Destiny x Tom Bilyeu: Nobody Wants the Truth - They Want a Tribe (and the Internet’s Making It Worse) PT 2

Picking up at the heart of America’s identity debate, Tom and Destiny challenge cultural “mousetraps” and headline myths—from the rise of anti-Semitism and the future of Israel to the core principles that truly define American greatness. This second half pivots toward international relations, the US-China rivalry, and, crucially, the actionable roots of economic despair underlying America’s political paralysis. Dive deep as Destiny critiques the populist decay of discourse—slogans replacing substance, and blame games crowding out honest policy discussions—while Tom pushes for first-principle thinking and careful, logical cause-and-effect analysis. Together, they confront the painful realities of debt, immigration, and institutional decline, proposing sharp, sometimes uncomfortable fixes for what needs to happen if America is to thrive in the coming decades. Whether debating liberal capitalism vs. Chinese authoritarianism, the role of innovation, or the “beautiful deleveraging” necessary to avoid collapse, this is a conversation guaranteed to stretch your perspective and test your convictions. SHOWNOTES 47:10 – Why Can’t We Agree on Reality? “Mousetraps,” Perception, and the Limits of Consensus 01:02:17 – Defining Success: Rethinking the Value System 01:23:14 – The Necessity of Real Causal Analysis for National Renewal 01:58:19 – Destiny’s Prescription: Amnesty, Enforcement, and Moving On 02:14:19 – Why Governments Choose Fiat—and Why It Always Goes Wrong 02:20:36 – Are We Locked in a Cycle? Call for Real Solutions FOLLOW STEPHEN “DESTINY” BONNELL: YouTube: https://www.youtube.com/destiny Kick: https://www.kick.com/destiny Twitter: https://twitter.com/TheOmniLiberal CHECK OUT OUR SPONSORS Vital Proteins: Get 20% off by going to ⁠https://www.vitalproteins.com⁠ https://www.vitalproteins.com and entering promo code IMPACT at check out Allio Capital: Macro investing for people who want to understand the big picture. Download their app in the App Store or at Google Play, or text my name “TOM” to 511511. iTrust Capital: Use code IMPACTGO when you sign up and fund your account to get a $100 bonus at ⁠https://www.itrustcapital.com/tombilyeu⁠ https://www.itrustcapital.com/tombilyeu SleepMe: Visit ⁠https://sleep.me/impact⁠ https://sleep.me/impact to get your Chilipad and save 20% with code IMPACT. Try it risk-free with their 30-night sleep trial and free shipping. Jerry: Stop needlessly overpaying for car insurance - download the Jerry app or head to ⁠https://jerry.ai/impact⁠ https://jerry.ai/impact Shopify: Sign up for your one-dollar-per-month trial period at ⁠https://shopify.com/impact⁠ https://shopify.com/impact WORK WITH TOM! 7-8 Figure Leadership Workshop: If you're a 7 or 8-figure founder struggling with employee under-performance and/or churn, join my live workshop on Tuesday, July 22nd at 1pm PT. ⁠⁠Register for free here⁠⁠ https://tombilyeu.com/leadership?utm_campaign=Podcast%20Offer&utm_source=podcast_feed&utm_medium=july_ad. Zero to Launch GPT: Stop overthinking your business ideas and get clarity in 30 minutes. ⁠⁠Access my free CustomGPT trained on my proven validation framework here.⁠⁠ https://tombilyeu.com/zero-to-launch-gpt?utm_campaign=Podcast%20Offer&utm_source=podcast_feed&utm_medium=july_ad 7+ Figure Founders Only: Ready to abandon conventional business wisdom and think from first principles? ⁠⁠Apply to work directly with me to scale your business here. ⁠⁠ https://tombilyeu.com/scale?utm_campaign=Podcast%20Offer&utm_source=podcast_feed&utm_medium=july_ad ********************************************************************** LISTEN TO IMPACT THEORY & MINDSET PLAYBOOK AD FREE + BONUS EPISODES on APPLE PODCASTS:⁠⁠ apple.co/impacttheory⁠⁠ http://apple.co/impacttheory ********************************************************************** FOLLOW TOM: Instagram:⁠⁠ https://www.instagram.com/tombilyeu/⁠⁠ https://www.instagram.com/tombilyeu/ Tik Tok:⁠⁠ https://www.tiktok.com/@tombilyeu?lang=en⁠⁠ https://www.tiktok.com/@tombilyeu?lang=en Twitter:⁠⁠ https://twitter.com/tombilyeu⁠⁠ https://twitter.com/tombilyeu YouTube:⁠⁠ https://www.youtube.com/@TomBilyeu⁠ https://www.youtube.com/@TomBilyeu Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tom Bilyeu?

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• 0:45Tom Bilyeu?

  Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing. Just make it official. Click the link in the show notes to check out Taylor Brands and get started on your business today. This is a paid advertisement. I'm Tom Bilyeu, and this is Impact Theory. Welcome back to part two of my conversation with destiny. If you missed part one, I highly encourage you to hit pause and go check it out because today is where things get real and it builds on what we talked about last time. All right, here's where most people get destroyed. They don't know what they stand for, they can't defend their position, and they walk straight into ideological traps without even realizing it.

• 1:30Tom Bilyeu?

  Let's get into how to avoid it. I always try to map things from the level of cause and effect. So it's like I know where I'm trying to get to, and then I just look at knowing what I know about humans, the physics of economies and things like that. Here are the moves I think we would have to make in order to get us there. One, where do you want to see America get to? So what does, like, if we were going to make America great, what would that look like in your eyes?

• 1:54Speaker 01

  I think our institutions make us really good. I think we have really strong foundations when it comes to like education and scientific research. I think we have a really good mode of economy. I think that capitalism and liberalism have thrived here. The ability for people to invest in, you know, whatever they want. You know, when it comes to scientific research, we still lead the world. We were leading the world when it comes to like medical research and everything. When it comes to like investment in capital, regardless of how I feel about Elon Musk now, there's a reason why he chose the United States to start Tesla and SpaceX in. And I think that our like our form of government, we as of today, we have the oldest surviving constitution that is still in use, founding document of any country. And I think that speaks to the strength and the flexibility and adaptability of our

• 2:39Speaker 01

  kind of constitutional framework for how our government works. Yeah, I just, I think there's a lot of like cool things that America has as part of its history that have endured up to this point of time. And despite all of the crazy curveballs that have been thrown at us, you know, I think as a 36 year old, I've lived through like three once in a lifetime events between 2007 financial crash, between COVID, between nine 11, like everything else. Yeah, I think we're still holding on and there must be reason for that. And I think our, I think a lot of our institutional backbones are really good at that. I feel like people like Trump represent a lot of bad stuff directionally, but I feel like we're very lucky in that I view Trump as being very politically incompetent. So I think that we're getting like a taste of what that could look like.

• 3:22Speaker 01

  And I'm hoping that the rejection kind of works as a form of inoculation, like rather than having a real politically minded, like a JD Vance type character with the charisma of Trump coming in and, you know, taking over, we're kind of getting a taste of it now. And I'm hoping that when the midterms roll around, those look pretty blue. When 2028 rolls around, the Republicans, I think are going to feel pretty abandoned because I think Trump is going to check out completely because he's not invested in the future of the Republican Party. And I hope that we kind of course correct from there. So I view it as like a bumpy road right now, but I hope that we're on like the right path afterwards.

• 3:52Tom Bilyeu?

  Right. Okay, so if those things are in the abstract, what allow us to be great now? What like, if you were going to define the grounded things about our day to day lives that make it great, such that we could point to this system and say it outputs a thing that we think is pretty awesome. What is the thing, if you had to describe what we see now?

• 4:14Speaker 01

  So I think the thing that sucks the most about stuff that works, it reminds me of that Futurama quote, and I'm sure this came from somebody else before, but there's an episode where I think at the end, I don't remember the episode completely, but. I think God is either the universe or something and there's the stars are glowing at the end and he's like, the nice thing about when you do something right is nobody knows you've done anything at all. So I think that when everything is functioning well, we tend to just not think about it. So like an example of this would be scientific research done by foreign people that come to our country because they are attracted by our, you know, our research institutions, our schools. Um, I think, I want to say it was like 15 years ago. There's like research on these, I'm gonna get all the wrong, it's like a fish or barracuda shark

• 4:57Speaker 01

  or some random thing that they were able to like extract some substance and they're like, oh, this looks like it emulates, uh, you know, like a certain hormone in the human body. And there was just like a bunch of like research in that direction. And that materialized into a drug that also was pretty good for diabetes. Uh, these GLP-1 agonists and then that's materialized into the actual holy grail drug that might be the most important pharmaceutical discovery since, I don't know, insulin or penicillin, which is kind of all the, uh, people call it Ozempic, but the GPL-1 agonist derivatives and everything. So like, that's an example of, you can point to a thing for this drug has been discovered. And I would argue that it was off the back of American innovation, capital investment,

• 5:36Speaker 01

  um, attracting talent from all over the world, you know, institutional government and, and science investments and everything. That would be a thing I would point to, but it's hard to see kind of everything in the back. You just see the one thing that ends up working. So it's kind of like you get, you get Christmas presents on the 25th and you're like, oh, it must've been Santa Claus. And meanwhile, mom and dad are struggling in the background to make sure that you know.

• 5:56Tom Bilyeu?

  Working all year, yeah, putting it on layaway, wrapping it, hiding it from you. Yeah, fair. Um, so if you were to, um, try to confine that to a sentiment that you could say, all right, the thing that gave birth to this is, uh, freedom, a focus on innovation. Uh, we just have a better economy, like, because, and where I'm gonna move us to is you've got US v China. And I see two very different systems that are both outputting pretty incredible things along the lines of innovation. But I think that tactically to live there would be very different. Um, so if you, before we get to China, if you just had to sum up the thing that we have built around, what would you call that?

• 6:40Speaker 01

  I would say liberal capitalism, like liberalism and capitalism in the broadest sense.

• 6:45Tom Bilyeu?

  Liberalism defined that for me.

• 6:48Speaker 01

  So you have a government that exists to kind of protect your ability in life to explore and pursue a variety of different things, whether that comes to like educational opportunities, job opportunities, just cultural, personal stuff. It seems like that form of cultural arrangement has made us leaders when it comes to outputting productive workers.

• 7:07Tom Bilyeu?

  It matters what policies a country has, it matters what culture a country has, because ultimately, hopefully, what people are arguing about is the, call it the soil in which we're going to try to plant the garden. And all of us citizens are the things that are either going to grow or fail to grow. Okay, that makes sense to me. So I hear-

• 7:25Speaker 01

  I will say that that requires an alignment on what do we even consider success? And these are things that we talked about a bit more abstractly, like 15 years ago, actually, maybe longer. I remember in high school, like, what does it mean to be successful? And we have these default assumptions of like, you know, the, you know, the lowest distance between transistors on a, you know, in a CPU diode or whatever, or it could be the amount of medicine available. But nobody ever asks like cultural questions about how many friends can you keep, or how long do your relationships last? Like, we don't think about that in terms of success.

• 7:57Tom Bilyeu?

  Right.

• 7:58Speaker 01

  And I think that the MAGA movement especially, and then people's like general discontent have really challenged, like, what does it mean to be successful? And you had the attacks before of like, it's not just GDP, which is fair, although GDP is correlated with a whole bunch of good things in a country.

