Podcast

Michael, are we close to the biggest crash in history?

I don't know how close we are, but if it happens, it will be the biggest crash. But. And there's a reason the last crash, the financial crisis, it was a situation where financial institutions got themselves in trouble and a grown up could walk into the room and the grownup was called the government. And the government could say, look, calm down everybody. We can sort of COVID these risks and everybody calm down. Right now the source of unsettledness and the potential source of crisis are governments, our government, in particular, the United States government. And if it's a government started crisis, like a collapse in faith in US Government, in the US Government and US Government debt, then it's, then it. Yes, then it's much bigger than the financial crisis because nothing to put it out. It's like, where does everybody go? There's no safe place.

So Robert Kiyosaki in 2014 said the crash would be February 2025, which is now.

Well, you know, I hate to say that's interesting and I hate to say this, but it is true that whenever the crash happens, someone will have predicted it, because at any given time people are predicting everything. And it doesn't necessarily mean that they were smart, that they were right. So I'd be wary of people who tell you, like, unless they have some really persuasive explanation as to why. I'd be really wary about people making those sort of predictions. You know, I'd be surprised if it happened right now. We're almost out of February. Right. So he's got, what has he got a week before? It's not true.

So what are the telltale signs of a, you know, big crash?

Um, it's what it is, it's. It's a collapse in trust in the markets. If it's a, if you're talking about a financial crash, it's like that's what happened in 2008. And it was, it was all of a sudden people didn't believe that the other, the people they were doing business with would, or the things they were doing business on the, the actual securities were trustworthy. So it's a lack of, it's sort of, it's a, it's a psychological phenomenon. It's like a lack of faith, a lack of trust. And the problem right now is that we have a president here whose sort of MO Is to destroy trust. He's really good at it. Like, he finds places where people trust people or institutions that are trusted and he wrecks him. And I think there's sort of a reason for this. I think that he himself, his whole life has been pretty untrustworthy. He's done what comes out of his mouth is often untrue and he's bankrupted six companies and all that. So to level a playing field, he likes it to be, he likes it to be a playing field without any trust on it. So he's sort of like hostile to it. And so the he that he has, the, you know, he, he's now in a position where he has the ability to destroy trust in the government. And if that happened, I mean we live in a world right now, a financial world where there is a riskless security where people flee. If there's problem in the world and it's called the United States Treasury Bond, people come here, come to the dollar. If that's not, if that's not like a place where people want to come, then you have a free for all, then you have like money doesn't. What happens is people don't want to invest in risky assets so they withdraw from the stock market. People don't want to lend money to other people. So interest rates go way up, causing the stock market to go down even further. Wealth seeks like real estate, gold, Switzerland, that kind of thing. And, and, and the result is there's huge results for economic activity. You end up with a depression. And as I said is that when that happens and it's in the financial sector, just the government could come in and, and booster, boost confidence, restore trust, all that. But if it, if it really starts with the government itself, I don't know what happens. I don't know what that looks like. It's unlike any kind of crash I can think of, which is not to say I'm predicting a crash. I'm just saying that I don't think it's likely. But I think that if we, the next crash will look something like that if it happens.

So you mentioned the word trust. Now I can speak more about the UK than America, but maybe you can parallel for us the trust in our government in the UK is the lowest it's been in my life. I'm pretty sure of it. And I know many politicians and I know very many successful people and they're all saying the same thing. The pound is very weak, the public services are ruined, the economy is not growing. It looks like a lot of the gold in London is going to be pulled out to America. I mean, I can't like there's nothing that I'm listing where there is any trust yeah, no one trusts the police.

Well, so let me just, so let me, let me give you my perspective from here. I. To the. If you all, if you say the British people don't trust their government, I would say the American people will see you and raise you that there has been a, the government has been pummeled by politicians for 50 years. And so on the surface it looks like. And if you ask Americans, do you trust the federal government, that kind of question, you don't get a really encouraging answer. However, there are lots of functions of the government that people completely trust in, implicitly trust. I mean, weather forecasts, economic statistics. They trust the Fed, they still trust the central bank. Basically, they trust the dollar. If you, you can go around the government and see things the government is doing, people basically trust it to do because they're not talking about it. You know, it's just sort of like it's the air we breathe. This is a way of saying that we have much further to fall, that actually we aren't at bottom in trusting government. Not here, anyway. You're bottom when all of a sudden the government tells you what the inflation number is and everybody says, oh, someone just rigged that. That's not, we don't, we don't trust that we're not there yet. We still think that, rightly, that, like there are these, you know, nonpartisan bureaucrats who are grinding out these statistics and telling us what inflation is. Lots of things like that are going on around the government and people trust it. So I don't think we actually know what it looks like to have a population that genuinely, genuinely mistrusts anything coming out of the government. We could, we could get there, but I don't think we're there yet. And I tell you, I spent, I was just there last week. I was just in your fair country. And it feels, it feels a little similar. Like, yeah, people, people don't like politicians. One thing you know is that whoever is elected prime minister, six months later, everybody's going to hate him. Right? That's been true for a while. Even if you were elected prime minister, as likable as you are, as, as much as people think they know and love you, you know that six months after you were elected, no matter what you did, people would hate you. So that's the function of, like the media environment we're in. It's a function of a lot of things, but that's different from the whole government being genuinely mistrusted. So I don't think, I think we're set. We're sowing the seeds for greater and greater mistrust. And it get takes us into a darker, darker place. But I don't think we're there yet. I don't think it's as, I don't think it's as bad as, as, as it could get.

Okay, so are the financial markets rigged?

