Why the U.S. Can’t Repay Its Debt, What Comes Next, and How to Prepare | Ray Dalio - PT 2 (Fan Fave)

In today's insightful discussion, Tom sits down with renowned investor and author Ray Dalio to delve into pressing economic challenges and the changing world order. We'll explore Ray's unique perspectives on self-reliance, learning from mistakes, and the significance of "triangulation" in decision-making. Tom and Ray discuss how confronting the basics of survival and embracing simpler lifestyles can foster resilience amid economic turbulence. Ray Dalio emphasizes understanding historical patterns and recognizing financial cycles to navigate current and future crises, drawing parallels to past global events. They address the implications of the U. S. national debt, rising global tensions, and the role of education and financial literacy in preparing for economic downturns. In this episode, you will learn about the mechanics of money and debt, the impact of internal and external conflicts, and the benefits of radical transparency in personal and professional settings. There's also a deep dive into Ray's principles for successful decision-making and the importance of cultivating meaningful relationships and purposeful work. 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?

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• 1:30Tom Bilyeu?

  I'm looking for people that will challenge my ideas. I'm looking for disconfirming evidence. I want to get the smartest people that I can possibly attract to what we're doing and saying, okay, we need to disagree with each other well, so that we can identify the right answer. To your earlier point, you're going to be wrong so often that if you go into something thinking I'm infallible, I'm going to have all the right answers, you're just headed towards disaster. So my question is, how do we set up a situation where people can disagree well? What is that structure?

• 2:05Speaker 01

  I think it starts with worry.

• 2:09Speaker 01

  I I got a principle, if you if you worry, you don't have to worry. And if you don't worry, you need to worry. Because if you worry, you'll take care of the things that you're worrying about to the best possible way. If you don't worry, and you just go headlong into these things, you're gonna have a real problem. So I think um that you have to have um people first realize what does that picture look like if we don't do these things? If we don't, if we don't have bipartisan, if we don't solve these problems together, if we fight,

• 2:51Speaker 01

  you know, you have to see the clarity of those two paths and have people choose the good path, you know? Okay, we will figure this out intelligently to make the best possible thing to intelligently and together. Okay, it starts there. It's not a structure. Where does the structure come from? It comes from people, okay? And it comes from people having a need to create a structure in a way of being.

• 3:23Tom Bilyeu?

  So how do we get people to worry?

• 3:25Speaker 01

  Well, maybe what we're doing. I mean, I think they have to worry at two levels. First, enough of us worry that

• 3:35Speaker 01

  we uh vote for it or, you know, we use our voting and our others to say, let's vote on together and compromise and smart people doing these kinds of things. Um, or and that that's worrying about the society as a whole. And then there's worrying of as an individual, if they don't do those things, how do I take care of myself? Those are the two types of worries or two types of impacts you can have, right? So I think they need to think of both of those.

• 4:14Tom Bilyeu?

  For people that aren't familiar with Lincoln, how much have you looked into him? His idea of a team of rivals sounds like very similar to what you're saying about having a bipartisan cabinet.

• 4:27Tom Bilyeu?

  Is he somebody that you've looked at or?

• 4:30Speaker 01

  I know that I know a bit about Lincoln. I wouldn't call myself an expert and I know that about him. And yeah, and I think that's really, really great, you know?

• 4:41Tom Bilyeu?

  So when, whether it's at Bridgewater or elsewhere, how do you facilitate people disagreeing well? Because let's say that you have an intern going against your chief investment officer. Like, how would you, do you take that person seriously? They have little to no experience. How do you set that up so that you don't waste time, but at the same time you get the best ideas?

• 5:06Speaker 01

  First of all, you explain to people and you understand yourself

• 5:13Speaker 01

  how important thoughtful disagreement is. So you remove it, you minimize it from being something that people view as a fight and get upset about. You have to change the attitude about disagreement so that,

• 5:37Speaker 01

  you know, if you're in disagreement,

• 5:41Speaker 01

  then one of you is probably wrong. How do you know the wrong person isn't you? And then also you still have to resolve the disagreement in some way. And so you have to have in place, first of all, you know, an understanding and an intellectualization of that. So you don't get emotionally carried away in thinking, because I disagree, that's equivalent to a fight. Okay, so you have to change that psychology. And then, once you do that, then you have to have protocols in place for doing that. Now, you know, in, in my book, you know, Principles, Life and Work,

• 6:27Speaker 01

  in the work part of Principles, I've outlined those things, those techniques, that can be done repeatedly. So you have to have a system for that. And, you know, and so let, let, let me make a very simple examples of that. If you and I are disagreeing, and we sort of want to try to get at the truth, things that you can do is to mutually agree on a mediator. So, okay, you, you could step out of your argument and say, okay, this isn't working. How should we do this disagreement? And maybe, like, let's mutually agree on a mediator.

• 7:10Speaker 01

  Like, we both agree that that person, you know, something, somebody we can trust and to, through. Okay, that's a good step. Then, as you're doing that, carrying that through, you can also say, are you taking in the other person's thinking and replying to that? Or are you just blocking? And there are techniques that you can do to, to demonstrate you've taken it in.

• 7:45Speaker 01

  Okay, like, repeat the other's point, and so on, and then reply to the other's point. And then do certain things like not interrupt. Or in other words, I have a rule, call it the two-minute rule. Somebody says, okay, can you give me the two-minute rule? That means for the next two minutes, I can speak uninterruptedly.