• 8:11Tom Bilyeu?

  Who pushes back on GDP?

• 8:13Speaker 01

  I mean, I would argue-

• 8:14Tom Bilyeu?

  People who don't like the results of the current GDP, like, that's the only thing I can imagine.

• 8:17Speaker 01

  Yeah, I would say the whole MAGA movement is okay with, and populists in general, you could argue Bernie Sanders-

• 8:21Tom Bilyeu?

  They're switching to match whatever the moment requires.

• 8:24Speaker 01

  Kind of, yeah. So it's like, it's not about GDP, it's about manufacturing everything here, or it's not about growing the economy, it's about making sure that we only buy from ourselves. Like, there are things that are, and there's not a right or wrong answer here, like, you can have a preference, but-

• 8:34Tom Bilyeu?

  I have a feeling they're shifting their value system, which could be fine, but my beef with people that talk politics is often they don't even know what their value system is.

• 8:44Speaker 01

  It's a revealed versus an expressed preference. And oftentimes, people don't realize it, but there are a lot more invisible qualifications. on their statements than they'd like to admit. And sometimes what's perceived as you're basically saying this what's perceived as a change in values has actually just been like elucidating people's values like somebody might say you should never use violence to achieve some end. But what they really mean is you should never use violence to achieve an end that I don't like.

• 9:06Tom Bilyeu?

  Right.

• 9:07Speaker 01

  Right? Like I've had people ask me when it comes to, you know, political violence or whatever else. It's like, do you think that political violence is ever justified? And I think it's a funny question because I'm an American and our country was born from a rebellion against political violence, like actual violence. So yeah, it's yeah, identifying that like, what are you actually saying is a very challenging thing for a lot of people.

• 9:25Tom Bilyeu?

  Yeah, that's why, as you were talking, I was like, okay, this feels like a very American frame of reference. I'm wildly pro-American. I too think that this country is great. I think that at the beginning, it's going to seem like, and you and I've talked before, so we know there's some overlap. There's a lot of disagreement. But I feel like in that sort of general explanation that you gave, there's nothing that I would really push back and say that I have a beef with that. I don't even think that we have a beef with the outcome. And so part of the reason that I want to interview you, and by the way, I thank you for every now and then covering my content. Obviously, it means the world to me as I go down that path. Perfectly fine that a lot of times you think I'm just completely out of my mind.

• 10:03Speaker 01

  Sure. Which is fine. But just as a clear, because my chat watchers like, I'll see something. If somebody says something like, oh, my God, this is so dumb. But like, I don't hate the person. I don't think the person is dumb.

• 10:11Tom Bilyeu?

  No, no, you're always very respectful. Love it. So, but what I do like is I like that you are excruciatingly good at being able to follow a chain of logic. And so when there's weakness in my logic or anybody else's, you become a very useful tool to find out like where those points are. And so it's a big part of what I hope we figure out here today. So as I've gone into politics, I've become literally completely drawn in emotionally. Because I feel like we're in a transitional moment. And the more that I've tried to look back into history and find the cause and effect to why we see certain things loop.

• 10:50Tom Bilyeu?

  For me, the, and it's admittedly oversimplified, but it's a very useful simplification is to focus on economics. And so then as I look at the economic loop that we're in, the passing of the big, beautiful bill is essentially a guarantee that we're going to go bankrupt. And when you look back at this loop and what happens when the country goes bankrupt, it gets violent. And so now I'm like, okay. I started going down this road originally when COVID kicked off because I thought people are going to get eaten alive by losing their jobs. It's going to be a bloodbath. Like, what do we do? I need to make like basic save your money kind of dollars and cents content for people because I've known so many people that grew up poor. So I was like, okay, that's going to be how I can help in this moment. And then money printing happened and nobody like struggled.

• 11:35Tom Bilyeu?

  And I was like, wait, what's going on? So that led me down that insane rabbit hole. But now I see that we're sort of at this natural conclusion of you can't count on Republicans to be fiscally responsible. You can't count on Democrats to be fiscally responsible. Like, there's a political reality that have you read James Burnham? No. Okay, fascinating. I'd be so interested to see your take on it. But he wrote a book called The Machiavellians, The Defenders of Freedom, and it's all about what he calls the iron law of allegarchy. And he's like, you're always going to have a small group of elites. There's just no way around that. Whether you have a Communist Party or you have a democracy, you're still going to have a group of elites that run it. And so I just realized, yeah,

• 12:17Tom Bilyeu?

  that to get elected, people are going to promise free things. And so here we are. And so for the first time in my life, this just feels, and this being world affairs, politics, policy,

• 12:31Tom Bilyeu?

  it's really going to matter. And I think it's going to matter dramatically over the next 10 years. And so what I'm hoping that we can do is I want to understand your worldview because the conclusions that you draw when I listen to your content are like, that's like diametrically opposed to where I end up. But I think you're good faith. And then I want to give you where I think like, for real, for real, like, this is what I actually believe we have to do. And then hopefully, you can help sharpen my thinking if nothing else. Sure. Okay, so I feel like I have a basic understanding of where you want to get us to.

• 13:06Tom Bilyeu?

  Contrast that with China for me. So China is outputting some incredible things. China is outputting amazing technology. I would say, and I've never been to China, so this is me looking at video and things like that. But it does seem from an infrastructure standpoint that they're just beating us. And so when I look at somebody that's positioning themselves for the future, I look really at three things: infrastructure, technology, most particularly AI, and energy, because AI is going to be so energy hungry. And in those three arenas, China's either right on our ass or they're, in the case of energy, they're like blowing past us.

• 13:47Tom Bilyeu?

  But yet I find myself being totally turned off by the way in which they got there. And so to your point about what I call invisible goals, I obviously have an invisible goal where I'm like, okay, they're outputting some of these things, some better than us, and I still don't want to do it. So why don't I want to do it? We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. Luxury brands are not charging you more for better cashmere. You're paying for the storefront, the ad budget, the name on the tag, but Quince cuts all of that out. They work directly with ethical factories, they skip the middlemen, and sell 100% Mongolian cashmere, starting at just 60 bucks. 50 to 80% less than similar brands.

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• 15:14Tom Bilyeu?

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• 15:59Tom Bilyeu?

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• 16:24Tom Bilyeu?

  Thanks for sticking around. Let's get right back into the action.

• 16:27Speaker 01

  You're red, just carried. Do you remember The Giver?

• 16:28Tom Bilyeu?

  Mm-mm.

• 16:29Speaker 01

  Oh, okay. This is a book you read like in high school, but it's just funny because they have, like, I think, like a perfect society, but then the kid realizes, like, oh, it's because at, like, 60 years old, they send all these people off to die, basically, so they don't drag it down. So it's like, they have the good output, but you're like, ah, I don't know, actually.

• 16:42Tom Bilyeu?

  So do you think about China, or is that, like, not on your radar?

• 16:44Speaker 01

  Um, kind of, but it's like, it's such an external problem from what we have right now. I think one of the issues that I have that I've gotten to is-

• 16:53Tom Bilyeu?

  Because you feel it's like getting pulled apart by something completely internal?

• 16:56Speaker 01

  Yes, right now, absolutely. A house divided against itself cannot stand, basically.

• 17:01Tom Bilyeu?

  All right, so walk me through, what are our problems?

• 17:03Speaker 01

  I think the biggest issue that we have right now is there's a lot of factual information that

• 17:09Tom Bilyeu?

  What does that mean?

• 17:09Speaker 01

  Like just empirical stuff, like what are the things that are true, what are facts that are true? And these go to informing like a worldview. And it's easy to have all of this conceptual level stuff, like we should have a lower debt or deficit. But it's not easy to figure out how to do that when there's not a lot of attention paid to a lot of the underlying facts of the matter. So if you ever host debates, by the way, I'd be super fascinated. I haven't read the book of the one guy, but the guy you brought up.

• 17:37Tom Bilyeu?

  James Burnham.

• 17:38Speaker 01

  James Burnham. So there are a couple of truisms that are given that I feel like have been radically challenged and have exposed them as being not true. And one is the idea that elites or oligarchies run our system. And specific one is like the military industrial complex. I think the military industrial complex had the hold on our country that people thought it did in the past. We would be funding Ukraine completely out the ass. There would never have been a delay in shipments. We would be sending them all sorts of weapons. Clearly, there's not the power there that people had thought there was. And then when people think of like, well, think of the money and everything else. I mean, like you've been a business owner, you look at like market capitalization, like who's commanding like these huge revenues? Like Apple alone is like, I think, two X the value of like all of our military contractors combined in terms of revenues and market capitalization.

• 18:21Speaker 01

  It's like, well, let's assume there's like a world where the elites are running society. My guess is like, Apple would be putting out the hits on Raytheon and Lockheed executives, like you guys are going to go to war? The decrease in revenue that we're going to have will exceed the market capitalization of all of your companies? This isn't happening. We're going to kill you. That would be my.

• 18:39Tom Bilyeu?

  I don't know that I want to derail us on that, but I think I could convince you that the oligarchy not being the people we thought it was, or that there are competing factions within the oligarchy is not the same as there isn't an oligarchy.

• 18:51Speaker 01

  Sure, that might be a thing. I would say that another concern is there's this phrase that gets used a lot, like getting into the weeds or derailing. It feels like a derail, but the boring truth is that a lot of those underlying facts are actually the most important things. Because like you said, you and I agree conceptual a lot of stuff. The only difference that you and I, based on what I've heard you say, probably the only difference we have is which facts we've ascertained are true or not.

• 19:14Tom Bilyeu?

  Or not even necessarily which ones we think are true, what do we think that means?

• 19:19Speaker 01

  Sure.

• 19:20Tom Bilyeu?

  And then you said something that I thought is pretty interesting. And when I see say derail in this situation, what I mean is I first want to get your whole sense of like what's broken.

• 19:29Speaker 01

  Yeah, sure.

• 19:30Tom Bilyeu?

  Because I.

• 19:33Tom Bilyeu?

  For better or worse, my mind is simple enough, I to understand something and engage with the topic, I must follow it through a chain of cause and effect.

• 19:40Speaker 01

  Yeah, that makes sense.

• 19:40Tom Bilyeu?

  Or I'll forget it. Like, I can't hold it as a set of facts.

• 19:43Speaker 01

  Yeah, so to return broadly, I think there were three things that you brought up. You said infrastructure, energy, and

• 19:48Tom Bilyeu?

  Technology.

• 19:49Speaker 01

  Technology. So, one of the frustrating things for me, as I've watched kind of a lot of the tech world walk, I guess in the shadow of Elon Musk, into the kind of Trump-MAGA stuff, is MAGA speaks a certain language, but it's not, it's a populist language that doesn't, I don't think map, it doesn't really map on to what you would want it to map on to if you cared about the things that I say I care about, or I feel like the things that you say you care about. So when we talk about like, energy, for instance, I obviously, and I think most neoliberal-type people will agree, for transitioning to things like green energy, it has to be like, a meaningful transition. Yeah, you have to do this in a way that makes sense economically.

• 20:26Tom Bilyeu?

  Right, right.

