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309: A Money Revolution?

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Catch the full episode: https://www.wealthformula.com/podcast/309-a-money-revolution/

Buck: Welcome back to the show, everyone. Today my guest on Wealth Formula Podcast has been on the show many times. He’s one of our resources trying to understand Macroeconomics and how it affects us on an everyday basis as investors. His name is Richard Duncan. He is probably best known to you for his newsletter that I know a number of you have subscribed to call Macro Watch. We’ll talk about that as well a little bit. Richard has also written a number of books, and his latest one is a very important one. It’s called The Money Revolution, how to Finance the Next American Century. Now, we have been talking a lot about inflation, war and all that. In the last few weeks. We’re going to take a step back and take more of a global view through the lens of Richard’s books. Richard, welcome back to the podcast. 

Richard: Hi, Buck. Thanks for having me back. It’s nice to be here. 

Buck: So let’s jump into this. We have The Money Revolution, how to Finance the Next American Century. Why did you write the book? 

Richard: Okay. So as you mentioned, this is my fourth book. The first one came out 19 years ago, the Dollar Crisis. So I’ve been an economist working in the financial markets as a strategist really all of my adult life since I moved to Hong Kong in 1986 and started to work as a securities analyst. So over the course of all those years, I have done a lot of research on the economy, on economic history and the financial markets. And this study has led me to believe that our economic system works very differently now than it did before the Bretton Woods system broke down. And as a result of it working differently now, this creates new opportunities. We have a different kind of economic system. And this economic system that we have today creates opportunities that didn’t exist before. It also creates dangers that didn’t exist before. Let me explain in a little bit more detail. The big break was when dollars ceased to be backed by gold five decades ago. Up until 1968, the central bank, the Fed, was required by law to hold gold to back all the dollars that it created. And so, of course, that limited how many dollars it could create because it only had so much gold. But it also imposed a lot of other constraints on the economy that subsequently disappeared because in 1968, the Fed no longer had enough gold to issue any more dollars. And that was a big problem for the economy. And so at the President’s request, President Johnson asked Congress to remove that law to eliminate that requirement, and Congress complied. So from 1968, the Fed was no longer required to own any gold to back dollars in any way whatsoever. So afterwards, it was free to create as many dollars as it dared. The only real concern it had was it didn’t want to create so many dollars that it would lead to very high rates of inflation. So then three years later, President Nixon ended the Bretton Wood system, the international monetary system created at the end of World War II by reneging on the US promise to allow other countries to convert their dollars into US gold. So that was the final nail in the coffin. After 1971, there was no connection between the dollar and gold whatsoever. So this gold had been money going back for centuries. And all of the economic theory about how the economy works was built on the premise that money is gold. Gold was the cornerstone of all economic theory. And all of the theory that followed was based on that assumption money is gold. Now, when money ceased to be gold or gold ceased to be money, this set off a series of developments that caused our economic system to evolve into a different kind of economic system, or at least a radically altered form of the economic system. So here are some important changes that occur. First, of course, as I mentioned, the Fed was free to create as much money as it pleased. Now, this had important implications for a number of things. First, international trade. Before that time, trade between countries had the balance because if the trade didn’t balance, the country with the trade deficit had to pay for that deficit out of its gold reserves. If England had a big trade deficit with France, then England had to ship a lot of gold over to France to pay for that deficit. And that would have meant that England’s money supply contracted and that their economy went into a severe recession and unemployment went up and they would have had deflation. And so, of course, they didn’t want that. So they managed not to have trade deficits. There was an automatic adjustment mechanism within the gold standard that ensured that trade between countries balanced. Now, once the bread and wood system broke down, the United States quickly discovered that it no longer had to pay for its trade deficits with gold. It could just pay with dollars. And there was no limit to how many dollars the Fed could create or the government could pay with treasury bonds. So suddenly, trade no longer had to balance, and the United States started running very large trade deficits with the rest of the world, alarmingly large. By the middle of the 1980s, the US current account deficit was three and a half percent of GDP, and by 2006, it was 6% of GDP. Now, what this meant, why this is so important, is because once this change occurred, the United States was able to start buying things from other countries with very low wage labor. They could buy goods from China and Vietnam and Indonesia and other low wage countries where the workers made less than $10 a day. So this was extremely deflationary, and that’s why inflation peaked in and steadily came down and down and down until coveted. It was flirting with deflation off and on for years. In the US, deflation was a greater concern of the Fed than inflation was. They were worried about how to make prices stay above their 2% target growth level. So in globalization, these trade deficits were extremely deflationary, and that caused the inflation rate to go to very low levels, and that made interest rates go to very low levels. So that was an extremely important development because next, with inflation at these extremely low levels, that meant that the US government could spend a lot of money without causing inflation. The government could run very large trade deficits. I’m sorry, the government could run very large budget deficits and stimulate the economy like President Reagan did. 