You asked very simple, direct questions. Let me see if I can answer this in a way that doesn't sound like a conspiracist. Broadly, no. Broadly they are like, they're, they're kind of like price discovery mechanisms. They are pricing things pretty accurately. However, when you go into the guts of the world's biggest financial market, the US Stock market, there is no question there's rigging there. It's very subtle. I wrote a book about this called Flash Boys, how this happened. Once the markets became purely electronic and all the, the computers were doing the trading, essentially there's a tiered system and there are people who pay high frequency trading firms who pay lots of money to the stock exchanges for privileged access to the information, the trade information, and actually know what's happened in the markets before. A normal person knows and they trade in front of the other people. They use that information to their advantage. They are scraping out of the market fractions of pennies or pennies per transaction. It's nothing like, like for you, the average investor, you're, you know, you're being fleeced, but it's not much, but across the markets it's billions. And so the effect of this is you have, here's a, here's a stat that will sort of, if you just think about it for a minute, dramatizes the situation. There is a high frequency trading firm in the United States called Virtue Capital. Most of these places are private places. They're, they don't release their profits or you never know what, what's going on inside of their black boxes. Virtually, Virtue thought it wanted to go public, sell shares in itself, so it had to reveal some stuff about itself. This is a decade ago. They revealed that for the entire year, entire year of trading, every day of the year, they were profitable trading in the stock market. They never lost money. Any day now. Nobody who's taking risk in the stock market makes money every day. The reason they're able to make money every day is that the market's got this rigging in it that gives them this guaranteed profit, basically that shouldn't exist. So it's rigged in that sense. And our regulators, the securities Exchange Commission has acknowledged as much and said they've been trying to deal with it and fix it and they've sort of like put band aids here and there, but they haven't completely addressed the problem.

Wow. So why do we see some of these American politicians on a 250,000 a year salary with a net worth of $250 million?

Who do you have in mind? Because I think it's probably got to take it on a case by case basis.

I don't know that I want to name names, but Elon Musk's put pictures of them all up on X. Well, is there insider trading going on?

Oh, well, I don't know. I mean, you know, I just don't know. If I had to bet. Yes. Just because there's insider trading going on outside of Congress, why wouldn't there be in Congress? And the kind of information you get in Congress, it's probably easier to, to, to, to do it without getting caught. It's because it's not, it's not probably company specific as a sort of like some policy that may or may not happen that has implications for industries. And there have been stories about this like people have written that, you know, and it is scandalous that our elected officials are able to trade in the stock market. You know, my, my daughter is an, is a new employee at a Wall street investment bank and she's not allowed to trade in the stock market. Like it's just because she might have some piece of information that might be relevant and they don't want to put them to be ever in the position of being charged with inside trade. I mean, Congress, you can actually push legislation that will affect the prices of stocks. So it's a little crazy that they're allowed to trade in individual stocks. And it's not that hard not to. I mean, here's, Let me just make finish this point. I could do whatever I want. I'm a free citizen, basically. I basically don't trade in individual stocks because I think it's kind of dumb. Like I think the smart thing to do is just put your money in an index. It's the smart strategy because you basically, I don't think you have an edge picking individual stocks unless you have inside information. So why it's so hard for the elected officials to just put their money in index funds as opposed to pick stocks. I don't get that. Um, that they should be, it is, I don't think this, this freedom to do this exists so they can do insider trading, but it does create the possibility and I'm sure it happens this.

Subject we've just discussed in the last three minutes. Sounds like a Michael Lewis book to me.

Does it really? It does. It's a. You know, that's funny you say that because you're not wrong, actually, that if, if there was a way to do it. So I'm not, I'm generally not coruscating investigative reporter who's angry at the world kind of thing. That's usually. I just don't feel that way. Right. I get angry and it goes away after five minutes. And I generally write things that I find fun, like for whatever reason, I find it kind of funny. And it may, it could be that it rises, it becomes satire, that what goes on in Congress and the financial markets between Congress people and the financial markets rises to a kind of place where satire is the right response. Wants. But, but having said that, it's. You don't. You never really want to punch down. And Congress is so in the tank, like the Congress. The approval rating of our Congress is like 10% or, you know, it's like people, they don't like the congressman, they like their own congressman, but they don't like anybody, any of the others. It's like, I'm not sure what point there is anymore in beating up on them. It's just like, it's like kicking a man when he's down. So it wouldn't be that for that reason. It wouldn't be a natural subject for me. But I don't know. It's. You never know. But if you, you can, if you have ideas for me to write books about, just make a list and send them to me. You're not far off.

So, Michael, is there going to be a Big Short opportunity sometime soon? That was obviously a really popular book of yours. The film was also great. Is there another Big Short? Can we short the next crash?

All right, so let's. Let me disabuse you of any notion you have that I can predict anything. So the Big Short was not me. I wrote that after the crash. Right. I was just trying to find people who could explain what happened. And they happened to be some people who had predicted it and bet on it and made fortunes. It should be a warning to anybody who thinks anybody can predict anything that none of the characters in the Big Short have repeated their success. That, that none of them have predicted the next thing, and some of them have gotten themselves in financial trouble. So it's, it's, it's really hard to predict what's going to happen and even harder to time it. So you make money doing it. So I, I don't have the, I, it would never in a million years would I try to bet on a time like a financial crash. However, however I am. I just tell you what I've done. I'm sufficiently wary of the Trump approach to government and the trust destruction and you know, they're doing things that is going to cause inflation and cause recession. That, and the stock market is very bubbly. That when he was elected, on the run up to the election, actually I started to kind of de. Risk. Uh, I, it wasn't, I wasn't shorting and I, I, I've actually never got a short, but it's sort of, my version of shorting is like just holding less risky stuff. And, and I've diversified a little. I've diversified a little bit out of the United States. You know, I'm moving some money into things that aren't dollars and not a lot, not everything. It's not a, it's just a slight shift. I feel less good about the dollar. I feel less good about anything that's trying to pay me a fixed rate of interest over a long period of time. I feel less good about risky assets like stocks and I feel better about things like gold, which I never used to invest in. So I've made some shift myself. But it's baby steps. I'm not betting that the whole world's going to fall apart. It's sort of like if the crash happens that we just talked about, that is government triggered. There's nowhere to hide. It's like you don't even really want to live in that world. The idea that you're sort of like trying to make your fortune in that world is not such a bright one. I don't, so I'm not preparing for that.

So, okay, you're not shorting a crash, but it sounds like you're like you said, de risking, diversifying, also becoming liquid. Because if there is a correction, surely that's a great time to buy assets, isn't it?

