Transcription
Sorry, >> the audience will not get to hear your analysis um because I think it's uh it was designed for that. But um I'm glad it's working now. It's good to chat to you again and as I was asking earlier before it glitched out. So it's the first time we speak. So I I want to get kind of a brain dump from you, your full analysis to understand how you see this war from the beginning when it first started. Even going back to why you think Trump started this war without getting too political because I think there's a lot of economic overlap in the decision- making as well. I'm not sure if that's how you see it as well with the straight of horses in China all the way from there to how the war went and the outcome of the war and just to kind of give a piece of news that happened minutes not minutes actually hours before we started and that is the straight of Hummus was closed again by Iran due to Israeli action in Lebanon. So the issue of hormone strait remains now and is part of the new reality post this war something that Iran can always leverage which uh is going to make the life of economists like yourself a nightmare but also more fun but um I would love to hear kind of a full analysis from you Muhammad.
>> Sure Mario thanks for having me. I I'll start with the the implications of the war for the global economy and then work backwards. Um the first implication is an inflation shock that starts very concentrated. It's in energy and then spreads throughout the economy. Um the perfect example I I use is initially energy prices go up, the price of gas and diesel goes up, the price of transporting the food to our supermarkets goes up, the price of food goes up, and it goes on. So, and if we're not careful, that price increase then starts destroying demand. So, we give up growth. The second impact, it undermines the benefits that the US economy gets from the global economy. The US has a very special position in the global economy and this is undermining it. How did we get here? I think it has a lot to do with the US being dragged into a war that it was told would be very short-lived and there wasn't enough scenario planning especially as to what happens when you close the straits and once you close the straight of the economic implications are not just energy they're fertilizers so we're going to see an impact on food prices in 6 to9 months and you start disrupting the supply chains. So we hear because there was this view that if the US comes in this will be a very short war but the reality this is going to have longlasting economic effects that are not favorable. The only good news for the US is that it suffers less than other countries because we energy independent because we have a very agile economy. We have a very entrepreneurial economy. So we will suffer less but never the less we will be worse off than we would have been otherwise.
Um the original question um that I was asking at the beginning of the war everyone was trying to figure out why. Do you have an opinion on that? What led Trump to start this war? you already said that you know I think everyone agrees he expected it to be a short war but why take such a massive gamble in your view
>> so I don't know I wasn't in the room and I've heard different interpretations what I think is clear to me is that he was convinced it was going to be really short whereas a lot of people from day one would have told you that you're going to weaponize supply chains and this is the story of the last few years is the weaponization of supply chains and Iran now has discovered that it has enormous power because it has weaponized a really important choke point as they call it. Um and it's literally a choke point. It chokes the global economy. Now we're going to build alternative pipes. We're not going to be in this situation again as vulnerable as we are today. But you know what? The Red Sea is another choke point. The bit of sea between Taiwan and China is another choke point. And what this war has shown is that by weaponizing a choke point, you can gain tactical and strategic advantage.
>> Yeah, that's um when you shake up a status quo, you start having so many unknowns that we have to try to understand. Now you remember when Indonesia a few months ago floated I can't remember the context the idea of charging a fee in the Malaka Straits not sure if you saw a comment by the prime minister is prime minister or president of Indonesia as a prime minister or president how's
>> it's it's president
>> president the president of Indonesia um do you expect other countries to either replicate Iran's strategy by looking at charging a fee or through warfare does that worry Okay.
>> Um so you know we are in the world of geoeconomics not just geopolitics geo economics where countries have recognized that you can weaponize economic and financial tools. You see it with tariffs. You see it with supply chains. You see it with technology. And it is attractive to the national security operators because it appears as being a lot cheaper than sending missiles and certainly much less problematic than boots on the ground. So we we are amplifying this period we are in in economics Mario there's two main dynamics. One is mean reversion is like a a rubber band. You you stretch it goes back. The other one is called multiple equilibria. That once you disrupt a status score as you called it, you are likely to go further away from where you've just come. You know the difference is between a ping-pong ball in a cup you it ends up by settling down or a pingpong ball on top of a cup. Once you move it, it doesn't come back. And I think with this JO economics, it's more the multiple equilibria dynamic than the mean reverent dynamic.
