Bubble Warning for Stocks, Bitcoin & Gold w/ Jim Grant (RWH062)

(00:00) People say we're always bearish. That's  not actually true. But we are almost invariably  

skeptical. What doubting Thomas's this is a  market of credul and conformity. Actually,  

you know, people nothing succeeds like  success anywhere, but especially on Wall  

Street. I think it was George Soros himself  said we will see a bubble just jump on it. 

(00:21) Get there early. And uh you look at it in  time. No, just I'll tell you when you'll know. But  

there are so many ways to make money off Wall  Street. I happen to have cultivated a following  

that is innately skeptical. [Music] Before we dive  into the video, if you've been enjoying the show,  

be sure to click the subscribe button  below so you never miss an episode. 

(00:46) It's a free and easy way to support  us and we'd really appreciate it. Thank you so  

much. >> Hi everyone. I'm delighted to be back  with you again on the Rich Hope Wise Happier  

podcast. Today's episode is an important, timely,  and extremely thought-provoking conversation with  

Jim Grant. Jim, who's a cult figure in elite  investment circles, is the renowned founder  

and editor of Grant's Interest Rate Observer, a  bi-weekly publication that he's edited since 1983. 

(01:16) These days, it costs the best part  of $2,000 a year for a subscription. So,  

it's not cheap, but it's widely recognized  as an invaluable source of unconventional  

insights for sophisticated investors. Nasim  Taleb, who's not an easy man to impress,  

has written that Jim Grant thinks outside  the box. Please read him, listen to him. 

(01:37) David Swenson, who ran Yale University's  endowment with huge success for decades,  

once remarked that Grant's interest rate  observer is on the must-read list of every  

serious student of markets. One reason for Jim's  stellar reputation is that he draws deeply on  

his knowledge of financial history to issue  early warnings about brewing storms that many  

investors fail to recognize until it's too late. (02:04) He's never been afraid to point out the  

wretched excesses of Wall Street. Those moments  when speculative fads get out of hand and when  

unscrupulous investment firms are selling dross  that's dangerous to the financial health of  

careless or credulous investors. In 1999, for  example, at the height of the dotcom bubble,  

Jim warned that it was one of the most perilous  periods in investment history and that America  

was dangling by a thread, financially speaking. (02:33) A few years later, he was one of the  

first people to warn about the dangerous mortgage  securities that led to catastrophe in the global  

financial crisis of 2008-9. In the years after  the financial crisis, he preciently warned that  

the Federal Reserve's monetary policies  would inevitably spark runaway inflation. 

(02:52) So, what's Jim saying today? Well, as  you're about to hear, he argues quite forcefully  

that prudent investors would be wise to exercise  considerable caution at the moment given the  

heightened risks and speculative behavior that  he's observing. As Jim sees it at this point  

in October 2025, there are many unsettling  symptoms of euphoria, recklessness, folly,  

and corruption in financial markets these days. (03:19) All of which he sees as potential warning  

signs of what he calls a major market top. Now,  the reality is I have no idea if Jim's right,  

and he's not sure either. After all, markets  are inherently unpredictable, and it's also more  

or less impossible to get the timing right,  even if you're smart enough or lucky enough  

to predict a major shift in market sentiment. (03:42) This reminds me of a discussion I had  

with Howard Marx in chapter 3 of my book, Richer,  Wiser, Happier. Howard told me, I don't even think  

about the timing. In the investment business,  it's very hard to do the right thing, he said, and  

it's impossible to do the right thing at the right  time. That said, I think it's well worth listening  

when someone as shrewd and seasoned as Jim Grant  warns that we should be treading with extra care. 

(04:06) At the very least, it's worth asking  yourself if you're overexposed to risks that  

you can't afford to be taking. As Howard Mark  said to me, "It's not about selling everything  

and suddenly going to cash. It's more about  preparing for an uncertain future by asking  

yourself if you're pushing the envelope too far. (04:24) For example, if you have too much debt or  

leverage, or if too much of your money is tied up  in speculative assets that might be dangerously  

overvalued. For battleh hardened survivors like  Jim Manhower, I think one of the great lessons  

of financial history is that reckless excess  and overconfidence is eventually punished. 

(04:46) So, it's important not to get too  carried away during outbreaks of what seem to  

be irrational exuberance. On an entirely different  note, I also wanted to take this opportunity to  

let you know that I'm launching a new richer,  wiser, happier master class on November 21st.  

This is a chance to study directly with me over  the course of a year as part of a very small  

group that's capped at a maximum of 20 people. (05:09) We'll meet once a month over Zoom and  

also at a couple of unique in-person events.  Last year, the Mosclass drew an incredibly  

accomplished group of 20 people from, I  think, seven different countries, including  

some very successful hedge fund managers, wealth  advisers, asset allocators, managers of single  

family offices, CEOs, and entrepreneurs. (05:31) The people who signed up for the  

new masterass are equally impressive, and we only  have a few spots left. So, if you are interested,  

please do email my friend and fellow podcast host  Kyle Greve as soon as possible and he can send  

you more details. His email address is Kyle,  that's ky l at the investorspodcast.com. The  

masterclass is designed specifically for people  who are serious investors and passionate learners  

and who are really looking to build lives  that are truly richer, wiser, and happier. 

(06:03) So, if that sounds like you, I'd love  to hear from you and would be thrilled to have  

the opportunity to study with you over the coming  year. And now, back to the show. Hi, folks. I'm  

absolutely thrilled to welcome back the great Jim  Grant to the Richer Wiser Happier podcast. Jim,  

as you all know, is a brilliant financial  historian and a wonderful writer and speaker  

and also the editor of Grant's Interest Rate  Observer, which he founded 42 or so years ago. 

(06:32) And it's a must-read publication for the  most sophisticated and well-healed professional  

investors. Partly because it's so expensive,  but also because it's so >> cheap with the  

price. >> Cheap at the price. Exactly. Every  time I think about getting my subscription,  

you put up the price again and I blanch again. (06:50) But I'm finally going to >> That's the  

That's the business plan. >> It's very wise.  But it's a wonderful publication. >> You're an  

aspirational subscriber. We have many of them.  >> Thank you so much for joining us again,  

Jim. It's a real pleasure to see you. >>  But it's a delight to be here. >> Thank you. 

(07:05) And um well, as Charlie Manga would say,  he said, "It's a delight to be anywhere." He was  

just glad still to be around for as long  as he was. So anyway, I'm happy to be with  

you and I attended your wonderful annual full  conference yesterday. >> I know. I was so very  

pleased to see your familiar and shining and  welcoming and emerging face of the audience. 

(07:23) >> Oh, it was great. And for people who  don't know, this is a very glamorous affair at  

the Plaza Hotel in New York City. And it  attracts many of the smartest and wisest  

people in the investment world, not only as  speakers, but actually as audience members.  

And you said just before we started that you  wanted to tell a story about something that  

came up >> at the end of the conference. Tell us. (07:42) I have no idea what this is about. >> I  

hope I'm about being indiscreet. Although  what is journalism for accept indiscretion  

with me? >> Exactly. Yeah. And this comes from  David Rosenthal who was a speaker of economics  

and David is number four hireer in Nvidia.  How is that for a credential life? He's an  

extraordinarily he's a gifted computer scientist. (08:10) I can't imagine what computer science is  

not gifted in many departments of metal acuity.  But David is stand out even in that rather  

formidable crowd. Anyway, this this story has to  do with a kind of reunion of founding employees  

of Nvidia and I guess it was fairly recently  and it takes place at a an ethnic restaurant. 

(08:33) I call it a Salvadorian cooking and there  tables full of Nvidia employees then and now. And  

uh Jen Sen Huang, the story CEO gets up and says  announces to the crowd, you know, I'm pretty good  

at fundraising and what I want you to do, ladies  and gentlemen, is empty your wallets and give me  

your cash. They complied. He's well present. (09:00) Made CEO and his colleagues CEO Jensen  

collects all this money. Interestingly for a  Silicon Valley crowd, there people carrying  

a lot of cash and so he has a big wad of  bills and he walks over the proprietor of  

this not fourstar restaurant and we here  know a little bit about how difficult it  

was to start. I want you to take this delightful. (09:24) >> Wow. >> Isn't that something? >> That's  

really nice. >> Yeah. Shouldn't we all do that  once in our lives? >> We should. We should. I  

thought for me the moment you mentioned David  Rosenal, what comes to mind to me is he gave a  

presentation that I think I only understood about  one in five words cuz it was deeply technical. 

(09:44) But what did you make of it that he was  he seemed to be dismantling the idea that Bitcoin  

was as safe and private as people imagine. And  he's obviously a very gifted computer scientist  

who has many patents. And as he put it, not  only was he the fourth employee at Nvidia,  

but actually given that there were three  co-founders, he was actually the first hireer. 

(10:07) So this is a very smart guy. And he  was saying that basically, as I understand it,  

that once we get further along with quantum  computing, I think he said there about 20%  

of the bitcoins out there are sort of lost  or unclaimed that people have lost their  

keys or they're in trash piles or whatever. (10:23) and that a quantum computer might  

be able to actually relatively quickly  figure out how to claim for oneself that  

missing crypto. What did you make of that?  This is way above my pay grade. >> Yeah,  

that's exactly the message. I think as you say it  was deeply technical certainly over my head many  

places but he was attacking the pretensions of the  technologically sophisticated who contended that  

uh Bitcoin was useful and safe and uh somehow  endured from infiltration by the likes of the  

coming quer computers try to expold that which (11:00) I gather he did >> and I think there's  

a link to this on his blog which I'll try  to remember to include on the show notes  

something that David Rosenthal gave to  a class at Stanford University. I think  

it's electrical engineering in in 2021. He  was just he was filling in for a professor. 

(11:31) It's the most lucid attack on Facebook.  I read it. I thought to myself, why isn't this  

fraud trading at zero? >> It did not go to zero.  So maybe people know something that and even David  

doesn't know about Bitcoin, but I thought  he made a very good set of close arguments.  

He winds up and says rarely if ever in the annals  of technology have the champions of a breakthrough  

technology gone to such pains to not use it. (12:03) So he was questioning the utility  

of it. So you kind of had to be there  for that one. And not only did you have  

to be there you had to understand much  more of the technical issues than I do  

and your summer got most. This is a very  familiar feeling to me in the financial  

and technology world that I'm with people  who are much smarter than I am and I I'm  

picking up crumbs as they fall from the table. (12:25) >> Don't think smart is I think familiar  

or trained or something but no doubt every  field has its vocabulary. We are all humbled  

in the presence of astronomers for example.  >> Yeah. >> Yeah. While we're at it, we should  

close this subject of cryptocurrencies because  this wasn't in any way where I was intending to  

go at the start of our conversation, but since  we're here, I'll ride this horse that we're on. 

