Bankruptcy Filings Exposed & the Fragile Fabric of Cultural Communities with Malcolm Collins Part 2

Welcome to episode 2024. 2024. And today we have Malcolm Collins back with us to talk about the Pragmatist Guide. And the Pragmatist Guide is a series of books with the Guide to Life and a whole bunch of other topics. So we will continue this fascinating discussion with him today. However, first I want to talk to you a little bit about bankruptcy. Now, bankruptcy filings can be an indicator as to where is going, where the markets are going. And I wanted to take a look at some statistics here with you very quickly to see if all of the Chicken Little Doom porn people. That's what I'm going to call it, doom porn, right? All these people that are out there saying the sky is falling and just love to get the clickbait and all the attention by talking to you about how the world is ending. Are they right or. Or are they lying to you? Let's take a look at some actual. Well, just the facts, ma'. Am. Here they are. So I pulled up from the government website, uscourts.gov, the bankruptcy filing statistics for several years. And I want to just go over these with you. So I was watching a video just last night where the creator was talking about how bankruptcies are skyrocketing and everything's going to end and the world is over. So let's see if he's right. Okay, so here are the most recent stats for the end of last quarter. So this goes up to the end of last quarter. Here you can see that 403,000 new cases were filed and about 650,000 cases are pending. That's as of the end of last quarter. So this is the most recent stats. Right. Then it breaks it down by chapter 7, chapter 13, business filings, non business filings, you know, is it a personal bankruptcy, corporate bankruptcy, etc. Etc. Right? And then it shows you the regions, you know, what states are having the highest and lowest rates of bankruptcy filings. Okay? So we got to keep this a little bit simple. We got to round our numbers off because it'll just get too darn confusing if we don't. So let's take a look at it. So that's the recent stats. Just remember two numbers. 400,000. I'm just rounding a little bit here. 400,000 new cases filed, new bankruptcy filings, and about 650,000 are pending. So there's about a little over a million bankruptcies going on in a country of 332 million people. Right. And countless entities beyond that, corporations, LLC, those can also go bankrupt. Okay. All right, we got that. So 400,000 filed and 650,000 pending. So compared to what? That's always the question. It's what you have all told me is the Jason Hartman question. Because I have been beating the drum on this question for a long, long time. Well over 10 years. And that question is compared to what? I always say it's life's most important question. The way we know anything is by comparing it to something. Right. We can't evaluate anything without comparison. We are comparison creatures. So when we compare the rates of bankruptcy, what does it tell us? What does it look like? Well, what happened a year ago? Okay, a year ago, there were 395,000 cases filed. So a whopping 5,000 less filed in the first quarter of last year. But there were more cases pending. There were 705,000 cases pending, about 55,000 more cases than are pending now. So overall, a year ago, the bankruptcy rate was higher than it is now. Now, the video I was watching last night talked about how the bankruptcy rate is skyrocketing. Well, compared to what? Compared to a year ago, it's actually falling. Okay, but that wouldn't be enough information, Jason. You got to give us more info than that. That's just year over year. That's only one year. Okay, let's look at some more years. Let's look at 2019, the pre Covid era. Okay, what was going on then? Well, in 2019, in the first quarter of 2019, there were almost 800,000 new bankruptcies filed, about double what we have now. New filings. But pending, there were just over 1 million cases. Dramatically more, about 400,000 more than we have now. So the bankruptcy rate compared to 2019 is much lower than it was in 2019. Pre Covid. I didn't go into the COVID years because everything was so mucked up then. The courts were closed. People were just sort of on hold. They were getting stimmy checks. A lot of distortions during the COVID era. So I didn't pull those up for you because, frankly, I don't care. Okay. I'm looking before COVID Right. Before COVID I'm looking right after Covid. And then I'm looking currently, which is like a year after Covid. And I don't know when did Covid end? Really? Hasn't ended. Right. But they all keep the narrative going as long as they can. Right. But now let's go back even further. So we looked at 2019, the pre Covid era. Let's go back further than that and let's go back to 2016. All right, 2016, right around presidential election time. Right. When the orange man bad got elected. Right. Okay, what were the filings like then? Well, 833,000 new filings the first quarter of 2016, and 1.2 million cases pending.

