and maybe, but that's got a whole other distributive elements to it as well. So it's going to be a slow motion car crash, right? People have been talking about the last time the US was in surplus was when Clinton was president, right? And people were talking about the debt and deficit back then. Yes, right. Right? And I think that's the other angle people take with it because the doomers very much have this problem that they must reckon with, which is, well, people have been saying this for 30 years, dude, and it hasn't happened yet.

49:08And the person building the bunker has been left so far behind that even if the market crashed 80%, they're still behind. But, and it's true, you've got to acknowledge that. But you are playing a game of chicken. And so if you're going to play the game of chicken, fine. You just want to make sure that that other car is going to swerve first or it's far enough away that it's not yet risky enough. And I'm the first to, maybe it is. But these are highly risky bets to my mind. And we will have a monetary reset of one way, shape or form. very serious people in the u.s right now are talking about revaluing the gold because the gold u.s holds ostensibly a bunch of gold actually we don't know if that's true trump was going to do an audit and then that just went by the wayside like that's what what are we going to count up the gold no don't worry about it it's like okay that fills me with confidence but one way assuming they hold what they think that they hold this is by the way this is gold's great problem if only there was something instantly verifiable and auditable.

50:12But anyway, that's another point. If they revalue the gold, they can use that to repay a bunch of the debt. But that only solves your problem temporarily because the fiscal situation is so out of control. It's a thorny problem. And I don't have an answer for you other than hope and pray with everything you're worth that we are going to have a productivity miracle and that productivity enhancing miracle is going to be shared in a somewhat equitable fashion because if it's not and particularly if you don't hold any hard assets you're going to be poorer in the future and for most people that's that's going to be the case can i can i add productive assets to hard assets just to be clear yes yes you're not excluding shares and other things you're not saying hard assets from that so you're just separating out currency coin cash from from other assets.

51:05Is that right? Yeah, yeah. A lot of words in your mouth. I'm just curious. Well, so even, you know, my views on property. I mean, I think I get misunderstood on it. I think property is wonderful. It's an incredible asset. It's one of the best assets around. But, you know, whether or not the valuations are – it's a whole other argument. But the thing is you can't print houses easily. Right. And you certainly can't print desirable houses recently. I'll be a little bit local here, but, you know, I'm in the Sydney area and there's only so many houses that fit around the harbor. So the price might be stupid.

51:38It might not make any sense. But if you're a gazillionaire and your only focus is wealth preservation and not returns, actually property is a great investment because the government can do all kinds of silly things short of seizing your property. Again, that happens in a lot of places of the world, but I don't think it's going to happen here. But anyway, so yes, to your point, Scott, woolies or coals, I mean, it's stupidly priced, insanely priced, but, you know, they are hard. You can't click your fingers and create another Coles. You can click your fingers and create$2 trillion. Well, I can't.

52:12You can't, but a lot of people can. Well, but they only have our best interests in heart and we'll only put it towards good use. But this is, so what I'm really trying to say here is anything that has a degree of scarcity to it is likely to do well, not in real terms necessarily, but relative to the thing you're measuring. And it's got, I mean, this has been discussed for thousands of years. Wittgenstein's ruler is the best description I've had of it. It's just like, we just change the length of the ruler and pretend that things aren't getting longer. And that's what we're doing with the money.

52:44When you look at a lot of the growth, quote unquote, that we have had, and you normalize that. And we talked about this off air, whether it was for gold or whether it was for M2 money creation, the growth looks very different. And in real terms, it's not to the same degree. And then on top of that, you get the data being muddied by just natural productivity enhancement as well. So it's sort of like, well, you know, the monetary growth in Australia has been, I think, 7%, 8%, 9 % per year going back to however, like 50-odd years. We haven't had inflation of that because, thank goodness, for the miracle of productivity because we've had all these incredible inventions that we can do, you know, make things a lot easier.

53:22But it's kind of you've got layers upon layers upon layers that makes it very, very, very difficult here. And I guess all of the hard money advocates are saying is, let's just be honest with these things and let's just use a measuring stick that doesn't change in length because then at least we know what's happening rather than obscuring it with all of this silly buggers and all cloaked in an ideology that says, trust us, bro, it's good for you. I need you to go back to the question that was asked Okay How do we get to a hard money standard? Yeah How I exit in a sly roundabout way And we're doing it How does that actually work Given the current level of debt we've got Without causing massive disruption And kind of I'll say catastrophic just for the sake of hyperbole But the reality is getting to that point from here Given the amount of debt Is a scary slash catastrophic phenomenon, right?

54:21Yes, it is How would you do it? You've got to frame it properly because the premise, the unspoken premise here is that we haven't defaulted yet. And I'd say, yeah, we already have. It's just that we're masked over it. So any subsequent bust just reveals the lie of the boom. And so the losses are there. We just pretended they weren't there because we, our elected representatives and our monetary authorities, papered over it. But they're still there. I mean, just all that they've done, they said, oh, it's just really an asset. So when we do quantitative easing, it's not money printing. It's really just swapping an asset.

55:00It's like, yeah, but you're swapping an asset that no one wanted for an asset that everyone did want, i.e. you took a useless bond that's worth nothing and you gave me cash for it, right? And so it's happened. It's happened already, really. And that's the change. The reckoning is still. So how do we have the reckoning in the least painful way, I suppose, is the question, really? You just opt out. I think the other thing you've got to remember, again, from a broader historical lens, is that we, in our lifetimes, and that of everyone listening, money has just been something that the government ordains.

