Every Economic Collapse Starts EXACTLY Like This...

In today’s thought-provoking deep dive, Tom Bilyeu explores one of the most pressing questions of our time: Has America fallen behind, and should we take a page from China’s playbook to catch up? Drawing on history—from America’s industrial feat during World War II to the rise of China as a global manufacturing powerhouse—he examines the economic, political, and military collision course between these two nations. Tom Bilyeu breaks down the complexities and trade-offs of free market capitalism versus the efficiency (and risks) of a command economy, unpacking how government intervention shapes innovation, competition, and even your investment portfolio. He traces America’s journey from rapid-growth freedom to managing decline through increased regulation and central planning, warning of the pitfalls of excessive government control. Tune in as Tom Bilyeu shares his take on the best path forward: advocating for a return to first principles of economic freedom, entrepreneurship, and smart, limited government intervention. This episode challenges you to rethink what it means to compete—and succeed—on the world stage. Get ready for a no-nonsense, straight-shooting analysis that’s equal parts history lesson and wake-up call for America’s future. What's up, everybody? It's Tom Bilyeu here: If you want my help... STARTING a business:join me here at ZERO TO FOUNDER https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show: https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show SCALING a business:see if you qualify here. https://tombilyeu.com/call: https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox:sign up here. https://tombilyeu.com/: https://tombilyeu.com/ ********************************************************************** If you're serious about leveling up your life, I urge you to check out my new podcast,Tom Bilyeu’s Mindset Playbook https://open.spotify.com/show/47VE90Cittmo6TGGFqg2xf —a goldmine of my most impactful episodes on mindset, business, and health. Trust me, your future self will thank you. ********************************************************************** FOLLOW TOM: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu ButcherBox: Your choice of holiday protein — ham or turkey in your first box, or ground beef for life — plus $20 off at https://butcherbox.com/impact Bevel Health: 1st month FREE at https://bevel.health/impact with code IMPACT Linkedin: Post your job free at https://linkedin.com/impacttheory HomeServe: Help protect your home systems – and your wallet – with HomeServe against covered repairs. Plans start at just $4.99 a month at https://homeserve.com Netsuite: Right now, get our free business guide, Demystifying AI, at https://NetSuite.com/Theory http://netsuite.com/Theory True Classic: Upgrade your wardrobe at https://trueclassic.com/impact Cape: 33% off with code IMPACT33 at https://cape.co/impact Surfshark: Go to https://surfshark.com/bilyeu or use code BILYEU to get 4 extra months of Surfshark VPN! AirDoctor: Up to $300 off with code IMPACT at https://airdoctorpro.com Raycon: Go to https://buyraycon.com/impactto get up to 30% off sitewide. Found Banking: Try Found for FREE at https://found.com/impact 00:00 Intro 03:54 Part 1: The Choice We Must Make 11:50 Part 2: Giving The Devil His Due: China’s Playbook and Their Incredible Rise 19:58 Part 3: America Has Some China in its Past 30:07 Part 4: The Dangerous Path Forward 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?

  Let's talk about the moment your side hustle becomes a real business. Now, I see way too many founders stay stuck running their business like it's a hobby, and then they wonder why nothing ever feels real. It doesn't feel real because it's not. I've helped thousands of entrepreneurs build real businesses through Impact Theory University, and the first step in the path to building a legit business is registering it. And Taylor Brands will help you do just that in a few clicks. An LLC, a limited liability company, is an official business structure. It's inexpensive to form and very simple to maintain. It's how you open a business bank account. It's how customers know they're dealing with a real company. And Taylor Brands doesn't stop at the filing.

• 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. On December 7th of 1941, Japan launched a surprise attack on Pearl Harbor, sending much of the US's naval fleet to the seafloor and killing thousands of Americans. The next day, the United States declared war. History would mark this infamous day as one of the starkest examples of [BLEEP] around and find out.

• 1:29Tom Bilyeu?

  Admiral Yamamoto is often quoted as saying, "I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve." Whether the quote is apocryphal or not, the statement is true. What the US did next is unparalleled in human history. On a dime, we pointed our incredible industrial base, single-mindedly, to winning the war. What followed was industrial shock and awe. American industry produced nearly 100,000 tanks, 200,000 artillery pieces, and a staggering 300,000 aircraft.

• 2:12Tom Bilyeu?

  All of that was in addition to manufacturing nearly two-thirds of all allied military equipment. A feat of production so incredible that it buried the Axis powers and ensured none of us had to learn German or Japanese. America proved we had the will to fight and the ability to outproduce anyone on the planet. We mobilized like a command economy briefly, and then we unwound it once we were again living free. And what did we do with that incredibly well-earned freedom? We went back to sleep. We globalized. We decayed. And we have fallen behind, way behind.