Whoa.

The bankruptcy rate was super high back then compared to any of these numbers we've looked at so far. Now let's just move back to today and let's compare 2016 to this year. Right, the most recent statistics, the end of last quarter, those stats. Okay, Again, new cases filed, 2016, over 800,000. 833,000 new bankruptcy filings. And what was in the pipeline at that time? 1.2 million filings. So there we've got over 2 million bankruptcies underway, either new filings or in process. Compared to Today, we've got 403,000 new filings and 655,000 just rounding slightly pending bankruptcies in the pipeline. So we had about 2 million in 2016 overall, and we have about 1 million today. So bankruptcy filings are down by half. We have 50% fewer bankruptcy filings than we did in 2016. And let's just go back again just to refresh the memory. We're going to 2019 again. And comparing it to today, 2019, we had almost 800,000 new cases filed in the first quarter of 2019 and just over a million pending. So about 1.8 million total versus today, about 1 million. Bankruptcy is down by 80%. Right. Okay, so then we have 2022. We have one year ago, one year ago, 400,000 filed slightly less. Filed slightly less new cases by like five grand. That's a drop in the bucket. But about 55,000 more cases underway in process. So the bankruptcy rate is down from 2016, it's down from 2019, and it's down from last year. Folks, I gotta tell you, you just gotta really be careful who you believe, because statistics can be manipulated every which way you can possibly think of. And if you want the truth on this stuff and you want the reality of it, and you want to get life's most important question answered, which is compared to what? So that you have some basis to really evaluate what's going on. Join us for our upcoming virtual event. Just go to jasonhartman.com, we got a virtual event. You're just going to jump on Zoom with us on Friday, July 21st and then Saturday, July 22nd. This is about a seven hour event in two parts on Zoom. Of course, we'll take some breaks, we'll have some breakout sessions, et cetera, et cetera. But this is the first time ever that I have taught my core event online. I've done this live. And tens of thousands of people have been through this event live in the past 18 years. It's called Creating Wealth. It is my signature event. It's where we really hone in on the macroeconomic issues that affect your investments, your retirement, your future, and certainly the real estate markets. So join us for that. Go to jasonhartman.com, get your super inexpensive ticket because it's a virtual event. No travel cost, and one ticket gets access for the entire household. So the whole family can join on one ticket. Right. You know, a lot of times at our live events, people are bringing their spouse, people are bringing their kids, and they're buying tickets for all those people. Plus they're traveling and getting hotels and all that stuff. So this is just a really easy event to attend. Super easy, smaller event. I can easily take your questions, I love your questions and the engagement, and join us for that virtual event. Just go to jasonhartman.com to get your ticket. And one more thing I do want to say is that last night, I want to thank all of our empowered mentoring members and our Empowered Pro members for joining us last night because we had such a great two hour Zoom session with you, talking about hybrid self management and a whole bunch of other aspects of real estate investing, how to build a bigger portfolio management, efficiencies, strategies and so forth. So thank you to all of you who joined us last night. If you are not an Empowered Pro member, you are absolutely missing out. I just got to tell you, these monthly Zoom meetings are fantastic. The social network is another great tool, the property tracker membership, the software being included, another tool. But nothing beats the Zoom meetings. Okay? So join us for those. And if you can't make them, all of the Pro members have access to the archive and the mentoring members do too, have access to the archive. You can watch the recordings and so forth. Also for this virtual event coming up, you can also get the recordings as well. So go to Jason hartman.com, get your tickets for that and join us on the 21st and the 22nd. We'll look forward to seeing you there on Zoom. Real easy to attend that one. Okay, let's get to our continuing discussion with Malcolm Collins, author of the Pragmatist Guide series, which is a great series of books. I think you'll really enjoy this. So let's dig in.

