Lex Fridman Podcast - #54 - Ray Dalio: Principles, the Economic Machine, Artificial Intelligence & the Arc of Life

The following is a conversation with Ray Dalio.

He’s the founder, co chairman,

and co chief investment officer of Bridgewater Associates,

one of the world’s largest

and most successful investment firms

that is famous for the principles of radical truth

and transparency that underlies culture.

Ray is one of the wealthiest people in the world

with ideas that extend far beyond the specifics

of how he made that wealth.

His ideas that are applicable to everyone

are brilliantly summarized in his book, Principles.

They’re also even further condensed

on several other platforms, including YouTube,

where, for example, the 30 minute video titled

How the Economic Machine Works

is one of the best educational videos

I personally have ever seen on YouTube.

Once again, you may have noticed

that the people I’ve been speaking with

are not just computer scientists,

but philosophers, mathematicians, writers,

psychologists, physicists, economists, investors,

and soon, much more.

To me, AI is much bigger than deep learning,

bigger than computing.

It is our civilization’s journey

into understanding the human mind

and creating echoes of it in the machine.

That journey includes the mechanisms of our economy,

of our politics, and the leaders

that shape the future of both.

This is the Artificial Intelligence Podcast.

If you enjoy it, subscribe on YouTube,

give it five stars on Apple Podcast,

support it on Patreon,

or simply connect with me on Twitter

at Lex Friedman, spelled F R I D M A N.

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And now here’s my conversation with Ray Dalio.

Truth or more precisely an accurate understanding

of reality is the essential foundation of any good outcome.

I believe you’ve said that.

Let me ask an absurd sounding question

at the high philosophical level.

So what is truth?

When you’re trying to do something different

than everybody else is doing

and perhaps something that has not been done before,

how do you accurately analyze the situation?

How do you accurately discover the truth,

the nature of things?

Almost the way you’re asking the question implies

that truth and newness have nothing, are almost at odds.

And I just want to say that I don’t think

that that’s true, right?

So what I mean by truth is, you know, what’s the reality?

How does the reality work?

And so if you’re doing something new

that has never been done before,

which is exciting and I like to do,

the way that you would start with that

is experimenting on what are the realities

and the premises that you’re using on that

and how to stress test those types of things.

I think what you’re talking about is instead

the fact of how do you deal with something

that’s never been done before

and deal with the associated probabilities.

And so I think in that,

don’t let something that’s never been done before

stand in the way of you doing that particular thing.

You have, because almost the only way

that you understand what truth is,

is through experimentation.

And so when you go out and experiment,

you’re going to learn a lot more about what truth is.

But the essence of what I’m saying is that

when you take a look at that, use truth,

find out what the realities are as a foundation,

do the independent thinking,

do the experimentation to find out what’s true

and change and keep going after that.

So I think that when you’re thinking about it

the way you’re thinking about it,

that almost implies that you’re letting people

almost say that they’re reliant

on what’s been discovered before to find out what’s true.

And what’s been discovered before is often not true, right?

Conventional view of what is true is very often wrong.

It’ll go in ups and downs and I mean, there are fads

and okay, this thing, it goes this way and that way.

And so definitions of truths that are conventional

are not the thing to go by.

How do you know the thing that has been done before

that it might succeed?

It’s to do whatever homework that you have

in order to try to get a foundation.

And then to go into worlds of not knowing

and you go into the world of not knowing,

but not stupidly, not naively, you know,

you go into that world of not knowing

and then you do experimenting and you learn what truth is

and what’s possible through that process.

I describe it as a five step process.

The first step is you go after your goals.

The second step is you identify the problems

that stand in the way of you getting to your goals.

The third step is you diagnose those

to get at the root cause of those.

Then the fourth step is then now that you know

the exact root cause, you design a way to get around those

and then you follow through and do the designs

you set out to do and it’s the experimentation.

I think that what happens to people mostly

is that they try to decide whether they’re gonna be

successful or not ahead of doing it

and they don’t know how to do the process well

because the nature of your questions are along those lines

like how do you know?

Well, you don’t know, but a practical person

who is also used to making dreams happen

knows how to do that process.

I’ve given personality tests to shapers.

So the person, what I mean by a shaper is a person

who can take something from visualization,

they have an audacious goal and then they go

from visualization to actualization, building it out.

That includes Elon Musk, I gave him the personality test,

I’ve given it to Bill Gates and I’ve given it to many,

many such shapers and they know that process

that I’m talking about, they experience it

which is a process essentially of knowing

how to go from an audacious goal

but not in a ridiculous way, not a dream

and then to do that learning along the way

that allows them in a very practical way

to learn very rapidly as they’re moving toward that goal.

So the call to adventure, the adventure starts

not trying to analyze the probabilities of the situation

but using what, instinct?

How do you dive in?

So let’s talk about.

It is being a, it’s simultaneously being a dreamer

and a realist, it’s to know how to do that well.

The pull comes from a pull to adventure.

For whatever reason, I can’t tell you how much

of it’s genetics and how much is environment

but there’s a early on, it’s exciting.

That notion is exciting, being creative is exciting

and so one feels that, then one gets in the habit

of doing that, okay, how do I know?

How do I learn very well and then how do I imagine

and then how do I experiment to go from that imagination?

So it’s that process that one, and then one,

the more one does it, the better one becomes at it.

You mentioned shapers, Elon Musk, Bill Gates.

What, who are the shapers that you find yourself

thinking about when you’re constructing these ideas?

The ones that define the archetype of a shaper for you.

Well, as I say, a shaper for me is somebody

who comes up with a great visualization,

usually a really unique visualization

and then actually builds it out and makes the world different,

changes the world in that kind of a way.

So when I look at it, Mark Benioff with Salesforce,

Chris Anderson with TED, Mohammed Yunus

with social enterprise and philanthropy,

Jeffrey Canada and Harlem Children’s Zone,

there are, all domains have shapers who have the ability

to visualize and make extraordinary things happen.

What are the commonalities between some of them?

The commonalities are, first of all,

the excitement of something new, that call to adventure,

and then again, that practicality, the capacity to learn.

The capacity then, they’re able to be,

in many ways, full rage.

That means they’re able to go

from the big, big picture down to the detail.

So let’s say, for example, Elon Musk,

he describes, he gets a lot of money

from selling PayPal, his interest in PayPal.

He said, why isn’t anybody going to Mars or outer space?

What are we gonna do if the planet goes to hell?

And how are we gonna get that?

And nobody’s paying attention to that.

He doesn’t know much about it.

He then reads and learns and so on.

Says, I’m gonna take, okay, half of my money,

and I’m gonna put it in there,

and I’m gonna do this thing, and he learns,

and blah, blah, blah, blah, blah, blah, blah,

and he’s got creative, okay.

That’s one dimension.

So he gave me the keys to his car,

but this was just early days in Tesla,

and he then points out the details.

Okay, if you push this button here, it’s this,

the detail that, so he’s simultaneously talking

about the big, the big, big, big picture.

Okay, when does humanity going to abandon the planet?

But he will then be able to take it down into the detail

so he can go, let’s call it helicoptering.

He can go up, he can go down,

and see things at those types of perspective.

And then you’ve seen that with the other shapers.

And that’s a common thing that they can do that.

Another important difference that they have in mind

is how they deal with people.

I mean, meaning there’s nothing more important

than achieving the mission.

And so what they have in common is that there’s a test

that I give these personality tests,

because they’re very helpful for understanding people.