Buck: So this shift, you would call this sort of the shift to a credit based economy at this point, right? 

Richard: Right. So the government was able to run very large budget deficits and stimulate the economy, make the economy grow more quickly than it would have done otherwise without pushing up interest rates, because globalization was very deflationary and the Fed could print money, create money, and help buy some of those government bonds to help finance that government debt at low interest rates. So that was another big change before this time, if the government had big budget deficits and spent a lot of money, it would have pushed interest rates much higher because as the government borrowed money, it would have crowded out the private sector and pushed up interest rates, and that would have damaged the economy. So this is another big change. The government could spend much more money now. And finally, at this point, total credit in the country absolutely exploded. Credit growth accelerated so rapidly that it became the main driver of economic growth. By total credit, what I mean is the total debt of the country. Total debt is equal to total credit. This is not just government debt, but also household debt, corporate debt, financial sector debt, all the debt it first went through $1 trillion in one nine point 64. Now total debt in the US is $88 trillion. So it’s increased 88 times during my lifetime. And credit growth became the main driver of economic growth. Credit exploded and it allowed the Americans to consume much more. The US trade deficits allowed the rest of the world to sell more and more goods to the United States. And so this new arrangement pulled hundreds of millions of people around the world out of poverty. But then we reached 2008 and the private sector was so heavily indebted that it couldn’t repay its debts. And the whole credit bubble started to implode. And that forced the government to respond with trillion dollar budget deficits. And the Fed created trillions of paper dollars through three rounds of quantitative easing. And they prevented the bubble from imploding. They reflated the bubble. So those are the big changes that occurred as a result of the break and the length between dollars and gold. Credit growth became the main driver of economic growth. I call this creditism. I think capitalism evolved into creditism because now our economic system is driven by credit growth and consumption, whereas in the past it was driven by businessmen who would invest, earn profits, save their profits, or accumulate capital. Hence capitalism and repeat, invest again, save, invest and save investment and savings was the dynamic that drove economic growth in the past. But credit creation and consumption is now the dynamic that drives the economy. And if we don’t have credit growth, the economy will collapse into a depression. 

Buck: One thing I was wondering about too, though, is like we talk about this credit bubble and credit driving the economy now, and it sounds so negative, but is it fair to say that if not for the shift into credit ism, as you call it, that we probably would not be anywhere near the rate of growth that we’ve had in the last 30, 40 years? 

Richard: Yes, that’s exactly true. And also, it’s not certain that the Soviet Union would have collapsed. For instance, it’s not certain we would have won World War II because over time, the economy and policymakers have had to respond to events and as they have responded to things like President Reagan’s build up of the military to confront the Soviet Union, this changed the way the economy worked. The total debt of the US government tripled during the twelve years of the Reagan Bush administration. 

Buck: What’s interesting to me about this whole idea is that so often we talk about debt and we usually talk about the evils of debt. And of course, we don’t want to have these huge debts, we don’t want to continue borrowing at this rate and all that. But to put it into perspective, if we didn’t do it, we probably wouldn’t be where we are as a country. And that sort of leads me to, I guess, another message in your book, which is that as a result of these changes, it’s now possible potentially for the US to borrow trillions of dollars and create a better world. 