• 20:27Speaker 01

  It can't just be like, a value-driven, "I'm a climate change person, and I'm gonna shut all the natural energy off," right? But the issue is that, like, for MAGA, for instance, when I think of future of energy, I'm thinking a lot in green energy, and that sounds kind of like a cucked position of like, ew, you wanna like, save the trees, but it's like, the sun is a big provider of energy to this planet, and being able to harness energy is really important. And things like nuclear energy, and harvesting other forms of solar energy, like wind energy and hydro energy, these are really important steps into the future for a large variety of reasons. Not just because of pollution, although pollution is part of it, but just because it gives you the ability to generate a variety of energies that aren't as reliant on global markets on oil and all these things. But right now, we can't have that conversation because the political party in office wants

• 21:09Speaker 01

  to fight against that because they have like, moral problems with green energy. So we've got, you know, while we're trying to compete with

• 21:15Tom Bilyeu?

  Do you really think it's moral, or do you think it's tribal?

• 21:17Speaker 01

  Like, the same thing. I'd like to have like, a feeling, a revulsion. Like, if I say like, "Don't you think it'd be good if we would start like, solar and wind?" They're like, "Oh, no, those are the people that wanna take your cars away from you." And it's like, this is, what are we talking about right now, right? Like, we wanna compete with China when it comes to energy, and we've had a president saying, "Clean coal, clean coal." And it's like, that's not where China's going. China's not going towards clean coal. Like, why is that our direction? Or you bring up like, technology, you know? It's not like China is screaming at the United States, "Stop stealing all of our patents. Stop stealing all of our intellectual property." We're screaming that at China. But at the same time, while our leaders are telling us, "We need to bring back manufacturing and we need to go back to the, you know, the mines with pickaxes." China's like, "I want more of your computer scientists."

• 22:00Speaker 01

  Like, "I want your AI. I want your, like, last-stage development." So, we're like going backwards because we think that there's more, like, moral value in real work. Like, um, is it Mike Rowe, the guy who did...

• 22:11Tom Bilyeu?

  He is a guy. I'm not sure where he had it.

• 22:13Speaker 01

  Yeah, like, we, like, these are real jobs. Like, yeah, blue collar. You're making real stuff, not, not gay stuff, like, AI or computer stuff or whatever. Like, those are like thick jobs, service jobs. But it's like, that's, this is the future, like...

• 22:23Tom Bilyeu?

  Yeah, but can, so, on that, I would say, um, I think what's really happening is two things. One, everybody thinks in heuristics. So, everybody has to simplify the world. Now, some people don't realize they're simplifying the world and that, that sets us up for the second thing, which is Michael Malice has this idea of a mousetrap in somebody's mind. I think that's an echo of a heuristic. So, they've narrowed the world down to a thing that they can say back so that they can feel confident when they speak. That heuristic gives them a, "This is right. This is how I move." And that removes a lot of anxiety.

• 22:57Speaker 01

  Sure.

• 22:57Tom Bilyeu?

  And so, I get why people, I think all humans do it. Maybe some do it more than others and maybe some don't even realize that it's happened and so they just like the way that it feels and it becomes that mousetrap where you bring it up, they don't even want to think through it. They've already made that decision from a heuristic standpoint. Close the door, you say the words, mousetrap goes off and you're like, "What the fuck?" And it, it just, you completely derail. But if we can go, "Okay, I get what they're after," which in the blue-collar jobs is, all right, uh, so much of my family are blue-collar. And so, when you watch them get super anxious or you have a couple die from opioid addiction, you start going, "We do need to do something about this problem."

• 23:40Tom Bilyeu?

  So, they might have a terrible solution, but if... That's the place that it's coming from and you can go, okay, look, they're over, they're coming up with too many shortcuts. So then it's like, I feel like I better know how to deal with that. I understand the mousetrap that's gone off.

• 23:57Speaker 01

  I'm sympathetic to that. The issue that we run into then is like, what is the most compassionate way, I guess, to move forward? Where you're accounting for these people's anxieties, but you're not throwing the country back into the dark ages. And instead of having that conversation, which I think is a fascinating conversation to have, instead we have, you know, the party on the right is basically saying, you hate blue collar workers, you hate these people, you just want everybody to go to college and you hate all these people that are, you know, doing the real jobs. And then on the left, like, okay, well, I guess the debate is going to be on whether or not I hate blue collar workers. That's the whole debate now. So we're not actually going to have a meaningful conversation about moving anything forward. You know, you say heuristics and I say it's not even that. It's just, it's been sloganeering from, from MAGA. It's just been slogans of like, we need to bring back manufacturing. And it's like, do you like, what does that mean?

• 24:37Tom Bilyeu?

  Do you think slogans are unique to the right?

• 24:40Speaker 01

  I think the stupidity of them is unique to the right. Yeah.

• 24:43Tom Bilyeu?

  Interesting. I think slogans, and I'll stick with heuristics, but I get why you call them slogans. I think heuristics are baked into the architecture of the human mind. I think it is the only way for us to navigate. And so that's the first thing I would say that I don't think that's going to allow you to map the right well.

• 25:04Speaker 01

  I think, I think the reason why I say slogans is because they've reduced every, there are some problems that are just not easily solvable in one sentence. So like a really great example of this, and there's not a single person in the country that's having this conversation, is the cost of housing. Okay? This is an undeniable reality.

• 25:23Tom Bilyeu?

  Brother Preach.

• 25:23Speaker 01

  When you talk about people that are looking for housing and you talk about people that are, that have housing, their interests are diametrically opposed to each other and nobody wants to talk about that. Because if you're going to fight to push down the price of housing, you are hurting everybody that owns a home, which 70% of the people in the United States live in a home where there's a homeowner. And then if you're trying to bring, you know, and if you're trying to make those homes more valuable, it pushes up, you're hurting everybody that wants to buy something, right? This is like, uh, these are countervailing forces. It is incredibly difficult to navigate that. But when the conversation is just like landlords are evil or billionaires are evil, that the government wants to steal your homes because of femur ever like, well, what do you do at that point? Like the, these slogans have destroyed people's ability to even engage in the conversation.

• 26:07Speaker 01

  Like you can't even have a reasonable back and forth because it just comes down to whether or not you think billionaires are trying to steal everything or not. And like, that's it. And it's like, okay.

• 26:14Tom Bilyeu?

  Yeah. So now you're on to my exact thing and I've no idea if this is going to be a Sisyphean thing. And, and one day I just give up because I realize, oh, this isn't going to work. Is I'm trying to, uh, when I go live, when I do, uh, one of my normal episodes that isn't an interview, I'm just trying to map cause and effect, cause and effect. I pick a topic and we just go cause and effect. What, what actually makes this thing transpire? Let's look back in history and see if we, if, hey, if I say this is the cause and effect sequence, does it predict what we saw? Because if it doesn't, then I know it's wrong. And so, um, getting people to understand housing, like this is how I, um, I find I can avoid getting trapped in my own beliefs. Because I'm like, well, does it actually lead predictably down a chain of cause and effect?

• 27:00Tom Bilyeu?

  Uh, obviously that's not going to be accessible to everybody. There's some people won't take the time. There's some people that just intellectually are not going to be able to understand it. But I feel like that is the only path forward. Like there is only one path forward and that is to say, this is where we want to go. And this is a chain of cause and effect that will get us there. And then we can argue about whether we want to go there or not. We can argue about the efficiency of the moves to get there. But at least if everybody gets off sloganeering, if that becomes super cringe and everybody hates that, and we just go, okay, wait, but give me your chain of cause and effect.

• 27:33Tom Bilyeu?

  Uh, we're not going to get anywhere unless we do that.

• 27:35Speaker 01

  This is, I agree with you. You just have to be careful when you're looking back and when you're looking forward, because sometimes people can misidentify how cause and effect works. So for example, if I tell you, I know a guy, uh, and he has $200,000 in his bank account. Do you think that guy is successful or not successful?

• 27:53Tom Bilyeu?

  Yeah, you won't know.

• 27:54Speaker 01

  You have no idea, right? Because if I tell you the guy's like eighty-five with twenty dependents or whatever, and this is his life savings, and you know, he's about to retire, like, if I tell you the kid's like nineteen.

• 28:02Tom Bilyeu?

  Or if he started with six billion and then

• 28:04Speaker 01

  Sure, oh, yeah, or that, yeah.

• 28:05Tom Bilyeu?

  And he didn't give it away.

• 28:06Speaker 01

  Exactly, yeah. But if I tell you it's a kid who's like, you know, twenty, twenty-one, who's been working side jobs and saving every penny his whole life, and he's got like a six-figure bank account, I was like, yeah, that's a big kid, he's doing really well. When it comes to cause and effect, people will say things like, um, people will say things like, the economy used to be better when this was happening. And like, I can say that America, you know, had, had a good intervention and helped a lot in winning World War One, and we didn't have to use or have nuclear weapons at all. But, you know, why is that? Well, it's because nobody else had nuclear weapons, right? We lived in a different world. So when people say things like, well, when we were manufacturing, when we were doing this or that, you know, the economy was so much better. It's like, true, but we weren't competing with other people who were, you know, trying to figure out how to optimize AI, or trying to figure out all of these service or higher level, you know, final

• 28:49Speaker 01

  stage of manufacturing jobs. We were making cars in America. It wasn't like the whole world was making cars, and we just made the best car. People were like, leading the industry here.

• 28:56Tom Bilyeu?

  Yeah, but I think what I hear you mapping is, yeah, there's a surface level cause and effect that you can trick yourself, but then there's actually getting down to the level of the real cause and effect. And then if you have some way to test your hypothesis way better, um, this is why I'm always drawn to economics, looking at history through an economic lens, and then actually saying, okay, I'm gonna do that here in today, and am I winning or not financially? Um, but if, in fact, let me ask directly, is cause and effect knowable to say eighty, eighty-five percent accuracy?

• 29:32Tom Bilyeu?

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• 30:11Tom Bilyeu?

  Switch to a CRM built by salespeople for salespeople and join the over 100,000 companies already using Pipe Drive. My link gets you an exclusive 30 days free instead of the usual 14 day trial. There's no credit card payment needed. Just head to pipedrive.com/impact to get started. Again, that's pipedrive.com/impact and you can be up and running in minutes.

• 30:40Tom Bilyeu?

  All right, we're back. Let's get into it.

• 30:44Speaker 01

  As a hardcore determinist and materialist, I would say, yeah, everything is cause and effect in the universe. It's just, it's like you said, you hone in on it. You have to identify what actually is the cause and effect. Because sometimes we can look at how a thing happened and people who are successful are sometimes the worst at this. We can look at how a thing happened and say, well, that happened, so that's the cause and that's the effect. When they're strictly speaking, they're right, but they picked a correlated thing and they didn't actually pick the reason why there was a successful cause and effect there, like they didn't hone in on what was going on. So somebody might say, going back to my example, like when America manufactured, that, you know, helped us lead the world in so many different things economically. And they're right, but it wasn't because it was America manufacturing.

• 31:25Speaker 01

  It's because America was leading the world in technology and the technology at the time happened to be manufacturing. Right? So they're, so when they look at it incorrectly, they might go into the future and be like, okay, well, we need to go back to that, I guess. Cause that's where we're the most successful. It's like that only worked then because of these conditions. Then the world is different now and we have to adapt the conditions now.

• 31:44Tom Bilyeu?

