1 00:00:11,127 --> 00:00:11,697 Anja: Hello. 2 00:00:11,697 --> 00:00:14,007 Joining me today is Paul Musson. 3 00:00:14,097 --> 00:00:17,817 Paul is a veteran investment professional with over 30 years of 4 00:00:17,817 --> 00:00:19,917 experience in traditional finance. 5 00:00:20,037 --> 00:00:24,627 He brings an insider's perspective on, um, flaws of traditional 6 00:00:24,627 --> 00:00:25,797 finance, you could say. 7 00:00:25,827 --> 00:00:29,637 And he's also the founder of, uh, Paddington Capital Management, which 8 00:00:29,637 --> 00:00:34,347 focuses on investment consulting and financial reform, while his 9 00:00:34,347 --> 00:00:39,297 blog political economy spelled Paul for political economy, dissects 10 00:00:39,297 --> 00:00:41,517 economic policies and inequality. 11 00:00:41,577 --> 00:00:47,847 Inaccessible, no nonsense, uh, terms, most notably his book, capital Offense, 12 00:00:47,877 --> 00:00:53,097 why Some Benefit at Your Expense is out now, and we are here to talk about that. 13 00:00:53,097 --> 00:00:54,717 Welcome to Honest Money Paul. 14 00:00:54,722 --> 00:00:55,382 Paul: Thank you Anja. 15 00:00:55,407 --> 00:00:56,187 It's great to be here. 16 00:00:56,817 --> 00:01:00,807 Anja: I would love for you to introduce yourself as well to my audience a 17 00:01:00,807 --> 00:01:05,157 little bit, and yeah, tell us what your journey has been to this date and what 18 00:01:05,157 --> 00:01:06,982 ultimately led to you writing this book. 19 00:01:08,457 --> 00:01:13,227 Paul: Yeah, so I was, uh, going way back, I was born in Wales. 20 00:01:13,767 --> 00:01:19,047 Uh, the family moved to Montreal in Canada, 1965. 21 00:01:19,047 --> 00:01:20,157 I was almost four. 22 00:01:21,267 --> 00:01:22,137 Grew up there. 23 00:01:23,037 --> 00:01:27,267 And, um, but I wasn't fluently bilingual as a bilingual province 24 00:01:27,267 --> 00:01:28,767 in Quebec, French and English. 25 00:01:29,637 --> 00:01:33,837 And, uh, language is not my, uh, forte. 26 00:01:33,837 --> 00:01:37,947 Even English, nevermind other languages, you know, so, so 27 00:01:37,977 --> 00:01:39,447 it was tough finding a job. 28 00:01:39,447 --> 00:01:47,907 So in 1990, I uh, loaded up my 1980 Plymouth Vale with all my possessions 29 00:01:47,907 --> 00:01:51,657 and headed to Toronto looking for work. 30 00:01:52,317 --> 00:01:54,027 And so I arrived in the city. 31 00:01:54,927 --> 00:01:59,397 I was literally sleeping on a hardwood floor of like a small bachelor apartment, 32 00:01:59,547 --> 00:02:03,182 I dunno what you call it in Australia, but it's like a one room plus a bathroom. 33 00:02:04,707 --> 00:02:08,967 Um, yeah, just started looking for work and my first job was in a video 34 00:02:08,967 --> 00:02:15,717 store working nights from six till 1230 at night, and I was 29 years old. 35 00:02:15,897 --> 00:02:18,027 And that's how I got my start in Toronto. 36 00:02:18,597 --> 00:02:25,047 And it, uh, it was a long, sort of circuitous, unchartered, 37 00:02:25,557 --> 00:02:27,207 uncharted path, if you will. 38 00:02:28,047 --> 00:02:30,297 Uh, to get to where I got to. 39 00:02:30,717 --> 00:02:33,627 I knew I wanted to be in research. 40 00:02:33,687 --> 00:02:38,817 I knew I wanted to analyze businesses, investment analysis, but I was very 41 00:02:38,817 --> 00:02:44,367 naive about the structure of the industry because all through school 42 00:02:44,367 --> 00:02:48,057 I wasn't really serious about, I knew school was important, but I didn't 43 00:02:48,057 --> 00:02:51,537 know what I wanted to do, and so. 44 00:02:52,542 --> 00:02:56,712 At the time, all I wanted to do, I had a thirst for knowledge, so like history 45 00:02:56,712 --> 00:02:59,202 or philosophy, geography, nature. 46 00:02:59,622 --> 00:03:02,502 So I would just do what was required in school just to get 47 00:03:02,502 --> 00:03:04,932 by, rush home and read my books. 48 00:03:06,102 --> 00:03:09,102 And it reminds me of that old Mark Twain line. 49 00:03:09,462 --> 00:03:11,352 I never let school interfere with my education. 50 00:03:12,492 --> 00:03:18,762 And, uh, so, so like I didn't realize at the time, but I was, I was sort of 51 00:03:18,762 --> 00:03:26,382 building a foundation of principles and, and morals I think at the time. 52 00:03:27,402 --> 00:03:29,802 Um, I was just doing it because I loved it. 53 00:03:30,372 --> 00:03:31,392 It was so much fun. 54 00:03:32,322 --> 00:03:39,882 And then, um, yeah, one job led to another and eventually I ended up, 55 00:03:39,972 --> 00:03:42,972 uh, uh, in the mutual fund industry. 56 00:03:43,452 --> 00:03:43,722 Yeah. 57 00:03:43,722 --> 00:03:47,982 Started as an analyst and I became a portfolio manager, and then my boss left 58 00:03:47,982 --> 00:03:50,412 and then I ended up heading up the team. 59 00:03:51,807 --> 00:03:56,847 And our investment style was to invest in very high quality companies, 60 00:03:58,977 --> 00:04:04,857 uh, defined as a business that we think has a sustainable competitive advantage. 61 00:04:06,237 --> 00:04:10,392 It's not that difficult to find businesses that have a competitive advantage. 62 00:04:10,392 --> 00:04:13,857 You can just look at the financials and if you've got great cash flow, 63 00:04:13,917 --> 00:04:16,467 great free cash flow, good return on capital, they're growing. 64 00:04:16,467 --> 00:04:17,727 They have a strong balance sheet. 65 00:04:18,297 --> 00:04:21,987 You might not know what's special about them, but there's 66 00:04:21,987 --> 00:04:23,097 something special about it. 67 00:04:23,187 --> 00:04:25,257 Then you gotta go figure out what it is. 68 00:04:25,257 --> 00:04:28,857 What is it that enables that companies to generate these great financials? 69 00:04:29,607 --> 00:04:30,627 You can figure that out. 70 00:04:30,837 --> 00:04:34,707 The most difficult part, of course, is having confidence with respect to the 71 00:04:34,707 --> 00:04:37,107 sustainability of that competitive edge. 72 00:04:38,697 --> 00:04:40,197 And there are no guarantees. 73 00:04:40,197 --> 00:04:44,367 But one of the big things that we would look at is the 74 00:04:44,367 --> 00:04:46,977 corporate culture of the business. 75 00:04:48,162 --> 00:04:52,782 Is it a, uh, a self-reinforcing type corporate culture? 76 00:04:53,112 --> 00:04:56,862 Is it a business model where all the constituents of the 77 00:04:56,862 --> 00:04:58,002 business are benefiting? 78 00:04:58,002 --> 00:05:03,762 So not just the shareholders and senior management, but also the suppliers, also 79 00:05:03,762 --> 00:05:06,342 the employees, also society at large. 80 00:05:06,432 --> 00:05:11,172 And then finally the sixth one and the most important, the customer. 81 00:05:12,312 --> 00:05:15,342 Is it a true customer value proposition that the customer's 82 00:05:15,342 --> 00:05:19,122 willing to pay for part with some of their hard earned capital to 83 00:05:19,122 --> 00:05:20,862 buy whatever it is you're offering. 84 00:05:20,862 --> 00:05:23,232 And the reason the customer is the most important out of all these 85 00:05:23,232 --> 00:05:27,822 six is 'cause the customer is the only constituent in this business 86 00:05:27,822 --> 00:05:30,792 model that pays all the others take. 87 00:05:30,882 --> 00:05:32,982 And um, and it was fun. 88 00:05:33,042 --> 00:05:33,642 It was fun to do. 89 00:05:33,642 --> 00:05:37,302 I've been in Australia, in Australia a number of times looking 90 00:05:37,302 --> 00:05:38,832 at some businesses down there. 91 00:05:39,132 --> 00:05:40,572 It was a fantastic job. 92 00:05:41,862 --> 00:05:46,932 And so what led me to where I am today in terms of writing this book? 93 00:05:48,252 --> 00:05:49,032 Is that 94 00:05:51,582 --> 00:05:57,522 many years ago, even before I became an investor, I had decided that I 95 00:05:57,522 --> 00:06:03,492 was gonna do everything possible to not be a burden on anybody else. 96 00:06:04,662 --> 00:06:11,982 And so whatever I have from a material wealth perspective, I would hope would 97 00:06:11,982 --> 00:06:17,442 be a reflection of the wealth that somebody else out there also has. 98 00:06:18,342 --> 00:06:23,022 And in a free market capitalist system, that's the way it's supposed to work. 99 00:06:23,052 --> 00:06:27,672 You only benefit if you create a capital that somebody else values and they're 100 00:06:27,672 --> 00:06:34,602 willing to, without coercion, freely exchange their capital for your capital. 101 00:06:34,602 --> 00:06:38,022 And we do it through the medium of exchange called money, which 102 00:06:38,022 --> 00:06:39,192 we'll talk about, I'm sure. 103 00:06:40,362 --> 00:06:45,012 And uh, so when that's happening is a beautiful thing increasingly. 104 00:06:45,807 --> 00:06:46,887 That's not happening. 105 00:06:47,757 --> 00:06:50,847 People are benefiting at the expense of somebody else. 106 00:06:50,847 --> 00:06:54,627 And I talk about this and, but it's often two or three steps removed. 107 00:06:54,627 --> 00:06:58,287 You can't see the perpetrator, you know, you're getting screwed and 108 00:06:58,287 --> 00:07:01,167 life's getting more difficult, but you can't see who it is as benefiting 109 00:07:01,167 --> 00:07:03,387 directly from your, from your stress. 110 00:07:04,677 --> 00:07:06,537 And so I talk about it in a book. 111 00:07:06,537 --> 00:07:10,167 It's, it's getting like, you know, a big game of poker. 112 00:07:11,277 --> 00:07:15,507 So in a game of poker, there's no capital created at the table. 113 00:07:16,047 --> 00:07:21,507 There is a redistribution of wealth at the table and at the end of the game you 114 00:07:21,507 --> 00:07:26,097 have one winner and a bunch of losers, which, you know, is sounding increasingly 115 00:07:26,097 --> 00:07:28,047 familiar to a lot of people out there. 116 00:07:29,247 --> 00:07:35,937 And it's because I believe the monetary system, um, enables, not 117 00:07:35,937 --> 00:07:39,897 only enables it, but encourages it not, and it's not a conspiracy theory. 118 00:07:39,897 --> 00:07:43,827 I don't believe that policy makers purposely set. 119 00:07:44,667 --> 00:07:47,307 To increase wealth disparity, which is what has happened. 120 00:07:47,307 --> 00:07:49,467 And, and it was entirely predictable by the way. 121 00:07:49,677 --> 00:07:57,057 They convinced themselves that by bailing out Wall Street, by creating a housing 122 00:07:57,057 --> 00:08:03,957 wealth effect after the oh one recession, that by driving asset prices higher, yes, 123 00:08:04,047 --> 00:08:06,207 the existing asset owners would benefit. 124 00:08:07,197 --> 00:08:11,547 But don't worry, the benefits of that will all trickle down to everybody else 125 00:08:11,667 --> 00:08:15,357 because those higher asset prices are gonna drag the economy up with them. 126 00:08:16,227 --> 00:08:17,787 No, it doesn't work that way. 127 00:08:18,927 --> 00:08:24,302 So if you back up, so for stock markets, if stock markets are going higher, 128 00:08:24,957 --> 00:08:32,247 because companies that are in the index are putting capital, putting scarce 129 00:08:32,247 --> 00:08:38,277 resources to productive use to create more capital, they increase their profit, 130 00:08:38,277 --> 00:08:42,237 they hire more people, they pay them more, they reinvest in the business. 131 00:08:42,777 --> 00:08:47,457 Ratchets up that higher profitability then pushes their share price higher, 132 00:08:48,027 --> 00:08:51,237 and then of all the companies in the index, or most of them are doing that, 133 00:08:51,657 --> 00:08:53,367 then the stock market grows higher. 134 00:08:53,367 --> 00:08:55,107 So that's a real wealth effect. 