55:32But that's really an unusual precedent. Like in history, that's never been the case. Money has always been an emergent organic phenomena. You know, every culture around the world has invented money independently because it solves a massive problem. And none of those instances, and it's happened hundreds of times or at least dozens and dozens and dozens of times throughout history, no one got together and said we're doing that. People were just doing it because it solved a problem. And then at a point the government, like, so gold was the natural end state of that because it was the hardest to print.

56:09It was the easiest to verify. It was the most scarce. It just had all the qualities that made for a good money. And then King's just said, well, we're going to make it even easier. We're just going to put a picture of my head on it to make, to standardize it, to make, to actually, to fix one of the problems of fungibility. So it was a technical solution. And it was a solution that was abused through coin clipping and shaving and, you know, again, it's just, there is nothing new under the sun, right? And so in our particular historical place, it feels really strange to think that there could be a money that no one ordained.

56:49And, well, it's actually already bootstrapped itself up over the last 16 years. And, in fact, even without Bitcoin, it's actually we're going back to gold already. It's$4 ,200 an ounce. I mean, again, it's hard to do visually. Anyone listening, Google gold price and bring up a chart. It looks like NVIDIA. That's what it looks like. And the so what there is just like, yeah, people can be irrational. And yeah, there can be bubbles. And it's just a real-time currency collapse playing out. That's what it is, right? And again, no one's ordained this. People are just rationally figuring out that these little bits of paper and digits on a database that you have presented to me are not worth what you say they're worth.

57:30So I'm going to opt for something else. And the government will adjust and work around that. But anyone who is holding liabilities denominated in the dollar, yeah, it's gone. It's already gone. You just don't know it yet. Get out while you can, man. You're holding fixed interest. I can't give advice. But think about it. And don't take my word for it. Think about it from first principles and ask, what is this? What is it? It's on an investment bank's database there. and it's a promise from the government that they'll pay you back. And knowing what we know with the debt and our spending, they can't pay you back.

58:07So not in real terms. So they're going to print the money to pay you back. And you're going to sit there and tell me that that's a risk-free asset? Well, I mean, good for you if you want. I mean, each to their own. That's what makes a market. But I'm not storing. I worked hard for my money. Everyone listening has worked hard for their money. I want to store it in something. Now, you might not go to where I've gone, but you, for the love of God, own high quality businesses, high quality real estate, hold shiny yellow rocks, hold anything that they can't print. And I'm not saying it's going to happen tomorrow, right?

58:38It's been this slow motion car crash has been in place a decade or two, you know, longer. And maybe it goes before it actually hits the gradually and suddenly part. But I'm not playing chicken with these idiots at the wheel who are just spending like drunken sailors and have no ability to even recognize the problem let alone redress it i mean good luck to you if you disagree but i you know each their own i i fundamentally disagree and uh i'm storing my money in something that can't be printed okay i'm going to take you back to the question one more time that's how we do it you opt out that's how individuals do but how's the economy do i mean this is not we are we are the economy no because everyone can opt out by definition that's not how yeah you can anyone can opt out we can't all opt out though collectively because the because the result is still the result the The debt still exists, right?

59:27So someone holds the debt, someone repays the debt, someone is impacted by the reduction of consumption that happens if debt is repaid rather than being increased or maintained. So there are societal economic outcomes. Okay, let me frame it this way. Let me frame it this way. It's a game of musical chess, right? At the moment, there's a lot of chess because no one really thinks the music is going to stop. But if you can look around the corner a little bit better than most, sit down. Just sit down and grab the chair. I still find you're writing the question. Okay. How does the Australian economy avoid it?

1:00:01Put it that way. Okay. We can't. We can't. How do we minimize that? Someone is going to wear it, and the person who's going to wear it are the poor who are going to wear it because that's always who wears it. They're wearing it now. My point is it's only an accounting trick that it's not a more hard, obvious default. It's already happening, right? They're feeling it in the same way. So if we put you in charge of the RBA. They're not feeling it. No, not the change that comes moving to sound money directly. If we put you in charge of the RBA tomorrow and say you've got five years to wind this thing down or 10 years or whatever, I say to you, you're right, you're the final governor of the Reserve Bank.

1:00:40We are moving to a hard money standard of whatever form, gold, fixed Australian dollars, Bitcoin, whatever it is. We go to that chance and say, right, you've got to choose the timeframe and the process under which we get to that point. That process at an Australian economy level is painful. How do we make that transition? Well, here's the riddle in that. Because the moment that I do that, I create the run. I create the virtual bank run. Yeah. I don't know how you do it. That's the root of the question, though. Yeah. I mean, it sounds selfish, but I don't know if it's even possible. So I'm just – all you can do is protect yourself and your family.

1:01:19So what happens? People wear the loss. People wear the loss. Can you – I'm not sure if you can. It's your super. It's your insurance. It's your pension scheme. What's the mechanism? Yeah, we all get poorer. What's the mechanism? So look at, okay, so after, history is so informative. So World War II ends, thank goodness, right? Germany has to repay a bunch of money. There's no money, chopper. It's not here. Money is not here. So the society wears it. And again, they could say, well, we'll just print up some money, but no one, no one falls for that. You know, when it's slow, I can siphon a liter out of your petrol tank every night and you'll never notice it.

