Episode Transcript
[00:00:00] Speaker A: Welcome to the Independence by Design podcast, where we discuss what it means to be a business owner and ways to get unstuck from the day to day so we can design a business that gives us a life of independence.
If you caught my episode last week with Lawrence Leppard, the author of the Big Print, this is really an extension of that conversation because, you know, in last week's episode, you're hearing me talk a lot about, like, what is the actual game, like the, the foundational layer of the game that we're playing, Understanding the economic system, the monetary system, impacts your decisions to answer the question, is what I'm doing worth it? And so on today's episode, I was actually on Kim Clark's the Growth Playbook with her father, Ambolio, who is from ITR Economics, and we have a very fun conversation. Alan and I go back and forth and I'm just trying to find the truth of, like, what is the actual foundation of what is the current situation that we're in so I can better understand where we're going so we can make better decisions. And I really respect Alan a ton. And so it was just in the process of trying to think through the implications of a lot of the stuff that I talked to Lawrence about last week, so that way we can make better decisions about what we're doing today. So I was able to distress test some of my ideas against Alan.
His understanding we're both going back and forth in search of the truth. And Kim and I were talking about, okay, what do we do about this as we go, as we're, you know, sliding into 2026, building a moat around our business and creating sustainable cash flow, good leadership, team, understanding predictable revenue and like, understanding how we can build a moat around our companies is going to be the utmost importance.
And so hopefully this episode gives you a little bit more of the more practical why are we going to be doing all of this stuff? And I'm going to continue to deliver episodes on, like, how and the. The episode after this. Jeff west is going to be on probably one of the favorite conversations I've had about leadership and building a business that's surrounding yourself with people that can help you navigate these waters, to build a Noah's Ark and have a huge amount of impact and, and success even though the waters are choppy. So this is a light of hope and it should give you some serious courage or encouragement that there's a lot of good stuff. A lot of opportunities are in the environment when there's a lot of challenges. So Enjoy the conversation with Kim and Alan.
[00:02:30] Speaker B: Hi, everybody. Welcome back to our latest episode of the Growth Playbook with myself, Kim Clark, and my dad, Alan Bolio, and our special guest today, Ryan Tansom. Thanks for joining us again, Ryan.
[00:02:42] Speaker A: What's up? I'm excited.
[00:02:45] Speaker B: Today we are going to be talking about and breaking down a podcast episode that we all watched by Luke Gromen. The title of it is has the debt spiral started?
Ryan was so kind to share it with me. I found it interesting to listen to. I shared it with my dad. He found it interesting to listen to, and we thought there were a lot of perspectives in there that potentially our audience are also feeling or considering. So let's break it down as part of our overall series of planning for the future with confidence. Confidence. So thank you for agreeing to jump on this topic. I have lots of questions for both of you, but just curious where either of you would like to get started.
[00:03:26] Speaker A: I'll just kind of preface it with I'm super excited for the conversation, Ellen, because, you know, as I've been trying to spend, like, an insane amount of my time trying to figure out, like, what is the actual landscape of the playing field of what we're all dealing with, like, how do we make bets? I mean, you know, one of your books is make your move.
And I've just. Just been trying to map out, like, what the hell's going on, because I, you know, fully subscribe to, like, certain fundamentals of the demographics, the debt, you know, all these different things. So I've just, like, I have found it more and more difficult as I get into the weeds to figure out how to reconcile what I believe to be true, but also what I'm not sure about, you know, because I'm like, I. And. And. And I don't know how to articulate this as maybe as well as I could, but, like, trying to find. And I. I respect you so much, like, trying to find other people that, like, okay, like, how. How are you thinking about this? You know, because we're starting on, like, a certain foundation of, like, hey there. These things we all agree upon, but, like, we're, you know, how do we continue to get better together? And I just. So I'm excited for the conversation.
[00:04:34] Speaker C: You know, that truly proves you're a geek because you get excited about these types of conversations.
[00:04:38] Speaker A: Yeah, well, yeah, I've. I've come to that conclusion quite a while ago. So here we are.
[00:04:45] Speaker C: But maybe we can, you know, a nice way that. To position it from our perspective. And I'm Sure. Yours too, Ryan, is that we can help people. I mean, that's been our goal for years and years. And yours too is just to help businesses and help individuals. So this conversation can be geared in my mind towards that. One of the things that you brought to my mind as you were speaking, and I used to tell the younger economists this and also clients, because they would go, what's going to be the trigger to whatever the event was, whether it's recovery or a recession, what's going to be the trigger? And I would say, as we were years out, I go, who the heck knows?
Yeah, right.
[00:05:25] Speaker A: Go black swan for black swan for a reason, right?
[00:05:29] Speaker C: Yeah. And even if it's not a black swan, just a normal economic event, it can spring up out of, seemingly out of nowhere. What I would tell people is you can be focusing on these four things and find out it's the fifth thing coming out of the woods that's going to get you.
So keep your head on a swivel and you're more likely to see it coming rather than being hyper focused. And I agree with what you're saying. You know, we've talked about the basics, but what's going to be the trigger? We know the dominoes are going to fall, but what's going to push that domino? What's going to be the thing that just knocks over that first one so that it continues? And in my mind it's not going to be starting here, it's actually going to start in China.