(12:48) But you spoke at the conference of the  pretense of things that are not money posing as  

such. It's fair to say if people listen to  our last interview on podcast 3 years ago,  

we talked about crypto in some depth. And  Bitcoin now, I think, is is around $116,000  

per coin as we speak, despite a recent selloff. (13:08) You've written quite a lot about,  

as you call it, a cryptobesotted Wall Street  that's driven up valuations so that there's now,  

I think, more than $4 trillion in aggregate value  of all cryptocurrencies. And I I read on Bloomberg  

the other day that Bitcoin ETFs now manage more  than $142 billion and that even Vanguard is now  

weighing the possibility of allowing its 50  million or so clients to trade crypto ETFs,  

whether it's Bitcoin or Ether or whatever. (13:36) Jack Bogle, the founder of Vanguard,  

had famously warned investors to avoid Bitcoin  like the plague. And so I'm just wondering what  

you make of what we're seeing here. Is this  just standard top of the cycle recklessness  

and folly or is this you've been following this  world of finance for quite a long time? When you  

look at this phenomenon, what does it mean? >>  Well, one is is forever humbled by the markets,  

the ways the ws of the market. (14:03) I still don't understand  

what people see in it. Maybe it's a divide of  some kind. A limbic system divided. People say,  

"Oh, yes. Bitcoin. What? I want some of that."  The price of a house. You want What is it? Can  

you see it? No. No. You can't see it. Now,  what are you going to use it for? What's its  

functionality? Well, I'm not so sure about that. (14:26) But I It has done well, hasn't it? Yeah.  

So I am no longer on certain cable TV stations  that I used to be out regularly. I humor myself  

or I I try to comfort myself by saying it's it's  not age. It's not the overfamiliarity with the  

arguments that fall from my lips. No, it is my  anti-maga country club republican line that grants  

and it is also the last words that I spoke of this  particular cable channel when asked about Bitcoin. 

(14:59) I said the most efficient price is  zero. And um my god, this administration is  

all in on crypto. It's a it's the scammiest  thing, the connection between Bitcoin and the  

Bitcoin promoters and the president and the  and his family and these coins and it began  

before his inauguration. you know, had issues  in Trumpcoin and was kind of a rug pole thing  

and I and it's shocking and contemptable, but  these cryptos are being heavily promoted by the  

administration both overtly and indirectly by the  regulatory approach it has taken toward them. Now, 

(15:39) as to Wall Street, it's monkey seeing  monkey do, especially when that monkey is moving  

upward and to the right a stock chart. You know,  Bitcoin's genesis was in synonymous, right? Not  

enough. Yes. So, you could go and procure whatever  you wanted to, whether there's drugs and surface  

to air missiles or if you were living in a united  country that allow you to take money out, you can  

take your money out through Bitcoin and Wilson. (16:06) But any case, it was off the grid and  

outside the pale of conventional Wall Street.  Now look, Vanguard for peace sake, you know,  

it's it's right down the middle of the fairway. So  the establishment which could not abide it could  

be bit. Ah god, now it's Yeah, Bitcoin it's  a thing. Let's start the next ETF. So I still  

think the most efficient price of twice is zero. (16:31) >> Well, that's good. So now that we've  

very efficiently offended half our audience  in the first 10 minutes, either politically  

or financially, we can be much >> Let's get the  other half. >> Let's get the other half. >> The  

other half. >> By the time we come around  to talking about your book in an hour or so,  

nobody will be left except for my mother. (16:49) >> Well, they should buy the book.  

They should buy the book, right? >> I I bought the  book and I very much enjoyed it. Although I have  

to say it's 400 and something pages long and I'm  still and I'm about 20 pages from the end. So, I'm  

ashamed that I didn't quite finish it last night.  >> I'm not going to tell you how it wound up. 

(17:07) >> Did it all end happily like most  of history. So, anyway, we'll get to the book  

later. But the thing that I wanted to start  talking to you about except for the fact that  

both of us digressed for 15 minutes to insult half  the country is I found yesterday the conference,  

your conference, it was a fascinating  day and also a slightly unsettling day. 

(17:27) And what struck me I think was the  divergence between the current mood of euphoria  

in the markets and the acute skepticism and  weariness in the room among your speakers  

who are a savvy battled hardened bunch. And so  for example there was a credit investor named  

Victor Kosler who manages something like $22  billion who said markets are very bubbly and  

there are lots of problems under the surface. (17:53) So for example, he said there are entire  

areas of private equity that are in deep trouble  and lots of companies within private equity that  

are defaulting on their debt and going bankrupt.  Can you give us a sense for people who weren't  

at the conference of the mood there and what it  reflects about the financial environment today  

because >> yeah I'll be happy for the listener  you have to understand that you know it was a  

self- selected group of people and grants made its  living was only two odd uses were yes but people  

in a g whiz world people say we're always bearish (18:26) that's that's not actually true but we are  

almost invar variably skeptical what doubting  Thomas's this is a market of credul conformity  

actually you know people nothing succeeds like  success anywhere but especially on Wall Street  

I think George Soros himself said we'll see  a bubble just jump on it get there early and  

uh you'll look at in time you'll just I'll tell  you when you'll know but there are so many ways  

to make money on Wall Street I happen to have  cultivated a following that is innately skeptical  

And so that just so bear that in mind (19:03) and we take away people walk out  

of these conversations. Oh my god, how could I get  tomorrow morning? >> Yeah, I felt I should go in  

fetal position in the bathroom at lunch time. >>  It was a good fair mix of people. For example,  

even within credit you mentioned Victor Kler  and guy name was Jonathan Lewinsson of diameter  

ke rather said u well things aren't so bad. (19:25) Look at this things are much better  

than you'd think by looking at a few soft spots.  So there was there was disagreement and John  

Hughes talked about investing in great companies  and not selling it as it's a fair. So that speaks  

to the the variety of ways in which people  of different sets of buildings and different  

intellectual turns or different terms of mind  can find a place under the big tent of investing. 

(19:50) It's nice in that way, isn't it?  And we had a innate copakar. We had the  

pure specimen of the bear. To me, it's a very  fetching buy in the set. He's a perfect example  

of an avatar of the sell first, buy later  approach to securious trading, you know,  

investment. He exhibited the rofal humor  of someone who was prepared to be wrong  

about 90% of the time in anticipation of being  magnificently and all by himself magnificently  

right six or eight or 10% of the time. (20:27) Yeah, he said something lovely about how  

you asked him impertinently in the way that only  a journalist can. Why do you do this? You know,  

sort of an existential question about being a  short seller. And he said, "Well, for the 15  

minutes when you're right, it's so delicious."  It just made me think some people really,  

they're so smart and they make life very, very  difficult for themselves by picking a particularly  

hard way to play the game of investing. (20:53) Yeah, he's chosen the highest degree  

of difficulty and there are many left. These  markets run over the skeptical mind. You said,  

well, have you read the documents? What the  what's the valuation? It's going up. That's  

the valuation. So, um they his talk had to do with  private equity and with AI and all the privates,  

private credit, you think be a sergeant or a  corporal or this mix. No, it's all privates. 

(21:23) And he pointed out it was a magnificent  tour to force a tour of the horizon. Uh was wrong  

in finance having to do with the structure  of things with the underlying fragility of  

debt and with the consequences of all those  years of suppressed rates of interest which  

of course interests me as I'm still sore that uh  interest rates were not a thing for so many years. 

(21:48) Publication ladies, it's called grass  interest rate observer. If you can't see them,  

it's not good for business. So, I'm still nursing  a grudge against the Fed for that. >> But now you  

have your 15 minutes. So, all is well for you.  And Nate, he also pointed out, I mean, I think  

it was in his talk, one of the most striking  things that was a recurring theme that I think  

is relevant to a fair number of our listeners is  that we should be deeply skeptical of the world of  

private equity as they try to democratize it. (22:21) And I think it was Nate Kobak said  

that in finance whenever you hear the word  democratizing, hide your wallet. And he said  

it's like Chanel marketing itself to Walmart.  Can you talk about that because that seems like  

a really beautiful example of this imbalant  time where Wall Street is dreaming up new and  

better ways to separate us from our money. (22:43) >> Well, the hypocrisy is delicious  

as Nate to put it. You know, private equity  people at first did everything they could  

to distance themselves from the common man.  Their shoes were bespoke suits magnificent.  

uh their club memberships extensive,  you know, and they would deal with the  

institutional world and not all of that. (23:05) And lo and behold, interest rates  

did not remain at near zero after 2021. And the  valuations that were acceptable in a regime of  

like nothing interest rates suddenly became very  precarious. Indeed, those valuations went away  

in a time when British kind of began to normalize.  So these companies, these private equity companies  

20 something thousands over the world were  capitalized for prosperity and more meaningfully  

capitalized for a regime of very very easy money. (23:42) So suddenly instead of paying I don't  

know say 3% interest and I'm going to get him they  were now paying 8% or 10 or 12 makes a difference.  

So what to do? Well, the investors and  they're not just wellto-do endowments. Well,  

the endowments were among the elite institutions  to which the private equity people sold. 

(24:02) So they would go around to mimicking the  famous Yale University model of >> David Swinsson.  

Yeah. >> Yeah. David. And they go around to  these endowments, colleges, what have you,  

and say Yale did this. And what it did was to  carve out a very big niche in his portfolio  

for venture capital and private equity. and you  won't be susceptible to adverse marks that reflect  

the unreason volatility of public markets. (24:29) Rather, the the marks that we give  

you are virtually correct and marks meaning  mark to market or not. So not >> not marks as  

in the sense of a Ponzi scheme where you've  identified marks. >> Yes. Right. Yes. I did  

ask Nate about Ponzi schemes and he said  that the term seemed a little bit seemed  

unnecessarily brutal for this sophisticated audit. (24:57) So um private equity sold overwhelmingly  

to such institutions and now such institutions  having budgeted for return of their capital are  

finding that it's not being returned. Nor  are the dividends or the interim payments  

they'd expected quite up to snuff. So they are  being pressed by the presidents of colleges and  

maserary institutions museums had to where  exactly is the uh money we need for the  

draw this year draw the development funds and  they're hardressed to come up with the money. 

(25:30) So they're some of them are turning  to the sec the secondary market for shares  

and these private equity companies. They're  being peeled off and sold to like you sell  

a used car and it's not what they not what the  buyers originally counted on. So private equity,  

I think that may demonstrated, is in trouble. (25:51) And it's in trouble because it has  

neglected to honestly value its assets as interest  rates began. And now it's stuck with assets that  

are being carried at unreasonably high prices  and the assets are not returning the cash that  

the investors need. So what to do? I know  we well the dear public oh the dear public  

and the I took a long time to get to this. (26:19) So this is where democratization  

comes in. Shouldn't the little guy have a piece  of this marvelous asset class, private credit,  

private equity? Credit, by the way, has none of  the overtones of debt. >> It's kind of the same  

thing. Private debt, meaning not publicly traded,  so not publicly marketed. And you can see it in  

the unwavering line of capital appreciation that  these funds and these assets have delivered to  

investors supposedly anyways being marketed to the  public as a safe and nonuler inducing alternative  

to sometimes tumultuous public markets. (26:58) Nate correctly says I think that  

this is not a sign of benevolence of the promoters  but rather a sign of their increasing desperation.  