So who is on everybody's top five list of world's greatest investors? Warren Buffett.

And he's cash. He's all cash.

He's got, he's got $340 billion in CA now. I mean, it's a trillion dollar company, but it's a trillion dollar collection of assets. But that tells you something. The other thing that tells you something is Warren Buffett, when he likes the price of his own stock, he buys it back and he's pretty aggressive about it. The last year is like the first year. He hasn't done this in a long time. So he thinks his own stock is a little inflated. So I think that's. So he's one of the. I invest in basically two things, index funds and Berkshire Hathaway. And. And he's, in a way, my buffer. Buffett's my buffer. He's that. He's. He's. If I give money to Warren Buffett, he's putting it in treasury bills waiting for the crash. So I think he thinks that he doesn't know. He can't predict when it's going to happen, but he is. If you look at his record, he has been so good historically about having liquidity, having cash on hand when things go really bad. And at that point, he sweeps in and he scoops up all kinds of bargains. And I think he thinks he's got that in his near future. And it wouldn't shock me, like, it just wouldn't shock me.

Do you think that gold. So I was buying gold when it was $700 an ounce. It's obviously nearly $3,000 an ounce now. And obviously I wish I bought more. And it felt like, oh, it's quite toppy. But, you know, with the news that maybe there's not much gold in Fort Knox.

I'm sure I would believe that news. That was that Trump saying that maybe it's not there.

Well, I mean, Elon Musk's trying to crowbar it open, isn't it?

Yes. Yeah. It's like. Isn't that the plot of Goldfinger? I don't know. I just. I feel like he's a Bond villain. Yeah. But anyway, yes. Yeah, it's.

I mean, gold, God's money, gold, if any currency is weak, if there's any threat of recession, correction, revolution, historically, gold does well, doesn't it?

Yes, it does. It's odd that it does. Well, it doesn't generate any kind of income. It doesn't really have that much inherent value. But everybody agrees that's where you put your money. If. If there's trouble, there's now an alternative. Right. Bitcoin. It's. It's that. That bitcoin has been marketing itself as digital gold for a long time. It's like this thing. There's a fixed supply of that everybody agrees has. It's sort of like people with wealth agree this will have value and have always done so. Gold has a much greater history of it. I think it's more deeply rooted in the psyche and I would trust it more. I would not trust Bitcoin as a digital gold. So, yes, and I didn't put huge sums of money into gold and it felt weird to do it because I don't think it's actually generally smart. It's more of a bet, it's more of a speculative bet that people are going to feel less and less comfortable with risk. That's what I think. Whether it's justified or not, people are going to be more and more uneasy about financial risk and that will result in the price of gold going up. I had the thought. Thought crossed my mind. I did what you did. I bought it. What you know about that $700 around there? And I've been looking at it. I've been wondering, when's the time to sell it? Just, I hadn't thought, had that thought until just recently. And I. It's not feeling, to me, it's. If it's crossing my mind, my mind is. I'm thinking maybe we're getting to a point where that feeling of fear, of risk is topping a little toppy. But I don't, I don't, I, It's. I don't completely trust it as an investment. Gold, I don't Gold. I. Because I think, I think it is. It's measuring fear. And I have no, I can't predict fear. It's not generating income. If I give my money, if I put my money in treasury bills, I know I'm getting 4%. If I put my money in Berkshire Hathaway, I know I'm getting this. These earnings, you know, that are generated every year. And gold, I'm just making a bet on how people are going to feel about gold and how they feel about gold is a product of byproduct of fear. And I just don't know where fear is going. It feels pretty toppy right now.

Isn't gold, though, the hedge against everything else? Pretty much.

That's the argument. Right. It's sort of like it goes up when other things go down, or at least it holds its value. But what if we wake up in a world tomorrow? I mean, this seems improbable, but could happen. Oh, Trump and Putin cut a deal. The Ukraine war ends, really ends. The trade wars all of a sudden go away because Trump's happy with his deal with China and the European Union, that actually things start to settle down as opposed to heat up inflation numbers come in low. I could see gold going the other direction. I mean, they're. I can't predict these things. I feel, I feel unjustifiably enriched by my investment in gold. It is tripled or whatever or quadrupled tripled and it feels like I got away with.

And what's your prediction for bitcoin?

That it will eventually go to zero.

Oh, Michael Lewis.

Yes. Now I'm just saying eventually. I don't know when but that I think that eventually it's going to be perceived as it was useful for speculation and not much else.

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A choice between bitcoin and gold you use, you'd take gold and so I don't, so I would, I'm not, I'm not bet I'm not. I don't care. I don't believe my prediction so much that I'm shorting bitcoin. I think that would be insane. But I think I look at it and I think you're basically looking at a religion. It's like Scientology. They that and it's very hard to predict the trajectory of this religion. It's, it's a religious like faith that people have in it or people are betting on the religious like faith even if they don't have it. And I can't tell when that's going to go away. But it's been, but crypto so far has been, it's been around for a while now and it seems like it's, you know, it's sort of like a solution in search of a problem that it hasn't figured out what it's for. So I just, I just, I tell everybody, don't buy it, stay away from it, pretend it doesn't exist.

Wow, that surprises me. So does it? Well, I mean, I'm not an evangelist on Bitcoin and I agree with you. There's some very smart people who are actually myopically blind to the downsides, which doesn't make them smart, in my opinion. Even though everyone holds them in high regard of smartness, they just can't see the downside. You know, if our technology changes, that technology could be old and out of date. But gold's never going to be old and out of date. It's billions of years old and they can't even see it. So I'm not an evangelist, but I didn't think it had currency properties. If it's deflationary like it is at the moment, why are you going to spend it? But I do think it possibly has a reserve property. We've like, we've got no reserve. Dollars and pounds are like really deflating in, you know, going down in value. And it feels like a limited supply of something does have a reserve property or quality.

That's, that's interesting. That's interesting that maybe it might replace the dollar as the world's reserve currency.

Or at least a reserve for the dollar backed by something like it was backed by gold back in the day.

