Mailbag: What happens when AI takes over the world? August 3, 2025

25:45So they officially make a profit when the share market goes up and they officially make a loss when the share market goes down. And Buffett says, well, I'm not going to necessarily sell or buy at those prices. Yes, it's real in the sense that it's what they're worth. That's the asset value changes. But I've got to put that down as a loss. You know, if, simple example, you own a company whose shares go from 10 to 90 and then back to 200, you've lost 10 and you made 100. At neither time you've done anything unless you've actually sold the shares. So is it real? Yeah, it should be reported. Yes, because the reporting standards say you have to.

26:15But it's like, that's not the operating earnings of the business. It's just a change in price, right? And so it's both necessary and important, but also it's necessary and important to make changes or alterations or present alternative data. to make sure they give lots of context. And that's, you could probably, Jacob, you asked how to do it. Throw away the press release is the first thing I'd say because the press release is just, hey, look how good we are. Look at all the good things or here's an excuse for the bad things. Now, I say chuck it away. A good management team will give you good information there.

26:47The vast, vast bulk of companies, unfortunately, are too caught up with IR, investor relations spin and don't. And not every company. And again, you've got to try and work out who you're listening to and who's telling you what. And you get a feel for that over time because you'll see the ones that are telling the truth when things are bad, the ones who are just trying to spin and cover it up. So yes, they might explain some of the reasons, but it's actually, throw that out or at least put it to the back. Go to the statements themselves. Ignore what the company's writing and start with the financial statements and then work backwards.

27:16So say, okay, what is the reported net profit after tax? Okay, great, what's that? All right, EBITDA, does it matter? Well, kind of, it's been known as BS earnings as we know. But it also means if you're a company that has unusual or large or changing interest, tax depreciation or subsidization, and you look at the operating earnings of a business, if it does, it's pretty good. It's very useful. But it's not the only thing. We can't be talking about only that. They're probably doing it because they're trying to hide something more often than not. So yeah, start from the back work forward. It's my advice.

27:44Start with the financial statements. Then look at the adjustments. Then look at the explanations. Keep a relatively, not jaundiced eye, but be a little bit skeptical. Just expect that someone's trying to spin to you. Just look out for that sort of stuff. But yeah, throw away the graphs. Metrics and measures, again, it's really hard, right? I have a love-hate relationship with some of the new metrics. Online businesses love to talk about the cost of acquisition or lifetime value, that's right, customer acquisition cost, or lifetime value, LTV. Net recurring revenue, you'll see. And they do that in dollars, customer churn.

28:20Again, they shouldn't be the primary numbers you're looking at. But as long as you understand what the business is, what it does and how it aims to be successful. It can be really useful. The Motley Fool is an online business. We acquire customers for a cost. Our customers stay with us for an average length of time. They spend an average amount of money. And if we can acquire a customer for less than what they're going to pay us, then it's worth doing. Now, that payback comes in multiple years. So Xero is a great example. The accounting business, they spend absolute fortune acquiring customers.

28:47And if you look at one year's cash flows, and particularly cash flows from those customers, I spent$100 acquiring the customer, they paid me 50 bucks. And you would say you'll go broke doing that. That's a stupid idea. Now, the lifetime value of that customer hanging around for 10 years is$500. You only acquire them once. And you spend$100 to get$500 worth of revenue. You do that every day, right? You should do it every day, as long as the time value works out. And so, you know... They're useful in the context in which they're presented. Correct. But we talked about this on Friday. It's the holistic approach.

29:17Like GDP is useless. Unemployment, useless. Interest rate's useless. like, you know, in and of themselves. And it's the same with companies. Put it all together. There's a story there. Look at a doctor, right? They'll take your temperature. They'll look at your blood pressure. Open your mouth, go, ah. You know, they don't just like take one measure and then diagnose. Well, at least I hope they don't, right? Like they take a reading as much as they can and then they look at what kind of fits. That's how you do it with investing as well. Look at as much as you can. what's it what is and you gotta you gotta fit a story to it and ideally one that's true yeah sorry mate i cut you off no it's gonna i think you've already covered it beautifully that's all that's all i've got to add so just yeah do do the work um ask yourself whether well as you said judge apt exists right so look up if you're not sure the definition that's easy to solve and then just use them use them skeptically or at least cautiously um what am i being told does it present them in an unreasonably good light but don't ignore them management accounts, management metrics matter.

30:29I used to work in a business years ago and they had a thing called contribution margin was the phrase which is fascinating it kind of just assumes you're paid off your fixed costs and so what you're really trying to work on is it talks about the benefit you get from extra volume and that kind of, I won't give you the arcane detail of it but basically if you're doing product costs at the beginning of the year, you assume an amortization of your fixed costs and you assume a certain volume. So, okay, I'm going to make 100 items and the fixed cost is 100 bucks. Therefore, a dollar an item is in the cost base.

30:58You sell it for$1.50, you're doing pretty well. You make 50%. Okay, that's fair. We sell it for$1.10, maybe. We sell it for 90 cents. Now, you would say, no, you're losing money. But what if you sold 300 units rather than 100? Well, now I'm making a lot of money. So maybe the averaged cost is less useful. It's actually the contribution margin. In other words, what's the variable cost of production? If I sell more, I can make even more money. So sometimes those accounting rules where you do want to know what is the average cost of a widget? Well, the average cost, if you make 100, 100 bucks, okay, I get that.

31:27What if you make 400 of them? Well, then it's different. So those are - It's not just what you paid in raw materials, right? Exactly, right. You've got to amortize the fixed cost, but the number of units over which you amortize it dramatically changes the price you want to pay for it, the relationship between price and volume, all that kind of stuff. So lots of good bits, lots of moving parts. I just use that to say, you know, if someone used it in a press release, got downsides, by the way, if you only use contribution margin and you undershoot your volumes, you're not going to cover your fixed costs and you're screwed.

31:54So is it the right metric? Yes and no. Is gross margin the right metric? Well, yes and no for the same reasons. I can tell you that this is a little bit off topic. Well, it's sort of related, but I increasingly think that the focus should be the balance sheet. So you've got your balance sheet, statement of financial position, you've got your income statement, statement of financial performance, and the one that you mentioned is the cash flow statement. There's also a statement of changes of equity, but let's put that aside. They're the three big ones. And the professional investing class and investors in general focus a lot on the income statement, and not for silly reasons.

32:30I mean, that's how much money did you make this year? It's kind of important. They're all important, but they're important for different reasons. And each of them tell you different things. But it just, I don't know if it's your observation as well, mate, but it feels as though over time, there's less and less and less attention paid to the balance sheet. And to me, it's sort of like, no, the balance sheet's everything, right? Because, and, you know, what the income statement, statement of profit and loss just tells you what happened over the last year, if we're talking about an annual statement.