And so I gave it to all these shapers.

And one of the things in workplace inventory test

is this test, and it has a category called concern for others.

They’re all having concern for others.

This includes Muhammad Yunus,

who invented microfinance, social enterprise,

impact investing, as Muhammad Yunus received

the Nobel Peace Prize for this,

the Congressional Medal of Honor.

One of the, a fortune determined,

one of the 10 greatest entrepreneurs of our time.

He’s built all sorts of businesses to give back money

in social enterprise, a remarkable man.

He has nobody that I know practically

could have more concern for others.

He lives a life of a saint.

I mean, a very modest lifestyle,

and he puts all his money into trying to help others.

And he tests low on what’s called concern for others,

because what it really, those questions under that

are questions about conflict to get at the mission.

So they all, Jeffrey Canada,

who changed Harlem Children’s Zone

and developed that to take children in Harlem

and get them well taken care of,

not only just in their education, but their whole lives.

Harlem, him also, concern for others.

What they mean is that they can see

whether though individuals are performing at a level

that an extremely high level

that’s necessary to make those dreams happen.

So when you think of, let’s say Steve Jobs was famous

for being difficult with people and so on,

and I didn’t know Steve Jobs,

so I can’t speak personally to that,

but his comments on, do you have A players?

And if you have A players, if you put in B players,

pretty soon you’ll have C players and so on.

That is a common element of them,

holding people to high standards

and not letting anybody stand in the way of the mission.

What do you think about that kind of idea?

Sorry to pause on that for a second,

that the A, B, and C players,

and the importance of, so when you have a mission,

to really only have A players

and be sort of aggressively filtering for that?

Yes, but I think that there are all different ways

of being A players.

And I think, in order to grade a great team,

you have to appreciate all the differences

in ways of being A players, okay?

That’s the first thing.

And then you always have to be super excellent,

in my opinion, you always have to be really excellent

with people to help them understand each other themselves

and get in sync with them about what’s true about them

and their circumstances and how they’re doing,

so that they’re having a fabulous

personal development experience at the same time

as you’re dealing with them.

So when I say that they’re all different ways,

this is one of the then qualities,

you asked me what are the qualities.

So one of the third qualities that I would say

is to know how to deal well with your not knowing

and to be able to get the best expertise

so that you’re a great orchestrator of different ways,

so that the people who are really, really successful,

unlike most people believe that they’re successful

because of what they know,

they’re even more successful

by being able to effectively learn from others

and tap into the skills of people

who see things different from them.

Brilliant, so how do you win that personality

being first of all, open to the fact

that there’s other people see things differently than you,

and at the same time have supreme confidence in your vision?

Is there just the psychology of that?

Do you see a tension there between the confidence

and the open mindedness?

No, it’s funny because I think we grow up thinking

that there’s a tension there, right?

That there’s a confidence

and the more confidence that you have,

there’s a tension with the open mindedness

and not being sure, okay?

Confident and accurate

are almost negatively correlated to many people.

They’re extremely confident and they’re often inaccurate.

And so I think one of the greatest tragedies of people

is not realizing how those things to go together

because instead it’s really that by saying I know a lot

and how do I know I’m still not wrong?

And how do I take that the best thinking available to me

and then raise my probability of learning?

All these people think for themselves, okay?

I mean, meaning they’re smart,

but they take in like vacuum cleaners,

they take in ideas of others,

they stress test their ideas with others,

they assess what comes back to them

in the form of other thinking

and they also know what they’re not good at

and what other people who are good at the things

that they’re not good at,

they know how to get those people

and be successful all around

because nobody has enough knowledge in their heads

and that I think is one of the great differences.

So the reason my company has been successful

in terms of this is because of an idea

meritocratic decision making a process

by which you can get the best ideas.

You know, what’s an idea meritocracy?

An idea meritocracy is to get the best ideas

that are available out there

and to work together with other people in the team

to achieve that.

That’s an incredible process that you describe

in several places to arrive at the truth,

but I apologize if I’m romanticizing the notion,

but let me linger on it.

Just having enough self belief,

you don’t think there’s a self delusion there

that’s necessary, especially in the beginning.

You talk about in the journey,

maybe the trials or the abyss.

Do you think there is value to diluting yourself?

I think what you’re calling delusion

is a bad word for uncertainty, okay?

So in other words,

because we keep coming back to the question,

how would you know and all of those things?

No, I think that delusion is not gonna help you,

that you have to find out truth, okay?

To deal with uncertainty, not saying,

listen, I have this dream

and I don’t know how I’m going to get that dream.

I mentioned in my book principles

and described the process in a more complete way

than we’re gonna be able to go here.

But what happens is I say, you form your dreams first

and you can’t judge

whether you’re going to achieve those dreams

because you haven’t learned

the things that you’re going to learn

on the way toward those dreams, okay?

So that isn’t delusion.

I wouldn’t use delusion.

I think you’re overemphasizing the importance

of knowing whether you’re going to succeed or not.

Get rid of that, okay?

If you can get rid of that and say,

okay, no, I can have that dream,

but I’m so realistic in the notion of finding out.

I’m curious, I’m a great learner, I’m a great experimenter.

Along the way, you’ll do those experiments

which will teach you more truths

and more learning about the reality

so that you can get your dreams.

Because if you still live in that world of delusion, okay?

And you think delusion’s helpful.

No, the delusion isn’t.

Don’t confuse delusion with not knowing.

Yes, but nevertheless, so if we look at the abyss,

we can look at your own that you describe.

It’s difficult psychologically for people.

So many people quit.

Many people choose a path that is more comfortable.

The heartbreak of that breaks people.

So if you have the dream

and there’s this cycle of learning, setting a goal,

and so on, what’s your value for the psychology

of just being broken by these difficult moments?

Well, that’s classically the defining moment.

It’s almost like evolution taking care of,

okay, now you crash, you’re in the abyss.

Oh my God, that’s bad.

And then the question is, what do you do?

And it sorts people, okay?

And some people get off the field

and they say, oh, I don’t like this and so on.

And some people learn and they have a metamorphosis

and it changes their approach to learning.

The number one thing it should give them is uncertainty.

You should take an audacious dreamer,

guy who wants to change the world, crash, okay,

and then come out of that crashing and saying,

okay, I can be audacious

and scared that I’m gonna be wrong at the same time.

And then how do I do that?

Because that’s the key.

When you don’t lose your audaciousness

and you keep going after your big goal,

and at the same time you say,

hey, I’m worried that I’m gonna be wrong,

you gain your radical open mindedness

that allows you to take in the things,

that allows you to go to the next level of being successful.

So your own process, I mean, you’ve talked about it before,

but it would be great if you can describe it

because our darkest moments

are perhaps the most interesting.

So your own with the prediction of another depression.

Economic depression.

Yes, I apologize, economic depression.

Can you talk to what you were feeling, thinking,

planning, strategizing at those moments?

Yeah, that was my biggest moment, okay?

Building my little company.

This is in 1981, 82.

I had calculated that American banks

had given a lot more money to, lent a lot more money

to Latin American countries

than those countries were gonna pay back,

and that they would have a debt crisis,

and that this had sent the economy tumbling,

and that was an extremely controversial point of view.

Then it started to happen, and it happened,

and Mexico defaulted in August 1982.

I thought that there was gonna be an economic collapse

that was gonna follow

because there was a series of the other countries,

it was just playing out as I had imagined,

and that couldn’t have been more wrong.