• 2:55Tom Bilyeu?

  If you look at the numbers, China now looks far more like the World War II era U.S. than the U.S. does. China is now the world's industrial superpower. They outproduce everyone. And because they're a top-down command economy, they can move far faster than the U.S. with all of its political gridlock. But they're a dictatorship. Let that hang in the air while you think about this. Right now, the stakes are sky-high. The U.S. and China are on a collision course economically, politically, and militarily. They're stuck in a historical pattern known as Thucydides' trap.

• 3:36Tom Bilyeu?

  This is where you have a declining superpower going up against a rising superpower, and the last 16 times this has happened in history, the two nations have ended up going to war 12 times. Each side will do virtually anything to win. The question is, does that include the U.S. becoming authoritarian? We've done it before, and right now, the U.S. is starting to make the same kind of policy decisions that China is famous for. Right now, today, the U.S. government is no longer just giving companies tax incentives, they're buying them. That means politics, not performance, could soon decide which businesses win and which

• 4:21Tom Bilyeu?

  ones get wiped out. That's the same as deciding which investors win and which ones get wiped out. So the question we have to ask is, should America be taking a page out of China's playbook? And if we do, will the free market die? And will your investments be the next casualty? The answer to that question is anything but obvious. We're going to walk through the issue in four critical parts. Part four is my answer and what I think the right path forward is. But it will only make sense if you understand what's really going on right now between the US and China. So don't skip around. This one goes down straight, no chaser. Welcome to part one, the choice we have to make.

• 5:06Tom Bilyeu?

  As of 2023, China is responsible for roughly 29% of all global manufacturing value add. That's more than the next four countries combined, which includes the US. China makes over half of the world's steel, producing 76 million metric tons in December of last year alone, while the US clocked in at a measly 6.7 million metric tons for that same time period. As for shipbuilding, China controls over half of global commercial shipbuilding as well. The US is just 0.1%,

• 5:45Tom Bilyeu?

  a number so grotesque, most mainstream think tanks consider it a national security threat, which it is. During COVID, it became clear just how many things, like masks and pharmaceuticals, were controlled by China. And they control 70% of the rare earth minerals that power every phone, drone, and EV on Earth. If global competition were a footrace, China is sprinting while America argues over the rulebook. China plans. Our politicians do and say whatever they need to to get reelected. And right now, China is winning. Such is the power of a command economy.

• 6:25Tom Bilyeu?

  When you can marshal capital, labor, and infrastructure by fiat, you can move mountains. You can pick a goal on the horizon and just march everyone towards it. No shareholder votes, no focus group polling, no need to even build consensus. It's efficient, disciplined, and ruthless. And that's why China can build a bridge in a month while we spend a decade arguing over the environmental impact statement. When a top-down system works, it is breathtaking. But when it fails, it fails spectacularly. The same centralization that lets you move fast also guarantees that when you make a mistake, everyone goes down with you.

• 7:08Tom Bilyeu?

  Mao taught us all that lesson in the most terrifying fashion imaginable. Forty-five million people dead from policies that a moron could have told you were a terrible idea. But to tell him no was to be beaten to death, shot, starved, or exiled. And today, under Xi Jinping, China is relearning the same lesson, albeit more sophisticated. Ghost cities, a housing collapse, re-education camps, forced labor, and entrepreneurs vanishing simply for questioning the party. The founding fathers of America understood this danger all too well. That's why the US was founded on the ideal of freedom expressly

• 7:52Tom Bilyeu?

  because they had lived under tyranny and they knew just how bad and arbitrary it could get. But freedom, the free market, and democracy also have their trade-offs. And that's why we now have to make a choice. Do we embrace free-market capitalism with all of its mess and chaos so that we can reap its never-ending innovation? Or, in order to catch up with China and make up for the mistakes of globalism, do we now begin copying China? We could go on for days with all of the ways that China has outmaneuvered the US in recent decades. And we are clearly no longer the World War II-era America that could kick anyone's ass on the battlefield.

• 8:35Tom Bilyeu?