>> Yeah, true. What what are what are examples of things that that that it could change in that in what you call geoeconomics? In what ways? What could we what are various possibilities we should be on the lookout for? For example, we could see other countries try to use choke points um as as part of warfare as part of a pressure tactic. That's one example because we're going to see Iran leverage the trade of humor constantly. Another one would be countries looking to diversify away from choke points and I think we'll see multiple pipelines like what we have in Yamu and in Fujiro and the UAE. But I'd love to get other examples um that you could think of.
So resilience becomes really important >> and efficiency becomes much less important. So if your corporation instead of having one factory in one place you will have multiple factories in multiple places. Now that looks good is resilient but it's expensive and someone's going to have to pay for that. So resilience becomes a driving force. It it it started happening actually after COVID as well and now it's accelerating. The second issue with harms the US is that the US is at the center of the global economy. We provide things that no other country can provide. We provide the dollar the reserve currency. Now the dollar is a great deal for us. Other countries take our dollars to use there and give us goods and services. That's a great deal. You exchange a piece of paper for goods and services. We provide the deepest financial markets. So other countries outsource their savings to us to manage which means we have more capital means mortgage rates are lower than they would have been otherwise and borrowing costs are lower than they would have been otherwise. What we're seeing happening now is no one can replace the US, but countries are saying, you know what, one way of being more resilient is to start reducing my dependence on a US-led system. And that that makes us less better off than we would have been otherwise.
>> Kind of like delobalization that everyone's been talking about for a while. That's going to accelerate.
>> Yes, I'm afraid it is going to accelerate. And I'm afraid that we as the major beneficiary of globalization, okay, um are are going to be less well off. There's um so globalization is in a way what led and I'm going to oversimplify things about what led the de to the de deindustrialization of the US. And the reason I bring this up is uh when I speak to military experts, we talks we talk about the depletion of Americans munitions because of the war and how significant of that of a risk that is. And then I had an analyst on my show tell me that like Mario, it's not too big of a risk back in World War II when we had a two-front war with Japan and Germany. We just increased that we we moved all our civilian um manufacturing base to the military-industrial complex and we could do the same thing again. But there was one important statistic that was not mentioned is the manufacturing the the percentage of the global manufacturing base in the US. It was about 60some percent before World War II. Now if the number is correct about 15 20 25%. Um how significant is that risk America's dependence on China the rest of the world as well but mainly China and that's where you get into geopolitics or or geoeconomics the rare earth minerals etc.
So it is very significant in certain areas and you mentioned rare earth. Look, two big mistakes were made with globalization. One is we allowed China to benefit from globalization without insisting that they live up to their responsibilities. So China took massive advantage of globalization including the industrializing parts of the west including the US and they didn't play by the rules. They didn't open up their markets like they should have and we waited way too long to hold them accountable to to for the way they were playing globalization. We were naive when I think back of what was written at the time. Um the belief was that China would behave like it's supposed to behave. Instead, it took advantage of globalization in a very one-sided manner. The second issue that we didn't pay enough about is the distributional effects within countries and how particular segments would be hit hard including undermining certain manufacturing industries that are really critical for national security. And unfortunately those lessons took a very time long time um to learn. And that's why wherever we end up, I suspect it will be what's called managed globalization light. It's light. You don't open up your markets to everybody regardless of whether they are behaving or not behaving. And it's managed. You you take care of certain segments of the population and of certain industries that are needed for national prosperity.
>> what did you when you said distribution effect, what did you mean by that?
So the the underlying assumption of many was that if you end up shutting down a factory here, somehow the people unemployed would go somewhere else or somehow there would be a more efficient factory created elsewhere. Um, there wasn't a recognition that we would be subject to unfair competition that would undermine this process of um they call it constructive um destruction that that that yes something goes down but something better goes up or something better didn't come up because of that. the kind of the efficient market hypothesis type thing, how capitalism works, the free market, how free markets are meant to work, but because China existed, that wasn't playing by the same rules as everyone for so many years. When you do close a factory, instead of that going to somewhere else that's more efficient or or yields better outcomes, it goes to China instead. Is that what you mean?
