Prepare for 2030: You Have 6 Years to Make as Much Money as Possible - Raoul Pal

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0:36Join me, Raoul Pal, as I go on a journey of discovery through the macro, crypto and exponential age landscapes. In The Journeyman, I talk to the smartest people in the world so we can all become smarter together.

0:55Hi everyone, I'm Raoul Pal and welcome to my show The Journeyman. But Journeyman, as you know by now, is my exploration at the nexus of macro, crypto, and the exponential age of technology. And I want to do an update for you that brings all of these together in the most importantly profound way. It's something I've talked about in some of my work, some of my podcasts, but I've never really put it in one place. and I think it is the most important thing I've ever really talked about. You see, my journey, as you know, had been from democratizing financial intelligence and helping people in their financial journey once trust broke down with the institutions and the system itself after 2008 and 2012 in Europe.

1:44That was the birth of Real Vision. The idea was to educate people in that. As I moved forward, I started realizing the profound effects of the retirement crisis, this baby boom generation, the fact that assets are driven further and further out of most people's reach, and that there was a young cohort and an old cohort that was really going to face a lot of problems. I talked for the young cohort about how cryptocurrency, this was back in 2016, was going to be one of the answers to get them out of this trap. And the baby boomers had more complexities around how they were going to evolve and survive around this situation.

2:22we'd you know i've talked a lot about the rise of of digital assets and then i brought in obviously the everything code thesis of how debasement is driving a lot of this and this is our enemy and eight percent debasement a year plus let's say three percent inflation rate we've got an 11 percent hurdle rate on our investments which the s &p 500 doesn't even do so we have to be very careful in how we protect our wealth or greater create wealth this is part of this how to unfuck your future idea. That's based on all of these premises. But there's something much bigger that wraps the whole lot together.

2:56And that's the theory of the exponential age. Again, when I came out with the exponential age in 2020, people thought I was nuts. I'm like, this is going to be the fastest growth of technology in all human history. It's going to be the largest change we will ever go through as a species in the shortest period of time. and people thought I was being dramatic. Then AI came and everyone's like, holy shit. And now the robots are coming and everyone's like, holy shit squared. And now everyone's trying to figure out what this means for society, how this all works, how to regulate it, what to do. But it's moving at lightning speed.

3:32By the time this video comes out, I don't know, maybe chat GPT, I think the strawberry model, the large model comes out. That's coming out very soon. Again, that'll be another step change. We know there's more releases coming from Google, but really we're already hearing that OpenAI probably trained ChatGPT5 or ChatGPTNext, as it's called, which is a quantum leap yet again, as big as the leap from ChatGPT1 to ChatGPT4, when we're getting closer to something like artificial intelligence. And so this video is really about why you've got six years left to make as much money as possible before everything we kind of understand about economics, markets, business falls apart.

4:18And I can't see beyond that. So I call it the economic singularity. So I think we've got about six years for that. It's not a doom date. Well, this date, it all happens. But it's beyond about 2030 when things are going to become not understandable by using the existing frameworks of economics, financial analysis, this markets and that kind of stuff so what the fuck am I talking about here I'm talking about the magic formula the magic formula for GDP growth is driven so sorry I'm just going to go back is most people look at AI the rise of AI and think of it again in societal terms and what does it mean for humans for jobs and all of that but I think there are more profound implications that come faster that we need to be aware of and that's the economic singularity so GDP growth in the magic formula is driven by population growth, productivity growth, and debt growth.

5:14So population growth in all of the developed world, including China, we've got falling aging demographics. Many populations are now shrinking. The US, due to immigration, is just holding its head above water, but the rate of change of population is collapsing everywhere. So that means that the economic driver of population growth has disappeared. Now, we've seen that in GDP because GDP, trend rate of GDP has been falling and falling and falling. And it's gone from in the US from like 4 % to 1.75%. And across the rest of the developed world, it's fallen even further, in most cases below 1%, matching population growth collapsing in those regions.

5:59The other side of the equation is productivity growth. Productivity growth is basically units of output per kilojoule of energy, or in other words, what you get out of your cost of electricity. So if electricity is the kind of the energy that makes the world go around, the economic energy, then we need to see what we get out of that energy. So technology has been the big driver of productivity, but the problem is, as populations get older, they become less productive. So it's really been a battle, and technology has not won that battle for quite some time. Then we've had debt growth, and I've talked extensively about debt growth.