It's very hard to imagine the United States government attaching the dollar to anything, like actually backing it with something.

Why? Because they just want to keep printing it. Yeah, yeah.

Exactly. And if you're going to attach it to anything, wouldn't you just reattach it to gold?

Yeah, I, I can't ever see them reattaching it. I agree with you. But then we don't, we don't, we don't ever pay the 35 trillion of debt back. Money just keeps going down in value cost, cost of living relatively keeps getting worse.

Yep.

In the end, in the end, that has to. Something has to give, doesn't it?

Depends on how fast it happens. It's been, that's been going on forever.

Well, since the early 70s, but when we came off the gold standard.

Yeah, Right, right. So, I mean, there is a monetary history of the Roman Empire that is just this. It's like things get worse and worse and they keep diluting the currency and that, that way lies ruin. I think that. But I think if, if you can keep inflation few percent a year, people put up with it and just, they just build it into their lives and you get this privilege that the United States government has of getting to issue this thing and repay it in cheaper thing. It's a great privilege. It's being abused. You know, it's being abused right now. And people really get upset when it's abused, but they allow some of it. So, you know, I just. How do we allow.

How do we allow?

You ask how do we allow it? You mean, why do we allow it?

Well, I mean, how. We don't have any choice. They print what they want.

Well, you don't have to hold dollars. Could say, I don't want dollars at all. You, you could say, I'll just hold something else. I'll hold gold.

If you're in America, you still need to buy milk.

Yeah, yeah. But you could just turn your Bitcoin or your gold into dollars. You could just keep minimum amounts in it. But you're right, you're, if you're, you're on a fixed income, you know, you're allowing it. You're, you're getting paid less at the end of the year than you are at the beginning of. I think there's a, like hovering in the back of this, of this issue is it's gotten this bad, which isn't bad as bad can get. This isn't like Weimar, Germany or Zimbabwe. People aren't running around wheelbarrows full of cash to buy a loaf of bread. But it's gotten this bad with an independent Federal Reserve, like with the Federal Reserve that can in theory squash inflation to zero. And they're doing their best to manage unemployment and inflation at the same time. How. But my point is, how bad does it get if the Federal Reserve is not independent anymore? And that's where, that's what we're staring, that's the gun we're staring down right now. The president, Donald Trump, has made it very clear he wants to just control the money supply and he wants to print even more. That's. He wants to lower interest rates and that. I think that's when, you know, we've jumped the shark. But that's that. Then we're in the Roman Emperor situation, because the Roman emperor got to decide how much actual silver there was in the coin. And if the politician actually gets to decide how much, what we're going to do with printing dollars, then we're, then we're headed to disaster. I do believe an independent central bank can, can make it tolerable, can control it, can keep, can keep the faith in the currency. I don't believe politician would.

No. Is the US government bankrupt?

The answer is no, right? I mean that we can. We, we what we owe, we owe in dollars and we can print them and hand those over so it's not bankrupt.

Print, print down your own debt.

Yeah, that's right. So we'll never be bankrupt. It'll never be bankrupt that way. It has got, I mean there are all kinds of red, red lights flashing right now around this but. And one of them is this is an interesting stat I just read for the first time, I think ever or maybe Since World War II, the interest payments on the debt exceed our defense spending. It's the, the, the debt to GDP is like approaching European financial crisis levels. So it's, it's obviously what's even so never mind the snapshot like where we are. What's really weird about the current environment for anybody who paid attention to politics for the last 50 years. There's no voice for fiscal responsibility like neither presidential candidate in the last election. Even though this is the elephant in the room. Like the debt is out of control, the deficit's out of control, the debt is massive. Neither candidate really even brought it up because the American people don't wanna hear about it. They don't wanna hear about how they need to tighten their belts. So this is not a problem. This is not a problem with who our politicians are. This is the problem with who our citizens are. It's like we don't want to discipline ourselves because we don't have to. You know, it's like we've been allowed to live this way, live beyond our means for a very long time. We've gotten used to it and you start taking things away from people and they get pissed off. But that, that's getting this under control is taking things away from people. Now, now it's even in a weird way even more disturbing is that what's going on right now with Elon Musk and Doge in. You know, the, the, the headline coming out of Musk is oh, I'm getting the spending under control. He's doing no such thing that it's that the, the federal deficit this year, 86% of it is either Medicaid, Medicare. It's entitled Social Security, defense or interest pay payments on the debt. 14% is in this other pie at slice of the pie. And all of his activity is in this other slice of the pie. And it's pretty trivial what he's doing. So he is disabling certain functions in the government, but he isn't doing anything meaningful to address spending. It's just the numbers are you can't do it the way he's doing it. And nobody in the Trump administration is proposing doing anything to 86% of the pie. And at the same time, they're proposing huge tax cuts, mostly huge tax cuts for people like me, people who are pretty well to do. And so it's, they're going to make the problem worse. And there are people in Congress who this upsets, like individual legislators, but it's not a winning thing to be upset about. They, like, they're, they're pretty muted, these voices.

But surely you have to cut taxes if you want growth, don't you?

I don't. From where they are now, I know we've had, we've had a pretty robust economy with taxes where they are now. I mean, so this is a conversation of tax policy that will get quickly get over my, like, pay grade. But, but yes, some tax cuts generate growth. I'm not sure the tax cuts they're proposing make any difference. So, no, that's not, that's not what this is about. This is about like who gets what. That's, it's more that how are we going to carve up the piece, not how we're going to make the pie bigger.

Well, I mean, in the UK, if you run a business, you have 20 VAT, you have to add on to your price. You have 25% corporation tax, probably 45% income tax, 15% national insurance, 4% pension contributions. You're probably paying 90 grand a year on business rates, GDPR IR35. The list goes on. We're getting.

So that's you. Yeah, that may be, that may be true there. I don't think it's true here.

No.

So, you know, I mean, Warren Buffett just, he just wrote his shareholder letter and he was bragging about how much tax Berkshire Hathaway paid. And he was, he was proud of it and he thought it didn't get in the way of their business at all. So the, the taxes here are not, I don't think they're as onerous on business as they are there. I'm willing to believe that the UK is gumming up its economic growth with Taxes. I don't think that's happening here in the same way.