>> Exactly. And China is a very large economy. So the notion of globalization is what's known the conveyor belt. You start in agriculture. Then with the help of the global economy, you go up to manufacturing. It's more value added. You can employ more people at higher wages. Then you keep on going up to services. Then you go to financial services. And if you look at the other countries that came up that way, they didn't cause major disruptions. China comes along and does two things. One, it's very large. So as it moves up it causes enormous disruptions and secondly they never vacated the low value they they started saying you know what we can do it throughout the value added curve so China has been incredibly disruptive in the process of globalization and part of that is because they saw it as a one-sided deal. They will argue the following. They'll say, "Well, Muhammad, you claim that China is the second largest economy that has benefit from globalization and it should play by its by the rules of globalization. It should be a responsible citizen of globalization. But let me tell you, look at our our per capita income. We're still a poor country and we need to pursue other objectives first." That's what they'll say. But the reality is there's a major push back going on now in terms of the way China is using the global economy for its own good.
>> Isn't it a bit too little too late?
>> Um, it's late. I don't think it's too late. It's late. Um, what's interesting is the US has woken up to it. Europe is still hasn't quite woken up to it. And if you see what's happening to the car industry um in Europe, you will see that it's major destruction that will have long-term effects. And it's because they're being flooded by cheap subsidized Chinese electric vehicles.
>> But I'm seeing on the headlines how Europe is starting to be more critical towards China. I haven't focused on it. So I'm just seeing the headlines because of the war, etc. But that's are they just headlines? that there is there's no action is following
>> not really um let me give you some numbers last year China's export to the US dropped by 25%. That's a Mar that's a big number. Okay.
>> Yeah.
>> Yet China's trade balance exports minus imports grew to a record 1.2 trillion.
>> Crazy.
>> Why? They've redirected these exports to Europe and to other parts of Asia. And now we're starting to see the recognition that those countries are dumping grounds basically for things that could not be sold to the US because the US got much more serious about this. How worried are you about the about China's growth and the leverage that China has over the US economy? And so the my first question was why do you think Trump started this war? Now I don't want to get too political, but the reason I asked it is there's the the narrative that I I've been talking about for a while as well that it's the straight of Homo. Having more influence or control over the straight of Homos having a regime in Iran, a government in Iran that's more friendly to the US gives leverage um gives Trump leverage over China the same way Venezuela does, etc. Panama Canal, to some extent, Greenland. Um, so that was the argument and and it fits to my question now is are you worried about China's leverage over the US with rare earth? How big of a risk is that to the US economy? And other than the American consumer, which China's kind of, as you've just said, demonstrated that it could diversify away from it, is there is there other levers that the US has to counter the the Chinese influence?
So I think the argument about reducing China's influence in Iran is a valid one. The straits were functioning fine. Okay, now we've weaponized the straits. So the straits are in a worse position today than they were before. Hopefully we'll get back to a good position or even a better position, but they were functioning fine. Look, what I worry about most with China is what they're doing in third countries that are important to us. That's what I worry about most. Um, we get a lot of raw material from all all around. And if you go to Africa for example, you'll see that China has penetrated deeply a lot of African economies and they go after commodities and the the contract that they offer is we're going to come in, we're going to build you infrastructure and against that we want special access to something. So you have very strange situation. Djibouti that has both a French base and a US base. the the the the port is Chinese. You see other things where where China has gained access to things that are important to us because they've offered those countries these these things. We will come and build you infrastructure. We'll give you money. They called it the belt and road initiative. So, and that Mario flies mostly under the radar. Okay. We we focus on rare earth as we should. We focus on Taiwan as we should and on on chips as we should, but also we should focus on what's happening to these third countries that are also important for us over the long term.
>> Yeah. It's not sexy enough for the headlines, but it's so effective.