A lot of people have this perception that, like, oh, society will just go on. It's gone on for a long time. You know, not a lot has changed. It's been all incremental changes. It's like, no, there's a bunch of new experiments we're playing out. But you saying we've never tried this before? No, no, no, we've tried this before. The same thing happened near the end of Athens. The same thing happened near the end of Rome. Sexual revolution, rise in gender equality. All of this, this rigmarole happens every time we're at the top of a cycle. Like, to be able to create an infinite top of a cycle. I actually think it's good to have, you know, gender equality and sexual freedom. And it'd be cool if we could find a way to do that without society collapsing. But finding that means we need to consciously think about what's about to happen and experiment with it. So remember when I said that this was a marketplace failure? Dating is a marketplace failure. It is a real marketplace. So people, you know, they sometimes are like. Oh, you mean like metaphorically? No, you have people, men and women, on two sides of a marketplace, basically trading themselves for someone they think is of equal value.

The marketplace, ideally greater value, especially for hypergamous women, but Right, right.

Equal or greater value. The problem comes when people get a misperception of their own value. Then you can't create a harmonious trade. So if you have a woman, for example, I mean, we talk about this a lot in the Pragmatist Guide to relationships, and she has been able to sleep with men who are a much higher quality than the men who will settle for her. She has a self perception that her value on the market is higher than it actually is. So she will not be happy with a trade that is, in market terms, in equal trade. And so this is what we mean when we say you have a broken marketplace. And it is very interesting. And women also have a problem here. You know, I actually know a woman when we talk about, like mainstream society having a broken marketplace, who converted, converted to Mormon just to find a husband. And she did. And she's very happy now.

I tell you, I have considered the same thing. I mean, the Mormon culture is really good. And I'm not saying everything about it is good, but the Mormon groups I've hung out with over the years and known, it just seems like they have a really good sense of community. And by the way, you know, being a moderately religious person, it's interesting. Leo Tolstoy came to the United States. And he was an atheist all his life, a hardcore atheist. Okay. And then he became religious later in life. Imagine that. You know, I wonder why that happens. Right? And, and he came to the US and he saw the Mormon culture and he made a comment, something to the effect of the Mormon religion should be the American religion. Because never has he seen a group of people so self reliant, so industrious, so community oriented and so supportive of each other. That's pretty interesting insight. It really is. Yeah.

Well, I mean, I think that Mormonisms provide a really interesting note here because a lot of people look at Mormons and they think, oh, this is a high birth rate culture. But again, this is one of those things where it's like, oh, look at recent statistics, it looks like Mormons have fallen below repopulation rate even though, like always in the last five years.

So they even fell for the, the lefty narrative, I guess.

Well, I don't know if it's. Yeah, it's more, I think that, see this in political terms, which hides what's really happening. So historically if I go back to the 80s. So I'm actually going to get into the poll and by the way, I.

Want to make a disclaimer about the Mormon thing. Okay. Because I, you know, I know I'm going to get like tons of hate mail on this. Okay. I just know it's the comment below and tell me I'm crazy. Okay, folks, whatever you want, I don't care. It just helps the algorithm. I love your, you know, I love your trolling comments. Okay, Keep it up. But, but, but, you know, the point is, you know, a lot of people think like the Mormon religion is a cult and you know, I don't know. I don't know the answer. I really don't. Okay. I'm not judging that. I'm just saying they seem to have a great sense of community. That's all I know. Okay. I have not investigated the religion and the practices in any major way.