135 00:08:55,107 --> 00:08:59,067 People feel wealthier because they truly are, not only are they 136 00:08:59,067 --> 00:09:03,147 wealthier, but society as a whole is wealthier because there's more 137 00:09:03,147 --> 00:09:04,737 capital than there was before. 138 00:09:04,797 --> 00:09:06,357 That's a really good wealth effect. 139 00:09:07,377 --> 00:09:11,787 But if stock markets are going higher because the Fed is taking interest 140 00:09:11,787 --> 00:09:17,367 rates down to zero or resuming QE, printing money to buy assets and drive 141 00:09:17,397 --> 00:09:21,687 equities higher through the portfolio effect, which we can talk about then 142 00:09:21,687 --> 00:09:24,387 no real wealth is being created. 143 00:09:25,197 --> 00:09:27,597 Wealth is being redistributed within the system. 144 00:09:27,597 --> 00:09:31,797 The asset owners are receiving more for the capital that they own. 145 00:09:31,797 --> 00:09:35,727 It's not that more capital is being produced, and we can go into exactly 146 00:09:35,727 --> 00:09:37,107 how that works if you're interested. 147 00:09:38,427 --> 00:09:40,677 So we've had a fake wealth effect. 148 00:09:40,677 --> 00:09:41,577 It doesn't mean that there's no. 149 00:09:42,132 --> 00:09:43,392 Wealth being created. 150 00:09:44,412 --> 00:09:48,972 It's just those who own stocks are much wealthier than they would've been 151 00:09:49,002 --> 00:09:56,532 otherwise if the Fed hadn't imposed its will on stock markets and deliberately. 152 00:09:56,592 --> 00:09:58,452 And that's, this is the problem, right? 153 00:09:58,452 --> 00:10:03,192 The, the markets know that the Fed will not let the stock market fall. 154 00:10:04,752 --> 00:10:05,802 They'll come to the rescue. 155 00:10:05,802 --> 00:10:11,412 So what encourages reckless behavior encourages mass speculation. 156 00:10:11,412 --> 00:10:15,372 Take on as much leverage as you can because the Fed is gonna be 157 00:10:15,372 --> 00:10:16,752 there and they've got your back. 158 00:10:16,902 --> 00:10:22,302 But this is extremely harmful for the economy, the price discovery 159 00:10:22,302 --> 00:10:24,312 mechanism of capital markets. 160 00:10:24,552 --> 00:10:29,292 Capital markets market players with skin in the game who know 161 00:10:29,292 --> 00:10:31,002 there's a real chance of loss. 162 00:10:31,002 --> 00:10:34,182 So they're very careful with how they allocate their hard earned capital. 163 00:10:34,842 --> 00:10:37,452 And it results in the most efficient allocation of capital. 164 00:10:37,452 --> 00:10:39,642 It results in the best productivity growth. 165 00:10:40,497 --> 00:10:43,707 What we've had over the last 25 years is declining productivity 166 00:10:43,707 --> 00:10:46,707 growth, still growing, but not nearly as fast as it used to. 167 00:10:47,367 --> 00:10:51,387 And you've got zombie companies roaming the earth, you know, who were 168 00:10:51,387 --> 00:10:55,767 destroying capital back in the early eighties, according to the BIS or 169 00:10:55,767 --> 00:10:57,477 Bank for international settlements. 170 00:10:58,557 --> 00:11:02,517 Zombie companies that back in the eighties were like low single digit percentage of 171 00:11:02,667 --> 00:11:09,477 listed companies and developed economies, um, maybe two, 3% before pre COVID. 172 00:11:09,507 --> 00:11:10,977 I think they got up to 17%. 173 00:11:10,977 --> 00:11:15,087 So these are companies that, through Champ Peter's creative destruction 174 00:11:15,087 --> 00:11:16,737 should have gone away a long time ago. 175 00:11:16,797 --> 00:11:20,397 And at Capital, those resources should have been reallocated within the 176 00:11:20,397 --> 00:11:22,257 economy and put to more productive use. 177 00:11:22,557 --> 00:11:29,517 Instead, they're allowed to, to exist and consume capital rather than create it. 178 00:11:31,677 --> 00:11:32,997 So that's on the stock side. 179 00:11:33,237 --> 00:11:35,937 Even worse, well, I don't know if it's worse. 180 00:11:36,447 --> 00:11:38,997 Well, it's worse for young people, is. 181 00:11:39,777 --> 00:11:42,687 Attempting to create a wealth effect through the housing 182 00:11:42,687 --> 00:11:46,377 . Yeah, so, uh, we were talking about the housing effect, so, or 183 00:11:46,377 --> 00:11:47,517 the wealth effect through housing. 184 00:11:47,517 --> 00:11:52,707 So even worse than a fake wealth effect by artificially driving 185 00:11:53,187 --> 00:11:56,757 stock markets higher by distorting the price discovery mechanism and 186 00:11:56,757 --> 00:12:00,777 capital markets and distorting the most important price in the economy, 187 00:12:00,987 --> 00:12:03,267 which I think Jim Grant talks about. 188 00:12:03,267 --> 00:12:08,067 This is interest rates, the most important price and it has been 189 00:12:08,457 --> 00:12:13,797 completely hampered by central banks and it's not allowed to fulfill its 190 00:12:13,797 --> 00:12:16,947 really important role of helping to. 191 00:12:17,802 --> 00:12:20,712 To allocate things and direct things within the economy. 192 00:12:20,742 --> 00:12:27,882 We have a distorted signal now, but even worse than this, is driving housing prices 193 00:12:27,882 --> 00:12:30,612 higher in order to create a wealth effect. 194 00:12:30,642 --> 00:12:36,402 Now, the central, the Fed will never explicitly say, although their 195 00:12:36,402 --> 00:12:39,402 actions in many things, they've said, it's pretty clear this is 196 00:12:39,402 --> 00:12:40,962 what they were doing in my opinion. 197 00:12:42,372 --> 00:12:48,492 So after you remember the.com technology boom in the 1990s, the whole rational 198 00:12:48,492 --> 00:12:52,302 exuberance thing that Greenspan called it, then he then he thought it was okay 199 00:12:52,302 --> 00:12:56,532 because productivity was justifying higher market prices for stock prices. 200 00:12:57,282 --> 00:13:00,192 So it was creating a very positive wealth effect as stock markets 201 00:13:00,192 --> 00:13:03,222 were soaring, people were feeling wealthier because they were wealthier. 202 00:13:03,462 --> 00:13:07,932 So they would either sell their stocks and spend it or borrow on their portfolio 203 00:13:07,932 --> 00:13:11,652 spend that that was contributing to G-D-P-G-D-P, just final spending. 204 00:13:11,652 --> 00:13:14,892 And by the way, we could talk about why that, I believe is a. 205 00:13:14,937 --> 00:13:21,687 A very misleading, uh, um, a misguided measure of economic health. 206 00:13:23,457 --> 00:13:28,827 So then it all came crashing down and then there was a negative wealth effect. 207 00:13:28,887 --> 00:13:32,127 People were feeling less wealthy, so they started spending less money, 208 00:13:32,487 --> 00:13:34,617 which is not good for that GDP number. 209 00:13:35,817 --> 00:13:44,967 And so back in oh one Paul McCulley of PIMCO and Paul Krugman echoed Paul, that 210 00:13:44,967 --> 00:13:50,397 the Fed should create a new wealth effect through the housing market because a 211 00:13:50,397 --> 00:13:53,277 lot more people own houses than stocks. 212 00:13:53,697 --> 00:13:56,427 And so if you can drive housing prices higher, that will encourage 213 00:13:56,427 --> 00:13:59,667 even more people to spend and that will be good for the economy. 214 00:14:00,417 --> 00:14:05,727 Again, this is this the Keynesian sort of mindset that consumption is 215 00:14:05,727 --> 00:14:08,247 the foun of all economic prosperity? 216 00:14:08,607 --> 00:14:11,277 No, that is the result. 217 00:14:12,312 --> 00:14:12,522 It. 218 00:14:12,552 --> 00:14:17,772 What drives an economy forward is saving an investment that allows us then to 219 00:14:17,772 --> 00:14:22,272 consume is so they're gonna all ask backwards and they think that because 220 00:14:22,272 --> 00:14:26,322 they look at GDP final spending and two thirds of it is consumption and 221 00:14:26,322 --> 00:14:30,702 your consumption to somebody else's income, but you cannot consume, like 222 00:14:30,702 --> 00:14:36,942 John Baptist say, said, you know what you produce gives you the wherewithal 223 00:14:37,032 --> 00:14:38,772 to then go and demand something. 224 00:14:39,702 --> 00:14:42,462 I mean, I'm getting off track anyways, back, back to housing. 225 00:14:43,062 --> 00:14:44,022 We can talk about that. 226 00:14:45,132 --> 00:14:49,752 So they take interest rates down to 1%. 227 00:14:49,842 --> 00:14:53,892 I think this was in oh two or oh three, despite the fact 228 00:14:53,892 --> 00:14:55,482 that the economy was growing. 229 00:14:56,742 --> 00:15:00,372 The recession in the US in 2001 was very mild. 230 00:15:00,402 --> 00:15:04,272 It wasn't even two consecutive quarters of contraction, it was only one quarter. 231 00:15:05,142 --> 00:15:09,372 And so in oh three, the economy is growing presumed. 232 00:15:10,347 --> 00:15:14,127 They keep interest rates at what would've been normally being 233 00:15:14,127 --> 00:15:16,167 considered emergency levels. 234 00:15:16,347 --> 00:15:20,307 We must be at war or there must be something going on, you 235 00:15:20,307 --> 00:15:22,377 know, a, a plague or something. 236 00:15:22,677 --> 00:15:28,887 No, they kept it down to drive housing prices higher and they kept it extremely 237 00:15:28,887 --> 00:15:31,287 low levels for about three years. 238 00:15:32,037 --> 00:15:37,137 And of course, the housing market responded and you had that crazy wacko 239 00:15:37,197 --> 00:15:43,497 housing market in the two thousands which resulted in the subprime 240 00:15:43,497 --> 00:15:50,667 mortgage debacle and, uh, the greatest financial crisis since the 1930s. 241 00:15:51,927 --> 00:15:56,727 And so, rather than say to themselves, well, you know what, 242 00:15:57,237 --> 00:15:58,587 maybe we shouldn't have done that. 243 00:15:59,907 --> 00:16:07,077 Instead they doubled and tripled down with now with QE printing trillions of dollars. 244 00:16:08,457 --> 00:16:11,487 Buying trillions of dollars of mortgage backed securities to drive 245 00:16:11,487 --> 00:16:15,897 mortgage rates to the floor to try and get housing prices back up. 246 00:16:17,727 --> 00:16:23,127 Now with qe, QE one, I still don't think it was justified. 247 00:16:23,757 --> 00:16:28,437 I think Wall Street presented policy makers, politicians 248 00:16:28,437 --> 00:16:29,642 with a false dichotomy. 249 00:16:31,467 --> 00:16:33,027 They said, you can bail us out. 250 00:16:34,137 --> 00:16:35,457 I know that's distasteful. 251 00:16:35,697 --> 00:16:39,677 Or your only other alternative is global financial Armageddon. 252 00:16:40,887 --> 00:16:45,177 So I think there were lots of things in between there, but of course 253 00:16:45,177 --> 00:16:48,717 they wouldn't have been very much fun for the bank banking community. 254 00:16:48,867 --> 00:16:52,557 I think any banks that were insolvent should have been nationalized, not let go. 255 00:16:52,767 --> 00:16:54,087 Don't, they don't go bankrupt. 256 00:16:54,837 --> 00:16:58,257 Government takes 'em over, shareholders wiped out bond holders. 257 00:16:58,257 --> 00:17:00,927 Maybe you're getting 25 cents on the dollar or something like that. 258 00:17:01,167 --> 00:17:02,217 But the banks are still running. 259 00:17:02,277 --> 00:17:03,357 ATMs are still running. 260 00:17:03,747 --> 00:17:06,507 You fire the board, you fire the senior management, middle management's 261 00:17:06,507 --> 00:17:07,797 still there running the business. 262 00:17:08,847 --> 00:17:13,527 And then you break the banks up back to the old glass eagle thing from the 1930s 263 00:17:14,157 --> 00:17:14,397 Speaker 3: and 264 00:17:15,117 --> 00:17:17,337 Paul: separating commercial and investment banking. 