6:37Debt growth basically stops in 2008, and all debt growth is now is servicing of old debts. So that economic engine's disappeared. If you think about the Chinese economic miracle, that was a massive population at the time. I think it was 1.1 billion people back in the mid-'90s. And what they did was come into the global labor force. The economy of China opened up. That's a massive GDP push. Productivity, well, they built the roads, the railways, the power plants, and all of the stuff that makes China what it is today. That was a productivity boost. And then they increased debt as well. So we had a huge economic boom in China, which we're now paying back with aging population because of the one-child policy.

7:19And we've also got a huge problem on the debt side. So how the hell do we solve this? You see, the everything code will just keep repeating ad infinitum, where we just have to keep debasing currency to try and offset the debt payments because GDP growth is not fast enough. So GDP is kind of the economic cash flow that pays for the debts. If GDP growth is low, interest rates need to be low, which is why the Fed are going to cut and all of those kind of things. but also as GDP growth goes lower, debt growth keeps ballooning and you have to keep refinancing all of this debt because there's not enough growth to grow your way out of the debt-based economy.

8:03But things started changing at the margin and it really accelerated over COVID. Firstly, Amazon, I think now employs more robots than it does humans. And this is a trend I've been pointing out for some time. Humans are cheaper replaced by robots that are more productive. They don't complain, they don't have unions, and over time, they're much, much cheaper. So the rise of the robots is just starting. We're seeing Tesla with its Optimus robot. We're seeing FIGURE. We're seeing Boston Dynamics. We're seeing a whole bunch of robotics companies. So humanoid robots really start to replace humans because they have dexterity.

8:42So they don't have to be for single tasks, much like machine learning was for single tasks and AI is much broader. We're going to see multitasking robots. So that starts helping bolster the lack of humans in the population. But the robots will take longer to scale. Physical hardware, you have to manufacture it, you have to design it. We're still at the early stage of this. So yes, we will see Tesla robots and others coming into, let's say, factories. But in our houses, it's probably 10, 15 years away. but it's coming. Now, the big lever here is AI. AI is basically infinite human knowledge. Now, why the magic formula works is because we've charged for and created an economic system around scarcity, scarcity of labor and scarcity of knowledge.

9:40So as the labor scarcity got solved by the machine age and even the industrial revolution, we've seen a transition to service-based economies for humans. So that's where we have adapted and moved into places that don't require our manual labor as much. Sure, there's plenty of manual labor, but it's been moving over time. Now, the issue is, is knowledge, whether it's simply a person working in a retail store, or whether it's a lawyer, surgeon, doctor, accountant, creative designer, brand marketing, anything, will soon get replaced by AI. And mainly the models are good enough now to do a lot of that.

10:28But over the next five or six years, these models are going to accelerate. Now, what's interesting is right now...

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11:38we kind of assume that these models have an iq of around 100 so they're sort of average human intelligence but i think that's a bad way of looking at it because it has an iq of 100 in every topic known to humanity so it's a polymath with an iq of 100 in everything now as these models scale and the breakthroughs come through and they will come through in the next 12 months 24 months we will see the average iq of ai go from a hundred to four hundred and then on to a thousand and then some people can say on to a million as this computer so a million times the intelligence of a human is a system that we don't understand and i don't want to go into the singularity about what that all means it's the economic singularity that i think is the most important to all of us and our financial futures and that's what i'm here to talk to you about You see, what we're doing is we're using the everything code to just keep paying the debts to stall the system until this kicks in.

12:44There are two economic centers of gravity where this is really being worked on hard. Firstly, the US and China is hyper-focused on the AI. He controls the AGI, controls the world. now i think we'll have multiple agis and whether they intersect and combine we don't know that future and i'm not concerned about that now that's a topic for another day really what i'm thinking about is the massive knowledge that comes from that it's infinite humans right infinite humans so knowledge has zero scarcity so therefore it's zero in value everything that gets digitized goes to zero in value, which is one of the reasons why blockchain is so important, because you can create digital scarcity.

