ReSolve Riffs with Demetri Kofinas on Geopolitics, Financial Nihilism and the New World Order

This is “ReSolve Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global* and Richard Laterman of ReSolve Asset Management.

“There are two types of truths – one that can be derived from first principles, and another that emerges from a common set of beliefs or a shared narrative.”

It was our great pleasure to speak this week with Demetri Kofinas, host of the popular Hidden Forces podcast. We have been keen listeners to Hidden Forces for some time and have admired Demetri’s ability to dive deep into topics as diverse as epistemology, philosophy, global macro and digital assets, to name just a few. Our conversation included:

  • Demetri’s background in media and journey to establishing Hidden Forces
  • Disillusionment after the Great Financial Crisis and conspiracy rabbit holes
  • Is the fracturing US political system beyond repair?
  • The Trump Phenomenon – cause, symptom or catalyst?
  • Hyperrealism, information bubbles and the struggle to find common ground
  • Fiat news and narrative wars
  • Defining truth – the trouble with epistemology
  • Digital assets, financial nihilism and generational divide
  • US, China and Russia – the geopolitical backdrop

Demetri also walked us through his process for generating ideas for episodes and cited memorable guests that have helped shape his understanding on many of the subjects we touched upon. It was a truly fascinating conversation and we hope you enjoy it as much as we did.

Thank you for watching and listening. See you next week.

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Demetri Kofinas
Host of Hidden Forces Podcast

Demetri Kofinas is a media entrepreneur and financial analyst whose mission is to help others uncover the hidden forces and pivotal patterns shaping our world. His contrarian perspective and critical-thinking approach has helped hundreds of thousands of people make smarter, more informed decisions.

He is currently host of the Hidden Forces podcast, where he gives listeners an edge by using a financial and cultural lens to help them make connections, challenge consensus narratives, and realize novel ways of looking at complex problems.

To keep up to date on his latest thinking, listen to Hidden Forces at, and follow Demetri on Twitter @kofinas.



Richard:00:01:01Happy Friday.

Mike:00:01:02Friday is on us.


Mike:00:01:03This is amazing. I thought you were moving places Adam. I was I was…Cheers.

Adam:00:01:10I was going to but it’s too complicated I don’t even know how to make it work now. So I’m gonna have to navigate. I’m going to have to be active on the mute button but I’m going to make it work.

Mike:00:01:18My legs stopped working, I was nervous that all happened at the same time.


Richard:00:01:23Before we introduce our guests, let’s have the…

Mike:00:01:26Yeah, everyone keep in mind it’s another Friday afternoon here with Riffs. So, we are going to have a happy hour, have a drink, have a wide ranging discussion with our guest Demetri today. So none of this is investment advice. Please don’t take investment advice from four dudes on a YouTube having drinks on a Friday, probably a bad idea, or is it? Anyway, I will also ask you right now those who are viewing or listening, please smash up the Like Button or give us a comment. Share this and like it with your friends to propagate the message.

Adam:00:02:01All right. So Richard, why don’t you go ahead and introduce our guest today?

Richard:00:02:05Yeah, I’m got to let him do most of the introduction but suffice to say that I think all three of us and some of the other guys at the firm have been listening to Hidden Forces, Demetri’s podcast for some time and there’s a lot of overlap in terms of interest, to say the least.

Mike:00:02:20And if you haven’t you should.

Richard:00:02:22Yes, absolutely. But we’ll let Dimitri do all the promos there in the beginning and at the end, if he wants. But Demetri, welcome. Please give us a little bit of your background for the benefits of our listeners and viewers that might not be familiar with your work, please.


Demetri:00:02:37Sure. Thank you guys for having me. This is very fun. I’ve worked mostly I guess now at this point, in my career, mostly in in media for sure, and mostly on the content side of media. I began my career very briefly in finance, and then I left to start a video game company. Was a middleware skill gaming company for the console gaming industry, and then I transitioned from that into the application development design side of television, like set top box stuff. And then from there, I got into radio with my own radio show, and then TV, with a TV show that I created and produced until 2013. And I’ve done stuff in theater, I have a theatre company and I started the podcast in 2017, and I’ve been doing that ever since and it’s been great.

