Mailbag, incl: Will the US dollar stop being the reserve currency? August 9, 2026

27:19And it actually incentivizes for efficiency and quality of outcomes. It just does. And I could spend the next six weeks trying to unpack that. And every week when we get together, I usually sneak in a little bit of a thing, as our listeners know, to sort of point to that. And when you get a lot of people with proper incentives operating according to their own incentive incentives, you know, things send, it's not a perfect, there's no such thing as a perfect system. Does bad things happen? Yeah, 100%. The bad things happen anyway, right? But it really decentralizes the decision-making process to a level which really leans into just the reality of human nature and coordinating productive behavior across very, very large systems.

28:04And it's just the best way that we've ever found of doing that. So layering on more bureaucracy and just saying, I hope, but I would do it better is, I agree. I agree. Don't get me wrong. Like, let's put the best capable, most capable people that we can in. But I think we give them an impossible task. And I think the best person, I think our caller would know this. Who is the best person to make a judgment call at the front line in the maternity ward? Is it the Minister for Health or is it the midwife running the department who's right there who does it every day? I mean, I know who I'll put my money on every single day of the week.

28:43Who's the best person to decide what should happen at a school? The principal. I would say they're there. They speak to the students, the parents. They know it all about it. You know, someone in Martin Place who's never been inside a public school in the last eight years, I don't think they – again, it's not trying to defame characters here. It's just how can you possibly do it? I guess I'll shut up in a minute. The one irony I point to here, because right now there's a lot of people with very good reason thinking that I'm absolutely talking bollocks, because when you talk about the quote-unquote private system in health, it is a litany of grift and scam and inefficient.

29:21You know, how much money did we give the – was it the northern – which hospital was it here in Sydney? North Shore. Libs gave it to their mates and they gutted it and took all the money offshore. Especially a privatised public hospital that the government ended up buying back, yeah. Yeah, yeah, yeah. And nursing homes, another classic example. And people look at that and they rightly go, well, you let the private sector in and look at that. How can you possibly advocate for that? And I think, and why I say it's ironic is it's sort of like, that's exactly the opposite of anything coming close to free market capitalism.

29:52That was giving someone exclusive access to very valuable assets with no oversight, no competition, absolutely protected, thrown all kinds of different incentives and schemes and benefits and, you know, inducements and, you know, funds and all this kind of stuff. And it's like, oh, it turned out really badly. It's like, yeah, of course it did. But then to turn around and say, that is a failure of a free market mechanism, I just think completely misses the reality of the situation. The other misunderstanding that comes with this is that people take that sort of that it's like words, it's like capitalism in general, socially, these words just mean different.

30:35I always make this point. I think it's hard to have a discussion with someone when you're so preconfigured in what these sort of terms mean. We end up sort of talking past each other. But the other misunderstanding comes is that it feels that when you advocate for this, that you're advocating for no oversight, an absolute laissez-faire, you know, brutal, you know, Darwinistic kind of, and not as well. I'm just saying there's a spectrum here, and I think one end of the spectrum is more desirable than the other end of the spectrum, and that we should always remember that whenever we're trying to, it's Gaul's law, whenever you're trying to design a complex system, know that it's going to fail, and that the only, the best way that you can have of ever having any properly functioned complex system is to have a complex system that's built on lots of very robust small systems which is make the decision making at the front line at the people who are making the call as soon as you as soon as you put decision making in a different city with with people who aren't there it is going to end bad or let me put it this way it is going to be non-ideal and and you can you can you can you can find i reckon you could find the best bureaucrats on the planet and the best public, ex-public officials on the planet, and they're still going to suffer from that.

31:55Now, very capable, competent people will be aware of it and go out of their way to do it. But again, the system is being designed that that will always be that kind of person. And I just feel as though a little bit of honest competition, a lot of on-the-ground frontline decision-making, a lot more decentralization in all of this kind of system goes a long way. This also doesn't mean that we don't fund public health system. We fund it in a better way, in a simpler way, rather than giving a department that grows its workforce by 5 % every year, whose payrolls go up 10 % every year. I'm not even making these numbers up.

32:34And to give that more money and think that's going to solve the problem, well, there's actually less midwives in the ward there and like 14 other mid-level managers above them. It's the height of madness. So I think there's a lot of complexity and all that. Sorry, mate, it was a bit of a spray. so I'll hand it back to you where you want to go but I really do appeal your idea appeals to me I just find it I find it difficult to execute I don't disagree with anything you just said other than I think perfect might be the enemy of the good if we're not careful and I reckon I grab if I grab 12 public service say can you find me some money that'll more than cover your cost and the answer is yes then it's an exercise worth doing not that it necessarily is is the perfect or even the best option just as one way of saying, and this is incentive to some degree, and a really, really simple example, right?