Okay, so is Elon Musk net benefit to humanity or a megalomaniac?

Can he be both?

You can answer whatever you want, Michael.

It's your answer. I think he's, I don't think he's a net benefit to humanity.

Wow.

I don't. I think there was a moment where you could argue that he was kind of useful, but I think Tesla was great. Is a great thing. I don't think so. It's a, He's a mixed picture, right? He's. I think he's mistaken as a great runner of businesses, of institutions. Like, he came into Twitter and did what he's doing to the US government, come in and disparage the workforce, fire everybody and say that, you know, you're all waste, fraud and abuse. And he's destroyed 60% of the value of Twitter. I mean, if you were an investor in Twitter, your most recent statement said that your, your, your stock is worth, you know, 40% of what it was when you invested. So that doesn't work. He has championed products that I think are kind of cool and great for everybody. So they've done. That's good. I think at the moment he's a horror show. I mean, I think he is, I think he is power drunk, ignorant about a lot of things that he's meddling in now. I don't think he actually understands how the government works. He has paid very little attention to it. And I think he's, he's doing a lot of damage. I think you could kind of go case by case and say, like, that's a bad thing to have done and it has really bad consequences. And he's a hypocrite. He's a hypocrite. He's a hypocrite because he's.

What are the bad things he's done?

Well, let's just say like firing the inspector generals. This is a really good one. Every agency in the government has someone who's genuinely independent, who doesn't. He's not really full internal facing. He's. The job is to talk to Congress to identify the waste, fraud and abuse. They are the people who tell you, like, there's a problem here. They're the inspectors inside the place. The first thing, they fired all of them. So there's no, there are no eyes on it. So that, so, you know, he's encouraging the very thing that he says he's trying to eliminate. But then there's the hypocrisy it's like the. There's a piece today in the Washington Post that just sort of details his commercial interactions with the government, going back to Tesla. Tesla doesn't exist without a $475 million loan from the Department of Energy in the very beginning. And he's that money. Without that money, he does not have a company. And there's that, that kind of thing reprises itself through his career. It's a partnership between his companies and the government. And he, he's failing to acknowledge that's sort of like how the wealth was created. It wasn't just him. He had help from this enterprise he's disabling and claiming does nothing useful. So I mean, I think he's troubling and he's also kind of cruel and a bully. He's a little like Trump. He didn't do this. Trump did this. But here's another tell about the sort of the spirit of their enterprise. One of the first things Trump did when he came when after the election was to remove the Secret Service protection of some Americans who had worked on know things like Iranian policy and who had targets on their back like actually were like possibly going to be assassinated by a foreign enemy. It, it's, there's that kind of streak running through the both of them. Like I'm just going to just sow salt in the, in the soil of my enemies and we'll all pay a price for that kind of eventually. That bothers me about him. I think that he's very much kind of like that but you know, useful as an entrepreneur but over overrated is like he's socially really important and we wouldn't be where we are without him kind of thing. We'd be much better off without him now, I think.

What do you think's motivating him? What's behind it, you know, to buy X and to do this Doge thing. What's. Is there something behind that?

I'm sure he has a story, a lust for attention, power. Like I think he's just like, it feels like someone has stuck his finger in the socket of social media and just exploded. Like he just, he got, he spent too much time just living on social media and he loves that. He, he loves it all. He loves the, the attention, the positive attention and the war and the fights he gets in. He just like it's addict. It feels like an, it feels like an addict is what it feels like to me feels. He feels like an, like an addictive personality. He's gotten addictive to These being in the limelight, being at the center of things.

Wow. I mean, a lot of people think he's kind of preserved and protected free speech. Do you disagree with that?

Yeah, I do. I mean, I never felt there wasn't anything I could say.

Well, you couldn't talk about vaccines and Covid, could you, if you wanted to reach on social media, not on Facebook and not when Biden was in power.

Yeah.

Oh, so.

So, so. All right. But I could have. I mean, I could have posted something on. I could have had a substack where I did that. I could have said all these things, I guess. I guess, you know, sure. You people. There's more permissiveness on X. Whatever. I don't equate free speech to being able to say anything on a social media platform. It's like the New York Times has no requirement to publish anything I say. I just don't think that's. I don't think Facebook says you can't say that vaccines kill people or whatever you want to say about vaccines. I don't feel like my free. Free speech is threatened. I can still say it. So the kind of. It's. What you're talking about is lack of refereeing or lack of editorial interference on a social media platform. And it's true that there's less of that on X. Okay. Is the world better for it? I don't know. I don't. I don't know if it makes a much difference. I'm not all worked up about that. It's.

Well.

And time will tell how much he loves free speech. I mean, that he may not like some of the speech that people address to him, and we'll see how much of that he tolerates.

So who controls the world's money?

So it's like the money supply, like the actual money, the central banks basically is. So, I mean, if that's the question.

Well, I mean, the question is for you to answer however you want because you're my guest.

Okay.

And you can. You can ask.

I feel like I would, like, feel like I'm having. I feel like I'm sitting down with my financial therapist. Go. Go deeper, Michael. Tell us what you really feel.

Well, BlackRock have a lot of it, don't they?

Yeah, they do. Yeah, yeah, yeah. There's a lot of people who have a lot of it. But who controls the supply of money is the central banks.

But is there someone controlling the central banks?

I don't feel that, no. I mean, it depends on the central bank. I'm sure the Russian central bank is different from the, I mean, I think Jerome Powell and his, the people who are running the Federal Reserve really do control the money supply there. I don't think any, and I think that they probably got a little bit of an eye on the White House, but I don't think they're going to destroy their credibility. To keep sweet with Trump doesn't mean that Trump will somehow seize control of the Federal Reserve. Think the bank of England controls the money supply in England? In, in, in autocratic regimes? I assume that, I assume that the, the political leader controls the money supply. But it's tricky. I mean if you're running a country, if you or I were running a country and we, we wanted it to stay in power, this is still a decent argument for letting the, the, the central bank be genuinely independent. There's such benefits to it if, if the markets perceive that it's not independent, you pay such a price. So I, I'd have to, I don't know enough about the Chinese central bank or the Russian central Bank to know that there's real interference there. I assume there is, but I, I just don't know if it feels like.