Richard: Well, so the book has three parts. Let me tell you a little bit about each of these parts of the book. The first two parts are history and the third part is what I would describe as policy recommendations based on the lessons that can be learned from the history laid out in the first two parts of the book. So the first part of the book is a history of the Fed, essentially from the time it was created and began operation up until the present. And it’s not a typical history of the Fed. There really aren’t that many histories of the Fed, surprisingly, but mostly them to describe what this Fed chairman said or what that Fed chairman did or when they increased interest rates. That’s not what my book does. It tells the history of the Fed by tracing the evolution of the Fed’s balance sheet through roughly ten consecutive periods from the beginning until now. And changes in the liability side of the Fed’s balance sheet that shows you precisely how the Fed created money. And changes on the asset side shows you precisely what the Fed did with the money that it created. So by tracing changes in the liabilities and assets of the Fed during these ten key periods of US history, it shows you how the Fed developed new processes and new techniques for essentially managing monetary policy and helping to manage the economy during different periods, very frequently in response to crises such as World War One, which occurred immediately after the Fed opened its doors in 1914 in World War II. And it shows you the Fed’s mistakes during the Great Depression, why they didn’t were unable to prevent or fail to prevent the Great Depression. It shows you the diminishing role of gold decade by decade. And it shows you what the Fed has done subsequently, for instance, in response to the crisis of 2008 and more recently, in response to the COVID crisis. By creating a lot of money, it’s kept us from falling into a new Great Depression. So if anyone wants to understand the Federal Reserve, which is now the world’s most powerful economic institution, and the United States government’s most effective policy tool, if you want to understand the Fed, read part one of this book and you will, it tells you how the Fed works. Most of the difficulty in understanding the Fed is just understanding the jargon it’s typically used to discuss what the Fed does. Part one spells all of this out in everyday language, and it will give you a very comprehensive understanding of how the Fed works today and its entire history. So that’s part one, it’s the history of the Fed. Part two is, you could say the history of credit over the last going back roughly to 1950 and especially after dollars ceased to be backed by gold in 1968. As I mentioned earlier in the conversation, this caused our economy to evolve into a different kind of economic system driven by credit growth. Now, no one planned this. This isn’t like some evil conspirators in Washington sat behind closed doors and discussed how to add the economy to credit. This just evolved in the course of events when there were no longer any limits constraining how much money the Fed could create. These things just changed. And also there were changes in laws. For instance, over time, the required reserve ratio, how many liquidity reserves the banks were required to hold relative to their deposits. Congress reduced that steadily, decade after decade. Until today, there are no reserve requirements at all. And so as the reserve requirements went down, that allowed the banks to create more and more credit through the system of fractional reserve banking. So part two is the history of credit and the history of creditism, if you will, how credit became the most important driver of economic growth. And one very important lesson from that is that anytime credit in the United States grows by less than 2%, adjusted for inflation, the US goes into recession. So that’s happened nine times between 1952 and 2009. At the time of the economic crisis, every time credit grew by less than 2%, the US went into recession. And the recession didn’t end until there’s another big surge of credit creation. So what this tells us is that our economic system now must have credit growth to stay out of recession. And if credit contracts, it will collapse into a depression. So that’s the main takeaway from part two, I would say, is in this history of creditism, it shows us that our economy is addicted to credit and it has to have credit growth to stay out of recession. So then part three is called the future. What do we study history in order to have more knowledge so that we can understand the present and hopefully put in place policies to make the future better? And the lessons that I think we can draw from the last 100 years of the history of money and the history of credit in the United States and how they have evolved is that this new economic system, creditism, creates both unprecedented problems and unprecedented opportunities. The problem is creditism requires credit growth to stay out of crisis. However, the opportunity is that it also gives the government now the unprecedented possibility of investing in new industries and new technologies on a very large scale. So, for example, think about the crisis of 2008. The government responded to that crisis by having trillion dollar budget deficits four years in a row. And the Fed helped out with three rounds of quantitative easing, creating $3.6 trillion to help finance the government borrowing and the government spending that stimulated the economy. At one point in 2009, the Feds the money supply growth. In other words, representing how much money the Fed created. Money supply growth peaked at 110% year on year in 2009. In World War II, it only peaked at about 20%. So the money supply growth was five times more in 2009 than it was at the peak of World War II. But the inflation rate peaked a couple of years later at only three. 8% in 2011. And a few years after that, early 2015, there was deflation again in the US. Cpi was negative in the first months of 2015. So what should we learn from that? Well, what we can learn is that it is possible for the US government to spend on a very large scale and for the Fed to create money on a very large scale without misleading the very high rates of inflation.

Buck: Obviously, we are in the middle. We have quite a bit of inflation right now.Tell me why your thesis survives that big bump here, because a lot of people are like chickens coming home to roost, so to speak, at this point. 