Yeah. So, so to, to go with this, why Mormonism is failing, you know, we talk about, you were saying, oh, progressivism has gotten to them as well. But I think that when we look at progressivism, what we see it as in our society now is a continuation of the old sort of democratic policies of the 80s and stuff. Whereas I'd argue it's a totally new and different movement and not a derivation of communism like many people think it is. What it really is is this sort of memetic super virus that kills various organizations, religions, institutions and Then starts to like it infects them and then it wears their skin to protect itself. So when you get a strep throat viru, kill your red blood cells and then it like coats itself in the red blood cells so your immune system thinks that nothing is wrong. And what I mean when I say this is I think if you look at the modern feminist movement or the modern like Unitarian Universalist church or like progressives from pretty much any religion or any church, and you scratch it beneath the surface, you're going to see that they have very similar beliefs about everything, you know, whether it's a progressive Jew or progressive Muslim. But if you look at conservatives from these same religious traditions, they typically are quite differentiated in their beliefs about the world. And so what you are seeing here and what the progressive movement is optimizing for isn't what it historically optimized for. It used to optimize for equality, even if that's misguided. Now it seems to optimize for the removal of any emotional pain. That's why you see things like California removing things like test scores. Obviously that'll cause more emotional pain in the long run, but in the short term, it removes emotional pain. This argument of we can remove emotional pain from your group if only you submit to these social norms is a really powerful argument, especially to a pro social community. And a lot of communities have put up a longer fight against this than others, but they will all eventually succumb to it unless they build intentional social technologies to protect themselves. And from the more conservative Mormon communities to the more conservative Catholic communities, you see people beginning to build these new social technologies to fight these new challenges they're facing and stabilizing their birth rate within the more conservative factions of these communities.

Okay, so people are undoubtedly thinking, what is he talking about a social technology? Are you talking about a social media app or a dating app or what are you talking about when you say that?

Oh, here's a great example of a social technology that's been very effective. So one group that's been very effective at fighting this are the Mennonites. Right? Mennonites are a form of Anabaptists, similar to the Amish, but not as extreme as the Amish. And one thing that they will do is they have these little apps on their phones. Now this isn't the social technology. The social technology is the way that they're using it. So it's a way you're using technology to combat something else that lock their phones out of most of their capabilities and they give the password to these apps to their spouses or best friends. So they have to admit to their spouses or best friends a social, like a failing of self control when they want to use them, but they can still use them for business purposes because their spouse is like, oh, you're using this for business. Okay, here, I'll grant access to this specific app. So that's an example of a social technology that has emerged to fight new social pressures that didn't exist 10 or 20 years ago.

Okay, yeah, so. So it's basically an agreement. A social agreement.

Yeah, yeah, yeah, a social agreement. I mean, a Mormon, when we're talking about Mormon dating. Mormon dating wards are an example of a social technology where everybody comes together who's of a certain age and who's single, 20, and then they pretend to be husband and wife and like host other people in their ward. So they get to try that out. I mean, a lot of that is like, you know, you could argue that.

The debutante ball or the bar mitzvah and the bot.

Exactly. Social technologies.

Yeah, sure. Okay, got it. Oh, and you know, marriage itself. Right? Okay. Yes, yeah, absolutely. Okay, good. Let's move on. But let's circle back to the economy and what all this means to the economy, what we can look for forward to, you know, in the next 10, 20, 30 years. I think that's really important. It's what our, what our listeners want to know.

Yeah. So I think the first thing you need to know is that the ball on this is going to drop somewhere in East Asia. Could be South Korea, could be China, we don't know. But within the next 20 years, probably within the next 10, we are going to see an economy collapse and it will be broadly recognized that it collapsed due to fertility rates. When that happens, people will start paying attention to fertility rates and may start pricing it in to the way that they're investing in things. That is one path that things could go on. Now, the links to which an economy can stay delusional about something is I think can always shock everyone. So it could be much longer before this happens, or it could be that the economy in East Asia collapse and people don't begin to price this in. Where this begins to become really interesting is those of you who are watching who have kids and are thinking about how do I store my assets for my kids? Because a lot of traditional ways of storing assets no longer make sense intergenerationally, no longer make sense in a collapsing economy or a collapsing population scenario. So things like real estate become a lot less Valuable intergenerational stores of wealth. In a, in a intergenerationally shrinking world, things like hard assets with, you know, stable values, gold become less stable, intergenerational value sets. Right. So then what does become valuable? This is a really interesting question. So in a world where. So it used to be, the thing that would have the most value is anything that you knew had a. A static quantity and the quantity was known. This is one of the reasons why Bitcoin had value to a lot of people, because it had a static quantity and the quantity was known. This is why real estate has value. You have something of a static quantity and you can sort of chart how much that quantity may increase over time. But static quantities have value because the number of people who want that thing of static quantity is increasing and the wealth that they have is increasing. If that number shrieks, this old static quantity rule goes out the window. So then what has value in that world? What has value in that world are human beings. That is where it gets really interesting. Human beings and cultural groups that continue to grow and are technophilic and economically productive. And this is why it gets interesting. Because a lot of people say, oh, well, then that means we should invest in any growing population. But a lot of growing populations are just not economically productive. This can be. I mean, I don't want to be overly offensive here, but if you're talking about like the Haraidi Jew population in Israel, right, Like a lot, the unemployment rates are really high and stuff like that. They are not as economically productive as other populations, even though their birth rate is enormously high. In the US you could say the Amish population, they're not technologically productive, but they are economically productive. So. But if you have populations that are technologically engaged and technologically productive, but also economically productive and have a high fertility rate, that will be the core thing of value in the future. And so what it actually means is your kids themselves have more value than the places you can store wealth for them. So assuring that they have stable intercultural transference, that they find good partners and that they are well educated becomes infinitely more valuable than those things would have been in our historic society. And that gets really interesting. And there's a lot of ways you can theory, craft around this. Frankly, we don't know where things are going to go because no one has ever gone through this before. No culture has ever gone through this. No one has ever made it through this before.