There is in the uk you can't really prove it, but also you need a solid person with integrity and vision to be running the central bank, don't you?

So I had a friend who ran the Central bank of England. He was my tutor when I was at the London School of Economics. Mervyn King.

Yes.

He's fabulous.

Right.

I never doubted for a minute and I went and visited him while I was governor. Not for a minute would anybody make Mervyn King do something he thought was wrong. He wouldn't put up with it. So if they're all like Mervyn King, you're fine. I don't know that they all are, but if they're all like Mervyn King, you're fine.

Do you think maybe that's what we lack in politics? We lack people who are principled and unmanipulatable and think in 10 year chunks, not just in terms.

So this is a really good question. Not that all your other questions weren't good questions, because public service, it attracts all kinds of people. You remember, I don't know if in the English school people ran for class president, but in the American system the people run for president from the age of about 14 years old for their class president. And there's a certain type of person who always wants to be class president. And it's not the most admirable kind of person usually they not the worst, they're not the best. They just kind of like that role. Politics attracts that kind of person, but it also attracts people who really are rising to an occasion and feel like they need to do something about a problem or a set of problems. Once you get into it, you are subjected to forces beyond your control and a set of incentives that you're probably aware of, but you don't feel until you're actually there. And the incentives are so short term. I mean, if you're in the House of Representatives, your election is two years after you got elected and, and you put a foot wrong right away. If you come, if you're in the Republican Party and you go crosswise with, get crosswise with Donald Trump, you're doomed. You can't afford to be brave like you can't afford to be principled. This is not, that's not going to work. You're just going to lose. So I could see if you're sitting there in your seat thinking how principle. You start thinking, how principled can I afford to be? Rather than I'm going to stick by my principles. I think it's that. So it's not bad people, it's like bad system. It's, it's more that. But having said that, I gotta say that the people I have met and spent time with in both in the civil service, but also elected officials, politicians, I'm always kind of impressed. Like I'm always, They're always better than you think they would be giving. The newspapers are given just like people, what people say about them behind their backs, I always find them more, more, less, less selfish, more, more like actually trying to do something good and useful. Not, not perfectly, but there's like, there's something good there in the ones I've come to know, both sides of the aisle, Republicans here, Republicans and Democrats. So they're not the worst among us. I don't feel that way about them. I don't, I don't like to like, dislike, casually trash politicians. It's easy to do. It's easy to hate them. Right. They're just like an easy target. Yeah, I try, I try to lean against that because the actual meeting, getting to know them sort of, sort of causes me. It disrupts the stereotype of them actually getting to know them. Do you know any, do you know any really serious?

Yeah, I know quite a lot. UK ones who are well known and the ones I know, I would say I feel like they're relatively genuine, no greater or lesser than any other humans you meet. On a day to day basis. I think they're not paid enough. I think they export experience massive amounts of abuse. No matter what they say, half the population automatically hates them. And in the uk, some politicians have been stabbed to death. So whilst I do rant a bit on social media, on things I think are wrong, I agree with you. I think it's a really hard job where the system makes it virtually impossible for you to have any change and no matter what you do, half the people will get pissed off and everyone's got an opinion about you online.

Yeah, no, it's an awful job. I mean, I'm not suited to it. I just be angry all the time. What gave me pause in what you just said is they're politicians who've been stabbed to death in our country that would be considered at a kind of like a less violent end. Nobody stabs anybody here. It's like automatic weapons in everybody's hands.

Yeah.

I mean, but I'm amazed that I think we're at that point in our politics where we're on the verge of this kind of violence. It's, it's. You can see it, you can feel it in the air that they're actual physical. These people have, are on the receiving end of real physical risk. So anyway, I don't remember what the question was that led us in, led me down this rabbit hole.

But yeah, you just asked me if, if I knew any. I think you were basically, you know, what are they like? And you know, there. I know lots of business people that are probably harder and more ruthless and maybe more manipulative.

So.

Yeah, yeah, I agree with you and I'm glad we've discussed that because I think you're right. It's just too easy to hate on a politician.

Yeah.

Yeah.

This gets back to why I might not write a book about congresspeople insider trading. It's, it's.

This book's making itself as we go here.

Yeah. It's just like. It's not, it's not the class of people I feel like beating up on right now.

Yeah.

You know, I don't really like beating up on anybody, but it's just like, it's not who seems needing going after right now. And God, they're so dumb if they do it. It's just. But it is. Anyway, sorry about that.

That's good.

I was digressing there. It's okay.

I've got two or three main questions and then the quick fire round.

All right.

So could I ever beat the markets? And we just Use AI to trade and it beats the markets and job done.

This is a great question and I don't know the answer, but I suspect not. And I tell you why that AI is going to be really good at taking everything that's known and like looking for patterns and like if, I mean stupid, if Coca Cola stock goes up, Pepsi stock will go up. You know, those sort of things that machines already are kind of doing, that people are programming machines to look for and respond to. It'll be faster at that kind of thing. But the way markets work, it's like it's constant game theory. Like once something's identified, it's no longer useful and there's the next thing and, and it's like, it's like a game where the rules change every day harder for I think more and more useful that it's, it's such a kind of semi chaotic environment that I don't think you're going to get rid of people. I think that there's going to be, there'll always be a place for human judgment to sort of override a dumb thing that AI is doing. Because AI thinks the rules of the game are this, but actually no, now they're this. The human will see the rules changed. But maybe, I mean, I don't know for sure, but I think it's going to be, that's not one of the places it's going to disrupt first. It's like it's not going to disrupt what I do first. It'll be a while and I've tried. You take AI and have it write a story about something and it's really not very good. It's, it's, oh, it's like okay for a school paper, but it's not great. And I think that, I think that like market prediction is going to be something that it sort of intrudes on a bit, probably undermines. It's probably better than your average hedge fund manager. Like they don't do. It's like, but, but not better than your average high frequency trader. That, that the relationship to the, of the machine to the man is. It's like robot arms. That's what it's going to be. You're still going to have to have someone kind of operating the arms.