Richard: Well, you’re exactly right. The situation we have now certainly creates challenges for my thesis, but I think we have a very clear example right now. The waters are very muddied, if you will, because of Covet and then now Russia’s invasion of Ukraine. It makes this experiment difficult. Is it because do we have inflation now because the government spend too much money, because the Fed printed too much money, or is it because they’re a global supply chain bottlenecks and because Russia has just started a war in Europe? This pushed wheat prices and oil prices and metal prices up to shockingly high levels. I think it’s mostly the latter, but we have another experiment that I’ve described earlier where we have only one force at play that’s 2008, 910, 1112, 1314, the policy response to the 2008 crisis. Whereas I mentioned money supply growth peaked at 110% one year and the inflation rate was only 3.8%. Now this time, the money supply growth during this crisis peaked at less than half that rate. It was only about 55% money supply growth at the peak in 2020 or early 2021. And so we have much less money supply growth this time than we did in 2009. But we have much higher rates of inflation. So I believe that it is the disruption in the global supply chain that has caused most of this inflation. 

Buck: Although, Richard, just to play Devil’s advocate for a moment, I think we had 6.5% inflation over a year before the war started. Right? 

Richard: Right. And we’d had COVID disrupting the global supply chain. So the first blow was Covet. Covet started right at early 2020. And at first it caused deflation. Everybody was locked in at home and prices fell. Then suddenly we discovered that there were not enough semiconductors in the world. And so new car prices shot up and used car prices shot up 40% year on year. And in the second quarter of last year, when the inflation was at its highest, at least thus far, the spike in used car prices was responsible for one third of all of the inflation in the second quarter. Now, we also have found that there’s a shortage of shipping and there’s all kinds of shortages. Now, had this war not occurred, it seems likely, but not certain. It seems likely that these global supply chain bottlenecks would have dissipated in the coming months. That is what the Fed expected. That is what most economists expected. That was a reasonable thing to expect. The world would return to normal if there was a shortage of semiconductors, people would make more semiconductors like they’ve always done in the past, and the prices come back down. That seemed like a very reasonable assumption, but of course, it wasn’t certain because we don’t know if there’s going to be another wave of COBIT. First we had the Cobra 1.0, and then we had Delta, and then we had Amikron. And we don’t know if this is the end or not. As you know, I live in Asia and it’s a concern because now Hong Kong had a zero covered policy, just like China. But Amikron got into Hong Kong and now 1 million people have caught COVID because of Amikron. There are only seven and a half million people in Hong Kong, and it’s now getting loose in China. And if it spreads through China, China has a zero COVID policy. If they begin shutting down their cities, then we’re going to see another huge wave of global supply chain disruption as a result of COVID spreading through China. They’ve already shut down Shenzhen for one week, causing all kinds of global supply chain problems. And they could shut down another 50 cities to keep Covid from spreading. So we don’t know how long this is going to go on and how long Cobbt is going to continue disrupting the supply chains. But trying to be optimistic and under the assumption that Covet will fade out, hopefully this year, it was reasonable to assume that the global supply chains would return to normal and inflation, globalization would resume, and prices would once again be back at their normal levels and would be back in a world where globalization puts down strong downward pressure on wages and prices, just as we were before. 

Buck: So getting back to the book, given the assumptions that you laid out, specifically globalization ultimately creating some overall deflationary pressures, the remedy that you suggested for some of the issues that the US is facing right now is a fairly significant investment program. Do you want to talk a little bit about that? 