[00:06:10] Speaker A: Interesting. And maybe I got, and Kim, you got some questions. So I don't want to derail us. Maybe the, one of the questions I have and you can put it into like how you want to guide this, but by trigger, like what do we think the thing, like how does this unfold? You know, one of the, one of the conversations we had in one of our previous episodes was is it actually a crash or is it a melt up where our money's not worth anything anymore? And then how crabby does everybody get that they can't pay for things based on their living wage? And so like, I just don't, I, I've been trying to figure out how to map out like what is that when you say like that domino, that triggering event, like what are the things that could unfold? Because I think, you know, from my conversations that I have with people, people think that there's going to be like another, you know, we're going to go on Bloomberg and everything's going to be down and you know, and that's Kind of how they're mapping the potential crisis.
So I'm just curious Kim, on how we want to navigate that. That part of the conversation.
[00:07:11] Speaker B: Has thoughts on it. I just, I documented something like the major takeaways in the Luke Roman po.
So it was economic precarity and Fed policy, debt spiral and inflation risk AI and labor disruption, petrodollar system and geopolitical shifts which dad, I think that ties into some of the China stuff that you were just going towards because it actually had an interesting point where it said Middle east trust erosion is pushing countries toward China and away from US Dollar dominance was one of the take. And so I'd love to kind of break down this podcast by Luke Groman and say like what are the thoughts and positions and agree disag why from he talks a lot about stablecoins and bitcoins. Ryan, you're our in house expert on that subject. So I'm just thinking I have some of those questions for you. And then Data is our expert economist too, just on these, these other points too.
So if you want to start maybe with what you were talking about with the geopolitical shifts and what are your thoughts on their perspective in the podcast where it would be pushing countries toward China and away from the US dollar.
[00:08:23] Speaker C: Pushing them towards China, India, Russia, the three in alignment is the key and maybe involve Brazil, maybe not.
And it's not so much pushing them that way, although we could be very good at pushing that way, but the three of them attracting people as well. So it's not just no choice. You know, the US is forcing us. There'll be nations who want to go there and that could include the Middle east where both India, I mean China and Russia have a presence as well as, as we know that could cause a balance, a shift in the balance of power economically in the world because their GDP combined is almost the same as the GDP of the United States. So that's a lot of weight.
And if, if we're no longer the leading economic power that takes away some of our say in the world, some of our ability in the world, some of our push to have our own way in the world. And that can cause a lot of people, I think to wonder, all right, what about the dollar, what about the debt? Will they keep buying our debt and all that kind of stuff.
And I think that's a very valid point that he brings up. There can be this geopolitical shift and you know, is, is it possible? Yeah, it's absolutely possible, but it's also possible and I know, I'm sounding like a two handed economist here and I apologize, but there, there's something called involution going on in China where their demographic base can't afford things and where their real estate market's a mess and their government funding of businesses that can make a profit is a short road to disaster. So we tend to think of China as this great big powerful monolithic being that can come along and pound the stuffing out of us.
They're beginning to look like they're hanging on as opposed to going forward. Ryan, do you agree? I see you're shaking your head.
[00:10:22] Speaker A: Nodding my head, yeah, yeah, yeah, I do agree, Alan, and you know how I, what I try to do is map what I understand to be true on top of the dynamics so I can go to the first principles instead of getting so stuck in the nuances. And like, I go, okay, it's what I've, I've very much appreciate about Luke Gromen, Lynn Alden and like Michael Howell, like just people like, which is why I've loved listening to you for years, is like, okay, what are the general trends in the situations?
And you know, you throw in Europe, you throw in Canada, you throw in Australia, there's talks and potential that they're unrealized capital gains. You go, so for my brain, I go, what the hell's going on across the board? Because if I, the way that I look at like, okay, well if you like take one of those topics in isolation, it doesn't have any context. And I go, well, all of these countries, their dollars are bankrupt and you go like, well, they're just printing money to keep things going and all of their populations are getting poorer, including us.
So it's a currency war across the globe. And I look at Luke's comments and I don't know whether his, you know, when I kind of go like, there's what's to be true and then what are people predicting is going to happen? I really don't know what's going to happen and I'm very open to that. I'm just trying to figure out and continue to build that foundation. What do I believe to be true and go, well, all of these countries have been buying the dollar and we keep printing more. So they're saving in the dollar and we're stealing from them along with every bondholder. And there was two things that Luke Groman said. One was on this podcast, another one was on another one where there was a few like a month ago where when Trump just said good luck, bricks and he, he, these are his words, not mine. That, that was as, for him, as monumental as the fall of the Berlin Wall. Because it was like, hey, we chose peace. Kind of like, we can't fight our way out of this. And then you, then a few weeks later, China and the whole rare earth, you know, debate is like, China's like, your fake dollars can't buy the stuff that we have to mine out of the earth.
So then there becomes like back to then, the China and the BRICs, they're starting to trade in gold and oil because it's actually a sound money that can't be diluted. And so I know there's a lot behind this, but I kind of map out what's the game being played. And I look across the countries in the geopolitical environment and it's an economic currency war trying to figure out how to keep things going without having everything collapse underneath itself.
And I don't know if you think that, that, like, what do you think is true, not true in that, or like, how do you, how do you process, like, the overall landscape?
[00:13:07] Speaker C: I think it's.
I think there's an overstatement in that.
I don't think there's a currency war going on. I think there is some skirmishes, if you want to call them that, but we're not, we're not seeing a flight from the dollar. I mean, 20, 25, there's been a little debasement, but that happens. I mean, we're not looking at a falling dollar, which if there's a true currency war going on and people were just running from the dollar, we'd be seeing an entirely different economic landscape. We're seeing a lot more inflation and purchasing power erosion and all kinds of things.