Really fascinating. So back to the things that will lose value. Assets, stock market, real estate. I see that really starting to hit in the late 2000-40s. Am I right about that?

I think you're absolutely right. It'll hit in the late 2000-40s. Something to remember is that something like this will be very slow and then all at once. That's the way like runs work in Detroit is a good example of this. People are like, oh, if there's less people, then real estate will be cheaper and that'll be great. And real estate is great when it goes down in value 20% or 30%. Right. When real estate goes with. When everyone knows real estate is always going down in value, then houses sell for a dollar. Like what's happening in Detroit, that's not good for anyone because real estate, as anyone who's a real estate investor knows, costs a fortune to maintain.

As I always say, Detroit is quite literally the poster child for left wing government disaster. It's just been so mismanaged in so many ways. It's just terrible. I mean the population of metro Detroit has been cut in half. You know, people don't realize that Detroit used to be this world class city. I mean Motown music, the automakers, I mean it was the place in its day. And then it just, just, you know, they let the labor unions get too powerful. They had a bunch of left wing mayors and different governance and it's just, just a disaster, absolute disaster. So anyway, go ahead. About decline in values and asset value.

Yeah, so what you're saying is it's a 2040 issue and a lot of people may think, you know, this is too near term for like too long term for me. But I also think that a lot of people who are your.

Well, it's really more of a 2050 issue in my opinion. 2048, 2050, 2040.

No, I agree. And a lot of people who are your watchers though have kids and they're thinking, how do I store wells for my kids? And this becomes really tricky in the world today. And so that's what. Where this becomes an interesting question. And again, it's one of these things where it's just useful to be aware that this is happening. That the name of the economic system or the economic system that we have built as sort of our default and all of our decisions are optimized around will not be the economic system of our grandkids. And that means that the way we store value for them and is is going to be totally different. But what's really cool is that being in the US we will get to see how other countries react to this and how other countries collapse before it hits us because we are fortunately a more culturally resistant country to this, this sort of prosperity induced collapse than East Asian countries. So I think that through looking at how East Asian countries react to this as it happens to them, we can get a better understanding of how our government's going to react and how to store value. Now one of the fears is you look at something like zero Covid in China, right? All of these tracking apps, everything like that. This might be a government reacting to this, trying to control the populace to prevent revolutions so that even as things collapse, the static power hierarchy can stay stable and they can sort of wipe up any value that's left in the economy.

Yeah, I mean, look, the Chinese Communist Party party is definitely in fear. They are very concerned about an uprising. They are very concerned about maintaining their power. And you know, the zero COVID policy was just insane. What they, the way they oppressed people was beyond. Beyond the beyond. But what I think really people want to know is like what do they do, you know, specifically to just guard against this future, Especially people in the U.S. yeah. And one thing that I think needs to be understood, understood though is that we're talking about overall population decline. What we didn't really consider, and we just don't have time to, is immigration. And the way people will, I think, find the US to be the most desirable island in the storm. And I think they're going to continue to do that because I think it's, you know, whatever is going to happen in the US is going to be worse in the vast majority of other places, in my opinion. Am I wrong?