33:05The balance sheet just tells you exact point in time on June 30. Here's all the things we own. Here's how much they're worth. Here's all the things we owe. That's how much we owe. And that's the difference. So already they're very different. One's point in time, one's over a period of time. But what you realize is that if you want to be a little bit sneaky and you want to like pump the share price, there's all kinds of all the shenanigans that happen. most of the shenanigans happen by manipulations of the balance sheet not illegal manipulations either mind you but how fast should you depreciate this kind of asset did the did the uh the income the revenue that you brought in what what were you strip mining the capital base of the company like you know i i've often said you could put me in charge of any big industrial company and i will absolutely make that thing rain cash for the year or two.

34:02And then the business will collapse because I just will absolutely gut it. Speaking of private equity. Sorry, Jacob. But you know what I mean? But the income statement will tell me it's like, whoa, look at that. And all I've done is just slash my costs, stop all kinds of investment. And all these, and you know, if you want to, if you really want to reduce the risk of your investing, I'll shut up after this point, focus on the balance sheet because no one knows what's around the corner. But I do know this, a company that's got not very highly leveraged with a lot of liquid capital on its balance sheet is just going to be super, super resilient.

34:41That doesn't mean that they're not going to get hit by some global economic slowdown or whatever happens to come along, but they're still standing at the end of the day. The companies that never survive, at least not with heavy dilution or government bailout. Hello, Wyala. You know, you're Mount Isa as well, Friday's conversation. Yeah, you're just, it's just, you're going to find, you're going to learn some painful lessons that way. So it's just a big rant to sort of say, look at the balance sheet a lot. Like it, mate. Like it. Hey, let's go to a question from Adrian. Good one. He says, hi, gents.

35:13Thanks for the free educational content and the cathartic whinging about anything relating to politics and the longstanding nonsensical norms of the financial industry. My mother has recently received a cash inheritance that she'd like to give to my kids who are both under two to invest for their future. I explained to her the 66 % tax rate kicks in at about 450 bucks a year. So I'd be aiming for a low yielding, low fee ETF investment to best maximize their return without being eroded by tax. She said it was a very smart sounding response to her, which was largely built off knowledge from your pod.

35:45So cheers. I've done a bit of research and have found an iShares Global 100 ETF, which yields 1.1 to 1.3 % with a management fee of 0.4%. It's a decent option, but it's largely weighted to big US tech stocks, which I have some apprehension on given the already high valuations and major shifts that could occur with the AI transition over a 20 odd year investment period. Given I've got two kids under two, rather than spend my precious limited time diving into ETF yields and underlying holdings, I thought I'd attempt to tap the well of knowledge that is the Motley Fool Money podcast and see if you can make any other suggestion on ETFs that fit the brief.

36:22Cheers, Adrian. I'll let you go first on this one, mate, because I actually don't know the specifics of the tax code there. Other than, just one thing I will say is just don't make a worse investment for the sake of dodging some tax is all I would. No, I'm not suggesting you are, but I've seen it enough. Minimize tax, yeah. I've seen it happen enough where you're just like, and I'll just, I'll steal your line here. It's like, the goal is to maximize your after-tax income. It's not to minimize your tax. Nice. Yep. So Adrian, the rule is, and what he's alluding to for those who don't know is, again, I've said this many times, I'll say it again, because we are our own worst enemy.

37:05People decided they would employ in air quotes their kids or put money in their kids' names to try and maximize their, to minimize their taxes. Why? If I got 100 grand and I invest 25 grand in each of my four kids' names, I don't have four kids if I did, they have four tax-free thresholds and I'd pay almost no tax on that money earned from that money, income earned from that capital. And so people did it to try and avoid tax and the government went, well, okay, you idiots, I'm going to have to make a rule that stops you doing that now. So if you're a minor, I think it's under 6 then, maybe under 18, my apologies for not knowing for sure, and you have unearned income, in other words, non-labor income.

37:43Yeah, you can earn up to$450-odd a year, and then after that, it's a 66 % tax rate. So it's designed to be deliberate. Let's call it what it is, right? Zero over the course of a year. It's basically some pocket money from grandma, and other than that, no. Yeah. So that's why Adrian said, well, hang on, if I have some money invested for my kids, it's a large amount of money, and I go over that amount, they're going to pay stupid amounts of tax through that process. Adrian, so here's the problem with ETFs, and this is a little bit detailed, I won't spend too much time on it, but because of the way ETFs are structured, they're effectively trusts.

38:17And those trusts are obliged to distribute all capital gains and income in a given year. The problem with that is if there's a lot of buying and selling and there are capital gains made because of changes to indexes, indices, and therefore the ETFs, your dividend distribution is going to be quite variable. So I would just be a little bit careful to assume that any of them are going to stay that low, not even because of the cash generation of the dividends for those companies, which is kind of what you're looking at with 1.1 to 1.3%. But if there was a big change in the index and something was added or subtracted or had to buy or sell units, you will see some variable amounts of income.

38:54And you kind of see that. I just pulled the numbers up a second ago. And I won't go through the detail because it's a bit painful. But I'm going to read just the last six dividend payments, $0.61, then$1.43, then$0.53,$0.82,$0.57,$1.45. Now, some of that will be dividend income from the companies in the ETF. A lot of it will be distribution of those capital gains that vary in those different periods. So you're going to be a little bit careful of your machine. They'll always be low yield just because of the way they're designed. So it's just to caution you a little bit. I don't know how much money your mother has decided to put in for your kids.

39:35It's a massive amount of money. you probably have a different issue than it's a small amount of money. If it's a modest amount of money, I'd go with Ram's idea of just not worrying too much about it. Don't sweat the couple of dollars in tax you might pay. Concentrate far more on the returns you're going to get. That's absolutely the first. If it's a very large amount of money, you're obviously going to have 450 bucks a year and buy a lot and therefore lose two thirds of that benefit, then that's going to suck. And there's no point doing that that way. I got to say, I probably wouldn't try and get clever about an ETF investment, I think I would probably do one of two things.

40:10Actually, the thing I would do is I would probably, and I'm not a tax, firstly, if it's a large amount of money, get tax advice, don't ask, don't listen to us. You need specific tax advice. If it's a, but think about a couple of things. Firstly, put it in your name as trustee for the kid. Use the kid's bank account, the kid's tax file number. Excuse me. That means you end up, you're as clear as possible with the tax department. It's not for your benefits, for theirs. But it's holding your name as trustee for them while they are growing up. The other option is just putting your name altogether and just deal with effectively passing it to them at the appropriate point in your life that you think is appropriate.

40:49I've said before, I have investments in my son's name he doesn't know about. I'm going to listen to this podcast, so it's fine. No chance. And we aim to be able to make that available to him at some point. We haven't decided when yet. It might be at an age. It might be at a life circumstance. basically just invested in his behalf. Done that way. The flip side is to do it like another family member who has money invested in their name for their kids and they're going to just pass that on at some point just directly as a transfer or just take the money out and use it. So yes, there's tax payable on that transfer.

