The Exchanges

Q very different sides of this debate, that AI is going to play a massive component in quote, owning the future. Uh, when you have companies like Google, uh, that work, that can use their ad business to subsidize massive gains elsewhere, choose to launch free products for consumers, and then use that data to help their AI machines course correct faster. Is that a good or bad thing for society?

A Um, do I want AI owned by a corporation? Um, uh, probably not. Um, I would rather have AI General purpose are owned by a whole bunch of people. Um, do I want AI owned by a government? No, I, I don't. I would rather have the benefits widely distributed to society. Um, but the incentives around a company to create it are so massive that it makes sense for Google. It makes sense for Amazon. It makes sense for, um, so I don't think it said that I'm, I'm from Canada. Some of the top AI researchers, uh, In the world or in Canada, and it's because the government incentive, um, when most, most governments were stepping out of AI research because they didn't believe in it, Canada continued to, to invest in it. So some, some of the top people around the world moved here, and, and, but we haven't capitalized on the commercial value of AI. There, there is a sucking sound from all of our talent to the, uh, to the, the Amazons and Googles and everything else, because you can work on problems faster, right? It's around data capture and everything else. And so the top researchers go to some of these companies because they can, uh, they can solve problems faster. And that's because they, these companies understand network effects, how to capture data, uh, data a lot faster. So that path, if you look at the amount of investment in AI and you compare what's happening, um, to these massive compani…

AI assessment note: “do I want AI owned by a corporation? Um, uh, probably not.”

Q What does can't continue mean? When does the world get shocked into the moment when they say, oh, it is broken. We realize it's broken.

A Well, all the evidence is there already, right? It's been You talk about the, the polarization, uh, in political circles all over the globe. That's a, that's a consequence of trying to retain a system that doesn't work in the way that it should, the way we grew up with. And so, so over a 185 trillion dollars has been added to global debt in the last 20 years to, uh, to produce 46 trillion dollars of economic return in GDP. That's per year. But the growth of debt is exploding. And when you grow debt at that rate, all you're really doing is pulling forward demand. Then you have to pay for it tomorrow, right? So you're pulling forward demand, and you're having to increase the amount of debt with each different step against, against prices that want to go down because of technology. Jobs that want to go down because of technology. And, and when, and when you do that, you, you're caught in an existing, so you, you, you get caught in an existing trap. Asset prices go up, those same asset prices That you're forcing to go up because of that creation of debt. Then you have to bail out the people on the other side through UBI or something else, because you've, the prices of the assets are unnaturally high, and people can't pay for them. So you're wasting money all over the place. And, and, and And you, you, you said, um, the signposts are everywhere, and so it's actually surprising that,…

AI assessment note: “Well, all the evidence is there already, right?”

Q What would, if you didn't have, wait Jeff, what would it look like?

A It would look deflationary just like everything else. If you didn't have this, if you didn't have, uh, if you didn't have this, and then your savings would be going up and you would be able to buy more for everything would look like that. You would follow the natural trend of what prices wanted to do. It's not necessarily debt. That's a negative. It's debt that can't be repaid, and then you changing the currency underlying to pretend you repaid it. That is a real critical thing. So if you actually have to repay that debt, Then you're borrowing from the future. You're just pulling forward demand. And if you did that, then growth has to slow in the future. Because you have to pay back that debt with interest. And it's pulling, pulling future demand, uh, from, uh, from today's demand. So growth has to slow even more. So it's not necessarily the debt. Debt can be used. Debt is not a bad thing. It's debt that can't be repaid. And then, and then governments distorting capitalism to pretend that they're repaying it, changing the currency value.

AI assessment note: “It would look deflationary just like everything else.”

Q thinking, wait a second, wait a second, wait a second. My drug, the cost of this pill that I really need for my chemical imbalance that helps me balance out my copper has quadrupled in price over the past 10 years. There are certain areas where this deflationary nature of technology has not resulted in cheaper prices. Address that. Why hasn't that, why isn't this the case across all industries?

A Okay. Let's, let's go into, and some are manipulated higher, right? Some are, uh, and, and, and right now, most are manipulated higher by the same function of currency that we're talking about, right? Why is real estate going up in value? Because you're in, you're, you're pulling, everybody's trying to take their money and put it in a store of value that is, that, that, that doesn't get eroded by, by, uh, by inflation. So you take your money out of there and you, you put it in a house. And if, if China is going to devalue the currency, which they will devalue their currency, right? Everyone from China says, I got to get my currency out of China and I'll put it in New York real estate. The New York real estate goes, it goes up, but that game is happening all around the world and that massive easing. So if you didn't have a 185 trillion dollars of additional easing, What would real estate look like?

AI assessment note: “most are manipulated higher by the same function of currency that we're talking about”

Q And so the audience is naturally thinking, Jeff, enlighten us. When does the destruction happen? Lindsey Graham, just this morning, this is some interesting stuff, saying we should potentially default the US government on the trillion dollars of debt that China holds of US treasuries. Is that what destruction looked like? Is, I mean, is that the bomb?