>> Yeah. And you know them, they play a long they play a long game, you know, and and they want to secure commodities. Okay, so perfect timing. I love when Trump does this to make the the my show more interesting. So when he does a post during my show, so let me see what he said. It's about hormone. There will be no tolls in the Holm Strait for 60 days during the ceasefire period. And there will be no tolls after the 60-day period has expired unless they they are imposed by and for the United States of America should the deal not be completed for services rendered as the guardian angel to the countries of the Middle East for purposes of both past, present, and future reimbursement of costs. This is I don't know where I don't know where he gets those from. So he's saying there won't be a toll by Iran for those 60 days. And after those 60 days, the only toll that could be there is an American toll because of the uh the guard because of the US is the guardian angel to the countries of the Middle East for the purpose of both past, present, and future. I swear I'm I can't I can't put myself in the shoes of these Gulf leaders dealing with what's happening right now. But it goes maybe I can link that to a question I wrote down is when you said the straight homes could even be better. What you mean by that because I don't know whether it's relates to what Trump just said and I'd love to get your thoughts. Not that it matters anymore with his posts because it's just all over the place. But what you think of that post?
>> Um so so what I mean by better I mean maybe even secure even more secure long term um if you if you remove a strategic risk to it. Um, you know, charging tolls for going through international waters is is a very tricky thing. It's very tempting, but where does it stop? Where does it stop? You know, should Yemen charge at all for using the Red Sea? You know, where does that stop? You know, when I look at at at the momentum of understanding, Mario, there's like four big things that are in the way that have to be dealt with. One is all the details, and you just heard more details. Are there going to be tolls that aren't going to be tolls? What's what's going to happen after the 60 days? Then the second one is you've got to get other count, other parties to agree to what's in them. And and and Israel, Hezbollah is a big issue there as we've seen. The third one is even when we reopen this trade, it production and shipments are not like putting a light switch back on. It takes time. So, we're not going to feel the immediate relief that we'll feel later. And then the final thing is what e economists call scarring. The sort of thing we've been talking about, the long-term effects um of a disruption that has occurred. And there's lots of scarring that's going on. Geopolitical scarring, economic scarring.
>> There's there's scarring just from reading Trump's posts right now. There's social media scarring that's happening. Um, I I have to admit it is it is entertaining. There's another status quo that changed and that's the way world leaders handle social media. Um, actually talking about his posts, how were they so effective in impacting the markets? Because I I understand he's the leader of the world's biggest economy and military and and democracy and he's the person that calls the shots to an extent in what happens in the Iran war. But still, it to a lot of us that are not deep into this, it kind of seemed obvious he was, you know, sharing good news when the markets just before the markets open and then hits the fan before the markets closed. And that was kind of the the same thing repeating itself. Um, what do you make of the the correlation between his posts and the markets? And has the have the markets become some somewhat immune to his posts?
>> Well, it depends what his posts are. If they are posts that suggest things will be better, the markets love it and they react consistently. um if it's posts suggesting that things are going to be a lot worse then they are much less sensitive and that reflects two things that is going on in the markets. First you have to understand all the incentives in the markets for the players and I'm talking about the investors. I'm talking about those who sell shares and sell bonds. I'm talking about the banks, the investment banks is for prices to keep on going up. That that is everybody has an incentive for it to go up. So you have a very strong inherent bias towards good news relative to bad news and that inherent bias has been reinforced by the fact that every time we've sold off the market has come back quickly. Then the second thing um is that the market right now has a very powerful narrative and that is that AI will make productivity higher, will make corporate earnings higher and therefore will push stock prices even more. That is so deep Mario right now in there. So when they have a positive post from from President Trump, they think, "Oh, something that could have gotten in the way of this strong dynamic is out of the way now." And you see a leg up every single time, but you don't see a leg down when when when things um get reversed. And it's been amazing the amount of records of p of stock market records that have been achieved dur during this war.