Adam:00:03:28 So, the podcast is your primary focus the moment, like that’s your major project, your primary venture. Maybe walk us through how you decided to get into podcasting, and what the business model is, how you’ve shaped it.

The Business Model of a Podcast

Demetri:00:03:47Sure. I loved, once I got on radio for the first time which was really by chance, entirely by chance I actually should say. I had no idea that I wanted to be on radio. I felt like I wanted to do documentary filmmaking when I was younger, or work in movies, because that stuff always interested me. But once I got on radio and I was on the mic, I naturally took to it. And after going a number of years as a result of something I’ve talked about before, which was a brain tumor diagnosis and surgery and radiation that forced me to kind of take a break from everything I’ve been doing, I really missed it and I tried to, I had something, actually I haven’t talked about, but I tried to get a job in TV and it was a very frustrating experience, meeting with, interviewing with people at some of the top programs that you would recognize, and I realized it was going to be hard for me to get the same level of control and creative control over a program that I used to have. And I also never really worked very well in a corporate structure.

So ultimately, I just decided to launch a podcast from scratch and when I look back now, if I had to do it all over again, I wouldn’t do it. It was so hard.

Mike:00:05:20This is always the way.

Demetri:00:05:22Yeah, completely. I shot out of a cannon, if you listen to my early interests, they’re so embarrassing because I sound like I’m hooked up to a battery. I’m so wired and so animated and intense. And I was so excited, I was so happy to be doing it. So anyway I started the podcast in 2017, and for the first year or so I didn’t do any anything financially with it. Or the first couple years. I never took ads, I never wanted to take ads and I had been approached about doing that many times, especially as the podcast reached a certain critical threshold. And I can go into reasons why. But I ultimately launched a Patreon subscription and that has grown pretty substantially. I mean, it’s not a bad source of revenue. And I’m currently exploring alternative ways to monetize the podcast that don’t involve taking sponsors. And the reason I don’t want to take sponsors is, first of all, I don’t want to have to vet a company, and then that feels stressful.

And then also, I don’t like having to say stuff that isn’t natural, or that isn’t part of what I want to talk about. So having to promote a show or promote a company at the beginning of my program, is something I don’t want to do. Also, I didn’t want to be compromised. When you do a show like mine, you really cover so many different things and I just didn’t want to feel like I had to walk on eggshells or any particular thing because you inevitably self censor, and I actually had that situation happen once with a company that I was invested in, which I talked about on the program quite a bit and had the founders on, and I got a lot of heat from people for doing that, even though I fully disclaimer’d it. And I realized that that also impacted my own, it inevitably makes you biased, when you’re invested in a particular company.

And finally, something that I didn’t really appreciate, I kind of had a sense of it because you guys, we’ve sort of ingested a lot of the similar financial content I’m sure over the years, I’m very familiar with the financial newsletter industry and I have been for a long time. And I was familiar with how profitable the industry was and is, and how great a stream of revenue recurring revenue streams are. And so I was generally aware of it but, I’ve really come to appreciate what a big deal it is to have a revenue stream that consists of 1000s of individual subscribers, versus a couple to five maybe big sponsors. So it’s been really liberating, it’s great, I feel like I’ve sowed a lot of seeds or whatever it is, planted, maybe I need to sell them, I don’t know which one is which. And so there’s a lot of opportunities for that. But honestly, I love doing this., it’s so much fun, it’s what I always wanted to do. So the business model has been the last on my agenda. It’s something that I’m focusing on now and trying to manage the managerial stuff which is very different, very deliberate versus the artistic, which is what I love doing, and I love just creating and reading and thinking. And so trying to manage those two as best as I can.

Adam:00:08:58Your passion for it comes across in every episode. It’s just so clear that you have a generally or genuinely curious nature. You actually want to learn about all the subjects that you are interviewing about, and that comes across. You obviously haven’t driven your content in a direction that is commercial but rather you’ve got content that you want to cover, and you want to create, and conversations you want to have and you’re trying to try to create a business around that. So, do you find that there’s any tension there? How do you navigate that?