Richard: Yeah, just let me wrap up more on the inflation side. The proposals that I make in this book are based on the assumption that globalization persists. If globalization breaks down, then that’s another matter altogether. And COVID was a very severe blow to globalization and followed by Russia’s invasion of Ukraine, which was another very severe blow to globalization. So just when it looked like Covet was going to fade out and global supply chain disruptions would disappear and prices would begin to inflation would start to go away, then another blow, Russia invades the Ukraine and drives up all the commodity prices to very high levels and creates new and different kinds of supply chain disruptions. So we don’t know how long this is going to go on or how severe it will be. Hopefully it will go away soon, but it could become much worse. So that’s the issue. Globalization is now under siege. If it breaks down, then that creates a totally different environment for us. But under the assumption that the world goes back to normal at some point in the not too distant future, then I believe that we have a tremendous opportunity for the US government. So here’s what I’m proposing in the book. The book is called The Money Revolution, how to finance the next American century, how to pay for the next American Century. And we can do this by the US government funding a multi trillion dollar investment program in the industries of the future over the next ten years, not this year, over a ten year period, or whenever globalization makes this possible again. And what I’m proposing is a multi trillion dollar investment in industries like artificial intelligence, Neurosciences, genetic engineering, biotech, nanotech, robotics, and green energy, renewable energy, all the usual things that come to mind when you think of future technologies. We have the possibility to do this on such a large scale. Just think that in the second quarter of 2020, the US government borrowed $2.5 trillion in just three months, and the Fed effectively financed about 80% of that by creating money. So that gives you some idea of the amount of money that the government has at its disposal to invest in new industries and technologies. I really believe that if we do invest on a multi trillion dollar scale over a ten year period, we could cure all the diseases, we could radically expand life expectancy. We could turbocharge US economic growth and productivity, create unprecedented wealth, and greatly enhance human wellbeing, and not least of all shore up US National security in the face of a growing threat from China, frankly, and Russia, as we now see. So I think this creates an extraordinary opportunity. So in the book, I don’t put a particular number on how much the government should invest. What I recommend is that the government invest as much as possible, as quickly as possible. And if the investment turns out to overheat the economy and cause too much inflation, then they can slow it down until the bottlenecks that are causing the inflation are overcome, as they always are, and they can re-accelerate the program. But for instance, just to provide some examples of how this would impact the size of the budget deficit and US government debt, I use the example of how the government could invest. This is just for the sake of an example. If the government invests $10 trillion over a ten year period, then in the book I show how this would impact US government debt now, ten years out, here’s my assumption. Just to make this a very conservative forecast in my projections, I assume that this $10 trillion investment over ten years just for the sake of making a pessimistic assumption, I assume that every last Penny is wasted, that nothing good comes from this whatsoever. The GDP doesn’t grow, no new technologies are created, nothing positive happens. $10 trillion is just washed down the sink, and nothing good comes from them. In that scenario, the ridiculously pessimistic scenario, then the government’s debt ten years from now would be 150% of GDP instead of 120% of GDP, which it is expected to be by the Congressional Budget Office ten years from now. So it would be 150% of GDP instead of 120% of GDP. Japan’s level of government debt now is 260% of GDP. So ten years from now, in the assumption where every last penny is wasted of this investment program, US government debt at 150% of GDP would be where Japanese government debt to GDP was 20 years ago. 

Buck: One question that obviously sort of killed build back better a little bit was the issue of how to finance it. And if we were talking a little bit offline, the timing of this book is not ideal in the sense that right now there’s not a whole lot of appetite for any kind of spending. 

Richard: Let me jump in right there. Actually, the timing, the inflation is certainly a problem for this book. But on the other hand, people, you and I have been discussing these issues for a few years now, and you and other people have sometimes suggested that what I’m proposing is the government’s just never going to do anything like that. Many people have said, but in fact, this is already beginning to be implemented. Just two months ago, Congress, the House of Representatives, passed the America Competes Act, allocating $350,000,000,000 for investment in new industries and technologies, including $52 billion specifically for the semiconductor industry to make more semiconductors in the United States. And this follows on a bill that was passed last year in the Senate that was called the United States Innovation and Competition Act, which allocated $250,000,000,000 for investment in the industries and technologies of the future, including also $52 billion for investment in US semiconductor manufacturing. So this is exactly what I’ve been calling for for a very long time, for a very large scale government funded investment program targeting the industries of the future. And now both the House and the Senate have passed these laws. They have to go through the reconciliation process, and then they’ll be signed into law by the President. So this is beginning to happen because they have finally realized first. Well, a few things. It’s not good to be reliant on other countries for semiconductors, but also a lot of this is driven by the realization that because China’s government invests so much more than the United States does in research and development, that they’re overtaking US technologically and therefore will soon overtake us economically and militarily. That’s why they have hypersonic missiles in 5G in the United States doesn’t. 

Buck: So how are they financing this stuff and how would they continue on a much larger scale, as you’re suggesting? How would it be financed? 