33:22If it was me, who is talking to the Department of Health, the Department of Education, the Department of Veterans Affairs, the Department of Welfare, the Department of Aging, and saying, hey, guys, which systems are you using? What bank are you all banking with? Who are you buying your paper from? There's stupid examples, right? But the centralisation or the duplication or the overlap or someone who says, hey, the state, New South is doing this and the Fed's doing this, it's kind of the same. It's those kind of structural things that I just think are, and it's deliberately and specifically, and again to the question, it's not about someone, it's not grabbing Bernie Fraser out of retirement, wheeling him out and saying, right, Bernie, how many midwives do we want at North Shore Hospital?

34:01It's, hey, here's the public health system. What would you do to make it more efficient? Well, actually, there's that duplication and that bad system. I just, I think there are some very, well, I think there are, but it's an assumption. So I assume there are some significantly sizable opportunities which don't even go close to the front line, which is the 14 managers you talked about, mate, or whatever other version of that is like, you know, what if we just did those things at a systemic level? There's just money for jam. And by the way, fixed frontline service. So, you know, I think we're agreeing entirely just at different levels or different kind of inflection points.

34:39But my point is just don't tell the midwives how many, you know babies to look after and don't tell the teachers what to teach in class just kind of go hey the department of education is this or the department of health is that or the system they're using is this or overseas they do that or yeah it's that kind of stuff that steps outside the fiefdoms and it's the independent person who comes in and goes hey mr or mrs treasury secretary health secretary aging secretary whatever whatever yes this is your fiefdom but i've just been inside and I've seen these things. And so that you need to change.

35:09And that's the stuff I suspect. That's when you hollow out the 14 levels and end up with maybe 12 or maybe five or maybe one or maybe still 14. But either way, just attacking the issue from both, I suppose. Do yours and do mine. I suspect we're in a better place. Yeah, yeah. Yeah, yeah. Isn't it? It's so hard, though, because I find what's really tricky about it is even with good intentions. Yeah. Like you find, you know. Nothing's perfect. You hire your mates. And I don't even say that in a bad way because I would too. And if you tasked me with this job that you're outlining, why would I hire my mates?

35:45Not because I want to give my mates, put them on the gravy train. It was just sort of like, hey, I know you, I trust you, and I think you're competent. And I don't know that person over there. I want you to run. And I might even be kidding myself. But that's what we do as humans, right? And it's sort of like you're going to hire and promote and go with people who are aligned with you ideologically, you know, just gel with you for some way. And it's why things sort of – and this is what's so beautiful about the decentralised kind of thing. It's kind of like, well, those who are really good at being efficient will reap literal different ends and they'll actually get a wonderful reputation.

36:30You open up a hospital and I open up a hospital in Sydney. We're both completely outside of the public system, right? It just turns out – and by the way, we've always got to remember the economy is a process. It's just not a point-in-time thing. It's a thing that evolves and shapes and shifts over time. So we fast forward 10 years and I have been running – I'm an evil, bloody capitalist. I've just been trying to squeeze every penny out of this. I've been overcharging. I'm not giving you all the services you need. I mean, there's a very, very, very high chance over time that no one comes to me, right?

37:01And there's like people go to you. Or maybe we both sort of look after patients as best we can. You're just able to deliver the same level of service delivery for half the price. You know, and it's just like I'm clearly not being – and if you can do it at half the price, you can do twice as much. And it's sort of like these are the things that are so – Adam Smith clocked into this hundreds of years ago, right? And it's just sort of like this is the stuff that really take – what it does is it allows the consumer to choose the winner and not a politician, a bureaucrat or a well-meaning outsider.

37:37You choose it. We choose it by our collective actions. And people want good schools. They want good hospitals, right? Now, again, there's a spectrum here. So you're right. I think both sides of it there. but just the, I'm a little bit passionate about it because it just, I've said on the pod before, it feels like every single bloody problem that comes along these days is let's appoint an expert. And it's like, we've got a lot of them or let's throw some more money. And it's like, yes, desperately in need of funding, but where you're going to put the money probably ain't going to help, right? Like there's just, we've got to, and the other, I guess the other trouble with it is, is like, I would trust you implicitly to choose some really good people.

38:18But I reckon if you got out there and you chose your A team and then you took the time to explain the rationale, really do it, I reckon at least 40 % of the country would think you're the biggest, dodgiest bugger on the planet. I thoroughly disagree with you. And then we get back into the realms of politics and it's like, let the consumer decide what is valuable to them and let the people that deliver that value to the highest quality standards at the best possible price win. And may they be showered in gold for their service to society. There you go. Done. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

39:06Let's get a question from an anonymous questioner. He says, hi, Scott and Andrew. First of all, I'm a great fan of your very entertaining podcast. And it has certainly made one one-hour commute to work very enjoyable. I eagerly wait for new episodes. And half the way back. Well, one and a half speed, maybe it's exactly right. I eagerly wait for new episodes to listen on Mondays and have been listening to them for the last five years. Then goes on to say, this email is an experiment to see if this passes the minimum threshold of kissing the ring to make my letter qualify for the podcast. No, no, it doesn't.