That was the exact bottom in the stock market

because central banks eased monetary policy, blah, blah, blah,

and I couldn’t have been more wrong,

and I was very publicly wrong and all of that,

and I lost money for me, and I lost money for my clients,

and I only had a small company then,

but these were close people, I had to let them go.

I was down to me as the last person.

I was so broke I had to borrow $4,000 from my dad

to help to pay for my family bills, very painful,

and at the same time, I would say it definitely

was one of the best things that ever happened to me,

maybe the best thing from happened to me,

because it changed my approach to decision making.

It’s what I’m saying.

In other words, I kept saying, okay,

how do I know whether I’m right?

How do I know I’m not wrong?

It gave me that, and it didn’t give up my audaciousness

because I was in a position, what am I gonna do?

Am I gonna go back, put on a tie,

go to Wall Street and just do those things?

No, I can’t bring myself to do that, so I’m at a juncture.

How do I deal with my risk and how do I deal with that?

And it told me how to deal with my uncertainties,

and that taught me, for example, a number of techniques.

First, to find the smartest people I could find

who disagreed with me and to have quality disagreement.

I learned the art of thoughtful disagreement.

I learned how to produce diversification.

I learned how to do a number of things.

That is what led me to create an idea meritocracy.

In other words, person by person, I hired them,

and I wanted the smartest people

who would be independent thinkers

who would disagree with each other and me well

so that we could be independent thinkers

to go off to produce those audacious dreams

because you have to be an independent thinker to do that,

and to do that independently of the consensus,

independently of each other,

and then work ourselves through that

because who know whether you’re gonna have the right answer?

And by doing that, then that was the key to our success.

And the things that I wanna pass along to people,

the reason I’m doing this podcast with you

is I’m 70 years old,

and that is a magical way of achieving success.

If you can create an idea meritocracy,

it’s so much better in terms of achieving success

and also quality relationships with people,

but that’s what that experience gave me.

So if we can linger on a little bit longer,

the idea of an idea meritocracy, it’s fascinating,

but especially because it seems to be rare,

not just in companies, but in society.

So there is a lot of people on Twitter and public discourse

and politics and so on that are really stuck

in certain sets of ideas, whatever they are.

So when you’re confronted with an idea

that’s different than your own about a particular topic,

what kind of process do you go through mentally?

Are you arguing through the idea with the person,

sort of present is almost like a debate,

or do you sit on it and consider the world

sort of empathetically?

If this is true, then what does that world look like?

Does that world make sense and so on?

So what’s the process of considering

those conflicting ideas for you?

I’m gonna answer that question,

but after saying first, almost implicit in your question

is it’s not common, okay?

What’s common produces only common results, okay?

So don’t judge anything that is good

based on whether it’s common,

because it’s only gonna give you common results.

If you want unique, you have a unique approach, okay?

And so that art of thoughtful disagreement

is the capacity to hold two things in your mind

at the same time.

The, gee, I think this makes sense,

and then saying, I’m not sure it makes sense,

and then try to say, why does it make sense?

And then to triangulate with others.

So if I’m having a discussion like that

and I work myself through and I’m not sure,

then I have to do that in a good way.

So I always give attention, for example,

let’s start off, what does the other person know

relative to what I know?

So if a person has a higher expertise or things,

I’m much more inclined to ask questions.

I’m always asking questions.

If you wanna learn, you’re asking questions,

you’re not arguing, okay?

You’re taking in, you’re assessing when it comes into you.

Does that make sense?

Are you learning something?

Are you getting epiphanies and so on?

And I try to then do that if the conversation,

as we’re trying to decide what is true,

and we’re trying to do that together,

and we see truth different,

then I might even call in another really smart,

capable person and try to say, what is true

and how do we explore that together?

And you go through that same thing.

So I would, I said, I describe it as having open mindedness

and assertiveness at the same time,

that you can simultaneously be open minded

and take in with that curiosity

and then also be assertive and say,

but that doesn’t make sense.

Why would this be the case?

And you do that back and forth.

And when you’re doing that kind of back and forth

on a topic like the economy, which you have,

to me, perhaps I’m naive,

but it seems both incredible and incredibly complex,

the economy, the trading, the transactions,

that these transactions between two individuals

somehow add up to this giant mechanism.

You’ve put out a 30 minute video.

You have a lot of incredible videos online

that people should definitely watch on YouTube,

but you’ve put out this 30 minute video

titled How the Economic Machine Works.

That is probably one of the best, if not the best video

I’ve seen on the internet in terms of educational videos.

So people should definitely watch it,

especially because it’s not that the individual components

of the video are somehow revolutionary,

but the simplicity and the clarity

of the different components just makes you,

there’s a few light bulb moments there

about how the economy works as a machine.

So as you described, there’s three main forces

that drive the economy, productivity growth,

short term debt cycle, long term debt cycle.

The former, productivity growth is how valuable things,

how much value people create,

valuable things people create.

The latter is people borrowing from their future selves

to hopefully create those valuable things faster.

So this is an incredible system to me.

Maybe we can linger on it a little bit,

but you’ve also said what most people think about

as money is actually credit.

Total amount of credit in the US is $50 trillion.

Total amount of money is $3 trillion.

That’s just crazy to me.

Maybe I’m silly, maybe you can educate me,

but that seems crazy.

It gives me just positive human civilization

has been able to create a system that has so much credit.

So that’s a long way to ask,

do you think credit is good or bad for society?

That system of that’s so fundamentally based on credit.

I think credit is great,

even though people often overdo it.

Credit is that somebody has earned money.

And what happens is they lend it to somebody else

who’s got better ideas and they cut a deal.

And then that person with the better ideas

is gonna pay it back.

And if it works well,

it helps resource allocations go well,

providing people like the entrepreneurs

and all of those, they need capital.

They don’t have capital themselves.

And so somebody is gonna give them capital

and they’ll give them credit along those lines.

Then what happens is it’s not managed well

in a variety of ways.

So I did another book on principles,

principles of big debt crises that go into that.

And it’s free, by the way,

I put it free online as a PDF.

So if you go online and you look principles

of a big debt crisis is under my name,

you can download it in a PDF

or you can buy a print book of it.

And it goes through that particular process.

And so you always have it overdone in always the same way.

Everything, by the way,

almost everything happens over and over again

for the same reasons, okay?

So these debt crisis is all happened over and over again

for the same reasons.

They get it overdone.

In the book, it explains how you identify

whether it’s overdone or not.

They get it overdone.

And then you go through the process

of making the adjustments according that

and it explains how they can use the levers and so on.

If you didn’t have credit,

then you would be sort of everybody sort of be stuck.

So credit is a good thing,

but it can easily be overdone.

So now we get into the, what is money?

What is credit?

Okay, you get into money and credit.

So if you’re holding credit and you think that’s worthwhile,

keep in mind that the central bank,

let’s say it can print the money.

What is that problem?

You have an IOU and the IOU says

you’re gonna get a certain number of dollars, let’s say,

or yen or euros.

And that is what the IOU is.

And so the question is, will you get that money

and what will it be worth?

And then also you have a government,

which is a participant in that process

because they are on the hook, they owe money.

And then will they print the money

to make it easy for everybody to pay?

So you have to pay attention to those two.

I would suggest like you recommend to other people,

just take that 30 minutes

and it comes across pretty clearly.

But my conclusion is that of course you want it.

And even if you understand it and the cycles well,

you can benefit from those cycles

rather than to be hurt by those cycles.