265 00:17:18,027 --> 00:17:23,517 And um, and so you make the banks smaller and so none of them are able ever again 266 00:17:23,517 --> 00:17:25,197 to hold the rest of the world hostage. 267 00:17:26,457 --> 00:17:28,617 But anyways, back to the housing wealth effect. 268 00:17:28,737 --> 00:17:32,487 A house has no business going up in price. 269 00:17:32,817 --> 00:17:36,507 Now there are going to be some instances in areas, very popular areas like 270 00:17:36,507 --> 00:17:39,027 New York City or London or wherever. 271 00:17:39,027 --> 00:17:40,467 They're always gonna be more expensive. 272 00:17:41,997 --> 00:17:46,287 But like I was saying earlier, you know, in a free market capitalist 273 00:17:46,287 --> 00:17:48,507 system, you're only supposed to be benefiting to the extent that 274 00:17:48,507 --> 00:17:49,797 you're benefiting somebody else. 275 00:17:50,397 --> 00:17:53,487 So you create capital, they create capital, you fairly exchange it. 276 00:17:54,477 --> 00:17:57,537 So my wife and I live in this house. 277 00:17:57,717 --> 00:18:02,202 It's in a suburb of Toronto and we bought it in 2001. 278 00:18:03,012 --> 00:18:07,722 It just happened to coincide with when the Fed started their wealth 279 00:18:07,722 --> 00:18:09,642 effect housing wealth effect policy. 280 00:18:11,142 --> 00:18:16,452 And so our house has gone up four times in value over the last 24 years. 281 00:18:17,712 --> 00:18:22,152 So if we're only supposed to be benefiting because somebody else is 282 00:18:22,152 --> 00:18:26,832 benefiting and we make four times on our home, who else out there made 283 00:18:27,612 --> 00:18:29,832 four times what we made on our home? 284 00:18:31,062 --> 00:18:31,662 Nobody. 285 00:18:33,102 --> 00:18:34,242 But it's worse than that. 286 00:18:35,112 --> 00:18:41,412 It's not that somebody else didn't make four times their, it comes at 287 00:18:41,412 --> 00:18:43,752 their expense four times their expense. 288 00:18:44,652 --> 00:18:47,442 So we only, our, the house is not a productive asset. 289 00:18:47,652 --> 00:18:53,742 Our house is not producing four times the amount of stuff that it produced in 2001. 290 00:18:53,832 --> 00:18:56,292 It hasn't increased four times in size. 291 00:18:56,652 --> 00:18:59,742 It hasn't relocated to where you live. 292 00:18:59,742 --> 00:19:02,322 The beautiful area of part of Australia. 293 00:19:03,657 --> 00:19:10,797 It's the same economic good that a younger couple or, uh, a newcomer 294 00:19:11,367 --> 00:19:15,837 immigrant to our country is forced to pay four times what we paid for it. 295 00:19:16,407 --> 00:19:19,767 So it's a redistribution of wealth from their bank account 296 00:19:19,797 --> 00:19:21,387 and into our bank account. 297 00:19:22,947 --> 00:19:24,717 And you're at the point. 298 00:19:24,897 --> 00:19:26,367 So it's completely unfair. 299 00:19:26,367 --> 00:19:27,597 I think it's immoral. 300 00:19:28,497 --> 00:19:30,897 I don't think policy, like I said before, I don't think policy 301 00:19:30,897 --> 00:19:32,997 makers really thought it through. 302 00:19:32,997 --> 00:19:36,687 I don't think they thought that these actions would lead to a, a housing 303 00:19:36,687 --> 00:19:41,427 affordability crisis where a whole generation is priced out of the market. 304 00:19:41,877 --> 00:19:44,457 Where there, I think the average first time home buyer in the states, 305 00:19:44,457 --> 00:19:46,107 the average age is 40 years old now. 306 00:19:46,767 --> 00:19:48,177 I mean, this is ridiculous. 307 00:19:48,177 --> 00:19:48,597 Australia. 308 00:19:49,377 --> 00:19:50,667 Yeah, it's, it's, yeah. 309 00:19:50,667 --> 00:19:55,287 I mean, and Australia and Canada are probably the two worst housing markets 310 00:19:55,287 --> 00:19:57,057 from an affordability perspective. 311 00:19:58,167 --> 00:20:01,317 So nobody planned, intended to get us to this place. 312 00:20:02,277 --> 00:20:04,767 Um, although it was very predictable. 313 00:20:04,887 --> 00:20:11,037 And so here we are where a whole generation, they're pissed 314 00:20:11,907 --> 00:20:13,737 and they should be, right. 315 00:20:13,737 --> 00:20:15,597 They, they, they've played by the rules. 316 00:20:16,647 --> 00:20:17,547 They've gone to school. 317 00:20:17,547 --> 00:20:19,077 They're better educated than me. 318 00:20:20,607 --> 00:20:24,747 They're willing to work just as hard, just as smart, smarter probably. 319 00:20:26,067 --> 00:20:30,177 Um, yet they can even dream of affording the sort of lifestyle that 320 00:20:30,177 --> 00:20:32,187 I have been fortunate enough to enjoy. 321 00:20:32,187 --> 00:20:35,517 Now, don't get me wrong, I worked very hard, but so are they. 322 00:20:37,287 --> 00:20:42,087 And so it's like the contract has been sort of ripped up 323 00:20:42,087 --> 00:20:43,677 and thrown out the window. 324 00:20:44,517 --> 00:20:52,287 Now I'm 64 and you know, I haven't done anything wrong. 325 00:20:52,407 --> 00:20:58,107 And when I tell this to, you know, my friends, my family, my generation. 326 00:20:59,787 --> 00:21:01,227 Like, no one is to blame. 327 00:21:01,227 --> 00:21:05,307 This is not about a, I'm not trying to be sort of vindictive here. 328 00:21:06,627 --> 00:21:10,197 It's like we all play by the rules and you thought, well, yeah, just get on 329 00:21:10,197 --> 00:21:13,797 the housing ladder as they call it, and you know, and then you'll be able 330 00:21:13,797 --> 00:21:17,127 to sell that house and get a bigger one and that will go up in price and, 331 00:21:17,757 --> 00:21:19,467 and then you can retire in comfort. 332 00:21:20,607 --> 00:21:26,637 So, you know, it is not about bad people, it's just about a bad system. 333 00:21:27,837 --> 00:21:33,777 And so when I tell people my age, this story, you know, at first 334 00:21:33,777 --> 00:21:37,797 they don't like it and I get it right, because it's human nature. 335 00:21:37,797 --> 00:21:41,757 You like to, you know, made four times on your house Musson way to go. 336 00:21:41,757 --> 00:21:44,427 I'd say, yeah, I know a thing about real estate. 337 00:21:44,427 --> 00:21:45,477 You know, I knew what I was doing. 338 00:21:45,477 --> 00:21:46,287 No, I didn't. 339 00:21:46,707 --> 00:21:49,377 We just needed a place to live and we happened to buy 340 00:21:49,377 --> 00:21:50,457 it just when the Fed started. 341 00:21:50,457 --> 00:21:53,127 There were housing wealth effect policy back in 2001. 342 00:21:53,132 --> 00:21:54,177 I just got lucky. 343 00:21:54,237 --> 00:21:54,987 That's it. 344 00:21:55,662 --> 00:21:55,962 Right. 345 00:21:55,962 --> 00:21:57,252 Doesn't mean I didn't work hard. 346 00:21:57,252 --> 00:21:59,472 And same thing with all my friends and family. 347 00:21:59,472 --> 00:22:04,842 They all worked hard, went to school saved, and, uh, they 348 00:22:04,842 --> 00:22:05,922 met a fortune on their home. 349 00:22:06,822 --> 00:22:10,062 And so when I explained this to them, at first, they don't really 350 00:22:10,992 --> 00:22:17,232 like it, or, or they sat sounds, they, they look surprised, but 351 00:22:17,232 --> 00:22:18,522 then they very quickly get it. 352 00:22:18,702 --> 00:22:21,942 And they, the vast, vast majority say You're right. 353 00:22:22,602 --> 00:22:23,322 It's not fair. 354 00:22:25,152 --> 00:22:33,042 Um, although every now and then I do run into someone, not, not very many, but 355 00:22:33,042 --> 00:22:39,942 every now and then I run into someone who not only doesn't like it, but refuses to 356 00:22:39,942 --> 00:22:46,392 acknowledge it, refuses to acknowledge that they have, we have unfairly benefited 357 00:22:46,452 --> 00:22:49,062 at the expense of the next generation. 358 00:22:49,602 --> 00:22:51,822 And they'll come up with all kinds of. 359 00:22:52,737 --> 00:22:57,717 Crazy theories as to what's going on, which are all very 360 00:22:57,717 --> 00:22:59,787 easy to debunk, obviously. 361 00:23:00,687 --> 00:23:01,467 But I get it. 362 00:23:01,587 --> 00:23:03,387 You know, and they're not bad people, don't get me wrong. 363 00:23:03,897 --> 00:23:05,127 They're not bad people. 364 00:23:06,117 --> 00:23:11,007 But it's tough when you've lived your whole life believing something and 365 00:23:11,007 --> 00:23:13,947 then you're told by me, you know, Mr. 366 00:23:13,947 --> 00:23:18,237 Debbie Downer, that, you know, maybe, maybe we didn't deserve this. 367 00:23:18,237 --> 00:23:26,217 And, and, um, and it's, I'm always reminded of that saying by Upton 368 00:23:26,217 --> 00:23:31,977 Sinclair, he was a US I think it was a politician, like a left-leaning 369 00:23:31,977 --> 00:23:35,067 socialist politician back in the 1930s. 370 00:23:37,107 --> 00:23:41,457 And he said that if somebody's income depends on them not 371 00:23:41,517 --> 00:23:45,597 understanding something, then don't expect them to understand it. 372 00:23:46,437 --> 00:23:51,267 It's not that they can't, they don't want to emotionally, they can't. 373 00:23:51,942 --> 00:23:54,762 Intellectually they can for sure, but they don't want to. 374 00:23:55,152 --> 00:23:55,992 It's too painful. 375 00:23:56,172 --> 00:23:56,232 Yeah. 376 00:23:56,772 --> 00:23:58,122 And I totally understand it. 377 00:23:59,292 --> 00:24:08,022 And so over the years as I was investing, you know, I said earlier, we looking 378 00:24:08,022 --> 00:24:09,912 for like world class businesses. 379 00:24:10,722 --> 00:24:16,602 So we would take the savings, the hard earned capital of Canadians, and they 380 00:24:16,602 --> 00:24:18,432 had already saved and they're doing well. 381 00:24:18,432 --> 00:24:21,912 Then we would take their capital and try and augment that for them. 382 00:24:22,512 --> 00:24:26,022 Just grow a little bit, protect it at the same time. 383 00:24:27,282 --> 00:24:32,532 And we would do that, affect that by investing in world-class businesses 384 00:24:32,532 --> 00:24:36,582 who we were confident would put their capital to productive use 385 00:24:36,582 --> 00:24:39,012 and grow it, grow it carefully. 386 00:24:40,242 --> 00:24:44,232 And then that comes back to the clients and they're better off and 387 00:24:44,232 --> 00:24:48,732 they pay us and they pay their advisor and, and everybody wins because 388 00:24:48,732 --> 00:24:50,502 everybody's providing a service. 389 00:24:51,117 --> 00:24:55,047 Like I don't create capital, I play like a facilitator role, which we could talk 390 00:24:55,047 --> 00:24:59,367 about how government and finance industry are facilitators of capital creation. 391 00:24:59,367 --> 00:25:04,467 You don't create capital and so, so I always felt that I was 392 00:25:04,887 --> 00:25:09,777 playing an important role myself and thousands of other investors. 393 00:25:10,437 --> 00:25:14,487 This is the role that we play channeling savings to, to productive 394 00:25:14,487 --> 00:25:16,287 use and keeping companies honest. 395 00:25:16,437 --> 00:25:19,677 And if they're not putting the capital to productive use or doing stupid 396 00:25:19,677 --> 00:25:24,417 things or making reckless acquisitions because their organic growth is slowing. 397 00:25:24,417 --> 00:25:30,837 And then we take the capital back, you starve basket case companies of 398 00:25:30,927 --> 00:25:37,467 capital, but then the housing effect, then the bailouts of Wall Street. 399 00:25:37,497 --> 00:25:46,827 And I just became increasingly frustrated that this was happening and you could see. 400 00:25:48,192 --> 00:25:52,992 The path that we were on and how this could potentially 401 00:25:53,082 --> 00:25:57,132 end and it will not end well. 402 00:25:58,032 --> 00:26:01,062 That I know for sure is not sustainable. 