  We're now the soft, financialized America that tries to solve all of its problems with sanctions and tariffs. But that hasn't even stopped post-Soviet Russia, let alone the juggernaut that is China. And honestly, you could make an argument that we chose long ago to abandon the free market, that we're already a command economy, we're just doing it poorly. We've got enough regulations right now to stifle innovation, enough money in politics to guarantee regulatory capture, and in the The past year, the US government has started taking direct ownership stakes in key American companies like Intel, MP Materials, and US Steel. And unlike in times past, there's no obvious plan to exit those positions once this crisis

• 9:20Tom Bilyeu?

  has passed. Backed by the Department of the Treasury and the Department of Defense, these ownership stakes mark a bold move from being a supporter of an industry to becoming an active player tilting the scales. For decades, economists and advisors alike warned against using government-controlled capital to guide sectors, pick winners, and crush competition. Now, though, the US has had its head turned by a new bell at the ball. Over the past 40 years, China's economy has exploded, and America has gotten bogged down in culture, war, bullshit. We got so convinced that we were the best, we forgot we climbed to the top by being the best, by outcompeting everyone else.

• 10:04Tom Bilyeu?

  We tried to take all of the risk out of competition. We tried to shame people for being aggressive. We prioritize safety over freedom, and we watched our lead erode faster than any economic lead that massive has ever eroded before. And now that we're behind, we're open to changing the rules this country was founded on, the very predicate of our success, in order to catch back up. And make no mistake, this is all about your portfolio as much as it is about policies and politics. Because when government capital distorts markets, valuations detach from reality. Companies look valuable because they're protected, not because they're productive.

• 10:48Tom Bilyeu?

  Everything becomes insider trading because when the political winds shift, so does a company's fortunes, and potentially yours with them. Once the state becomes a top shareholder, CEOs stop chasing consumers and start chasing congressional appropriations. R&D budgets turn into lobbying budgets, and the market shifts from who builds the best product to who plays the policy game the best. That's how you get Fewer moonshots and more safe, state-approved mediocrity. It's how you strangle the entrepreneurial impulse that made America the engine of global innovation in the first place. There's also a bigger threat lurking: the erosion of free-market capitalism.

• 11:31Tom Bilyeu?

  When the government owns a slice of the economy, it holds power to influence outcomes, which means insiders get access and outsiders get shut out. This leads to favoritism, rigged competition, and a system that rewards connections over creativity. But it can't be denied that it lets you move fast. Now, I wish the dilemma that we face right now was simply a moral one, but it's not.

• 11:57Tom Bilyeu?

  We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. There's a reason Quince sells cashmere for $60, and it isn't the cashmere. It's real 100% Mongolian cashmere. It's the same stuff luxury labels charge a fortune for. Quince just works directly with ethical factories and cuts out the middleman, so there's no need for a markup and no logo tax. The $60 goes to the actual sweater, not the fancy name on the tag. That's why everything they make runs 50% to 80% less. And it's not just the cashmere. I ordered a few things myself: their fleece joggers, a couple of their tees, which I wear obsessively.

• 12:39Tom Bilyeu?

  First thing I noticed was the quality: soft, well-made, built to hold up. They make down jackets and wool outerwear now, too, so upgrade your stuff to things you'll actually wear. Find your next fall favorites at Quince. Download the Quince app for app-exclusive offers, or go to quince.com. Get free shipping on your order and 365-day returns, now available in Canada and the UK, too. And when Quince asks where you heard about them, let them know it was Impact Theory. It's the best way to support the show. Let's talk about something that genuinely keeps me awake at night. My team at Impact Theory gets hit with phishing scams from bad actors pretending to be me all the time, and they keep getting more sophisticated attacks with details...

• 13:25Tom Bilyeu?

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• 14:06Tom Bilyeu?

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• 14:26Tom Bilyeu?

  Thanks for staying tuned. Now, let's get back to it. So, welcome to part two. You gotta give the devil his due. China's playbook and their incredible rise. China's GDP per capita rose from $180 in 1978 to over $12,500 in 2024. That's a 70-fold increase. In that same time period, China has pulled approximately 800 million people out of extreme poverty. The greatest poverty reduction in human history. As American wages stagnated, the typical Chinese workers' wages went up nearly 30x. As US life expectancy declined, in part due to deaths of despair,

• 15:09Tom Bilyeu?