Richard: So how they are financing this, since it will be something that will begin to be implemented either later this year or next year. They’ll finance it the way they always finance their spending through deficit spending to some extent, or they haven’t specified how they would finance it, which means it will result in the budget deficit being higher than it would have been otherwise, which will mean they will borrow more. And we don’t know how much of this will be financed by the Fed. Up until this month, the Fed was creating $120,000,000,000 every month, and they were using two thirds of that to buy government bonds, which helped finance everything the government spent. But now as of this month, they’re not creating any new money at all. So assuming that they don’t reverse course, then it will just result in the government borrowing more. But, of course, the government borrowing peaked last year. What was the government borrowing last? In 2022 years ago, government borrowing increased by $4.6 trillion. Last year, it increased by 1.7 trillion. So there was a very big drop in how much the government borrowed last year, and it’s expected to be lower again this year. The Congressional Budget Office is expecting the government to borrow $1.1 trillion this year. So, of course, this will not all be spent in one year. This bill that they have just passed, these laws I described, it will be spread out over several years. But as it’s spent, then it would add to the level of the government’s budget deficits unless some other change is made. Now what I’m proposing in this multi trillion dollar plan over a ten year period is for the Fed to finance it all. In other words, the government borrows the money by selling government bonds. Let’s say, sticking with my example, $10 trillion over ten years. The government sells it starts off slowly and then builds up. You can’t just have a $1 trillion investment in the first year. For instance, you have to hire people. You have to make plans. So gradually they start the borrowing at a slower rate and then accelerate it going forward over the ten year period. So the government sells bonds and the Fed creates money through quantitative easing and buys all the bonds, just like it has been doing through COVID. The government’s borrowing related to COVID was roughly something like $5 trillion. And the Fed created $4 trillion to help finance that government borrowing. So the Fed effectively financed 80% of the government’s borrowing during Cobid. And during the crisis of 2008, during the three rounds of quantitative easing, the Fed created roughly enough to finance 70% of the government’s borrowing. So what I’m proposing is the Fed just create money by all of these government bonds and finance it that way through money creation. And if 2008 is the best model to follow, and I believe they can do that without causing high rates of inflation, because as I said in the money supply growth was 110%. In other words, the size of the Fed’s total assets more than doubled in 2009, and the inflation rate only went up to 3.8%. 

Buck: So we talked a little earlier offline about who it is that you’re writing this book for, and it’s really as much as it’s useful for sure, for people like me. The goal here is to really persuade not only the general public, but academics and policy makers as well. Have you had any sense of what kind of feedback you’re getting from those policymakers and academics on the work? 

Richard: So I haven’t really officially launched the book yet. You’re one of the first people I’ve spoken with in detail about the book, but the official launch is coming in the next couple of weeks, and then there’ll be a press release and social media marketing campaign. And so hopefully it will reach these people and in terms of policy makers, encourage them to do even more of what they’ve begun to do, which is passing laws to invest in new industries and technologies on a very large scale. 

Buck: The book presumably will be available in all the usual Amazon and the usual places people buy books. 

Richard: Yes, it is available now. So I hope your listeners will go to their favorite bookstore or Amazon and buy the book. It’s 500 pages and it has 250 charts. 

Buck: Well, if the general public people are going to read it, it’s going to be this audience because they are pretty smart people are very inquisitive. The book is called The Money Revolution, how to Finance the Next American Century. In addition to that, tell us a little bit and remind us a little bit about Macro Watch. 

Richard: Well, let me tell you three reasons why I think this investment is so urgently required. First, as we discussed earlier, our economic system must have credit growth to stay out of crisis, and the private sector is so heavily indebted now that they can’t keep borrowing at this scale. And so that only means we’re dependent on government borrowing. There is no limit as to how much they’re effectively no limit as to how much the government can borrow. So this sort of investment program that I’m describing, the government borrowing, would keep credit expanding and keep the economy out of prices. So that’s the first reason credit ism must have credit growth to survive. The second reason is also something we’ve touched on. We’re about to be overtaken by China. China is investing more than the United States is in research and development, and they’re about to overtake us technologically, economically, and therefore militarily. We do not want to be at China’s mercy if they develop artificial intelligence before the United States does, the way that they develop 5G and hypersonic missiles before the United States has, then if they get to the level of artificial intelligence where the machines are as intelligent as humans, then that increases exponentially after that point, and they become the global dominant superpower, and the United States becomes a vulnerable second rate has been power at China’s mercy along with the rest of the world. It will be China’s world. They’ll make the decisions. They’ll decide whether there’s free press or not or individual liberties. It will be something like the 21st century equivalent to China having a nuclear weapons monopoly. We don’t have to allow that to happen. 