• 8:13Speaker 01

  So there are techniques that you can use to first understand that it's not a big fight, that there's protocols. Okay, then how do you do that in a hierarchy? Okay, there are different ways you can do that in a hierarchy. But anyway, there are many of them. And, you know, we're not going to have the time to go through them. But they're outlined in, you know, my book Principles, Life and Work, in the work principles part of it.

• 8:43Tom Bilyeu?

  Yeah, that's something that we found really effective here is rules of engagement is how we refer to it. So whether it's the two minute rule or something else. But ultimately, getting people to understand, I'm saying this in the context of somebody who's trying to figure out how we get, we know that the the big cycle has a high degree of predictability. And I'm willing to accept that maybe the US can't remain the the reserve currency forever. Maybe we're not going to be the dominant world superpower forever. But that I want to handle that transition out as well as possible. And usually, phase five to six ends with literal bloodshed. And things have to get so painful before people can correct

• 9:25Tom Bilyeu?

  course. And so trying to give people a framework, I know you're saying that maybe I'm looking at the structure too much, but I think in framework. So what's that rubric by which people can go into whether it's the 2024 election, whether I think right now we're still in gridlock with the budget or the debt ceiling or whatever it is, giving people ways to navigate through this well. And so my thing is, everything begins with a goal. So what's your goal? And even just getting any group to agree on what the goal is. Now, once we know what the goal is, then we can start saying, okay, what people or ideas are most likely to get us there? How do you stress test an idea? How do you know?

• 10:09Speaker 01

  I just want to emphasize, though, as you're doing that, the people have got to agree how they want to be with each other first, before there's a structure. I mean, I can, we can have structure. I can create structure.

• 10:26Speaker 01

  And we could do all sorts of things. We can have a bipartisan cabinet. We can have the the going off for six months and doing the project and we can do all, there's lots of things we can do. But you first have to change the mindset of going from a, I want to win at all cost to wanting that. So all I'm saying is when you say, I want the structure and I'm a structured guy, I'm, I want the structure and I'm a structured guy too. But it takes people wanting something. And so what is the goal? You say the goal. You start with

• 11:08Speaker 01

  the goal. Okay, that we're not going to fight with each other in a dysfunctional way.

• 11:15Speaker 01

  Okay. That we will work together to overcome our differences. That we will be good with each other. Okay. If you put those things there and then judge those things and you sort of then say, how are we going to do that? Okay. Then you do to buy founders and structure or whatever, you know, bipartisan cabinet, blah, blah, blah, blah, all that other stuff. Then you can come around to it. But you have to. If you're in a, I will fight at all cost mode. Nothing, the structure of the constitution is not going to work.

• 11:54Tom Bilyeu?

  I, I'll give you my hypothesis on the only way to pull that off. And let me know if you see another option. Lord knows, I hope there is one. I've thought a lot about how you sway people into doing something that is more advantageous. I'm usually thinking about it for them. So just what's more advantageous for them. And it all ultimately comes down to you have a leader or a group of people for whom you're trying to earn the respect of. And by earning their respect, you do the right things. So I'll sum it up at, at the national level, we would need a leader that can actually bring the two sides together. Somebody who has a very clear vision. You've, you've grimaced. For anybody that's just

• 12:39Tom Bilyeu?

  listening to this, Ray Dalio just grimaced hard. All right. So, explain the grimace, Ray.

• 12:45Speaker 01

  It's like wishing for the tooth fairy or something. I mean, it's like I'm not going to the root cause of why you don't have that leader. Okay, if you look at history, this is one of the great challenges of a democracy. And when it gets into everybody fighting for their own cause with populism, they, you know, and so, you know, Mussolini comes to power to make the trains run on time because it's badly managed and so on. So, somebody says, "Give me the dictator.

• 13:27Speaker 01

  Give me the dictator and then I will, and I want that dictator." So, that's what we're, okay, so how do you get that leader? Okay, it increasingly, I'm just dealing with the mechanics. So, how do you get the leader?

• 13:49Speaker 01

  And what do you do with the opposition? Okay, it's almost like,

• 13:58Speaker 01

  well, you have this fighting of the various types and do you accept losing? And then, does the opposition remain and undermine everything you're trying to do?

• 14:17Speaker 01

  So, it's almost like it gets to mob rule.

• 14:23Speaker 01

  That's why the dictators come to power.

• 14:28Speaker 01

  Okay, so that's just history and that's all understandable. If not desirable, it's still understandable that that's the mechanics. So, to wish and say, Okay, we need a strong leader who will get control and make everything go alright. Sounds a little bit like wishing for the tooth fairy.

• 14:53Tom Bilyeu?

  That, that is how dictators come to power. That is very much the scenario I would want to categorically avoid. So, do you see that just as, that is an inevitability? Because right now, right to your own point, we are not being good with each other. From what I can see, there, there is certainly a broadcast signal, and maybe this is a distortion of social media, but I don't think so, certainly not given the elections of recent. There is a broadcast of a signal of massive division. In a moment of massive division, you get people fighting. In a moment where people fighting, there is a winner-take-all scenario. That's the path to dictatorship.

• 15:33Tom Bilyeu?

  So, while my path may be wishing for the tooth fairy to want somebody who's inspiring, that can unite people, I'll ask it pointedly. Do you just see it as an inevitability that we head towards dictatorship?