What are some unique or surprising traits of the richest and most successful people in the world?

So I haven't spent a whole lot of time with the richest people in the world. Some spent time with Jeff Bezos. So I don't know if I feel comfortable generalizing about the richest people in the world. But people, the kind of people I write about this, who are successful and interesting at the same time. What they, what a lot of them have in common, most of a lot of my characters have in common. They actually care very little what other people think of them. Deep down, they really care very little. And they, they're willing so that it's, it's not that. And it's not that they're, oh, I don't give a shit about what you think of me. They're not that way. They're not overt about it. It's like they have some deep sense of self that is just indestructible. And they'll move through the world as they move through the world and they'll notice, oh, that upsets people and they won't let it get on in their way. They're not looking to piss people off. It's not. They're not looking to be that kind of person. They're genuinely moving through the world in a particular sort of unusual way and are not conforming to just how other people do things. So that's. I'd say that's a. And that sounds like it's. This is like in the financial markets, everyone wants to be a contrarian, but actually nobody is. They're all sheep. I mean, it's just the financial market is filled with sheep, everybody. Because you get so much trouble. You don't get in trouble losing money. You get in trouble losing money when nobody else lost money in the same way. Everybody loses money in the same way. You're okay. So it pays to be a sheep kind of thing. It's safe to be a sheep. That, that it's hard to be genuinely this way. And the, and, but the, the people I think of as the most successful people I know are genuinely this way.

So this brings a really fascinating paradox for me here because are we saying if you really care about what people think, it's going to be really difficult for you to be successful. And let's be honest, most people on the planet really do care what people think, even when they say they don't.

Yes.

Wow.

Yeah.

So that's the thing to master, is.

It'S just like, it's a self possession. It's like a self possession. You, you have a. You are you who know who you are. You have a sense of how you should move through the world and you do it. And you're not really knocked off course by public opinion. Now that's also the definition of a sociopath. So it's, you know, this isn't, this is a recipe for more than just success. It's just. But that's an ingredient that these successful people have.

Wow. Who's the weirdest person you've ever met or interviewed or written about and why?

Sam Bankman, Fried.

Wow.

Going Infinite. My most recent book. Yeah, weirdest. By and by that I mean like less like any other person than anyone I've ever met. How he, it was, he was the closest I've ever met to kind of AI. Just that it's someone who had so abstracted himself from the world and it was so in his head and was actually taking concrete actions in response to whatever program was going on in his head which was auto generated. Like there was the. It was very unclear to see. It was very hard to see what the inputs were. It was kind of everything, like AI, everything gets put in there and then the machine does what it does and it spits out this output, that, that and there's a reason for it. You can, you know, it's, there's a logic to it. It's a very peculiar logic and unlike what anybody else I've ever seen. So he was, I think, the most peculiar person I've ever met. Just kind of denatured. Like no connection to. Literally like no connection to the grass out back, the trees over his head, the people around him, the environment he was in. He was just like this logic machine moving through the world.

And was he, was he a genius? Was he a sociopath? Was he a hardcore fraudster? What was he?

He was, I would say none of those things. He was basically sweet natured. This is odd, you know, like wouldn't hurt a fly. Which is odd to say for someone who moved $13 billion of other people's money into his own private account. Like not, not scared of conflict. Like not a bullied. Not like not at all like Elon Musk. Very private. What he was, was so removed from other people and so removed from basically society. He was sort of numb to the effects he had in the world. And that, that the way that manifested itself was he very happily put a lot of people at risk without asking their permission. Not just with, not and not just with the fraud, with, with like everywhere we moved through life, you knew, you knew he wasn't thinking how to keep you safe. He wasn't thinking how to keep himself safe. But he was, he was like not, not normally concerned with risk. The risk he was incurring on behalf of all the people around him all the time. So you felt around him, you feel a little wary. Not of, not of him, but of the situation he's created. Like you, you know, he's not watching out for you. He's taking risks because logic has led him to a place that is not natural. You think, and you feel that feeling like this is not natural to be here. Has someone really thought this through? And he has, but maybe he's right, maybe he's wrong. He's really smart. Like this is. It is. It is true that. And by smart, I mean almost everything that came out of his mouth was kind of interesting. Even when it was dumb, it was just like different. It was just like, well, paying Donald Trump, trying to pay Donald Trump $5 billion not to run for president. He's in negotiations with the Trump people to pay Donald Trump. Way back when, this seemed like Trump might accept that deal. It's a weird thing to do. It's kind of a dumb thing to do because Donald Trump would just take the money and run for president anyway. But it's, it's. But it's a weird. It's an interesting thing to do. He did that kind of stuff constantly. So it just, he was just interesting. Like you. If you were. If I just said, rob, you get to spend, spend a day with Sam Bankman fried at his peak, and you just travel along a side of him. You think, that was the most fun day I ever had. Because he's just. It's weird shit after weird shit. It's constant but interesting weird. So it's stimulating.

Yeah. So we're now going to move on to the disruptors round. And this is Quick Fire Michael. So just a few minutes from the end, I'm going to stick a question for you in here because I'm fascinated by this myself. As someone who's written brilliant books, you know, I've read all by your recent book. Really love them. Moneyball. Big short. Great books. What's one book you wish you'd written?

I wish George. I had not pissed off George Soros when I met him in 1992. And he was trying to build democracy behind that in the former iron. In the former communist countries and at the same time was sort of sitting right in the middle of the financial markets and doing brilliant trades. I wish I had not screwed up my relationship with him because he had. He had agreed to let me in to write. It was going to be kind of a biography.

Oh, wow.

And that he was such. He was a great character. He is a great character. And that's the book that got away. That was really a shame. And what I did, the reason it got away is instead of just keeping my counsel and not, and not letting him know how I thought about the world. I wrote a little piece about him. The two of us traveling through, you know, former, through Eastern Europe. And he, it just irritated him. He didn't like the piece and so he said, no, we're not going to do this. It was so dumb. It would have been a masterpiece. The material was that good. So that's the book I wished I had written.