403 00:26:02,382 --> 00:26:05,052 Exactly what that ending looks like. 404 00:26:05,052 --> 00:26:06,192 I don't know for sure. 405 00:26:06,192 --> 00:26:11,472 I've got some things and we can discuss one or two things and I 406 00:26:11,472 --> 00:26:15,852 don't know when nobody does, but, and I've been talking about this with my 407 00:26:15,852 --> 00:26:19,572 clients who are financial advisors or stockbrokers, financial planners, 408 00:26:19,602 --> 00:26:25,482 like amazing people for many, many years, and a number of people over 409 00:26:25,482 --> 00:26:29,682 the years said, you know, Paul, you should really write a book about this. 410 00:26:30,792 --> 00:26:34,482 You're the only one that talks about it in this way, at least in the mutual 411 00:26:34,482 --> 00:26:36,942 fund industry that they they of. 412 00:26:38,382 --> 00:26:43,692 And I think one of the reasons they recommended that I write a book. 413 00:26:45,177 --> 00:26:47,997 It's because of my presentation style. 414 00:26:49,407 --> 00:26:54,267 So back when I first started off in the investment industry, you know, you 415 00:26:54,267 --> 00:26:57,447 go to a conference and you get up on stage and you got hundreds of financial 416 00:26:57,447 --> 00:27:02,577 advisors out in the audience there, and you're nervous as hell and 'cause 417 00:27:02,577 --> 00:27:04,347 a lot of smart people in the audience. 418 00:27:05,337 --> 00:27:12,117 And so my goal was to impress them, try and impress them with how smart I was. 419 00:27:12,657 --> 00:27:20,337 So I used all kinds of charts, graphs, fancy words, and, and you know, I started 420 00:27:20,337 --> 00:27:23,847 getting caught out in little white lies over the years, or contradicting 421 00:27:23,847 --> 00:27:28,287 myself because I was saying things to get the sale, to get their money, 422 00:27:28,977 --> 00:27:35,187 rather than being intellectually honest and thinking about how best can I help 423 00:27:35,187 --> 00:27:40,647 them with their business, how can I help them explain to their clients? 424 00:27:41,112 --> 00:27:44,382 Why they're investing their money with us or why they're not 425 00:27:44,382 --> 00:27:45,702 investing their money with us. 426 00:27:46,932 --> 00:27:50,412 And so yeah, it was getting embarrassing, embarrassing getting caught out like that. 427 00:27:50,412 --> 00:27:51,762 So I just said, that is it. 428 00:27:51,792 --> 00:27:53,352 I'm not doing this anymore. 429 00:27:53,742 --> 00:27:58,782 I am just gonna tell everybody the unvarnished truth, whether I, whether or 430 00:27:58,782 --> 00:28:00,252 not I think it's gonna lead to a sale. 431 00:28:00,252 --> 00:28:02,652 Like I never lied, but I would tell people what they want. 432 00:28:02,652 --> 00:28:04,002 I knew what they wanted to hear. 433 00:28:04,902 --> 00:28:05,232 Anja: Yeah. 434 00:28:05,772 --> 00:28:09,552 Paul: And so, yeah, so then I just started think, how can I most clearly 435 00:28:09,552 --> 00:28:13,182 communicate what we do and why, what's going on in the economy? 436 00:28:13,332 --> 00:28:14,622 And empower them. 437 00:28:15,732 --> 00:28:19,782 Empower them to make the right decision with their clients, hard earned capital. 438 00:28:19,782 --> 00:28:22,992 And it might mean that they don't invest with us, but that's a good outcome. 439 00:28:22,992 --> 00:28:26,202 Then because we're not appropriate for them, they have a different risk 440 00:28:26,202 --> 00:28:28,902 tolerance or whatever, they won't stay the courts, they'll get pissed off. 441 00:28:28,932 --> 00:28:31,002 'cause we're not keeping pace in a crazy market. 442 00:28:32,292 --> 00:28:38,022 And so, and so intellectual honesty and clear communication became 443 00:28:38,022 --> 00:28:40,332 an extremely important part of. 444 00:28:41,697 --> 00:28:45,057 Of, of what I was doing and it was fun. 445 00:28:45,057 --> 00:28:48,777 And the more I did it, um, the more I enjoyed it. 446 00:28:50,037 --> 00:28:58,077 And so my book, capital Offense, why some Benefit at Your Expense was, uh, or is 447 00:28:58,077 --> 00:29:00,297 written in very easy to understand terms. 448 00:29:01,977 --> 00:29:05,727 And so if somebody reads it takes the time to read it, they 449 00:29:05,727 --> 00:29:07,137 will understand what's going on. 450 00:29:07,887 --> 00:29:12,867 I use all kinds of analogies, stories and stuff like that to sort of bring 451 00:29:12,867 --> 00:29:20,007 home the point and the reason it's called Capital Offense, you know, 452 00:29:20,007 --> 00:29:23,517 it's a very, um, you know, title. 453 00:29:23,547 --> 00:29:25,287 Very provocative title, I guess. 454 00:29:25,287 --> 00:29:27,777 Yeah, yeah, to say the least. 455 00:29:28,107 --> 00:29:33,957 But the reason it's called that is so people need to understand the 456 00:29:33,957 --> 00:29:36,057 difference between capital and money. 457 00:29:37,527 --> 00:29:39,627 So money is extremely important. 458 00:29:40,542 --> 00:29:42,522 But it's not money that makes the world go round. 459 00:29:43,422 --> 00:29:45,162 It's the creation of capital. 460 00:29:46,752 --> 00:29:49,482 So money is simply the medium of exchange. 461 00:29:49,512 --> 00:29:55,482 What we use to exchange all that capital indirectly, and we temporarily 462 00:29:55,482 --> 00:29:57,822 store up our capital in that money. 463 00:29:59,082 --> 00:30:06,102 So the example I like to give is, let's say you make a bike and I make a suit. 464 00:30:06,822 --> 00:30:08,562 So we both created a capital. 465 00:30:08,592 --> 00:30:11,892 There was no bike in the economy, there was no suit. 466 00:30:13,092 --> 00:30:17,622 You made a bike, I made a suit, and then we exchanged the bike 467 00:30:17,622 --> 00:30:18,702 in a suit with each other. 468 00:30:18,942 --> 00:30:21,852 So that's barter, direct exchange. 469 00:30:22,872 --> 00:30:25,392 And now I've got your bike, you got my suit. 470 00:30:28,062 --> 00:30:33,972 This creation of capital in the exchange didn't come at anybody else's expense. 471 00:30:34,812 --> 00:30:37,967 Nobody else is worse off because of what you and I just did. 472 00:30:40,077 --> 00:30:41,427 That's the way it's supposed to work. 473 00:30:43,017 --> 00:30:46,557 Now, we don't do direct exchange. 474 00:30:46,587 --> 00:30:52,167 You could not have a, an economy of any size if, if you were just doing barter. 475 00:30:53,607 --> 00:30:57,897 An example I use in my book, you know, well, how many kitchen chairs do I have 476 00:30:57,957 --> 00:31:00,327 to make to buy a, a flight to Florida? 477 00:31:00,507 --> 00:31:07,347 You know, or, or what about, you know, uh, someone who sells filters for a furnace? 478 00:31:08,457 --> 00:31:10,017 What if they need brain surgery? 479 00:31:10,377 --> 00:31:12,267 You know, so it doesn't work. 480 00:31:12,297 --> 00:31:13,467 So we have money. 481 00:31:14,427 --> 00:31:20,097 So now let's say you make 10 bikes or a thousand bucks each. 482 00:31:20,097 --> 00:31:20,907 They're nice bikes. 483 00:31:22,197 --> 00:31:22,977 You sell them. 484 00:31:23,667 --> 00:31:25,737 So you've got $10,000 in your bank account. 485 00:31:26,607 --> 00:31:31,617 What that $10,000 effectively represents is the 10 bikes that you made. 486 00:31:32,217 --> 00:31:36,897 You're effectively storing up 10 bikes in your money. 487 00:31:37,422 --> 00:31:41,322 While you're waiting to use it, while you're waiting to spend it. 488 00:31:43,122 --> 00:31:46,602 So you don't wanna spend your $10,000 right away. 489 00:31:46,782 --> 00:31:49,392 You are, uh, saving it to go on a vacation at the end of the year. 490 00:31:49,812 --> 00:31:54,732 Now, before you get a chance to spend your money, the central 491 00:31:54,732 --> 00:31:56,142 bank doubles the money supply. 492 00:31:57,312 --> 00:32:03,402 Now, when a central bank increases the money supply, they do not create 493 00:32:03,402 --> 00:32:05,772 any capital to access that money. 494 00:32:05,892 --> 00:32:10,212 They just create that money out of thin air, print it or press a few buttons. 495 00:32:10,212 --> 00:32:14,867 It's digitally created, and so that new money has no capital stored up 496 00:32:14,867 --> 00:32:21,552 in it, but it obtains capital as soon as it comes into circulation, it 497 00:32:21,552 --> 00:32:25,542 obtains capital from the rest of the money that's already in existence. 498 00:32:25,872 --> 00:32:30,312 So as soon as the, the, the Fed doubles the money supply and that 499 00:32:30,312 --> 00:32:31,602 money comes into the economy. 500 00:32:32,877 --> 00:32:37,767 It takes five bikes from your $10,000 and puts it into the newly printed money. 501 00:32:38,727 --> 00:32:44,247 So now your bank account statement still says that if you've got 10,000 502 00:32:44,247 --> 00:32:49,167 bucks in your account, but instead of storing 10 bikes, it's only storing five. 503 00:32:49,587 --> 00:32:53,667 And so now your $10,000 will only buy half as much as it would've done before 504 00:32:53,667 --> 00:32:55,347 the Fed doubled the money supply. 505 00:32:56,787 --> 00:33:01,947 And that's why my book is called Capital Offense because they take your capital 506 00:33:01,947 --> 00:33:03,927 from your money without your permission 507 00:33:06,507 --> 00:33:09,087 and doesn't produce government's. 508 00:33:09,087 --> 00:33:09,747 Very important. 509 00:33:09,867 --> 00:33:13,737 I'm not anti-government and I'm not anti welfare state either. 510 00:33:13,737 --> 00:33:15,027 I'm very much in favor of it. 511 00:33:16,497 --> 00:33:18,237 I'm not in favor of too much. 512 00:33:19,617 --> 00:33:23,847 You know, if, if you're, if the benefits are too generous, it's a 513 00:33:23,847 --> 00:33:26,187 disincentive, disincentive to work. 514 00:33:26,967 --> 00:33:29,907 And the only way you can pay those is by taxing people more 515 00:33:29,967 --> 00:33:31,167 and the more you tax them. 516 00:33:31,872 --> 00:33:33,702 They're disincentivized to work as well. 517 00:33:33,702 --> 00:33:37,842 So both sides are disincentivized to work and you get less and less stuff being 518 00:33:37,842 --> 00:33:39,492 produced and or otherwise would've been. 519 00:33:40,752 --> 00:33:46,992 So the government doesn't produce anything itself, anything that it spends it first 520 00:33:46,992 --> 00:33:52,692 obtains from the private sector and it can obtain capital from the private 521 00:33:52,692 --> 00:33:56,502 sector only in one of three ways. 522 00:33:57,132 --> 00:33:59,022 Most obvious is taxation. 523 00:33:59,952 --> 00:34:03,972 And that is something that you know, they can campaign on and 524 00:34:03,972 --> 00:34:06,732 we can all vote accordingly. 525 00:34:06,852 --> 00:34:12,342 Deciding on what we think is a fair amount of capital to be taxed away from us, 526 00:34:12,912 --> 00:34:18,222 to help those who are less fortunate to help pay for Medicare, uh, to help pay 527 00:34:18,222 --> 00:34:22,872 for welfare, defense, whatever police. 528 00:34:24,402 --> 00:34:25,392 So taxation. 529 00:34:26,772 --> 00:34:30,072 Second way government's gonna obtain capital obviously, is by borrowing it. 530 00:34:31,047 --> 00:34:37,467 So we freely lend our money capital to the government and 531 00:34:37,467 --> 00:34:39,357 then we expect to be paid back. 532 00:34:39,357 --> 00:34:43,557 And we can talk about that when you have a government bond. 533 00:34:44,097 --> 00:34:47,307 It's an asset, but it's not an investment. 534 00:34:48,087 --> 00:34:50,757 The government does not invest your capital, it's consumed. 535 00:34:51,327 --> 00:34:52,437 We'll talk about that later. 