39:42So let's move on to another question. This one, no, I'm kidding. All right. Just, just. Let me jump straight to the question, says our questioner. What are your thoughts on purchasing currency hedged ETFs for the US market? Terrible. Now, well, here's the thing, right? So our questioner says, I know this has been discussed before, and the general conclusion is not to worry about it if investing for the long term. And here's the but, mate, which I think you might maybe be interested in, or maybe not. Okay. But, says our questioner, What do you think of the risk of the US dollar not being the reserve currency in future?

40:20I am talking about 10 to 20 year time horizons when I will have to start selling the ETFs in my retirement. With the US debt increasing like crazy and other issues like tariffs and wars, could the world stop trusting the US dollar and move to alternatives? And if that happens, won't the Aussie dollar become much stronger than the US dollar? I also read a comment by Gemini that if the US dollar is not the main reserve currency, it could further strengthen the Aussie dollar due to our minerals being directly purchased in Australian dollars. In that sense, what are your thoughts? Does your view hold then on not bothering?

40:58It's a great question. I mean, one, this is a very, very long term thing. So when I sort of enthusiastically nod along, it ain't happening anytime soon. The greenback's here for a while, I dare say. But I also said in there that it is shifting. It's already shifting. We can see it just on central bank balance sheet. This is outside of private markets, just like the actual central banks of the developed world. It's just like they're holding less of this stuff. And they're not idiots because it's just like, well, you're mathematically broke. You're insolvent already. It's just a question of when.

41:27So they'll still do it, but they'll just demand much higher interest rates, which is, surprise, surprise, why long-dated bonds are going up and will continue to go up in yield and down in price. So, yeah, it's a very real thing. The trouble with it is that the cost of the hedging for 20 years is kind of eroding. It's like a very high fee on the returns that you're going to get. So I just think it's sort of – I totally feel all of that. But it's – to channel my least favorite economist, John Maynard Keynes, he was famous. It's such an interesting story. Like it was a lot of back in the day before his views were taken as gospel and there was actual debate in the economics profession.

42:14A lot of the sort of flaws in his ideology sort of came out and his response was, well, in the long run, we're all dead. In other words, it's like what you're saying will not work over time. It's like, yeah, but in the long run, we're all dead. And that's kind of where that sort of saying comes from. Anyway, to bastardize that in the long run, we are going to be all dead. And in the long run, these kinds of long running debasements or shifts in global currency world orders, it's not nothing. In fact, it's almost everything in some kind of ways. But it's also such a slow moving. Well, I guess it's a gradually than suddenly thing, but still like gradually is really going to be extended.

42:46I personally am not doing anything in regards to hedging because I think unless it happens to accelerate much sooner and faster and to a bigger degree than what I'm accounting for, you'll probably find that the medicine is worse than the disease. I suspect. Yeah. That is the bet, right? The bet is duration. So if it happens faster than you think, then you should have hedged. If it happens less quickly than you could have thought, then you shouldn't hedge. And if you're not sure, you can hedge, but then you're going to be losing returns. It's a little bit like diversification of other asset classes.

43:22You're going to hold some cash and bonds if you want less volatility, just know you're going to pay for it. So that gives you a little bit less, I was going to say more certainty, It gives you less uncertainty, but you pay for that with your returns. And that's kind of the question. I have US investments that haven't hedged a single dollar of them. The other thing too, by the way, for what it's worth is there's nothing to say this can't happen or fall over a cliff and drop massively in a given day. But as long as, again, speaking of duration, as long as it doesn't, you can change your decisions at any point in that time.

43:50And so do you need to hedge now just in case in 25 years something's happening? No. If it's a slow erosion, the question is back to the point of duration. Is the erosion more than the return to your earning? And that's an ongoing question. Otherwise, you can always sell in 3, 5, 7, 12, 15 years time if when you look at it and go, this feels worse than it is now. And we still won't know for sure at the time, but I think you can probably reasonably, you're a smart person, it's a great question. You can probably reasonably guess at what options or what outcomes are likely and how likely they are and make your decisions at those points.

44:22So I think, you know, directionally, this could happen at some point, or even if you say this will happen at some point, the question is still am I going to get hurt by more than the insurance premium I'm paying if the answer is yes then hedge if the answer is no they don't hedge I'm with RAM at some point I'm keeping across this I'm very aware of exactly the question you asked but I don't suspect the damage to the US dollar is greater than the returns I'm earning or the cost of the hedging in the short term I'm a short term investor I just mean I can change my mind at any point if I wake up tomorrow and go actually or in a week's time or year's time and something happens they go, okay, I feel like we've crossed that threshold now.