41:22The tax is payable eventually anyway. If the kid takes it, you know, sells it themselves, they're going to pay that cap of gains. If you sell it and give them the money, you're effectively just prepaying some of that gain. I mean, yes, there is a slight cost of the compounding of doing it that way, but overall, it's probably not a big enough deal. So, yeah, I hope that's a half answer, Adrian. I would probably be inclined to get specific tax-wise to a very large amount of money and understand what you can do best. There's also insurance bonds. I'm not a big fan of them, but they exist. I was going to mention them, yeah.

41:52Yeah, they exist. They're okay. I think I'd keep it simple. I'd probably put it in my own name as trustee for the kid, I think. Yeah. I mean, this is definitely an example of good quality tax advice being it's worth its weight in gold. Yeah. Oh, yeah. And it shouldn't have to be. And again, if other people, before I said it, screwed around the tax system, you know, it's crazy that you couldn't give a kid some money. Let them build their own investment account, have that compound for their benefit over time and pay the appropriate amount of tax on the appropriate earnings. It shouldn't be a problem.

42:24But again, people have screwed with the tax system by basically saying, hey, this is a problem. They're using the kids as a tax shelter so the poor kid doesn't get to build their wealth because their parent was trying to play funny buggers. And that's kind of where we end up. And unfortunately, the ones who didn't do it have to get hit with the same law because otherwise we could do it tomorrow. I could do that with my kids tomorrow. So I get why it exists, but it doesn't make it bloody hard for kids to try and generate their own income. And for us to give money to kids, either inheritance or just a small kernel to grow into hopefully an acorn to grow into an oak tree over many, many years, you just can't do that.

42:58but my kids my kids have nothing i got nothing i don't do any shares for them i don't nothing and i and i say that uh i mean i kind of i do it's just i mean again they're just a it's just a a bucket a man-made bucket that sits here and like it's in mine and my wife's name and that's kind of cool but you know it's theirs right like yeah i guess i could rug pull them if i really wanted to no one's trying to do that right so it's kind of like i'm sure there's someone there who's got a really deep knowledge of this stuff saying there's probably a more clever way i could do it but then again you've got to think about the sum of money where it's just sort of like the administrative costs of that need to be such and just the time costs such that it's it's worthwhile now big large sums of money it almost certainly is um but for yeah for that reason i I just don't do it because I've looked at it ages ago.

43:54And my conclusion then was that's way too hard. The money's all here. I'll give it to them at some point, right, when they're adults. Yeah, yeah, exactly. And it'll just be easier. It'll just be easier. Totally. And you're going to pay tax to sell it at some point, but then the kids got to pay tax when they use it anyway. Yeah, so there's no avoidance. I mean, I said there's a slight compounding detriment to selling and then reinvesting the after-tax proceeds, obviously, and then starting again. That being said, the future tax obligation has already been paid to that point. so the next lot of tax is lower anyway so it's not nothing I wish there was a better solution I don't know how you would legislate differently because you could say well the kid's got to have the money but then the kid can choose to take the money out at 20 and get back to mum and dad as a tax dodge it's a difficult one to try and police and this is probably the least worst outcome yeah it is are you sitting down Ram?

44:39yeah I can see you sitting down Akshay has asked us a question which I know you have views on and so I am going to remind you we're 45 minutes inside this podcast Just to put that on the record. Hi, Scott. I love these, by the way. I always know it's going to be a good one when you set it up like that. Hi, Scott. I wonder if you guys have any thoughts on how we can think through the impact of a very high US debt level and its potential ramifications on the stock market. This news is also bubbling up in all my feeds as well. Regards, Akshay. Oh, my God. How are we going to do that in a short amount of time?

45:14I'll try. and just wave at me through the Skype cam if I'm going on too long. I will say when you're in the zone, sometimes I do that and sometimes you don't always see me. But thank you for listening. I'm not done. Turn the video off. I'm just talking. Sit down, Phillips. I mean, look, actually, it is one of the questions of our time. It's a big, big question. And it's sort of like the most interesting part of it all is that A, very few people are talking about it. That in itself is kind of like, what? The world's sole superpower and largest economy is like drowning in debt and has absolutely no plans to get out of it or ability to get out of it.

45:58It's like, okay, what are we doing about that? I don't know. We'll figure it out. What about later? That's it. That's it. Yeah. And it's like, so that's kind of fascinating. So, yeah, we'll have implications. I think we're already seeing implications. I mentioned to you off air mate and I actually have mentioned it on and I'm sure many times the stock market is at a record high properties at a record high even quote unquote bloody crypto is at an all-time high right like it's like and yet it's so flipping bearish that's out there and I think part of it is because of this this idea it's like when the money is broken you just buy anything that's more scarce than the money.

46:40It's sort of itself. And like, so think it through. What are your options? What are your options as the US government? It's like, well, we're going to cut all the entitlements. Like, you're not doing that because you're not going to get reelected, right? You just, we're going to stop paying our veterans and our retirees the entitlements that we promised them for decades. No, you're not doing that. Politically impossible. Okay. Well, I guess we'll raise taxes. Like, I can't even say that with a straight face. No, you're not going to do that either. But for exactly the same reasons, and certainly not to the extent that is needed to get out of it.

47:13So your only option is just like money printer go brr, just inflate it away. Just make everyone whole on dollars, even though if those dollars have a fraction of their purchasing power, that is what's going to happen. Just Google Ray Dalio, the founder of Bridgewater, the biggest hedge fund in the world. He's written books on this. He's the one banging the table on this stuff. And he studied every past crisis going back a thousand years. It's like, it always ends in the same way, right? It ends in the same way, which is a devaluation of the currency. So that's what's going to happen. But why I mentioned the stock market, and this is what breaks your brain.

47:49It's like, well, that sounds really bad. Yep. So the stock market's going to crash. Nope. The stock market's probably going to melt up. Like, what? But you just said everything's real. Yeah, they're drowning in debt. They'll never be able to pay it back. but they will pay it back in nominal terms. That money has got to find a home. Rich people need to put that money. Rich people, we have this view, this quaint view of a Scrooge McDuck with a big vault with money sitting in it. No one does that. I mean, if you're rich and if you're really rich, you definitely don't do that. So when you hear Elon Musk is worth whatever or Jeff Bezos, he doesn't have that much cash.

48:23He does not have anywhere. Like 0.001 % of that wouldn't be in cash. It's all in assets because assets is the only way that you protect yourself from this debasement, which is just forever happening. And I won't get into the ideology of it, but we design it that way. It's not like, oh, look what happened. It's like, no, no, we're engineering it to happen this way. And with the current situation that we've got, it's going to go even further. So you will find, I suspect, that we all go into the market. Look at the Magnificent Seven, right? Like the valuations that are pretty up there, right? Look at the big stocks.