• 15:49Speaker 01

  When you say, um, have a leader that way, you're not dealing with the mechanistic determinants to say, how do you get a society that is splitting apart and operating in the way that I described, to have a leader that leads and people follow properly? Okay, you're skipping over that. You can't skip over that.

• 16:14Tom Bilyeu?

  Do you see a path, though, other than, because the natural way that this plays out?

• 16:17Speaker 01

  The only path I can see is the one that I'm referring to. If you worry about the alternative, okay? If, um, okay, so, if you worry, look at that. What is it? You must not have it. If, the more people worry about that, then the more likelihood you won't have that. In other words, if you want to tilt the odds, in all the different ways, I don't know, take out the ads, have conversations like this, do whatever it is and say, "I worry of what's gonna happen." So, we must not have that. And we really must have this other alternative. I really want to buy into that other alternative.

• 17:01Speaker 01

  And you have somebody arguing for that other alternative. Like, will you follow?

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• 19:32Tom Bilyeu?

  All right, let's pick up where we left off.

• 19:34Speaker 01

  Let me just tell you the story very quickly of Mario Draghi in Italy. Mario Draghi used to be the head of the European Central Bank, which was like being head of the Federal Reserve for a number of years. And he and I got to know each other in that. He completed that. And he's highly, highly respected. He's Italian. And Italian has, Italy has crazy anarchy. Like they've had an average of one prime minister a year. And so chaotic and so bad that all the political parties got together and said,

• 20:19Speaker 01

  "We will be united under Mario Draghi. We will let him lead. We will turn it over to him." And he said, "I will do that only as long as all the political parties remain united. Because if they don't remain united, we're going to get into this dysfunctional fighting. And I know it's not going to work." So for a period of 18 months, he was Prime Minister of Italy and very loved. People loved him. And then one of the political parties

• 21:06Speaker 01

  dropped out because they disagreed on his approach for, I think it was handling Ukraine.

• 21:15Speaker 01

  And he said, "Okay, now I'm resigning." Even though everybody wanted him to stay overwhelmingly. But he said, "I can't govern under that kind of a fragmented environment." And, you know, in other words, he knew where it was going to go. So, so he resigned. And in the period between him resigning and actually turning it over to the new prime minister,

• 21:46Speaker 01

  we had lunch. And, um, and we were talking about these things. And what he was describing and what exists is the issue that we're talking about. The inability of a leader to be able to lead when there's so much fragmentation. And if you look at the history of democracies, um, and you go back to Plato, back Plato's Republic, he wrote the Plato. You know, a lot of people think Americans invented democracy. It existed way back, you know, um, in the Roman and Greek times and all that.

• 22:32Speaker 01

  Um, and so he looked at the cycles. And what he said was, there's the cycle of these different systems. One leads to another in this way where what happens is the greatest risk of democracy is an anarchy. Because the fragments, it becomes uncontrolled. They all have their interests, they fight and they tear the thing apart. And then, so what happens after that is then you get the dictator. And, um, you get ideally the benevolent dictator. In other words, the one who really knows how to make good things happen.

• 23:15Speaker 01

  And he cares about the country, he doesn't care about his personal wealth and those kinds of things and that, and they create that. And, okay, to create order that comes about that. And then in that cycle, after a period of time, you inevitably get the incompetent or selfish dictator. And then you have a revolution and then you go to a democracy and so on, and these things go in cycles. And so when you're asking the question, you know, of the leader, you know, you're saying, okay, let's create a leader and, um, and, and have them go lead.

• 23:56Speaker 01

  You can't ignore the fragmentation and the inability, uh, to lead in that set of circumstances.

• 24:06Tom Bilyeu?

  I agree with that, but if you, even in your own example, what you had in Mario is somebody that is able to garner the respect of all the different factions. Now, I understand that it ultimately broke apart, but he is the tooth fairy that I'm talking about. You need somebody that people can unite under.

• 24:25Speaker 01

  But it didn't work because of the power the people behaved with each other, and it won't work. Okay?

• 24:33Tom Bilyeu?

  Yeah. Okay, so if, if we know that people aren't going to stay united for long, what you're saying is the duration that people can stay united is the duration that you can have that sort of peace, prosperity, and the second that you...

• 24:50Speaker 01

  How long is that duration here? I mean, let's, let's look at the situation. I mean, it doesn't exist, let alone have a duration to it.

• 24:57Tom Bilyeu?

  Yeah. Ray, you say very troubling things in a very calm manner, which I think is probably the only way to say them. Um, all right. So as I then step back and I say, okay, the cycles are what the cycles are. You said something earlier, which I think is really important that I want to reemphasize. What's happening now is a determination from something that happened earlier. And so to some extent, you're in a better position to deal well with the way things are, the reality. I've heard you talk a lot about that. The reality is what the reality is. You need to be awake. You need to be paying attention to that reality, and then you need to base your plan of action based on the truth of that circumstance. To

• 25:39Tom Bilyeu?

  do that, though, one thing I think is incredibly important is people have to be able to strip their emotions out of this. Uh, I know you're a huge proponent of meditation. Are, how do people get good at removing emotion from the equation so that they can see reality accurately?

• 25:56Speaker 01

  Well, meditation is a huge benefit for that. Um, so I really, it, it, it gives one...

• 26:07Speaker 01

  Both a calmness and a clarity. And it gives one an ability almost to go above everything and look down on it and say, "Okay, here's how things work." And, uh, and, and an acceptance of reality. It's like this serenity prayer. "God, give me the serenity to accept that which I can't control. Give me the power to control that which I can. And give me the wisdom to tell the difference." And, you know, just to be able to approach things in an open-minded way. Like we talk about, uh, you asked the question about, um, disagreement. How can I approach disagreement?