  Yeah. So I think you've put your finger on the real issue, which is you're able to identify, I would say somewhere to 80, 85% enough that you've got so much predictive validity that it's going to allow you at least have hypotheses that make sense. They will be very informed. They may not work, but boy, you're not like throwing random darts, which often feels like the political discussion becomes either things that have been tried in the past and obviously don't work. Or just like, oh, we've never tried this. Let's give it a shot. In business, I always teach entrepreneurs, if you're ever about to try something, ask, has anybody already done this well? And if they have, go look at it. Copy it. You'll be able to learn from it. I'll say like, I'm often asked how we built Quest into a billion dollar company. And I'll say, I could tell you literally minute by minute.

• 32:28Tom Bilyeu?

  And if you tried it today, it wouldn't work, which goes to your thing, which is either you've oversimplified, or that we live in a different world. And so it worked then because nobody had done it. We were the only person with a nuclear bomb. So it's not necessarily going to work now. But if you can abstract it out to principles of if you have destructive capability that is orders of magnitude greater than your opponent, then it puts you in this situation. And this will be the likely outcome. Yeah. And so you can get enough information that you can then use it. I think the more terrifying problem is, just as you have done multiple times now, where you'll give like a very common assessment, only to then show us that there's another layer that will cause

• 33:13Tom Bilyeu?

  you to go in a totally different direction. You can do that and do do that and have been online doing that for a very long time. And yet it's either, hey, just keep going. And maybe one day, like you amass enough people that really can start to think like that. And it becomes a groundswell and it works. Or that we're bumping up against that I would, and this is definitely an oversimplification, but I would round it to people thinking heuristics. They need heuristics so badly that they will join a team, especially in times of strife, when clear thinking is most necessary. Clear thinking is the thing we have the least of. And so I look at this and go, first principles are easy enough to think from. We can map all of these problems from first principles. If we know where we want to go, we at least

• 33:58Tom Bilyeu?

  know what things to try. Again, they might not work, but we have a very logical set of things to try. But If my YouTube comments are anything to go by, you just, you get to a point where it's like, the words you're saying do not line up with what my tribe says is okay. And they're just

• 34:14Speaker 01

  And it's gone, yeah.

• 34:14Tom Bilyeu?

  Yeah.

• 34:15Speaker 01

  I think heuristics are fine. Like you said, I mean, we all, everybody, we included, everybody uses heuristics on, on everything. It's just a matter of like what the heuristics are. So like, for example, when, when I'm doing, when the Trump tariffs were coming down and everything, and there were a lot of people asking me like, what do I do with my investments? Like, should I sell everything? And you know, how to, you know, like my advice at the time was, listen, okay, heuristically, okay, the markets are definitely going to tank, they are, but there's a lot of people who are chasing the exact, you know, peaks and the exact valleys. I can't give you the advice on that. You're not going to be able to figure it out, except by random chance. And that means statistically, most of you are going to be losers. So if you have money in your investment accounts, you just leave it sit and you ride out the storm. And that's how investing works. It's dollar cost averaging. That's all of these like heuristic, basic investment principles.

• 34:59Speaker 01

  And if you're one of the people that tried to time, you know, those peaks and valleys, you probably lost a lot of money. And if you just sat with your account, you're probably doing okay right now, you know? So heuristics are fine, but it's just which heuristics are we going by? Like, do we trust in times of, you know, fear? It's always in, I feel like we see so many movies about this where it's like, oh my God, like the strong man has come up in the time of fear. And it's always the worst person to follow. And then all of the rational people are kind of pushed to the side. And I was like, oh no, maybe we should have followed those people. I feel like we are, there's just a lot of boring, tried, like previously tread ground that we don't need to do this anymore. And it's frustrating because I don't even want to have the debate. I guess I'm curious personally, your thought on this. I feel very strongly, I will never, ever, ever make a business decision

• 35:43Speaker 01

  based on who I hire, fire, how I expense members, based on what my personal like tax rate is, ever. Like, if you want to tax me at 45%, fine. If you cut it to 39%, I'm not going to hire anybody else. I'm not doing any of that money. It's going to write in my bank account or my investment account. That's it. So when I have conservatives who are talking about like, we need to cut, you know, the income tax. And meanwhile, the one promise that we had from them was, we're going to do something about the debt and deficit. Well, that's completely blown the fuck out now. To, to do what? To help me save an extra $50,000 on my taxes? I'm not doing anything with that. Like, why, why? What's the point? And this like conversation about like supply side trickle down, why are we still having this debate? There's no empirical evidence that this has ever stimulated the economy in any meaningful way. There's so many different ways you could have allocated money. And I don't even know business people who say, like,

• 36:25Speaker 01

  Thank God they cut my personal income tax rate a little bit. Now I can finally do this thing with my business that I've always, I've never heard this before. I don't know, maybe you have.

• 36:31Tom Bilyeu?

  I have to look at the data. That's one of those ones that is seems so self-evidently true that I've never gone to look at the data. So I'm, I guess, the exact opposite. So my entire career at building Quest, Impact Theory, I wasn't extracting money out of the company in operations. We used to always say to each other, there's no money in operations. You have to sell if you want to make money.

• 36:53Speaker 01

  Sure.

• 36:53Tom Bilyeu?

  And so we were doing hundreds of millions of dollars in revenue and just plowing it all back into the company.

• 36:58Speaker 01

  Yeah.

• 36:58Tom Bilyeu?

  So we thought, okay, one day we might sell. So it's like for us, when I say plowing it back into the company, I mean, making strategic investments. We were building exotic equipment when everybody thought that was insane. We built custom-made facilities so that we can make products that nobody else had made. Like, I mean, we, we really were like, hey, if you cut our taxes, that money just means that we've got more to pour back into the company.

• 37:21Speaker 01

  Well, but for a lot of this, like this wasn't, you were reinvesting, it's not even tax money, right? This is, these aren't, these are revenues, not profits.

• 37:26Tom Bilyeu?

  It's CapEx. So sure, you can dodge some of that, but you find yourself in a situation where it's like, okay, um, how do I want to allocate the funds of my company? And if I know that I'm going to have a, uh, some of this depends on the structure of the company.

• 37:42Speaker 01

  Sure.

• 37:43Tom Bilyeu?

  So it's like, if the dollars are flowing out to you, then you're going to, it's going to affect everyone differently. And I don't want anybody to think that this is like a, uh, one size fits all. In fact, we need to talk about the four levers of what I think we actually have to do to fix this problem. And some of it is tax people. But it is my understanding that the data backs up, that if you want to get people to reinvest in their companies, allowing them to hold on to more of their profits allows them to do that. Now whether that's because you're right, if you can justify it internally as a business expense, you can do it before it becomes a taxable event anyway. Um, so.

• 38:21Speaker 01

  I think on that end, I think there might be, um, you can talk about like corporate tax structure, I think is legitimate, but for personal income tax, the only thing I could ever see you doing, if you're dropping your personal tax brackets is incentivizing people to invest less. Right? Because at some point it might be, well, if I can withdraw this money at only a, you know, 30% hit, uh, then screw it. Why would I reinvest in my company trying to grow it now? All of a sudden my, you know, my NPV plus, you know, you know, what are my, what are my good future investments? It actually just makes sense to pull the money out now because I know I'm not going to get taxed on Harley at all versus. Like if you're trying to build a company, most of the reinvestment that's happening, like you said before, you guys were re- and every startup is like this, you're constantly reinvesting revenue. That's, that has nothing to do with your personal income tax bracket at all.

• 39:02Tom Bilyeu?

  I think I now get why the data would move in that way, if the data really does move that way. Uh, is for the very simple reason that if, if you make that money, the money is either going to come to you. If you're pulling money out of the company, it's either going to come to you or it's going to go to the government. Now, if it comes to you, in the system that we live in, you would be a fool to put that into your bank account.

• 39:27Speaker 01

  Sure.

• 39:27Tom Bilyeu?

  So you're going to put it into a productive asset. Now, it could be government debt, in which case they get it anyway, at least temporarily, but you get something in exchange. But certainly investing into VC, um, angel investing, starting another company, buying, uh, physical assets. All of that stuff puts some money back in the economy into a productive way. And so if you look at the, certainly there is a class of person for whom, when they aggregate capital themselves, they always go refund the next business. Given how much of America's ingenuity is tied to that, um, I can certainly see that that's actually the loop that's at play.

• 40:06Speaker 01

  Sure.

• 40:06Tom Bilyeu?

  Is that you've got people that they're taking their own gains, they're reinvesting into the next product. And now you get that sort of American ingenuity.

• 40:13Speaker 01

  Yeah. And I think capital investment is important. Um, I'm not going to take the, like the majority report lefty line of, we need to have 90% marginal tax rates again. But if we are facing huge deficits, budget deficits of which we are, if we think the debt is a problem, which a lot of people seem to think it is. I feel like the last place in the world we would be looking to eat into our budget is just doing more tax cuts for wealthy people by like two to three percentage points. I just, I don't believe, uh, if you have wealthy friends, I'd be curious to hear them say, I just don't believe that there is some guy out there who is, you know, you know, his, his, his below the line, his AGI is like 2.5 million. And he's like, God, if it was just. If I just saved like another hundred thousand dollars on my taxes, I would do so much more with it. I just don't believe that. And I feel like

• 40:57Tom Bilyeu?

  Yeah, I think so.

• 40:58Speaker 01

  It's just so much money that we're leaving on the table. And then we try to find it in other ways where it's not even remotely close. Like Doge was never going to find that two trillion. They were never going to find one trillion. In the end, they found like nine billion.

• 41:09Tom Bilyeu?

  Yes, but God, we should all want him to win. That one, I have a particular bone to pick with anybody. So we'll get to that.

• 41:16Speaker 01

  Okay, we'll get to that.

• 41:16Tom Bilyeu?

  But first, let's start with the, uh, the investment. So if anybody thinks that when you lower the tax rate, that you, you've now done something that's going to trigger like this altruism of like, oh my God, I got more money. And therefore I'm going to do something nice. No, you go, oh my God, I have more money and I have to put this to work. And so from a purely selfish stance, I want to make, I want to turn the whatever five billion that I got. I want to turn it into 50 billion. And so that person's going to go try to do a thing. And this is where I think, and I know this isn't you, but I think the vast majority of people just do not understand assets, even if they own some of the S and P 500. They don't understand assets, like they don't understand what they do.

• 41:56Tom Bilyeu?

  They certainly don't understand the history of how they came into existence and what they're for and what they unlocked and ah. And then something like 40% of Americans don't own any assets whatsoever. And so, uh, you trigger a very selfish thing by allowing people to take their money out. But that selfish thing puts money back into the economy, creates the money velocity. They're either buying things or they're investing in things, but it doesn't just sit in the bank.

• 42:21Speaker 01

  Yeah.

• 42:22Tom Bilyeu?

  And so anyway, that's the proposition.

• 42:24Speaker 01

  Which is good. And I was, I'll say like, I agree with you. That just needs to be the conversation that we have. If we want more investment, we want more CapEx, then tax cuts theoretically could incentivize that. But you can't say this is like, for instance, like good for workers. Because that's, it's too broad of a statement and it doesn't even strictly make sense. Not to sound mean, but from a business perspective, workers are always, that's a cost of doing business. Your goal is always to minimize cost. You're never arbitrarily increasing them.

• 42:49Tom Bilyeu?

  I heard somebody argue with you on that. I was like, what?