1:02:03But if I take the whole thing, it's gone, right? So it's, you can't, man, it's gone. This is what I'm saying. It's going to be painful. People want, I want, I have been drinking a bottle of vodka every day and you're telling me if I stop, I'm going to have a hangover. It's like, yeah, no, no, no, no. How do we do it without getting the hangover? You can't. You can't do it. So I don't have the magic answer for it other than get out. Talk about the transmission mechanism though. So what are the actual, to the extent you have a view, what are the, so let's say we go to Sam Money, we set a deadline for whatever it is, 2035 or 2030, it doesn't really matter.

1:02:42It's effectively just permanent quantitative tightening until we get back to zero, right? That's kind of – so loans – so what happens to the economy as that process unfolds? Oh, very painful transition. Yeah, yeah. Okay, so let's do it. Okay, so let's just snap our fingers and make central banks disappear. Yep. What a wonderful world this would be. Except for the payment cause in the meantime, but yes. Yeah, but, you know, again, hangovers are worth having if it makes you healthier, right? And it's like – the other thing you ought to remember is like that comment assumes that everything's great now.

1:03:16It's clearly not great, right? So it's sort of like... It's going to get better until it gets worse, right? How bad is it gets worse or it gets better? Yeah, yeah. I'm not going to argue against that. It's absolutely going to get worse, right? I'm not saying we shouldn't either. I'm just making that clear for our listeners. Yeah, yeah, yeah. Absolutely. So let's kill the Reserve Bank, right? Now, a whole bunch of people out there have bought, either directly or indirectly, have bought things like government bonds. They've taken a loan from the bank. With that loan, they've bought a car. They've invested in a business.

1:03:44They've done all the things that people do when they lend money. And bonds are just another way of lending money. Now, at some point, because we don't have an artificial backstop anymore, some of those loans are going to go bad, which means that the person who lent you the money is going to be left holding the bag. Scott, lend me a thousand bucks. I'm going to start a lemonade stand. Oh, the lemonade stand went really badly. I can't pay you back. So you suffer and I suffer and we both suffer. That's it. You know, sorry. Now, what happens now when that happens to our discussion on Friday about aluminium works and these kind of things?

1:04:20What happens now when that happens? We go, don't worry, we'll fix the, quote unquote, the government will fix it. And they go, well, all we really do is we just print up some more money and then make it whole. So it kind of like protects you and your crony billionaire mates and everyone feels good about it. But the loss has already happened. We've just papered it over and the dilutive effects in an aggregate sense over an economy are very hard to notice. Even if you throw a couple billion dollars at this place, it's like, wow, you know what I mean? Maybe it's only a 1 % or 2 % dilution effect.

1:04:50So it's not too obvious. But that loss has happened. Now, what I'm saying is when we take away that backstop and there is no buyer of last resort, when the loans go bad, the loans go bad. And again, who's holding the debt? it's people the superannuation industry it's the pension funds it's the investment banks it's it's it's that you lose money and and and and i'm i'm gonna sound harsh but this this is the other side of of capitalism that the the big fat cats tend to ignore is it's like you know with with risk with return comes risk and you you what you did is you lent a bunch of money in a very ill-disciplined way and the people that you lent it to can't pay it back so you don't get your money back now now unfortunate unfortunately i mean again this is why i think it'd be good if the rba wasn't around or any central bank is around because what happens now is when they ballot again it's the people without us it's the poor people who ultimately pay the price in this system when the pain comes who's going to hurt most the the richest people with all the assets with the bad assets who have indirectly, knowingly or unknowingly have lent all this money by buying all these government, they're the ones that suffer.

1:06:04And I'm not saying they deserve to suffer or that I champion their suffering or that I want them to suffer. I'm just saying that you lent some money to an entity that is now not paying you back. And yes, that sucks, but that's the reality of the situation. Right now, you get a bailout because of the economy or some word that gets thrown around and it just basically well thank god for that we we did all this dumb stuff with our reckless with our lending we misallocated capital all over the place we solved it quote unquote by printing a bunch of money which just means that the single mom in bankstown is now paying three times as much for her groceries and she's the one who's wearing it right and and and i'm saying there will be pain but at least this way the pain is felt most directly like everyone will hurt to some degree but and i'm not i'm not championing i really don't want this to happen but Unfortunately, we've painted ourselves into a corner where there's no other way out of it.

1:06:57Right. But at least this way, the people most able to shoulder the blame, the pain will shoulder the pain. And I'm sorry if if Gina Reinhart's 400 billion dollar investment portfolio takes a 20 percent or 50 percent hit or whatever it happens to be. But them's the breaks, Gina. Then like, you know, you shouldn't have lent all the money to the government by buying government bonds or, you know, buying mines that are unviable or whatever it is. That's the thing that I think people miss. You and I get it, I guess, because we're investors. You don't ever buy a share thinking that if it goes bad, the government should bail me out.

1:07:39But these people do, and these people have pulled the wool over our eyes and convinced us that they need to be bailed out because they grab the worker, the blue-collar worker, they put him in a headlock, they point the gun and say, you bail us out or this dude's going to lose his job. And we go, oh, we can't let that happen. And then they get away with it. No one in the West went to jail after the GFC. In fact, in that year, in 2010, I think Wall Street had its highest bonus payouts. How is that fair? How is that fair? So this is why people laugh and sneak over. It's like get rid of the – they are so damaging because they introduce a moral hazard that protects the privileged and the connected.