• 26:52Speaker 01

  Do I emotionally get into a fight about it? Or do I handle it well? Meditation and those types of things. Calming yourself down, viewing everything more like it's, you know, it's, think of a reality as being like a game, like a chess game. Okay, calmly. Okay, this thing happens and what's your next move? And how does it work?

• 27:21Tom Bilyeu?

  Okay, very fascinating. So if you take a chess grandmaster, anybody that's really proficient at chess, and you put a chessboard in front of them, they, they look at the board and they don't have to analyze each individual piece. They know that pattern on the board very well. They know where you are in the game. And so that, that's a chunk of information. Uh, it feels like a very similar approach to the way that you're looking at financial markets, global movements, the big cycle in that, oh, I can drop you into a scenario. You'd look at a few key pieces of information. You'd know where we are in the cycle. So, I mean, starting with the three forces that we talked about at the very beginning. Hey, tell me where those three forces are. You expanded it to five. But tell me where we are with those five forces. That's the chunk on the chessboard that I need.

• 28:06Tom Bilyeu?

  Boom, now I know how to take that next move.

• 28:09Speaker 01

  That's what I want to try to give to people, okay? That's why I have the... Animated video on YouTube. That's why I have the book. Because it's like watching the same movie happen over and over again. You can see it. And you understand the cause effect relations. So you can understand. So when you ask questions like,

• 28:36Speaker 01

  you know, how do you get better? And then we go deal with the mechanics of that like, okay, how do you get financially better off? And how do you be good with each other and not be threatened? I mean, it's just if you look at it that way and you understand the mechanics, it is what it is. That's how reality works. And then how do you deal with it?

• 29:00Tom Bilyeu?

  Makes a lot of sense. Okay, so in terms of chunking, in terms of understanding where we are in the cycle.

• 29:07Tom Bilyeu?

  One thing that I'm thinking a lot about is as we go into the 2024 election.

• 29:16Tom Bilyeu?

  I've heard credible people say that they think China is going to make a move on Taiwan. In the sort of chaos of the division that we have here in the current global superpower. Do you see that as a logical move? On the chessboard for China? Is that something that seems plausible to you?

• 29:39Speaker 01

  I have very good contact. So I have close contacts of on both sides. And and so I'm just wanting to say rather than just throwing out an opinion. My opinion is that

• 30:00Speaker 01

  there's a political situation in the United States that that it's really the issue of how much the United States pushes the issue in Taiwan. That makes it risky. Because

• 30:19Speaker 01

  there's a a move for of let's say hawks or some to

• 30:33Speaker 01

  Defend Taiwan or so let me just give you the facts. If there is a, I'm gonna give you a little history. Okay. Please.

• 30:50Speaker 01

  Taiwan was part of China.

• 30:56Speaker 01

  And around 1840. Foreign powers came into China. And they wanted to trade and do things with with China and China didn't want to do that. And so around that time. Um, they had the Opium Wars. You may have heard that in history. In which um, the um, the Chinese at the time said, I don't want to trade. You don't have anything that I want. And then they brought in opium. That the Chinese wanted so that they would have this trade and whatever and then militarily won. And took over.

• 31:41Speaker 01

  Large parts of China took control of that. And in 1895.

• 31:49Speaker 01

  It was many foreign powers and in 1895. Japan takes Taiwan.

• 31:58Speaker 01

  Okay, fast forward. Um, you go into World War Two and after World War Two. The winners of the war get to divide up the world and said, who who gets what? And Taiwan was given back to China. That's 1945. Then they have a civil war.

• 32:23Speaker 01

  Oh, as usual, the left and the right, they fight each other. And so the capitalists get kicked out by the communists and they go to Taiwan. And they control Taiwan. Okay, so everybody agrees that China is part of, Taiwan is part of China, but they argue, who controls China? The ones in Taiwan say, oh, we control China, and the ones in Beijing say, we control China, but everybody agrees with that.

• 32:56Speaker 01

  Fifty years ago, so that's a, that's a big issue in their mind, because it's part of China, and it's been told to them that it's part of China, Taiwan's part of China. And, but it, but they, the capitalists, which is called the Kuomintang, they are living in Taiwan and, and they're not controlling it. So Henry Kissinger first makes the, gets together, goes to China, and deals with reunification, and then Nixon follows.

• 33:35Speaker 01

  And, and there's this argument, and they reiterate that Taiwan is part of China.

• 33:46Speaker 01

  Everybody agrees on that. And that there should be peaceful unification of China. And that goes on fifty years now, and brings it up, up to where we are today. Okay, so a red line for China is if the United States or Taiwan says Taiwan should be an independent country, that would produce a war.

• 34:21Speaker 01

  And everybody knows that, all those in government would know that would produce a war.

• 34:27Speaker 01

  This is a big thing for them, you know, in other words, they call that period of time a hundred years of humiliation, it was taken, it's promised back, and whatever, it's, it's

• 34:39Speaker 01

  in their mind, an indisputable reality.

• 34:44Speaker 01

  Now, we're in a situation in which the United States, and particularly

• 34:53Speaker 01

  some congressmen who are more hawkish, say, "Good chance," they will say, "We will militarily defend Taiwan," and then go on and sell them more military equipment.