I think it was also interesting that he said  that they have this reputation for being super  

sophisticated and obviously in some cases  they really are super sophisticated but he  

said when you look at the record of many private  equity firms they've shown as he put it maximum  

aggression at periods of maximum risk. (27:29) And so he said really they have  

a tremendous record of momentum chasing.  And so for me it was kind of a reminder  

that often we fall for the illusion that  the smart money is incredibly smart and way  

smarter than us and is going to protect us  from turmoil that can come. >> Yes. Well um  

in the audience was my friend Emanuel German. (27:55) Michael German as a Bell Labs caliber  

physicist who made a career change to Wall  Street became a renowned practitioner of  

quantitative fast you know he was a we call  them quats of course and he worked at Goldman  

Sachs for a time and other such high ranked  institutions on the Wall Street tables he wrote  

a book called my life as a quad a great memoir  never mind my book uh by David Emanuel Dur's  

books published in 2003 or four left is caught. (28:31) Anyway, at one point Emanuel harks back  

to the long-term capital management affair  1997 I think there it was the now fable then  

frightening collapse of a hedge fund that  was run literally by Nobel laureates and  

u in his memoir Emanuel Dur says he was on a call  with other Goldman Sachs people talking with the  

principles after the blow occurred and he said he  was startled and deeply impressed by the depth of  

sophistication on the part of these authors,  the failure of long-term capital management. 

(29:09) And they knew much more and asked  much better questions about valuation and the  

composition of the assets and the hedge technique  than did the Goldman Sachs traders who were trying  

to value this stuff. And Emanuel takes away from  this that sheer metal power, sheer metal accurity.  

It's not invariably the road to riches you have. (29:30) It's not necessarily the the equipment  

that gets you where you want to go. I don't think  you use the word humbling, but it gave him pause  

for thought, you know, and a lot of times I think  a lot of times on Wall Street, the simple common  

sense, I don't get it. Tell me again. So you're  telling me that you put all these subinvestment  

grade mortgage structures together, slap them  together, and the ones that the 40th percentile  

have been transmogrified into AAA securities. (30:02) Is that where is that? Can you again this  

time more slowly? But anyway, so the population  of intelligent people on Wall Street is a quite  

a large proportion of the practitioners.  And so at the Fed, the thousand or so,  

more than a thousand or whatever, the PhDs in  economics who who fail to foreseeing 20120 and  

21 that if you infuse the wallet of the population  with thousands of dollars of stimulus and open the  

stigance of the central bank and promise through  the central bank that interest rates, what you  

will generate is a great investment bubble (30:38) and the spending spree by people who  

have been given all of this  might result in inflation.  

And the Fed with all of its hundreds of  PhDs didn't happen to come to that kind  

of common sensical conclusion. So all this  is by way of windy way of affirming that  

um brains aren't everything. >> No, absolutely. (31:00) And you've written a lot about artificial  

intelligence in grants. Obviously, this is one  of the things that's been driving the euphoria  

in the market, and you've talked about the  insatiable enthusiasm for anything related  

to AI. I was looking at one of the daily  newsletters that you send out from grants  

the other day. >> Almost daily grants. (31:18) >> Almost daily grants. Yeah.  

It was talking about how Amazon, Microsoft,  Alphabet, Google, Meta, Oracle, and Coreweave  

will splash out $382 billion in capital  expenditures this year by city groups count,  

up more than 50% from 2024 and triple that seen  in 2023. And you said that the Magnificent 7  

now accounts for 31% of the S&P 500's total  capital spending from 19% at the end of 2019. 

(31:46) And you point out that there are these  firms like OpenAI and Anthropic that have raised  

billions of dollars every few months and are  now valued at hundreds of billions. And so you  

wrote this piece in July about the check writing  contest within the world of AI where everyone is  

basically racing to invest as much as quickly as  possible. And I just was wondering as a battleh  

hardardened investor, an observer of craziness  as you are, when you look at this excitement,  

how reminiscent is it of previous booms, whether  it's the railroad bubble that ended in disaster 

(32:20) in 1873 or the.com bubble that ended in  disaster in 2001 or or is this really different  

this time? Can you put in some context what  we're seeing here? I think what we are seeing  

is the promise of a marvelous technology  with human characteristics and those human  

characteristics have to do with uh falling out  line and doing what others do and if possible  

doing more of it higher, faster and louder. (32:49) This reminds me a lot of the fiber  

optics check writing contest of the late  1990s. How much of the stuff you put in  

the ground? Is there demand for it? rather  there will be or the as you say late 1800s  

the railroad building contests as it were the  check market contest war track parallel track  

to your competitor but still the contest is worth  it we'll beat that so there's a lot of redundant  

capital investment then and these things end  invariably with a panic and a crash I think  

that's the model for now another point that David (33:22) Rosenthal made was the problem with the  

capital investment may not be so much in its  size but rather in the demonstrated gap so  

far that people are not willing to pay for the  product of that congestion with extraordinary  

sums being laid out for data centers these  buildings that in the case I think meta  

building something the size of Manhattan Island  well and good except are you going to get paid  

for it if college students go away in the late  spring and don't come back until the fall and  

will they go away. The demand for AI goes way (33:59) down because who else has such a deep  

and persistent need for plagiarism. They have  to plagiarize papers to get through anywhere.  

So the demand for AI falls off marketkedly  and measurably come the springtime. I hear  

myself saying I saying I get a horse in  1903. You know, it's cars. They stink. 

(34:23) They look at the tires that  blow up all the time where steamboats,  

steamboats explode and kill hundreds every fiscal  quarter in 1840s. I'm not even talking so much  

about the technology as the very human response  to great technologies and the promise thereof.  

And don't forget, this is still a promise. (34:42) The question, what comes next? Is it  

the realization of the promise with the payday? Or  is it the crash that precedes the realization and  

the payday? I perfectly see this stuff is going to  do wonders for somebody. But for the time being,  

people seem not to be willing to pay for what  the producers of these large language marvels are  

laying out to achieve them and to  compete with others achieving them. 

(35:11) So I'm all in on comparisons to the bus  of yesterday Europe. I think this is that's the  

model for now. >> There was a lovely quote that  I I don't know if I had heard before that your  

friend Pierre Lassand who's a very successful  gold bug quoted from Voltater where he said  

history never repeats itself. Man always does. (35:30) I thought that was quite revealing  

about what happens with these deals, right?  Like the tendency at certain times in cycles  

for people to get carried away. And you had  someone I think um at your other conference,  

the credit conference earlier in the year who  was saying exactly the same sort of thing that  

basically at times like this there's  just this sort of fear of missing out. 

(35:50) I think it was Michael Gatau who's head  of direct lending at Silverpoint Capital. He said  

when there's a lot of capital and the emotion  is greed and there's fear of missing out,  

bad deals get done. And similarly,  when there is a lack of capital and  

the emotion is fear, great deals get done. (36:07) And so I think this is one of those  

areas where it's not like we can say what's  going to happen with AI and all of this spending,  

but there's a sort of familiarity to the  pattern of human behavior here. Is that  

fair to say? >> I think yes, I think it  is. When Pier said history doesn't repeat,  

he's not going to say, but it rhymes. (36:25) Don't say that. Not again. >> So Pier  

and Voltater's twist on this. I guess no, maybe  Mark Twain had the twist on maybe Mark Twain never  

said it. I don't know. I suspect Balta didn't  say it either. Whenever you are writing a book,  

you look back and you check the origin of these  quotes and you discover very inconveniently that  

nobody said what we claim they said. (36:43) >> He should he should have  

said it. Yes. >> If Volater had been smarter,  this is what he would have said. >> And more  

cynical. >> Exactly. >> Possible. >> Exactly.  So assuming that AI has been driving a lot of  

the euphoria in the current US stock market,  there is ample reason to be a little wary of  

what we're seeing in the US market. (37:05) And you've reported recently  

in your newsletter that the S&P 500  is priced at more than 40 times its  

cycllically adjusted price to earnings  ratio. And that back in the fall of 2021,  

it was at 38.6 times. And you said that that  means it's the richest reading in history after  

the dotcom bubble when it was 44.2 back in 1999. (37:31) Can you put in context when you look at  

the market at the moment when you look at US  stocks? Like this isn't a prediction of what  

we think is going to happen, but can you give  us a sense of why it's wiser to proceed with  

caution than with our foot as heavily on  the gas pedal as possible? >> Yeah. Well,  

everyone has to be in and valuations show that. (37:56) But appropo of there are many ways to  

make money. We heard from John Humes who is a  now compounder of capital and we concentrate  

portfolio and companies that embody the virtues  he thinks are that dispositively define a great  

investment and they have to do with barriers  to entry and with capital allocation and with  

management quality and the like and he holds  them through thick and thin and he's done  

marvelously through all manner of thins. Right. (38:27) That's about broad Buffett's counsel is  

too with respect to people who are listening  perhaps a lot of this has to do with their  

age and with their risk tolerance and if you are  starting out and you have a reasonably diversified  

portfolio and being in your 20s and I think it's  it's entirely prudent not to pay attention to what  

I am now saying or to talk about these macro  things come and go if the long-term America's  

gray is going to be great that I am this but  say you hypothetically you were a general  

of a certain age and you will (38:59) own a lot of stocks  

and you might want to pay a little more  attention to the signs of excess and they  

are at every hand. Valuation sentiment, the  incidence of unmistakable corrupt promotion,  

uh the swaggering of newly empowered through  wealth people who know know only one thing which  

is that markets only go up. It's all here. (39:26) The whole theater of uh the major  

financial markets top is on the stage. The  theater is opened and the pageant of top making  

um scenery and actors and script all that  is in play. Now the question of timing,  

does it have to end now? Nope. Does it have to  end in two years? No, it does not. But it will.  

lot of legends of people who got out in timing. (39:58) 1929 I wrote a book about one of them.  

Bernard M. Duke who's a great spectator. He's  the subject of my first book way back when I  

died like 40 more of legends come down through  the years that Bernard sold on the eve of the  

crash 1925. No, he did not. I have the stock  market. I had the his records to prove it. 