1:08:23And it doesn't protect the ordinary person who suffers through rampant inflation. And we do it because we want to pretend that the loss didn't occur. The money's been misallocated. It's lost. We can pretend it's not lost, but it's lost. So let's acknowledge. So how do we do it? Sorry, I'll answer the question. How do we do it? We go through a very bad period of pain and there's no other way around it. Is that the only go? Well, but at least you now, because most people, there were people in Weimar, Germany with wheelbarrows full of paper that were in good faith thinking, well, at least I'll get a loaf of bread for this.

1:09:01You know, right up until the end, until it's like, no, it's literally zero. And most people don't grok it right until the end. And I am saying, and I am screaming from the head, from the top here, it's like, do what you can to protect yourself. Not because it's intermittent, not because it's tomorrow, but because it's like just a sensible, rational, logical thinking. Like just put a little – and it doesn't have to be buddy Bitcoin, you know, anything. Do not keep your money in fixed interest. Do not keep it in the bank beyond day-to-day living expenses because it's monopoly money. It's all it is.

1:09:35And it's going to be painful, but you can make it less painful for you. So is that pain only come, in your view, when the next crisis hits? Or is there a pain that felt – It's usually a tipping point, yeah. But if we go to sound money, though, as opposed to just... Your version is kind of eventually this eventual kind of there's no money left. It's Weimar Germany. If we chose in the meantime to take our medicine before we actually had to take the medicine, if we said, well, actually, we can see that might happen at some point, we're going to move to a sound money standard. When that's announced tomorrow or next week or whatever it is, how is the pain transmitted?

1:10:10Is it not transmitted at all until the collapse happens? Have you realised we stopped trying to save it? Yeah, great question. So let's play it out. Again, game theory is so illustrative, right? So you are a large investment manager, and then you turn the news on, you open up your Bloomberg terminal, whatever, and then the government makes this decision. And the first thing you do is you look at all of your assets and go, well, how does this impact me? And then you kind of do it in the Keynesian beauty contest, which is not so much what does it mean for me, but what do other people think it means to me?

1:10:43I can guarantee you what will happen right now is those assets dump in value. Bond yields go through the roof and gold continues its ascent because people realize that there's – someone just shouted fire inside the theater and the door only lets out one person at a time. So I'm just going to effing run for that bloody door and everyone else is. Even if I think, well, hey, guys, I'm the guy in the corner going, hey, it's all okay. If none of us panic, it's all okay. It's like, good luck with that, bro. I'm out the door, right? And I am gone. And so what happens to your point? Before we go back one step, though, just really quickly.

1:11:19Why does everyone run for the door when they announce that? What is the mechanism that the investment manager says, oh, my God, this is over? Why would I suddenly sell everything? Or not everything, but, you know, why would I hit for the exits as soon as the government says, actually, now it's our money? Because now I know there is not an implicit backstop on these useless bits of paper. Let's draw a pie chart of every single asset in the world. And planet Earth, you've got property, you've got equities, which is business, you've got bonds, and then you've got things like art and collectibles and, you know, those kinds of things.

1:11:49But, you know, the big, you know, it's estimated to be about 900 trillion US and 450 trillion of that is bonds. So it is by far, by far the largest, right? And then it's property because, you know, there's a lot of humans in a lot of nice houses around the world. And then it's equities. And then it goes down very quickly from there. And so the big gorilla in the room is the bonds. Now, at the moment, people, the serious allocators of capital, are saying to places like the US government, I will lend you money for 30 years and you only have to pay me 4.3%. It's madness. But it's not madness if you think that there will always be a backstop there.

1:12:30Once you take the backstop away, Wall Street is - And the backstop here being you can print the money if you need to. Yeah, they will always make you whole. by printing money. Now, Wall Street are a lot of things and not very nice things, but one thing they are not is stupid. And again, remember, we always say price is set on the margin. So you are a sovereign wealth fund. You are a large investment bank. You are the US Steel Workers Association pension scheme. And you look at your assets and you go, holy crap, we've got everything in this IAU and the government just said that they're not going to print to pay it back.

1:13:11So either the budget goes into surplus very quickly and they start repaying this or they're just going to default. Right. So it's the risk of default because they haven't got the revenue raising capability or not prepared to make it. So you either raise taxes or you default, right? Or you cut spending, I suppose. Yep. Now ask yourself this question. I mean, would you bet half of the world's assets on the fact that the US of all places is going to find religion in its fiscal problems. I mean, maybe. I'm not saying it's impossible, but politically impossible. I mean, it just doesn't. It's why we get populists.

1:13:51We either get far left or far right politicians. And your view is then they choose to default rather than raise taxes. Oh, yeah. Because they're generally defaulting on foreign owners or big owners. No, don't forget. We've just said that we're going to a hard money system, which is just another way of saying, well, when we can't print to make it up. So people, I think, would look at that and go, oh, man, they're going to default. Not on everything, but a lot of stuff's going to be default. And I just thought - You cut spending or you don't pay the bill. I mean, it's a classic risk off trade, right?