Yeah. Well, the markets are always forwardlooking. My geopolitical guests were always surprised whenever they see the markets do well, oil prices drop or equities do well in the midst of the war and like we we hear bombs or gas fields truck and then markets don't react, don't you know, oil doesn't go up by 20%. And I learned it from back during '08. And um I watched you a lot back in '08. That's when you were just really so good at explaining those things. And that's when I was introduced to that world during that financial crisis. But um one thing I learned is how forwardlooking the markets are. They would be you know everyone would be talking about the strike that happened in the gas field. But the investors would be thinking about third, fourth, fifth order consequences of what's going to happen next and what that will lead to. What the how the Iranians would respond? How the Gulf would respond? Would that pressure Trump for peace? Would it do the opposite? And they'd react based on those factors among other factors. It was just fascinating to watch. Um on that point, can what's your what's your view of of the Gulf right now? How much how has this war impacted them? In what ways do you think they'll recover? Will it be quick? Because one another thing I learned from markets is that somehow the world just recovers and forgets very quickly. CO being and global financial crisis being two other examples. So would it be the same now with the Gulf and it's going to go back to business as usual in most ways?
So unless something really bad happens um it is highly likely that they will recover that they will some will recover quickly some will recover over time. Already we hearing from certain um countries like Qatar for example that had earlier said that they had lost a third of their production and would take two years. Now suddenly they can bring half of it back in two months. So, so, so they will recover and they do have the financial buffers to absorb. There's going to be a lot of reconstruction like you said yourself. There will also be a lot of um rewiring of supply chains away from the straight and we've already seen that happen and will happen even more. So, economically they will recover and they will recover to a better place. Financially, they will use some of their enormous wealth for domestic reconstruction, which means less capital available for US companies and other companies. And we're going to have to navigate a period where there's less Gulf capital and Gulf capital has been really important in terms of funding the AI revolution, in ter funding life sciences. Um, so on the financial side, the fact that they're using their buffers will mean that the rest of the world will benefit less from investments from that part of the world.
>> And how about um I'll ask you about the UAE specifically cuz that it's the country that depends the most on kind of that sense of security and stability has created very successfully. Do you think the trust in that in that image it's created will return quickly back to the country?
If you look at historical examples, my guess is yes. Again, looking at historically how quickly people forget. Um, am I am I right in assuming that? I think you are. And where do you seen it coming back? I mean, as you know, it's not only a place that people go to visit or people go to live. It's also a transit place. And Emirates Airline had established itself as a major airline um for Europe, US to Asia, etc. that got hit really hard. Now we're back to 90% already >> of of where we were. So yes, I I think that they will come back and they will come back strongly. Um, because they have I mean they're they're very agile country, quick decision making, good leadership and and good financial resources.
>> And um what about the uh the reconstruction fund for Iran? a $300 billion reconstruction fund. I know right now it's just just a a concept, very conceptual, very early in a way symbolic, but apparently according to Reuters, half of it has already been committed. Do you know much about it at all? And for that to exist, doesn't that mean there has to be some sort of sanctions relief to follow this agreement to allow that money to flow into Iran? And that would be part of a bigger bigger question is um what can happen in Iran? Could Iran become a big player globally or are we are we getting a bit ahead of ourselves?
>> So, first I I don't know much about that fund. I hear different hypotheses, guesses if you like, as what's happening. Um, you know, no one's put their the hand up and say I'm going to fund it. Um, there's lots of proposals about how to fund it. One of it is is to use Iranian assets um and and to use some of the sanctioned relief to go into that fund and then that fund is distributed depending on what happens on the ground. It's but it's not clear to me. I mean I would be guessing like everybody else is guessing and that's one of the things that that's going to have to be um go into a lot of detail not only about how do you source it but how do you use it uh for what purposes etc. Um, can Iran become a major player? Look, the Iranian economy is was not doing well before the war and is doing even worse. They have oil, they have people, um, you know, and and they have entrepreneurial people, but they need a system that puts infrastructure in place that enables people. Um, and that doesn't get done quickly. So at some point if if you get if you get better leadership um can they be influential? Yes. But it will take decades not years decades.
>> Yeah. A significant changes both Iran domestically but also um American policy towards Iran. A lot of it would depend I don't know this deal hopefully would usher a new page for that country. It's been through a lot and for the region
>> to be clear disclaimer. I'm I'm a I'm a foolish optimist all the time. So, I take everything I say with a grain of salt.
>> Well, we balance each other well.
>> That's glad. That's glad.
>> My mother told me when I was young that if I didn't have something to worry about, I would invent something to worry about. So, we balance each other well.