(40:18) But what he did do was take the measure  of things in 1930 and get out salvaging like  

60% or 70% of his capital in a cycle that would  denude the buy and hold investor by up to 95% or  

so of his capital. And that took 20 years to wear  off. That cycles down made a high in 1929 and we  

captured its high in 1954. Put that in context. (40:45) That was the year the Giants were in  

the World Series and it was the most extraordinary  year. Now it was dividends are counted market came  

back before then. If you just look at the Dow I  guess that's 25 years right and my mentor and boss  

at Barrens Robert M. Bleberg he was a depression  child and quite vivid memories of the crash and  

its aftermath and was very very cautious of 1954. (41:11) But what he did not say 1954 is although  

there was a great markets man very instincts  and I went back and read his stuff 1954 58  

what he did not say was we are on one of the  greatest errands of prosperity and investment  

success that you won't be able to it's all in  front of us there will be bumps in the road  

but consider that put away those memories of  the bad old days they are not humane but yes  

I think that this is a major top in motivation. (41:42) I'm with Nate Copakar with others and  

with myself. I don't need anybody else to  help me along with this. Nate did such a  

good job in exposing the underside of things of  credit in private markets. It will come unstuck  

and you'll have me on the show >> and I  am not going to gloat at all. You know  

why? >> Because I have been around the block. (42:07) And the the important thing is to  

recall at moments like those were able  to spend themselves that just recall how  

full of beans you were in the runup to the  moment of crowning success. Just remember  

that >> it's a very difficult game, right? I  was listening to an interview that David Ter,  

who I've never interviewed before, but who's  obviously very smart, very successful guy,  

he had done on CNBC when he said, "We're having  a really good year, and I'm so miserable because  

I still own the market, and I can't stand (42:38) that I own the market." But he said,  

"I'm not ever fighting this Fed with all these  expectations of interest rate cuts coming before  

the end of the year." And he said, "You've got to  stay for some of the party because the punch bowl  

is still there. They haven't taken it away yet. (42:53) " He is a constantly successful  

speculator. I remember watching him on  CNBC at 2010 when Ben Esperant from PhD  

wrote the piece in Washington Post saying  we are going to institute QE and this will  

infuse the net worth of the people who have  equities and America will be growing again  

because the stock market will be rising again. (43:14) That was essentially the argument. I  

remember David Terry I remember he was sitting on  set in the CBC and it was a chair. respond like  

this and nervous to go back and forth like this  and he's exactly explaining how this was going  

to happen and it happened exactly as he said it  would. He's someone to pay attention to. If you  

were listening to it probably say don't follow me. (43:36) I'm miserable because I know full well all  

the odds are against much more of this except  he's also in the business of not getting off  

the train prematurely. that FOMO because he's  rather too sophisticated with that. Although I  

dare say he's as a human being, he's not immune  entirely from it. But he knows also that things  

go on so much longer than you would think  they would or if you're a moralist should. 

(44:01) >> Yeah. Happen to be a moralist should  is getting on the Fed as I often bet against the  

Fed. I can't stand this adage. I don't fight  the Fed. I've made my life throwing left hard  

jabs and left hooks. the Fed and occasional  overhang right at the Fed and they never  

hit back except sometimes I feel the blow. (44:21) So >> yeah, people will be shocked  

if I don't ask you very briefly about the Fed.  We talked at great length about it last time  

on the podcast, your lack of tremendous  enthusiasm for the way the Fed is run,  

but if you could just give us a sense of how  you expect the Fed to handle what's really a  

very challenging economic situation at a  really important juncture with I I think  

Chairman Jay Powell's term expires in May 2026. (44:49) You interviewed Kevin Walsh yesterday  

who served on the board of governors of the  Fed until 2011 and who a lot of people are  

saying could be J. Pal's replacement. Obviously,  there are a lot of demands for the Fed to lower  

interest rates and the like. And when you look  at this institution and its position at this  

very interesting juncture, what do you see? What  should we be thinking about? I think we ought to  

be looking at the uh administration's attempt  to conquer to uh subjugate it and to institute  

its own regime of ultra low interest rates at (45:30) the Fed having conquered it. I think  

the Steven I Moran was the advanced kind of the  Ptorian guard of MAGA of the Fed. He came under a  

questioning by Elizabeth War of the Senate Banking  Committee bing his fitness for the unique position  

of chairman of the council of economic advisors  and governor in she said to him tell me Mr. 

(45:57) Wood did Donald Trump lose the 2020  election he answered the Senate confirmed Joe  

Biden as winner of the election I know that Mr.  Then Donald Trump moves the election, the Senate  

confirmed. So, um, it's, uh, the robotic response  to me is a little bit concerning. You know,  

I the people around Trump were some saying, "Mr. (46:24) President, you had your golf carts sized  

bottom kicked in 2020. May we please move on?" I  dare say no one at all saying that to him. Now,  

they also, Mr. Morantum the Bureau of  Labor Statistics. Did they fake these  

numbers to make the president look bad? The  quality. The quality of the federal economic  

data has been declining for some Yes. Yes. Yes. (46:50) Did they intentionally the quality of f  

like that? It would not be a shock to me that  the president's views on interest rates which  

everyone knows lower the better in in 2000  whatever it was 2018 this late 18th his line  

was the Swiss have negative the Japanese have  negative nomine why can't we have negative why  

are we paying any what's wrong with less than  zero he still thinks that if he does subjugate  

the fed if he manages to bring his own people  in for a bay I think we can look for much lower  

money market interest rates and a much weaker (47:29) dollar and a much steeper yield curve.  

Meaning that high that longerdated interest rates,  longer term yields, bonds, mortgages will be  

higher, much higher than short dated money market  instruments like T bills. So what MAGA believes  

they might be right? Who knows? I gave up seritude  a long time ago but although it may not sound like  

that some but there's great hope for AI great hope  for transformation of American productivity not  

after the crash that has typical occurred with  excess exuberance and investment but before so 

(48:07) next year after revolution no there's  going to be a crash first you'll be sorry you  

ever heard the phrase AI is how bad can it be that  there's hopes for a productivity revolution such  

that this country can handle much lower interest  rates, a much more dynamic as they use the word  

uh credit when people can access the credit  market and find affordable mortgages. 

(48:32) The housing market's going to pick up  after this long so people can't afford to move.  

That'll change. They paint a wonderful picture of  what life might be like after the president finds  

his people and plast them at the Fed. as Donald  Trump himself often says, "We'll see, you know,  

or we don't we'll know more in four years. (48:51) " >> So, while we're busy worrying  

everyone that we haven't already alienated,  let's talk about government debt,  

which also was a major recurring theme at  the conference yesterday. Pierre Lasson,  

the gold investor we mentioned before, pointed out  that the world is drowning in debt, as he put it,  

and he talked about the fact that there's this  overstretched fiscal situation, not only in the  

US, but China, the UK, France, and elsewhere. (49:15) and he had some amazing statistics.  

He said that the total global debt has risen from  $16 trillion in 1980 to $314 trillion in 2024. And  

likewise, he said that US federal debt has risen  from $1 trillion in 1980 to 37 trillion in 2024.  

You've also pointed out in grants you said  uh nothing puts the fiat money era in starker  

relief than the fact that it took the US 222  years to borrow what the efforts of presidents  

Biden and Trump achieved in not quite 8 years. (49:50) So we can be equal opportunity in  

blaming different parties for the history of  recklessness here. But can you talk about,  

you know, give us a very practical economics  lesson for people like me who don't understand  

this stuff? Like you've argued for a while  that the fiscal deficit's unsustainable. Can  

you give us a sense of what's causing  the problem, what's likely to happen,  

and and most important perhaps what  the implications are for long-term  

investors like our listeners and viewers here. (50:16) >> Let's take the contrary argument first,  

which I have to deal with. There was a a time when  the contrary argument was upper in the minds upper  

most minds in that argument held basically that  yes debt is a thing but so is the income that the  

debt produces and for every debtor who may be  worried about overindulgence there is a creder  

who is more than happy to buy those IO and in the  case of a country such as the United States whose  

currency is sought after and accepted worldwide  there's no limit to what you can borrow and that 

(50:55) particular line of reasoning has held up  until this function to this very moment I mean so  

recently speaking the government I guess is still  shut down was supposed to be shut down the world  

still seems kind of okay with our shenanigans and  our debt and it's because they like the dollar  

still it's the world's reserve currency meaning  the currency that enjoys the kind of the Coca-Cola  

quality brand name and people accept it as good  money even though they're not sure what is what's  

behind it you know is it just the promise of (51:27) government or is it something okay  

so that's the argument against concern against  anxiety in the world right so the argument for  

concern is that the burden of interest and the  weight of issuance will exhaust even the friends  

of this country and the friends of its power.  Later this year, I'm going to be launching a  

richer, wiser, happier master class for a very  small, select group of people who'd like to  

study with me over the course of a year. (52:00) We're going to meet once a month  

over Zoom, typically for about 2 hours per  session, to discuss the themes in my book,  

Richer, Wiser, Happier. We'll also meet in  person at a couple of really special events.  

I'm going to cap the group at a maximum of 20  people. So, this is an unusual opportunity to  

study very directly with me in a small group. (52:22) What sort of people am I looking for to  

join the master class? Well, really anyone who's  deeply interested in exploring how to live a life  

that's truly richer, wiser, and happier. This  is the second time that I've taught a richer  

wiser happier masterclass and I'm planning to  do this again because it's really been a totally  

joyful experience for me over the last year. (52:44) The group has included an amazing array  

of 20 people from six different countries  and I can tell you that the current members  

are an incredibly interesting, accomplished and  really delightful array of people. They include  

some extremely successful fund managers,  some investment analysts, wealth advisers,  

heads of family offices, CEOs, entrepreneurs, a  management consultant, really renowned physicist  

turned quant investor, and a friend of mine  who's a highly successful professional gambler. 

(53:13) The common denominator here, I think,  is that they're all united in this desire to  

live a truly abundant life, and they're also all  great learners. One of the most joyful things for  

me personally has been to see the friendships  form between these remarkable people as they  

learn from each other and support each other.  In any case, if this sounds like something  

that might appeal to you, please email my  friend and fellow podcast host Kyle Grievy,  

which is kyle e attheinvespodcast.com. (53:48) Are you looking to connect with  

highquality people in the value investing world?  Beyond hosting this podcast, I also help run our  

tip mastermind community, a private group  designed for serious investors. Inside,  

you'll meet vetted members who are entrepreneurs,  private investors, and asset managers. 

(54:07) People who understand your journey and  can help you grow. Each week, we host live calls  

where members share insights, strategies, and  experiences. Our members are often surprised  

to learn that our community is not just about  finding the next stockpick, but also sharing  

lessons on how to live a good life. We certainly  do not have all the answers, but many members  

have likely face similar challenges to yours. (54:30) And our community does not just live  

online. Each year, we gather in Omaha and New  York City, giving you the chance to build deeper,  

more meaningful relationships in person. One  member told me that being a part of this group  

has helped him not just as an investor,  but as a person looking for a thoughtful  

approach to balancing wealth and happiness. (54:51) We're capping the group at 150 members,  

and we're looking to fill just five spots this  month. So, if this sounds interesting to you,  

you can learn more and sign up for the weight  list at thevesspodcast.com/mastermind. That's  

the investorspodcast.commastermind or feel free to  email me directly at claytheinvestorspodcast.com.  