  China's skyrocketed from 66 years in 1978 to 78 years today. A jump of 12 years in a single generation. It's not hard to see why America would look at what China is doing with extreme envy. But if we're not careful, we risk learning the wrong lesson. There's no doubt, one must give the devil his due. What China has done since Mao's death has been nothing short of... sort of extraordinary. But as I go to great lengths to remind people, Deng Xiaoping, who replaced Mao, realized the catastrophe of Mao was in centralizing decision-making. Allowing one man to make all of the decisions for a country

• 15:51Tom Bilyeu?

  had led to mass murder and biblical levels of starvation. Ironically, Deng Xiaoping, the man responsible for China's true great leap forward, looked at the devastation brought on by Mao's central planning and then looked at America, her free market, and the prosperity that it brought, and decided to copy that. That was the innovation that actually propelled China forward. Capitalism, the very thing America is in the process of abandoning in favor of a post-Deng Chinese model that thanks to Xi Jinping is headed back in the horrifying Mao direction. People forget the timeline. Beginning in 1978,

• 16:35Tom Bilyeu?

  Deng Xiaoping opened the economy to private markets, private enterprise, and foreign capital. And the results of that were seismic. And he did it by inviting Americans to come in and teach them about the American system. From creating thousands of banks and decentralizing loan applications to the structure of venture capital itself, they took it all in and replicated our model and our success and in many ways honestly surpassed it. But make no mistake, Deng's reforms came with strings. The Communist Party never relinquished ultimate political control. The state kept the levers of credit, land policy, and licensing.

• 17:19Tom Bilyeu?

  It would let private enterprises grow until it looked like private enterprise might grow into a rival. Fast forward to Xi Jinping. He inherited a nation far wealthier than Deng could have ever imagined. And he had learned the lesson of Russia's collapse. And so Xi set out to prevent that from happening in China. He understood that once people begin questioning the party, stability weakens. And he was not going to let that happen in China. His toolset was blunt and comprehensive and expansive.

• 17:52Tom Bilyeu?

  anticorruption drive that purged anyone who wasn't loyal and ensured corporations cooperated with the party. Hundreds of thousands of officials gone and a regulatory offensive that installed party officials into even the most successful and powerful private firms. He rewired party oversight into corporate boardrooms everywhere and made clear who ultimately decides the rules. That's the danger of a system built on authoritarianism and not freedom. When entrepreneurs publicly challenged the system, or even just sounded too independent, the state responded aggressively. The most famous example was Jack Ma, one of the world's richest and most successful men.

• 18:37Tom Bilyeu?

  On the eve of Ant Group's $37 billion IPO, Jack Ma made the fatal error of criticizing bank regulators. The IPO was instantly halted and Jack Ma was essentially kidnapped and reeducated. Ma's public disappearance and Ant's enforced restructuring served as a vicious warning to the entire entrepreneurial class. Companies were told to align with state priorities or face severe consequences. Fines, restructuring, and reeducation were all on the menu. These moves were not subtle. They conveyed an unmistakable message: The party will allow markets only to the extent markets remain politically useful.

• 19:19Tom Bilyeu?

  The government also allowed, and in many cases engineered, huge economic bubbles, most famously in real estate. For years, local governments relied on land sales for economic progress and developers were incentivized to borrow cheaply, ultimately building entire ghost cities on speculative demand to please Xi. The model blew up spectacularly when credit tightened and buyers began to balk. That led to the 2021 collapse of Evergrande, a company with roughly $300 billion in liabilities at its peak. That failure exposed just how leveraged and brittle China's property economy had become.

• 19:59Tom Bilyeu?

  And the fallout was immediate: frozen projects, distressed homeowners, and a contagion of developer failures that punctured confidence in that growth model. The state has since tried to manage the damage, but the era of easy finance growth is clearly over because markets operate on physics. Now... There are moral costs as well. Alongside economic control, the party has deployed coercive measures against minorities, most notoriously in Xinjiang, where re-education camps and mass detentions have drawn international condemnation and documented human rights abuses. The same political machinery that builds super-fast rail and industrial capacity is also capable of mass lockdowns,

• 20:44Tom Bilyeu?

  mass coercion, and what some have called "concentration camps for the Uighurs." That duality, breathtaking development on one hand, and brutal repression on the other, is the devil's bargain of a command economy. The thing people always seem to lose sight of is the fact that when you're telling people what to do and how to do it, eventually, someone is going to disagree. In a free country, you have to convince them. You have to use persuasion. In an authoritarian system, you just use guns. And in the end, boys and girls, the guns always come out. So when choosing that system, you are choosing violence. So when America looks at that system and swoons, every alarm bell I have goes off.

• 21:28Tom Bilyeu?