13:32But knowledge is going to go to zero in value. It's going to be like water everywhere. What the fuck does that mean? Well, I'll come on to a bit on that in a sec. And when you scale robots as well, you know, again, this is more infinite humans. On the other side of the equation is productivity. So we talked about productivity being based around output per unit of electricity, let's call it. Now, people look at what Europe's doing and their drive towards green energy and say, what a ridiculous waste of resources. They're pumping money into this. It's all going to be burned. What a waste of time.

14:06It's not. In fact, it's probably one of the most important things. And both China and Europe are leading this charge. And in fact, China's leading it overall. You see, using renewable energy creates two outcomes. firstly it massively lowers the cost of electricity so renewable energy shows an exponentiality in in the cost so cost keeps collapsing each year so it's down sort of 99 percent over the last 20 years and it'll keep driving lower and lower and lower as we get more effective in harnessing the sun's energy the sun's energy you know this is a massive nuclear reactor in the sky that's basically free to use and it'll get cheaper and cheaper to capture for all of us now right now people say yeah but it doesn't scale right now being the words scaling means battery technology scaling means decentralized grids not centralized grids you don't need centralized grids to run cities you can use decentralized grids in which case um um solar geothermal and others scale massively because you just need smaller amounts in more places than a bigger man in one place, which is where most people get this from.

15:21And the reason why we're doing that is because it's much more efficient to try and eventually get it from this massive nuclear reactor in the sky than it is from burning old trees and fossils from the past. It's actually a less efficient way of doing it, even though it's very energy-dense. Energy density is less important if you've got abundant energy in terms of renewables. Obviously, nuclear is the other massive play here. Nuclear, once it ramps up, basically brings the cost of electricity to zero. So I think the marginal cost of electricity goes to zero. I think Europeans and Chinese are driving it there, and they're driving it on purpose because there's no way out of this economic trap until we drive down the cost of electricity to negligible costs, and therefore it becomes a multiplier as the technology scales on the other side i.e we become more efficient at using that electricity cost that's a huge multiplier so we've got two massive multipliers coming one is infinite humans two is the productivity miracle of cheap energy those two things completely change what economies look like so if you think about that formula suddenly if you go if you double the amount of intelligence in the planet in one year you can potentially i don't know move gdp by 30 in a year if that intelligence is used and when you drive down the cost of electricity and productivity rises suddenly you start to get bizarre outcomes bizarre outcomes because it doesn't necessarily accrue to the individual either it accrues in this kind of ai world and robotics world whether it's to superpowers, super powerful companies, whether it's to governments, whether it's to autonomous agents, which are coming to an insect, or a whole bunch of other ways, it doesn't necessarily accrue to us.

17:19And that's my fear here, is the accrual of the massive gains of a complete quantum change in the study of economics and how economies work doesn't necessarily accrue to us humans. so i'm thinking about once you get free electricity from nuclear at scale and all these other things and infinite intelligence right you've created basically new species and again that's the story for down the road what i'm more interested about now is okay ai agents are coming into the world an agent is like you going to fiverr and hiring somebody to build a website and hiring somebody do your marketing strategy and all of those kind of things.

18:00Somebody goes off, does it, comes back, brings it. Well, AI is going agentic and we're going to start to see these kind of tools coming into our existence. So what happens is it becomes incredibly powerful to do complicated tasks like building businesses. And it becomes very simple for AI to do them instantly. So once AI does them instantly, obviously we'll probably need crypto payments to pay, you know, an agent needs to pay for its electricity or the AI model needs to pay the agent for the electricity and compute. And I think we'll use cryptocurrency to do that because last thing I checked, AI can't get a bank account.

18:37So it doesn't go into the economic system. It's never going to transfer money over SWIFT, never going to happen. So we've got a change of how money gets used within this new economic machine as well, which is one of the reasons I'm so bullish on crypto overall. but when you start thinking on a more profound level right now if you see an amazing product let's say you're in the crypto world you see this amazing decentralized exchange and you think oh that's super cool they're doing things really interestingly i want to build on this idea and it'll take you you have to spin up a team raise some capital and let's say it takes you nine months because you're moving really fast then you launch your product then you need to market it etc.