Demetri:00:09:41Again, whatever I’ve been successful at in my life, I’ve thought differently about it, and that’s a general framework that I apply. Of course, just being a contrarian doesn’t mean anything. You can be a contrarian and wrong about anything. But television is a great example, and I’ll bring this back to the business model. And I’m writing that business model so I don’t forget, because I have this, where was I going with this? When I had the TV show, when I created Capital Account, the head of the network really pushed me on a regular basis, like on a daily basis, to make the show more like what Fox News was doing, which meant, remember he would not watch, he would not listen to the show. He was sort of a student of Roger Ailes, so he would do whatever he had heard Roger Ailes did, which was you have it on mute, you bring in sexy women or what you perceive to be or sexy women, you get leg shots, you get lots of colors, and you get dynamic fighting and stuff like that. That was the opposite to what I was doing. I was more like in the Charlie Rose direction of what I wanted. And I felt like there’s a huge segment of the market that wanted that.

And so, I think to answer your question about my business model and approach, just knowing myself, I need to apply that same sort of open minded, free thinking when it comes to how to extract value from the content I’ve created, and how to monetize my audience, and not thinking about it strictly in terms of selling more subscriptions or getting sponsors. And I think for me just knowing the way that I work, that just requires that I prioritize it, and I create a space to focus on it. And that’s been the challenge for me, because I’m not a great multitasker. I just kind of do one thing and I just do it like really hard and really well and really passionately. And it’s hard for me to silo different tasks, but I have the help of some people, so I think I will get there.

Adam: 00:11:47One of the things that…

Richard:00:11:47But you do have some…

Adam:00:11:49Go ahead Richard.

Richard:00:11:50I was going to say some cognitive flexibility when it comes to the topics.

Demetri:00:11:53Cognitive flex, I like that.

Adam:00:11:56Yeah, because you mentioned that you have some background in the world of finance, even though you also have this sort of artistic and communications background. But the topics that you cover range quite a bit. You go into some financial topics, but you’re into geopolitics and you’re into epistemology and philosophy. And so I’m just curious as to where did the idea for the guest/topics come from, folk that interest you? Do you follow some of the recent books that come out? Do you get some referrals? How does that work?

Demetri:00:12:30Sure. Well, a good examples is, the guest that’s coming on, on Monday, I had no clue who he was. I’m in a unique situation because I normally only book one guest a week, and I try to book the guests when they’re close enough to publication, which is something that most podcasts don’t do shockingly, even podcasts that talk about current events don’t publish guests within a week. And I try to publish them within four to, five to three days. But I’m in a unique situation because I’m going to be going away in about a month and a half so I need to stack some guests. And I’m speaking with two guests this week, and I needed to find someone sort of quickly, and I was scanning through Amazon. This is one way that sometimes I’ll find guests, and I was looking through books, and this book caught my eye. It was called Revenge of the Real. And I’ve spoken quite a bit lately about what I feel is a sense of hyperreality, that we’re living in a hyper real environment, where we are increasingly, really have no relationship to the physical world, or to the world as we know it to be, the natural world.

And so I saw that book, I saw that title, it spoke to me because I felt like is this book suggesting that the real world which is the persistent world will have its day? That we can sort of live in this digital manifestation or the secondary layer of society, but ultimately we’re tied back to the physical world, which is something that I felt to be true. I did this one episode with Balaji Srinivasan who was CTO of Coinbase and a very successful, very creative minded guy in the crypto space. And generally, I think he had started a pharmaceutical company or something to that effect, before he got he became CTO of Coinbase. Anyway, very interesting guy. And his thesis, and I think he pulls from others who actually have written something similar, is that we are moving increasingly towards a world where nation states and physical borders will be irrelevant. and that the secondary layer network connections are going to be what matters, and tertiary and so on. And he talks about this in terms of either digital statehood or the network state is his term. I’ve seen it elsewhere as digital statehood. I’ve never been persuaded by that argument, and I’ve really tried to be persuaded by it, or tried to grapple with it and see if there’s something there beyond the interesting sort of superficial aspects of it. But really, can we escape the exigencies of the physical world? I don’t think we can. And so I thought that was interesting, and I’m going to have him on Monday, I’m reading the book now. I’m reading some other papers he’s written. So that’s one example.