No, you're right. The US is the island in the storm of this.

So Americans or people coming to America, take heart, you're in better shape than everybody else, right? Yeah. So the question is always compared to what? So we looked at different countries and answered the compared to what question? The US is far better off than the vast majority of other countries. Okay. In literally every way. Even though it is also in decline. Okay. I don't deny that certainly the US has been in much better positions in the past. Then we have to look at different asset classes and answer the question compared to what? Right. So we talked about how this is going to put massive downward pressure on the stock market, massive downward pressure on real estate values. But there are so many other things. I mean, bank failures, defaults on treasury bills, possibly just massive inflation through money printing to paper over the problem. How does that all look?

Well, so what increases? So there's two real areas so you're like in, in this world, if you're talking about compared to what AI is really going to change things.

Yeah, huge topic. And that might be a really initial unemployment, but then ultimately overall long term increase in prosperity.

And AI could fix everything. I've talked about if AI could begin to add workers to the economy through simulating human beings. What a, what a weird way to enter a post human world where humans just stop breeding and AI voluntarily replaces them because they, what they've decided to date. AI's over people and stuff like that. So I think that what does AI eat? AI eats power. What does AI trade? Well, so it can't trade assets as easily as we can trade assets. Right. Like it can't open a bank account, but it can trade crypto. So AI is going to engage with assets very differently than we have historically engaged in assets. Can that protect those assets? I don't know. I think the core areas where you are going to see value maintained, and this is what I see a lot of my very wealthy friends focused on right now is when I say like build community, I mean like literally like they are buying land, they are having other wealthy people that they know, or smart people they know who aren't wealthy move to these lands, start these communities. Or the people I know who are just smart and not wealthy, they're finding people who are culturally aligned to them. They're making sure their kids know each other. They are sort of moving back to a communitarian society.

And I think permaculture, you know, whatever. Yeah, I get it. I see that trend quite a bit.

And those communities I think are where you are going to have persistent value in the future in a way that the term economic value may not mean the same thing to people in the future that it means to us today. Because the mere concept of economic value is so focused on this idea of I have a thing of limited supply. That thing of limited supply will always be wanted more by people because there will always be more people. And so we really have to sort of flip around and say, okay, so what really matters is our communities and our children and the culture we create for our children, which in many ways is a good thing. You know, in Korea, this was constantly obvious to me. I was like, I lived in this country where, you know, I'd think, okay, so what happens? Their population declines 95%. Where do they get immigrants? Well, they can't get them from Japan, they can't get them from China. Both of those countries are also collapsing in population. And I was like, it's. It's wild to think that less than a century ago, you know, Japan came, killed what, millions of people to try to, like, culturally impose themselves on Korea and China. And in the next hundred years, they could just walk into these two countries. If they were able to motivate their people to have sex, they were. They were able to motivate their people to kill people, but they weren't able to motivate their people to have children and pass on their culture. And I think that that shows this completely different mindset we need to think on when we think of what does it mean to culturally win in this new collapsing world.

Yeah, very interesting points, Malcolm. There's just so much to unpack here. There's no way we have time for it. Just wrap it up with any closing thoughts, advice, predictions, and give out your website.

Well, I'd love people to check out our pragmatist guidebooks. The one most focused on this is the Pragmatist Guide to Crafting Religion. We recently started a podcast called Based camp. It's on YouTube and other podcasting apps. So I'd love people to check out that if they find us musing on this stuff. Interesting. And in general, I'm just really excited to get people thinking about this because we are next to a civilizational change. And I think that it's your type of listeners who think about the future, who act pragmatically, who are best positioned to sort of win after this societal change. Because the cool thing is, is that the group that's definitely going to lose is the powers that be, the quote, unquote elite of our society. They are the ones who are being replaced, and hopefully they're replaced by people like us, which is very fun. You know, just people who thought ahead and are excited to see where things are going.

Yeah. Good stuff, Malcolm. Thank you so much for joining us.

Great to be with you.