  China imitating elements of the free market? That made sense. But here's the playbook we'd be copying if we decide to ape China now. Step one: centralize political power. Step two: embed the government inside of companies by buying up state-owned shares. Step three: drive enormous gains in output, incomes, and capacity for a chosen set of winners. Step four: when private power threatens political control or when speculative bubbles form or when people just disagree, step in with force. The result is a system where market incentives run on an authoritarian chassis. It produces the kind of scale and speed that democracies can only envy,

• 22:13Tom Bilyeu?

  and I get why it's seductive, but boy, oh, boy, does it have a downside. But despite that, I think this decision is a lot harder than I'm making it sound. Because history has proven, in times of crisis, even America, the land of the free, has set freedom aside. And folded under something approaching a temporary dictatorship. So before part four and my path forward will make any sense. We've got to go through part three. America has some China in its past. In 1942, the US government created the War Production Board, giving Washington the power to tell companies like Ford, GM and Chrysler exactly what to build. The Reconstruction Finance Corporation revived for World War II,

• 22:57Tom Bilyeu?

  issued more than $35 billion in government loans direct to the private sector to build refineries, synthetic rubber plants and shipyards. Cold War era R and D was basically corporate socialism. In 1964, the Pentagon's Advanced Research Projects Agency, ARPA, spent federal money to wire universities and defense firms together, which is basically the prototype for today's internet. In the 1980s, when Japan threatened US semiconductor dominance, Washington formed Semtech, a government-funded consortium of chipmakers backed by the Pentagon, the first public-private partnership of the digital age. Post 9/11, the federal government became a direct investor again.

• 23:41Tom Bilyeu?

  DARPA, Incutel and the Department of Energy's loan programs financed the early research behind Google Earth, Palantir and even Tesla's first factory. And today, the Chips and Science Act and Inflation Reduction Act have Washington allocating hundreds of billions in subsidies, equity stakes and tax credits to micromanage everything from chip fabs to EV batteries, the very definition of hybrid, state-sponsored capitalism. These are the same kind of state-backed capital plays China is making. Hard reality is, America abandoned true capitalism a long time ago. We like to think we only do it in times of war and crisis,

• 24:24Tom Bilyeu?

  but in all honesty, government interference in the free market has been at a fever pitch ever since 1913, a year that should truly live in infamy. As they say, remember why you started. And the founders didn't fight to found a new country just so once again, the government can control the economy. They wanted government to secure property rights, enforce contracts, mint sound money and then get out of the way.

• 24:55Tom Bilyeu?

  Alexander Hamilton argued for a national bank, but only to stabilize credit after the revolution. His goal was not to try in direct industry. Jefferson and Madison hated even the idea of that much involvement and fought him on principle. Jefferson said banks were "more dangerous than standing armies." Madison warned that concentrated credit power would enslave the people under monopolies of paper, and they were right. The ultimate compromise they struck was to put strict limits in place and a term on the bank's charter of only 20 years. When Congress tried to renew the charter in 1811, Jeffersonians killed it on the floor. Their fear was very simple. When the state controls the money, it controls the men.

• 25:40Tom Bilyeu?

  They wanted a marketplace of competing enterprises, not a command economy hiding under a powdered wig. For roughly a century, that's how America ran. The federal government stayed small. The dollar was gold-backed, and markets, though often brutal, self-corrected fast. Entrepreneurs built railroads, telegraphs, and oil empires with almost no federal direction. Boom, bust, rebuild, repeat. That was the chaotic cycle that forged the richest industrial society in human history. But then slowly, Washington began tightening its grip. Now, please note, this is how you protect the rich

• 26:22Tom Bilyeu?

  from losing their money and begin to stagnate the class structure. When wealthy people can't lose because the entities they're invested in are too big to fail or too systemically important, you now have a caste system and an economy that never self-corrects. If rich people can't become poor through a series of bad decisions, you have a sick economy. And that is what we've done to ourselves. In 1913, the diabolical Federal Reserve Act was passed.

• 26:52Tom Bilyeu?

  Creating a permanent central bank. I did a whole video on it, which you can watch right here. For now, just know that it created an unelected committee with the power to print and price money. And this is why most young people today can't afford a house. And why socialism, the historically murderous economic system, is gaining in popularity. Not to be outdone, in 1933, FDR's New Deal installed wage controls, a wave of agencies that turned crisis management into permanent bureaucracy, and the disastrous industry codes of fair competition, which turned the US economy into a top-down command economy inside of a democracy.

• 27:34Tom Bilyeu?