Tim Grover, who was on recently, I just loved that episode. I don’t know if you guys heard it, but I think for anyone who sort of thinks of him or herself as either a winner or in competition or has enjoyed that sort of competition with self, with others, you can really appreciate that book. He was pitched to me. In other cases, it might be that there’s someone, let’s say, Paul Tudor Jones. I’ve reached out to Paul a number of times in the course of my time having the podcast, I’ve wanted Paul Tudor Jones on forever. He’s someone that I would love to have on. I’ve wanted to have on the head of the VIS. I was this close to having a the head of the VIS on. And maybe I think one day I will get him on. But so it depends, it might be the topic, it might be the person. I’ve wanted to do an episode for example, on… you guys might have seen some of those recent reports about BlackRock and other funds buying up entire neighborhoods in Texas and elsewhere. I couldn’t find the right guest for that. But that was a subject motivated episode. And if it were to come together, it would have been inspired by that, and not necessarily because of someone or something.

Adam:00:16:33One of the things that really, I think just being candid. One of the things that I find that I really connect with in terms of your content is, it’s clear to me, or it seems at least to me clear that a lot of your ideas seem to have crystallized in the crucible around the 2008 financial crisis, right? And the political machinations around that time, the policy responses and some of the assumptions around the societal objectives or political objectives that are implied by those responses. I find a lot of the topics that you cover and the conversations you have linked back to that. So I’m curious to learn more about your personal experience with 2008 or that time period, and how you think it was formative for you and informs how you think about things today.

2008 and Today

Demetri:00:17:41Yeah. I started learning, my first sort of touch point with finance happened in 1999 where my dad was a subscriber to a board financial, and he would read The Daily Reckoning. And you guys remember The Daily Reckoning? It was this hilarious letter written by Bill Bonner who is brilliant, and I’ve met Bill and I had him on my old television show. He’s one of those guys, real buccaneer. It was really libertarian, very anarchic stuff. And it was very Austrian. They had an Austrian economist whose newsletter they published called the Rice Backward Letter. And the economist was Kurt Richebacher, he was a German Austrian economist who passed away in 2007. And I learned so much from him, but I didn’t start reading Kurt until I started taking economics in college. Because I had the experience that so many other people did. I started studying and learning economics by reading Samuelsonian textbooks. And with neoclassical equilibria, and no mention of banking systems or interest rates. Certainly not interest rates in the context of prices. And eventually I started reading Kurt’s newsletters in 2003, and that was the right framing, for me to be able to see that we were experiencing a mania, a credit fueled mania in 2003 through 2008, and that that was not good. And that was going to lead to some bad consequences which were sort of cyclically predictable.

Adam:00:19:25What was your role at the time like, from 2003? How are you viewing this? Through what prism professionally?

Demetri:00:19:33In 2003, when I started reading Kurt Richebacher I was in an airport in Florence, missing my connecting flight, sorry, an airport in Rome missing my connecting flight to Florence, to study abroad. And I ended up going back to live in Italy and work in Italy after that, but that was, I was a student at NYU. Economics at NYU made no so sense. I majored in economics, I majored in political science and I minored in psychology. I was focused very much on economics and particularly political science at the time. And then I just found that shit fascinating. I found financial markets fascinating, maybe because for a number of reasons I’m sure. I think one of the reasons was I was always just there, it always felt like I was just there about to figure it out. And it would always escape me, it always escaped me. And I don’t think I understood that at that time, I think it took years later to realize that that’s always going to be the case. But I didn’t understand at that time, so I figured out and I figured out and I just found it fascinating.

Obviously, money is important, and money is a form of power. Power interested me. Raw power in the context of geopolitics and policy, not for myself, but in fact I actually considered a career working in policymaking and in political science because I loved it so much, it was so fascinating. But ultimately, I felt like if I was going to do that, there were certain ethical dimensions that were problematic for me. And I also felt like, I didn’t feel comfortable working in political science, working in a think tank, giving policy advice, even working for an administration, for the US specifically because of the US role in the world and not having served in the military, and served abroad. Because I felt like I was armchair general-ing it. Maybe if I had been a reporter abroad, I’d have to spend time in war zones to feel like I could really talk about and write about and think about policy. And that’s something that I think is problematic in general. You hear a lot of people commenting and without a caveat, because we’ll comment all day today but there’s a lot of stuff that we…

Richard:00:21:43No skin in the game.

Demetri:00:21:45100%. Or also like, whenever I think about or talk about China or the Chinese Communist Party etc, I don’t even speak Mandarin. So I have to interpret the words of President Xi through an interpreter. That’s like a huge impediment. Your original question Adam was what was I doing at the time that I was reading this stuff?