1:14:19So it's, you know what you do in markets and what markets have always done in the big, you shoot first and you ask questions later. You go, holy crap, this is real. They're no, oh my God, they're actually doing this. I don't, I got a sense of what it means. I don't know for sure, but I tell you what, you pick up the phone, Barry, sell everything, right? And we will reconvene when things calm down and we'll collect. But right now, I do not want to own an IOU. You're talking about bonds here, right? Because you go two shares, you go two gold, you go two bitcoin. I think you would find a crash in fixed interest and cash-oriented investments, and you would find a massive boom in anything that you might consider reasonably scarce.

1:15:02You don't want to keep cash because it's got the same problem. So you're probably going to go to something that at least has some sort of scarcity value, which is your point. I've talked about how stupid Woolies is at the current valuation, but I'll buy Woolies at a 50 times PE than a government, 30-year government bond offering 4 % in a world that's likely going into 7%, 8%, 9 % inflation, if not higher. It's just the rational move. But the broader question here is that there is no way out of it, right? There just isn't. except a very strong, immediate, deliberate pivot to fiscal responsibility and a productivity boom the likes of which humanity has never seen.

1:15:46And then maybe that happens. Maybe it happens. But I'm not going to bet my fortune on it. And that sell-off, just to get back to the question, that sell-off of assets is the first thing that happens. Yeah. Presumably at that point, it shakes business confidence and causes a meaningful decision. Oh, horrible. Yes. Yeah. Here's another historical. Now, where are the industrial centers? Well, it's changed with the rise of China, but let's go back a little bit before that. Isn't this weird, man? The industrial powerhouses of the 20th century with Germany and Japan. Japan, yeah. They lost the war. Yeah, yeah.

1:16:27They lost the war and we said, the victors said, you cannot build an army. What do we do with all this industrial capacity? I know, let's make TVs, toasters and cars. And that is the ray of hope, right? Because in Japan, Japan had the biggest property bubble that the world has ever seen. Like the Imperial Palace was worth more than California at one point in time, right? And again, back then it was like, it's too big to fail. It can never happen. I don't know if it goes. All the usual, you know, things that people say now in Australia. But my point is, is that after the war, both of those peoples, let's get rid of the abstract here, the flesh and blood human beings in those countries in aggregate ate it.

1:17:16I mean, they ate it big time. The quality of life plummeted. But the interesting thing is it was short and sharp. And on the other side of it, they built a base of prosperity that is now held up as the examples of what modern economies can do. Right. Like, like, and that's so this isn't I'm so optimistic about the future. And thank God that we now have a digital gold. Right. Because what what will that what this will mean is that this will mean an incredible, horrible, painful reckoning. but we'll come out the other side of it in much better shape, far more resilient, far more fortitude. And most of the pain will be shared by those who had all the paper assets of the rich.

1:18:04It would be a wonderfully fair thing. Now, you might say if you were cynical that the vested interests know this and don't want this to happen. Because I tell you what, if I was in some of these positions, I would be advocating for it not to happen because life is good, man. Life is good if I'm a contillionaire that's close to the money spigot. But for everyone else, we only go along because we're gaslit into being told that we have to go along and this is just how it is and it's all for our good. And if they don't do it, we'll lose our jobs and the rest of it. But I feel pretty good about it if some uber rich corporation or institution takes an 80 % loss on their investment portfolio, but humanity moves forward on a far more equal and solid foundation.

1:18:52Like, I'm prepared to take that. And while it will still suck, and there will still be ripple effects, and there will, I mean, I don't, I don't really don't cheer for this stuff, other than knowing that one way, we can either gracefully go through it as best we can, or we can have it thrust upon us. And if we're going to do it, I would say, well, let's try and do it as gracefully as possible. We won't because it's, you know, we will always kick that can wherever it's possible. But I'm an optimist because out the other side of it, there is, there is a, there is a wonderful future for humanity. I genuinely believe that.

1:19:28And it's, it's, yeah. To Jack's question, I will wrap this up, but to Jack's question, I think I would, and you mentioned quantitative tightening before. I mean, if that's how you would do it in a, if you're trying, If you're trying to get there over time, you would try and do it in such a way that you gradually reduce the pace of increase slowly to zero. And it might take 15 years, maybe 10 years, if I'm being really optimistic, and 25 years if it goes badly. I can imagine a scenario. I mean, Japan property is actually a really good example because that effectively hit a bubble in 1980, went nowhere for 30 years.

1:20:05Which is why every time you put shares, people say, well, what about Japan? It's like, well, if you're in Japan's situation, that's where you end up. Also, just very quickly, Japan has one of the highest standards of living in the Western world, in the developed world. Right. So I guess I'm just pushing back, maybe because I want to believe that it's true because I'm a Pollyanna here. A responsible government or series of governments, because it would take multiple terms of government, could bring us back to sound money just simply by slowly reducing the amount of money being printed. It would also then require reductions in government deficits, and you have to sort of glide yourself to that.

1:20:40But if I was in charge tomorrow, what I would try to do, just to try and answer Jack's question, and by the way, listeners, Ram is deeper in this than I am. So I'm going to give the layman's, hopefully the slightly informed layman's view and Ram give us the expert view. But if I was in charge, I would, we're close enough now we could bring the budget to structural balance effectively immediately. Yeah. And then we could spend 15 years running a 2 % of GDP surplus until such time as we had the debt paid down to zero and you would not print money during or most importantly thereafter and use quantitative tightening to effectively roll that to zero.