And the reason I'm not sanguine, but I'm not really as concerned about all that right now is because the bond market is still going go U S.
The bond market is still buying U.S. bonds. And if they're really concerned about the dollar failing and they're a bunch of smart people around the world, they would not be buying U.S. bonds. They would already be in Australian or Canadian bonds.
But they're not. They're still buying U.S. bonds.
[00:14:08] Speaker A: What do you think about Luke's comments and about the bond market? And like.
So Luke's got comments about the bond market and the bond market has dictated most of the global trade and global decisions for, since.
Since, you know, 71 effectively, or even, you know, since the Bretton woods. And there's nowhere else to go. It's part of the problem. And then I think that kind of lends into like, well, China. I mean like even if even Michael Howell is a fantastic source. He wrote Capital Wars. He talks about the, the US is saying trust our technology and trust us and China is saying if you can't trust us, trust the soundness of our money. So you're people are floating more towards that because of, you know, various reasons. But you know, at the end of the day when I also, when I, when I map on okay, what, what do I believe to be true? Like Lynn Alden has a very, a lot more probably towards your approach of like, hey, it's not dooming, it's not crazy catastrophe. Tomorrow there's a baked in 8 to 10% debasement and as things first brands and they don't know if they have $50 billion in losses or not in the private debt markets and they're just going to get bailed out left and right which is bakes in the 18 or 8 to 10% debasement which means anybody holding bonds has got problems. But then there's this balance between it. You can't just have it all unfold tomorrow because it would be complete catastrophe.
So then do we, like how do we, you know, do we take more of the Lynn approach to say, okay, well there's a problem here from our investment strategy and like as you just, it kind of just is factoring in a lot of that debasement because it just the nature of the system and then we need the bonds market. We need the bond. You know what I mean? I think you and I talked about that in the last call. Like we can't have a switch tomorrow. It would be a disaster for everyone.
[00:16:06] Speaker C: I think that's a really key point and part of the title to the podcast we're talking about was were we on the cusp or on the edge or the beginning of.
And I think everything you just talked about and we've been talking about for the last few minutes says no, we're not on the edge. Could we, if the premise is right and that's what Brian and I have been saying for a long time is going to be part of the problem. The bond market is going to get to a point and go, you guys are screwy. But it's not going to be just because we're screwed. It's going to be because China's a disaster in Europe's a mess and, and it's not a US faulted thing. It's a global financial mess.
We're not there yet. The, the bond market's showing we're not there yet. The machinery is still working.
So I disagree with whoever came up with the title. I don't know if it was him. Probably the market.
[00:16:55] Speaker A: That's what I struggle, Alan, with the, the YouTube titles. And Kim, the marketing expert here is you have to be clickbait and, you know, go to the algorithm gods in order to get viewed. And maybe that's why I'm not as popular as we should be.
I agree with you, Alan, on the, on the title.
[00:17:13] Speaker C: Now, there's also, you know, the, this talk has been going on for a long time and I know we have talked about how we've handed some. One of the keys to the kingdom, to China, and that they hold so much of our debt. They can, they can really have a major attack on the dollar anytime they want to, which would have an impact on them in the world, so probably won't, but they could.
As far as the petrol dollar, that's been a conversation for a long time. Middle east has been, you know, when they get angry with us, they start trading in other currencies or taking other currencies and. But the R and B is not a stable currency. It's, it's not a good bet.
So I would ask people all the time, they go, what about brick? What about dollar losing its status as the reserve currency of the world? I go, it's not the reserve currency, it's just the preferred currency. Where else would you go?
[00:18:06] Speaker A: What do you, what do you say about like. And how about. About the, you know, the ramp. Rampant purchasing of gold by every central bank now where they're now holding more gold reserves than US Dollars?
[00:18:18] Speaker C: Yep. I, I don't know. I haven't checked that out. I'll take your word for it.
I would get asked that occasionally. And my answer was, how much gold is there in the world? How fast can we get it on the ground? Is it enough to cover the reserves that are needed and the currencies? Because people say we should go back to having dollar backed by gold. I go, there's not enough gold on the planet anymore for that. You'd be causing such a dramatic upheaval in the value of that dollar that you'd ruin economies around the world. So stop talking like that. It can't happen. It's good to have it as a reserve. That's your emergency fund, if you will. But you can't base the global economy on gold anymore. It's just not possible because we printed so Much.
[00:18:59] Speaker A: And why I think fiat is garbage.
My personal opinion.
[00:19:03] Speaker C: Well, it could be, it could be. But that's where we are though. I mean, right?
[00:19:08] Speaker A: Agree down. And when I think, when I've heard Luke Gromen talk about it, Michael Howell has a new substack that came out that I should send your guys's way.
There's this play and this is where like I'm in the process of learning how this stuff works. So I might trip on my words or concepts a little bit, but agreed with you if you were to. I mean what happened with Europe after World War II? They tried to pretend that they didn't print all that money and their economy stagnanted for a long time and they lost their reserve. You know, their main status at if you China's trying to increase the price per dollar of gold because it benefits them. And technically if we raised our. I remember the numbers yesterday, it was like if the gold per ounce is 5,000 bucks at about 20,000, I don't know what the dollar gold and Bitcoin as sound money could potentially be a release valve as the stable coins and continue printing happens. Instead of having my house be worth $5 million, the developed countries and other assets are, you know, taking that release or helping with the release of that to keep the bond market volatile. Because what Michael Howell's framework has, is over the last 20 years, 30 years, we became a debt refinancing world economy instead of a cash flow investing economy. And so throughout this process, we're constantly needing to have the asset values go up. But the, the at the bottom of that pyramid is the bond market. And so the more volatile the bond market, the more trouble it is to refinance these debts. So we want the bond market to be nice and stable.