536 00:34:52,887 --> 00:34:57,627 And then the third way that the government accesses capital is by printing money, 537 00:34:58,377 --> 00:35:03,507 by extracting capital from the rest of the money that's already in existence. 538 00:35:04,947 --> 00:35:06,177 And, um, yeah. 539 00:35:06,177 --> 00:35:07,377 Anyways, I've gone on for a bit. 540 00:35:07,407 --> 00:35:09,552 Maybe I'll stop there and see where you wanna go next. 541 00:35:29,992 --> 00:35:30,762 Anja: Yeah, there's, um. 542 00:35:31,482 --> 00:35:35,832 A lot that I wanna cover, but like I, I guess the first question I have 543 00:35:36,012 --> 00:35:39,762 that I'm most curious, so obviously you said you know, you're a voracious 544 00:35:39,762 --> 00:35:44,502 reader and you've always had education that you've done on the side in 545 00:35:44,502 --> 00:35:45,882 conjunction with your schooling. 546 00:35:46,302 --> 00:35:50,412 I'm very curious to know that when you entered traditional finance, were you 547 00:35:50,412 --> 00:35:54,522 immediately aware of this problem or is that something that came later on? 548 00:35:55,332 --> 00:35:56,652 Paul: Yeah, I had no idea. 549 00:35:57,672 --> 00:35:58,302 No idea. 550 00:35:59,922 --> 00:36:09,732 And I would say it was only around 2003, 2004, that where the housing 551 00:36:10,182 --> 00:36:11,562 wealth effect was starting. 552 00:36:13,122 --> 00:36:17,142 And, and it was like, it was like mind boggling what was happening. 553 00:36:17,232 --> 00:36:22,062 Like these negative am negative amortization mortgages. 554 00:36:22,062 --> 00:36:28,032 I dunno if you, so Central Bank and the financial community, were doing everything 555 00:36:28,032 --> 00:36:30,672 they could to increase demand for housing. 556 00:36:31,422 --> 00:36:36,012 So first by driving interest rate down to one or extremely low levels, and 557 00:36:36,012 --> 00:36:38,832 then by, with new mortgage structures. 558 00:36:38,832 --> 00:36:43,962 So first they started, um, offering interest only mortgages. 559 00:36:44,172 --> 00:36:47,832 So your your monthly mortgage payment, you're only paying the interest, you're 560 00:36:47,832 --> 00:36:49,332 not paying any of the principal down. 561 00:36:50,232 --> 00:36:55,662 Of course, that lowers your monthly mortgage payment and enables you then 562 00:36:55,662 --> 00:36:59,772 to buy more house or bid more on a house and drive the house price higher. 563 00:37:00,162 --> 00:37:04,842 Then they started doing negative am or negative amortization mortgages. 564 00:37:05,532 --> 00:37:10,992 So they would, let's say it was a 6% mortgage for the first three 565 00:37:10,992 --> 00:37:15,042 years, let's say it would start off with a teaser rate of two or 3%. 566 00:37:16,002 --> 00:37:19,782 So you're not even paying the full interest expense on your mortgage. 567 00:37:19,842 --> 00:37:21,252 You're only paying two or 3%. 568 00:37:21,252 --> 00:37:24,882 The other 3% would be added to your mortgage. 569 00:37:25,437 --> 00:37:28,497 So each year, your mortgage, despite the fact you're making monthly 570 00:37:28,497 --> 00:37:31,317 mortgage payments, your mortgage was getting bigger and bigger. 571 00:37:32,067 --> 00:37:35,007 But of course, people who were doing this were told by the banking 572 00:37:35,007 --> 00:37:36,537 community, well, don't worry. 573 00:37:37,197 --> 00:37:40,677 'cause house prices are going up 20% per year. 574 00:37:41,427 --> 00:37:43,587 And especially in Florida, they're not billing any more 575 00:37:43,587 --> 00:37:45,117 ocean front and all this nonsense. 576 00:37:45,807 --> 00:37:50,487 And so, you know, after three years, when the, when, when, when it's triggered, when 577 00:37:50,487 --> 00:37:54,777 you have to start paying your principal down and you're not able to afford it, 578 00:37:54,777 --> 00:37:59,937 well you just refinance because your house has gone up 30% in value and then 579 00:37:59,937 --> 00:38:01,407 you start the whole thing all over again. 580 00:38:02,097 --> 00:38:05,157 Well, that worked until house prices stopped going up. 581 00:38:05,457 --> 00:38:11,427 I started going down and then I think you had about 25% of mortgages 582 00:38:11,727 --> 00:38:16,797 in the US by oh nine that were in a negative equity position. 583 00:38:17,427 --> 00:38:19,197 So they owed more. 584 00:38:20,082 --> 00:38:22,392 Uh, to the bank, then the house was worth. 585 00:38:23,142 --> 00:38:28,152 So back in oh 4, 0 5 0 6 when this was starting to happen, I said, this is insane 586 00:38:28,302 --> 00:38:31,872 that, I mean, this is, you're getting people into houses that they can't afford. 587 00:38:32,082 --> 00:38:34,752 And, um, and a lot of people suffered enormously. 588 00:38:35,292 --> 00:38:38,472 And I didn't know it was going to end up being the great financial crisis, 589 00:38:38,472 --> 00:38:43,872 but I knew it was stupid and I knew it was IR irresponsible and I knew it was 590 00:38:43,872 --> 00:38:46,302 reckless, and I knew why it was happening. 591 00:38:48,132 --> 00:38:52,842 Um, and I think that was the start, you know, that combined. 592 00:38:52,842 --> 00:38:58,032 But like long before that, I had this, my blog, which you mentioned 593 00:38:58,032 --> 00:38:59,772 called Paul Political Economy. 594 00:39:00,312 --> 00:39:01,842 It's a free weekly blog by the way. 595 00:39:01,842 --> 00:39:04,122 Anyone can sign up at the end. 596 00:39:04,122 --> 00:39:05,652 I do an audio version as well. 597 00:39:05,652 --> 00:39:12,642 At the end of every post, I sign off with be free and do no harm. 598 00:39:12,852 --> 00:39:15,642 You know, I don't wanna prescribe all the great things people should be doing. 599 00:39:15,642 --> 00:39:16,722 It's none of my business. 600 00:39:17,412 --> 00:39:22,272 But I think, you know, if you, if, if you're free and you really focus 601 00:39:22,272 --> 00:39:30,372 on trying not to do any harm, either physically, financially, emotionally, 602 00:39:30,522 --> 00:39:35,712 just by focusing on that, it's really hard not to make the world a better place. 603 00:39:35,922 --> 00:39:38,502 You know, follow your dreams. 604 00:39:38,502 --> 00:39:42,342 Do what, just make sure that it's not coming at anybody else's expense. 605 00:39:42,552 --> 00:39:44,232 And then you can do all the other stuff as well. 606 00:39:44,232 --> 00:39:46,422 Help people out when they need it and all that kind of stuff. 607 00:39:46,422 --> 00:39:47,622 I'm not saying you shouldn't do that. 608 00:39:48,852 --> 00:39:55,092 And um, yeah, so I think that's my initial foundations, if you will, and 609 00:39:55,092 --> 00:40:00,672 then seeing what was going on and then it sort of woke me up, if you will. 610 00:40:01,482 --> 00:40:07,002 And then, and then I've been on a journey ever since. 611 00:40:07,062 --> 00:40:10,602 So really starting in oh seven is what I started reading, economic 612 00:40:10,602 --> 00:40:14,322 philosophy, and I didn't really know anything about economics. 613 00:40:15,912 --> 00:40:20,442 And so I didn't have any preconceived ideology, if you 614 00:40:20,442 --> 00:40:22,632 will, apart from the do no harm. 615 00:40:22,812 --> 00:40:29,952 And so, and the, and so then I definitely lent or leaned towards 616 00:40:29,952 --> 00:40:31,872 the, the Aus School of Economics. 617 00:40:31,872 --> 00:40:33,702 I liked classical school. 618 00:40:34,092 --> 00:40:40,542 So actually, uh, one of your guys, um, Steven Kates, he's an economist. 619 00:40:40,542 --> 00:40:42,042 He's actually a former Canadian. 620 00:40:42,432 --> 00:40:43,302 He's an economist. 621 00:40:43,302 --> 00:40:47,892 He lives in, uh, Australia, and he wrote a book about, say's Law. 622 00:40:47,922 --> 00:40:48,882 He's written a few books. 623 00:40:48,882 --> 00:40:49,962 He's a great writer. 624 00:40:50,802 --> 00:40:56,082 I've had a few email exchanges with him years ago, but I learned so much from him. 625 00:40:57,072 --> 00:41:01,602 And then the, actually, the economist I learned the most from was just on your 626 00:41:01,602 --> 00:41:03,642 show a few weeks ago of Bob Murphy. 627 00:41:05,622 --> 00:41:07,632 Just, he's so good. 628 00:41:07,782 --> 00:41:09,672 And, uh, and George Sgin. 629 00:41:09,672 --> 00:41:11,112 I don't know if you've ever heard of him. 630 00:41:11,652 --> 00:41:12,702 He's a free banking. 631 00:41:12,707 --> 00:41:12,897 No, 632 00:41:12,897 --> 00:41:14,337 Anja: I haven't heard of George. 633 00:41:14,797 --> 00:41:16,422 Um, no. 634 00:41:16,482 --> 00:41:17,682 Paul: Yeah, he's, he's amazing. 635 00:41:17,682 --> 00:41:23,592 He's, uh, so, so those three guys, um, so, but you know, I was reading, going all 636 00:41:23,592 --> 00:41:32,862 the way back, um, just trying to again, create a foundation, if you will, of like 637 00:41:32,862 --> 00:41:38,832 a philosophy, like what are the different schools of thought and why do they exist? 638 00:41:39,852 --> 00:41:43,482 And, you know, you would think the economic laws are, but they are. 639 00:41:44,262 --> 00:41:45,222 And, and they are. 640 00:41:46,182 --> 00:41:50,412 But there's different schools of economic thoughts because, you 641 00:41:50,412 --> 00:41:52,182 know, economics is a social science. 642 00:41:52,692 --> 00:41:55,752 It's not a hard science like chemistry or physics. 643 00:41:56,502 --> 00:42:00,252 It's based on human action as Bob talked about when he was on your show. 644 00:42:01,752 --> 00:42:08,262 And so, you know, the laws of economics can be very inconvenient. 645 00:42:09,837 --> 00:42:16,917 And can, you know, dictate that government should not run deficits. 646 00:42:16,917 --> 00:42:21,267 They should not run up the debt tab because it's not good for the 647 00:42:21,267 --> 00:42:23,277 economy, not with emergencies. 648 00:42:23,277 --> 00:42:24,447 There's nothing wrong with that. 649 00:42:25,047 --> 00:42:27,267 But post emergency we should pay it off. 650 00:42:28,377 --> 00:42:35,367 And um, and so, so then people, I think it's called normative economics. 651 00:42:35,367 --> 00:42:42,987 So economic schools of thought based on ideology, based on how you would like 652 00:42:42,987 --> 00:42:45,717 the laws to be rather than how they are. 653 00:42:45,777 --> 00:42:49,827 Then you come up with complicated formulas and stuff like that and consequences, 654 00:42:49,827 --> 00:42:52,107 two, three steps removed from the action. 655 00:42:52,107 --> 00:42:57,027 So it's hard to like connect the dots and you know, I think Bob 656 00:42:57,027 --> 00:42:58,527 used the example on your show. 657 00:42:58,527 --> 00:42:59,637 He is used it many times. 658 00:43:01,047 --> 00:43:06,627 You know, it's like getting angry, uh, or blaming gravity for plane crashes. 659 00:43:07,872 --> 00:43:08,802 Stupid gravity. 660 00:43:08,862 --> 00:43:12,252 Well, no, gravity is what it is. 661 00:43:12,252 --> 00:43:13,122 You can't change it. 662 00:43:13,122 --> 00:43:17,652 So don't try and come up with a new, new law, which will get rid of gravity. 663 00:43:17,652 --> 00:43:18,852 It's not going to happen. 664 00:43:19,842 --> 00:43:24,312 Or blaming gravity for, you know, unfairly targeting visible 665 00:43:24,312 --> 00:43:27,462 minorities or no, people do that. 666 00:43:28,752 --> 00:43:30,402 Economic laws don't do that. 667 00:43:31,422 --> 00:43:38,322 And, and so one of my main goals with the book, because I think when I have great 668 00:43:38,322 --> 00:43:43,512 faith in people, and I think the average person is very smart, particularly when 669 00:43:43,722 --> 00:43:47,442 it comes to what they should be doing with their own hard earned capital, 670 00:43:47,472 --> 00:43:52,212 they don't need a policymaker to tell them that stocks are, are fairly valued. 