1:21:17Remembering, of course, in John Howard's time, you mentioned Clinton. In John Howard's time, the government actually artificially propped up the Australian bond market. I say propped up, it sounds like it's been terrible. They actually ran some net debt just to keep the bond market open because they didn't need the money. So they had cash and they ran net debt just so they could have a functioning bond market. And we're going about whether that was possible. It was probably useful. They interfered in the natural functioning of the market is what they did. It was useful to have a market that existed when we needed it again, I suppose.

1:21:45Yeah, but as if there wouldn't be a market if we needed it anyway. It's a whole other point. We can't have a market in government debt if there's no government debt to have a market in. But yes, I do. Yeah, it's like, well, we're not issuing anymore. But when we need to, we'll issue it and someone will take it. The irony is that, mate, if we did all of this kind of stuff on a global footing, Australia, like for international capital allocators, like there is a reason that people put their money in Switzerland. Yeah, that's right. And not in the Congo. Yes, yes. And why? It's the institutional strength and resilience of that.

1:22:12So if we were to do all of this, and again, the experts will argue against it, but the irony is, is that we would attract capital because people aren't idiots. Yeah. Yeah, so I guess I'm just making the point. I think there's ways of getting to that result, you know, which is a difficult one to do, but we can get there in time. I think, and look, there's no perfect solution, right? There is no solution under which you say we are, you know, we can guarantee this is going to happen. I just think, and again, maybe I'll be pulling out of here, but to Jack's point, if you wanted to get there and you wanted to make it happen, the challenge, I suppose, I mean, we don't know who the debt is owed to, Jack, and I suppose, look, at some point, if it's owed to the RBA by the government, then it's, getting rid of it doesn't make any difference because it's the same mechanism.

1:22:57It's like running an offset account while you got some, what do you got a mortgage, right? We all know the money is, $100 ,000 mortgage, $100 ,000 mortgage offset. There's nothing going. So you're right. I would probably, whether it's real people or not, Jack, I don't think is as relevant or important, not because real people don't matter more than fake people, but the reality is the reduction of the debt level, the reduction of the mortgage level over that time. If we start by saying, let's run a structurally balanced budget to start with, which is not enough because we need to actually run a surplus budget balance to pay down the debt.

1:23:31But it's like household debt, right? I want to get out of mortgage debt at some point. I'm going to do that by earning$100 and spending$98 and putting the rest into my mortgage until it's gone. That's kind of how I'd do it. I think you could do it. It would require a reduction in the increase of standard of living because we pretend there's a better standard of living because we take more debt on to do it, right? So we earn$100, we spend$102 and pretend we're rich or at least better off. Artificial. Yeah. So on a daily, weekly, yearly basis, our quote living standards would increase less quickly than what they otherwise might because you're putting more of your proceeds into paying down the debt.

1:24:09The reality is once you get there, then you can go to a sound money standard if that's what you choose. And I think we should. I've said before, I'm a Keynesian from a budget balance perspective and I'm monetized from a money supply perspective. We should run budget deficits and surpluses when the circumstances require it because we care. We shouldn't inflate the money supply just for the sake of doing that. And I think, mate, to your point, I like the Switzerland example. I hadn't thought about that. But if it was me, Jack, to your point, that's what I'd do. They won't do it, though. I mean, you're right, mate.

1:24:38You're dead right. If you're a level-headed, far-thinking, long-term thinker, that's the best you can hope for. But don't forget, let's say you're running for PM and you get up there and say, hey, here's my plan. And some other numpty's going to go, yeah, don't vote for them because I'm going to give you whatever you want and I'm going to make sure that I'm going to keep the bad things away. Even though, like, if you thought about it for half a second, it's like, well, that actually doesn't work at all. They're going to get elected in. And that's why I say it's not impossible but politically impossible because it's possible if you have a very, very charismatic, articulate leader who can bring the nation with them.

1:25:25And I don't know who could fit this bill, but it certainly ain't the lot that's in now and it definitely ain't the other lot that's the alternative, right? But you need to sell that vision in such a way that people would go along with it. And not only that challenge, you need to somehow say to all of your most important donors, oh, we're going to screw you over. But it's for the good of the broader nation. I think you don't need to screw the donors over, though, if you do it slightly, right? I mean, you may be offering less new debt. You may have less growth. But if you can manage the decline, I suspect your argument is the one that works, which is you start by saying, we are inflating away your savings.

1:26:06We've been doing it for 50 years, and it is, I was going to use another word, rubbish, and we should stop. And if we keep doing it, here's what it looks like. And you want more stuff, and I want to give you more stuff. The reality is I'm giving you more stuff by putting more money on the national credit card, but this ends badly. So what I'm going to do is I'm going to ask you to trust me. I'm going to ask you to allow me to change the budget balance such that we pay this thing off so that we are in a better position and when it happens we will be as you said the destination for investment we'll have a standard money system your savings won't be inflated away I want to help you build real wealth this is how we do it rather than pretend wealth you've got to make that case in some sort of palatable version if you can do that I don't think you well I don't think you screw the donors you screw in a counterfactual sense which is you might have grown at 4 % now it's only going to be 2 % Suck it up, buttercup.