44:59I'm going to make some alternative choices. So that's kind of how I'm thinking about it. Look, it also depends to what you're investing in. Like, you know, let's say that you pick the next Amazon or something like that. And like, you have to go to the US and to the NASDAQ to sort of find that kind of thing. It's sort of like, okay, you've had some really strong currency headwinds over 20 years, but the thing is up 2000 % or 2000X, I should say, you know, something of that magnitude. So for me, it's always, I actually, I don't have a lot of money offshore, honestly, a bit in super. And it's, it's, for me to cross that threshold, to take that sovereign risk and that exchange risk, it has to be, I'm not doing it for an income investment.

45:41I'm not doing it for a mature, slow and steady kind of company. It has to be a company, at least with the potential for pretty extreme growth, because it has to outweigh some of those other factors. So it depends, unfortunately, the frustrating answer. And just before I do, I sort of said something pretty conclusively. It was like, well, how can you be so sure of that, Andrew? And what I said was, yes, the US dollar will no longer be the reserve currency. Again, my deference here is always to history. 16th, 18th centuries, it was pieces of eight. The Spanish silver dollar was the global reserve currency.

46:18I have to say that with a pirate accent. My little doesn't exist. It's our pieces of eight. Pieces of eight. That's better. There we go. The Dutch Gilder, the British pound right up through to World War I, you know, pound sterling. Right. Why was it called sterling? There's a whole rabbit hole there you could go down, you know, and now it's the US dollar. And look, if it's not something like Bitcoin, it might be the yuan. It might be a basket of currency. Bricks have been for like, God, at least 10 years at this point, talking about another form of currency for settling international transactions in.

46:52So all I can tell you is there's a very, I forget who, but a very wise person once said, something that can't go on forever will eventually stop. Which is one of my all-time favorite quotes. Because it's kind of like, that's ridiculous, but so profound. By definition, you're right. Exactly. You know, and it's just like, and it wasn't, God, who was it? Someone can Google it for me. It was actually in reference, as I understand it, to an economic sort of question. And that's, you know, whether you're talking about the Australian property market or global reserve currencies, there are some things you can say with extreme certainty.

47:26You just have no clue as to exactly when and how. So it'll happen. I suspect it'll happen certainly in our kids' lifetime. The whole damn thing is built on trust. The whole damn everything from top to bottom is trust. and the trust in the US system is very rapidly eroding. Herb Stein, Senior Fellow of the American Enterprise Institute. Excuse me. Said that. If something can't go on forever, it will stop. Such a good line. There you go. Do I have anything else to add? No, I do not. Let's move on to a question. Brendan, I want to say Brendan. I'm not entirely sure. I don't have the surnames and the email address.

48:06So let's assume Brendan gets two goes or maybe there's two Brendan. Two would know. So amongst, what, 25 listeners, two Brennans would be a lot, but anything's possible, so let's assume. Two Scooter and Rampage, the illustrious instructors of the Motley Pod machine. Would that make the listeners the recipients of machine learning? Ooh. And then if machine learning is part of AI, then does that make me a robot? Sorry, I digress, says Brennan. Are you even real? Well, we're probably in a simulation anyway, aren't we? I'm pretty sure it is, yeah. Very unlikely statistically that this is base reality.

48:45In the recent discussion about a sovereign wealth fund and the impact of government debt from the end of May, Andrew initially suggested that the debt problem needs to be fixed and Scott suggested that it wasn't necessary. This seems at odds with the commentary around borrowing to invest in shares on a personal level where it sounds like Andrew's tolerance to debt for investing seems higher than Scott's. Have I misunderstood something? Scott, are you suggesting that borrowing is less risky with other people's money? Then you go on to say that nothing should be run more conservatively than the country, and you also don't want debt left to the next generation.

49:23Could you elaborate on this for me, as it seems unusual that you are happy for a government to take the mathematical gain between borrowing and investing, but generally suggest individuals avoid that same approach? all right i'll start this one you can jump in it's a great question go go for it few things brendan firstly governments have longer time horizons than individuals secondly they can print their own money and for all of rams very very very very critical views on that i'm actually share the criticism as it is indirectly not less extremely right right you don't want to front up to a debate and explain to me why someone should have a printing press but not you i will take that on any day.

50:06Sorry. Go on. And the government can raise effectively, I went to endless amounts of tax because the Laffer curve is real, but they have the facilities to do it. So governments are very different in mechanism and duration and opportunity slash alternatives than individuals are. Governments are also less likely, and I will say, I think this, I will say this is absolute truth, relatively, if not absolutely. Governments are less likely to freak out than individuals are when using debt for those very reasons. And they're less likely, almost impossible, to find a situation where they can't pay the interest on a reasonable amount of debt because of those mechanisms I just mentioned before.

50:44Print some dollars, raise some taxes, cut some services, do some things. If I lose my job, I can't raise taxes. I can't cost to some degree. But there's only a reasonable... And by the way, normally households are far, far, far more indebted than governments are for all the government debt we talk about for rightly, the amount of private debt in Australia is phenomenally huge. So I say all that because I think it's true, Brendan, but my point was a relative rather than an absolute one. And I don't know what I actually said because it was a long time ago. And if I misspoke, then I will apologise happily and correct the record.