Adam:00:22:09Well, yeah, just going all the way back, obviously, my sense is that that experience of 2008 really helped to shape your political, philosophical, economic, financial compass . And so I just wanted to, what was your professional role at the time and how did that impact what you were observing?

Demetri:00:22:33Yeah, so I was working in Italy, I was managing off campus real estate for NYU, and I was also chaperoning student trips around the country and some other things for the university. Amazing fun job, loved it. And then I worked, like I said, I work very briefly in banking, I worked for a very small bank, a bank in New York that was purchased by Santander that was part of the whole centrifuge of…

Adam:00:23:02Okay. That’s a breadcrumb for sure.

Demetri:00:23:06So I was doing internal audit, and I was going to branches all over the…I was basically helping, at the time I was kind of figuring it out. But I was basically helping the CEO and the executives consolidate the books and everything else, tie it up in a nice bow, so they could sell the Santander. But I left there in very short order. I didn’t like the job. And internal audits are the last thing I should be doing in my life. But it was fun going to all these different branches and meeting a lot of people, the social aspects of it was interesting. I thought many times about how to rob a bank, because I went through the protocols, not that I would ever rob a bank, let’s be very clear.

Richard:00:23:53You know this is live, right? There’s no editing anything out afterwards.

Mike:00:23:57The first thing a bank robber says.

Demetri:00:23:59Yeah, exactly. Why would I talk about it like this? And so then I quit and I started a company called Gorilla Gaming Concepts. And the product was called Green Thumbs which was basically like I said, it was a, it was a middleware for the console gaming industry that would allow you to bet on video games. It was very early, I think we were really ahead of the curve in that regard. In some ways we were still ahead of the curve because this was focused very much on console gaming. For many reasons, there was an explosion of Party Poker at the time. All of my friends from school were working at hedge funds or investment banks. They all played video games, they all smoked weed, they all played poker, and there was this sort of intersection, this brilliant intersection where it’s like why, and I focus grouped it with people. Why, if you could bet on Call of Duty, if you could bet on Madden NFL, everyone was just stoked by it. Now, this is the classic case of inexperience bumping up against more inexperience. But my co-founder and I made incredible progress with this company, just given what our backgrounds were. We went with all the top executives at Sony PlayStation, we got a sign off, we got licensed to develop on the PS 3, we were at the Game Developers Conference in San Francisco in 2006 when they had released LittleBitPlanet. We took it as far as we could take it, but we ran into certain technological problems around security, and as well as lag issues and raising questions of fairness, but ultimately it’s fascinating when you look back at this time.

And I’ve talked about this from a different dimension which has to do with how the world…I was on Grant Williams’ podcast not long ago, and I talked about how the world feels fundamentally different today from anything that existed before 2012 or so. And what I chalked that up to is, but especially before 2000. And what I chalked that up to is the proliferation of mobile, and ubiquitous connectivity, and social networking, and all of these applications that are on your phone. And this was right at the cusp of the mobile revolution. Like the people that were sort of, only investment bankers had BlackBerry’s and BlackBerry’s aren’t iPhones, there’s no rich mobile experience in the browser. And so, the focus was really PC and consoles. And the decision between PC and console was really about the demographic and the culture. The console gamer was very much more of the kind of guy who would bet on sports, bet on poker, or whatever. But mobile was not in my sort of view and that’s really where the opportunity would have been and was, and I think also much more scalable for lots of sorts of reasons.

So anyway, that was a fascinating experience. We drove those wheels off that bus up until 2008, and then I transitioned to a role at Cablevision working under Wilt Hildenbrand and Patrick Donohue in a strategic product development. Wilt Hildenbrand built Cablevision’s, built a network under Chuck Dolan and he was an amazing guy. Just one of those people that, I think about this sometimes too, because I also worked for someone similar when I was a kid. I worked in commercial real estate at a commercial real estate brokerage, and this guy had fought in the Korean War. Was an Irish guy, kind of big family of kids and sort of very much, my word is my bond type of person, very principled. And those people, it feels like they’re a dying breed. So anyway, Wilt passed away not long ago, he was really amazing. One of those guys, again, brilliant, he was a helicopter pilot in Vietnam. I don’t even know if he went to college. A different breed. And so I had the privilege to work for him and I learned an enormous amount. It was a really special cool role. It was an incredible opportunity. And I got to do that until my brain tumor diagnosis, six months after which I quit, because of again, things I talked about, all the uncertainties around, what that diagnosis meant. And what, how much time I would have left, and what did I want to do with my life.