>> Well, it's it's worked out well for you financially. Congratulations on your success. Um, all right. So I I wrote just so many points as you as you were explaining things to me and I'm sure the audience enjoyed them. So the US dollar I want to ask you about that. Um a lot of worries about it especially how it's being weaponized. There is no real alternative. People talk about how the yuan the growth of the yuan as part of um uh global reserves here of global reserves and I want to mix in gold as well as a hedge against just defla um inflation in general. Are you concerned about the US dollar long-term? What's your position on gold? And let me throw one more in the mix as well to make it interesting, and that's America's national debt. How big of a concern is that for you? Because I just feel like this is the one thing everyone agrees is a big concern, but no one does anything about it.
>> Okay, so first the dollar. Um, you cannot replace something with nothing. There is no other currency that can can play the role the dollar plays. So the dollar is secure at the core of the system, but but the image I said earlier, what you're seeing is little pipes being built around it. It doesn't displace the dollar, but it makes it less influential. Gold, as an example, we've seen massive um diversification of central bank reserves around the world into gold. China is creating what's called bilateral payments agreement, which means Mario and I, we're going to trade, but we're not going to trade with the dollar. Russia has found a system to bypass the dollar using four or five other currencies and continue trading. So, we see these little pipes, they don't replace the dollar. Why don't you replace the dollar even though we have high debt? Your third question is because we are what's known as the cleanest dirty shirt. So, imagine that you are on a business trip and imagine that you just have carry-on and you've packed exactly for the duration of your trip and you're getting to the airport and your flight is canled and you have to stay another day and you can't get to the laundry. What are you going to do? You're going to go and find your cleanest dirty shirt and you're going to wear it or your cleanest dirty blouse and you're going to wear it. That is what the dollar is. It's not pristine, but relative to the European currency, relative to other currencies, we're much cleaner than them. And the world, as you know, in currencies operates in relative space. So, we are still attractive even though we're not pristine. What is a threat to our cleansess? Debt.
>> Yeah. You know, it was unthinkable unthinkable me growing up as an economist that the US would have very low unemployment in the 3 to 4% range. We're now at 4.2. We would have very low unemployment and yet we would run a fiscal deficit of 6 to 7% of GDP. Because when you have low unemployment, you're supposed to be re running almost a surplus because when you hit if you hit a recession, then your tax revenues will collapse and your deficit will balloon. You know, um John Kennedy said when it's when the sun is shining, you fix your roof. And the sun has been shining on our economy, but we've been putting more holes in the roof because of this. So, I do worry about it, but like you said, there isn't much political will on either side to do something about it.
>> Are you hedging and how?
>> So, I I'm not hedging right now because as long as everybody's calm about it. Okay. You know, um then then and people are really calm. You know, interest rates while high are not as high as you would think given that our debt to the GDP, our debt to what we produce is over 100% now and we're running deficits of 6%. Um, no. As long as the the financial markets solve in relative space and continue comparing us to Europe, which is in a big mess, to China, which is also in a mess, right, economically. As long as they continue making this comparison, we we we will be okay. The risk is at some point they make a different comparison. I don't think that's going to happen anytime soon, but but you don't you don't want to get too close to the edge.
Before we go to gold, you mentioned China and you said it's in a mess. I've been hearing that China's in a mess for decades now. They keep growing and growing and growing. Um, what in the collapse of their real estate market? I don't know how it their economy kept humming along. Their society kept functioning well. What mess are they in and how bad is it?
>> So, you wouldn't have heard from me that they've been in a mess for a very long time. You would have heard this in the last six or seven years. for a very long not from you. I mean, I'm just saying I'm just saying for a very long time they were delivering one of the biggest development success stories um that the world had ever seen. And the reason why is that they have a system that does two things that we're not really good at. One is they identify where do they want to be in 10 years time. two is they start the road there and learn really quickly. They learn from other people. They learn from their own experience and they course they course correct as they and that's the story of that development process. They've lost that in the last six or seven years. And at a time when they're supposed to take a step where they develop domestic demand, they unleash the consumer. They unleash private investment. Instead, they're relying on exports and we talked about that. And they're relying still on stateowned enterprises. So they're still growing, but they're growing less efficiently and in a less sustainable manner. And the private sector is becoming even more cautious. So the the last number we had, which is last week, retail sales went negative. So the consumer is spending less, investments went negative, the private companies are spending less, yet production was 6%. Why? Because they're just trying to ship everything outside. And as we discussed earlier, they're going to hit a wall soon in Europe by doing that.