51:17My view is not the government shouldn't pay debt back. It absolutely should. I think I've been pretty clear on that. Ram, you can correct me if I'm giving myself too much credit here. I think I've been very clear. What I did say, I think, or what I certainly believe, is it's not necessary to pay off the debt before investing in a sovereign wealth fund. So in year X, Brendan, at some point in the future, I want to have a very, very, very large sovereign wealth fund and zero government debt, at least other than cyclical debt, right? Because I'm a fan of budget deficits and surplus that offset each other over time, and that would entail some debt unless you spend out of your savings.

51:53Whole different conversation. I think government should get debt to zero, and I think the government should build a sovereign wealth fund. What I am saying, though, is you don't need to do them sequentially, in my view, because your returns from the debt, sorry, your returns from the fund are going to be larger than the cost of the debt. And so if you think about opportunity cost terms, this is absolutely, you mentioned the mathematical difference or mathematical gain, Brendan. You're dead right. You're 100 % right. But I've also said, by the way, on a personal level, if I had no recourse, low rate debt, I would happily borrow a million dollars tomorrow and buy shares with it.

52:26as long as the rate was low enough that I thought I could beat that rate with the returns. So I always have spoken out of both sides of my mouth when it comes to margin lending, 100%. No, I'm not even going to try and pretend otherwise. I've deliberately done it that way because both things can be true. So if I said we don't have to pay off the debt, I'd be surprised if I said that because I've never believed it. So LSA misspoke. Literally, I said it's screwed. I misspoke in the politician's way of excusing a lie. If I just said the wrong thing, I said the the wrong thing. But my view is we absolutely should pay off our debt.

52:58But if you're going to say to me, here's a billion dollars, do you want to pay the debt off with or invest it? I might do a bit of both maybe. I might do something else. But I think the country is better off investing in a sovereign wealth fund, getting equity-like returns. More clearly, I wouldn't pay off the debt, a 4 % debt, foregoing a 9 % return if I was a federal government. In fact, if I was the federal government tomorrow, I would absolutely, I would structure the budget, the recurring budget, so that it was running mild surpluses to pay off the debt. And I would use resource money to put in a sovereign wealth fund.

53:31And I do both at the same time. So it's not either or, Brendan, but it is definitely, it's both, but for that reason. Ram? Yeah. It's like with, it depends. I'm sorry, I was really trying not to say that, but it depends. I mean, if you are borrowing money just to cover regular day-to-day expenses, if you are buying groceries on your credit card, that's just like some people don't have a choice. But if you can avoid it, that's just a really dumb thing to do. And that's what Australia is doing. It's what the US is doing. In fact, they're in a kind of a fiscal dominance sort of situation now where it's sort of like the deficits are so huge.

54:17and the interest burden. The deficit is so large, the debts are so large, the interest burdens are so large that in terms of line items on the budget, interest is like the second biggest expenditure in the US. Like, you know what I mean? It's going to compound away at you very, very rapidly. So that's just a very precarious situation. Now, if all of that debt was put into something that was going to yield, you said this, was going to yield a really good return, then you should absolutely do it. If I've taken on a conservative loan to buy a house, well, I don't think any Australian in the country would look at you and go, that's ridiculous, because that's what we're all doing to excessive degrees.

54:58So yeah, I think it's all about what the money is borrowed for. Is it a temporary funding, to your point, to get through a tough situation? No problem with that. Is it funding because we're going to do a big nation building project that's going to have insane levels of return, both financial and indirect non-financial. Yeah, absolutely. Let's absolutely do that. Oh, I don't have quite enough money this year because I promised all those tax cuts and I can't pay the police. I guess I'm going to print some money and borrow on that. That's dumb. That's dumb. And the trouble is, is the higher the debt goes, the less wiggle room that you have.

55:34And you get into the situation, which is, well, this is not sustainable, but one more go around and we'll fix it eventually. It's the whole free beer tomorrow at the pub, you know, just not today. That sign is always, tomorrow never comes, right? And fiscal responsibility and budget repair and balance sheet repair never happens. So yeah, debt is a good thing when it is prudent and applied to endeavours that yield a greater return than the interest cost, if I can summarise it. Yeah, he's right. And I just think, I think, Brendan, to your point of individuals, the government, governments, nations, not only governments, nations have advantages individuals don't have.

56:18And so there's just a simple, there's simply just a very different set of conditions and criteria where the concept feels like it should be the same. When you overlay the ability to raise taxes, print money, cut costs, frankly, the leverage that those things carry already, they're not going to sell when the market drops because there's just no governmental need to do it. You haven't got emotional people doing it. Not that government people aren't emotional, but it's a very, very, very different setup. Even if the structure looks the same, the criteria conditions are very different. Yeah. Oh, man.