If you enjoy excellent breakdowns on individual  stocks, then you need to check out the intrinsic  

value podcast hosted by Shaun Ali and Daniel Mona. (55:25) Each week, Shawn and Daniel do in-depth  

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perspective. Go follow the intrinsic value podcast  on your favorite podcasting app and discover the  

next stock to add to your portfolio or watch list. (56:11) My most friend both domestic and foreign  

and you have seen signs of this already.  You've seen in 2019 and 20 saw little  

anti-bubble eruptions concerning the markets  willingness to accept uh what you saw in 2019  

and 20 was discontinuity in the supposed  deepest of all world security markets. 

(56:38) 2019 it's concerned the money market  shortens the money market shorted interest  

rates because suddenly there was a a crisis  in the funding market for our debt meaning  

access to shortdated loans with which to buy  bonds that was in the fall 19 2019 and in 2020  

there was a fright scare in around March  and April concerning the world's tolerance  

for buying more of our longerdated securities  like the 10year and 20 and the 30-year bond. 

(57:12) And that happened with the pandemic and  with the Treasury's evident plans to borrow a lot  

of money. And the Fed's expressed intention to buy  a lot of bonds with money that didn't exist until  

it was ready to print it. So those were amber  lights. So the question really is what is the  

ultimate demand for US securities at these rates  of interest you know a question will they are they  

marketable at any rate so if the United States was  today was going to sell treasuries a 10year note  

not at 4 something not at 418 4.1% but rather (57:55) at 10%. Wow, that'll be a little bit  

of all. Right. Right. Or 12%. Also, that's  not that's not that this is not isolated  

to the sovereign debt. Consider also the private  debts that have been accumulated. And to be sure,  

private bonds that receive the interest on those  debts, right? There's a two-sided argument pro  

and con, but the US economy, as resilient as  it famously is, has been rendered much less so,  

rather vulnerable by the years of near  0% interest rates that precipitated  

and encouraged the deal making in private (58:36) equity and elsewhere. these aforementioned  

20 odd thousand more than 20,000 companies that  are now trying to find their footing at a time of  

interest rates they can't quite handle and so what  happens if the world loses its taste for American  

securities owing to the shambolic nature of the  administration how they so characterize it and  

if inflation for example comes back in unscripted  fellowship the Fed can't lower rates in good faith  

but rather must consider raising ing them. (59:09) How would higher rate interest rates  

play in this world of financial fragility,  at least as some of us see it? That's a kind  

of a an attempt at an overview of what's wrong  with too much debt. It's part of it is is the  

uh American brand in dollars and  debt being corroded and debased  

by overdoing it by overach is humans. (59:34) And then there's the question  

of whether in the event of say unexpected  inflation whether the private sector is  

going to be badly damaged by the need of the  Fed to post higher interest rates you know.  

So the reason that people like clean balance  sheets is it affords the borrower or the wouldbe  

borrower the future borrower with flexibility  that's why companies with clean balance sheets  

get primature AAA or double A very true but the  well that's clean balance sheet that's good it's  

good because that company can opportunistically in (1:00:10) advance when the times are difficult but  

when the times are difficult in this country  the government famously its construct of the  

welfare state must borrow much much more. We are  borrowing heavily in a time of a 4% plus rate of  

unemployment long thought to be full employment  and we are borrowing at a time of roaring markets  

and of a GDP that is rising according to  the Atlanta rate close to 4% annualized. 

(1:00:38) Wow, we need a six or 7% deficit to  make things work. That doesn't sound like a  

well-managed public finance operation. So  these are latent problems now. As I say,  

look at the screen. Are the bond markets  kind of okay? Credit spreads meaning the  

premium of private borrowing costs over public  ones is near an all-time modern all-time low,  

meaning no anxiety about private debts. (1:01:05) So the arguments against heavy  

borrowing must be made rather defensively  for the time being. I listen this thing. I'm  

pretty confident. I think that the too much  debt argument will prevail that really will  

rule much of our mismanagement of the public  credit and uh of so much private credit. >> I  

wanted to talk a bit more about inflation. (1:01:28) I was reading a back issue of Grants  

from earlier in 2024 where you connected inflation  basically to flaws in human nature and use this  

as an argument for why we can expect a future  of more inflation in what you've described as  

inflation nation America that is and you quoted  a German economist called Vilhelm Rupki if I'm  

called Rupka if I'm pronouncing it right. (1:01:50) >> Yeah, it's exactly right. Yeah.  

I wanted to read a little bit of what he wrote in  the 1950s because you've said you wrote has anyone  

said it better and and so I'm going to read a  few sentences him that maybe >> anthem here. Yes,  

please. Yes. Uh so he wrote this in the  '50s about inflation as the way a national  

economy reacts to quote a tendency towards  excess in every sphere and all circles to  

a presumptuous overconfidence in oneself to a  frivolous attempt always to draw bigger checks  

on the national economy than it can honor. (1:02:22) And then he said people want to  

invest more than savings permit. They demand  wages higher than the growth of productivity  

justifies. They want more imports  than exports can earn. And above all,  

the government, which should know  better, raises its claims on this  

overstretched economy higher and higher.  Thus, there is a riot of claims and an  

insufficiency of goods produced to meet them. (1:02:47) And then he talks about the impact that  

this tendency and human nature has on money.  And he writes this very elegantly. He says,  

"Just as there are organs in the human body  in which, if consistently abused, ailments  

slowly but surely accumulate, eventually taking  their revenge, so the national economy has its  

own equally sensitive organ. That organ is money. (1:03:08) It becomes feeble and ceases to resist.  

And it is this infeeblement which we call  inflation, a dilation of money, so to speak,  

a managerial disease of the national economy."  Can you unpack that a little bit because it  

seems >> No, I can I cannot unpack because  it's like a Can you unpack the Declaration  

of Independence or or Lincoln's second  inaugural address? All I can say is a man. 

(1:03:33) I mean, it's just it's an overstraining  of things. You know, it's an overstraining what  

you can read to impute in his writing is that  some of what he was saying is this is the way  

things worked out at the gold standard when there  was this over money would leave the country. gold  

being money country and um because paper money  was unacceptable in the world acceptable within  

the boundaries of the nation that could print it. (1:03:59) The departure of gold was a deflating  

force. You know you were losing the monetary  things. You were losing the capacity to issue  

credit loans credit debt and that was how the body  politic began to protest. Now in this age you have  

a reserve currency country America meaning it's  the kingpin monetary kingpin and there is to  

date no real hard limit on how much it can do. (1:04:33) There are some softer limits than the  

ones to which Ripkar I think was referring.  One is there's domestic protests against  

too high rate of inflation, but the Fed is  capable of uh finding that away. It's got  

this this press to digitation, this magician  stuff. So now they're saying that 2.8% is got  

a little bit of all that's fine vigilant. (1:04:56) So you watch 3% is going to be a  

little bit less fine, but we've got this. And  certainly Donald Trump is going to say I'm not  

sure he's going to use the word transient,  but I think he might say it's going to be  

go away. AI will wipe it from the slate. But  what a beautiful succession of sentences you  

wrote describing what I think is exactly the  almost exactly this dynamics of inflation. 

(1:05:20) And notice as well inflation under  a paper money system that the dollar never  

regains the purchasing power. It loses  to inflation. Now we met Chesley Martin  

a longest serving Fed chairman said that  the dollar never regains the person loses  

to inflation. In times past it there would be  prices would go up then go down business the war. 

(1:05:43) One of the things that I think  helped Donald Trump get elected in 2024  

was that people saw inflation even when the rate  of inflation declined. Well they should because  

the prices they saw not the prices they knew  in 2019 and 20. Since the economists have been  

saying confusing the rate of inflation with what  people saw to their very eyes in the supermarket,  

I don't care what they're saying. Look at this. (1:06:07) Look at the price of eggs for a  

time. >> Eggs are no problem for me, but I  drink a lot of coffee and I had a cappuccino,  

a large skimmed cappuccino to neutralize the  effect of the blueberry scone that I had with it  

the other day here in in Westchester, New York.  $21. That's just stunning, isn't it? >> One of  

the interesting features about the present day  and the shed's concern or lack of knowledge is  

the price of gold, which is kind of knocking  on the door of $4,000 an ounce. It was $20. 

(1:06:41) 67 67 cents from basically Alexander  Hamilton. It's just upside down until 1933 and  

it was $35 notes approximately again with some  wiggles until 1971. Then it was cut loose cut  

off the gold standard. What remained in the gold  standard and it was free to float. it did float,  

but now it's kind of gone bonkers and  people who are just as worried as our  

friend David about his stocks, you know,  is it what's driving it? Is it priced as  

it is only to disappoint its many somewhat  bruised and calloused followers by collapsing  

as it did in 2011? 2011 the price got to (1:07:27) $1,900 and something dollars an  

ounce. And what fell in the next three or four  or five years was a return to like $1,200 now and  

the collapse in gold mining shares upwards of 90%  in some of them. 95% everything's kind of out of  

whack, right? The credit spreads are out of whack. (1:07:52) Uh gold seems even for the gold people  

who love it seems and love it is unfortunate  the word for many of us today. It's a seductive  

asset. It's not just any old asset. You  know, it's not boom handles. You fall in  

love with it or not. It was like Bitcoin. Some  people fall in love with it or not. >> And you  

you've had a long love affair with this. (1:08:09) I mean, you you bought it in  

January 1980, I think. Your first Krueger  for what, 850? >> I don't mean to brag,  

William, but I happen to live in it.  >> Nice job. So, you're few thousand  

years old. Good job. >> It looks to see if he  was I think 2300 or something. I wear that,  

should we say, not pinpoint time purchase as  a badge of honor or at least of constructive  

humiliation to I don't need to remind myself  others who might mistakenly in their ignorance  

fasten the guru titan as a gold price here. (1:08:50) other side of the conference show  

this very well. your gold moves in cycles and  that can go sideways are down for 15 years and  

then he puts it down to an overissuance the public  debt and the questions about the public and then  

it just takes off like a stuck pig you know  it startles everyone as it is towards now I  

think fans it's a curious kind of bull market  public participation is still rather muted  

there are signs of it growing but there isn't  the frenzy you saw Bitcoin in 2020 between 20  

and 24 for example were common stocks today. (1:09:26) >> You've been pushing gold for many  

years, right? In this sort of very contrarian  way and now that it's seems an awfully crit  

commission just touting, hawking, advocating, >>  peddling. Now, now that it's it's hit 3,900 an  

ounce this week and is up what a good 40%  this year, it must be very uncomfortable  

for you as someone who is always a skeptic. (1:09:50) Now you're looking at and thinking  

we have a speculative bubble in gold or is  the runup justified given the backdrop of all  

time? >> I look uh I happen to be in the presence  of one of the uh the great speculators of our age  

and with springtime and I said this is what  it was like because of the closing in on 3000. 