Because I don’t know the way the cycle works

is somebody gets over indebted,

they have to sell an asset.

Okay, then I don’t know,

that’s when assets become cheaper.

How do you acquire the asset?

It’s a whole process.

So again, maybe another dumb question, but…

There are no such things as dumb questions.

There you go.

But what is money?

So you’ve mentioned credit and money.

Another thing that if I just zoom out

from an alien perspective and look at human civilization,

it’s incredible that we’ve created a thing

that only works because currency,

because we all agree it has value.

So I guess my question is how do you think about money

as this emergent phenomenon?

And what do you think is the future of money?

You’ve commented on Bitcoin, other forms.

What do you think is its history and future?

How do you think about money?

There are two things that money is for.

It’s a medium of exchange and it’s a storehold of wealth.


So money, so you could say something’s a medium of exchange,

and then you could say, is it a storehold of wealth?

And money is that vehicle that is those things

and can be used to pay off your debt.

So when you have a debt and you provide it,

it pays off your debt.

So that’s that process.

And it’s, I apologize to interrupt,

but it only can be a medium of exchange or store wealth

when everybody recognizes it to be of value.

That’s right.

And so you see in the history around the world

and you go to places, I was in an island in the Pacific

in which they had as money these big stones.

And literally, they were taking a boat,

this big carved stone,

and they were taking it from one of the islands to the other

and it sank, the piece of this big stone,

piece of money that they had, and it went to the bottom

and they still perceived it as having value

so that it was, even though it was in the bottom

and it’s this big hunk of rock,

the fact that somebody owned it,

they would say, oh, I’ll own it for this and that.

I’ve seen beads in different places,

shells converted to this and mediums of exchange.

And when we look at what we’ve got, you’re exactly right.

It is the notion that if I give it to you,

I can then take it and I can buy something with it.

And that’s, so it’s a matter of perception.


And then we go through then the history of money

and the vulnerabilities of money.

And what we have is there’s, through history,

there’s been two types of money.

Those that are claims on something of value,

like the connection to gold or something.

That’s right.

That would be.

Or they just are money without any connection,

and then we have a system now,

which is a fiat monetary system.

So that’s what money is.

Then it will last as long as it’s kept a value

and it works that way.

So let’s say central banks, when they get in the position

of like they owe a lot of money,

like we have in the case, it’s increasingly the case,

and they also in our mind and they have the printing press

to print the money and get out of that.

And you have a lot of people might be in that position.

Then you can print it and then it could be devalued in there.

And so history has shown, forget about today,

history has shown that no currency,

every currency has either ended as being a currency

or devalued as a currency over periods of time,

long periods of time.

So it evolves and it changes,

but everybody needs that medium of exchange

and everybody needs that storehold of wealth.

So it keeps changing what is money over a period of time.

But so much is being digitized today and there’s this ideas

that are based on the blockchain of Bitcoin and so on.

So if all currencies, like all empires come to an end,

what do you think, well, do you think something

like Bitcoin might emerge as a common store of value,

a store of wealth and a medium of exchange?

The problem with Bitcoin is that it’s not

an effective medium of exchange.

Like it’s not easy for me to go in there

and buy things with it.

And then it’s not an effective storehold of value

because it has a volatility that’s based on speculation

and the like, so it’s not a very effective saving.

That’s very different from Facebook’s

of a stable value currency,

which would be effective as both a medium of exchange

and a storehold of wealth.

Because if you were to hold it

and the way it’s linked to number of things

that it’s linked to would mean

that it could be a very effective storehold of wealth.

And then you have a digital currency

that could be a very effective medium exchange

and storehold of wealth.

So in my opinion, some digital currencies

are likely to succeed more or less

based on that ability to do it.

Then the question is what happens?

Okay, what happens is do central banks

allow that to happen?

I really do believe it’s possible

to get a better form of money

that central banks don’t control.

Okay, a better force of money

that the central banks don’t control.

But then that’s not yet happened.

And we also have to,

and so they’ve got to go through that evolutionary process.

In order to go through that evolutionary process,

first of all, governments have got to allow that to happen,

which is to some extent a threat to them

in terms of their power.

And that’s an issue.

And then you have to also build the confidence

in all of the components of it

to say, okay, that’s going to be effective

because I won’t have problems owning it.

So I think that digital currencies

have some element of potential,

but there’s a lot of hurdles

that are going to have to be gotten over.

I think that it’ll be a very long time,

possibly never, but anyway, a very long time

before we have that, let’s say,

get into a position that would be

effective means relative to gold, let’s say,

if you were to think of that.

Because gold has a track record of thousands of years.

All across countries, it has its mobility,

it has the ability to put it down,

it has certain abilities.

It’s got disadvantages relative to digital currencies,

but central banks will hold it.

Like there’s central banks that worry about others,

other countries, central banks might worry

about whether the U.S. dollar is going to print or not.

And so the thing they’re going to go to

is not going to be the digital currency.

The thing they’re going to go to is gold or something else,

some other currency, they got to pick it.

And so I think it’s a long way to go.

Well, you think it’s possible that one day

we don’t even have a central bank

because of a currency that doesn’t,

that cannot be controlled by the central bank

is the primary currency?

Or does that seem very unlikely?

It would be very remote possibility

or very long in the future.

Got it.

Again, maybe a dumb question, but romanticize one.

When you sit back and you look,

you describe these transactions between individuals,

somehow creating short term debt cycles,

long term debt cycles, there’s productivity growth.

Does it amaze you that this whole thing works?

That there’s however many million,

hundreds of millions of people in the United States,

globally over seven billion people,

that this thing between individual transactions,

it just, it works.


It amazes me.

Like I go back and forth between being in it

and then I think, like, how did a credit card,

how is that really possible?

I’m still used, I look up credit card, I put it on,

the guy doesn’t know me.


It’s all strangers. It signs, okay.

We’re making the digital entries.

Is that really secure enough and that kind of thing?

And then it goes back and it goes this and it clears

and it all happens.

And what I marvel at that and those types of things

is because of the capacity of the human mind

to create abstractions that are true.

It’s imagination and then the ability to go from one level

and then if these things are true,

then you go to the next level and if those things are true,

then you go to the next level.

And all those miracles that we almost become common,

it’s like when I’m flying in a plane

or when I’m looking at all of the things that happen.

When I get communications in the middle of,

I don’t know, Africa or Antarctica

and we’re communicating in the ways where I see the face

on my iPad of somebody, my grandkid and someplace else

and I look at this and I say, wow, yes, it all amazes me.

So while being amazing, do you have a sense,

the principles you described,

that the whole thing is stable somehow also?

Or is this, are we just lucky?

So the principles that you described,

are those describing a system that is stable, robust

and will remain so?

Or is it a lucky accident of our early history?

My area of expertise is economics and markets

so I get down to like a real nitty gritty.

I can’t tell you whether the plane

is gonna fall out of the sky

because of its particular fundamentals.

I don’t know enough about that

but it happens over and over again

and so on, it gives me faith, okay?

So without me knowing it.

In the markets and the economy,

I know those things well enough, in a sense,

to say that by and large, that structure is right,

what we’re seeing is right.

Now, whether there are disruptions

and it has effects that can come,

not because that structure is right,

and I believe it’s right,

but whether it can be hurt by let’s say connectivity

or journal entries,

they could take all the money away from you

through your digital entries.

There’s all sorts of things that can happen in various ways

that means that that money is worthless or the system falls

but from what I see in terms of its basic structure

and those complexities that still take my breath away,

I would say knowing enough about the mechanics of them,

that doesn’t worry me.