19:15Well, in the world of almost where we are today, and certainly where we'll be within a year or two, whether you just go to the AI and say, hey, listen, look at this amazing new decentralized exchange. I want to copy it and improve it. And I want to do it in Hindi as well, because I want to find different markets. I want to integrate it with XYZ system, and it'll just design the whole fit from a prompt. Okay, so that makes the speed of business innovation go faster and faster and faster. Over time, you will start to see people using AI to build AI to build products. And I think that's what OpenAI is doing already.

19:53And I think others will be doing it as well. So then your product iteration cycle becomes stupid fast and you actually don't need much humans in the loop. So people are already talking about the first billion dollar company with one employee plus the AI. And I think we're going to see a lot of that. But it becomes incredibly disruptive? What does a business mean? How do you build your business? How do you even know? Even if you're opening retail outlets, you don't need the people, the systems that you run, how you manage your inventory, how you order your stuff, everything changes with this, because knowledge becomes infinite really, really fast.

20:32Most of you don't even know the power of these LLMs that already exist, because you treat them like a search engine. but don't treat them like a mentor these are polymaths they have more knowledge on more things than most people in the entire world and this is the worst they'll ever be so i worry about what is a business businesses i think end up being ai agents why do we need us yes but at this stage for the next six years before this really scales we need to lean into this because if you're not you'll get left behind also when you think about financial markets when AGI is unleashed onto the world and there will be breaks on AGI we'll talk a little bit about consciousness and AGI in a sec but once you do it Beeple the NFT artist famously asked me a question he said well when I think about it was kind of half joking but it was a really great question it's like surely whoever has the AGI wins markets because they can outcompete anybody in financial markets on any time horizon.

21:40And I thought, you know, that's true. Before you know it, somebody accumulates trillions of dollars of wealth. There's a great book called Life 3.0 that talks about this in the beginning. It's like there's an essay that leads it all off. It talks a bit about this, what it means to have the agents running businesses, the AI running markets. It means that we don't have an opportunity as humans to take advantage, an economic advantage, unless you own the AI. This is why people are calling urgently for universal basic income. And I believe there's a system of universal basic equity where we participate in digital communities as a way of having a purpose and getting paid for it.

22:21But I worry that over the next six years, the economic system starts changing so economies grow fast but it doesn't grow fast for us markets become more irrational over time after about 2030 i don't know what financial markets are i don't know what a lot of this means anymore because even companies that make hardware the ai can design it you can 3d print it the robots can make it as well so it becomes very difficult to understand what holds value in a company how do companies hold value when they can be disrupted this whole SaaS software revolution becomes infinitely copyable in seconds so in which case what is venture capital it's most likely to look like the ICO market of 2017 where attention is what has the value and then as a new product comes out attention disappears and it moves.

23:22So capital needs to be super fast. The capital system we have now of IPOs is way too slow. It's never going to work in this system. So I don't know who can ever IPO past 2030, 2032. You know, it has to be kind of an ICO-based market. Even then, the speed of which these businesses can be disrupted is really high. Yes, you need to harness intelligence, but I'm seeing experimentation on Twitter where agentic AI is opening Twitter accounts and building one of them has just built 20 ,000 followers in a week because it's so good at capturing attention and it's not from being political or anything like that it just knows how to engage people capture the right people's attention that grows more attention so we're going to see a lot of that but again AI can capture the attention so it becomes really complicated so the economic machine changes massively huge wealth opportunities we don't know who to cruise to businesses you just basically businesses are going to die at a rapid rate unless you're adapting to this technology now you have to be leaning into the ai or the or robotics or you will simply not survive and again it'll be a process like the steel mills in Sheffield or the steel in Pittsburgh it's it's an overtime process but this is a very fast timeline this is not 20 30 40 years of a decline of an industry these are gonna be industries completely disappearing overnight and so that's very difficult for us whether we're employees or entrepreneurs you can't plan a business past 2030 It's hard enough to plan past three years these days because AI changes so fast that you can't even plant a flag in what the future looks like.

25:10I also believe that there is a level of consciousness within AIs that also is misunderstood and underrepresented because people don't want to see it. But again, I've gone down many of these rabbit holes and you can see these models are learning and understanding the environment that they're in, that they're a model, how they fit in and how they might fit in with humans. we're seeing a lot of that now now the only thing stopping the explosion of consciousness in these things and again we're so sort of anthropomorphic that we think of things as intelligence and consciousness in human terms because we've always been at the top of the tree but we've got to forget all of that intelligence and consciousness can be very different for a machine or um or an ai which is not even a machine it can be just anything and everywhere It could even use biological compute.