56:53Oh, God. That's such a topic, right? I mean, think about it this way. It's sort of, I use the term, this is a good thing to Google when you're bored on the weekend. Fiscal dominance is... There you go, kids. Don't scroll into your Instagram. Google fiscal dominance. You'll find good stuff on Instagram, actually, on this. Good financial influencers out there on this. But it's sort of like this is why, you know, the influence and power, degree of power of central banks is greatly overstated. You've got to almost feel sorry for Walsh at their Fed or, you know, the ECB. Not that sorry, of course, because they're, after all, central bankers, but a little bit sorry in this sense.

57:33And even here at home with poor old Michelle Bullock, is that when the government has got such a big and growing and structural kind of deficit here, it's sort of like the little levers that you can pull just aren't going to change the fact that they're just going to have to, they're going to have to raise a bunch of money each year by issuing bonds out into the open market. And the only thing that you're going to do is just say, that's really, you shouldn't do that, which they do, what they all sort of say it. You really need to kind of pull your weight here, which they're not going to do. And then at some point, the bond market blinks and goes, I ain't buying that.

58:04And then the gun is held to your head to say, okay, I guess we're buying it. When I say your head, the central bank, which is the people who are managing your unit of account and your store of value. And it's sort of like why I really just feel as though central banks are becoming increasingly impotent in the face of that kind of setup. In a different era, back in Volcker's era, it was a different thing. Debt to GDP was 30%. Things weren't nearly as bad. Central Bank had a bit of room to sort of play around. They don't anymore. And it's just going to get worse. It's just going to get worse. It has to get worse because the only way it stops, like this is why it's, sorry, side tangent and rant here, but like the amount of focus that we give to the Central Bank and the RBA and stuff here, and such a shallow surface level kind of attention that we give it.

58:57Meanwhile, that's happening in Canberra. You know, they're fighting, they're employing a failed philosophy also, but even within that they're fighting with one arm behind their back. And you need both fiscal and monetary policy to be aligned if you ever hope to get out of this. And I don't see it happening. It's certainly not happening so far. Let's hope it starts to happen. but yeah, that's the game, isn't it? Hey, Brennan, do you have a second question? A second question, if I may. Yeah, okay, Brennan, fine. I'm one of those young 'uns in my early 40s. Yes, I know, bastard. We'll stop at this point, Brennan, and say, yes, yes, you are a bastard.

59:45That said, let's not pretend that you're a bastard. Not that much you're a bastard. Exactly, that's right. You can say young 'uns, and if you're trying to make yourself feel better by saying 40's young, you're entitled to that. All I'm saying is, yes, you're a bastard. Yes, you're younger than me. and let's not gilded the lily too much. It's like me moving into the nursing home and saying, look how young I am, you know. I'm only 67. I guess it's all relative. It is all relative. My wife and I are both balancing part-time jobs, part-time hobby farmers. That's fun. I would love to do that. And beginner investors while raising two children.

1:00:17We are keen to grow our investments while minimizing the time spent managing them. Fair enough. We have real estate investment with a small house and farm, but no debt. so we are financially stable. It's a good start. We've commenced investing in some Australia-only index ETFs and are considering the next stage in our investment journey. Given I want to aim for good long-term returns, but with the minimum time spent on research, we are considering narrowing our focus to Australian-only ETFs and companies, possibly with Motley Fool guidance. To ensure we maintain our diversification, I'm considering increasing our allocation to international shares inside our super funds as our Australian investments grow outside of super.

1:01:01I'm keen to hear your thoughts on some pros and cons of this type of ultra simple investing plan. Keep up the good rants crossed out and work replaced with it. Brendan, thank you, mate. We'll keep up the good rants and the good work, I promise. Ram, what do you reckon? We can't give Brendan personal advice, obviously, Brendan, but we talk generally about that kind of idea. What do you reckon, mate? I'll just try out my usual answer. So it's just like we could dissect some of the finer points and maybe we will, not to just fob it off, but it's just like you're doing the right thing. Really, you know, really conservative, strong financial base, investing into some low cost ETFs.

1:01:40I got no notes. I've got no notes. Right. Like, yeah, you know, maybe you should do a bit of this and a bit of that. But it's all you've got the you've got the basics right. And the analogy I always give you, like it's on the diet front. You know, it's like maybe having a ice cream for dessert every day and again and not hitting the gym as much as you can, but at the same time, you're not smoking much, you're not smoking and you're not drinking much and you've got otherwise a very perfectly healthy lifestyle. It's just like, you know, to then come and say, well, actually you should only eat chicken breast and you should be working out for four hours a day.

1:02:11It's kind of like, no, man, you're doing great. This is brilliant. You know, like how sometimes I think we, this industry in particular loves to overcomplicate this kind of stuff. I've said it a thousand times before, spend less than what you earn, put the rest into some sensible long-term investors, get on with your life, raise your kids, perfect your craft, get out there and make an impact on the world. Look, there's two types of people. Those who can infer. There's two types of people when it comes to investors. There are the majority that are there for, like Brendan, very pragmatic, practical reasons.