By then we had had the 2008 crisis, to bring it back to your question Adam. I had a TV, at Cablevision. I was at Cablevision. We had TVs and set top boxes everywhere. So I was watching Erin Burnett and all the sort of folks at CNBC. I was glued because I was blown away that this was happening. Not that the crisis was happening, but that the government was just, that was not my model. They literally just stepped in, they just took control. There was like, we’ll take that. We’ll take that, thank you very much. We’re just got to stop pretending that this is all sort of a nice organic machine that operates. And that put me in a dark place. And I talked about this on one other, I think recently. Global may have been, no, I don’t remember where it was, maybe it was on a podcast. And I talked about this sent me down a dark rabbit hole of conspiracy, just going through the wackiest theories. I’ve consumed hundreds and hundreds of hours of Alex Jones, maybe 1000s, maybe 1000s of hours of Alex Jones.

Mike:00:29:45Some of it is true. We just don’t know which some.

Demetri:00:29:48What did you say?

Mike:00:29:49I said some of it’s probably true. We just don’t know which some.

Establishment Narrative Bullshit

Demetri:00:29:51       There is stuff that’s true. Well, that’s how it works. Of course there’s stuff that’s true. One thing is that’s completely true, is that the establishment narrative is bullshit. That’s completely true. And you have to sort through all of that noise to figure out what is a much more representative model of the world. What folks like Alex Jones do is they tell you that’s bullshit. And then they construct a very elaborate or an elaborate series of theories that explain the world that makes sense in retrospect, but they’re not actually true, or they’re not reliable models of the world. And he wasn’t the only one. I mean, I went down so many rabbit holes. I have a shelf in my library that’s dedicated to books that I read during that time of people that, I don’t know what the hell I was thinking. But it was extremely interesting to go down that road.

And either some of those folks are the kind of folks that you don’t see on Joe Rogan, but you probably would have seen on Joe Rogan if he was doing the show back in 2008. And I saw this … documentary, which was an incredible piece of internet history, culture, I don’t know if you guys are familiar with that Peter Joseph’s film, but it was like, if you’re a nerd around, and I’ve done an episode on this. Again, why I did an episode early on in the show, episode four on the history of American television and culture, because I found all this stuff fascinating. But it was an incredible moment in the power of the internet, the raw naked power of the web before it was really commercialized in the way that it has been, specifically in the context of YouTube and really, just a purely viral piece of user generated content.

So anyway, that’s what I was doing. I got really depressed as a result of it because I had like I said, been without saying I was predicting a crisis, as you get as close to saying I was predicting a crisis, I was getting into a lot of really aggressive conversations at family dinners or if not family, family holiday things where there are a lot of people, or I went to and saw Marc Chandler from Harriman Brothers, was a great guy, speak at like some event I remember in the city in 2008. And I would get into arguments with people about how F’d we are and like, just this is a giant bubble, etc, and wanted to be right. And then when all of this happened, it was dis-illusionary, and it made me question everything including 2001, 9/11. I went down conspiracies there. And it was just general unraveling, realizing that the world as I thought it was, was even less true. What I thought was even less true than what it was. And I just didn’t know what to hold on to, what sense to make of anything, and that made me want to understand markets even more.

Adam:00:32:51It’s astonishing how much overlap there is between your experience and my experience which I’ve also articulated in various mediums. But yeah, just the same sense of seeing it coming, being well positioned for the crisis in portfolios and being completely ill prepared for the magnitude of the policy response. And then creating such a sense of disillusionment that lasted for several years and sent me spiraling in a variety of different directions, and you just can’t help but your brain is rewired during times like that, and then that you’ve viewed so many other things subsequent to that through that prism, and then there’s a process that you have to go through to unwire or reset some of that stuff, so that you don’t just continue to see 2008 coming around every corner, and you can begin to see things through somewhat of an optimistic prism, or see some silver linings and things. And did you find that you emerged from that a different person, or do you continue to work through some of those things to this day, do you think?