• 42:51Speaker 01

  Yeah, you have an adversarial relationship or shouldn't say adversarial, but like an employee's goal is I want to get as much money as I can for as little work as possible. And the boss's goal is I want to extract as much labor from you as I can while paying you as little as possible. If you give money to one side and not the other, the idea that these people are going to help each other is just not true. And that's the only thing. So like if, so what you're saying, if you want to have more investment and you think that cutting taxes will get you there, that's almost certainly true because the money's not going in a bank account. But if your goal is to like, help the average man and worker, whatever, and you're cutting taxes, that's just not going to happen. Right. So I just wish people had that conversation.

• 43:22Tom Bilyeu?

  On that one, it might be purely psychological, but cutting, like I would expect cutting taxes for the wealthy to be hotly contested. And I get why. Cutting the taxes for the middle class, I don't know. It's interesting. I could be totally on emotion on this one. I do not know the data about what they do with their money. And they probably either spend it on something that is not a productive asset, or they put it in the bank, both of which are suicide. But setting that aside for a second, let me lay out the, the problem that I think that we have the like just major thing that is holding us back right now. We're 36 trillion dollars in debt is the easy number to point at.

• 44:02Tom Bilyeu?

  But it's actually only part of the picture. I think when you take in government debt, corporate debt and individual debt, I think it's something like 170 trillion dollars in debt. So we are in, we're in so deep, there's no way to get out gracefully anymore. There's only either civil war or revolution, or what Ray Dalio calls a beautiful deleveraging. But you have to, you have to get out from under the debt. And getting out from under the debt is, I mean, Ray Dalio, as far as I'm concerned, just, he has this mapped out. Nobody's made more money by understanding these cycles than Ray. He's bet in the markets and has one showing that, oh, every country goes through it.

• 44:46Tom Bilyeu?

  This is exactly, it goes in six stages. You bet in each stage just like this, and he's made god knows how many billions of dollars. So the, you have four levers that you can pull to get out from under this debt. They're all painful and.

• 45:01Tom Bilyeu?

  You, what he calls doing it in a beautiful way is to like balance all of them. So the four levers are, you have basically wealth redistribution. So I think everybody understands that one. You've got austerity. So, sorry, we have to move towards balancing the budget. You're not going to do it instantaneously. You have printing money and you have debt forgiveness or debt restructuring. And that's it. Now, the problem is debt restructuring is, you're just telling some people, sorry, you're not going to get paid back or you're going to get paid back some small amount. And so that person just lost, God knows how much of their wealth. So they're going to be traumatized. You have to be very careful.

• 45:42Tom Bilyeu?

  Obviously, wealth redistribution, getting confiscatory makes people pretty unhappy. So you're only going to be able to do that for so long before people bail. And anybody that's read Ayn Rand, no matter how cringey you think it is, she's got her finger on something, which is there are certain people in society that make. And the only way the government has taxable revenue is if entrepreneurs build things and amazing people work for those entrepreneurs to help build those things. And that generates tax revenue and yay. And then obviously you're going to have to raise taxes. You're not going to be able to, the only way that you could ever hope is that if you slash taxes and you see an immediate increase in GDP growth. And the odds of that happening are effectively zero. It might happen over time.

• 46:26Tom Bilyeu?

  And so when times are plenty, great. But in a situation like this, you're going to have to tax people more, the wealthy. You're going to have to tax the wealthy more, to be very specific. And so if I'm right about, or I should say rakes, I am very much just repeating what he's laid out. If he is correct about that, the one thing that nobody's doing is pulling any of those levers, except for money printing. All people do is money print.

• 46:55Speaker 01

  If we ever want to have an argument, I'd love to argue with him. Yeah, please. The, the way that I see it is if you want to have a serious conversation about the debt, there are a couple of very easy things that you can do first. And until people do those, it's not even worth talking about anything else because everything else is way more exotic. Yeah. The, I'm sure you've had, somebody talks about like, I need to min max, um, like, what is my optimal anabolic timing window for eating after the gym? And this guy goes to the gym like once a month. And it's like, bro, you literally go and do anything for 30 minutes a day and then we'll talk because everything else is a waste of time. Um, the first thing, uh, and this is inarguable, you have to fund your IRS. Okay. Before that happens, nothing else matters. The IRS has told us on its own that there's like 400 to 600 billion with a B dollars every single year that is legitimately owed money to the federal government

• 47:38Speaker 01

  that they just don't have the resources to go after. So if you're not serious about your revenue collection center, nothing else matters. Nothing else that anybody says is relevant. And they, I just think it's a kind of a joke. It's a mean conversation to that point. So the first thing is whatever money is owed to the government, you have to fund the IRS to get it. That's number one. Number two is you look at your huge impact. I'm sure in business, you got, do you call it the 80 20 thing or something where like 20% of things you can do in a business have 80% of the impact. Yeah, the free to principal. Yeah, sure. Yeah. So like, yeah, focus on those first, right? Um, there are some things you can do that have a huge impact on the budget. Okay. One is, nobody will ever do this. And we're talking about this, we need to expand our tax base in the United States. I'm sorry, but middle class and working class people don't really pay that much in taxes in the U.S. Despite what they think, they have no concept of it. People

• 48:21Speaker 01

  will talk about how nice these European countries are, you know, people on the left. If you work in one of these European countries, if you make 30, 40, 50,000 euro, pounds, whatever a year, you pay a decent chunk of taxes. In the United States, the bottom 50%, the effective tax rate is like 1.3% uh, because of FICA. And that's because of all our refundable tax credits and, and the standard deduction is now like $20,000, I think for American dollars is huge, right? We need to expand our tax base. That's a huge revenue increase. And we probably need to bump up some of our rates, just like a couple of points. Bump up what? Bump up a couple of our rates, a couple of points. So all of our, so those Trump tax cuts should have never been extended. It's not going to hurt anybody. You can probably bump your capital gains rate a few points. These are things that will have a very small impact across most people and it

• 49:04Speaker 01

  Will be massive, hundreds of billions or trillions, depending on the timescale you're looking at.

• 49:09Tom Bilyeu?

  You feel like what I just said is that runs contrary to that?

• 49:13Speaker 01

  Not necessarily, but I'm saying like these are the two.

• 49:15Tom Bilyeu?

  I'd say the IRS, but sure, yeah, the idea is you have to collect more tax.

• 49:19Speaker 01

  Yeah, so these are the two things that need to happen first.

• 49:22Tom Bilyeu?

  Yep.

• 49:23Speaker 01

  From there, when it comes to dealing with debt and deficit, we need to have a conversation of like, what should the debt be? It can't be zero because that doesn't make sense because there's certainly there is some way that the United States government can productively allocate money that's more efficient than just sitting at no debt. It can't be 500% of GDP because that's probably not sustainable and eventually interest payments are going to dwarf everything else we pay for in our budget. So we need to figure out what that debt should be and that needs to be a moving target. We need to be.

• 49:48Tom Bilyeu?

  I'm pretty sure that it would be impossible to get to 500% of GDP.

• 49:53Speaker 01

  What are we, is it 140?

• 49:55Tom Bilyeu?

  98% of all countries that have gone north of 130 end in civil war. So I just don't think you get there. I think the country tears itself apart first, but anyway, whatever.

• 50:02Speaker 01

  That's possible. Yeah. The, so, so IRS has to be funded. We have to probably bump taxes up. We need to look at, if you want to make spending cuts, then you need to be a big boy and you need to make real spending cuts, not whatever Doge does. If you want to reduce the size of, if you want to do something about Medicare or if you want to do something about like Medicaid or the federal, like the DOD. If you want to do something about your huge line items, then let's have that conversation.

• 50:27Tom Bilyeu?

  You have to. There's no way around it.

• 50:29Speaker 01

  But right now people want to nibble around the edges at the smallest reductions that are going to do nothing. Yeah. And then nobody really wants to talk about increasing the taxable revenue. Oh, and then there's another thing that you can do, and I don't know if it was in those four levers, but growing your economy will, will help everything.

• 50:42Tom Bilyeu?

  It's not in the four levers because that's not going to get, that's not like an active thing you can do to get yourself out of debt. It's a thing that you do and if it works, holy shit, it will get you out of debt.

• 50:50Speaker 01

  Because as the economy grows, assuming the government budget is increasing at a lower rate than the growth of the economy, then your tax receipts and everything grow along with it, which is also good too.

• 50:59Tom Bilyeu?

  Yeah, for sure. And look, I think right now Trump's whole playbook is don't worry, we're going to grow our way out of this. And I don't want to deny that that's not amazing and God, I hope that we pull it off. And I hope that by deregulating and reducing taxes, that's exactly what helps. But these are not the playbook for getting yourself out from under 36 trillion dollars in debt.

• 51:17Speaker 01

  Yeah. So I would say that the big problem that we have right now is the thing that I talked about earlier where people are, they're picking positions that like morally or normatively seem like, oh my God. Like I remember when we mined coal and they think that's like good for the economy, but Trump is making some of the worst. Moves for getting us out of debt. So for instance, Horrible. Depending on where you want to go, this concept of like tariffing all these other countries on the planet. One of the nice things, we kind of argued, I think we talked about this, maybe the last time I talked to you. When it comes to trade deficits is people think that if you have a trade deficit with a country, you're losing. There are things that we gain though, by everybody in the planet, holding USD. One of those things we've gained uniquely is that we can actually do a lot of debt in our country in a way that no one has before.

• 52:02Speaker 01

  Because every country on the planet wants to buy treasury bonds. The only thing that managed to shake Trump off of his ridiculous tariff position was when those treasury yields started to increase. When it costs more for the United States government to issue debt, for the treasury to issue debt. And that was because other countries were for the first time looking at the US like, I don't know if I actually want to be a US dollar holder, or if I want to buy US treasury bonds now, I don't know what this is going to be worth. So we have the ability to issue debt largely because of the deficits and because of the way that we trade with other countries. And so because of that, we can fund our government for longer than I think historically other empires have been able to. And if we take the other moves necessary, like real moves to increase our tax base. So it's not popular on the left, but you have to expand your tax base.

• 52:44Speaker 01

  It's not popular on the right. Wealthier people can probably pay a couple of percentage points more on capital gains or on on ordinary income and be okay, right? If you do these things, you continue to grow your economy and then you capitalize on what you're good at. We have to stop demonizing like service worker, demonizing last stage of manufacturing, or demonizing, you know, like people that autistic people sitting in front of computers because these are your most productive workers, right? We need to throw everything in that direction and we need to not, Trump is like attacking all of the fundamental things that make us so successful as a country. Like attacking schools, like regardless of how you feel about the United States, nobody in Uganda, nobody in France, nobody in Indonesia has been like, oh, you know Harvard and Yale, these are like the worst things about the United States. Why would you attack your, your most successful institutions that are bringing the brightest and smartest people to conduct research and everything else?

• 53:29Speaker 01

  Just all of those steps seem like they're economically minded, but they're in the worst direction. And we had an economic contraction last quarter. Why? That shouldn't have happened. They're just, they're, yeah, we're going in the wrong direction. Under, under the guise of this is supposed to be the guy that cares about the debt. And it's like, what is happening? What happened there?

• 53:46Tom Bilyeu?