(1:10:09) I've lost track of one but it  just hurdle cleared some high hurdle and  

I said you think gold's a bubble  he said of course it's a bubble.  

I said, Paul, is it justified by what we on Wall  Street are pleased to call the fundamentals? And  

this is where you've instruct you build these this  narrative for yourself about what's causing it. 

(1:10:36) I remember it very well in 2011 that the  S&P had downgraded the treasury from AAA to double  

A plus. And by the way, live to rule there for the  next 10 or 15 years because the authorities went  

after them big time for having done the tarity to  do that. And the precious gold had been in the mid  

1,500 years for a while. I thought so. I saw it. (1:10:59) Well, now the world is catching on to  

the joke and the world will demand of this  country a reform in the finances which will  

entail some role for gold in the monetary  system and gold will find its place at a  

higher price. I'm not sure we actually  use the phrase permanent high plateau,  

but that's what a a gold standard is. (1:11:20) is literally a permanent  

plateau. Is that a high or low? But $20.67 for  135 years is a high plateau or it's a plateau.  

$35 for decades was a plateau. So that  was some of the thinking among the thought  

leaders of the gold world. It turns out that  there was not any such thing as a worldwide  

permanent condemnation of our messy fisk. (1:11:46) Nor was there any intention the  

part of the authorities of bringing gold back  into the world of America's monetary system.  

America has read out gold from its monetary shares  starting in 1976 under Treasury Secretary Bill S.  

turn our back on it. No, no more gold period in  the IMF or in Treasury. Gold is it might as well  

be scrap metal that is housed under guard to be  sure in Fort Mox and elsewhere. But no more gold. 

(1:12:16) So you can build these air castles of  narrative. My current castle, if I were to have  

built one, will consist of administration  that seems a term unlikely will prove to  

be successful in taking over the central bank  and opposing its interesting theories of money  

interest rates on the dollar and on the world. (1:12:42) It uses the dollar. That's one plank  

of this castle and another would be proclivity  of the Treasury to borrow much more than it  

takes in and the Congress to allow that and for  the fiscal dilemma to be talked about but never  

act upon it to one. So that would be enough to  convince me of the upside still in front of us. 

(1:13:03) But mine, you can't be sure and if  you have too much of this stuff and you have a  

restless night's sleep, but you want you don't  want as David, you don't want to miss all the  

upside, you know. So it's it's that's what makes  this this line of work so interesting. There's no  

firm ass there's no certitude. There can't be. (1:13:22) People think they have it. One thing  

about them or two things about you know they're  not very old and know they have not really had the  

invaluable education experience of having their  face ripped off during a bare market. >> There's  

two things you know about or one of the two.  >> I I always remember Bill Miller many many  

years ago saying to me there is no certainty. (1:13:44) It's all probabilities >> and it's very  

unsettling. And so, you know, in terms of just  being a prudent investor to position ourselves,  

and this is before we turn to your  book, which I want to talk about next,  

to position ourselves sort of prudently given  the backdrop. >> You don't much like bonds.  

You said basically in 2021, we entered a  40-year well after a 40-year bull market,  

we've entered a long period of bare market. (1:14:08) >> I own some bonds personally,  

my wife and I do, because no one's getting  any younger and I dearly love gold. But you'll  

notice that that it is sufficient in one thing  only. It pays no interest, which is also one  

of its great virtues. It's money. It's simple.  It's money. The world regards that with bonds. 

(1:14:27) So, um, I own some. It's a fund that  invests in special situations that yield rather  

more than the ones that trade in public markets.  And it's risky, but risk is well managed. So,  

that's part of our lives in these this time.  I intend to work my whole life. I don't have  

any intention of retiring, but prudence would  dictate that there's some reasonably assured  

income outside social security. So that's that. (1:14:54) So that's my cautel to in my anti-bond  

stance. I own some of them. >> I saw yesterday  at the conference and talked to briefly the great  

Paul Isaac who we talked about last time you were  on the podcast who you'd invested with many years.  

So I'm assuming you still have some exposure  to the stock market through people like Paul. 

(1:15:11) >> Oh yes, I do. I do when he's coming  into his own all these stocks that stood still  

or seeped lower and lower of course in the past  five or 10 years coming into the roy seems to be  

a well is a by way of preface is a deic value with  nested they look for special situations that he  

feels are downside and this would have to do with  quality of the balance sheet of the earning stream  

of course of the price afford some protection  it's been beaten down and ignored sufficient  

by Wall Street there's some protection it's (1:15:43) and it's very obscurity who's not  

going to be a part of the kind of portfolios  that will be liquidated. It will pay a price  

during the liquidation because it's traded  somewhere and this has to do with company  

so banks in for example in Europe and it  has to do with medical device companies in  

this country that are kind of on the have been  neglected because they once failed at something. 

(1:16:05) I'm not sure special situations is a  better description of his some of his investing  

style than valuing, but he looks for opportunities  that will not necessarily be borne a loss by a  

great rush into mag seven and they have been  left behind. So he has suffered by comparison  

with that. But these things they say, "Wow, what  >> unless unless what is happening now is every  

last dog is finding its adopter from the pound. (1:16:36) " It's like every the pandemic dogs,  

even the uh most improbable beasts get led out of  the pound. >> Let's hope that he's not listening  

to this and thinking you're describing  him as a three-legged pandemic hound is  

finally having his day. But I think the point  is that it's not like you're going to cash and  

crawling up in fetal position in the corner. (1:16:57) It's about taking intelligent risk  

whether it's with gold and commodities or bonds  or diversifying beyond the US market and beyond  

the So this isn't you advising everyone to panic  and cash out. It's just saying be more conscious  

of the risks that you're mindlessly taking >> or  take them thoughtfully. Even though it's well and  

good to anticipate your peace of mind come the  liquidation, but everyone's got a plan until it  

gets hit with Tyson like Tyson line. Yeah. (1:17:31) Never under never underestimate  

how sweaty your palms are going to be. These  liquidations can seem upending. They typically  

don't. It's also about at this I was listening  to Grant's current yield podcast and you were  

talking about how we're in the age of decadent  finance. And so part of it is about being wary  

of having stuff sold to you that's kind  of marginal and speculative at a time  

when we should be being more prudent. (1:17:59) And there was a lovely line  

you said we at Grants take a rather  moralistic view sometimes. Instead  

of credit being man's confidence in man  in this day and age of decadent finance,  

it now demands man's confidence in the  sagacastity of his lawyer because the  

ingenuity of the strong and the cunning. (1:18:15) I'm misstating that, but you get  

my point that what you were saying is you can't  just be trusting at a point like this where all  

of the most rapacious cunning people come out  to try to sell you stuff that is not >> and  

all of the rapacious cunning people have done  very well by their rapacity and by their guile. 

(1:18:32) You know, it's a markets when allowed  to function properly go down as well as up and the  

down portion serves any number of functions. One  of which is to skim the bad actors off the stage,  

you know, just to flick them away. But what  happens when the Fed with every good intention  

I'm sure lends its force its arm and strength to  prolonging cycles and for stalling bare markets  

and to pumping up the GDP so that we never  have to endure this uh experience again so  

bad conduct goes uncorrected unchastised Mr. (1:19:10) market is the best disciplinarian.  

Never mind all these only lessons that you  can read down reflect on Warren Buffy. He is  

a great coiner of phrases. But Charlie Bunker, but  nothing succeeds like having your head handed to  

you as a learning tool. disbarment in the case  of for the bar or delicensing in the case of  

financial advisors and just to get some of these  people out where they ought to be which is like  

I don't know working for the Fed I don't know  whether they go after this get them out of the  

markets where they have lingered too long and (1:19:40) they're going to get too many people  

in troubles and that's my moral argument. Let's  turn to your lovely book, Friends Until the End,  

which is a double biography of these two  magnificent 18th century orators, Edmund  

Burke and Charles James Fox. And it's set against  the backdrop of three great events, I guess. 

(1:19:59) So, Britain's loss of the American  colonies, the rapacious exploitation of  

India by the East India Company, the  great dominant monopoly of its time,  

and also the French Revolution. And it would  be great if we could chat for half an hour  

about the book and the lessons therein. Early in  the book, at the end of the preface in writing  

about Burke and Fox, you say, "I love them  for what they said and the way they said it,  

for what they believed and for what they did. (1:20:27) " Can you give us a sense of why you so  

greatly admire these two figures who were in many  ways giants, but also have been widely forgotten  

by many people, although Burke obviously is an  important figure in the world of conservatism.  

For me at least a great oratory is like music.  I read it as I listen to the third moment of  

Browns's third symphony which I happen to love. (1:20:51) >> I'm going to May I read you a little  

something from >> I would love that. Yeah. This is  works of panag to his friend Fox in the preface to  

this is that to bring British East India Company  to heal to curtail the most abusive practices of  

its agents in India. Edinburgh internal stocks  together drafted a bill to revise the governance  

of this monopoly is the biggest company that won. (1:21:18) Box who was the front man for this in  

the House of Commons of Great Britain bore  a lot of abuse because if the bill went  

through he would command a great deal  of power in nominating functionaries  

to serve on the new governance commission  you know so he had all this power awaiting  

him if only the bill will get through. (1:21:38) Oh, this is Borsy. So they  

question his M. But he has put to hazard his  ease, his security. His interest is out even  

as darling popular of the people who has never  seen. This is the low that all heroes have be  

heed and used for loss. You will remember  that obviously as a necessary ingredient  

in the composition of all true glory. (1:22:07) You will remember that it was  

not boldly in the Roman customs, but as  in nature that constitution of things,  

but calibly and abuse are essential parts of  triumph. Now, is that not a wonderful read? That  

speaks to the first part I tried to make the what  they said, how they said it. A book is so well  

seasoned with quotations from both Burke and Fox. (1:22:33) They're both magnificent speakers and  

they both came into their prime after  stenographers were at least semi-legally  

allowed with the House of Commons take close  notes. They couldn't get all of it. These  

things like capturing a bird on the wing and  they were writing scribbling on a short head  

of world creation, but witnesses to Foxes  and Brook's eloquence contender was was  

much better than what you read in the page. (1:22:55) Oh my goodness, it was pretty good  

on the page. So that was what they said and  how they said it. There was an amazing line  

from Boswell in your book, the biographer of the  great Dr. Johnson, where he said, watching book,  

if I get this right, it was something like  being in this orchard where he could just  

pluck these apples at will, like so fast. (1:23:15) And I think one of the amazing  

things about their oretry was both of them,  they were so brilliant and so quick speaking  

and quick thinking that they could be quoting  Virgil and Horus and they would be quoting in  

Latin from memory. And the same with people like  William Pit who became prime minister at 24 who  

you quote I mean I think there's a bit in the  book where Pit suddenly quotes Scipio in Latin  

from memory about some old guy who's insulted him. (1:23:45) I think that's part of what's so amazing  

about the rhetoric the oretry that they use.  Ah yes they at one point uh I'm not sure if  

how much is this is documented but supposedly B  Norris who was the prime minister during much of  

the time was in the House of Commons as was Burke  and Durk was lacing into the government when Lord  

North and North happened to be sleeping during  and Burke then quoted something about but North  

heard him misquote something about and he awakened  corrupted him and then figned and return sleep. 