Have you seen disruptions in your lifetime

that really surprised you?

Major disruptions? Oh, all the time.

This is one of the great lessons of my life

is that many times I’ve seen things

that I was very surprised about

and that I realized almost all of those

I was surprised about because they just,

they were just the first time it happened to me,

they didn’t happen in my lifetime before

but when I researched them,

they happened in other places or other people lifetimes.

So for example, I remember 1971, the dollar,

there was no such thing as a devaluation of a currency,

it didn’t experience it

and the dollar was connected to gold

and I was watching events happen

and then you get on and that definition of money

all of a sudden went out the window

because it was not tied to gold

and then you have this devaluation.

So and then, or the first oil shock or the second oil shock

or so many of these things.

But almost always I realized that they,

when I looked in history, they happened before,

they just happened in other people’s lifetimes

which led me to realize that I needed to study history

and what happened in other people’s lifetimes

and what happened in other countries and places

so that I would have timeless and universal principles

for dealing with that thing.

So I’ve, oh yeah, I’ve been, you know,

the implausible happening

but it’s like a one in a hundred year storm, okay?

Or it’s or.

They’ve happened before.

Yeah, they’ve happened.

Just not to you.

Let me talk about, if we could, about AI a little bit.

So we’ve, Bridgewater Associates manage

about $160 billion in assets

and our artificial intelligence systems algorithms

are pretty good with data.

What role in the future do you see AI play

in analysis and decision making

in this kind of data rich and impactful area of investment?

I’m gonna answer that not only in investment

but I give a more all encompassing rule for AI.

As I think you know, for the last 25 years,

we have taken our thinking and put them in algorithms

and so we make decisions.

The computer takes those criteria, algorithms,

and they put them, they’re in there and it takes data

and they operate as an independent decision maker

in parallel with our decision making.

So for me, it’s like there’s a chess game playing

and I’m a person with my chess game

and I’m saying it made that move and I’m making the move

and how do I compare those two moves?

So we’ve done a lot but let me give you a rule.

If the future can be different from the past

and you don’t have deep understanding,

you should not rely on AI, okay?

Those two things.

Deep understanding of?

The cause of fact relationships that are leading you

to place that bet in anything, okay?

Anything important.

Let’s say if it was do surgeries

and you would say, how do I do surgeries?

I think it’s a good idea to do surgeries

but I think it’s totally fine

to watch all the doctors do the surgeries.

You can put it on, take a digital camera and do that,

convert that into AI algorithms that go to robots

and have them do surgeries and I’d be comfortable with that

because if it’ll do the,

if it keeps doing the same thing over and over again

and you have enough of that, that would be fine

even though you may not understand the algorithms

because if the thing’s happening over and over again

and you’re not asking, the future would be the same.

That appendicitis or whatever it is

will be handled the same way, the surgery, that’s fine.

However, what happens with AI is for the most part

is it takes a lot of data with a high enough sample size

and then it puts together its own algorithms.

Okay, there are two ways you can come up with algorithms.

You can either take your thinking

and express them in algorithms

or you can say, put the data in

and say, what is the algorithm?

That’s machine learning.

And when you have machine learning,

it’ll give you equations

which quite often are not understandable.

If you would try to say,

okay, now describe what it’s telling you,

it’s very difficult to describe

and so they can escape understanding.

And so it’s very good for doing those things

that could be done over and over again

if you’re watching and you’re not taking that.

But if the future is different from the past

and you have that,

then if the future is different from the past

and you don’t have deep understanding,

you’re gonna get in trouble.

And so that’s the main thing.

As far as AI is concerned,

AI and let’s say computer replications of thinking

in very ways, I think it’s particularly good for processing.

But the notion of what you want to do

is better most of the time determined by the human mind.

What are the principles?

Like, okay, how should I raise my children?

It’s gonna be a long time before AI,

you’re going to say,

it has a good enough judgment to do that.

Who should I marry?

All of those things.

Maybe you can get the computer to help you

but if you just took data and do machine learning,

it’s not gonna find it.

If you were to then take one of my criteria

for any of those questions

and then say, put them into an algorithm

and you’d be a lot better off than if you took AI to do it.

But by and large, the mind should be used

for inventing and those creative things.

And then the computer should be used for processing

because it could process a lot more information,

a lot faster, a lot more accurately

and a lot less emotionally.

So any notion of thinking

in the form of processing type thinking

should be done by a computer

and anything that is in the notion

of doing that other type of thinking

should be operating with the brain,

operating in a way where you can say,

ah, that makes sense.

You know, the process of reducing your understanding down

to principles is kind of like the process,

the first one you mentioned,

type of AI algorithm where you’re encoding your expertise,

you’re trying to program, write a program,

the human is trying to write a program.

How do you think that’s attainable?

The process of reducing principles to a computer program

or when you say, when you write about,

when you think about principles,

is there still a human element

that’s not reducible to an algorithm?

My experience has been that almost all things,

including those things that I thought

were pretty much impossible to express,

I’ve been able to express in algorithms,

but that doesn’t constitute all things.

So you can express far more

than you can imagine you’ll be able to express.

So I use the example of,

okay, it’s not, how do you raise your children?

Okay, you will be able to take it one piece by piece.

Okay, at what age, what school?

And the way to do that, in my experience,

is to take that and when you’re in the moment

of making a decision or just past making a decision,

to take the time and to write down your criteria

for making that decision in words.

Okay, that way you’ll get your principles down on paper.

I created an app online call,

it’s right now just on the iPhone, it’ll be on Android.

I tried getting it on Android, come on now.

Let’s get it on Android.

It’ll be, in a few months it’ll be on Android.


But it has an app in there

that helps people write down their own principles.

Because this is very powerful.

So when you’re in that moment

where you’ve just, you’re thinking about it

and you’re thinking your criteria

for choosing the school for your child

or whatever that might be,

and you write down your criteria

or whatever they are, those principles,

you write down and that will at that moment

make you articulate your principles in a very valuable way.

And if you have the way that we operate

that you have easy access,

so then the next time that comes along,

you can go to that,

or you can show those principles to others

to see if they’re the right principles.

You will get a clarity of that principle

that’s really invaluable in words

and that’ll help you a lot.

But then you start to think,

how do I express that in data?

And it’ll shock you about how you can do that.

You’ll form an equation that will show the relationship

between these particular parts

and then essentially the variables

that are going to go into that particular equation

and you will be able to do that.

And you take that little piece

and you put it into the computer.

And then take the next little piece

and you put that into the computer.

And before you know it,

you will have a decision making system

that’s of the sort that I’m describing.

So you’re almost making an argument

against an earlier statement you’ve made.

You’re convincing me.

At first you said,

there’s no way a computer could raise a child essentially.

But now you’ve described making me think of it.

If you have that kind of idea meritocracy,

you have this rigorous approach

that Bridgewater takes with investment

and applied to raising a child.

It feels like through the process you just described,

we could as a society arrive at a set of principles

for raising a child and encode it into computer.

That originality will not come from machine learning.

The first time you do,

so that the original, yes.

That’s what I’m referring to.

But eventually as we together develop it

and then we can automate it.

That’s why I’m saying the processing

can be done by the computer.

So we’re saying the same thing.

We’re not inconsistent.

We’re saying the same thing.

That the processing of that information

and those algorithms can be done by the computer

in a very, very effective way.