And what makes a great character?

Great question. I mean, there are lots of different things, but the easy way to get a great character is one, they don't think of themselves as a character. So they have no self consciousness of themselves as the character. Two, they are, they are obsessed. They have some sort of obsession. They care a lot about something and that something's interesting. Three, they kind of like, they create lots of friction with the environment around them and they do it in a lot of different ways. But so there's, there's con, there's a kind of conflict they're in with the world around them and, and they're going someplace and you feel like you're on a ride with them. He had all those things.

What's the most disruptive thing anyone's ever said or done to you?

All right, and this just pops into my head. I got an interview with the Economist, is that this is how I became a writer. I submitted a piece to the Economist science pages to get an internship. There's a little thing in the Economist, it's called the Richard Caseman internship. They say, write us a 600 word piece and if your piece is the best, we'll give you an internship for the summer. I never published anything anywhere. I saw this thing, I wrote a little piece. I had no background in science. I mean, I'd gone to college. I had, had had to fulfill a science requirement. I got a F in, I failed the course. I took a course called Physics for Poets to get myself through this requirement. I couldn't get through it. Like I, I don't belong in writing about science. But I got to the short list. I, they picked three people to interview for the job. And at the time there was a pretty well known, very well known English writer named Matt Ridley who was running the. It was a long time ago. He was deputy editor of the science pages. And I got to the interview and he saw actually who I was, you know, like that I had, didn't know anything about science. I just written this thing. And he says, like the other two people who got here, they're both studying for PhDs, one at Oxford, one at Cambridge, one in chemistry, one in physics. He goes, how did you even get here? And he looks up, he says, you're a fraud. He says, you're like a complete fraud. He said, but you're a really good fraud. And that's what a journalist is. It's like you're really good at doing the thing we do. And. I don't know why that popped in my head, but I remember thinking, he's just given me license to be myself. And there's a kind of fraudulence. You're dropping into things you know nothing about digesting them and spitting them out as if you're like the world's expert. And I had the ability to do that, move on, and then completely forget about whatever it was I was just expert in. There's a kind of fraud, but it was a kind of a liberation in that moment where I thought, shit, yeah, yes, I can do this. He said, I can do this.

What's the biggest risk you've ever taken?

The easy answer is leaving my very high paying Wall street job to write my first book, Liar's Poker. That looks like the biggest risk that didn't feel like a risk. So that doesn't count. The biggest risk physically I ever felt was jumping out of an airplane. That I never felt anything quite so terrifying as jumping out of an air. I had a parachute on my back, but it was, you know, 8,000ft up and I figured once I figured you had a parachute on. I know, I know people do this for pleasure, but I did it just once as a lark and I had no particular desire to do it. I just went along with a friend because he wanted company. And I find myself, you know, six hours later up in a plane and I have to jump out the plane that I. That moment is still vivid with me. It's like, what the fuck are you doing?

It's like, it's, it's, it's.

So that that was the biggest physical risk. I, I've never been in the army, you know, you know, but that, but that was terrifying.

And what's your most brutal life lesson?

The death of my daughter.

Oh, I'm so sorry to hear that.

Four years ago, my 19 year old middle child was killed in a car accident. And I think up until that time I thought somehow I was going to skate through life without feeling loss. My parents are still alive. I mean, I felt lost but not this kind of loss. And it's incorporating that feeling that this is part of life is very hard. So that's the brutal life lesson.

And how do you, how do you keep going through life with that loss?

It's improvisational. It's like, it's a. It's a making it up as you go along feeling that incorporates her memory into the journey. Oddly, I have no trouble at all getting. Still getting lots of pleasure out of life, that. So that's good. I'm wired for happiness. I love what I do. So, So I, I love, I love. I'm just, I'm in my zone and in my own head when I'm working. But it's, you know, it's harder. There's no question. It's like it's never going. That I'm always going to feel this absence. And I think, But I think, I think grief and loss, it's part of life. I mean, I think you're not going to avoid it. You don't have to learn how to, how to, how to cope.

What would be your biggest failure or regret?

When I was a kid. This sounds stupid. I bullied other kids a few times. And that haunts me. That just haunts me. I stopped being cruel by about the age of 16, but I had a cruel streak before then, and it wasn't wide, but it was wide enough. And that. I look back on the few moments where I feel, like, physically bullied someone. I just think, like, how did I ever do that? I wish I could go back and undo that.

This show is called Disruptors, in case you had Maritista.

Oh, there we go. Look at that. And who's the host? Oh, who would you. Yeah, hard to know.

What does that word disruptive mean to you?

It means the kid in the back of the class who shoots a spitball into the forehead of the teacher. You know, I don't. I have. I think of it as comic. It's sort of like someone who comes in, farts in the, in the, you know, in the, in the, in the chapel. I don't think, oh, this is the person who's building the future.

And on that note, on that note, you've written some amazing books, Michael. Big short, moneyball. What are you working on right now? Where can we follow you? If you had one book, what are you going to tell us to go read?

You know, the next one? Why not? It's called who is Government? And it's Profiles. I only wrote a third of it, but I curated the whole thing. It's these profiles of American civil servants. And the stories are riveting. I mean, it sounds boring, but the subjects are not boring. And comes out next month. Comes out over there, too. I think that's kind of current. I'm very partial to going Infinite, the book that came out a year. This book about Sam Bankman fried. It's not in the news anymore. It probably will be again sometime soon. I would not be shocked if Trump pardons him. Uh, but, but, but the but I'd read the new one that it's not available yet, but it'll be out in.

A couple weeks and then. Are you active on any social media? Can we follow you there?

I don't do it.

You don't do it?

I just don't do it.

Oh, wow, Sorry. So I would just tell everyone to go buy your books then, and that's.

If they want to meet me. That's where to meet me. Yeah.

I really, really, really enjoyed this, Michael. Thank you so much. It's been great.

Total pleasure, Rob. Hope to see you down the road, like. All right.

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