(1:24:21) >> I had an amazing history teacher,  a legendary history teacher at Eaton, which is  

where Charles Fox went and pit this guy called  Michael Kiddson, who now if he was still alive,  

would be banned from teaching because he would  say such incredibly inappropriate things,  

but he was wonderfully articulate and he would  always say they were giants in those days. 

(1:24:44) And you get that sense not only from  the quality of the rhetoric of the actual use  

of language and hyperbole and just all from memory  and a lot of it off the cuff anyway. They wouldn't  

dain to look at their notes and Burke could speak  for 11 hours. >> It was very bad. It was very bad  

form to speak for the script. >> Yeah. So amazing. (1:25:01) But then also and I think this is  

probably what you were about to get to. It's  not just that. It's the moral courage that  

they demonstrated. And I mean if you could talk  a bit about that because that certainly comes  

through particularly with Burke like this sense  of his humanity and his moral courage and his  

compassion and there's a point where he says that  he has one rule for himself which is to act as the  

representative of the people who had no power. (1:25:27) Can you talk about that because I  

think that's the other thing where you feel not  only that you're uplifted by reading the quality  

of their language but also the quality of books  morality and decency. He was a difficult person  

for so many occasions, you know, but he was  also most of the times incredibly generous and  

courageous in the causes he would take out. (1:25:52) For example, two guys were caught  

making him love and of course crime,  serious crime. They're called before  

the bar of baleiff and sentenced to a time  in the stocks and put your head and your  

arms and wrists and would stand before  all the worst people around and they  

would toss stuff at your head. Sometimes  merely vegetables and other times rocks  

and these two male lovers suffering rocks. (1:26:21) One of them was killed in the stalks.  

One of was named on Masharif and he died didn't  die either. But Burke took up their cause in the  

House of Commons. Of course, you can imagine  a ridicule came down his head for this and all  

the knowing who lear is one member to another  on the other side of the house of Congress,  

the government less and this man who must  have had both curious motives for taking up  

the cause of these two reprobates, these two  offenders against the laws of God in nature. 

(1:26:55) But Burke persisted a newspaper  liable him and he sued the newspaper and he  

won a modest symbolic settlement which he gave  away as a gift or something. That's one example.  

There was a wonderful example too where I  think you write about this poet crab who's  

at the end of his tether and he comes  as a total stranger to Burke and Burk's  

Burke not only reads his poetry but helps him  revise it gets it published totally transforms  

this guy's life this total stranger >> crab is is  literally hungry and destitute you know sleeping  

on the embbackment as it were and show and (1:27:32) pulls himself together enough to  

knock on door of Edmund Burke and Burke takes him  in just as you say it's I came to view Burke as a  

kind of a nextdoor neighbor to a saint my friend  and neighbor Ay Schllays who read the book said  

you know Burk's crazy and not crazy >> as he aged  and history became if not more not floored exactly  

but more complex and more heavily decorated  with Shakespeare and Milton and the Latin poets  

the younger crowd, younger people came  in and he became rather an old number  

in Edinburgh and and he would be greeted by (1:28:13) coughs, organized coughing by the young  

folk and he came to be known as the dinner bell  because when he rose they left and went to the  

House of Commons, I guess cafeteria was not quite  right, but they went to get themselves a dinner.  

One of my favorite things from him is that  there's a I mean you were talking about his  

willingness to take unpopular positions and  there's a beautiful thing similarly where he  

he was often accused of being Catholic because  he was a great defender of the Catholics and  

there's something where he responds and the (1:28:44) Catholics are obviously tremendously  

persecuted at the time and it says and if Burke  went on account of such sentiments people call  

me a Roman Catholic it will give me not the  smallest degree of disturbance they do me  

too much honor who aggregate me as a member  to any one of those respectable societies  

which compose the body of Christianity wherever  they choose to place me I am sure to be found in  

extraordinary good company it's beautiful  right >> that brings tears to my eyes it  

does that was Burken's best and his best was (1:29:16) fantastic so what do they believe  

so they were these guys were Burken Fox were in  the opposition whole careers basically each one  

had a short time in government in the ministry  which meant they drew no money from the House  

of Commons or unpaid. So they scrambled around  for money sometimes rather gaming speculations  

and Caribbean land deals of course unsuccessful. (1:29:40) So as members of parliament as members  

of the opposition what did they believe they  believed that the king was overstepping his  

balance the king was going too far to become  news rather a tyrant and they do what they could  

to sty the king the king of stying nib. So the  two of them believed in the following episodes  

of their careers together believed the following. (1:30:02) So in the American Revolution, they were  

both allied with George Washington and his feeble  rag tag army and the ideals of revolution against  

the heavy hand of Lord Martha and King George  III. Now Edenburgg was welcomed the affection  

of the American people but would squash them if  they had presumed to achieve power over England. 

(1:30:26) He was not a friend of a risen and  powerful American state. But he believed the  

colors were in the right and their dismiss over  taxation. But Fox as was his kind of unchained  

want. He wore George Washington's colors  around London his carousings and gambling  

at Brookson's club buff and blue and what you  know what some people took his enthusiasm with  

the cause with treachery against and uh  so that was that was America they both  

were quite stalwart members and would say after  George Washington's route of the battle of Long 

(1:31:02) Island let us stand by our friends  and their advers as well as the prosperity never  

abandoning people who stand for the principles of  the glorious revolution of 168 in this country but  

always support them in those ideals. So that was  one episode. The second had to do with overbearing  

corrupt and a quite cruel regime at times quite  cruel regime of the East India Company in India. 

(1:31:30) And this shows Burke Adam and his  dogmatic and semi crazy side involved a trial  

of Warren Hastings who was a leader of the Houston  company. And I'm not sure whether Warren Hastings  

was quite as guilty as everything as I thought  he would. But the trial lasted for eight years  

and by the end of it only Edwin Burke was  interested in pursuing the case against and  

again my friend Abby face calls this law affair. (1:32:03) So that shows a dogmatism of Burke and  

how he could seemingly be unself-aware. >> It's  worth dwelling for a moment on the East India  

Company because as you write in the book it was  as well hated and well envied as any modern-day  

technology giant. And so this was the world's  largest business. So Hastings who you mentioned  

was the governor general who got impeached. (1:32:25) Can you talk a little bit about the  

misdeeds and the wars and the cruelties and the  scandals and the plundering of money from India  

that it's kind of amazing because we talk  about business now and the nefarious things  

that we've been saying Wall Street has done.  There's a level of brutality and corruption  

to what they were doing that's quite astounding. (1:32:45) Well, all you have to know about u see  

behind you William the portraits of Charlie  Maver and I guess Warren Buffett. Yeah. Yeah.  

And Charlie Maver is fond of saying Shelby  and Sen show you the outcome. The East India  

Company would send to India as employees  of the firm lads of 16, 17, 18 scarcely  

shaving and they would be very illpaid. (1:33:12) They were to make their way in  

the company by setting up shop for themselves and  by conducting their own business as a sideline.  

Actually the side hustle became their focus and  their main day job. So instead of enriching their  

employer they enriched themselves. That's one  thing to know about incentives. The other was that  

the East India Company was itself a sovereign. (1:33:36) It had his own army and it had his own  

merchant fleet and its own navy. And what would  a prophet sitting in company do with its own  

military power in search of prophets? It would  wage wars, right? >> Well, maybe the equivalent  

is Musk having Star Link and maybe he's the  uh the person with the power that they had. 

(1:34:01) >> Yeah, maybe that's coming. But  knowing those two things, you can imagine what  

liberties the servants of East India Company took  on their own behalf as opposed to that interest  

of their stockholders and indeed the interest  of the sovereign that gave them the monopoly.  

So they ravaged the country and uh you probably  have a favorite episode of their misgovernance,  

but it was pretty steady and pretty heavy-handed. (1:34:27) >> Well, Clive was amazing. Clive of  

India and I used to when I was living in  Belgravary in London I would pass this  

gorgeous house that would say Clive of India lived  here and you'd think oh this must have been some  

noble guy and it's like then you read your book  and you realize no they were just pillaging left  

right and center and then would having plunder  jewels and stuff they would come home with  

just millions and millions of dollars and buy  themselves respectability >> not respectability  

they would buy themselves seats of parliament (1:34:56) >> yeah power >> social respectability  

was I'm not sure anyone had enough of  that for them. But Clive of India was  

the avatar of the internal mobile. >> Yeah.  >> They turned their bloopers I guess into  

jewelry. >> Yeah. My favorite bit that you  write, well actually this is Burke that you  

quote on the East India Company talks about  these young men, boys almost govern without  

society and without sympathy with the natives. (1:35:25) They have no more social habits with  

the people than if they still resided in England,  nor indeed any species of intercourse but that  

which is necessary to making a sudden fortune with  a view to a remote settlement animated with all  

the avarice of age and all the impetuosity  of youth. They roll in one after another,  

wave after wave, and there is nothing before  the natives, but an endless hopeless prospect  

of new flights of birds of prey and passage with  appetite continually renewing for a food that is  

continually wasting. And just that image of these (1:36:01) new flights of birds of prey coming  

in to rip off these poor natives plundering  their wealth. It's just an amazing piece of  

writing and rhetoric. >> Ah, well you see why  I wrote the book. >> Yeah. I think the book in  

some ways it almost tells me as much about you  as it tells me about Burke and Fox because it  

seems like it's just infused with your love  of language and writing and scholarship. 

(1:36:27) is that there comes the trial and  Hastings to close that at war Hastings the  

governor general of India as she noted impeached  was tried off and on mostly off I guess but still  

over the course of eight years and this is  a impeachment in the House of Lords and he  

finally gets off and uh it's most remarkable  display okay but there's more of that side of  

Burke in their death scene and we're coming  up to that now with the French Revolution  

This is where these two friends parted company. (1:37:03) It was quite irreparable to Fox. The  

French Revolution was that's the greatest  thing that ever happened in history world.  

Tossing off and throwing off the chains  of the tyranny of the French crown and of  

the miserable system of aristocracy  and the suppression of lives of the  

people. He thought it was was marvelous. (1:37:27) Okay, there was Fox and Burke  

saw in this. He saw chaos. He saw the  destruction of civil society. He saw the  

structure of things that the uh order of society  by social rank. Very important to have family,  

privilege, all this stuff which to him was  the fabric of a functional and prosperous  

societ. All this would be destroyed. (1:37:50) The church would be destroyed.  