And so what I've understood is the stable coins and all these different mechanisms is to keep that bond market stable to help the debt refinancing. So it's balance sheet capacity more than it is cash flow these days, which I just find as a fascinating concept in itself.
[00:21:08] Speaker C: It is a fascinating concept and it's the fundamental flaw I think we agree on, on that certainly is that, you know, the US and other nations that have gotten into this serious debt cycle is, is an intractable problem and the only thing that fixes it is, is a bust.
You know, going back to Luke and in the discussion there, he talked about inflation and inflating our way out of trouble and all the rest of that they talked about there's potential that it could get to Be really serious. Inflation.
But he kind of dismissed it as I remember. And I thought, well, that's the flaw because there's no time that you don't get into an inflation cycle where eventually the economy basically falls apart. Aware macro, Venezuela. I mean, pick, pick any of the.
[00:21:56] Speaker A: There's a book called Gradually. Then suddenly. You've ever heard that there's a concept. Yeah, it's. Yeah. At some point people are like, what? I don't. No, thanks.
[00:22:04] Speaker C: Yeah. So my house is worth $5 million, but I can't afford to get a loaf of bread because it's going to double in price.
[00:22:10] Speaker A: Alan, I picture that picture. It's from Germany and they're literally shoveling the paper marks in for heat into.
[00:22:17] Speaker C: The stove because it means nothing otherwise. So I think I'm going to go back to where you were before. The nuances and the details are fun and it's interesting and all the rest of that. But the greater theme is if we're living in a system, and I think we are, that's creating global inflation for multiple reasons, not just because of the debt, but because of demographics, because of mindset, modern monetary theory, talk about universal basic income, all kinds of things that are going to lead us to this position.
Then it's an, in my mind, an inescapable conclusion that we will have inflation that becomes so problematic as to. As to cause the economy to burst because the Fed central banks around the world will have to step in and do something or the economy will just collapse on its own, as it does in Venezuela or Wearmark, et cetera.
[00:23:13] Speaker A: I totally agree with you because that's two times. Yeah.
And that's why when I think about where Lyn Alden potentially has things slightly off or some of these other, like, it's like, you can't just do this forever to what you're saying. You can't.
Like at some point, even the banking, the commercial banking system is no complete Ponzi scheme because, like they're lending things out at 6%, the government's printing at 8. I mean, they're completely illiquid. I mean, if you keep doing that and the whole. At some point. And what I saw with China a couple weeks ago is China said we have to spend real time and energy mining rare earths and we don't want your fake dollar as an exchange of that.
And so like, in. That sounds like there's like they're kind of tamping that down for now, whatever, they're, whatever conversations are happening. But at some point, I'm in total agreement where there will be a halt to say, like, this doesn't make any sense anymore. And whether it's the fact that most people can't afford anything. I mean, like my wife got her 4% raise last week and it's a total effing joke.
I ran the numbers after taxes and literally just the health insurance cost that. And thank God I can just go sell more shit as an individual and make more money, like, whatever. But like, if you don't have a variable like ability to make more money, good luck with any of this. And so, but what I, what I'm curious to hear your thoughts on is that's why when I think about most people that I talk to that are not in the weeds of all this stuff, they think it's going to be a Bloomberg crash down.
When the money actually is. When I say melt up, it becomes.
They're looking for stuff that's scarce.
They're looking for hard assets, whether it's businesses or buildings or commodities or something that. And I think there's this big kind of glaring red light for everybody where the AI bubble.
Like, I mean, I can never pronounce his name. The CEO of Microsoft say, I can't remember how to pronounce it, but he literally said, we have racks and racks and racks full of Nvidia GPUs and we literally can't plug them in because we have no energy. So like everything between the rare earths and like all of the trade that, the global trade and AI and data centers and all those business models of tech was like, we don't have infrastructure. Now it's like you have infrastructure that takes real effing energy to pull it out of the ground and plug it in. And now the economics of the business models are like, obviously broken. So like, when I think about all of that, I go, okay, well, is there a crash down where all of us in my house goes from worth $5 million to 200 grand again? And then we. Or, or is it like we have to switch the, the monetary base layer? Like, how does, how do you see what that looks like?
[00:26:19] Speaker C: You cover a lot of ground in a short period of time. I just want you to know that.
[00:26:25] Speaker A: It'S tough up in the 6 inches between my ears, Alan. That's why I want to talk to you.
[00:26:30] Speaker C: All right, let's start at the beginning. You mentioned rare earth. Okay. And whenever you say rare earth, I think of one of my favorite rock bands. You know, this is a great band, but I think they were playing And I don't mean this probably as harsh as it's going to sound. I think they were doing a Donald Trump.
I think they were. I think they were just putting on a face. You know, they, they need to. And want to sell rare earth because they need the, the commerce. They need.
[00:26:56] Speaker A: Yeah, yeah, yeah.
[00:26:57] Speaker C: So to slander or slam the dollar. Better way to put it. It's just their way of fighting back and saying, you know, your currency is not worth. Jack, Jack. So, you know, we're not going to send you any rare earth. Now that's settled down. They're sending re Earth again minus the.