• 35:18Speaker 01

  So it's very, very close to saying, "I will..."

• 35:26Speaker 01

  It's a separate state.

• 35:29Speaker 01

  So we're very, very close to that particular issue. So what will come?

• 35:37Speaker 01

  I don't believe China is going to initiate a move

• 35:46Speaker 01

  to take control of Taiwan.

• 35:51Speaker 01

  Unless the United States crosses that line, pushes that line.

• 36:00Speaker 01

  Now, so the way that it is understood, and just by different parties,

• 36:08Speaker 01

  is it's understood by the Chinese to be the way I describe it. Look, it's been promised, it's here, you know, I mean, no, that's an uncompromisable thing. And Americans, I think, think about

• 36:25Speaker 01

  this

• 36:28Speaker 01

  communist dictatorial bully that is trying to take a free country, a free people, and in a...

• 36:43Speaker 01

  You know, aggressive way, take over them and that we need to defend liberty and protect them from that. Okay. I just want to emphasize,

• 37:03Speaker 01

  it's more complicated than the way that I said. And also, it's like,

• 37:11Speaker 01

  from the Chinese point of view, it's part of the American containment strategy, which means, you know, China has grown and it's become a higher percentage of world economy and so on, and it's expanding. And it's like Taiwan is the lid on this boiling pot.

• 37:33Tom Bilyeu?

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• 38:17Tom Bilyeu?

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• 38:40Speaker 01

  If you want to know what really happens,

• 38:44Speaker 01

  watch it the way I describe it. In other words, is it unprovoked?

• 38:50Speaker 01

  Or is it provoked in the way I just described it? Now, again, I'm a very realistic person. I'm not an ideological person. I'm not trying to, okay, I'm just like, how does the, how does reality work? And what's the move? And what's the next move? And I'm just trying to describe that reality. I'm not taking a side in it, just like two sides in a chessboard. And I'm just looking down at the chessboard.

• 39:16Speaker 02

  In your mind, we think, what do you want? And the reality is, when you look at the neuroscience and psychology, that there are different parts of your brain that want different things. And so, in the simplest sense, there is the logical part of the brain that you're conscious of. It's called the conscious. And you think you're being logical and you want to make those decisions. And then there's the subliminal, below the limbic system, part of the brain, which is the emotional, and it's not as conscious to you. But it has more of an influence on you than really the logical one. And so, they're not aligned.

• 40:00Speaker 02

  And so, when you're experiencing that pain, or let's say the ego. Right, there were two main things. You got an ego barrier and a blind spot barrier. If you can get past your ego barrier and you get past your blind spot barrier, you can accomplish anything. Because you also know that you don't have to do everything to, you don't have to figure it out yourself. You can take in from other people, the different ways to approach things in the best possible way. And so, the realization that we all are really struggling with ourselves, and to think which are, which is in control. Meditation helps to deal with the alignment of those two things. Because both are valuable.

• 40:44Speaker 02

  In other words, intuition, imagination, the things we really love, come from our subliminal us's, right? Our needs, whatever they may be. They come from here, that subliminal. They may be valuable. They may be... Scare damaging, you don't know the difference. And so when they come up and you're looking at those with your logical mind and you can align those things, you're probably in good shape. If you can do that, that alignment between the subliminal and the logical, and you can do that with other people, so that you can triangulate with other people and say, does that make sense, and get alignment, that alignment is the path to the future.

• 41:29Speaker 02

  Because you only have to know what the best things to do are. You don't have to have them all come up from your head. And for God's sakes, don't be overly opinionated, because just because you have that opinion, it doesn't mean it's true. So that's where the two U's and the alignment really is so important.

• 41:48Tom Bilyeu?

  All right, I want to talk about the process of getting those two things aligned, tying this into meditation. So in my own experience, meditation is a stillness. It's a quiet from the chatter of the mind and more maybe profoundly than that, I can feel my brain shifts into a different gear. So maybe it's less linear thinking, it's more lateral, I'm making connections that I might not otherwise make. So is it in that still, in that quiet, where you're able to look at your, what's bubbling up from beneath the limbic system, your emotional life, you're able to look at that without judgment, and then able to say, okay, but this is what I'm trying to do sort of consciously,

• 42:30Tom Bilyeu?

  these are my plans and all of that, and now how do I, are you altering either of them? Or are you beginning to say, I need to understand if this is a useful emotional driver or a destructive emotional driver? Like what is that process?

• 42:46Speaker 02

  I think you described it very well. And when you go deeper, by the way, you go literally into your subconscious. So you're creating a connection. When you transcend, I do transcendental meditation. When you transcend, I am not conscious and I'm not unconscious. I am in the subconscious. I'm not aware, but if somebody make a little noise like that, boom, I would, I would. So it's not like being asleep. And that's also, by the way, where creativity comes from. If, you know, it's like you go take a hot shower and a great idea comes, not because you're muscling it. So when you're having that, then you're calm and you're natural state.

• 43:30Speaker 02

  And then these things bubble up and it helps that alignment. So you say, okay, let me look, go above myself. Let me, let me go above myself and look at myself within the context of my circumstances. What is around me? How does that work? How does reality work? Okay, if I do this, what are the consequences? And so the going above it and just saying, I'm responsible for my decisions, my life, and how do I navigate the things, the things there that I can pull the levers of, who do I get? How do I do? How do I deal with those? And going above it in that calm way is really what it's about.