Religion itself would be trampled under a  flood. And much of that indeed did come to  

pass with a terror and Fox was raised grinned  by the terror you could imagine and put in Wall  

Street terms. He said I'm really bullish on this  and then most terrible things that happen become  

it goes broken and everyone's revealed to be  a not only offender against the laws of the  

country of the rules of the SEC but also  criminals of most horrible sort you know. 

(1:38:18) That's the kind of the Wall Street  analog to the call that he made after the fall  

of best deal. But still Fox clung to his view  that this was a glorious moment in history of  

man. And of course he had many comparisons in  this romantic generation them coming up cheered  

them on and he cheered them on and okay so that's  that. But Burke was equally unmovable in his view  

about not only the net evil of this but also the  gross evil that you didn't see much that would  

come out of it except the end of France I guess. (1:38:52) So what about the friendship it came  

to a tearful end in the House of Commons and  it was a debate over something having nothing  

to do with France and Burke went on about  the French Revolution. Fox said, "This is  

not germaine." And Fox quoted back to Burke some  of his thoughts in the American Revolution. And  

Burke went incandescent over the incivility  of having his own words quoted back to him. 

(1:39:19) That to him was a heinous  crime against the unwritten rules of  

the house and more especially against the  unwritten rules of friendship. And he said,  

"Our friendship is at an end." And Fox now  breaking into tears said, "No, it's no it's not.  

So that was that time passed and Burke's son  tragically precedes him and that predescases  

him and Burke falls ill and falls broke. (1:39:46) They're all both of them are  

broke. Both their whole lives they you know  Fox lives for bankruptcy and Burke is broke  

at the end and that does nothing to lift  his spirits. And as Brooke lay they die,  

Fox reaches out to his wife Mary and  Branch. May I come and see my friend?  

And she consults with her husband and  she writes back to Fox that word for  

word certainly the spirit of his reply. (1:40:12) A stiff reply that Mr. Burke  

must adhere to the views that the public knows  so well and that if he were to fear from them,  

it would be a great hurt to the community and  to couldn't do it. So three eyes Burke does and  

u Fox lives a long time afterwards many years  in declining health himself and declining health  

well earned by the way he so lived something  comes around to ask Fox if he would not like  

to contribute to a fund in collection to raise a  monument to late Ed Fox says no I can't pretend to  

a spirit of forgiveness such that I could do this (1:40:57) without being a wanker. I I can't. So  

that was that. And the book closes in with  the fox having finally succeeded in putting  

over a law outlawing the slave trade in  Britain knows what he wanted most of all.  

This is a statue of a fox in Westminster  Abbey depicting a freed slave or something  

freed slaves lying on his lap and gratitude. (1:41:27) So I said that that Fox is a enduring  

monument and marble and that Burke's collected  items are a marble of another find. >> One of  

the things, Jim, that was so striking to me is  both Fog and Burke were incredibly admirable  

and gifted in so many ways and yet they were  both absurdly bad with money. Both of them  

lived in debt. Both of them died broke. (1:41:51) But I think Fox was kind of  

extraordinary. Can you talk a little bit about  his gambling? I mean the recklessness of it  

is quite staggering and his father was absurdly  rich. So it was quite impressive what he managed  

to achieve. >> He comes for a interesting  line financially speaking. His grandfather,  

Sir Steven Fox, was a payoff from the forces,  which meant very briefly that you got to invest  

the money that was entrusted to you for the  payment of the troops until that money was  

needed by the king to discharge those debts. So, (1:42:25) you could do anything with it and you  

got to keep the profits whether it was interest  on investing government securities or or profits  

from dealing with college stocks. So that was  Sir Steven Fox and Fox's own father who came  

to know as Lord Holland got the same gig and  he became fabulous and rich. People couldn't  

believe what he did with those with that money. (1:42:53) He just he fed the profits to his  

addicted gambler. Fox would play night and day  at his club, Brooks's club. He played dice games  

of dice and cards and um he's a horse player  rather better at that than cards and dice.  

He lost quite literally fortunes at gambling.  >> He lost £900 on a single game of billiards. 

(1:43:17) You right at a time when that was real  money. I think you write that in 1776 he had  

£140,000 of gambling debts. That's many millions  in today's money. Right. >> Yes. and what did not  

speak well of his moral character didn't seem to  bother him people would say how can you sleep at  

night all I want you to do is father said well  the question is how could my cred sleep at night  

and it's so amazing he would go out sort of  drinking all night sleeping with prostitutes  

sleeping with his mistress and then he would  come into the house of parliament and give an 

(1:43:49) amazing speech and I think there's a  wonderful bit where Horus Walpole >> listens to  

a speech that he's just given after basically  being out drinking and carousing all night And  

he's like, "This is just total genius what  he could do." >> Yeah. Yeah. People were  

astounded by it. But also they recognized  that he was basically just a big sponge. 

(1:44:08) He borrow from his friends, borrow  from everybody from whose father died desparing  

the debts that he had accumulated and what it  did to his estate. But he still kept feeding  

on money. Burke was different entirely. He  bought lovely estate beacons field. It was,  

as so many lovely estates are, it was  a money pit. You didn't make any more  

money at farming than most people do today. (1:44:32) He was a student of scientific  

agriculture. But think of the productivity that  he had or didn't have. Now, this place lost money.  

He could by hitching some oxen ahead of horses  and plowing that he could plow one acre a day.  

Now today a mechanized farmer at a not  so very accommodating hilly New York farm  

can do 21 acres a day mechanized plowing. (1:45:02) So 20fold appreciation in plowing  

had two jobs as a parliamentary a devil. He was  a gentleman farmer, but actually more than Joe.  

He was a hands-on farmer, a scientific one at  that, who with the right equipment, ox as well as  

horses, could plow all of one acre a day. Upstate  New York who can do 21 acres a day with machinery. 

(1:45:23) Not much productivity growth there.  And so the place never paid for itself. It  

was mortgage. So he was perennially in debt  to his friends and to his political mentor,  

Lord Rockingham. and with all the  insecurity that entails. So, uh,  

at length, Burke became a member of Brooks's club  as well and Socks was towards the end of his life. 

(1:45:48) And one of the documents that my  quite terrific research assistant and length  

intellectual partner Janice managed to fish out of  archives was a letter from Brooks's Club to Mrs.  

Edmund Burke about eight years after his death  dunning her for unpaid dues as Brookton's. Huh.  

Oh god. So that was the state of his exjecker. (1:46:12) I think that Brooke never suffered in  

his lifetime the indignity of bankruptcy more  than once. Fox's uh his furnish was out on the  

sidewalk. The debt collectors came just took his  stuff. Once he was u after a night approaches  

after immense losses one of his friends came  to him concerned about what this might do to  

would he take matters into his own hands with  a pistol alone and dead at night no so he came  

and there was Fox reading some great Latin to his  friend said what are you doing and Fox said well  

what do you think I ought to do I've lost every (1:46:47) shilling there was a serenity in the  

face of ruin that will amaze the readers of I hope  we want to share one last story about Fox's death.  

So he he fell in love with a cortisol. This is  what I'm missing. Not ever sure whether was a Mr.  

said, but they had a genuine love affair  and at length during one of the breaks in  

the Napoleonic horse, Fox takes his then  wifely at length takes her to France and  

they sit down with a taland French diplomat  and Talan too had married a cortisan and the  

two ladies sat next to each other on (1:47:28) the back and they shared  

very interesting observations  about people they had known.  

Oh, marvelous. >> Before I let you go, Jim, one  last question. You spent so much of your time  

studying history. I wondered if if it gives you a  sense that life has improved, that we've survived  

these terrible periods in the past, whether it's  the French Revolution or Civil Wars and the like. 

(1:47:56) Does it give you a sense that even  in our strange and difficult moment now,  

that we sort of muddle through after all? Like  does your study of history give you optimism  

or pessimism about the future? >> A little  bit of both as to the material side of life  

it is onward and upward. Nothing like it's  ever been seeing and we would not be having  

this discussion except for advances in medicine. (1:48:19) I wouldn't be interlocatory and captain  

somebody else. The marbles with which we live  are just astounding. this little thing I have  

in my pocket which I forgot to put to airplane  mode has the entire Canada world knowledge it  

does and so people think I say yeah what about  the next edition of the Apple whatever it is you  

know get jaded about these things get jaded  about I find myself hear myself complaining  

about the pills I have to take to ward off the  next round of uh disease in rank in gratitude  

so in so many ways things never been better (1:48:53) and we should thank our lucky stars live  

when we do. In other respects, we live it's back  to living in in rags in the forest with respect to  

public oratory going back to grunting and groaning  wherever where have they conducted business before  

the perfection of writing and the arts of of  literacy. Can you compare what comes out of  

today's House of Commons as well as of course  truth social or the House of Representatives  

from the all dignified Senate? you want to lay  your head down and uh not watch television, do 

(1:49:28) something else. It's mixed, you know.  So the so all of the intellectual energy of Murk  

and Fox's time for a certain class of people was  in literary pursuit as a great American chancier  

called Albert Gallatin. He was the treasury  secretary, a near successor to Alexander Hamilton.  

I think there was one or two between the two of  them, but Hamilton was a treasury secretary under  

Jefferson and Madison and then he was a diplomat  who helped to settle the war of 1812 when he came  

back was a banker and he retired and the (1:50:03) gravestone talks about so he  

retired to pursue academic studies and literary  pursuits. Gallatin did and went down to the grave  

universally honored. I go over to the churchyard  from time to time and read his gravestone gallons  

and think about him. It's marvelous. And so  if you're a lover of the oratory language,  

you'll be uh disappointed to not  to have lived in some other time. 

(1:50:31) Otherwise, never mind the commonplace  diseases of late life. Just go a trip to the  

dentist. Just thank your lucky star as you know.  >> Yeah. >> Uh but it's pretty great on balance.  

Pretty great. I'm glad to be here. >> On on that  note, Jim, it's been such a delight and I'm so  

happy to have got to spend this time with you. (1:50:51) It's one of the great pleasures of  

having a podcast is it gives me an excuse to hang  out with you and um >> awfully uh kind and what a  

pleasure it is to be in your company. I wrote  my written my biographies mainly about people  

whose company I wanted just to have to be in. >>  Huh. >> So, uh I like your company too, William. 

(1:51:09) >> Ah, thank you. That's lovely to hear.  and I loved coming to the conference yesterday. So  

now I'm planning to become a regular. I'm  looking forward to it. >> Thanks so much.  

Lovely chatting with you. >> Okay, William.  Happy days. >> Thank you. >> Most people are  

only as happy as they make up their minds to be. (1:51:29) So what this teaches me is that whatever  

happens in your life irrespective of unbelievable  experiences your control of your mind determines  

how you end up how you survive and how you  deal with it. And that's what people need to  

learn. We think about we have some problems  in this life and we have disappointments,  

depression and experience and so forth and so on. (1:51:58) And to think that under these  

conditions, you can still  be happy if you learn how  

to think and use your mind, that's pretty amazing.