[00:27:12] Speaker A: Military components from what I've gathered, which makes sense. Like, why would we, why would China fund our ability to build bombs to bomb them? And like, so hence, like, we maybe have chosen peace because, like, we can't. We're gonna get, like, we're gonna get our supply chain to then fight you. China. It just doesn't make any sense.
[00:27:29] Speaker C: No, it doesn't. But we also have things that we ship to them that help their military, so we'll just cut that off too, and. Yeah, yeah, and, and when you do that, actually, it tends to lead to war because people get desperate.
Another discussion.
[00:27:43] Speaker A: It's kind of like, isn't it kind of economic, Mutually assured destruction, which is kind of a good thing for all of us, right? Because it's not as dramatic as what most people probably think.
[00:27:54] Speaker C: It is. A mutually assured destruction.
Globalization and the holding of resources. Our interconnectivity means that we need each other. We're not doing this for fun.
So if we disconnect, it is destructive to many, many nations.
I like people to think there are producer nations or end user nations or intermediary producers, raw material producers, intermediaries, final producers, and consumption.
We're towards the latter part. And so if we all of a sudden fall as a nation, it's a domino. I mean, the small little countries that have no direct connection to the United States are going broke because nobody needs your junk anymore. So it's, it's, it's a horrible thing. Will it happen again? It will happen.
Will it be because of rare earth? No. Will it be because of tariffs? No.
To your point earlier, it's not one thing.
But if the United States loses its allies because of its intractability, because of its unwillingness to get along, its unwillingness to be friendly, whatever the reason might be.
To Kim's earlier point, we could be pushing those people into a relationship they don't really want, and that feeds really well into I'm trying to remember his name real quickly. The end of the world is just the beginning, Peter.
Peter Zane's deglobalization.
And with de globalization comes that economic collapse that we've been talking about. So it could be a political source, it could be a debt source, it could be a dollar source. I mean, there's a number of ways that it could come about. I think the important thing to do is to do what you said earlier, Ryan, which is have some gold and probably real gold as opposed to just gold futures, because, you know, paper derivatives.
[00:29:47] Speaker A: Is not, it's not in your safe.
[00:29:49] Speaker C: That's right. And don't tell anybody how much you have in your safe, because it's not safe anymore.
[00:29:56] Speaker A: Exactly.
[00:29:58] Speaker C: And you have to protect yourself, whether it's Bitcoin or Stablecoin, you know, you know much more about that than, than I do. The genius act certainly is going to help stablecoin and another and other cryptocurrencies like it, because the backing of the United States still means something.
We may find that there's a return to reasoned thinking because we're crossing the point now where what we pay in interest payments in the United States in our budget is in excess of our defense spending and it's chasing after what we spend on Medicare. You know, when people start paying attention that they're going to go, this is crazy, because they can say, let the boomers die. But when it's your generation, it's going to go, wait a minute here.
Now you're mortgaging my future.
[00:30:44] Speaker A: Well, it's already happened. And like, that's where I, I struggle seeing a actual like red line candle handle down.
It's like, I mean, there, there, there's. What is a 95% correlation to the, the deficit spending and demographics. I mean, they've inverted those two charts and it's like map on each other perfectly. You know, when I think about all the financials, Alan, that I, I ripped through with company financials, payroll and rent are the two.
Right. And then everything else is like on the margins, you know, you can't cut your way, you know, and you name every single private equity firm that's having troubles right now. It's like you got debt, you got payroll, you got rent.
It's like, you can't cut your way out of it. You gotta, must grow your way out of that. And so that's where you mean, even Elon's comment is like, all right, and then Scott best it. And everybody's like, we got to grow our Way out of this. And when I look at history, it's through capital controls where the government's borrowing at less interest than everybody else.
Everyone else's assets go up in value, the whole economy's GDP grows because they're stealing our wealth through debasement. And it could.
When I'm trying to map on what does it actually. What is the actual. Is there an event or is it just slowly people cannot afford anything and get really like the social unrest. Ray Dalio's got his like, so, you know, internal fighting meter or whatever on top of the. His other couple things that he measures. And so is there like an. Like, do you actually see an economic collapse where like there's like every. All the prices go back down? Because then how do you handle the debt and the debt payments.
[00:32:31] Speaker C: Again, number thoughts? The answer to one of your questions is B because you offer two choices. So the answer is B. Now, you got to remember which question that's only fair.
[00:32:42] Speaker A: The answers be if like, do you believe it'll be like prices go down.
[00:32:45] Speaker C: Or that deflation's coming, deflation in the next decade will occur. Not immediately. It'll be later, you know, after the depression begins to eventually get to deflation and the values of things go down, wages will go down and it's kind of reset. What happens there, though? Because that's a great question is how does that end? It ends because, and we've had. I think we've talked about this.
My generation dies. You know, I'm a fairly young boomer. So when I die, it'll be a good sign because things will be getting better. The.
[00:33:17] Speaker A: The Kim just like, come on, dad, what about your grandkids?
[00:33:24] Speaker B: I just call you every day. Nope, still here.
[00:33:27] Speaker A: Hey, by the way, when can I get some life insurance on you?
[00:33:33] Speaker C: Now the bulk of the boomers will be dying, you know, late 2030s, early 2000s. And that's going to be. That's going to allow you folks to make some smart financial decisions at the governmental level as to how are we going to chasing. Because the big burden's gone the drain on the economy globally. So it's not just us voters, but every country going to decide, all right, how are we going to change this? Because we've just seen that was real bust. That was real painful.