A Yeah, so that's one, that's one of the, because, but, but already that's happening, right? So that's what, uh, all over the world, global trade has really, has really been a mug's game around, so once you're, every country, every country has its own currency that's devaluing to try to get higher jobs, and every currency is doing the same thing, You can't underlie, you can't have trust in global trade anymore because let's just take, it's simple if you see it as, as, as, as an example, you and I, right? Uh, you, you loan me a whole bunch of money. We're trading, right? I'm in Canada. You're in the U S you loan me a whole bunch of money and you're buying my goods and everything, or sorry, um, I'm loaning you money. You're buying my, buying my goods. And then at some point you say, I'm not going to pay you back the loan. Um, or like Lindsey Graham just said, right? Am I going to trust that trade relationship anymore? Or am I going to trust your currency anymore? No, I wouldn't. Or the opposite, or I'm going to change the value of the underlying currency and pretend to pay you back. But I'm going to pay you back in, in, in worthless pieces of paper, right? On both, on both of those things, the framework of trade and the framework of, of trust and, uh, trust and services back and forth between you and me, or anyway, just keeps breaking, breaking down. That's where we are in this cyc…

AI assessment note: “Yeah, so that's one, that's one of the, because, but, but already that's happening”

Q law and the advances in technology over the next 20 years, so if we have another interview in 2040, will the ratio stay the same or get worse? In other words, worst case, or no, sorry, best case. Can governments around the world print four dollars to get a dollar note of GDP, you know, in 2040, so we're doing 500 trillion in debt and 160 trillion in global GDP?

A Well, that's the question right now, right? So, so, so, so, Since the book came out and COVID, let's, let's look at a micro example, right? Zoom going from ten million users, what we're on right now, right? Going from ten million users to three hundred million users in a month and a half, right? Will, will the 290 incremental, uh, two hundred ninety million incremental users all go back to their commercial real estate? I think the answer is obviously no, right? Some will go back to commercial real estate, but everyone that doesn't reduces the value of commercial real estate, um, and reduces GDP as a function of all of this coming down. And then those people aren't eating out as in restaurants near the commercial real estate as much and everything else. So all that's happened is with tech, with COVID is we've accelerated the process of technology change.

AI assessment note: “reduces the value of commercial real estate, um, and reduces GDP”

Q How do we keep them? Is that the right question to be asking?

A Well, so you've, you've fortunately read the book. Um, I think we're asking the wrong question, right? So, uh, so, so if technology is deflationary and it makes things more, uh, more efficient, maybe the question should be, how do we rebuild society so we don't need as many? Um, but, but that question, it breaks people, right, because it's, because we haven't, we haven't grown up in that society. We, we, it's always been a growth society, get more, try to, you earn more over time, you pay back your debt with future dollars that were deflated, were inflated away, um, and it's worked for a long time, and, and so we can't see that we're caught in this loop. And we're, and we're asking the wrong question. You, you said, uh, something to kind of, that I'm not an author. I didn't write the book. I, I don't need money from book sales. I don't, um, the, I, I wrote the book because I care about our, my kids. I wrote the book because I care about the future world that we all grow up in, uh, and, and, and solely for that, uh, that reason. But, but entrepreneurs have an advantage, right? Entrepreneurs see the way something Should work versus the way it works now. And they build to that. And, and a lot of times those entrepreneurs are chastised early on, right, because they, because they're competing against a system that doesn't work that way, and they're trying to create a new system. So,…

AI assessment note: “I think we're asking the wrong question, right?”

Q Give a counterexample to WeWork. Where has it been good debt over the past five years?

A Well, so go back a little further. Amazon borrowed a bunch of money to, to, to create real value in their business. Um, and that, and, and the future cash flows, it was a negative working capital model and the future, uh, future cash flows and the growth of creating that platform would easily pay, pay that back. But any single example that you, you take as you break, as you add more and more debt to, to get, uh, No real, look out at the future and say, can this debt be paid? You know, it's, you're already way past the point of rescue. And so, so your, your example with airlines or any of these others, which just all goes up to the federal government, which is really from the taxpayer. Um, you, you look at the entire thing and it's just a house of cards.

AI assessment note: “go back a little further. Amazon borrowed a bunch of money”

Q Switch. Let's incentivize solar, right? It's going to be painful. We're going to lose fracking jobs, but guess what? We'll be energy independent. That's good geopolitically, right? We'll have solar. Moore's law will continue to bring the price of solar cheaper. Like, these are all good things. Why wouldn't people get on board with that?

A Um, you hope they will. Now, so just the transition, you know it in the book, and one of the things on podcast, you can't go as deep as it is. There'll be a whole bunch of people questioning, oh, solar can't provide enough power today. And they're right. So the transition to solar is, uh, is, is really important because you're not going to just to tomorrow go from energy dependence on oil and coal and everything else to, to, to solar like that. But the transition, the people in front of the transition and the people that create the innovation and the transition will export that innovation around the world. Um, and so the best, um, where owning the future, um, is, is the best, uh, is, that transition is an important transition that those investments of jobs, those jobs, they don't just carry

AI assessment note: “There'll be a whole bunch of people questioning, oh, solar can't provide enough power today.”