• 44:14Speaker 02

  And when you do it well with others, so you triangulate. That's why I have the radical truthfulness and the radical transparency. When you have that radical truthfulness and the radical transparency, you're triangulating with others. You're going above it with them and you're just looking at that circumstance and you say, okay, well, we're in the same goal or are we? And then how do I navigate those so that we get to where we want to go? Because if you're forming your company, you've got your company, we're on the same mission together, right? So now let's all go above ourselves. What are your strengths and weaknesses? How do we get at what's true? And how do we do that with transparency? And that's it.

• 44:54Tom Bilyeu?

  Yeah, oh man, so, so powerful and putting into action, I'm really seeing exactly how it begins to allow, and I think truth is probably the, what you call hyperrealism, the getting to such an objective look at what is true. And going back to sort of an objective look at that emotional state, which I think is where a lot of people struggle. One of the biggest and most profound, probably the only lightning rod moment in my life, where it's like, whoa, my life can be divided into before that literal, like instantaneous recognition, and after, everything is completely different. And that was the first time where I realized that I was being driven by something that I had not yet recognized,

• 45:39Tom Bilyeu?

  which was, I was telling everybody that I wanted to generate wealth in my life, but I was acting like I just wanted people to tell me that I was smart. And so, the, the, like friction between those, like hit this collision. And so, at the time, I was just a copywriter, and the guys who would later become my partners at the time were my employers. And we got in this huge fight over something stupid. And I was arguing and arguing and arguing for my idea. I needed my idea to win, because I had, they were just so much farther ahead than me. They were smarter than me in that they can process data faster, and that, that's just true. Like, they could think through things more rapidly than I could. So I was like, I have an inferiority complex over how fast they think,

• 46:20Tom Bilyeu?

  and they're like 15 years ahead of me as entrepreneurs, so I just always feel like a buffoon. And so, I'm starting to really feel badly about myself. And so, I'm arguing for this dumb idea, arguing, arguing, arguing, and then finally, I wear them down and they agree. And I was like, shit, I know it's the wrong idea. Like, there's a voice in my head screaming, "You know this is a stupid idea, stop arguing for it." But I needed to win. And so, when they left, I thought, okay, whoa, what, what's real? I, I just need to know what's real. No judgment on me. If what you want is to get rich, you have to change the way that you're acting immediately. But if what you really want is to just feel smart, you need to leave this company. Because butting heads with them every day and feeling inferior is, is never gonna get you there.

• 47:03Tom Bilyeu?

  And so, in that, I realized, wait, there's actually a third option, where I could value myself entirely for learning. And if I switched my identity over from being smart, being right, being good, being worthy, to just, I learned, that's what I do, then everything will change. And it did, literally like that. Like, I remember that day so clearly.

• 47:22Speaker 02

  To me, what you're describing is just another one of those, right?

• 47:26Tom Bilyeu?

  You have to go deeper on that concept, the notion that everything loops, that history repeats. Because I think people get it from like a US history class, but they don't necessarily understand it in their own life.

• 47:36Speaker 02

  There's practically nothing that hasn't happened before, really, if you look at the theme. So when I take your particular case, I can digress into it, but I won't. I'll come back to that in a second. Almost everything that happens has happened many, many times before. And just like I described, there's the hero's journey, and there's this and that, there's that particular path, and the whole thing happens over and over again. So my reaction to what you're saying is, yeah, that's absolutely right. That's a winning strategy. So if you step back from that and you write, okay, what happened to you? What happened to you is what we're talking about. You went above yourself, okay?

• 48:19Speaker 02

  So you exemplify it. Okay, here are the things. You went above yourself. Now you could have had the ego thing, the big O barrier. Okay, the ego barrier is going to be the thing that's sort of going to kill you. Then by reconciling what your subliminal desires were, okay, I want to be just as smart, and then connecting that with your intellect and saying, okay, now intellect, what is really going on here? Okay, and then to be able to step out of that, now you just did it alone, but you could do it with others and it's even better. And so you figure out, oh, okay, this is that. Here's what the choices are. Here's how reality works. And so I'm just saying, you did what we were talking about, right?

• 49:03Speaker 02

  And if everybody gets that and really understands how to go do that, the two big things is, how do you get your alignment of your lower level you with your upper level you? How do you get past your ego and your blind spot? We know what the ego barrier is, like, I gotta be right, or whatever it is, or I'm not good at this. The blind spot barrier is the realization that people actually see things different. They see different things, like somebody will see the big Picture, somebody will see the detail. They'll focus on different things, almost like a color spectrum type of thing. And if you realize that you will see a part of that spectrum and other people will see the other part of the spectrum. And so that you really need to, when you go above yourself, you really need to orchestrate

• 49:48Speaker 02

  all those ways of seeing. Because you are not just one of those people that's got to do it yourself. Your way of being the success is to go above it and be the orchestrator and know what you're good at and what you're not good at. So it's almost like if you want your life to be successful, you will not let yourself do certain things. Because you're just no good at them. Once you get that picture down, then you can find the path wherever the paths are. You're open minded. Because you, now you've given up your ego barrier and your blind spot barrier. So your particular case just was another one of those.

• 50:26Tom Bilyeu?