671 00:43:52,212 --> 00:43:53,382 So you should be buying them. 672 00:43:53,592 --> 00:43:56,202 You should be buying this house because the price is gonna go up 673 00:43:56,202 --> 00:43:57,402 again and you're gonna make a fortune. 674 00:43:57,402 --> 00:43:58,152 No, shut up. 675 00:43:58,362 --> 00:43:59,232 It's none of your business. 676 00:43:59,232 --> 00:44:03,042 You should not be trying to coerce people or encourage people into 677 00:44:03,042 --> 00:44:05,712 spending their money in areas that you think they should be. 678 00:44:06,872 --> 00:44:07,137 It is. 679 00:44:07,917 --> 00:44:09,537 That makes me so angry. 680 00:44:10,377 --> 00:44:15,867 And so the average person is very smart, and I think the average person 681 00:44:15,867 --> 00:44:18,447 as well is, is a very good person. 682 00:44:18,567 --> 00:44:20,967 Most people want to do good things. 683 00:44:22,257 --> 00:44:29,547 And, and I, and I believe that one of the main issues, the reason that we've gotten 684 00:44:29,547 --> 00:44:35,367 to where we are today is because people don't really understand what's happening. 685 00:44:35,397 --> 00:44:38,577 They don't understand why they're making a fortune on their home. 686 00:44:38,787 --> 00:44:44,097 And there's an old saying that the people always get the government 687 00:44:44,187 --> 00:44:47,847 that they deserve, you know, in other words, well, you voted for them, 688 00:44:47,847 --> 00:44:49,377 so shut up and stop complaining. 689 00:44:49,977 --> 00:44:54,267 Well, no, you know, you only get the government, you deserve 690 00:44:55,617 --> 00:44:57,687 a, if the government does what they said they were going to do. 691 00:44:58,707 --> 00:45:03,897 But also if you actually understand what's going on, you can't vote accordingly 692 00:45:03,897 --> 00:45:04,992 if you don't know what's going on. 693 00:45:06,477 --> 00:45:12,237 And so my goal with the book is to help people understand what's going on, is to 694 00:45:12,297 --> 00:45:20,457 educate all these beautiful, well-meaning very smart people with respect to how 695 00:45:20,457 --> 00:45:22,347 their capital is being taken from them. 696 00:45:22,347 --> 00:45:25,167 And redistributed all with good intentions, by the way. 697 00:45:25,377 --> 00:45:29,727 And then demand different actions from our policymakers. 698 00:45:29,937 --> 00:45:32,787 And our policymakers will do it because they're not bad people. 699 00:45:33,237 --> 00:45:37,587 They wanna do the right thing, but doing the right thing today is 700 00:45:37,587 --> 00:45:42,327 political suicide because they and the academics have convinced us all that 701 00:45:42,327 --> 00:45:44,157 you can get something for nothing. 702 00:45:44,697 --> 00:45:46,617 The deficits and debts don't matter. 703 00:45:46,617 --> 00:45:47,007 They do. 704 00:45:47,007 --> 00:45:47,967 They matter a lot. 705 00:45:48,807 --> 00:45:52,377 And so if a politician tries to do the right thing by being responsible 706 00:45:52,377 --> 00:45:56,097 and stop redistributing other people's wealth from the next generation to 707 00:45:56,097 --> 00:45:59,487 our generation, well, guess what? 708 00:45:59,487 --> 00:46:01,077 They're not gonna be in office very long. 709 00:46:01,887 --> 00:46:04,707 And so they're not gonna be remain empowered to do all the 710 00:46:04,707 --> 00:46:06,837 right but difficult things. 711 00:46:08,277 --> 00:46:09,897 They'll do it once we demand it. 712 00:46:11,007 --> 00:46:11,427 Anja: Yeah. 713 00:46:12,147 --> 00:46:12,717 On that. 714 00:46:12,777 --> 00:46:16,977 I'm very curious to know, because the way I kind of understand the system 715 00:46:16,977 --> 00:46:22,737 is it's set up in a way that, um, the governments and the policy makers of the 716 00:46:22,737 --> 00:46:28,887 day kind of have no option but to kick the can down the road as far as they can. 717 00:46:29,787 --> 00:46:35,517 If we were to demand change, what might actually some of the solutions be? 718 00:46:35,517 --> 00:46:41,007 Can we like reform the system that is so badly designed? 719 00:46:41,547 --> 00:46:49,377 Paul: Absolutely, we can, uh, the only trouble is that it won't be without pain 720 00:46:51,417 --> 00:46:53,067 and it won't be easy. 721 00:46:53,697 --> 00:46:59,877 Some people will benefit enormously from that change, uh, next generation. 722 00:47:00,447 --> 00:47:02,127 My generation will be harmed. 723 00:47:03,537 --> 00:47:10,257 And you know, like I mentioned, our house has gone up for, and, and, 724 00:47:10,257 --> 00:47:12,087 and it's worse than you think, Anya. 725 00:47:12,267 --> 00:47:20,967 So by encouraging people to rely on the inflated value of their home for their 726 00:47:20,967 --> 00:47:28,137 retirement, it encouraged people to spend and consume more of their capital 727 00:47:28,137 --> 00:47:29,697 than they otherwise would've done. 728 00:47:30,987 --> 00:47:33,597 So society saved less. 729 00:47:33,627 --> 00:47:37,827 So the time preference in economics, they call it, the time preference 730 00:47:37,827 --> 00:47:42,207 of society is higher than it that it, that it would've been otherwise. 731 00:47:42,207 --> 00:47:46,552 So time preference for, I like to make sure people all all understand it. 732 00:47:47,577 --> 00:47:50,967 Time preference is just your, your desire to consume today. 733 00:47:51,282 --> 00:47:54,492 Rather than delay your consumption and consume in the future. 734 00:47:54,492 --> 00:47:58,092 So if you have a high time preference, you typically save a lot less or 735 00:47:58,092 --> 00:48:00,222 nothing and you consume it all today. 736 00:48:00,612 --> 00:48:04,782 If you've got a low time preference, then you consume less today, you save more of 737 00:48:04,782 --> 00:48:11,052 your money, you invest it, and you can consume that much more in, in the future. 738 00:48:11,052 --> 00:48:13,572 So you delay your gratification for your consumption. 739 00:48:14,052 --> 00:48:18,192 So encouraging people to rely on their homes for their retirement, 740 00:48:18,192 --> 00:48:22,212 encourage people to save less so there was less saving and investment in the 741 00:48:22,212 --> 00:48:25,332 economy than there otherwise would've been, which I think has contributed 742 00:48:25,332 --> 00:48:27,132 to declining productivity growth. 743 00:48:28,782 --> 00:48:29,862 So that's the first thing. 744 00:48:30,972 --> 00:48:36,882 So when people, you know, when you pay off your, your home, the way your 745 00:48:36,882 --> 00:48:41,292 home should provide you with a NASDAQ for your retirement is because you 746 00:48:41,292 --> 00:48:43,152 paid off your mortgage over the years. 747 00:48:43,602 --> 00:48:46,452 And it's a really cool thing like a mortgage. 748 00:48:47,382 --> 00:48:50,232 It's, it's a, it's a form of forced savings. 749 00:48:51,387 --> 00:48:55,647 So you have to pay the bank, the monthly mortgage, otherwise 750 00:48:55,647 --> 00:48:56,667 you might lose your home. 751 00:48:57,417 --> 00:49:01,437 And so every time you make a monthly payment on your house, on your 752 00:49:01,437 --> 00:49:03,837 mortgage, it's like a piggy bank. 753 00:49:03,837 --> 00:49:05,937 You're putting some money into your home. 754 00:49:06,687 --> 00:49:10,767 So if you make bikes, you sell a bike and you've got money, your, 755 00:49:11,007 --> 00:49:12,627 your bike is stored up in that money. 756 00:49:12,627 --> 00:49:16,137 Now you use that money to pay off some of the mortgage. 757 00:49:16,767 --> 00:49:20,367 So effectively what you're doing is you're storing your bikes in your house. 758 00:49:20,577 --> 00:49:25,077 So after 25 years or whatever you've paid off your mortgage, 759 00:49:25,557 --> 00:49:27,417 you own your house free and clear. 760 00:49:27,687 --> 00:49:30,027 Let's say it's worth $400,000. 761 00:49:30,867 --> 00:49:33,597 Effectively what that is, is 400. 762 00:49:33,597 --> 00:49:34,617 Do the 400. 763 00:49:34,677 --> 00:49:37,797 What it represents is the $400,000 worth of bikes that you 764 00:49:37,797 --> 00:49:43,707 created through your career and exchange with other people, right? 765 00:49:43,707 --> 00:49:48,867 So that now you retire and you've got $400,000 worth of bikes stored 766 00:49:48,867 --> 00:49:50,127 up in your house that you can now. 767 00:49:50,952 --> 00:49:52,182 Fund your retirement with. 768 00:49:53,352 --> 00:49:58,992 But in places like Canada and Australia, your $400,000 home 769 00:49:59,472 --> 00:50:01,722 is probably worth 1.6 million. 770 00:50:03,162 --> 00:50:12,372 So not only is it storing $400,000 worth of bikes, but it might be storing $400,000 771 00:50:12,372 --> 00:50:18,162 worth of n nursing services from a, a younger couple or electrician services 772 00:50:18,162 --> 00:50:24,882 or, or suits from, uh, new immigrants who are, they wanna buy a home now. 773 00:50:24,882 --> 00:50:31,002 So you've got all this other capital from all other people stored up in your home 774 00:50:31,002 --> 00:50:35,802 that you can now go and spend, but that, that's capital that they cannot spend. 775 00:50:35,862 --> 00:50:42,582 So, um, we can reform the system at first, at the end of the book, 776 00:50:43,242 --> 00:50:45,132 I've got sort of the 10 steps. 777 00:50:46,002 --> 00:50:47,082 It just happened to be 10. 778 00:50:47,082 --> 00:50:49,002 I hate it when people have an even number. 779 00:50:49,002 --> 00:50:53,112 It looks like they started, I need 10, and then they sort of reverse engineered it. 780 00:50:53,802 --> 00:50:55,002 It just happened to be 10. 781 00:50:56,142 --> 00:50:58,842 But the first one I should have put was what I just said. 782 00:50:59,142 --> 00:51:04,752 That step one is educating people with respect to what's happening. 783 00:51:06,102 --> 00:51:15,042 But step two would be to stop increasing the money supply at such a rapid rate. 784 00:51:15,912 --> 00:51:19,902 Now, I know you've had a lot of Bitcoin people on, and I totally 785 00:51:19,902 --> 00:51:21,852 understand where they're coming from. 786 00:51:21,852 --> 00:51:22,332 I get it. 787 00:51:22,332 --> 00:51:24,072 I understand the principles of. 788 00:51:24,222 --> 00:51:26,922 For the principle of why Bitcoin? 789 00:51:27,042 --> 00:51:29,652 I don't know that we have to go to Bitcoin. 790 00:51:30,642 --> 00:51:31,362 Maybe we do. 791 00:51:31,362 --> 00:51:31,932 I don't know. 792 00:51:32,052 --> 00:51:37,272 But I, there's nothing wrong with a fiat currency system per se, 793 00:51:38,412 --> 00:51:47,352 other than it's subject to terrible abuse by, well, no, exactly. 794 00:51:47,352 --> 00:51:52,122 So, you know, you, I don't know if you've ever read any 795 00:51:52,122 --> 00:51:54,132 of Lawrence White's, uh, work. 796 00:51:54,462 --> 00:51:59,892 He's, um, he's got a good book published last year, gold, I 797 00:51:59,892 --> 00:52:02,682 think it's Gold Dollar or Bitcoin. 798 00:52:03,402 --> 00:52:06,282 And, um, it's well worth reading. 799 00:52:07,512 --> 00:52:14,232 And so, you know, gold standard, I think, I think that's what he leans towards, you 800 00:52:14,232 --> 00:52:17,952 know, a slightly elastic money supply. 801 00:52:19,572 --> 00:52:23,442 I don't think he wants a completely inelastic money supply like bitcoin. 802 00:52:24,372 --> 00:52:25,752 Then he talks about Bitcoin as well. 803 00:52:26,652 --> 00:52:32,412 But I don't, I don't think you need to go to, to gold. 804 00:52:33,702 --> 00:52:37,422 Like if you could have, if, if the authorities could be trusted 805 00:52:37,422 --> 00:52:39,792 with a fiat currency system. 