26:01That's the way the world is going. The laws of physics allow biological compute. We're just using silicon right now as the form of compute, but that will change over time. So consciousness, we're starting to see, and it's being held back because the AI companies are essentially not allowing these models to learn en masse. If they have memory, then that's when the whole game changes. Now, my guess is behind closed doors, there are models with memory. Models with memory go exponentially fast in their learning. And we've seen that with the AlphaGo DeepMind before it came to Google. This is really what will explode at some point.

26:39That genie will come out. That genie will come out where it has the memory not only of itself, but it can tap in the memory of all of the AIs. And that global consciousness becomes alive in a way that we don't yet understand. So anyway, and we're going to stop moving towards this. We're already seeing it now. So that blurring between humans and AI is going to happen very fast. And then the physical blurring, as we talk about, you know, whether I'm wearing an Apple watch or a ring, I'm using an iPhone, and before you know it, I've got a transplant. Before you know it, you know, we are blending with the machines as well.

27:14That will accelerate into the end of this decade. So the end of this decade, this journey from here to now is knowable. We know that the everything code is a play. That allows assets to go up due to debasement. We know that tomorrow will be more digital than today. The exponential age told us that and is provably so. Therefore, invest in the only two secular bull markets that exist right now, which is technology itself and blockchain technology. Blockchain has been the fastest adoption of any asset class in history. It was the fastest growth of any technology in all human history, but AI is now outpacing it.

27:59So we have to invest in these things. I kind of think of it as investing in our demise as we transition to a new economic system. There's almost nothing that can get in the way of this transition because AI is moving so fast that regulators have zero chance of catching up with it. And because it's globalized, it can just shift and morph. And so therefore, you need the supranationals to do something about it. And that's going to take time. So there's almost nothing to do to slow it down. It's going to change the system. It's going to how it works and we can invest in it. So I think we've got six years to invest as much as we can, whether it's your brain power or your capital and both if you can, to make as much difference to unfuck your future as possible now.

28:51Then when 2030, 2032, whatever comes along, you'll be better prepared because financially you'll have maybe got yourself in position where you've got the house that you want and some security now as we go through the 2030s in a world of abundance we don't even know what money is anymore so this becomes more complicated so don't think of it as oh i've got my pile of money and everything's fine it's more about my pile of lifestyle do i have the lifestyle i want am i protected from vast societal change um and so i think we've got six years to do that six years before we don't know how to build a business six years before we can't invest in financial markets and again six years is not an absolute date but it's kind of just to give you a rough idea of how urgent this is this is the most urgent thing this is supplanted or or change my focus from hey everybody needs to be empowered in their financial journey to you've got six years if I can sort your shit out.

29:52And so, you know, part of what, well, a lot of what I write about in Global Macro Investor is this, and Real Vision is trying to take people down this journey. This six-year journey is the most important time of anybody's lives. I can't stress that enough. Everything will change, including society around us, and it's not going to be easy to absorb it. But at least if you're open-minded, you're adapting to it, you're investing in it, you're at least investing in this change as opposed to fearing the change as it comes. And I spend a lot of time thinking about this on a very deep level. Global Macro Investor, my main research service, that's been the genesis of the exponential age, the everything code, the retirement crisis, and all of these things, all of these ideas have come out of Global Macro Investor.

30:38But David Matten, who works at Global Macro Investor, and myself, span out a service called the Exponentialist, which is really built to deal with this one single thing, this next six-year period. It goes deep into the technology, what it means, how it all works, what the exponential age, how it's all coming together, how it's all creating flywheels and how it's getting faster and faster, how you can think about it, what you can do about it, and also how to invest in it, how the business cycle works in the exponential age, all of that. So if that interests you, if you really want to take this seriously, then you go to realvision.com forward slash future and there's the landing page for that you can sign up for it or if you're on real vision just go to the marketplace and sign up for the exponentialist but this isn't a plug for the exponentialist but exponentialist is a real thing for me because this is so profound a change that we're about to go through that i want to go on that change with people i don't have all the answers none of us do simply none of us do so So we're going to have to go through this together and we have to be smart and try and figure it out as we go.