  Yeah, the concept of just another one of those, I think is, it's bizarrely easy to miss in your book. And so I want to linger on this point for a second. And it's funny because people ask you this question all the time and you give the same answer. You're so consistent. And yet, people don't spend the time that you spend. So let me encapsulate. You've done so well as an investor, it's kind of crazy. And so needless to say, people are like, alright, what's the strategy? And your answer is actually usually not specific. Your answer is, understand the historical context. Understand the historical context and get smart people around you so you're not making decisions by yourself. So, the notion of it's another one of those is looking at investing, looking at the human condition, looking at your own life as

• 51:10Tom Bilyeu?

  this thing that has these repeating elements.

• 51:13Speaker 02

  Every dimension of every, everything, the way is another one of those. And, so that's how you could, if I can get people to think, what, I want to convey what that means. And then, I want to then understand how to think at the principle level. Because then, life becomes so much easier. Because if you have the principle. And what I mean by that is, like you could look at all the things that are coming at you. And they're just the things coming at you. If you instead, think of each thing as being like a type of species. Think of that as an, like an animal species or something. Okay, what one of those is it?

• 51:58Speaker 02

  And how do I deal with those? And you have your principle for dealing with those.

• 52:04Tom Bilyeu?

  So you have the species coming in, you have a principle that lines up with the species. So now there's no guesswork or refiguring it out.

• 52:10Speaker 02

  I figure it's like, I don't know, it's a type of snake that's coming at you. But everything is another one of those. So when you start to think about, how do I deal with that? How does reality work? And how do I deal with those? So the way it looks to me, I'll speak figuratively to help to convey the image of what I mean by that. Maybe there is something like fifty different personality types. I don't know what the exact number is. And they are all living out the same scripts happen, maybe they're just fifty different scripts. And then through those, you know, maybe there's a certain X hundred things through time.

• 52:52Speaker 02

  And it seems all confusing because we're looking at them bit by bit. You know, it's like you're in a blizzard, a snowstorm, and each of these bits come at you and so on. If you can kind of step back and just say, okay, okay, what one of those is it? And it's happened before, and it's happened to different people. So let's say, for example, you have a kid. And you think, okay, now I'm a kid. And you could just sort of say, okay, now you're parenting. But whatever it is, you can sort of says, hey, it's happened before a million times. And in that particular circumstances. So when you realize everything happens over and over again, pretty much for the same kind of reasons. Okay, and you understand that.

• 53:34Speaker 02

  And you could almost look at who's been through it before? Who knows how it works? How do I best navigate that thing? What are my principles for that? Then it's great. The reason I discovered it accidentally, I discovered this accidentally, is because I got in the habit that I suggest you get into and other people get into. And that is, whenever you're in a situation where you're making a decision, important decision, just pause and write down, what type of decision was it?

• 54:06Speaker 02

  And why did I make that decision that way? That's writing down your principles. It's kind of your recipe for success. And we could talk about it. And then every time I'm in a situation, I'll write down, why did I make that decision? And we could look at those criteria. Did that make sense to do that decision that way? Would you have different criteria? And so on. And you do that over a period of time, okay? And then you have your principles. And then, so they're just your reasons for making your decisions and what matters to you, right? When you do that, so that's why I'm encouraging you, because you're going through these and then you have found a path in life. I viewed your story. What you just told me is just another one of those. Now you keep doing it. It'll become apparent to you

• 54:50Speaker 02

  how everything's another one of those. Because what'll happen is the next time around, you're gonna find, I don't know, let's say you're firing somebody, use that as an example. You would say, okay, now I'm firing somebody again. Okay, now let me just kind of reflect. Would I modify that principle? And how would I do that? And then, okay, now maybe you're firing somebody who's been with you for 10 years and you love. And that's not the same as firing the son of a bitch who you want to get rid of. So then you refine that. How should I deal with that one and that? And why does it make sense? Because that reflection, why does it make sense? Why does it make sense? And really wanting truthfulness. You know, not worried about being embarrassed. Making mistakes. We're going on the struggle with all of you together

• 55:34Speaker 02

  is a good thing.

• 55:36Tom Bilyeu?

  Yeah, so the... How do you define a species? Like, how do you begin to codify all this stuff and go... Because I think it's all too easy to get lost in the, well, this isn't another one of those. This isn't just firing somebody. This is firing somebody that I love. And so, no, there's, you know, this is all just so different.

• 55:55Speaker 02

  It's simple. Because all you have to do really is to sort to say, if you start to think everyone's another one and I was, and I'm making a decision, I just got to write down why I made the decision. I don't care how you title it. Okay, just write down, okay, uh, okay. What's, what, what, what are your criteria? Make it, write it down. Well, you'll see that they're close cousins. You know, let's say if you're saying, is it a different one because it's a close relationship that you've had for a long time? Or somebody is new? Okay, well, you'll see those two things are close together, okay. But it's another one of those things. And it changes your way of seeing things. Okay? It changes your perspective. Again, I want to repeat.

• 56:39Speaker 02

  Because then life becomes easier. Because it's not all these bits and pieces. Okay, it's, okay, it's another one of those. It gives you an equanimity and like a ninja. Okay, it's another one of these coming at me. Okay. And how do I approach this? And then you can have a conversation. It's just reality. How should you deal with that reality? And if you do that, then you think in a whole different way. Okay? You just want to get the best way to deal with your realities.

• 57:09Tom Bilyeu?

  You've talked about how about 30% of the people cannot do radical candor. Be great for you to-

• 57:15Speaker 02

  I call it radical transparency, but whatever it is, okay.

• 57:17Tom Bilyeu?

  Perfect, so radical transparency. Define what that is exactly. And then what is it about that 30%? Like, are they, they can't get rid of the ego? Or what, what is that?