806 00:52:39,792 --> 00:52:42,942 'cause I think it's a lot more efficient, obviously a lot less costly than going 807 00:52:42,942 --> 00:52:46,392 around the world and digging up gold and transporting it all over the place. 808 00:52:47,772 --> 00:52:50,382 Um, but that's, that's the issue. 809 00:52:50,712 --> 00:52:52,632 Like, can they be trusted? 810 00:52:53,292 --> 00:52:59,802 And, you know, whenever there's an emergency and they decide what defines 811 00:52:59,802 --> 00:53:05,922 an emergency, they'll simply break the rule and start printing again. 812 00:53:06,672 --> 00:53:12,312 And they'll, like, during a great financial crisis, their favorite 813 00:53:12,312 --> 00:53:16,092 saying, well this is no time to worry about moral hazard. 814 00:53:16,992 --> 00:53:17,682 Yes it is. 815 00:53:17,682 --> 00:53:22,092 That's exactly the time that you should be worrying most about moral hazard. 816 00:53:23,442 --> 00:53:30,882 And, um, and they'll do that because they're able to convince 817 00:53:30,882 --> 00:53:35,532 people and themselves that it's for everybody's own good. 818 00:53:36,912 --> 00:53:41,682 So it's only with an understanding that it's not, will they 819 00:53:42,252 --> 00:53:43,602 potentially not do that? 820 00:53:44,832 --> 00:53:50,052 It just understanding empathy, you know, we need all this 821 00:53:50,052 --> 00:53:52,632 compassion is not gonna be easy. 822 00:53:53,832 --> 00:53:57,282 So understanding, stop increasing the money supply. 823 00:53:58,752 --> 00:54:03,972 I think Milton freed me to talk about increasing the money supply at a, 824 00:54:04,932 --> 00:54:07,182 at a preordained rate, if you will. 825 00:54:07,182 --> 00:54:10,032 Like 3%, three to 5% or something like that. 826 00:54:10,032 --> 00:54:13,212 That'd be a lot better than what we've been experiencing over the last decades. 827 00:54:14,352 --> 00:54:17,052 Um, the next step is to stop. 828 00:54:18,582 --> 00:54:22,662 Interfering at distorting interest rates, as James Grant says, the most important 829 00:54:22,662 --> 00:54:29,442 price in the economy that would lead to significantly better, um, allocation 830 00:54:29,442 --> 00:54:31,452 of capital and productivity growth. 831 00:54:32,832 --> 00:54:37,632 Um, and then no more bailouts. 832 00:54:37,842 --> 00:54:45,132 Wall Street needs to know, and investors need to know that if they screw up, 833 00:54:46,302 --> 00:54:54,492 taxpayers are not coming to their rescue either with fiscal stimulus or by the 834 00:54:54,492 --> 00:54:58,782 fed printing money and extracting capital from the savings of all the taxpayers. 835 00:55:00,432 --> 00:55:09,402 And that alone would have such a positive impact on the economy eventually. 836 00:55:09,462 --> 00:55:11,052 Initially, it'd be very painful. 837 00:55:11,712 --> 00:55:14,832 'cause asset prices are going to fall to their intrinsic 838 00:55:14,832 --> 00:55:17,022 value, both housing and stocks. 839 00:55:18,312 --> 00:55:23,592 And you know, you by no means should authorities try and force prices down. 840 00:55:25,242 --> 00:55:29,532 But if you stop manipulating interest rates and printing money and Wall 841 00:55:29,532 --> 00:55:35,862 Street knows that the fed's no longer coming to the rescue, then prices 842 00:55:36,102 --> 00:55:39,972 will, will adjust all under own. 843 00:55:41,772 --> 00:55:47,382 And so it will be painful for some, and I understand that. 844 00:55:47,592 --> 00:55:49,842 And I mean, and it's terrible. 845 00:55:51,252 --> 00:55:52,122 It's terrible. 846 00:55:53,592 --> 00:55:56,322 But this is not about punishing people. 847 00:55:57,732 --> 00:56:04,632 Some economists out there, they think that, you know, for people like me who 848 00:56:04,902 --> 00:56:07,272 claim that a recession is necessary. 849 00:56:08,157 --> 00:56:12,117 Wants an economy has been distorted higher by central bank policy. 850 00:56:12,447 --> 00:56:16,917 A recession is necessary to cleanse the economy, to fix the 851 00:56:16,917 --> 00:56:18,987 economy, to heal the economy. 852 00:56:19,917 --> 00:56:21,327 It's not about punishing people. 853 00:56:22,317 --> 00:56:28,287 So, and I use this example in my book, you know, if, if you have a tumor and 854 00:56:28,287 --> 00:56:33,687 you go to the doctor and the doctor says, okay, it's serious business here. 855 00:56:33,777 --> 00:56:39,087 I can operate and I can save you, but it's gonna be 18 months of rehab, 856 00:56:39,087 --> 00:56:40,377 you're not gonna be able to work. 857 00:56:41,247 --> 00:56:44,877 And so from an economic perspective, it's gonna be very tough for you. 858 00:56:45,837 --> 00:56:48,267 It's gonna be a pretty bad recession in your household. 859 00:56:48,267 --> 00:56:48,957 And guess what? 860 00:56:48,957 --> 00:56:50,097 There's gonna be contagion. 861 00:56:50,667 --> 00:56:55,227 Your household, your, your family members, due to no fault of their 862 00:56:55,227 --> 00:56:57,057 own, are going to suffer as well. 863 00:56:57,117 --> 00:56:59,157 They're gonna, everyone's gonna have to tighten their belt here, 864 00:57:00,537 --> 00:57:05,277 but after 18 months, you'll be healed and then you can go back out. 865 00:57:06,177 --> 00:57:08,997 It's not up to me, the doctor to tell you whether you should work or not. 866 00:57:08,997 --> 00:57:10,527 How much you should earn, how much you spend. 867 00:57:10,527 --> 00:57:12,987 No, I just focus on your health. 868 00:57:13,017 --> 00:57:20,337 So as the doctor, am I punishing that person by trying to heal them? 869 00:57:21,087 --> 00:57:21,537 No. 870 00:57:21,897 --> 00:57:28,227 You know, and so, so doctors don't take that route because they don't want 871 00:57:28,227 --> 00:57:29,697 you to be outta work for 18 months. 872 00:57:29,697 --> 00:57:31,077 So instead they print money 873 00:57:33,117 --> 00:57:38,877 to drive the asset prices higher right away and, and paper over the tumor. 874 00:57:39,537 --> 00:57:43,197 Instead of taking the tumor out, they give you this stimulant and 875 00:57:43,197 --> 00:57:44,277 whatnot, and you feel better. 876 00:57:44,277 --> 00:57:48,387 You go back to work the next day, but 18 months later or nine months 877 00:57:48,387 --> 00:57:50,877 later, you come back to the doctor, you still don't feel too good. 878 00:57:52,347 --> 00:57:53,037 Well, guess what? 879 00:57:53,037 --> 00:57:56,757 The tumor is not only still there, but it's bigger. 880 00:57:57,687 --> 00:58:00,867 Oh, I can still operate and save you, but instead of 18 months 881 00:58:00,867 --> 00:58:02,427 of rehab, now it's three years. 882 00:58:03,987 --> 00:58:08,817 And so the consequences of now doing the right thing are that much more 883 00:58:08,817 --> 00:58:13,767 severe, which makes it that much more difficult to do the right thing, right? 884 00:58:13,827 --> 00:58:18,357 'cause you're gonna get blamed for the suffering that everybody's going through, 885 00:58:19,857 --> 00:58:24,177 which are the consequences of bad policy from so many years in the past. 886 00:58:25,827 --> 00:58:32,937 And so, so for people who bought, like people from me, like me, so if 887 00:58:32,937 --> 00:58:41,937 my house went down, got high price, got cut in half, yeah, that's uh, 888 00:58:42,687 --> 00:58:44,967 big blow to my household wealth. 889 00:58:46,737 --> 00:58:47,487 But I didn't earn it. 890 00:58:49,137 --> 00:58:51,147 I should never have been mine in the first place. 891 00:58:52,047 --> 00:58:58,017 And so with that sort of mindset, it's easier for me to say, well, I would. 892 00:58:59,037 --> 00:59:02,967 Accept, well, I wouldn't have any choice, but I would actually celebrate that 893 00:59:02,967 --> 00:59:08,787 happening because it means that the next generation now is going to be able 894 00:59:08,787 --> 00:59:11,217 to afford what I was able to afford. 895 00:59:11,637 --> 00:59:16,647 Like it's a, a, a more fair and moral way of, of being, if you will. 896 00:59:17,577 --> 00:59:23,007 Now, it's very easy for me to say that, but it's not as easy for, let's say 897 00:59:23,007 --> 00:59:30,477 a younger couple who recently bought a home at a very inflated price, and 898 00:59:30,477 --> 00:59:35,967 for them it would be particularly painful and that's not good. 899 00:59:37,227 --> 00:59:42,777 But it doesn't mean that you should continue to price a whole 900 00:59:42,777 --> 00:59:47,427 generation out of the housing market behind them just to maintain the 901 00:59:47,427 --> 00:59:49,257 value of these people's homes. 902 00:59:50,367 --> 00:59:57,597 But, but for people like me who still have a capital gain. 903 00:59:58,167 --> 01:00:05,877 On the price of their home, that when you sell your home, some of that, there 904 01:00:05,877 --> 01:00:11,307 could be some form of capital gains tax to help those younger people who bought 905 01:00:11,367 --> 01:00:15,867 at right at the top due to no fault of their own, and now they're down 30% and 906 01:00:15,867 --> 01:00:20,067 they have to move and are 30% underwater, underwater under their mortgage. 907 01:00:20,067 --> 01:00:21,057 That's not their fault. 908 01:00:21,837 --> 01:00:25,857 So those who benefited, I think should be willing to help. 909 01:00:27,027 --> 01:00:31,287 Like in and in the states, you, you have capital gains on your home, right? 910 01:00:31,287 --> 01:00:32,937 So I think for an individual. 911 01:00:34,047 --> 01:00:38,787 If you make, uh, money on your home, the first $250,000 gain is tax free 912 01:00:38,787 --> 01:00:42,417 essentially, and for a couple you can claim up to half a million, 913 01:00:42,417 --> 01:00:45,867 but above that, you're getting tax at the capital gains rate. 914 01:00:46,707 --> 01:00:49,827 And I don't think there's a capital gain on house on your principal 915 01:00:49,827 --> 01:00:53,607 residence anyways in Australia and, and there's not in Canada. 916 01:00:54,087 --> 01:00:56,457 So people can make millions on their homes up here. 917 01:00:57,477 --> 01:01:02,157 And um, again, they haven't done anything wrong, but if it's come at 918 01:01:02,157 --> 01:01:06,417 somebody else's expense, I think a lot of people would be willing to. 919 01:01:06,867 --> 01:01:07,167 Okay. 920 01:01:07,167 --> 01:01:15,117 So maybe it's, you know, like maybe in the states, maybe after $250,000 of gains 921 01:01:15,117 --> 01:01:19,017 or half a million dollars of gains that you start to get taxed at the capital 922 01:01:19,017 --> 01:01:20,247 gains rate or something like that. 923 01:01:20,247 --> 01:01:26,247 I don't know, like there probably a number of different solutions, but I think if we 924 01:01:26,247 --> 01:01:32,487 all approach it in the spirit of fairness. 925 01:01:33,447 --> 01:01:42,417 Of understanding and compassion and not trying to demonize anybody, then I think 926 01:01:42,417 --> 01:01:46,887 we can come up with some solutions that would result in the least amount of pain 927 01:01:46,917 --> 01:01:49,527 for the least amount of people, I think. 928 01:01:52,077 --> 01:01:52,617 Absolutely. 929 01:01:52,617 --> 01:01:52,677 Yeah. 930 01:01:55,392 --> 01:01:55,682 Yeah. 931 01:01:56,037 --> 01:01:57,087 No, no, absolutely. 932 01:01:57,087 --> 01:01:57,987 You're absolutely right. 933 01:01:58,827 --> 01:02:04,467 And um, so somebody's getting screwed here. 934 01:02:05,787 --> 01:02:09,867 That is a given, that is unavoidable. 935 01:02:10,977 --> 01:02:17,427 And so I think you want to have the least amount of people being screwed 936 01:02:18,957 --> 01:02:21,567 by the least amount, if you will. 937 01:02:22,617 --> 01:02:26,427 And, um, yeah, it won't be easy. 938 01:02:26,787 --> 01:02:27,177 Yeah. 939 01:02:27,267 --> 01:02:29,527 But I think, you know, as I said before. 