  Created under the National Industrial Recovery Act, NIRA, of 1933, these mandates were one of the centerpieces of FDR's New Deal. Here's what the act entailed. The NIRA empowered industries to form government-approved cartels that set prices, wages, production quotas, and even hours. These weren't guidelines. They were legally enforceable codes, signed by the president and carrying the force of law. The idea was to end cutthroat competition during the Depression by coordinating business behavior from the top down. Over 500 such codes were written, covering everything from steel and oil to dry cleaning and dog grooming. The Supreme Court, however, struck them down in 1935,

• 28:19Tom Bilyeu?

  ruling that they amounted to unconstitutional delegation of legislative power. Attempts to control our economy didn't stop there, however. In 1971, Nixon closed the gold window, severing the dollar from any gold backing whatsoever, and ending fiscal restraint once and for all. From then on, money became little more than a political instrument, its supply being dictated by policy, not the production of additional valuable goods. By the 1970s and 80s, a maze of regulation, from the EPA to OSHA to price and interest rate caps, had crept into every major sector, throttling risk-taking while entrenching incumbents who could afford compliance lawyers.

• 29:02Tom Bilyeu?

  This is known as regulatory capture, and it's another brick in the wall that keeps the rich rich. Economists like Milton Friedman and Friedrich Hayek sounded the alarm when regulation and monetary manipulation replace competition, capitalism mutates into corporatism, where profits are protected by politics rather than outperforming the competition. Today, we might call that industrial policy, but the founding fathers would have called it tyranny. The way America was designed around freedom was radical precisely because it trusted that innovation would flow from the creative chaos of man pursuing his own self-interests,

• 29:44Tom Bilyeu?

  curiosities, delusions of grandeur, and passions. By giving people the right to be wrong, man is freed up from the overbearing will of those who are convinced they know better, but who rarely do. Freedom is driven by the belief that the individual is divine and therefore worthy of sovereignty, that markets are self-correcting by nature, and that trusting man's innate desire to compete for glory and riches will lead to far more innovation than temperous centralized control or safety. There is no doubt that freedom brings with it the unsettling creative destruction of mistakes, over-exuberance, greed, and plain stupidity.

• 30:27Tom Bilyeu?

  But it also allows for merit and productivity to steer the ship. When you try to remove all of the danger and risk from freedom, you make docile, anxious people, and innovation stagnates. The moment we decide safety matters more than freedom, we begin engineering our own decline. And that's what's happened over the last 40 years. As China allowed for more freedoms, they rose. As America strengthened its centralized control, we declined. We've lost sight of the fact that there are no solutions, only trade-offs. And now, we need to consciously decide what trade-offs we're willing to accept.

• 31:12Tom Bilyeu?

  Since the Federal Reserve Act was passed in 1913, we have lulled. People into the belief that they can have a command economy to protect the little guy. But in reality, it has come at a huge cost that has already led America into a cold civil war, which you are in right now, and it risks pushing us into a hot revolution. We already have political assassinations and states warring against the federal government based on party lines, and it's only going to get worse from here if we don't have a unified vision for how we march forward. Hold tight, we're going to take a quick break.

• 31:55Tom Bilyeu?

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• 32:59Tom Bilyeu?

  We're back, let's dive right in.

• 33:03Tom Bilyeu?

  So, welcome to part four, the dangerous path forward. Throughout the entire 19th century, federal spending averaged less than 5% of GDP. Almost all of it went to defense, the postal service, and infrastructure. From 1820 to 1900, US real GDP per capita roughly tripled, vaulting America from a frontier economy to an industrial powerhouse in just two generations.

• 33:33Tom Bilyeu?

  From 1870 to 1913, America's share of global manufacturing output jumped from roughly 23% to 32%, surpassing even the entire British Empire. Real wages rose about 60% between 1860 and 1913, while prices stayed flat or fell thanks to relentless innovation. Prices should go down over time. Despite Gilded Age tycoons, upward mobility in the US was extraordinary. By 1900, they had the highest worker wages in the world. By 1900, the US rail network stretched 190,000 miles, a continent-spanning logistics grid

• 34:17Tom Bilyeu?

  built largely by private capital. Roughly 25 million immigrants arrived between 1880 and 1913. That's the largest voluntary migration in history, and they came chasing opportunity, not government handouts. The United States' most explosive, world-beating growth happened under extremely limited federal government. By 1950, with just 6% of the world's population, America produced roughly 27% of all global GDP. Liberty, not dictate, built the richest society in human history. But as government spending, regulation, and central planning rose through the 20th century,

• 35:00Tom Bilyeu?

  the growth rate, dynamism, and social mobility that defined the American miracle steadily flattened. The freer the economy, the faster America grew. When Washington's share of GDP was tiny, innovation, immigration, and mobility exploded. As the state grew larger, however, with the addition of central banking and income tax, both were added in the same year, the explosion of the alphabet agencies, massive entitlements, and immoral deficit spending, growth slowed, volatility increased, and inequality stabilized into a permanent caste structure. Said as plainly as possible, America didn't rise because Government manage the economy.