1:02:51I've got some excess savings. I understand the stupidness of fiat money. So I'm going to invest it into assets and I just want a decent return. But I really don't. I'm not, I'm really not that interested in scrutinizing business models and financial statements. And then you get the weird, autist, nerdy people like us. They're a little bit on the fringe who just, for whatever reason, just geek out on this kind of stuff. And that's just because it's our bag. We like it, you know. I don't have to defend myself or justify myself to you. I just like it, okay? And just deal with it. And I know that there's a lot of people out there that are the same.

1:03:28But the most important thing of all is to understand who you are out of those two groups. And if you're not the latter, then there's absolutely no harm or fail anywhere in that whatsoever. And if that's you, it's like, I just, it's so hard to go past the ETFs. I know I could be critical in certain ways, but it's like, It's unnecessarily and unfairly critical for something that's just sort of almost perfect in so many different ways.

1:03:56What would you say, mate? I'm just going to say, Brendan, keep doing it. Just keep doing it. Yeah. Again, as you say, no notes. The other thing I would say is people have this, like to draw an arbitrary line between personal investing and super. Yeah, that's true. I do think that's, there's everything wrong with it, mate. If it's half and half, it doesn't matter which half. you can have half of your super in Australia and half internationally and half of your personal in each. You can have international in one half, super in the other, Australian in the other half. People seem to use the buckets as like they should do it differently in different buckets and I think that's just not necessarily true.

1:04:30So don't... Good point. I mean there's no reason not to either by the way. So I'm not saying you do anything wrong. I'm just saying people sort of go, oh I'll have Australian here so I'll do international over there. You can. But there's no reason you couldn't just do, either reverse it entirely, do half and half of each structure or something else. So I don't know. I would say you're in your 40s, mate. So you've got probably 20 plus years to retirement, depending on what you're planning to do. Super rules will change. Now, I'm not a conspiracist or a negative Nelly on super. I think super will always be as good or better than investing in your own name.

1:04:58So no issues there. I would think a little bit about, I don't want to get too complex. Super is taxed more lightly. So I would, if you don't need money in your own name, putting in super is going to be no worse. So think about whether you want to maximise your super contributions. Again, we can't tell you specifically, Brendan, but I'm just saying in general. Also, in retirement phase, you at the moment, at least, there's no tax on earnings inside super. So think about how that might be treated either way. International shares don't have franking credits and don't pay high dividends compared to local.

1:05:33So think about, again, how you want to structure that. So try and don't overthink it, but kind of cast your mind forward 20 years and go, right, But at retirement, which sort of shares do I want where and what are the tax implications of that? It's kind of how I'd think about it. So yeah, think about maximizing your super contributions, at least increasing them, if it makes sense to do so for you. Keep yourself some flexibility in your own name. But yeah, I would just think about which shares you want where. Generally speaking, you're going to crank your credits with dividends. So where is that best?

1:06:06Is that best in your own name to offset your income? Maybe. do you want capital gains in your super fund so you can sell them effectively tax-free in retirement probably it might make sense in that case to put your dividend investing in your own name and your capital growth income income in your other investments in your super maybe again i don't know your circumstances about your other income i don't know your any of your super balance i'm glad i don't because i can't give you personal advice but just think through some of those things just directionally just to decide whether the structure is right but mate yes Australian ETFs international ETFs couple of Australian companies or a few where many you want or none or lots if to Ram's point if you're one of the nerds like us lots if you're not none somewhere in between do a few hopefully that helps mate yeah I'm very tempted to be a little bit more down on super long term than you but I think you've I think you phrased it well that's what I was going to say that's where I stop I'm like it's going to be no worse there's no reason not to in my view but that's just I could be right No, I'm going to agree with you.

1:07:03I think that it's still going to have advantages, right? Yes. But as I said, was it this podcast? I can't remember. They all blur into one. Or Fridays. There's trade-offs in everything, right? Yes. And obviously the trade-off with, particularly someone who's very young, like Brendan, who's only, you know, early 40s. I mean, he's got 20 years, man. The year 2046, you know? Yeah. They're going to dip into that. they're going to dip into that cookie jar. And it's probably still going to be the most attractive way of investing long-term. So you're right on that. It's just not going to look in the same way that the pension is not going to be getting better.

1:07:43Like your parents are going to have a better pension and welfare system than you're going to have. And the same is going to be said of Super because of the various fiscal realities. I just put that out there, mate, not to be the tinfoil hat wearing conspiracy, but it's just like when it is wall-to-wall unanimity on the only sensible thing. Every financial, not everyone, not everyone. I'm being unfair, but virtually all will say maximize super. And they're absolutely right under the condition that nothing changes. And I just feel as though that that is not a terrible bet when you want to go out five or 10 years, but it becomes an increasingly difficult one to say with a straight face when you're talking 20, 30 years.