>> Um, and now maybe a good time to ask you about gold. Um, what's your stance on that on gold's performance?
>> Um, so I wasn't surprised that gold had done so well, nor was I surprised that gold had repriced. And if you put a gun to my head and say, "What do you want to do now? Are you buy or sell?" I say I'm a buyer. So what why has gold gold did so well? Because with central banks started buying because other investors started seeing it as a safe asset and gold kept on going up. But when something keeps on going up as you know it attracts lots and lots of speculators. We saw it in crypto. We've seen whenever something starts going up in a very steep manner, you pile on a lot of what I call tourist investors, not resident investors who understand the market, tourist investors who simply think they'll keep keep on going up. And when that hypothesis is broken, as it always is, then you have to deal with a ton of people looking for the door at the same time. And that dynamic makes other people very cautious. is the notion of catching a falling knife. You really want to catch a falling knife, right? Um, so I I think we've stabilized. I think gold has stabilized. I think Bitcoin had stabilized. We we we've sort of gotten rid of these very weak hands. We've gotten rid of the tourist investors and then the strategic investors will feel more comfortable coming in. That's why longer term over the next one year, I think we're more likely to see gold higher than lower.
>> Um, and a final question, Muhammad, you said earlier that um I'm the optimist and and and you're not and you weren't an optimist since you were a kid, so you'll probably enjoy this question. What worries you the most right now?
>> Um, what? Let me tell you a conversation I have with my my kids, okay? You know, 23 year old and 29 year old. They go, "Dad, your generation blew it. They really blew it. You're leaving us with enormous debt. You're leaving us with a very divided country. You're leaving us with a global system that's fragmenting. And you're leaving us with growth opportunities that aren't being exploited. You blew it. Your generation blew it. And I say, you know what? Yes, we did. But you have something that we never had. You have incredible innovations in artificial intelligence, in life sciences, in robotics, soon in quantum. And that hopefully will not just deliver prosperity for the country, but will also allow you to deal with what we have left behind. That bet depends not just on those who innovate. Think of those working on AI but Mario they depend on those who work with the innovations the companies that implement the artificial intelligence that implement the life sciences so that you can live a better life. Um, and we are so in love with those working on AI that we're not paying attention with the challenges of working with AI, with life sciences, with robotics. So, what worries me the most is the with part. I'm really really optimistic on the on part. I think the US is innovating at incredible scale. I just hope that we get better adoption policies at every level, the household, the companies, governments, because if we don't do that, then the promise of these productivity enhances that will make you and your kids much better off, okay, will simply not come.
>> The technology is incredible. The risk is in the implementation. You said in you said in one sentence what I needed 10 sentences or 20 sentences to say.
>> It's just such an interesting point to think about because a lot of people when you started talking about your kids, a discussion you have with your kids, I thought you're going to go down the path of the kids are not sure what to learn or what to do with artificial intelligence replacing humans in so many ways. Um but you took it into a different
>> No, no. I am optimistic that what's called labor enhancing AI is going to dominate labor displacing AI. But we just have to get adoptions right. Mario,
>> well said, Muhammad. Absolute pleasure. Thank you for jumping on the show and I learned a lot. I really enjoyed it.
>> Thank you very much.
>> Thank you. All right, guys. I'll be going live again in uh 1 hour. Let me know what you think of the conversation. I um you should see my notes how much I've taken. Muhammad is is just so remember him since 2008. how well he was at explaining the global financial crisis, what it means, all these different instruments. Um, and um, I can see why now. So, I hope you enjoyed it. Let me know what you think in the comments. I'll go through them later tonight. As always, we have David Lynn in an hour. Also, a discussion on the global economy, focusing on the straight homes being closed, what Trump is saying that the US may charge a fee at the straight home. And then we have Larry Johnson as a final interview for the day. I'll see you guys in less than an hour. Bye.