• 35:45Tom Bilyeu?

  It rose until the government started managing the economy. So if we're going to stop our managed decline and get back to being an unparalleled economic powerhouse, what do we need to do? Especially now in this unique moment where we're going up against a rising power like China. Do we take a page out of their playbook? Or do we get back to a true free market? The thing that powered our initial rise. Whatever we choose, it's not going to be a utopia. It will be risky. There is danger, no matter what we choose. Everything is a trade-off. But here is what I think is our best path forward. One. Build a strategy based on first principles. Economies operate on physics. This is why patterns occur over and over again in history.

• 36:30Tom Bilyeu?

  Every time you run the experiment, you're going to get similar results. Here are the rules to remember. Nothing comes for free. Everything is paid for by someone. Economics is a P V P V E game. Everyone is competing against everyone else in a highly complex, chaotic environment. Cooperation is a strategy to win, not an outcome in itself. The government should be a referee, not a player. Economic systems are too complex to predict, and therefore too complex to control from the top down. It can work for brief periods, but on a long enough timeline, rapid decentralized decision-making will always be more efficient than a command economy.

• 37:14Tom Bilyeu?

  Governments tend towards tyranny, so their power should be checked relentlessly. The rules of the game need to be fair and transparent. The government should therefore secure property rights and enforce contracts and the rule of law. Economies must be compatible with human nature. Humans pursue self-interests far more reliably than altruistic ones. So the system should be designed to take advantage of that. Said another way, the system should optimize for freedom and fairness. Two. Focus on infrastructure and innovation. The government has never been, nor will it ever be, the home of innovation. Because the government doesn't have to compete.

• 37:56Tom Bilyeu?

  Because of that, it does not have the necessary stimulus it needs to innovate. Its focus should be entirely on laying the foundation for the private sector, which does have to compete, to innovate on top of it. Whether that's building roads, the internet, or giving the kind of tax incentives that welcome all comers, the government should see its job as creating the soil in which the private sector can work its distributed, albeit chaotic, magic. Three, let creative destruction take place. The markets are designed to foster competition. If no one can fail, then bubbles form, and the losers never get out of the way of the potential new winners.

• 38:38Tom Bilyeu?

  You clog the system with ideas that should have died and been killed off long ago. Market signals get all confused, and therefore, progress stalls. You have to let people lose, and lose big. Stay out of the way of the markets, and they will correct themselves. Get involved, you may smooth out the pain, but you make growth far less likely. Four, focus on national security and national dominance. Every country should believe in itself enough to play to win. Remember, the game is PvPVe, whether we want it to be or not, so we might as well be going for broke. When deciding what soil needs the most nutrients, the government should focus obsessively

• 39:23Tom Bilyeu?

  on being the highest-growth economy with the largest middle class. It does not make sense to grow fast if you're just accelerating an excessive level of inequality. But some inequality is the point. People work hard to get ahead of others. You don't spend your entire life training for the Olympics hoping to end up in the middle of the pack. You do it to win gold. Economics is the same way. It is the sport of money. It doesn't mean you don't have alliances. You do, and you should. But it does mean that you're still playing to win, and you accept that you might fail, especially at the individual level. The only time the government should directly involve itself in the markets

• 40:08Tom Bilyeu?

  is if there is a national security reason to do so. Right now, for instance, where we have made the catastrophic error of globalizing to the point that our largest rival basically controls our entire way of life. It's absolutely suicidal and needs to be rectified urgently. We must bring advanced manufacturing back to the US. But it should be done in a way that adheres to the principles laid out in steps one through three above. Five, if the government must intervene, restrict it massively. If government money is going to be invested directly in private companies, for example, to secure chip production, critical minerals, or defense tech,

• 40:50Tom Bilyeu?

  we should do it through one small specialized fund that's tightly controlled, totally transparent, and extremely temporary. Here's how it would work step by step. A, a single backstop, not a bureaucracy. Think of it like a national emergency fund for industry, called something like the US Strategic Capital Facility, run by professionals, not politicians. It would be independently audited and legally shielded from political meddling. B, a clear job description. The fund would have just three ranked goals in the following order of priority.

• 41:30Tom Bilyeu?

  First, protect national security and keep essential production onshore. Second, step in only when private investors can't or won't fill a critical gap. Third, make sure taxpayers get their money back, and ideally with a profit. C, small ownership on equal footing. The government should never take over a company. It should only be allowed to buy a minority stake, let's say less than 20%, maybe going up to 25% during a formally declared crisis. Its investment terms... Must be the same as private investors. D. Taxpayers should share directly in the upside.