  Yeah, that one was really distressing for me. Just as you look back in history and you see how bloody it is when a country goes bankrupt. And I think, I don't think people think it can happen in America. Not only can it, it is a mathematical certainty as of right now, unless you have a sudden, dramatic reversal of policy, or AI takes off and just absolutely crushes it. But right now, you're at roughly somewhere between 6.2 and 6.5%. Your deficit spending is 6.2 to 6.5% of your GDP. So that's basically, your debt is expanding at twice the rate of

• 54:30Tom Bilyeu?

  your economic growth. So it's like, yo, you can't do that. That's insanity. So

• 54:37Speaker 01

  But all the things we're doing, deporting a ton of people, the ICE budget is like 160 billion, the DoD budget increased 150 billion, like, all of these are steps that are hurting our ability to address the debt. Like, we need more workers. We need labor is your most important supply for your economy. Like, we need more talent from around the world. We need more scientific research and innovation. We need more of the boring autistic white collar computer. But all of those things are under attack by the party that was supposed to be the one to reduce our debt and deficit. It's like, and we're setting ourselves up for like, long term pain here when it comes to this. And that's, I guess, is very frustrating for me to look at.

• 55:10Tom Bilyeu?

  So here's how I would read the economic situation. This moment in history got really wild, because over the last four years, so many people came in that were not hand-selected. And I believe that that creates a twofold problem. One, you are driving the cost of labor down in sectors where people that are least likely to be mobile, the learn to code people, for whom that's like, the most absurd statement ever, like, hey, bro, just start something up with AI. Like, these are the people that are least likely to be able to do that. And you're icing them out of meaning, purpose, and an income. That has massive ramifications.

• 55:52Tom Bilyeu?

  Also, and honestly, that to me is a minor point. I think we can deal with that in other ways. Bringing high-end manufacturing back will help to some degree. But the thing that worries me the most is, right now, you look at what's going on in Europe. And in Europe, they are, they've They're years ahead of us, maybe five years, maybe 10 years ahead of us in terms of importing people en masse that don't make an attempt to assimilate, that don't share values, and you will get a collision of values. And when you get that collision of values, maybe we're all perfectly fine with that. The Native Americans found out real fast, they had a collision of values with us, and we won, and I'm certainly not crying about it. But as the person that's

• 56:36Tom Bilyeu?

  here, I'm like, we have a set of values. Certainly, I have a set of values that I believe America stands for. We started this by essentially outlining at least what the two of us think are roughly the values that we're trying to build a system around. And when you import people that en masse with effectively no check on that, you're going to have a problem. So even if you separate it from the economic conversation, I think there's still a massive problem. And then, I haven't looked at the data close enough, but I have a sense from headline reading that there's also some level of economic draw from people that have come, they're not contributing, but they still do have access to certain resources, even if it's only emergency, there's

• 57:19Tom Bilyeu?

  just still some pull on the resource base. So now, for people that are already like, why isn't my healthcare better? You're like, you've got another thing chipping away at the edges of that problem. It is by far not the only thing, nor do I think it's the reason. I'm just saying, to me, the immigration conversation is more about values and what happens to a country, but there's also the economic tangle.

• 57:41Speaker 01

  Sure. So we can have that conversation about values, but before, when it came to the debt, you told me civil war. So it's hard to say like, well, is there going to be some value clash that is worth fighting for such that now we have a civil war and we all kill each other?

• 57:52Tom Bilyeu?

  Yes.

• 57:53Speaker 01

  So I think that that's a conversation that has to happen.

• 57:55Tom Bilyeu?

  Well, so let's, because I'm now maybe confused, but that of all the things I've said today that I am most able to point at the data and just be like, This is what always happens. Over the last 500 years, it's a cycle that repeats over and over and over and over and over across a whole bunch of different countries. Anybody that crosses the 130% debt to GDP ratio for too long, I'm talking like 18 months to two years.

• 58:19Speaker 01

  Sure.

• 58:19Tom Bilyeu?

  They end up tearing themselves apart.

• 58:21Speaker 01

  Sure. So the first issue I have is I think comparing the immigration problems in Europe to the immigration problems in the United States, I think these are different, meaningfully different in terms of what's happened. So the Syrian refugee crisis, there was a certain type of refugee even that was going into Europe. The issues that European economies have, funnily enough, resemble a lot of issues we would have if we were more manufacturing based. Like you have economies that we view as being very successful, like Germany. Germany views itself as being a little bit trapped in the manufacturing stage and they're having problems outputting these more productive, higher level positions. European countries have a lot more welfare stuff that the United States doesn't really have.

• 58:59Speaker 01

  Like in Europe, you legitimately do have problems in some countries, especially Sweden, where people can go, not learn the language, not get a job and be a leech on the system forever. In the United States, there's a reason why ICE isn't raiding, you know, food stamp offices, they're raiding Home Depot, they're raiding places of employment, you know? We are hungry for workers in the United States. We could legalize the 13 million people that were here before all of the asylum bullshit. We could legalize those people tomorrow and half of them are already working, you know? We would be able to put these motherfuckers to work and we assimilate people like crazy in the United States. We just, for a variety of reasons, I think a lot that goes back to that Reagan speech, like I could never go to France and feel French or go to Japan and feel Japanese. Anybody can come to America and truly feel American.

• 59:42Speaker 01

  And, you know, some of the most xenophobic racist people we have here, God bless them, are immigrants, some even illegal that have made it here, you know? So I think that comparing the United States to European immigration problems is a bit of a folly because our unemployment is still very low. We don't have a high welfare state. And when you think about the type of person that comes to the United States, you're already selecting for, even if it's illegal, you're already selecting for an exceptional person. They were willing to leave their country and go somewhere else, sometimes on these perilous journeys to go and work somewhere because-

• 1:00:08Tom Bilyeu?

  Yeah, I'll bump up against that one. So if you look at, the same would be true of the systems in Europe and that- Just hasn't been the outcome. It's not like

• 1:00:17Speaker 01

  What do you mean systems in Europe?

• 1:00:18Tom Bilyeu?

  The open borders forces people to like, oh my God, I'm gonna take a risk. I'm gonna go do the thing and I get there and ah. Uh, so you would think, oh, I've just attracted somebody who's really like got their head screwed on straight. They know what they want. They're willing to go after it. They're taking that risk. But they still, they're, people are going to exploit whatever the system makes exploitable. Like that's just human nature.

• 1:00:39Speaker 01

  I agree with that. Those systems don't really exist in the United States. We don't have a blossoming welfare state where it's like, I'm gonna go to the US and survive off welfare. That's a pretty hard.

• 1:00:46Tom Bilyeu?

  Interesting. I love that you, um, like I, right now ish, I would say I probably, but it's just emotion. It's just in intuition. I've not spent time looking at this. I want to be very clear.

• 1:00:58Tom Bilyeu?

  I have a feeling that there's ways to exploit the system that we haven't even thought about. I have a feeling if I looked at it, but anyway, I don't expect that to gain any ground. But, um, when I look at where we going and I can feel the shift. I think the, uh, economic freak show that we live in right now has created populism in a hyper predictable way. That's pushing us, uh, pushing younger generations, most importantly, towards something that looks like socialism. And that is a call for giving more things away, making more things available to everybody. And so, um, one of the reasons Quest was successful was we understood a new type of marketing that we now call social marketing.

• 1:01:42Tom Bilyeu?

  Uh, at the same time that the world woke up to the fact that sugar was the problem and that's a big reason that we took off. And so I think we're about to have a very unique problem, which is populism is pushing us towards socialism right at a time where we open the borders to everybody for four years. And so that is not without its consequences. Now, honestly, I think we'll bounce back from this. Obama showed that you can deport people well and that you don't have to have a whole country like up in arms and fighting itself over it. Um, I certainly don't think Trump is doing any favors to himself. There seems like a ton of political theater, like making it seem as Gestapo like as humanly possible.

• 1:02:19Speaker 01

  The horses marching through.

• 1:02:20Tom Bilyeu?

  So fucking weird.

• 1:02:22Speaker 01

  Park or McCarver, yeah.

• 1:02:23Tom Bilyeu?

  Stupid, but I think. That this is one while I don't love it because I don't like the way that it makes me feel in terms of I want like America to be welcoming and all of that and I love the identity that America has as being a nation of immigrants. But I think at this point um in the history cycle, we're gonna have to be way more thoughtful about immigration as snipers, finding the right people that we want to bring in that we think will both assimilate and be able to create the jobs of the future, fill the jobs of the future like this is, we need to make ourselves the place that everybody wants to be.

• 1:03:04Tom Bilyeu?

  Um and not just open our doors and and say to everybody, we're at least a little better than the country you're leaving.

• 1:03:09Speaker 01

  Sure, I don't disagree with that. I mean, Trump is attacking all of the reasons why we want people to be here, right? Attacking the visa system for shipping international citizens, attacking our huge universities, attacking our

• 1:03:21Tom Bilyeu?

  Have we seen Trump differently? And I'm certainly happy to break that down. I don't want to fuck up your flow, but.

• 1:03:27Speaker 01

  Yeah, I mean, we can get into that if you want. I'm just saying that if we want to have a realistic conversation about illegal immigration, right? I think that borders are important. I think illegal immigration is bad. I think that people should be tracked here. Like, these are all things that I can agree on. But I think like if I was the emperor, God Emperor for one year, and I wanted to fix this problem, the United States in a way that like, let's actually fucking, let's actually for real, for real, fix this problem. It would be, here's a path to amnesty for everybody in this country, okay? Go to a fucking office, fill out your shit, depending on how long you've been here, maybe we can, you know, have them do a fine on their future 10 years of income if it makes some people, you know, feel good about themselves, whatever. Here's a path to amnesty. Um if you've fucked up too much, so felonies, big misdemeanors, whatever, maybe they get the boot.

• 1:04:06Speaker 01

  And then from there, you crank up uh finder's fees or rewards and then punishments on people that are here illegally. If you have a path to amnesty, it's relatively easy to take that path. There's not the 30-year fucking waitlist that there is right now to immigrate here from some countries. If you figure all that out, okay, so amnesty, you know, 10, 15 million people, huge rewards, big punishments for kicking people out that are here illegally, and then you start from there. I think that's like a reasonable path forward to figuring out the problem. And then we don't have to think about it and talk about it. And now the people that are here legally can be tracked. We'll know if they're committing crimes, they're paying taxes. Taxes, you know, in a more legal manner, like, and then we move on to the next thing. This, like, we're gonna deport 20 million people is delusional, it's a waste of fucking time. No matter what you care about, it's bad, unless you just like the cruelty on TV. Because it's not helping your economy, it's not helping the government budget,

• 1:04:50Speaker 01

  it's not helping people trust the government more, and it's not fixing any of the problems of culture clash or anything else, because it's made people even more resentful. It, that, there has to be, like, it probably has to start with a path to amnesty, and then from there, uh, increase the penalties for illegal immigration, increase finer fees for illegal immigrants, and then work from there. If you're not willing to have the conversation, it's like the one with the budget. If you're not even funding your IRS, we're not serious about the debt. That's, that's how I feel. So when I see people fixated on so much of the other enforcement mechanisms, like, what's, what is even the point? It's like the war on drugs, like, how did that go, you know? How did the war on terror go, you know? It's like, let's, like, let's have a real conversation about this thing, is my frustration.

• 1:05:25Tom Bilyeu?

  Uh, okay, so, uh, that seems like a perfectly reasonable plan. I like somebody that can, uh, look at it and just, these are the outcomes that I would expect to get from something like that. We're not wasting time with, uh, political theater, uh, Humvees and horses.