49:00Commonwealth Bank is the most expensive listed bank in the world. And it's not the biggest bank in the world. Why? Because the money has to find a home and no one's leaving it in the cash with inflation running hot and government spending like a drunken sailor. So that's the real mind blow of all of this kind of stuff. So it's not that it's good or that it can end well, but we don't know when it's going to hit the wall. It'll probably be extraordinarily drawn out. It'll be a very, very slow-moving car wreck. And it'll probably be assets, harder assets that actually do really well. Why is gold doing so well at the moment?

49:40It's just a lump of metal. A little bit of dentistry, a little bit of circuitry. 90 % of it just sits in vaults under the ground. There's absolutely nothing. There's no yield. It's a rock. It's a rock. And it's record all-time highs. Because it does one thing and it does one thing only. It just says, I promise that I won't be printed ad infinitum because the only way to get more of me is to dig a dirty great hole in the ground and dig it out. And it's like a huge amount of work required to do that. And that's all it promises to do. And people are looking at it going, well, I've got some monopoly money over here that someone can press a button and increase the supply of.

50:18In fact, the supply of US dollars I think is 30 % greater than it was five years ago. I think Aussie is something like 22%. Right. Again, do I need to pull out the monopoly analogy here? You know, I can start throwing extra money around, but it doesn't change the things that really matter, which is Park Lane and Mayfair and, you know, the station. It's the assets that matter. So I'll shut up because I could go on about this as everyone knows. All I will say is this. They're not going to change their ways. It's a politically impossible situation to get out of. so they will print, they will devalue, they'll run inflation hot, and that's how you get rid of the debt.

51:00You get rid of the debt by inflating it away. I borrow a million dollars, I pay a million dollars back in 10 years time. It's just that that million dollars has a fraction of the purchase power. So I've actually defaulted in a very slow and sly and roundabout kind of way. And the Romans did it, right? The ancient Greeks did it. It's been happening forever. And we're going to do it again because there's just no other path out of it. So what do you do to protect yourself? You buy something that can't be printed you buy something and i'll even throw a bone to the to the property investors out there like there's only so many mansions on sydney harbour right and are they insanely stupidly priced yeah that makes no sense but you know you can't you can't press a stroke on a keyboard and make 20 more of them so so they turn and they turn out to be a better not a not saying that they're good we could have people have opinions on what's the better one but they are better than the actual money itself and when the money is in this kind of situation i just don't leave don't i don't even if i need to explain to you why leaving money under a mattress is a bad idea or god forbid even with an i interest ing account is a bad idea then you know i don't know you're you're in trouble right like you know it's a bad idea and and the and the and And pull up that thread and answer for yourself, why is it a bad idea?

52:20And once you sort of go down that rabbit hole, the only sensible answer is, I have to preserve myself, my wealth, the thing that I had to work for that others get to print for free. But I had to work for it. Everyone listening had to work for it. I'm just going to put it in something that can't be printed. That's what I'm going to do. And that's what I would encourage you to do. Whether that's a really high quality business, whether it's a property, whether it's a magic internet token, whatever, just don't leave it in the money. I would take slow exception with your not putting a high interest savings account.

52:47As long as it's high at the inflation rate, you should be okay. Ah, yes. But the maths only works if you have negative real rates. Yes, correct. So you're right. As long as you're covering inflation. If you can find an interest rate, semantics is important here. When I say inflation, I'm talking about monetary inflation, not CPI-based inflation. It's a slightly different kind. In other words, the quantity of money. So over, if you look at the last 50 years, the US and Australia is pretty similar. It grows at about 67 % per year. So if you can find a very credible institution that can pay you more than that going forward, and that rate might increase if you look at the current dynamics, absolutely have at it.

53:30But also ask, this is another really good question for all investors, dividend or cash or bonds or whatever, always ask yourself, where does the yield come from? What, where does that, when I give the bank ING, let's pick on them, a hundred bucks, and they say, I'm going to pay you 6%. Where's that 6 % come from? Well, it's because they blend out. Basically, you're giving them an unsecured loan and they're hoping that they can make enough money elsewhere through the things that they do, which is a whole other rabbit hole, to then pay you back. In other words, we say it's risk-free, but I don't know how many times in recent history we need to have, ask the Greeks how risk-free it is, right?

54:10Ask, you know, it ain't risk-free because they might not have the money. Look, ask the Silicon Valley bank people, right? Like it's sort of, it's, yeah, you made a really good point, but I don't mean to throw shade all over it. It's just that it's not the risk-free, it's not risk-free in the sense that a reasonable average person would consider it to be risk-free. and in these scenarios, at least throughout history, the only way that you can inflate your way out of it is if real rates are negative. They have to be negative because if they're not, the debt will continue to grow faster than the growth and then that means we haven't solved the problem.

54:52Yeah, correct. I don't really have much more to add, Akshay. You're doing it, while you're thinking, you were doing it the same as me though, right? In other words, I bet you don't have a pile of money under your mattress. Oh, totally. Yes. And I bet you don't have much beyond like spending and immediate spending requirements in the banking. I bet all of your money is in your house and your share portfolio. Spot on. The only thing I would say is I'm not...

55:51you and I were often asked about just because if I don't, my money will be eroded. In other words, I'm not trying to avoid the negative. I'm actively trying to achieve a positive result in excess of that inflation rate, a positive real return to your point. And it's not that important a difference, but I make the point because it comes back to Akshay's question, which is what do you do or what do you have on the market? My biggest concern, Akshay, is a situation where the US either defaults by the technical definition or by RAM's broader definition of just effectively inflating away or devaluing away the cost.

56:24And I'm not unaware or unconcerned about my US dollar investments if the currency is devalued. Because what I can bring it back for is different to what I might... So if I hold my Berkshire Hathaway shares for 25 years and in year 23, for whatever, either over that 23 years or at that point, there is a one-off or ongoing devaluation, then I've lost real value. You're saying the Aussie dollar is now at 30 cents or something. Right, exactly. So I've got to be a bit careful with the way that impacts my investing return. Other way around, yeah. $1.50 or whatever it is. So I've got to be a little bit careful of that.

57:02And I'm not worried about it, but I'm aware of it. And I suspect at some point if it seemed that – and here's the other thing, by the way. We talk about not minimizing tax but maximizing after-tax returns. If my Berkshire Hathaway shares grow faster than the US dollar was devalued, I'm still ahead. and so again you've got that question of what do you do and what outcomes what I'm not doing is panicking Morgan Howells has got a great line that more money is lost trying to avoid the next crash than in the crash itself in other words the opportunity cost is lost so I've done pretty well with Amazon I've done pretty well with Berkshire Hathaway if I'd worried about for the last five years the potential of what we're still talking about now I would have missed it now if it goes to zero at some point in the future then any time taking it out would have been better than leaving it but if it doesn't if I get the US dollar is devalued by 5 % a year but I get an 8 % return total, I'm going ahead by 3 % a year.

57:48Now, I still might be better off investing somewhere else than something else, but it's kind of not about the devaluation itself. It's the purchasing power in a very real sense, both in US dollars and in Australian dollars, given the foreign exchange. And this gets pretty technical pretty fast. So apologies to those who aren't trying to follow along and I'm confusing.