You don’t need to sit there and process

and try to weigh all those things in your equation

and all those things.

But that notion of,

okay, how do I get at that principle?

And you’re saying you’d be surprised.

How much you can express.

That’s right.

You can do that.

So this is where I think you’re going to see the future.

And right now we go to our devices

and we get information to a large extent.

And then we get some guidance.

We have our GPS and the like.

In my opinion, principles.

Principles, principles, principles.

I wanna emphasize that.

You write them down.

You’ve got those principles.

They will be converted into algorithms for decision making.

And they’re gonna also have the benefit

of collective decision making.

Because right now,

individuals based on what’s stuck in their heads

are making their decisions in very ignorant ways.

They’re not the best decision makers.

They’re not the best criteria.

And they’re operating.

When those principles are written down

and converted into algorithms,

it’s almost like you’ll look at that

and follow the instructions

and it’ll give you better results.

Medicine will be much more like this.

You can go to your local doctor

and you could ask his point of view and whatever.

And he’s rushed and he may not be the best doctor around.

And you’re gonna go to this thing

and give that same information

or just automatically have it input in that.

And it’s gonna tell you, okay, here’s what you should go do.

And it’s gonna be much better than your local doctor.

And that, the converting of information into intelligence,

okay, intelligence is the thing.

We’re coming out with, again, I’m 70

and I wanna pass all these things along.

So all these tools that I’ve found need to develop

all over these periods of time,

all those things I wanna make available.

And what’s gonna happen as they’re going to see this,

they’re going to see these tools

operating much more that way.

The idea of converting data into intelligence.

Intelligence, for example, on what they are like.

Or what are your strengths and weaknesses?

Intelligence on who do I work well with

under what circumstances?

The personalized.


We’re gonna go from what are called systems of record,

which are a lot of, okay, information organized

in the right way, to intelligence.

And that’ll be the next big move, in my opinion.

And so you will get intelligence back.

And that intelligence comes from reducing things

down to principles into.

That’s how it happens.

So what’s your intuition if we look at future societies?

Do you think we’ll be able to reduce a lot of the details

of our lives down to principles

that would be further and further automated?

I think the real question hinges

on people’s emotions and irrational behaviors.

I think that there’s subliminal things that we want, okay?

And then there’s cerebral, conscious logic.

And the two often are at odds.

So there’s almost like two you’s in you, right?

And so let’s say, what do you want?

And your mind will answer one thing,

your emotions will answer something else.

So when I think about it, I think emotions are,

I want inspiration, I want love is a good thing,

being able to have a good impact,

but it is in the reconciliation of your subliminal wants

and your intellectual wants

so that you really say they’re aligned.

And so to do that in a way to get what you want.

So irrationality is a bad thing

if it means that it doesn’t make sense

in getting you what you want,

but you better decide which you you’re satisfying.

Is it the lower level you, emotional, subliminal one,

or is it the other?

But if you can align them.

So what I find is that by going from my,

you experience the decision, do this thing subliminally.

And that’s the thing I want.

It comes to the surface.

I find that if I can align that

with what my logical me wants

and do the double check between them

and I get the same sort of thing,

that that helps me a lot.

I find, for example, meditation is one of the things

that helps to achieve that alignment.

It’s fantastic for achieving that alignment.

And often then I also want to not just do it in my head.

I want to say, does that make sense?

Help you.

And so I do it with other people and I say, okay,

well, let’s say I want this thing and whatever.

Does that make sense?

And when you do that kind of triangulation,

your two you’s, and you do that with also the other way,

then you certainly want to be rational, right?

But rationality has to be defined by those things.

And then you discover sort of new ideas

that drive your future.

So it’s always, you’re always at the edge

of the set of principles you’ve developed.

You’re doing new things always.

That’s where the intellect is needed.

Well, and the inspiration.

The inspiration is needed to do that, right?

Like what are you doing it for?

It’s the excitement.

What is that thing?

The adventure, the curiosity, the hunger.

What’s, if you can be Freud for a second,

what’s in that subconscious?

What’s the thing that drives us?

I think you can’t generalize of us.

I think different people are driven by different things.

There’s not a common one, right?

So like if you would take the shapers,

I think it is a combination of, subliminally,

it’s a combination of excitement, curiosity.

Is there a dark element there?

Is there demons?

Is there fears?

Is there, in your sense, something dark that drives them?

Most of the ones that I’m dealing with,

I have not seen that.

I see the, what I really see is,

ooh, if I can do that, that would be the most dream.

And then the act of creativity.

And you say, ooh.

So excitement is one of the things.

Curiosity is a big pull, okay?

And then tenacity, you know, okay, to do those things.

But definitely emotions are entering into it.

Then there’s an intellectual component of it too, okay?

It may be empathy.

Can I have an impact?

The desire to have an impact.

That’s an emotional thrill, but it also has empathy.

And then you start to see spirituality.

By spirituality, I mean the connectedness to the whole.

You start to see people operate those things.

Those tend to be the things that you see the most of.

And I think you’re gonna shut down this idea completely,

but there’s a notion that some of these shapers

really walk the line between sort of madness and genius.

Do you think madness has a role in any of this?

Or do you still see Steve Jobs and Elon Musk

as fundamentally rational?

Yeah, there’s a continuum there.

And what comes to my mind is that

genius is often at the edge,

in some cases, imaginary genius,

is at the edge of insanity.

And it’s almost like a radio that I think,

okay, if I can tune it just right, it’s playing right,

but if I go a little bit too far, it goes off, okay?

And so you can see this.

Kay Jamison was studying bipolar.

What it shows is that that’s definitely the case,

because when you’re going out there,

that imagination, whatever, is at the,

can be near the edge sometimes.

Doesn’t have to always be.

So let me ask you about automation.

That’s been a part of public discourse recently.

What’s your view on the impact of automation,

of whether we’re talking about AI

and more basic forms of automation on the economy

in the short term and the long term?

Do you have concerns about it, as some do,

or do you think it’s overblown?

It’s not overblown.

I mean, it’s a giant thing.

It’ll come at us in a very big way in the future.

We’re right at the edge of even really accelerating it.

It’s had a big impact, and it will have a big impact.

And it’s a two edged sword,

because it’ll have tremendous benefits.

And at the same time, it has profound benefits

in employment and distributions of wealth,

because the way I think about it is,

there are certain things human beings can do.

And over time, we’ve evolved to go

to almost higher and higher levels.

And now we’re almost like, we’re at this level.

You know, it used to be your labor,

and you would then do your labor,

and okay, we can get past the labor.

We got tractors and things,

and you go up, up, up, up, up,

and we’re up over here,

and up to the point in our minds,

where okay, anything related to mental processing,

the computer can probably do better,

and we can find that.

And so other than almost inventing,

you’re at a point where the machines

and the automation will probably do it better.

And that’s accelerating, and that’s a force,

and that’s a force for the good.

And at the same time,

what it does is it displaces people

in terms of employment and changes,

and it produces wealth gaps and all of that.

So I think the real issue is that

that has to be viewed as a national emergency.

In other words, I think the wealth gap,

the income gap, the opportunity gap,

all of those things that force

is creating the problems that we’re having today,

a lot of the problems, the great polarity,

the disenfranchised,

not anything approaching equality of education,

all of these problems,

a lot of problems are coming as a result of that.

And so it needs to be viewed really

as an emergency situation

in which there’s a good work,

good plan worked out for how to deal with that effectively,

so that it’s dealt with effectively.