• 1:05:40Speaker 01

  Like, I can, like, I'll predict, like, right now, and I'll be right, in four years, we're not meaningfully deporting any number of people from this country. We are wasting money on ICE. That budget has been increased to the size of the, what, the 17th largest military in the world.

• 1:05:50Tom Bilyeu?

  Do you think they stopped doing it because it's so unpopular?

• 1:05:54Speaker 01

  It's just hard, it's a lot of resources and money, and there's a lot of people that are invested in it not happening. If you're a landlord, you've got, like, seven people that rent in your building, and they don't cause trouble, whatever, and they work, you don't want those people kicked out. The job that employs them doesn't want these people kicked out, like, what? Like, you're hurting everybody involved in this transaction, like, it's just a lot of money and a lot of work and a lot of theater.

• 1:06:11Tom Bilyeu?

  Why do you think people are so pro-boot the illegals?

• 1:06:17Speaker 01

  Because if it's a feel-good message that you don't have to think about, and it's just like a nice, like, this is a person I can blame for my problems, and then we can kick them out. Like, when you have people in Pennsylvania that are obsessed about illegal immigration, clearly there's some disconnect from reality there, like-

• 1:06:31Tom Bilyeu?

  I think it's pointing to something very simple, which is, you mentioned earlier, the unemployment rate. I always get a little, um- Like the hairs on the back of my neck stand up when people talk about the unemployment rate because I want to know how many people have checked out, how many people would normally be considered looking for work and they've just decided I'm out.

• 1:06:51Speaker 01

  I mean, those numbers are all tracked. You can find it. We talk about the unemployment rate. That's the ordinary one is the U3 unemployment. There's a U6 unemployment, which includes, I think, discouraged workers and you've got labor force participation rate. All these numbers are about where you'd expect them to be. It's not like there's been this huge divergence from the U3 and like the U5 and the U6 or like the U3 and labor force participation has changed a little bit, but that's because a lot of people have like legitimately retired because their population is aging.

• 1:07:10Tom Bilyeu?

  So if I look at the numbers you're saying, it's going to be same as it ever was. We don't have a unique.

• 1:07:14Speaker 01

  We don't. That's a lie. Sometimes people will give this as a truism, like you don't know the real unemployment rate because you don't know how many, because U3 doesn't include, they'll say unemployment rate doesn't include discouraged workers. We have other numbers that track that, but there's a reason why we don't use those.

• 1:07:26Tom Bilyeu?

  But there's no meaningful increase in.

• 1:07:28Speaker 01

  Divergence from where they're at.

• 1:07:29Tom Bilyeu?

  Interesting, man. I'm very surprised. Total intuition. So hey, it is what it is. But that's interesting. Okay. So then I'll chalk that up to, let me do a quick layout of my economic thesis about why I think people feel the way that they feel. And if that one is just people feeling emotional, I wouldn't be too surprised. Okay. So the economy has physics and once you understand the physics of the economy, it becomes very easy to understand why people are so pissed off right now. The way that the economy works is we have a total fiat system. Every dollar that comes into existence comes in as interest bearing debt. It didn't exist and then it magically exists based on a semi-private company known as the Federal Reserve. They do it oversimplifying, but they do it by buying debt from the government.

• 1:08:14Tom Bilyeu?

  And so government issues debt, they buy it up. They try to sell it to citizens first, but if they can't, then buyer of last resort, as is known. And when they do that, they're making money out of thin air. The banking system does the same thing. Right now, they are not legally required to keep even a penny of every dollar that they intake. So if they intake a hundred dollars, they can loan out a hundred dollars. And so now you just doubled that hundred dollars. So every dollar that goes into a bank, it doesn't end up being exactly doubled, but legally it could be exactly doubled.

• 1:08:43Speaker 01

  Through Googling, this is like kind of difference between like M1, M2, M3 money supply. Investopedia will have like an article on all this.

• 1:08:49Tom Bilyeu?

  Right, exactly. So your money supply is inflating to high heaven. There's a relationship that I don't normally bother trying to explain to people between. Entrepreneurs are constantly innovating. Innovation actually drives prices down. It is deflationary, which people think is automatically bad. It is not. People have to differentiate between crisis-led deflation and innovation-led deflation. The government simply money prints over the innovation-led deflation so that you never realize that it's happening, so that 2% is actually more than what otherwise.

• 1:09:23Speaker 01

  I will say very quickly, some people don't realize this. When innovation drives cost down, it kind of does, but it kind of doesn't, because consumer standard of living doesn't buy things cheaper, they just buy more of the things. So for instance, innovation has absolutely driven down the cost of manufacturing Game Boys, but when the cost of manufacturing a Game Boy gets cheap enough, people want a Game Boy Advance. Or the cost of manufacturing a PS4 gets cheap enough, people want a PS5. So innovation will drive those costs down. Insulin is a really great example that everybody cries about now. If you want to go buy that cheap bullshit pig insulin, you can go to Walmart and buy it, you're probably going to die using it, but there is much better synthetic analogs available that cost more, but as the innovation drives the cost of some things down, the final product that's produced is usually better, so people end up spending the same.

• 1:10:06Speaker 01

  So in a way, we don't get to see the innovation driving stuff down. People unironically say stuff today like, "Well, my life isn't any cheaper than my, you know, great-grandfathers." And it's like, no, it's not, but that's because you have a fucking cellphone with 5G internet connection and apartment and a, you know, and a car and everything else. Like, you've got way more available in your life now than somebody had available, you know, like 30, 40, 50 years ago.

• 1:10:26Tom Bilyeu?

  Yeah, there's no doubt there's hedonic adaptation. I think about that a lot with video game development. It's like, there's never going to be a time where your game loads faster, because people will always build games that are at the absolute max of what the machine can hold. Having said that, though, you can now get a PlayStation 1 for, you know, like pennies on the dollar. You can get emulators and all that stuff. So the reason that the Fed can't just go 2% to target and nail it is because there is this complex interplay between the innovation, where there is going to be a time where it's just getting cheaper and cheaper and cheaper before they build the next thing, always and forever, but they're still going to inflate and eat up all of that. Now, the reason I don't normally go into that is because it is so complex and it's hard to tell, like, where are we getting benefit? Where did we just add more features?

• 1:11:11Tom Bilyeu?

  So on and so forth. But anyway, there's a complex interplay. But because you have a fiat money system, the only way to pay your debt is to print more money. Every dollar that you print inflates the money supply. Close enough. I am, that is very much heuristic, but.

• 1:11:27Speaker 01

  And then just the counterbalance to that is inflating the money supply versus also like having a growing economy, right? We don't want to have, it's not that inflating is necessarily bad. It's a balance of.

• 1:11:36Tom Bilyeu?

  Inflating is bad. Full stop, period, end of story. Inflation.

• 1:11:39Speaker 01

  When you say full stop, period, end of story, just to be clear, every single central bank and every single major economist on the planet disagrees and no country has ran successfully on a 0% inflation policy.

• 1:11:47Tom Bilyeu?

  That's false. So.

• 1:11:48Speaker 01

  Who has?

• 1:11:49Tom Bilyeu?

  You're saying who's doing it now? No one's doing it now, but we didn't, uh, from a historical standpoint, the reason that you would make the trade off. Cause it's very much a trade off. If you have a hard money system, it becomes very hard to smooth out the lumps in the system. So when something breaks, you are fucked.

• 1:12:07Speaker 01

  Sure. Like great depression and everything, right?

• 1:12:08Tom Bilyeu?

  Right. The government can't come in and be like, ah, it's, it's fine. You really all do have your money. It's a psychological game. Because they are just still stealing money and spreading it around, but it does have a huge psychological W. And that's why people need to, I, people need to understand it. While I will argue that from a moral perspective, people should have a hard currency option. That they can completely divorce themselves out of the fiat system and then force the fiat system to compete with the hard money system. But anyway, I don't expect to get anywhere on that. I know that that's like a, a big one. But I really think that there is a moral argument to be made, uh, for hard money.

• 1:12:49Speaker 01

  Okay. You can buy gold now if you want and you can always trade it back to USD before you buy things, right?

• 1:12:53Tom Bilyeu?

  You can, but it's been seized historically and gold doesn't inflate a lot, but it inflates by about 2% a year. So.

• 1:13:00Speaker 01

  How can gold inflate? Cause more is being dug out or?

• 1:13:03Tom Bilyeu?

  Yeah. Yeah. Like metal inflation, this is part of the discovery of the new world, technically Mexico. But when they discovered Mexico, they flooded Spain with gold and it was wildly inflationary. So, uh, anyway, gold is better than your alternatives. I don't want to over pitch crypto, but that's like the promise of Bitcoin is that this, hey, it's truly uninflatable. But it's also assailed and it has its own problems. But anyway. Uh, I'm trying to lay all that out so that people understand you're in a fiat system. Because every dollar that's created has a debt obligation. If you print a trillion dollars, you owe a trillion fifty billion at five percent. So how are you going to pay back the fifty billion? It doesn't exist.

• 1:13:47Tom Bilyeu?

  And so now you have a system where you're forced to print more money. And the bank has no cost of goods, the central bank that makes the money. So they have every incentive to want to put more money into the system because they make the interest. Now, it also creates a system where they're loaning you money and they don't care if you ever pay back the principal. They had no cost in the principal. All they care about is the interest payments. And so they'll milk that for as long as they can until the system effectively collapses. Which is exactly what you see. You see these six cycles where in the beginning, uh, governments are very judicious with their debt. They're very cautious. It grows like crazy. You were talking earlier, you don't want zero debt. That's true. Uh, so if you could stay in that phase one and be judicious with your debt, you'd be fine.

• 1:14:30Tom Bilyeu?

  But nobody ever does. Literally in the last five hundred years, every single country ever has started going crazy like we're doing, where they just start printing a little bit more, a little bit more, a little bit more. You can look at the graphs, they're just absolutely bananas. Uh, and so when you do that, all of a sudden you have inflation. And the inflation hurts, it's inflation is money printing. Is where you socialize losses across everybody. So you, it's an invisible tax that goes to everybody, billionaires and poor people alike. But it only gets given back to people who own assets. And it's literally directly given back to people that own government debt.

• 1:15:12Tom Bilyeu?

  And asset prices go up because people flee the dollar and into the assets.

• 1:15:20Speaker 01

  This is a clarifying question. Doesn't it technically hurt people that own government debt? Because if you're, if the money, like let's assume tomorrow the USD inflates a trillion percent. Well, now my treasury bond is worthless because it's locked in on that dollar amount that.

• 1:15:32Tom Bilyeu?

  That's very fair in the sense that anybody that owns government debt, like it's denominated in dollars and so that's going to go down in value. What I mean that it helps them is that they do it specifically to stop the bond market from collapsing. So instead of you losing your money, you're now like, hey, I'm protected. I know that the government is never going to default on it. This is how it becomes known as the risk-free rate of return. Now you accept that if your interest rate doesn't match the inflation rate, then you actually are losing. It's what they talk about when it's negative real yields. And so, yes, if you're in a negative real yield situation, you're in a bad situation. But you know that if you put in a thousand dollars, a thousand dollars might be worth less when you get it, but you're still going to get the thousand dollars.

• 1:16:16Tom Bilyeu?

  And as long as the interest was more than the inflation, you should come out ahead. Now, when it, when it, what they call a crack in the bond market happens, now you're starting to get into, ooh, it was negative yield. I've got to get out of this. There are no buyers. And that's where you find yourself in trouble. That's when the government starts seizing wealth because they realize they can't raise funds through government debt anymore. And given that this is all a house of cards, it's just complete chaos.