1:26:53It's not necessarily, I'm going to screw you by, you've got to fault on these loans, your assets are going to be worthless. It's just that conversation of moving forward, here's what this looks like. By the way, I think it would probably do wonderful things for the currency, so you'd probably take a whole lot of money and throw it overseas. You've tried first mover advantage before. If you're going to move to a sound money standard, you would invest as many Australian dollars as you could in foreign assets. Let those assets appreciate against the Australian dollar and then bring them on your home.

1:27:18It's a smart way to do it. Someone will figure it out and someone will realize that he who moves first wins. Yes, yeah, yeah. And I think if there's any, I don't want to give Trump any credit because I don't think he's thinking at it at this level. But if he's, he'll tell you what I would do, right? If I was Warren Buffett. Go on. Buffett has more money than God at this point, like Berkshire does, right? He wakes up tomorrow and says, we're putting our$300 billion into Bitcoin. That'd be a hell of a mic drop for his last three months of the job. Can I say he's retiring in September 31. And so think it through.

1:27:52All of a sudden it normalizes it. Now, Buffett's doing it. We're all doing it, right? And it forces the government to like, well, we – all of a sudden it's just sort of – it gives a viable alternative that just never existed before. Yeah. And it legitimizes it and it enforces, yeah, hard decisions that have been made. But again, decisions that – I mean, just denying reality never ends well, right? So people who go, oh, yeah, but, but, but, and there's these bad things that will happen, it's just like, well, guess what? Bad things are happening now. We're not choosing good or bad, we're choosing the form of bad we want.

1:28:29You must always come back to, right? You must always remember, anyone who advocates for a different point, the opposite point of view, which is the mainstream, explain to me how zeros in a database or paper in my hand changes the amount of stuff that we have. Yeah. I mean, how? It doesn't. Except that, well, if you do it, I will invest it really well and then I'll share it with everyone. That's the only argument, which I just say BS. Like there is no, I mean, and it's not even something that I have to guess at because that's never happened ever, right? The first example is the Monopoly game where you get$2 ,000 for pass and go rather than$200 and everything else stays the same.

1:29:10Yeah. I mean. There are not more properties on the board. There are not more houses or hotels. There are not more community chests. It's that simple. It's that simple. And the thing that I really want to stress here as well, and I made this mention last week, is that the North Star, again, for me here is fairness and equity, you know, and the system that we have at the moment. Think about this, right? You work in a business. I run a business. Everyone out there is one particular business that you can run if the government gives you the license where you can create money out of thin air and charge interest on it, right?

1:29:44My brother didn't know this before last weekend. I was like, I was ranting and raving. It was like, what? What do you mean? Like every time someone creates a loan, money gets created. No, no, no. It comes out of savings. Oh, dear brother. Dear brother, sit down. And he didn't believe me. So he Googled. It's like, holy crap, you're right on all this. Anyway, so you get to do that, right? Which sounds like a good deal. Sounds like a good deal. It gets even better. not only that, if you get into trouble, we'll bail you out. Now, if that isn't, now, how can anyone in good faith get up and go, no, Andrew, we need that.

1:30:25It's really important that Shane, what's his name at ANZ and Matt Common at CBO, they really need the power to do this. And like, we've given them this power for the last 50 years. And all they've done is inflate massive asset bubbles and engineer massive wealth inequality. That's what they've done. Because the money, the people who get the money are the people with the assets, because the people with the assets have the collateral. The people with the new money buy more assets, which means they have more collateral. In fact, they cause the collateral to go up in value. So you get this flywheel effect that it's just sort of like the rich get richer and richer and richer and richer.

1:31:01And everyone goes, oh, capitalism sucks. It's like, no, it's not the capitalism that's not the problem. it's all this like grifters close to the money spigot who get the money before anyone else and have an unfair advantage you know again the single mom in blacktown just to use that as a as a pretty simple example doesn't get to borrow at the same rate as clive palmer you know and look and to some degree that's not not unreasonable because arguably he's he's got some earning capacity or or whatever But the game board is tilted so heavily in that favor. Why is it that a company like Apple or Google would have any debt?

1:31:45You know, it's just like, because you'd be an idiot not to. Yeah, that's right. But, you know, hard money systems, like, we don't need the debt. We're not going to take that. And this is where my world has been flipped upside down. Because forever, I avoided debt until I saw the light. I was just like, holy no, maximize the amount of debt that I can have as long as it is serviceable very comfortably. So with a big fat buffer, we really have to emphasize that point because you can really get into trouble if you don't have that. But I will never pay off my house deliberately because I've got a debt that's denominated in melting ice cubes and the money that I would otherwise use to pay off that debt in things that can't be printed.

1:32:28I mean, and then it just took so, I can't, I was so embarrassed that I was in my late 40s before the penny dropped on this, but it's kind of like, that's why the rich get richer. Elon Musk and Jeff Bezos and Mark Zuckerberg have lines of credit at the major banks. And you go, what? They don't need debt. Yes, they do. Well, no, they don't. But of course they do, because I'm not going to sell my shares. It's easier just to lend against that as collateral all this money is being sloshed and pumped in the system. My Tesla shares keep going to the moon. Facebook keeps going to the moon. So it's just sort of like, and the real value, the proper inflationary adjusted debt just keeps getting smaller and smaller and smaller.