So because it’s good for the average,

it’s good for the impact,

but it’s not good for everyone,

and that creates that polarity.

So it’s gotta be dealt with.

Yeah, and you’ve talked about the American dream,

and that that’s something that all people

should have an opportunity for,

and that we need to reform capitalism

to give that opportunity for everyone.

Let me ask on one of the ideas

in terms of safety nets that support

that kind of opportunity.

There’s been a lot of discussion

of universal basic income amongst people.

So there’s Andrew Yang, who’s running on that.

He’s a political candidate running for president

on the idea of universal basic income.

What do you think about that,

giving $1,000 or some amount of money to everybody

as a way to give them the padding,

the freedom to sort of take leaps,

to take the call for adventure,

to take the crazy pursuits?

Before I get right into my thoughts

on universal basic income,

I wanna start with the notion that opportunity,

education, development, creating equality,

so that people say there’s equal opportunity

and is the most important thing.

And then to find out what is the amount,

how are you going to provide that?

How do you get the money into a public school system?

How do you get the teaching?

The fleshing out that plan to create equal opportunity

in all of its various forms

is the most pressing thing to do.

And so that is that.

The opportunity, the most important one

you’re kind of implying is the earlier, the better.

Sort of like opportunity to education.

So in the early development of a human being

is when you should have the equal opportunities.

That’s the most important.

Right, in the first phase of your life,

which goes from birth until you’re on your own

and you’re an adult and you’re now out there.

And you deal with early childhood development, okay?

And you take the brain and you say, what’s important?

The childcare, okay, it makes a world of difference,

for example, if you have good parents

who are trying to think about instilling the stability

in a non traumatic environment to provide them.

So I would say the good guidance

that normally comes from parents

and the good education that they’re receiving

are the most important things in that person’s development.

The ability to be able to be prepared to go out there

and then to go into a market

that’s an equal opportunity job market,

to be able to then go into that kind of market

is a system that creates not only fairness,

anything else is not fair.

And then in addition to that,

it also is a more effective economic system

because the consequences of not doing that

to a society are devastating.

If you look at what the difference in outcomes

for somebody who completes high school

or doesn’t complete high school,

or does each one of those state changes.

And you look at what that means

in terms of their costs to society, not only themselves,

but their cost and incarceration costs

and crimes and all of those things.

It’s economically better for the society

and it’s fairer if they can get those particular things.

Once they have those things,

then you move on to other things.

But yes, from birth all the way through that process,

anything less than that is bad, is a tragedy and so on.

So that’s what, yeah,

those are the things that I’m estimating.

And so what I would want above all else is to provide that.

So with that in mind,

now we’ll talk about universal basic income.

Start with that, now we can talk about UBI.

Right, because you have to have that.

Now the question is what’s the best way to provide that?

So when I look at UBI,

I really think is what is going to happen

with that $1,000, okay?

And will that $1,000 come from another program?

Does that come from an early childhood developmental program?

Who are you giving the $1,000 to

and what will they do for that $1,000?

I mean, like my reaction would be,

I think it’s a great thing that everybody

should have almost $1,000 in their bank and so on.

But when do they get to make decisions or who’s the parent?

A lot of times you can give $1,000 to somebody

and it could have a negative result.

It can have, they can use that money detrimentally,

not just productively.

And if that money’s coming away

from some of those other things

that are gonna produce the things I want

and you’re shifted to, let’s say,

to come in and give a check,

doesn’t mean its outcomes are going to be good

in providing those things

that I think are so fundamental important.

If it was just everybody can have $1,000 and use it

so when the time comes.

Use it well, right.

And use it well, that would be really, really good

because it’s almost like everybody,

you’d wish everybody could have $1,000

worth of wiggle room in their lives, okay.

And I think that would be great.

I love that.

But I wanna make sure that these other things

that are taken care of.

So if it comes out of that budget

and I don’t want it to come out of that budget

that’s gonna be doing those things.

And so you have to figure it out.

And you have a certain skepticism

that human nature will use,

may not always, in fact frequently,

may not use that $1,000 for the optimal,

to support the optimal trajectory.

Some will and some won’t.

One of the big advantages of universal basic income

is that if you put it in the hands,

let’s say of parents who know how to do the right things

and make the right choices for their children

because they’re responsible

and you say I’m gonna give them $1,000 wiggle room

to use for the benefit of their children.

Wow, that sounds great.

If you put it in the hands of let’s say an alcoholic

or drug addicted parent who is not making those choices

well for their children

and what they do is they take that $1,000

and they don’t use it well,

then that’s gonna produce more harm than good.

Well put.

You’re, if I may say so,

one of the richest people in the world.

So you’re a good person to ask.

Does money buy happiness?

No, it’s been shown that between,

once you get over a basic level of income

so that you can take care of the pain

that you can, health and whatever,

there’s no correlation between the level of happiness

that one has and the level of money that one has.

That thing that has the highest correlation

is quality relationships with others, community.

If you look at surveys of these things

across all surveys and all societies,

it’s a sense of community and interpersonal relationships.

That is not in any way correlated with money.

You can go down to native tribes in very poor places

or you can go in all different communities

and so they have the opportunity to have that.

I’m very lucky in that I started with nothing

so I have the full range.

I can tell you I’m not having money

and then having quite a lot of money

and I did that in the right order.

So you started from nothing in Long Island.

Yeah, and my dad was a jazz musician

but I had all really that I needed

because I had two parents who loved me

and took good care of me and I went to a public school

that was a good public school

and basically you don’t need much more than that

in order to, that’s the equal opportunity part.

Anyway, what I’m saying is I experienced the range

and there are many studies on the answer to your question.

No money does not bring happiness.

Money gives you an ability to make choices.

Does it get in the way in any way

of forming those deep, meaningful relationships?

It can.

There are lots of ways that it makes negative.

That’s one of them.

It could stand in the way of that.

Yes, okay.

But I could almost list the ways that it could stand.

It could be a problem.

Yeah, what does it buy?

So if you can elaborate, you mentioned a bit of freedom.

At the most fundamental level,

it doesn’t take a whole lot but it takes enough

that you can take care of yourself and your family

to be able to learn,

do the basics of, have the relationships,

have healthcare, the basics of those types of things.

You know, you can cover the patients.

And then to have maybe enough security

but maybe not too much security.

That’s right, yeah.

That you essentially are okay.

Okay, that’s really good.

And you don’t, that’s what money will get you.

And everything else could go either way.

Well, no, there’s more.

There’s more.


Then beyond that, what it then starts to do,

that’s the most important thing.

But beyond that, what it starts to do

is to help to make your dreams happen in various ways.

Okay, so for example, now I, you know, like in my case,

it’s like those dreams might not be just my own dreams,

they’re impact on others dreams, okay?

So my own dreams might be, I don’t know,

I can pass along these, at my stage in life,

I could pass along these principles to you

and I can give those things or I could do whatever.

I can go on an adventure, I can start a business,

I can do those other things, be productive,

I can self actualize in ways

that might be not possible otherwise.

And so that’s my own belief.

And then I can also help others.

I mean, this is, you know, to the extent when you get older

and with time and whatever, you start to feel connected,

spirituality, that’s what I’m referring to,

you can start to have an effect on others

that’s beneficial and so on, gives you the ability.

I could tell you that people who are very wealthy

who have that feel that they don’t have enough money.

Bill Gates will feel almost broke

because relative to the things he’d like to accomplish

through the Gates Foundation and things like that,

you know, oh my God, he doesn’t have enough money

to accomplish the things he wishes for.