So that's the reset. And it's allowed by or provided courtesy of the people who brought the problem on. My generation around the world and are leaving takes the problem with us. You folks should learn the lesson that just doesn't Work.
[00:34:16] Speaker A: Have you heard of the fourth turning?
[00:34:17] Speaker C: Yeah. So Neil Howe's fourth turning. Yep. Where people realize that and we'll actually find more unity within the nation because we're facing a common end hunger.
[00:34:28] Speaker A: The fourth turning is that his, Neil's, Neil's timelines a lot. It's really interesting because Neil's timelines map on top of your and Brian's timelines map on top of like the whole 2030 is the demographics. And like I think it's by 2035 ish to 24. I mean that's when on the other side of the. This is what they're kind of talking about. And so all of it is very fascinating because all the fundamentals kind of all end up lining up with each other. You know, back to your, you know, deflation. And I, there's a guy, Jeff Booth that I follow, which is interesting where like and Luke Groman has said it, where deflation and AI are completely incompatible with the fiat debt system because, you know, if we're refinancing and that's what the economy's end, we have to have our, the asset values go up and we have to pretend that the values are there to keep things going.
And in the natural free markets, deflation is the actual natural state because we're making more productivity. And so it doesn't reconcile with the fiat system where you have to have more asset inflation to do the debt refinancing.
[00:35:35] Speaker C: I disagree that deflation is a natural economic state. I don't think that's true.
You could find and make an argument that in certain places, interest, maybe even industries, deflation occurs.
But with a growing population, it's really hard to make an argument that deflation is a natural state because increased population means increased consumption, which means increased demand, which, you know, feeds the ability to keep prices or raise prices.
[00:36:02] Speaker A: So if, if we have deflation though, and you're in your example or in your scenario, how does that reconcile with how much debt we have and how we. Like, how do you reconcile, like in your mind, how do you reconcile what the debt is, what the asset price is? And like, how does that actually recalibrate and get restructured? Do you think we write off the debt at some point or is it like, how do you think about how that all gets reset?
[00:36:30] Speaker C: The trillions being spent in Medicare can then be turned to start paying down the debt.
Simple, if you vote appropriately.
And that's not one party over the other because both parties are terrible at this.
[00:36:46] Speaker A: Yeah, it's a unit party. Totally agree I mean, it doesn't matter.
[00:36:51] Speaker C: So when I die, that, that money it takes to keep me alive, especially in the last three months, with all the surgery to give me another three months on top of that, a pretty painful existence, if that is used wisely, you really do make a difference in a pretty short period of time. But it has to be a political decision caused by the will of the people. So that brings up the question, are people, I don't want to say, smart enough, aware enough, educated enough to do that? Not now is the answer, in my opinion. But given the pain of the depression, where people go, what the heck happened? How did we get here? You and Kim will be saying, this is how we got here. I won't be saying that because I'll be going like, it's my food puree. But you guys can explain it all.
[00:37:37] Speaker A: Yeah, and, and what I, what I, I, I, I don't disagree with the premise of it. And I, because I kind of going towards, and you've joked around about having thinking about people is like, I, like, man, Mandini was just voted in because people want more free because their lives suck so bad. And so you go, okay, well, I mean, in Ray Dalio's framework for better, for worst part of it, I like where it's like, we're either going to get fascists or communists because people are so freaking mad.
So there's this political dynamic of, like, at what point do people's social unrest become so unbearable? And like, you know, I, what I struggle with personally, it's like, I can understand the narrative that people are like, okay, my life is really hard. My parents, like, I can't afford anything to buy houses or cars or anything anymore.
They're looking for an answer and they don't understand the math or the economics like we do. So they're trying to find something to either blame or something to either give them relief.
But then you go, well, we know it doesn't work, like, from the math. Like, you can't just like, okay, okay, great. Now what are you going to do? You're going to print more money and all the capital disappears? And like, and so what is, how does that, how does the social part factor into your kind of mental model? Like, how this works? And like, what you think people, well, can we get to the point where we wait for you all to pass away and then just, you know, redirect that cash flow to pay off the debt? Or, like, are people willing to deal with that for the next 10, 15 years?
[00:39:10] Speaker C: Yeah, it's not going to be that long. And yes, I think it's the boiling frog syndrome. You know, you can bear that pain. And there's all. I forget the saying. And you talked about earlier too.
People think an impending disaster will be here much sooner than it actually usually is. But once you get here, it happens.
You fall off the cliff faster. You're not sliding down a slope.
And I think the civil unrest or the uneasiness that we feel now is really civil unrest. You weren't around in the 60s. There was a lot of civil unrest in the 60s and, and there were riots and, and protests and lots of stuff that was just truly nerve wracking to a lot of people and rightfully so. We're not there.
We're simply not there. And when we get there, that's Neil Howe's thinking. We're going to find ourselves into this economic mess that's going to unify us. We're going to go or we'll be at war. So we'll put it off to the side or there'll be an alien evasion out of space coming.
[00:40:14] Speaker A: I know, I. You're talking about. What, what is that?
[00:40:17] Speaker C: What's the Independence Day?
[00:40:19] Speaker A: No, I know, but there's. There, there's a, there's. Is it blue? There's some blue project.
[00:40:24] Speaker C: Whatever.
[00:40:24] Speaker A: They think that the aliens are going to come up and it's like, look over here while they do everything. You know, this is this distraction. You'll have to look it up. It's called blue.