58:08I suspect, to Ram's point, the owners of scarce and or productive assets well chosen quality all the usual riders and and specifications will be perfectly fine yeah um would i prefer there's no u.s devaluation yes that would be nice would i prefer they get themselves out of their own dead hole yes that'd be nice i i always and maybe again i necessarily draw a technical line between rams saying they can't get out of it or they won't get out of it with that's ram's assumption not of the technical feasibility but the likelihood of actual action and i don't say that mate to to um run your parade either but just to make the point that it's technically possible it's totally possible and it's possible for years from now yeah the difficulty gets harder the decisions get harder and the impacts get tougher all still better probably than getting to that point of that you know delaying it doesn't make the eventual thing easier it just makes it further away it makes it harder worse and further away so can they get over yes absolutely could they do it this year next year yes absolutely could they do it in 10 years time yes in 20 years time yes um each passing year makes it harder makes it less likely that Ian is going to want to.

59:11We mentioned this very briefly off air, mate. Actually, I hadn't read your question yet. We were just talking about it. There's a possibility. You can draw your own market on some sort of come-to-Jesus moment for the US where they have some sort of council of war and all of a sudden both parties go, all right, time to throw this all aside. We've got a real issue. We're actually going to have to face it. I didn't tell they did that last year. So as long as we admit there's a problem, as long as both parties kind of come to the party. I say both because you kind of need to know the other would go not to run a scare campaigns.

59:43No, one party's saying, we're going to keep government spending 30 % and pay back all the staff, put taxes up. And it goes, we're not going to do that. He gets the votes. So it kind of needs to be bipartisan a little bit, but just some sense of it happens. So is it possible? Yes. Is it likely? Not in the short to medium term. In the long term, I don't think it's unlikely as RAM probably does, only because you get to that point of, oh my God, we've now got two worse options. We can see it. It's coming at us like a train through a tunnel. we're going to have to make a decision here. And it may well be the decision is made that is stopped short of devaluation and does budget repair.

1:00:16But if it doesn't or they choose not to, more likely than not, they inflate away or devalue or money print or all those things which are effectively the same thing in different terms. Doge was really informative because Elon and Trump came in with, we're going to do all this. And I said at the time, like, I'm no fan, right? I really am not. But life's complicated and messy and there is nuance here. And I think that they had a point, you know, there was, we need to do something. The fiscal situation is out of control. Now, the way they went about it was stupid and everything. But that was the beginning of the end of the bromance.

1:00:57And Musk, with all his bravado and all his resources, started off, what would he say? We're going to cut$2 trillion from the budget. And after a few hundred billion, he gave up. It wasn't like, oh, we didn't quite make our target. We didn't get within mile of our target. It's just like that's how, and that's with a mandate of a renegade outside populist. Exactly. And a tech bro. Like if you can't cut spending with a political mandate with these firebrand weirdos, they can't do it, right? and some responsible party who's going to come in. So you're right, it's not technically impossible, but its degree of difficulty on this is insanely, insanely high.

1:01:44The other thing I should hasten to add is remember, this is my usual example of pretend you're an alien and you just arrived here. You don't know the societal norms and you're not, indoctrinated is not the right word, but you're not normalized to the state of the world because we're born into the world and this is how things have always been as far as we're concerned, right? But just remember, the stuff in the world isn't going to change, right? Like there's going to be probably more stuff given our increasing productivity over time. So numbers on spreadsheets and stuff are going to change. But it's really, when you get down to the base level here, what's really going to change is how we sort of allocate and take ownership and record all ownership of all these things.

1:02:29And this is why even if things get really hairy, the rich are going to be fine. They're always fine. You go to Weimar, Germany, rich were fine. Why? Because they didn't hold their money in cash. And they make their money through the holding of assets, productive assets in large part as well. But if you're like poor muggins on the factory floor and all you've got to do is sell your time, you're screwed. You are absolutely screwed. I said to you off air as well, it's like talking about the Greek crisis. Remember that? Remember 2012? Why did we take you back 13 years? There was a Euro crisis in the wake of the GFC.

1:03:02They just couldn't, and Greece was the worst of the worst. They were spending well beyond their means. Politicians making all kinds of promises. People retiring at 50 on 100 % of their salary. It's just like completely unfunded. And friends said to me the other day, oh, well, everyone was worried about that. But look what happened, nothing. It's like, I beg to differ. I beg to differ, nothing happened. And it wasn't the, we have these images of a great depression with big bread lines and all of this kind of stuff. And we don't see that. And so we thought, oh, it was all much ado about nothing.

1:03:33Well, I'll tell you what happened. The people who had sort of upper middle class to rich, they were cool because they had all the assets and you just can't print assets in the same way that you can print money. So yeah, inflation was a real thing, a really significant thing, but they were shielded from it as the rich always are. Everyone else is just like you lost your pension, you lost your entitlement, you had to work twice as hard to get the same amount of stuff. You were impoverished in a permanent basis. That's what happened. Go speak to some of your friends from Greece and ask them, you know, not the rich, ask the average schmo on the street how that experience went for them, and they will tell you that life sucks compared to how good it used to be.

1:04:11And so that's how it's going to play out. Again, I mean, you're right, I shouldn't use such absolute language, but the challenge of what needs to be done is just, it's so, I mean, look, I would say this, I would say hope for the best, prepare for the worst. So don't be a doom and gloom cynic like me and hope that everything and do what you can to move the world in the right direction, but also recognize that, you know, it could be tough. So whatever you do, this is, and it's always true actually it doesn't matter what the economic landscape is try and acquire the things that really count because money is just a legend it's just a totally it doesn't do anything no whether it's Bitcoin or the Aussie dollar or the peso or gold it doesn't do anything right like the real all it does is record and allow transactions to sort of happen so own the things that really really really matter and you will be far more shielded than the average person Nice, well put Motley Fool Money For more, subscribe to the free newsletter at fool.com.au forward slash listener We've got a topic slash question from P If they identify themselves I'm not sure if it's Mrs P or Ms P or Mr P or Master P It is P who says Good afternoon Mr Rampage and Mr Phillips I love the pod machine says P Truly an exquisite thing I can only imagine is powered by nuclear fusion and perfectly stable quantum processing.

1:05:46I think it's powered on our own sense of self-righteousness more than anything else. Self-importance and fist shaking at the world. We could power New York City for like 10 years. The perfect renewable resource. We'll work for beer and ranting. Pod machinery aside, says P, I do really appreciate both your efforts. Yours is the only finance podcast I found that it's simultaneously educational, philosophical, and fun. That's very kind. Thank you. My question is a theoretical one, although it does have some very practical implications. I didn't hear a politician mention AI, the selection cycle, and yet every year ungodly and increasing amounts of money are being spent in Silicon Valley and around the world on it.