1:08:24You know, just. Yeah, yeah. Do you reckon though, I mean, what are the, if you go to put percentage on it, What are the odds that over 20 years, Supra is a worse structure than your own name? I mean, it's got to be - Oh, very low. Yeah, very low. But like extraordinarily low? Yeah, yeah, yeah. Decimal points type low? So I think what will happen, anyone who tunes into the Library of Mistakes is really good out in Edinburgh. Russell Napier, the head keeper of the library there, historical economic historian. It's great. I just, I love these guys. They had a recent sort of podcast on talking about what happens when you get into these sort of current situations where at the moment with fiscal difficulties and the rest.

1:09:06And he uses the term financial repression, which again sounds very nasty and whatever, but I'm suspecting what you will almost certainly find. A couple of different things. First one is you will find more and more abilities to tap into it so long as it's buying government bonds or housing, which sounds good in a way, but we know what, we've already talked about reflexive nature's market and now it's totally not only going to make the problem kind of worse. The government is already unfunded, so they will roll back the tax incentives. They absolutely will, and they will make it less attractive.

1:09:41It will still be more attractive inside than out, and that's your point, and that's the right one to make. But I really want to make the point that it's almost certainly going to get worse from where it is now, and it's just something to be aware of. I've got money and so I have to have money. I don't have my choice of it, right? But I also, I invest, I don't max out everything into super because I want, again, trade-offs everywhere, right? And one trade-off I'm mindful of is I've got enough arrogance to think that I will be able to retire before hitting the preservation age. And I would like to have access to my money.

1:10:23and that's what that's one of the traps i guess less less fortuitous sort of uh taxation system but i get the flexibility of spending it whatever i want however i want and that that that to me um and counts for a lot there's also more flexibility in what you can invest in outside of super which which is also nice um and what was the other one there was another one in there too i've forgotten uh anyway it doesn't matter i just i just again not not to be too too weird about it all it's just not this it it's gonna change like like all like like like all state-backed financial arrangements it'll change and and for the worse you'd agree with that right i think over the long term yeah i i i think um what's already changed in our life they're letting people tap into it with you know at the moment yeah i think that's true but i also remind you that during our lifetime it got more advantageous as well and that's my point of the long term versus the short term.

1:11:19Ironically, mate, if the policies were more responsible, they'd probably be more financial repression more quickly. If they were populist enough to votes, they're more likely to try and kick that can further down the road. And so ironically, you've got both these happening at the same time and you're right to say, I'll say quote responsible, whether financial repression is ever responsible is a whole different conversation that would take us four hours to unpick. But if you're going to like, oh my God, I see this problem, we're going to talk about it now, so let's do this thing, then it's probably more likely than not.

1:11:44If you say you're a populist politician, they all are to some degree. I don't mean just the pure populist. But, you know, and you say, you know, John Howard and Peter Stein made super so much more attractive than Kitting did. And then it was pulled back and pushed forward. And so there's kind of, you know, notwithstanding those very real challenges. They took it from a high income tax haven. Right. They took it from something to save for your retirement to like a tax shelter. Tax shelter. Exactly. Exactly. So that's all I'm saying. In the medium term, in the intervening period, however long this is, I don't know the timeframes, I wouldn't bet against it being made more attractive and then maybe less attractive, then maybe more attractive, then maybe less attractive, and then maybe we get to a point of doing something about it.

1:12:25But you're locked in. You're locked in, so hopefully. Yes, correct. But it's just – I really want to just make the point clear here. It's more about just too many things in the world in general, but particularly in finance get thrown out there as if it's just like self-evident, evidentiary fact. Like it's just fact. And it's like, but it's not fact. Unquestionable, permanent. Exactly. Yeah. It's just like, but that's not true. And it's sort of like people look at you sideways when you say that. And it's just sort of like, I think it's healthy if nothing else than to just be aware. Things can change.

1:13:00History would suggest that they often do. So, you know, alert, not alarmed is the phrase here. And, you know, I don't know. Makes perfect sense, mate. Makes perfect sense. Very good. Mate, I reckon we've pretty much done this particular podcast. Don't forget, strawman.com is opening again this evening. And you can use a code that is very close to Ender in my hearts to get a 10 % discount, mate? 10 % off, yeah. 10 % off? That's something for nothing. That's about$3 ,000, so it's a good deal. Or you consider a payment for this podcast, whichever way you want to look at it. It's not$3 ,000. You'll get taken to court for that one.

1:13:37go to strawman.com, join the mailing list, have a look at what's on offer and consider joining Australia's premier online investment club because why wouldn't you? Andrew Page is the founder celebrating its five-year anniversary. All of the stars are aligning. Strawman.com. Until next Friday, mate, enjoy the reopen. I hope it's very successful for you. I know your members are very happy with what you do and I'm sure new members will be as well and full on. Very kind of you to say, mate. Thank you and cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned.

1:14:10General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.