The blue project or something like that. But it's literally like this conspiracy theory of like they're alien. They're gonna pretend there's aliens out while the, the big event happens.
[00:40:42] Speaker C: Yeah, the.
Again, that's part of the. What are the trigger things that I, I try. I mean, I like reading this stuff and, and actually I think, I think he's. Luke, Luke overstates the case. I think he's calling for it too early.
And I think when they were somewhat talking about the massive amount of job loss caused by AI, I think he's totally wrong. And for one thing, you brought it up. The electricity is an issue in powering all this and the amount of water that it takes environmentally sound and the actual application of AI to all those jobs. Kim and I had a podcast about that with the BLS. The amount of jobs that probably be lost to AI in the next 10 years was 1.1 million. How many jobs will be open in other fields that AI can't fill? 2.2 million. You know, it's just.
[00:41:30] Speaker A: Well and I tend to agree with you too Alan on that because the, even like the robotics, we don't have the supply chain or the ability to get all the robotics and all that stuff even deployed right now. And yeah, I agree with you on the inflation or on the AI's impact and can. What other questions? Because I mean this has been great. I'm curious, what are some of the other directions that you had that you wanted to go with the.
[00:42:00] Speaker C: He doesn't want to talk to me anymore, Kim. He's talking to you now.
[00:42:04] Speaker A: No, no, no, I, I think this is great because like. Well let me just recalibrate. Like I'm just trying to understand how to map what is knowable versus the hypothetical for me, for my clients. Back to how you've inserted. Like we just want to help people work. If people are making 5, 10 year bets with their company, with their capital, we just want to like, I mean one of my clients, you know, I, maybe this would be an interesting hear your comment on this. Like we, we got done this board meeting a couple weeks ago.
They're in the.
And he's probably listening and he'll know who I'm talking about. So he's in the boiler space and we're trying to figure out he's got a bunch of cash at this end of this year, right? I mean like he over, I mean he over succeeded his, his projections and he, we had then the next five year projections and we were looking at the growth rate what 10%. We're going okay, do we believe that? Well we don't have the labor to actually realize that growth and we have extra cash and so we're trying to figure out okay, well what do we do with that? We started talking do we give everybody a 10% pay bump? Do we pay for everybody's health care? Because we are just ideas, right? We're not saying that this has to be done but he's trying to look at how to place his bets and then solving this labor crisis for him of skilled labor. You know, do we have an academy and some training and certifications to attract right people? So like you know, that's a long term bet he's trying to make in trying to understand how to handle making the moves. So I bring all that up to say like I am appreciating understanding this and building out that foundation of what's noble versus like what could happen and how do you view the 2030 dynamics so that way we can map out what we know to be true to the highest ability without overshooting one way or the other.
[00:43:57] Speaker C: Yeah, and I like what you were saying. And build his labor force, keep his labor force. So you got to train them, you got to have the academy, and you got to have a moat around them so they don't go somewhere else. And paying their health insurance is a big moat. And providing for some nice benefits. The other side of the coin you touched on, which I would also encourage that person to do, is whatever you can automate through robotics, you know, different types of robotics, but, you know, robotics or automation might be a better word for it.
Do that without displacing people, because you're going to need those people as you're going to grow that 10% a year. So you're just going to repurpose the people as you bring in some electronics.
Not rocket science as far as the investment goes. Again, not having to know where it's coming from. It's a question of, all right, how do I protect myself from inflation? That's a wealth advisor concept.
And, and the wealth advisor's job is therefore to say, well, dang skippy, you don't want to be all, all in on bonds.
That's not the place to go.
[00:45:01] Speaker A: Support the. Support it.
Thank you for your charity.
[00:45:07] Speaker C: My point being in, in general terms, we can help companies like you are helping companies, because those things are straightforward without having to worry about whether the debasement is real or not and whether the debt spiral is going to begin in 27, 28 or 29. You know, that's not really important to guiding the company and people through the near term. Where my heart goes, by the way, to the people that you were talking about before, usually called the lower middle class or upper poverty level folks. I mean, this is a tough world.
This is not a easy life to have.
[00:45:45] Speaker A: And I think the middle class is getting eviscerated.
[00:45:47] Speaker C: I mean.
Oh, I like that word I heard.
[00:45:50] Speaker A: So, yeah, well, because, I mean, honestly, Alan, I mean, I'm turning 39 in a couple of weeks and you are.
[00:45:57] Speaker C: Yeah, I know.
[00:46:00] Speaker A: My dad about cried because he saw this picture where he was. We were doing our second company party for the family business and I'm the same age he was when he was in that picture and he was like, ah, brain.
I was like, yeah, it goes fast.
But like, you know, like out of my wife's high school friends, who are our dear friends, and then I've got, you know, and then my college buddies, only a few entrepreneurs.
Everybody else is like, I mean, double income, earner Very, very well to do people for the most part, you know, hard workers. And like, it's freaking hard. People are making good money and it's really hard.
And like, of course they're not going to go complain to the rest of the people because everybody, it's just even harder for everybody else. So it's just, I just, I, I think that that's why I, I go back to like, what is this? So like what are people's capabilities of dealing with this hard? And I think it's a lot more than most people think to your point. And I agree with that. Where like it's the boiling frog. Like, I'm an entrepreneur for a reason. I just want to control my own destiny. People listening to this podcast are also probably in that vein of like, I'm just going to go do the things I need to do to prosper in this situation. Curious what you think, what your thoughts about this are because you mentioned the wealth manager and then the business and Kim, this is what you and I have started talking about with how we're collaborating in our coaching businesses is I have a thesis that for people that have it's not right for everybody of like sell the business to a third party versus get out of the operations and run the company from the boardroom and keep the asset and use a playbook like Kim and I have been talking about.