But those things are not, you know,

they’re not the most fundamental things.

So I think that people sometimes think money has value.

Money doesn’t have value.

Money is, like you say,

just a medium of exchange at a store all the while.

And so what you have to say is,

what is it that you’re going to buy?

Now, there are other people who get their gratification

in ways that are different from me,

but I think in many cases,

let’s say somebody who used money to have a status symbol,

what would I say?

Or that’s probably unhealthy.

But then, I don’t know, somebody who says,

I love a great, gorgeous painting

and it’s going to cost lots of money.

In my priorities, I can’t get there.

But that doesn’t mean, who am I to judge others

in terms of, let’s say, their element of the freedom

to do those things.

So it’s a little bit complicated.

But by and large, that’s my view on money and wealth.

So let me ask you in terms of the idea of,

so much of your passions in life has been

through something you might be able to call work.

Alan Watts has this quote.

He said that the real key to life, secret to life,

is to be completely engaged with what you’re doing

in the here and now.

And instead of calling it work, realize it is play.

So I’d like to ask, what is the role of work

in your life’s journey, or in a life’s journey?

And what do you think about this modern idea

of kind of separating work and work life balance?

I have a principle that I believe in is,

make your work and your passion the same thing.

Okay. Okay.

So that’s a similar view.

In other words, if you can make your work and your passion,

it’s just gonna work out great.

And then of course, people have different purposes of work.

And I don’t wanna be theoretical about that.

People have to take care of their family.

So money at a certain point is the base,

is an important component of that work.

So you look beyond that, what is the money gonna get you

and what are you trying to achieve?

But the most important thing, I agree,

is meaningful work and meaningful relationships.

Like if you can get into the thing that you’re at,

your mission that you’re on,

and you are excited about that mission that you’re on.

And then you can do that with people

who you have the meaningful relationships with.

You have meaningful work and meaningful relationships.

I mean, that is fabulous for most people.

And it seems that many people struggle to get there,

not out of, not necessarily because they’re constrained

by the fact that they have the financial constraints

of having to provide for their family and so on.

But it’s, I mean, this idea is out there

that there needs to be a work life balance,

which means that most people,

we’re gonna return to the same things,

most doesn’t mean optimal,

but most people seem to not be doing their life’s passion,

not unifying work and passion.

Why do you think that is?

Well, the work life balance,

there’s a life arc that you go through.

Starts at zero and ends somewhere in the vicinity of 80,

and there is a phase.

And you could look at the different degrees of happiness

that happen in those phases.

I can go through that if that was interesting,

but we don’t have time probably for it.

But you get in the part of the life,

that part of the life,

which has the lowest level of happiness is age 45 to 55.

And because as you move into this second phase of your life,

now the first phase of your life

is when you’re learning dependent on others.

Second phase of your life is when you’re working

and others are dependent on you

and you’re trying to be successful.

And in that phase of one’s life,

you encounter the work life balance challenge

because you’re trying to be successful at work

and successful at parenting

and successful and successful in all those things

that take your demand.

And they get into that.

And I understand that problem in the work life balance.

The issue is primarily to know how to approach that, okay?

So I understand it’s stressful, it produces stress

and it produces bad results

and it produces the lowest level of happiness.

In one’s life.

It’s interesting as you get later in life,

the levels of happiness rise

and the highest level of happiness

is between ages 70 and 80,

which is interesting for other reasons.

But in that spot,

and the key to work life balance

is to realize and to learn

how to get more out of an hour of life, okay?

Because an hour of work,

what people are thinking is that they have to make a choice

between one thing and another.

And of course they do.

But they don’t realize that if they develop the skill

to get a lot more out of an hour,

it’s the equivalent of having many more hours in your life.

And so, that’s why in the book principles,

I try to go into, okay, now,

how can you get a lot more out of an hour?

That allows you to get more life into your life

and it reduces the work life balance.

And that’s the primary struggle in that 35 to 45.

If you could linger on that,

so what are the ups and downs of life

in terms of happiness in general

and perhaps in your own life

when you look back at the moments, the peaks?

It’s pretty much the same pattern.

Early in one’s life tends to be a very happy period,

all the way up and 16 is like a really great happy,

I think like myself, you start to get elements of freedom,

you get your driver’s license, whatever, but 16 is there.

Junior year in high school quite often

could be a stressful period

to try to get thinking about the high school.

You go into college,

tends to be very hot happiness, generally speaking.


And then freedom, friendships, all of that.

Freedom is a big thing.

And then 23 is a peak point kind of in happiness,

that freedom.

Then sequentially, one has a great time,

they date, they go out and so on,

you find the love of your life,

you begin to develop a family.

And then with that, as time happens,

you have more of your work life balance challenges

that come in your responsibilities.

And then as you get there in that mid part of your life,

that is the biggest struggle.

Chances are you will crash in that period of time,

you’ll have your series of failures,

that’s when you go into the abyss,

you learn, you hopefully learn from those mistakes,

you have the metamorphosis, you come out, you change,

you hopefully become better

and you take more responsibilities and so on.

And then when you get to the later part,

as you are starting to approach the transition

in that late part of the second phase of your life,

before you go into the third phase of your life,

second phase is you’re working, trying to be successful.

Third phase of your life is you want people

to be successful without you, okay?

You want your kids to be successful without you

because when you’re at that phase,

they’re at making their transition

from the first phase to the second phase

and they’re trying to be successful

and you want them to be successful without you

and your parents are gone and then you have freedom

and then you have freedom again.

And with that freedom and then you have these,

history has shown with this, you have friendships,

you have perspective on life, you have different things

and that’s one of the reasons

that that later part of the life can be real.

On average, actually, it’s the highest.

Very interesting thing, there are surveys

and say, how good do you look and how good do you feel?

And that’s the highest survey.

Now, they’re not looking the best

and they’re not feeling the best, right?

Maybe it’s 35 that they’re actually looking the best

and feeling the best, but they rank the highest

at that point, survey results of being the highest

in that 70 to 80 period of time

because it has to do with an attitude on life.

Then you start to have grandkids,

oh, grandkids are great

and you start to experience that transition well.

So that’s what the arc of life pretty much looks like

and I’m experiencing it.

You’ve lived it.

When you meditate, we’re all human, we’re all mortal.

When you meditate on your own mortality,

having achieved a lot of success on whatever dimension,

what do you think is the meaning of it all?

The meaning of our short existence on earth as human beings?

I think that evolution is the greatest force

of the universe and that we’re all tiny bits

of an evolutionary type of process

where it’s just matter and machines that go through time

and that we all have a deeply embedded inclination

to evolve and contribute to evolution.

So I think it’s to personally evolve

and contribute to evolution.

I could have predicted you would answer that way.

It’s brilliant and exactly right.

And I think we’ve said it before, but I’ll say it again.

You have a lot of incredible videos out there

that people should definitely watch.

I don’t say this often.

I mean, it’s literally the best spend of time

and in terms of reading principles

and reading basically anything you write on LinkedIn

and so on is a really good use of time.

It’s a lot of light bulb moments,

a lot of transformative ideas in there.

So Ray, thank you so much.

It’s been an honor.

I really appreciate it.

It’s been a pleasure for me too.

I’m happy to hear it’s a use to you and others.

Thanks for listening to this conversation with Ray Dalio

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Finally, closing words of advice from Ray Dalio,

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Thank you for listening and hope to see you next time.

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