• 57:29Speaker 02

  It's just what you're talking about. The struggle is between themselves as you go into a conversation. And, uh, and you're looking at that. Um, um, they find-

• 57:41Tom Bilyeu?

  So radical transparency is saying super hard shit, really direct, nice and clear. They're not good at this.

• 57:46Speaker 02

  Yes, while simultaneously saying, I don't know if that's true. In other words, if I say that I don't, I don't think you're good at that. I'm being honest, but also who knows whether you're good at that? So how do we then go from you think you're good at it? I don't think you're good at it. And how do we go through a process to find out together whether you're good at it or not?

• 58:08Tom Bilyeu?

  How do we go through that process? That would be one of my key questions.

• 58:11Speaker 02

  Okay. The best way to do it is you do it in an agreed upon way. Okay? The idea is, okay, we say, okay, Tom, you're not so good at that, I don't think. Okay, and then we go through the, how would we judge? Can we ask other people? Do we go through this test or that test? How do we find out what's true? Because if you can find out what's true- Your life will be better. Like, do you want to know what you're not good at? If you know what you're not good at, it's, your life's no problem. Because it, you don't even have to get good at it. You just have to work with somebody who's good at what you're not good at, right? So there's a path forward. When you get out of your head that you gotta do that.

• 58:54Speaker 02

  So the only basic notion is, when we're, if we were to have a relationship is, if you, and by the way, it's non-hierarchical. You could say, "Hey Ray, I don't think you're very good at that." And I'm, I'm gonna be the same way. I put it in because I needed it. Cause I, I'm worried that I'm gonna be wrong. So, then you come to me and you say, "I don't think it's very good." Well, how do we find out in a non-ego-constrained, objective way whether I'm good at that or not?

• 59:20Tom Bilyeu?

  Do you actually lay out criteria?

• 59:21Speaker 02

  Oh yeah, you'll do. Yeah, you, we will do. Yeah. Absolutely.

• 59:26Tom Bilyeu?

  And how do you come upon that criteria? Would you do this as a one-on-one? Would you do this in a group? Um, how do you begin to tease that stuff out?

• 59:34Speaker 02

  Um, first of all, in terms of the group, um, I like to make everything transparent. So, e-everybody could watch the same thing happening with anybody, so.

• 59:44Tom Bilyeu?

  Meaning you would do this in front of a large group of people?

• 59:47Speaker 02

  No, no, I would say taping. Uh, we do a lot of that tratical transparency. Because that way people see, is it fair? Is it a good process, right? So I like to do that discussion. But anybody can do it with anybody, right? And so, but I would like to have that conversation. If it's like, if, if I don't think you are good at something, and I am relevant to your life, or vice versa, we gotta work it out. We gotta figure that out together.

• 1:00:16Tom Bilyeu?

  Would you do this with your wife?

• 1:00:17Speaker 02

  In all relationships. In one way or another, you have to find out how you're going to make decisions. There are going to be agreements and disagreements. And you have to have the art of thoughtful disagreement. Now, people find their domains differently. Maybe somebody says, "Okay, I'll take care of these things." And you take care of that. I don't know. Some people, uh, you know, the traditional household might say, "Okay, I'll take care of making the money out." And the man goes out and he makes money in the world. And then when the woman says, "I'll take care of the kids." We're not there anymore. But each role, I'm trying to say, in some way, you have to find out how to do the art of thoughtful disagreement. It's, and it makes sense. And then also, knowing.

• 1:01:00Speaker 02

  What's good, what you're good at and what you're not good at. It's a good thing to know what you're good at and what you're not good at, right?

• 1:01:07Tom Bilyeu?

  What do you do, though, like when you, let's say you and your wife realize, "Ooh, we actually have something that we disagree with how to do with the kids." And that's high stakes. If you do something wrong, you could have a material impact on their psyche and the way that they approach the world. So there's sort of elevated stakes and there's just two of you. Unless you guys had a way of appealing to other people, would it come down, because you said, "Don't worry so much about what the person's saying. Think about the process by which they got there."

• 1:01:36Speaker 02

  Yeah, so I'm saying, whenever there's a disagreement between two people, that they can't get along on that, they should pause and they should go above it. And they should say, "How should we deal with each other when that happens?" In other words, what are our protocols for working ourselves through that so that we can then move beyond that to make a decision?

• 1:02:06Tom Bilyeu?

  And would a specific protocol in a marriage be something like, "If it has to do with the kids, you have more believability than I do, so therefore if we can't come to an agreement, we'll go with your decision?"

• 1:02:15Speaker 02

  That could be one of the protocols. The main thing I'm trying to convey is when people are ordinarily in an argument, they just argue. And they don't know the ground rules, they don't have a process in place. So if you look above it and you come up with whatever your rules are, it may be you could have domain. It may be that you have a mutually agreed party that you would say, "Okay, let's plead our cases to and have them mediate it." It could be a lot of different paths could exist to say, "Ah, I think that's a good path when we have a disagreement, how we plead our cases and then move beyond it." But you need to have the path.

• 1:02:59Speaker 02

  And that's what I mean by principled level thinking. Go above it, how should it be? Instead of, you know, this type of thing, right? We all need that in order to have successful relationships. It's fundamental, right? When you got this and you're not going above it and saying, "Why do you have this or how should this occur?", then you've got trouble.

• 1:03:27Tom Bilyeu?

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