I think that the financial return and the cash flow available to keeping a privately held company that's not saddled with debt because you didn't sell at the PE like you have. Like my client has the ability to look into the future price elasticity with his clients. So picking his clients in his industries, looking at the payroll and looking at the cash flow becomes like a Noah's ark to go through this.
And there's a very strong argument to say, hey, as long as we can extract you from your job and you can still make your 20 to 50 grand a month of free cash flow after distributions and you can keep reinvesting that money.
There's a very strong argument to keep the business instead of selling the business, getting it, you know, trading that equity for other fiat money that you have to then figure out how to keep.
I mean, so there, there is a strong argument for people who have very specific needs to want to sell to a third party. But Kim, you and I have talked well, you should probably get your together and figure out how to get that thing sold in the next couple years as fast as possible or how to build a moat and figure out how to continue to to run that cash flowing company.
But thinking about the landscape that we're talking about should be mapped on that decision of what they're doing.
Comments from both you curious maybe Kim, you want to fill any gaps in because you and I have talked a lot about this and you know your dad a lot better than I do. Obviously.
[00:49:11] Speaker B: I think you covered it pretty well. I'm just looking at the time so we've got about five minutes left. So I don't know. I want to end with some advice for our listeners too like a summary thought on we unpacked a lot on our expectations over the next 10 or so years and would love just to kind of for the individual and for businesses. What would our overall advice be? Ryan, you started heading there with the building a moat if you're going to hang on to it. If not start putting your plans into place now and then. Just curious dad, other thoughts on like you you started with your heart goes out to the people that aren't making as much money as some of the upper class and such. So just curious like what advice do we have when we to set people free from our show today and they can not leave with doom and gloom in their hearts and minds that everything's falling apart and there will be a crash in the future. There I, I go back to there's prosperity in an age of decline. That was the name of your book. So how can you prosper during this age of decline? Because you can't stop it. So then what do you do?
[00:50:22] Speaker C: Well, what Ryan said, you position your company for whatever your company happens to be and you decide what course you're going to be on. You can't be ambivalent about it. This is the path I'm on and this is what I need to do to prepare to be on that path, whichever path it happens to be.
And businesses are not going to all fail. I mean this depression is not the 1930s. No matter whose model you're looking at, it's not the 1930s.
So that means you'll still be making sales but you less sales, less profit. Learn how to live with that, get your mind wrapped around that, prepare yourself for that.
And I'm going to end it with, with something that I have deep embedded in me is as you're going through this, this will give you, the business owner, the board member, the entrepreneur, the greatest opportunity to do good in this world.
It's not gonna, I think, I think you want to do something good in this world. You're going to have A great opportunity. And you want to have people start thinking positively about business owners and capitalism and stuff. Do good in this world and make it known. A lot of people do do it privately. And I go, don't do that. You want every employee to know that this is the company I work for. We're feeding people, we're housing people and so that they can feel proud that they're actually contributing as opposed to, you know, the boss is getting rich and we're not doing anything to help people.
So I'm going to end there. Do good in this world.
[00:51:49] Speaker A: Yeah, I.
Exclamation point, underlying highlight for that, Alan. And I think the way that I'm enjoying helping people do that is getting that visibility into the future with their goal, their ownership goals of cash flow and valuation so they're not just guessing off of revenue. They can look into the future, their financials, and then like, the only reason that client that I was telling you about feels okay even entertaining a 10% raise and free health insurance, because he knows his cash position and it's good for him and he knows there will be a return. So it's, it's not just because he's doing it for the hell of it, like, but like, what allows him to do both and is do it for the betterment of the company.
And it gives him great joy to be able to have amazing people work for him and where his culture can be way better off than the people that are working for their competitors. So to your point, like, and that brings him great joy and it makes him excited to do the hard work. Kim, I'm curious on your $0.02, because you and I are looking to figure out how to continue to collaborate more and more to help people for these exact reasons.
[00:53:01] Speaker B: I think Mineling lends itself closer to the building a moat around the business. Right. What is your business strategy? What is your business plan?
Helping them realize that what worked last year isn't going to work next year and just helping them wrap their heads around. You can't just plan for 10% increase year over year and assume that's going to continue on. Like we are headed into some rough waters and knowing that being aware of it, you can develop plans. I always say through every challenge is an opportunity. And so that's what I'm just out there helping people do is find those opportunities and maximize the results of those opportunities. So I guess that's my ending thought. I love to do good and mine is through every challenge is an opportunity and we're headed towards a really big period of challenges. And so let's work and be diligent on working on the business instead of just everyday working in the business.
[00:53:54] Speaker A: What period?
[00:53:56] Speaker C: Exclamation point.
[00:54:01] Speaker B: Well gentlemen, today was fun. Thank you for joining for the episode.
Those watching you have any questions for Ryan, his information will be in the description so you can easily get in touch with him, that guy there and.
[00:54:14] Speaker A: Then subscribe to YouTube and click Share whatever wherever the things are all over all the things. Good to see. Alan Kim, thanks so much for facilitating this. So, so fun. I enjoy it.
[00:54:25] Speaker C: Always fun, Ryan. Always fun.
[00:54:27] Speaker A: Yeah.