Buck: Do you feel like the members of Congress have that message, have that understanding already? 

Richard: Yes. That’s the main reason they have passed these two acts that I described earlier, America competes and the innovation and competition act. More than about two years ago, Chuck Schumer made up the majority leader in the Senate. He was a minority leader. He made a speech before the military establishment in Washington stating exactly this. We have to invest in new industries and technologies because China is going to overtake us. And President Biden stated the inaugural address, he said almost that exactly. We have to invest more in new industries and technologies because China is going to overtake us. And that’s exactly right. This is our new Sputnik moment. If we don’t invest, we’re going to lose, and we may never be able to catch up with China. So that’s the second reason that this investment is so urgently necessary. And the third reason, and I think this is the most important and most compelling is I think we must invest because we can so easily afford to do this. As I show in the book in great detail, we can easily afford to invest on this sort of scale. And if we do, it would create such extraordinary breakthroughs at all levels. It would induce a new technological revolution. It would radically improve human well being. As I said before, I really believe we have the chance to cure all the diseases and radically expand life expectancy. Right now, the National Cancer Institute, its budget is $6 billion a year, and 600,000 Americans are dying of cancer every year, $6 billion a year. That’s all they get. Quantitative easing was $120,000,000,000 every month. So just imagine how radically we could expand the National Cancer Institute’s budget, for instance, and also those institutes charged with curing Alzheimer’s disease, heart disease, kidney disease, and other diseases. We have the potential to invest many multiples of what we’re investing now to cure these diseases. And if we do, we’ll cure them in our own lifetime. And that’s just health. We also have the opportunity to stop the environmental degradation, for instance. But Furthermore, this kind of investment would just turbocharge economic growth in my example. I assume that nothing good whatsoever would happen from this just to be the most pessimistic possible. But that’s so untrue. The economy would grow very rapidly. It would create extraordinary amounts of new wealth. The wealthy people would become wealthy and healthy beyond their wildest dreams, and everyone else would be as well. This would permeate through American society and Furthermore, not just us society. This would be beneficial to everyone in the world as we cure these diseases, for instance. So I call it a moral imperative. We must invest because we can so easily afford to do this. And in this book, I demonstrate that it is something that the Americans can easily afford to do. So that’s the third reason. That’s why we have to make this investment. 

Buck: Well, let’s hope you’re right and hope you convince some people here. Richard, again, the book is The Money Revolution: How to Finance the Next American Century. And also tell us a little bit about Macro Watch as well, because that’s a great resource for listeners as well. 

Richard: Thank you, Buck, for letting me mention Macro Watch. Macro Watch is my business. Every couple of weeks I upload a new video. So Macro Watch is a video newsletter, and my videos are PowerPoint presentations with audio in which I described something important happening in the global economy and how that’s likely to affect asset prices. So the last one came out just before the Federal Reserve met for the FOMC meeting last week. It was called Fear the Fed, and I explained why the Fed is likely to have to become very aggressive and tightening monetary policy now because of the high rates of inflation and why that’s likely to push downward pressure on asset prices, particularly since asset prices are so stretched at the moment. So those are the sorts of topics that I discussed. There are 75 hours of videos now, more than 75 hours going back eight years in which I have discussed all the major developments in the global economy since then. So anyone who subscribes to Macro Watch will get one new video every couple of weeks and also have immediate access to all of the videos and the archives. So I hope your listeners will check it out. They can find Macro Watch on my website at richardduncanecomics.com that’s, Richardduncanecomics.com, and they can subscribe at a 50% discount if they use the coupon code formula. So if they click the subscribe now button, they’ll be prompted to put in a discount coupon code. If they use formula, they can subscribe at a 50% discount. So I hope they’ll check that out. 

Buck: Richard, thank you so much again for being a wealth formula podcast and look forward to talking to you in the next few months to get further feedback on where we’re headed. 

Richard: Like the last time we spoke, we were talking about how uncertain the world was and how rapidly it changes. One of the comments I made was, of course, if there is a war between the United States and China, then of course globalization would break down and it would be all many horrible things would happen. I said I didn’t think that was at all likely, but you can never tell what’s going to happen next. And now we have this war in Europe. Hopefully next time the world will be a happier place, but yes. Thank you so much for having me back on. I look forward to the next time. 

Buck: We’ll be right back.