1:06:31The idea that AI is going to replace jobs, some jobs, isn't debatable. It's already happening. The open question is how many. i'm trying to picture an economy and a society where let's pretend 50 to 80 percent of people lose their jobs along with their societal bargaining power that is a feature of being needed somewhere in the production cycle what are the second third order effects of this says p can governments avoid corruption if corporate tax accounts for almost all of the national budget will it inevitably divide society distinct classes or groups the largest of which defined by whether or not they remain employable.

1:07:07If most people receive an identical universal pension, can all those people or none of them afford luxury items? Will the potentially enormous improvement in productivity weaken competition against the companies that operate with AI at scale first, meaning they've kind of won the game of capitalism? The concern for especially our children's future is taking up more of my brain space lately and is appearing increasingly dystopian. Feel free to answer all or none of these questions, but I'd love to hear both your thoughts on the subject. Cheers, P. You're loving this in at this stage of the pod?

1:07:39Yeah. I mean, it's the other great question of our time, really, isn't it? Isn't it? I don't know. I know it's going to be wild. I listened to a Lex Friedman one recently. He interviewed Demis Hassabis. He's the guy behind Deep Mind. He's like child chess prodigy. Just like the kind of person who's so smart it makes you sick. Like crazy smart. Anyway, he found a brain inside of silicon and he's basically, you know, the father of modern AI. So it's a fascinating, long conversation. And his view is, is that we're at AGI in 2030. And that's artificial general intelligence, which is much more than the narrow AI that we have at the moment.

1:08:24So that's basically pick any human in the world that you like, and this thing will be better at it in whatever domain and can skip across domains pretty easily. In fact, once you get to AGI, you get to ASI, which is artificial superintelligence that are sort of like, I don't know. If you think it's hard trying to explain, you know, demand supply curves to a chicken, well, that's what the ASI is going to have trouble trying to communicate with us, right? Or it might just peter out and we have another AI winter for another 30 years and nothing, we plateau out at this level, right, which is still in play.

1:08:58Where I'm going with this is the thing that I, one of the things I took away from that conversation was that one of the real recent breakthroughs, and I sort of say in the last five years with AI was the transformer, which is the mechanism. That's the T in GPT. That was a computer science breakthrough that enabled these LLMs and everything else. And what Demis was sort of saying was actually, we think we can run pretty far without another technological breakthrough. So what you may have heard in looking at all this stuff is that the next, what everyone is trying to do at this moment is scale up.

1:09:41So they're not trying to do anything differently. They're just trying to throw more compute at it and smarter compute at it, but not in a way that we need to fundamentally reimagine how physics works, or we have to completely conjure up a new computer science paradigm for this to happen. In other words, we're kind of there. We just need to juice it up a little bit. In other words, we know how Dynamo works. We just need a bigger one and we can make a lot more electricity. In other words, we know how AI works. We just need to give it more training data, more feedback, more compute and we're going to get there which basically says things are going to get really wild and and i don't know what that means and the other thing that they sort of discussed there which which was it it almost necessitates a complete reimagination of economics economics at its core is the study of scarcity so if you can put a brain inside a humanoid robot and the robots can make them more robots and the robots can do this and like and again this is not science fiction like some of the stuff there was a five thousand dollar robot out of china the other day was doing backflips and all kinds of cool things like this is and it's not because we figured out better actuators or better batteries it's just like no we've got a better brain to put inside the robot so these all all these technologies dovetail into each other so if we're going to that thing it's basically the cost of the productivity boom is so insane that the cost of production essentially trends to zero so we either have this really weird cast system of those who have the capital and the production and and those that don't or we have some kind of broad-based utopia i don't i just don't i don't know no one knows right i talk about that it feels like you know it's like a real stoner conversation as much as it is a serious like academic conversation because it's sort of Like it's so wild.

1:11:42And the thing that, oh, shut up in a minute, mate, because it fascinates me, is that it's different when you've got some weird podcaster who's like running away with the potential of a technology. It's different when you've got the leaders in the field and the smartest people in the room. This guy won a Nobel Prize, right, with his work with AlphaFold and stuff. It's just sort of like when you've got these people, very serious people talking very seriously about these things and not in 50 years, but in like by the end of the decade, it's just, it doesn't mean that you take it as gospel, but it means you do take it seriously.

1:12:23And again, what do you do? I don't know. I don't, I honestly don't know. My plan is, which is already the plan, which is try and acquire as much capital as I can. Right. because I don't know what I can offer the world when there's entities that are far smarter and far more numerous and that work for far less than I ever could. I just don't know what to do in that world. Yeah.

1:12:53Lots of great questions. And no one knows. History doesn't repeat, but it does rhyme. The question is pace. We should have flying cars. To your point about the AI winter, we get to a point with some things. Now, drones are not miles away. Maybe the drone is the flying car of the future at some point. Maybe we never do it. How do they coordinate soft driving cars? Blah, blah, blah. Maybe it was always a spurious technology that was never going to work. Right, exactly. So we get to some points and stop. We get other points and keep going. At the same time, in 1995, I've said this before, the Gardner brothers, Tom and David, who started The Motley Fool, were on a daytime chat show, people laughing at them that people would ever use their credit card to buy something on the internet, right?

1:13:39They'll say, yeah, well, of course they won't. That's a stupid idea. Have you seen the Burger King story? No. Doing the rounds, Burger King was one of the first retail outlets to accept credit card payments. Oh, right, okay. Yeah, and I was like, oh, I'm going to buy a burger with a credit card. Like, come on. And like the derision and the laughter and I was like, I was alive then, right? This isn't like footage from the 1920s. This is not that long ago. Anyway, sorry, I interrupted. Even in the articles, the intent is overhyped. You sent that one too. Yes. It's a central peak now. Interesting if you've got Wayne in this in 1996 or whatever it was.

1:14:15Or Amazon.bomb was the other game. Yes, that's right. Fortune 500. Forbes, was it? Cover? Yeah. Anyway. So no one knows. And it's a very unsatisfying answer, but it's the truth. So what? Well,

1:14:33it's a... Ram's point about cost, I think, is a really important one and what happens with costs. Now, there is a feedback loop, and at the end of the day, the only scarcity is time and the cost of... Well, the actual physical resources we have on this blue marble and our ability to get to them at a reasonable cost, and then the cost, which is the falling bit, of transforming those into usable products and services. So that's kind of, you know, we can't dig up more zirconium cheaply just because we want to, just because we have more robots can use more zirconium, but we can still do more of it.

1:15:08And if the price of the product comes down, you can do it more sufficiently with AI, do that mining, you know, those prices will come up. That's the story of humanity, right? Correct, exactly. I don't suspect - Doing things faster, better, cheaper. That's what we do. It's productivity. Exactly, that's right. We turned that on Friday or was it today? Anyway.