1:33:11So when the mega rich are using, and again, don't hate the player, hate the game here. I mean, I'm not saying none of those people I mentioned I'm particularly great fans of, but I can't fault their logic and their rationality here. It's just like they're only doing what is sensible, you know, and they have an unfair advantage. And as do all the big corporations, they do because they are closer to the money printer. They have all the collateral. They're going to use that to buy even more. And then the person for most of us, again, just look at the lineup, all the humans in the world. Most humans get money through the exchange of their labor.

1:33:52That's how they get it. Right. Right. And it's just so brutally unfair because while you're printing money, I can't print an extra arm or, you know, I can't clone myself to give myself extra productivity. But in effect, they can. And it's it's it's it's absolutely criminal. And then we are gaslit into it. I nearly I saw read the other day reading the AFL. I know we're so far beyond the point of ending now, but whatever, we're on a roll where the deputy governor of the RBA got up there and said, Australians need to get used to not having any pay rises because it'll stoke inflation. This is a woman on$500 ,000 a year before bonuses working for an institution that has a$400 million annual remuneration structure, right?

1:34:38Telling you that you can't have a pay rise because you're the fault of inflation. And it's just like, it's so unfair. It's like, no, you guys are the fault of inflate because you allow all this credit creation, you allow it to go to the most rich and privileged people. And then you turn around and gaslight us and say, it's our fault. It's so egregious. And think about this. Think about even moving all of that stuff aside. Who are you to tell a business owner what they should spend their money on? Do you think anyone owning a business out there has just decided to pay their workers double? But if I've got an opportunity and I'm making good money and I need to expand and I need to pay more for workers to do that.

1:35:19And you're going to tell me, no, I can't offer a pay rise because the economy or inflation. I mean, one, it shows a fundamental misunderstanding of how economics works, but it's like, that's the trend. That is the actual signaling mechanism for me saying, holy, oh, it turns out I'm doing things that consumers like and want and need. And to do more of it, I need to hire more people and pay them more money. Oh, but the bureaucrat has never spent a single day in their life in the real economy just said, I can't do that because inflation, while at the same time, causing the very inflation that they say is our fault.

1:35:57And by the way, at the same time, at the other side of their mouth saying, well, we actually do to the desire two to 3 % because you need to have, we need to make sure that you're two to 3 % poor every year. It is the greatest injustice of our time. And I will die on this hill. And inflation is the greatest lie that's ever been told. And it's in service of the people who it benefits most because no one else argues for it. And think about the genius of this, how you can tell to the ordinary person that when my 12-year-old would understand that, would you prefer if things got cheaper for you every year?

1:36:27Only a bureaucratic central banker can make the case that no, you don't want that and get away with it and get away with it. And you're like, how does that work? And yet the emperor has no clothes and he's walking down the street and we're all applauding. What a magnificent robe. What a magnificent robe he has on. And if that's not a perfect analogy or metaphor to land on, I don't know. But I'll tell you one thing, the emperor has new clothes and thank God there's a way to opt out. And I'm opted out if you haven't already guessed.

1:37:02couldn't give the people what they want Scott let's be honest this is why everyone's listening right that is a record rant that is a record podcast that's absolutely appropriate I think the people who here's the beauty of the podcast the people who are still listening want this people who don't want it they don't hear anymore exactly self-selecting you're welcome self-selecting you're welcome listeners that was a pretty impressive one mate I feel so powerful powerfully strong about that opinion and I can I say to you on this and I will shut up about it But as you know me, right, and my whole worldview has always been about trying to disprove.

1:37:37You know, it's why it's called straw man, right? You know, it's like I've said for forever, before all this sound money stuff, I wasn't even aware. I didn't need to be aware of it because things tended to work more or less okay until the last little while or so. But the whole idea is if I can't disprove an investment case, it must be a good one. and I really started down this journey because it just got to became hard to ignore and thought well it's clearly nonsense like there's none of this makes any sense let's disprove it and no one's been able to give me other than again a hand wavy ideological you know statement with with zero empirical evidence or backing just don't worry about it it's it's cool you're being silly no one else thinks that way and and I genuinely say this to you Scott or to anyone listening and we've got a lot of smart listeners.

1:38:26It's like if I'm missing, put it this way, I'm so up to the eyeballs in terms of my personal finances. Over his head. I need, and if I'm wrong, like I will drop to my knees and like pray to the almighty above. Thank you for telling me that. Because it's not about trying to have an ego winning argument battle. It's just like, no, my money is where my mouth is. And so if I am wrong, I want to know that I'm wrong. And I've just, and the reason why it's gone on for so long and I've gotten so passionate about it is because it really started off as, well, someone's going to, someone's going to talk me back off the ledge.

1:39:05And then you go, well, maybe I'll try and disprove it. And the further I've gone down and down and down, it's just like, I just can't. And so the only rational for me, unless, again, maybe I'm missing something, it's like, well, if that isn't, if I can't disprove it, then it must be right. stop playing with Monopoly money Andrew, get the hell out it'll take a long time to play out so none of this is imminent but just start thinking about it I guess I like it on that happy and very long note but I hope you've enjoyed it because I thoroughly enjoyed the conversation thanks for being with us enjoy the second half of your weekend or your Tuesday morning until next week, until Friday until Andrew gets the strength to rant yet again full on I love the strength, don't you worry cheers The Motley Fool and people appearing in this program may have positions in the companies mentioned.

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