• 1:16:39Speaker 01

  Okay. I feel like negative yield is not the worst thing in the world. What you're really trying to beat is just holding on to dollars, right? So if I buy a treasury bond and the printed, you know, bond is two or three percent return and the inflation ends up being higher, I've lost money, but it's still not as bad as just holding on to raw USD, right?

• 1:16:55Tom Bilyeu?

  Correct, because you're getting paid an interest payment. But really what you're trying to hold on to is purchasing power.

• 1:17:01Speaker 01

  Sure, but generally investments are done when you buy, when you're buying bonds. It's because you're, I imagine it's because your risk profile is such that you don't want to embark on any level of volatility. You need some kind of like guaranteed risk, you know, free rate of return or something. But an ordinary person, I'm, I'm going to guess you probably don't own much in bonds, right?

• 1:17:18Tom Bilyeu?

  I own a ton of bonds.

• 1:17:19Speaker 01

  Oh, why?

• 1:17:20Tom Bilyeu?

  But now for the first time ever, I'm starting to pull all my money out of bonds because I don't trust that over the next 10 years, the government will actually be able to pay.

• 1:17:27Speaker 01

  What's the, what's the incentive to buy bonds versus just like ETFs or any broad market or even VTS?

• 1:17:31Tom Bilyeu?

  So I have all of that as well. My thing is that I am extremely risk averse because I've already made my money. So.

• 1:17:38Speaker 01

  Oh, sure. Okay. Well, in that case, then it still fits, right? So you, so you're buying bonds. Because you don't need to make any more money and you just want to park it in a place that's like

• 1:17:45Tom Bilyeu?

  Yeah, so I've got some that's risk free.

• 1:17:48Speaker 01

  Sure.

• 1:17:48Tom Bilyeu?

  I've got some that's risk free. I've got some that's sort of medium risk. I have a lot tied up in my own company. That's my ultra high risk investments. So, but I am in a just much more defensive phase of my life because I've generated wealth.

• 1:18:01Speaker 01

  Sure. Can I ask you a question? I'm just curious for, because I always hear this given as like these hard rules of inflation is always bad. Money printing is always bad. This is suboptimal.

• 1:18:08Tom Bilyeu?

  Yep.

• 1:18:09Speaker 01

  Why is it that no other country on the planet seems to be pursuing that supposedly, obviously superior fiscal strategy of just having like a hard currency that has no central banking manipulation involved?

• 1:18:21Tom Bilyeu?

  Because of human psychology. So there is, uh, there are trade offs on both sides. So when you print money, you guarantee that ultimately your country is going to go bankrupt. Again, uh, only, only one country, Japan, has avoided the fate. So they've climbed over 130% and been able to stay there because of, um, unique cultural reasons to Japan. Be interested to see if that holds now that the Japan carry trade has fallen or the yen carry trade has fallen apart. Or is cracking, I should say. So don't know what Japan's future is. They, they may have run out of time and they may fall into that bucket, but I'm optimistic that they won't. Okay. So why do they do this? And I think we, uh, ended up bumping over this last time.

• 1:19:04Tom Bilyeu?

  So the reason that people would choose to do a fiat money scenario is if you did a fiat money scenario and you just stayed in phase one, you'd be great. It's just that nobody ever stays in phase one. Phase one is where you only loan money that you can easily pay back. So Warren Buffett summed it up. The easiest way to fix the US's deficit problem is to say that if the US's deficit is more than 3% of GDP, that none of the, um, Congress or Senate are available, uh, available for reelection. And he was like, suddenly people are going to balance that budget really fast. And all that basically says, we talked about at the top of the show, is that you're saying one year.

• 1:19:44Tom Bilyeu?

  You could, you could be in debt up to one year of your, uh, account, your economic growth. So economy grows roughly on a long enough timeline by two to 3%. So cool, 3%.

• 1:19:56Tom Bilyeu?

  And Everybody does it because it allows people to get elected. And you, once you have fiat money and you can create the illusion that everything is fine. Hey, your bank just collapsed. No worries. We've, we've still got all your money for you.

• 1:20:13Tom Bilyeu?

  The stock market crash, don't worry, like you're gonna be fine. It was about to ripple out to the banks, but we stopped it and all the banks are backstopped. There's no run on the bank. You're all good. But if they're doing all of that by money printing, they're, everybody's dollar buys less. And you still feel okay, though. And so you can take in tax a lot more from people that way than you can by just openly saying, I'm gonna have to tax you. And so what ends up happening is because they can do that, because the economy is so difficult to get right, they will keep borrowing and borrowing and borrowing, which they are structurally, they, they must, because the only way to pay back that debt, remember, because only a trillion dollars came into existence, but a trillion and 50 billion was owed.

• 1:20:56Tom Bilyeu?

  So it's like all the incentives are there, so they just keep borrowing, keep borrowing, keep borrowing to service the previous debt that they took on. And it then gets totally out of hand. People's purchasing power is going down. And so now you find yourself in a moment like today where young people are freaking out because they can't afford a house. Now, why can't they afford a house? Uh, partly because of regulation, we're just not letting people make enough because of what you were talking about with NIMBYism, where it's like, well, I don't want my property value to go down. I don't even want it to stay still. I want my property value to go up. That's the promise. And so we over tighten the ability to build rent controls, things like that. But the real one is asset prices go up as you money print. And so it just makes things out of reach.

• 1:21:40Tom Bilyeu?

  Now, I think homes fall into a unique category, which is it's the only asset that the average person understands intuitively. You don't have to explain it to them. They know, uh, I'm gonna buy a house because you can live inside of it. Hard to live inside of a piece of art, hard to live inside your crypto, hard to live inside your stocks and bonds, but you can actually live inside your house. And so people get that one. So once they become out of reach, that's how 40% end up not owning any assets, which means the poorest among us are gonna be the least likely to own assets, which means they're the most likely to get destroyed by inflation.

• 1:22:15Tom Bilyeu?

  And that creates populism because it creates this runaway inequality. It drives the rich richer and the poor poor.

• 1:22:22Speaker 01

  We could do a, we could do a whole episode on fighting, I guess, on, on macro econ stuff.

• 1:22:25Tom Bilyeu?

  Yeah, please, because if there's something I'm missing, I actually want to know, like, I'm not trying to win. So if you see something here that I'm missing, I really want to know.

• 1:22:34Speaker 01

  Sure. I would have to read up a lot more on this.

• 1:22:37Tom Bilyeu?

  Fair, man. I hope you do. Look, you're so sharp at this stuff because my, my.

• 1:22:42Speaker 01

  Can I, can I ask one thing?

• 1:22:43Tom Bilyeu?

  Yeah, please.

• 1:22:43Speaker 01

  So like right now, couldn't we theoretically pay off the debt completely without having to lend more money?

• 1:22:50Tom Bilyeu?

  You wouldn't be able to in the system that we have because there isn't enough money. So you have a system that guarantees you'll never be debt free. That's not even possible. Because you are, the money doesn't exist. So every dollar that comes into existence, comes into existence as interest bearing debt. You will always need to print more money to pay the interest.

• 1:23:12Speaker 01

  Okay, so walk me through.

• 1:23:13Tom Bilyeu?

  But you could keep that in a reasonable level.

• 1:23:14Speaker 01

  The government were to run a budget surplus for the next, you know, 15 years or whatever of, whatever it would have to be. It would probably have to be like a trillion dollars or something. But like, let's say they were to run this massive budget surplus. Um, as the government collects money, it doesn't pay it back out in the form of whatever bullshit.

• 1:23:35Tom Bilyeu?

  So like if we pay off the debt?

• 1:23:36Speaker 01

  Basically, yeah, because the government is just, because as treasury bonds expire. Um, and then they're not issuing more bonds to people because they don't have to like borrow anymore.

• 1:23:44Tom Bilyeu?

  If we paid off every dollar in debt, how many dollars would exist?

• 1:23:48Speaker 01

  Well, why is, explain why dollars wouldn't continue to circulate to some extent?

• 1:23:53Tom Bilyeu?

  They would be zero. Their, their every dollar in existence came into existence as interest bearing debt.

• 1:24:00Speaker 01

  So is there, is the maximum amount of like USD that is in circulation in the world is less than 35 trillion dollars or whatever?

• 1:24:06Tom Bilyeu?

  Thirty six, yeah, correct. So, well, that actually might not be correct. It's every, every dollar owed is more than every dollar in existence.

• 1:24:16Speaker 01

  Sure.

• 1:24:16Tom Bilyeu?

  That's the right way to say it.

• 1:24:17Speaker 01

  Okay. So then if that was the case, you're saying that it's bad if we, even if the deficit, even if the deficit stabilizes, or we get to some debt to GDP ratio, even if we maintain that ratio, in your eyes, that would still be a subpar way to run the economy? Or are you saying that would be like you're locked in phase one and that would be good, but nobody stays there?

• 1:24:38Tom Bilyeu?

  That would be awesome. Nobody stays there.

• 1:24:40Speaker 01

  Okay.

• 1:24:41Tom Bilyeu?

  But yeah, if you could stabilize it, this is why, like, when I heard that Buffett quote, I was like, oh my God. If we actually did that, you could live in a fiat system and odds are that you would never have a problem because there would, the, what ends up happening, the like weird psychological thing that keeps this flywheel spinning is that politicians will say and do whatever they need to say and do in order to get elected and reelected. The easiest thing to say and do is to say, I'm gonna give you free stuff. And so, once they say, I'm gonna give you free stuff, they're saying, I'm gonna money print. So like when Trump sent out the tweet that was like, hey, to all those fiscal conservatives, of which I am one, remember, we have to get reelected. Don't go too crazy. And I was out of my mind angry. I was like, what the actual fuck?

• 1:25:26Tom Bilyeu?

  Like, this is the problem. That you're like, yeah, we're gonna make promises to you guys that we're gonna make sure that people get their free stuff, and in a populist moment, everybody is fighting. I just want my piece of the pie. I get it. Yeah, yeah, yeah, whatever. It's all corrupt. Who the fuck cares? Just give me my piece. And so now people are like, I want a big bad man who's gonna go slap the other team in the face, who's gonna get me my stuff, and as long as I've got my stuff, I don't give a fuck. And so you've got all these congresspeople, senators, everybody just, well, as long as I've got the thing for my constituents, I'm fine. It's insane. I also, like, the way out seems to violate what I know about people, but... Okay. Right now, we're doing Lab Leak. Once I'm done with all my COVID stuff, maybe my next thing will be-

• 1:26:10Tom Bilyeu?

  Dude, this would be dope. Please hit me up. Like, is your finding stuff? Because I'm not, I just don't get attached to the way that I, uh, what I've said or what I believe. I care about cause and effect. Steven, man, thank you so much for the time. Where can people connect with you? Youtube.com/destiny, or kick.com/destiny. Or if you want a really wild ride, theomni-liberal on Twitter. Let's go. Yes, I have followed your Twitter. It is a wild ride. All right, guys, if you haven't already, please give a five-star review. It helps more than you know. And if you're not already joining us for the lives, please do on YouTube, Wednesdays and Fridays at 6:00 a.m. Pacific. I'll see you there. Peace. Let's talk about a pattern that is guaranteed to be killing your progress.

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