1:15:27So, so many questions. You made some great questions, Pete. I am of the current view that it will be modestly dislocating for no other reason than an absolute spitball guess. So we're seeing jobs lost already. This week alone, Atlassian and CBA both announced job cuts that will be effectively replaced with, in part at least, AI. So it is already happening, as you say. We had, at one point, 95 % of us worked in agriculture. At another point, 65 % has worked in manufacturing. And those things went away because of productivity, because of offshoring, because of all sorts of other things. And we don't have 85 % unemployment now because we don't all work on farms or work in factories.

1:16:11The question is one of, to my mind, pace rather than the effect itself. If this AI transition happens really quickly, we may see a meaningful and medium-term bump in unemployment. So that's the medium term. Long term, there's a question about do machines do absolutely everything? In which case, if you've seen the movie WALL-E, we're all sitting around on movable chairs, eating food and watching TV. That's one version. The other version is something more similar to now, which is we have new jobs that are done by humans and the machines do the things that we can't or don't want to do. There is a third option, which Arnold Schwarzenegger starred in as an Android robot in.

1:16:55There is that potential as well. That's the other choice too. If anyone asks, I have no idea where John Connor is. Yes, so, and no one knows. Absolutely no one knows. So here's a couple of your questions. I don't think corporate tax will account for almost all the national budget, but consumption tax may. So I think that's how we would fix it with tax consumption rather than incomes if it got to that point and that would be fine. Remember, of course, in Australia, corporate tax is effectively, ironically, very close to zero because in real terms because of franking. So for every dollar BHP pays in tax, it offsets my income tax or I pay no tax if I'm in a zero tax environment.

1:17:35So corporate tax is a bit of a misnomer in Australia. It's also why the corporate tax rate debacle is just overdone. If you lower the corporate tax rate, all you really do is benefit foreign companies and foreign owners because Australian investors get the money back through franking. So it won't be that or probably consumption. Will it inevitably divide society in distinct classes or groups? Nothing's inevitable, but I suspect that to our Rams point, you want to be an owner of capital. And that's a pretty dystopian view too because it means those without it are even worse off. Selfishly, I'm going to try to own some capital.

1:18:05Societally, I don't know how we resolve the problem but I suspect it will definitely make greater inequality more likely rather than not because ownership of capital will be far... It's already a superpower. We talk regularly about, you know, the rich are always okay. The poor or the workers are struggling. I think it gets worse if that does happen, if we do end up with that. So now if we don't, by the way - What have you got to offer society? Right. Like, I've got to be careful how that sounds. Yeah, yeah. But what? No, but that is the rhetorical question. Yeah, that's right. What can you do that a robot that costs$5 ,000 who never sleeps and complains, can't do better, faster, more efficiently and learn from the 50 other thousand robots that are doing the same thing and iterate on that?

1:18:46You don't stand a chance. You ask about competition, Pete. One of the things I'm most taxed by investing-wise at the moment is thinking through what AI does to competition generally. You say, well, look, we can competition against the companies that operate with AI at scale first. I don't think it's going to be that fast. I think you can catch up in a temporal sense to AI. Some will get, you know, the companies run online first. The so-called fast followers. Yeah, I mean, Amazon got there before Walmart, in a sense. Walmart had plenty of time to catch up. They didn't. They just chose not to try and really go after it.

1:19:18They tried to protect their own business rather than adopt it. so could have could have been very different um wasn't but could have been different i what i think about actually is is i think ai will lower the barriers the things that make individual businesses more special take retail for example i think i think a lot about supermarket retailing right now so in a world where an ai can work out what i buy how much of it i use and put two shopping lists together one for woolies and one for coals based on what's on special that week or based on the fact that, you know, McLean's toothpaste is$1.58 at Coles and$2.12 at Woolies.

1:19:55So I'll buy the McLean's from Coles instead of Woolies or I use a tube of toothpaste every three months. So every three months it buys, when it sees a special price, it buys it on special. Price discrimination is going to be really, I mean, the internet's done a lot to erode price discrimination. It goes much further with AI potentially. Now that's just a single example, but think about that across everything. Quality, okay, you know, chat gpt what's the best television uh at the price and who's gonna be the best price for it i've done the work for you and the sony 48 inch television from bingley is the best option for you great buy it for me please well okay now i haven't even you know all that stuff so it's consumer choice and business choice i think it's really fascinating that in that world um universal pension is fascinating because you're right about what people can all or none of hoard luxury items.

1:20:45I mean, at some level, a UBI is equivalent to a socialist kind of welfare payment. The thing is, it won't... Well, in your version of the world, if 90 % of us get the UBI and nothing else, then yes, you're absolutely right. Prices are normalized to levels of demand or relative levels of demand. If it's a UBI plus, then it's no different really to what we're already on. Everyone's on a minimum wage or a welfare payment now. So it depends on how many people get that only versus what else they get. And again, that comes back to ownership of capital. That's a lot. And the answer is we don't know, P.

1:21:22I don't know what to suggest you do about it. Do what you're already doing. That's the beauty of it, right? Because if this wasn't a thing, I would still be saying, try and accumulate capital. Right, exactly. Right? And if we're wrong, and none of this high blue sky stuff ever happens, it turns out I acquired all this capital. For nothing. You're okay. You're okay. I've only got a million dollars. Yeah, yeah, yeah. You know? That being said, I mean, I think, you know, from P's perspective, that sounds very selfish and it is. The dystopia is the societal level, not the individual level, and there are haves and have-nots, and we've talked about this.

1:21:56Frankly, P, I'm more worried about generational inequality than I am. Maybe I shouldn't be. Maybe I should be the other way around. But for the same reasons you highlight, if you've got the bank of mum and dad, you don't buy a house. Okay, well, then the bank of grandmother and grandfather, sorry, then it comes into issue. and how many generations do you go forward before you realise that, hang on, in 20... I'm going to pick a year. In 2099, for the fun of it, the only people who own houses are people whose grandparents owned a house because there's no other way to accumulate enough money to buy a property, for example.

1:22:26Now, will that happen? I don't know. But if you've got that money to start with, you're betting at someone who doesn't and you roll that forward enough generations, we end up with some sort of weird feudal kind of society. But on the same base, you're talking about P, which is kind of that idea of distribution of wealth. So I don't have any answer for you. Either allocate capital or you've made the point plenty of times remember come up with something that actually helps society. Build the new thing, design the new thing, do the new thing. The problem is that's how what we're really saying is we're trying to help you win the rat race which is if there's going to be a rat race you might as well win.

1:22:58So you might as well be a rat but jeez if there's winning rats and losing rats I'd rather be a winning rat. What does it mean for society? I don't know. I think universal basic income we should trial. I think we need to think about this sort of stuff and have plans for it. I'm probably naive. You know I'm a Pollyanna ram. I think, I suspect that every other... I know AI is different. You're talking about a different ram, and you're probably right. And so maybe I'm just trying to be optimistic and hopeful. But every industrial revolution, every stage of that, where people have put our work on farms, then in factories, we didn't create work just because we wanted to employ those people.

