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do you think that we're headed into a global depression yes but I want to be careful about what I use the word you know like to be though the word is an evocative word I'd be scary and so on so what do you mean by a depression okay something like happened in the 1930 so just to repeat 1929 to 1932 there was a fall in the economy and a very double-digit unemployment rates and magnitude a fall in the economy like about 10% do I think we're in that yes how was that dealt with 1933 what they did is they printed a lot of money then and the government came out with a same type of programs that we're having now yes okay same thing zero interest rates hit zero same thing okay same dynamics and then there is the that money causes an expansion from that point how long does it take for the stock market to exceed its highs or how long does it take for the economy to exceed its former highs a long time okay do I think that's what we're in yes that's what we're in we've seen that happen repeatedly in history you saw many many times it's just the most recent one and there's a structure to that so yes this is not a recession this is a breakdown and an operation that I'm just describing in terms of how its dealt with the production of money and credit and all of that that's what we're in and so you've talked about there's sort of four levers to recovery after a depression cutting spending also known as austerity debt restructuring or forgiveness redistribution of wealth through taxes potentially and printing if money some of these things you've mentioned will those things get us out of this situation since as you you feel it's happened before but how would you think about balancing these tools right now yeah those are those those are the tools through since eternity basically since recorded history those are the ones that operate it and I think what you're going to see is a combination you're seeing of printing money than redistribution and and I think it will last these things happen pretty quickly there they last maybe a couple of three years in terms of that process and then you have a rebuilding and they're dealt with with creativity the sort of the greatest force through time is inventiveness human inventiveness adaptability so you're going to see these restructurings happen and you're going to see the kind of inventiveness that you just saw up from Marco okay and it's the power of that adaptation that is the greatest power I did a study which is on LinkedIn if anyone wants to see it and it takes it goes back 500 years and it shows real GDP in other words economic activity going back there and what and there's a line and you don't see these depressions as we're calling them even on that line they barely Wiggles when you go into it and you look at the that piece that's what it looks like GDP Falls ten percent unemployment goes up and it passes and because the greatest force is the force of adaptation and inventiveness if we can operate well together so that's what I think it's going to look like over this period of time it'll pass it the world will be very different there'll be a new world water but it will pass and we'll be inventive because what we're dealing with now is just money and credit money and credit is just digital I mean there's no there was real good services you know that those are real but everything else is just a county and so when you change the digits and you work things out and you work yourself through that takes you know a couple of years at most kind of and then you come back into a restructured environment and it could be said that it is really healthy in many ways because it is a stress test because if you look at history people have gotten sometimes they get weaker or they're not prepared to in many ways weaker in terms of maybe they don't build enough savings and they operate that or maybe they emphasize luxuries over necessities it's a reorienting type of experience that in many ways makes us healthy even appreciating the basics of life right just popping in here with the questions from our online audience I mean the main question early on was just how difficult do you think you know the days ahead are for the economy and you've answered that very vigorously like using that word depression is that's a very strong word and it's it's tell me if I have this right it feels to me like what you just said there is stronger than most people in the market seem to believe the market is behaving as if you know the we've had the bad news and it's kind of want come back and a lot of people seem to think that within I don't know a year we'll be kind of be back where you are you're saying no it's going to take longer does that imply that there is basically a sort of some systemic shocks that the market hasn't yet fully seen perhaps to do with the ability of some players to handle the extreme levels of debt that are piling up right now as people can't work I can't speak for what everybody's thinking out there the you know the markets are off depending on what market and depending on what country you're in you know something in the vicinity of 25 to 45 or 50 percent depending what currency you're managing and and so if you're talking about emerging markets they are worse because they're not going to get as much and so on I can describe what I see okay we see something like 20 trillion dollars of losses okay we see so there if you work that through and you say you don't have money and you don't have credit your business can fail you know this we see this all around us so there can be failures when there can't be payments and so the question is who gets what check to make those payments and get past it but we're going to have a giant restructuring of the of the IOUs and we're going to work out when hospitals our group can go broke because this is terribly costly for hospitals and they will not fully recover their losses hospitals will go broke even though we know that they need them so when you go you have to go entity by entity through this and then you'll go through the process of who will pay so this is not you know some people mistake this as there is a curve i rescind the virus may come and go okay maybe we never see it again I don't think that's likely but I mean the people who tell me say but who knows but if it never came back again there will be those who are broke and and and who will have lost some income we're going to change how we operate and in a way the the supply lines are going to change in other words with self-sufficiency what is self-sufficiency now going to mean do we have enough of this and that we're going to restructure our economy and restructure the financial system in ways that we mean we are not going to go back to the way it was so do you see systemic threats to the financial industry as greater greater than happened in 2008 yes this is bigger than what happened in 2008 I'll distinguish it in 2008 we had banks it's the same thing meaning you have a certain amount of leverage things go down too much leverage means you're broke in the counting terms so then you look around and you say who are the systemically important entity that you don't want to go broke because do you want to lose those banks at this time and then you can make up money and make up credit and you can keep them alive in some way and you did it with banks and through the banks there were the mortgages and that's what it looked like this is more complex than that because there are the banks and then there are those all of those that are beyond banks although the little businesses all of those in all the different places that are beyond it and it's a bigger crisis and we have a less effective monetary policy because interest rates declines have reached their limit and just buying financial assets by the central bank and buying the normal financial assets won't work they have to buy the debt of the government and the government or the many governments have to be effective in getting buying power and production to those who need it around the world Wow whoa so when Ray Dalio billionaire hedge fund manager of Bridgewater Capital says that we're gonna have 20 trillion with the tea and losses that's something - oh my god that's just an amazing amount of money this is a great depression that we're in and I don't think the markets can fully understand that yet it just seems like the Fed is really trying to come out and say hey the grass is going to be green and everything's going to be great but we're in a deep deep down slide right there's going to be 30 million plus people out of work in the next couple of weeks and we are in a deep financial downturn the government's going to decide who gets checks and who doesn't which businesses are going to be able to stay and which businesses are going to be gone it's a very very dark time this TED talk with Ray was just unbelievable I felt like I needed to put something together just as a reminder of where we are in this cycle this came out last week and it's going to get a lot darker before I get slider the stock market is still managed to stay up pretty well but we'll see what happens in upcoming weeks in there's gonna be a tremendous amount of losses for some reason everything seems to be priced in is the best case scenario the the grass is going to be green after all this is over but I really don't know and I'm really getting scared of the overall outcome for the real estate market which I work in and the financial market and the way that we're going to come out of this Brea set there's going to be need to be restructuring there's going to need to be reinvention there's going to need to be a lot of things to to be done here and and it's just it's pretty overwhelming guys I want to make sure that people understand that we are in uncharted territory I really hope that people are able to come out of this and then be ok on the other end but just like everyone out there we all have bills to pay we all have things to do and it's a it's a real scary time right now I hope that you know there is a bright shining star that guides us through this and we can come out of this in a better shape than we that we are currently but there's going to be a lot of trying times going forward please leave some comments below on what you think is going to happen and you know how you're resolving to make it through this this chapter and hopefully come out on the other end I hope that you did find this TED talk informative and please again like and subscribe to the channel and I'll continue to go out there and find some of the best information I possibly can to keep us all informed in these trying times
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