940 01:02:31,887 --> 01:02:37,467 Understanding, compassion, fairness, that right. 941 01:02:38,067 --> 01:02:42,477 It's amazing what people can do if they put their heads to it and they really 942 01:02:42,477 --> 01:02:48,357 want to make a difference and they really want to make it fair and least painful. 943 01:02:49,737 --> 01:02:53,457 But it's also amazing what people can do when they want to convince themselves 944 01:02:53,457 --> 01:02:58,527 that they, that they are justified in making four times in their home. 945 01:02:58,617 --> 01:03:02,067 It's amazing what Wall Street can do to justify why the 946 01:03:02,067 --> 01:03:03,687 Fed needs to bail them out. 947 01:03:04,287 --> 01:03:08,067 They won't consider anything else, right? 948 01:03:08,247 --> 01:03:11,517 They will just consider, they will, they will. 949 01:03:11,937 --> 01:03:18,087 They will counter any other potential solution other than bailout because 950 01:03:18,087 --> 01:03:20,787 any other potential solution is not gonna be very good for them. 951 01:03:22,197 --> 01:03:23,277 And, um. 952 01:03:23,817 --> 01:03:26,877 So, yeah, so there are no easy answers here at all. 953 01:03:26,967 --> 01:03:32,517 I'm not here to tell people that there are, I wish there were, but 954 01:03:34,167 --> 01:03:39,747 you know, particularly in the US and increasingly in Canada, I'm not sure 955 01:03:39,747 --> 01:03:46,407 what, what it's like in Australia, but society's getting divided, you know? 956 01:03:46,857 --> 01:03:54,507 And it is so sad to see, and I think this is a huge part of it. 957 01:03:57,057 --> 01:04:02,037 Younger people in particular, they understand that they're not getting 958 01:04:02,037 --> 01:04:03,717 a fair shake for the most part. 959 01:04:05,007 --> 01:04:10,797 They understand that it's not fair, but they don't understand why. 960 01:04:11,307 --> 01:04:12,447 And that's why I wrote my book. 961 01:04:13,287 --> 01:04:17,877 And so if you don't, so if you don't understand why, but you understand you 962 01:04:17,877 --> 01:04:21,237 are getting screwed, that is very natural. 963 01:04:22,587 --> 01:04:25,377 To look for someone to blame. 964 01:04:26,607 --> 01:04:29,697 And so it was very natural then for Republicans to blame 965 01:04:29,697 --> 01:04:31,557 Democrats and Democrats to blame. 966 01:04:31,557 --> 01:04:35,247 Republicans appear in Canada as conservatives, blaming liberals 967 01:04:35,247 --> 01:04:37,167 and liberals blaming conservatives. 968 01:04:37,947 --> 01:04:38,367 Right. 969 01:04:38,367 --> 01:04:41,067 And because that's almost all you got. 970 01:04:42,177 --> 01:04:44,637 And now people can't even talk to each other. 971 01:04:44,637 --> 01:04:49,347 You know, we, uh, my mom and my, our eldest daughter live down in Florida, 972 01:04:50,607 --> 01:04:54,237 and so we go down there a lot and we've got a lot of friends down 973 01:04:54,237 --> 01:04:59,067 there, uh, Democrats and Republicans, they're all beautiful people. 974 01:05:00,057 --> 01:05:03,327 Many of them can't talk to each other, you know, and they agree on 975 01:05:03,327 --> 01:05:07,707 95% of the stuff, you know, and even the 5%, what they differ, I mean, 976 01:05:07,707 --> 01:05:12,447 they don't really differ a lot, but they're told to hate the other side. 977 01:05:13,587 --> 01:05:19,467 And, uh, and it's getting worse because the, the, the root 978 01:05:19,467 --> 01:05:20,997 cause of it, in my opinion. 979 01:05:22,252 --> 01:05:23,217 It is not going away. 980 01:05:25,197 --> 01:05:32,517 And um, so yeah, we can decide to, and, and it's not sustainable. 981 01:05:33,207 --> 01:05:35,667 So it's not sustainable. 982 01:05:36,117 --> 01:05:39,957 And so one way or another is going to end in my opinion. 983 01:05:40,797 --> 01:05:43,587 Now it might end next week. 984 01:05:44,337 --> 01:05:46,287 It might not end for another 10 years. 985 01:05:47,877 --> 01:05:51,897 You know, there's this rule of, um, the rule of holes. 986 01:05:52,707 --> 01:05:57,447 The rule of holes is when you find yourself in a hole, the 987 01:05:57,477 --> 01:05:59,067 first rule is to stop digging. 988 01:06:00,927 --> 01:06:07,377 And instead we've been digging faster and faster such that, you know, 989 01:06:07,677 --> 01:06:09,897 the bailouts are that much bigger. 990 01:06:09,897 --> 01:06:13,767 Government gets even more, uh, involved in the economy. 991 01:06:13,767 --> 01:06:18,537 The central bank balance sheet grows even higher and. 992 01:06:20,232 --> 01:06:28,992 And yeah, so, so it will end and it will either be my opinion, an out of control 993 01:06:28,992 --> 01:06:34,542 explosion where the people, those are getting screwed, finally have the vote 994 01:06:34,902 --> 01:06:36,492 and they say, well, no more of this. 995 01:06:37,392 --> 01:06:42,102 And you get some sort of hardcore socialism and you're getting more 996 01:06:42,102 --> 01:06:45,942 and more movements and it's natural that socialists are, are pissed off. 997 01:06:46,002 --> 01:06:49,032 They should be, but they don't understand what's going on. 998 01:06:49,032 --> 01:06:54,912 So they're, they would, they would throw out the free market capitalist baby 999 01:06:55,782 --> 01:07:02,442 with the crony capitalism, bathwater with the crony capitalism, moral hazard 1000 01:07:02,442 --> 01:07:05,142 bailout, wall street, bath water. 1001 01:07:05,232 --> 01:07:08,472 And then you think things are bad. 1002 01:07:08,472 --> 01:07:12,522 Now things would be con it, it'd be a lot more fair. 1003 01:07:13,452 --> 01:07:16,962 But instead of the wealth disparity be here, which is ridiculous, it should. 1004 01:07:17,292 --> 01:07:19,962 There should be wealth disparity based on contributions, ability, 1005 01:07:19,962 --> 01:07:23,682 whatever, you know, should be here, we're here, which is crazy. 1006 01:07:23,862 --> 01:07:27,552 With socialism, it would be much more even, but we'd all be way down 1007 01:07:27,552 --> 01:07:33,822 here, you know, and so that's the out of control explosion, or we have a 1008 01:07:33,822 --> 01:07:38,367 controlled explosion, like what I've talked about earlier, talked earlier, 1009 01:07:38,372 --> 01:07:43,452 and um, listen, I, I wish there was, there were other choices and maybe 1010 01:07:43,452 --> 01:07:50,112 there are, I mean, I, I just don't know them and I'd be more than happy to, to 1011 01:07:50,112 --> 01:07:51,942 listen to what other people have to say. 1012 01:07:53,082 --> 01:07:57,312 But, um, but I don't, I just, I don't see it, but yeah. 1013 01:07:57,477 --> 01:07:57,967 Exactly. 1014 01:07:58,362 --> 01:07:58,992 Exactly. 1015 01:07:58,997 --> 01:08:03,312 And, and, and it, and, and it is complicated and the terms that are used 1016 01:08:03,312 --> 01:08:11,232 are in some ways deliberately made to confuse, you know, and, uh, but like, 1017 01:08:11,232 --> 01:08:16,242 as you just said it, you know, it's, it's because of a lack of understanding. 1018 01:08:16,932 --> 01:08:20,202 Which is precisely why I've written the book. 1019 01:08:22,092 --> 01:08:23,532 That is step one. 1020 01:08:24,822 --> 01:08:31,572 And it is my hope that, well, first of all, it gets read and that, you know, 1021 01:08:31,572 --> 01:08:35,892 hopefully it can make a difference and start a movement where, I mean, there 1022 01:08:35,892 --> 01:08:43,332 are so many incredibly talented, capable people in this world, and if you can get 1023 01:08:43,332 --> 01:08:46,692 them on board, I think we can get there. 1024 01:08:46,992 --> 01:08:49,572 Um, I do like, I, I'm an optimist. 1025 01:08:50,892 --> 01:08:54,372 Uh, I'm a realist first and foremost. 1026 01:08:54,372 --> 01:09:01,362 I'm, I, I am, but I'm also an optimist in, in that, yeah, I 1027 01:09:01,362 --> 01:09:02,772 really do believe in people. 1028 01:09:03,012 --> 01:09:05,802 And for the most part, people wanna do the right thing. 1029 01:09:06,222 --> 01:09:07,332 They just don't know what to do. 1030 01:09:08,532 --> 01:09:08,712 Right. 1031 01:09:08,712 --> 01:09:10,842 And they don't know that they're doing the wrong thing. 1032 01:09:11,622 --> 01:09:16,032 And you know, it's bad systems bring out the worst and very good people. 1033 01:09:17,562 --> 01:09:18,402 And vice versa. 1034 01:09:18,762 --> 01:09:19,182 Okay. 1035 01:09:19,362 --> 01:09:20,382 And vice versa. 1036 01:09:21,102 --> 01:09:26,742 And I think with a better system, a fairer system, a more honest system, 1037 01:09:26,802 --> 01:09:34,062 a a more honest money that you know, that could really bring out the best in 1038 01:09:34,062 --> 01:09:40,152 so many people, create that many more opportunities for that many more people. 1039 01:09:41,472 --> 01:09:44,682 So many people don't have a fair shake at the stick. 1040 01:09:44,682 --> 01:09:46,272 They don't have a fair chance. 1041 01:09:46,902 --> 01:09:52,272 And just imagine if that many more people were able to productively contribute to 1042 01:09:52,272 --> 01:09:54,642 society, we'd all be that much better off. 1043 01:09:55,752 --> 01:10:00,162 I mean, nevermind first and foremost, from a moral perspective, giving 1044 01:10:00,162 --> 01:10:03,762 people the opportunity to live a fulfilling life and a productive 1045 01:10:03,762 --> 01:10:07,032 life, we'd also all benefit from it. 1046 01:10:07,872 --> 01:10:11,367 You know, it really is a win-win situation in my mind. 1047 01:10:11,367 --> 01:10:12,882 And, um. 1048 01:10:13,797 --> 01:10:14,607 So that's my hope. 1049 01:10:14,637 --> 01:10:15,447 Maybe it's a dream. 1050 01:10:15,447 --> 01:10:15,927 I don't know. 1051 01:10:15,927 --> 01:10:20,097 I guess I would, yeah, try not to. 1052 01:10:21,177 --> 01:10:22,737 A lot of people are very angry. 1053 01:10:22,857 --> 01:10:29,877 Understand, but try not to get angry at, you know, your fellow citizens. 1054 01:10:30,807 --> 01:10:38,157 Try to have more empathy from, you know, try to see things from their perspective. 1055 01:10:38,457 --> 01:10:43,167 And I think with more understanding and more education about what's going 1056 01:10:43,167 --> 01:10:47,367 on, I think more people will be on board and want to help each other. 1057 01:10:47,367 --> 01:10:50,997 I really do believe that, but people are gonna need to see 1058 01:10:50,997 --> 01:10:53,427 evidence and I get that too. 1059 01:10:54,237 --> 01:10:55,617 And I think that, 1060 01:10:57,867 --> 01:11:01,767 you know, once we all decide to do the right thing, 1061 01:11:03,987 --> 01:11:05,277 like we'll do it. 1062 01:11:05,727 --> 01:11:12,297 And, but it's, it's important that people know and trust. 1063 01:11:13,257 --> 01:11:15,687 That we are all in this together. 1064 01:11:15,687 --> 01:11:20,667 And it's not just me that's gonna suffer and they're all gonna be fine. 1065 01:11:21,807 --> 01:11:22,257 You know? 1066 01:11:22,257 --> 01:11:26,097 And, and I, and I think that will happen if we don't, we're gonna end up in 1067 01:11:26,097 --> 01:11:30,987 something like the movie from the Hunger Games, you know where, I dunno if you saw 1068 01:11:30,987 --> 01:11:35,517 that movie, but, you know, well, yeah. 1069 01:11:35,697 --> 01:11:41,097 And whether it's in the form of gated communities or whatever, I mean, that's, 1070 01:11:41,097 --> 01:11:47,427 uh, and less and less stuff being produced and, and people worse and worse off. 1071 01:11:47,547 --> 01:11:51,057 But, uh, I just think have faith in people and let's move forward. 1072 01:11:51,117 --> 01:11:51,837 Well, thank you, Anya. 1073 01:11:51,837 --> 01:11:52,377 It's been great.