• 42:13Tom Bilyeu?

  If a company later succeeds because of public support, the fund should automatically get warrants or a small share of profits, so taxpayers benefit, not just the company or its executives. E. There should be built-in end dates. Every deal needs a timer. The fund must sell at stake within five to seven years, and the entire program expires automatically after 10 years, unless Congress votes to renew it based on an independent audit and extreme circumstances. All of those things should happen only in extreme circumstances. Otherwise, the government should secure rights, enforce laws, and otherwise, stay the hell out of the way. In short, government intervention should be small,

• 42:57Tom Bilyeu?

  rare, and temporary, not a permanent bureaucracy. Help America move fast in a crisis, protect taxpayers, and then shut itself off before it turns into the next Fannie Mae. Six. Unclog the real economy so private capital can win. Execute regular regulatory spring cleaning. Sunset old rules unless re-justified every five years. Have a competition policy. Target regulatory moats, not scale. Mandate data portability so switching is easy, and companies have to continue to please customers to maintain their lead. Kill off monopolies wherever they rise up and threaten legitimate competition.

• 43:40Tom Bilyeu?

  Seven. Implement strict fiscal and monetary guardrails, or nothing else matters. Balance the budget. Set strict statutory debt to GDP rails that are mapped to annual growth. If you're growing by 3%, then barring war, you can't deficit spend beyond 3%. Put all of those together, and that's the path. Return America to the core of freedom that made it the most successful engine of broad prosperity the world has ever known. Acknowledge that there are trade-offs on both sides, but what corrupts empires and brings them down is always excessive governmental involvement.

• 44:22Tom Bilyeu?

  The market is simply too complex to plan from the top down. Despite its apparent utility in moments of crisis. China's model may seem to be working now. But its real engine of prosperity came from copying America's economic freedom. And all of China's current woes are born of its top-down mandates. Not its bottom-up billionaires trying to out-compete each other. That's where the innovation comes from. It is precisely the bottom-up chaos that gave us the microchip, the internet, electric cars, and private spaceflight. I'm not saying the government doesn't have a role in trying to make sure that the soil is prepared for entrepreneurs and private companies to come in and make use of.

• 45:04Tom Bilyeu?

  But the private markets is why a nation with 4% of the world's population still creates roughly half of the world's billion-dollar companies. Freedom to be wrong and to fail is the very oxygen of innovation. Because it lets people bet against the consensus, which is required to avoid stagnation. China's system can sprint, sure, but ours can self-correct. Freedom is inefficient, I get it, and it's messy. But it maximizes access to human creativity and ingenuity, unburdened by bureaucrats who will never be able to outperform the free masses. The path forward isn't romantic.

• 45:48Tom Bilyeu?

  It's practical and it's competitive. There will be major failures. And people will suffer in the short term from time to time. But as the history of America proves, in the long run, the entire world prospers when the world's best and brightest are given an even playing field on which to swing for the fences even when people think they're stupid. Many are going to fail. But over times, the winds will stack up into something undeniable. When the state is used like a scalpel, incredible things happen. When it's used like a sledgehammer, people learn to be quiet, hold their hand up for a gimme, and while you may remove risk, you also remove reward. We don't need a five-year plan. We need a five-point compass.

• 46:32Tom Bilyeu?

  Freedom, competition, sound money, limited regulation, and a government that knows how to leave when the job is done. That's how, instead of trying to out-China China, we will out-America everyone else. That's how you turn the next century into the century of progress, instead of the century of tyranny and control. In the end, it really is simple. We must choose between a future run by bureaucrats and one run by builders. The choice we make right now will determine whether America remains the world's innovation engine, or becomes yet another creator of the oppressed, who can only long to breathe free.

• 47:16Tom Bilyeu?

  If you guys are getting value out of this, make sure that you leave us a five-star review wherever you listen to your podcasts. And until next time, my friends, be legendary. Take care, peace. Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do. You need consistent nutrition. We all do. You need vitamins, probiotics, greens. We all know that we should be doing more of it. When your morning gets chaotic, you skip it. When you travel, you skip it. When your routine breaks, everything tends to break, and that inconsistency compounds against you every single day. AG1 is designed to solve the execution problem. One scoop, eight ounces of water, and you're done. You're getting 75-plus ingredients, vitamins and minerals, pre and probiotics, nutrient-dense

• 48:00Tom Bilyeu?

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