1:23:40We created work because we had the wealth, because of that increased productivity, to spend the money on other things. You know, hairdressers didn't exist. Everyone got their hair cut by their mums, right? Physiotherapists did, but only, you know, massage. No one. Okay, well, what about Netflix? Well, you know, go back. You know, there's no TV. There was no radio. My mother tells a story of her father, my grandfather, would have a bottle of beer once a year and split it with his mate. They'd pour one bottle and two glasses and that was it. Think about things we can afford and do now that we didn't do.

1:24:09The internet didn't exist. Podcasts weren't a thing. So in a best case part of the world, AI just helps with productivity and allows us to buy more things and do more things and have other jobs that wouldn't have otherwise existed. Is that enough? I don't know. Is that ridiculous because robots do absolutely everything and all that's left is to collect the doll check and sit in the beach? Maybe. I just don't know. And I do expect that the bad news, P, is even in my most positive moments, I expect a bump up in unemployment. There was one in the 50s, I think I've said this before on the podcast, there was one in the 50s that was kind of assumed to be actually behind a big wave of automation, just put a whole lot of people out of work all of a sudden.

1:24:53I want to say it was 3%, I think, was the bump up, and it was for three or four years. I'd be very surprised if we don't see something like that in this decade, but that's just me spitballing. Yep. I mean, we'll find out. it's unfortunately better or worse yeah i mean in a way in a way it's kind of like we shouldn't not wish for this like it's it's how we handle it like i mean step back for a second we are talking about a technology that has the ability to really improve the human experience like yeah yeah breakthroughs in medicine like you couldn't imagine cures for cancer kind of level stuff right exploring the stars, human flourishing, right?

1:25:32Like, I don't know what that looks like, but it's sort of like the potential is there for this stuff. We could crack fusion. We could crack cancer. We could crack everything, right? And it's sort of like, so the fact that there might be a disruption and some people could lose their job is not a reason to lean into this and embrace it. We want to tread carefully. We want to think very carefully about where this is all going. But it's also a question of, well, once genies are out of the bottle, They're really hard to get back in. Like, you know, we may look back now, we're not, but like hypothetically we might look back and go, oh, you know what, the internet really didn't do that much good for the world.

1:26:08It's like, yeah, but it's, you know, did nuclear bombs do anything good for the world? No, but wishing them away won't make them go away. It's happening, correct. They're here. And it's happening, right? It's so happening. And so it's sort of like, unfortunately, I think, we've talked about this in many different contexts, but polis will try and legislate it away, right? Like it's just, that is not going to work. It's just clearly not going to work. So I would just sort of say one thing that is not going to change, maybe that's the better way of looking at it. And I'm big. I love Charlie Munger, right?

1:26:43You know, despite his couple of foibles, I will say that generally speaking, he's a pretty smart guy. And he was famous for sort of saying invert, always invert. And I'm going to invert. So he's like, what's not going to change? Human nature is not going to change. Look at the internet, right? We invented the internet. What do we do? We gossip all day, every day. Like social media is by far where all the traffic goes, by far. And we're talking about what celebrities showed their bum and what the cat did, you know, like that's what we do. So I don't care what godlike powers AO bestows upon us. We're still going to want to gossip.

1:27:18We still want to shove tasty things into our faces. We're still going to want to do other naughty things that adults do. like that's what we're going to do and if anyone was a fan of the west world series you know there's two words that start with f and that's what humans are really good at one's fighting and the other one you can figure out for yourself right and and and that's probably some signal in that if you really want to skate to where the puck is going right like i don't know there's there's probably an angle that's around that.

1:27:53I'm not sure where to go with that. I know. I'm sorry about that. I'm sorry. No, it's good, mate. I hope we don't know at least in your answer, Pete, I don't know the answer. Stay informed. Generate capital. Argue for fairness and reasonable treatment of those who are left behind as we all should. But to Ramis' point, actually, I want to just finish off by double underlining your point, it will improve things for people as a whole. Every, and there'll be people who lose from that. You know, there were protests trying to stop mechanical looms, weaving machines used in the 7, 8, 8 hundreds. Why?

1:28:34Because it puts them so as out of work. And it was like, people killed in the protests. Like this, people laughed about it. It was a big deal. It was just people complaining, like this is going to change our lives. Do we want to go back to there? No. Do we want to look after people who are hurt by it? Yes. This is potentially bigger and faster. That's the big watch out for me. It's the speed, isn't it? Right. Because it all of a sudden can do... I'm surprised we haven't lost more jobs already. We are using it at the Motley Fool in many different ways. We're not yet using it to create content because we've chosen to just go slow and work out what members want.

1:29:03They want a robot. They want individual voices and people. I suspect in five years, it'll seem like a quaint idea that we wouldn't have done it that way. It's just a question of how quickly our members are prepared to come with us and what oversight and trust they put in it. That's very reasonable. The regulator makes sure we take responsibility for it anyway, but it's just one of those acceptance things. But it gets to be like the incident in paying with credit cards. At some point, it's like, what? You don't write this with AI? Why wouldn't you? It's great. It'll cost jobs. It'll cost jobs. The Motley Fool will cost jobs around the world.

1:29:31I'd probably expect my grandkids to get into a car and be very concerned if there's a human driving. It's like, are you driving? No, no, no. Don't you know how dangerous that is? I want the AI to drive, thank you. I didn't sign up for this. 100 % that's going to happen. Anyway, yeah, interesting times ahead. The other thing I would say, I'm not just saying I'm Polio anyway, but Pete, don't feel too dystopian about it. Not because it mightn't happen, just don't kind of, do you remember to look on both sides? But to Rand's point, this is going to be a lot of good as well. Every transition, every new technology has its downsides.

1:30:07Arguably, nuclear bombs have actually cost a lot of lives in the Second World, but probably save more wars subsequently because all of a sudden Russia and the US couldn't throw stuff at each other because of mutually assured destruction. It's far from certain that nuclear technology has saved us. Yeah, what's the counterfactual look like? Right, exactly, exactly. And again, I don't mean to in any way reduce or lessen that lives were taken by nuclear bombs just to say, yeah, without them, is there more conventional war? Because you can't afford to because no one's got a bomb that can obliterate the world.

1:30:33So let's keep loving stuff, right? In some counterfactual world where uranium and plutonium don't exist. have the US and Russia been at war for the last 15 years maybe I don't know maybe not but just kind of yeah don't assume it's don't focus too much on the bad stuff by all means offset talk about plan for that bad stuff argue for improvements just don't don't assume it's all bad don't get too sucked into dystopia yeah nice hey that's a long one mate but thank you for doing that yeah I probably shouldn't have thrown that at the end but it was next on the list and I thought it was fascinating so I want to talk about it it is it is that like that and the debt.

1:31:11They're the big issues facing our society, globe, like really, in the next 50 years and it's just going to be wild. We'll see what happens. And then the things that we can't think of yet. Oh, and the left field things, which will absolutely happen as well. Correct. Until then, well, actually no, until Friday, have a great weekend. Enjoy the first part of your week and full on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation.

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