Demetri:         00:34:09Yes, but before I answer that I wanted to ask you something Adam, which is it, because this is a question I don’t think I’d have an answer to. Why was it so hard for us to see that coming? The policy response? Because in retrospect, it seems sort of, if not obvious, certainly more likely than I think perhaps you, certainly me gave it, gave it credence. So, I wonder you and anyone else, why was it so hard to foresee?

Adam:00:34:42Well, there’s also a number of levers that were pulled, and many of them had never been pulled before. So one of them was, they changed the rules around mark to market accounting in I forget, I think it was November 2008. And so all these SPDs and all these bank balance sheets completely flipped. The sign of the balance sheet completely flipped, and by hundreds of billions of dollars overnight. There were these swap lines that were introduced. So all the balance of payments were equilibrated, there were obviously the expansion of the balance sheets that had never been experimented with before. So there were all these policy responses that there was just no historical precedent or if there was historical precedent, it was during the Depression. And so it …

Demetri:00:35:46Right. And during…go ahead.

Richard:00:35:49No, I was just got to say that QE did in fact happen in the time of the Depression, even though it’s so far back a lot of people don’t remember.

Adam:00:35:58It actually didn’t happen in isolation. It happened with a massive fiscal response as well.

Richard:00:36:03Yeah. And the fact that the government didn’t take preferred equity in all the major banks as they did in ’08, which would probably have prevented the Great Depression of having reached the depths that it did, and lasted as long as it did. So I think the idea that the government came as the backstop to actually owning the equity in the banks, which at the time was unfathomable, and now in COVID they’ve taken this one step further, which is now they started to buy corporate bonds. And I wouldn’t put it past them that if the next hiccup comes along, they’re going to go full BOJ or Bank of Japan and just actually buy outright equity, which is something that is along with the yield curve control, is always lingering there in the backdrop of potential policy tools that might be brought to bear if and when the market cries loud enough. Go ahead, you were?

Demetri:00:37:07Well, I have a question. Adam asked me a question and we’ll get back to it. I just want to say, that’s what the nihilism comes in. So Simon Mikhailovich, who I’ve known for a number of years as well, was recently on Grant Williams’ podcast, and he was a really great episode.

Adam:00:37:23I look forward to listening.

Demetri:00:37:24Yeah, it was very good. And he talks about his experience growing up in the Soviet Union, and the sort of nihilism I think, if I’m not overly paraphrasing, or misinterpreting that came out of the dissolution of the Soviet Union and the ideology that kept the union together. And we have an ideology. It’s called market capitalism. And what 2008 represented was a demolition of that ideology.

Adam: 00:37:57100%. Yup.

Demetri:00:37:58And so people look at that and they say, well, why the fuck should I invest in anything based on the fundamentals? None of that matters. Nothing matters. What matters is power, raw power, and the ability to mobilize it for private ends.

Richard:00:38:14Set in a compelling narrative to use the term that our mutual friend and guests Ben Hunt uses a lot, I know you’ve had Ben on and so have we, the narrative machine and the ability to weave the compelling narrative, that is what the game is about more than anything. So absolutely that is. And so I think, I wanted to walk forward the idea of using 2008 as this catalyst and the starting point for a different world view of how policy might respond, and walking forward to today with what we’ve seen in the post COVID policy responses. This is a conversation that we have internally quite a bit, and it’s this idea that the capitalist structure, the system that we’ve seen, isn’t really the true capitalism that we might have expected. It’s a socializing of losses. It’s the moral hazard of all of this, but it’s hard to shake the feeling that this system is arriving at a point of exhaustion to some extent.

End Mini-riff hereSo I wonder if you might sort of set the stage to some of the topics that we’ve been dying to dive in with you on the geopolitical front, but how you see where we are on a societal geopolitical, economic/financial standpoint, and both the US place in the world as the beacon of this form of capitalism, which appears to be somewhat crumbling as China rises, and this other system comes to antagonize it. I wonder if you could just give us your 30 foot view of how you see the world today.

The World Today

Demetri:00:39:55It’s interesting. Something that popped into my head just now that I hadn’t thought of in this way before, is that in the same way that 2008 was dis-illusionary because of the government’s actions. In a similar way, I think we find ourselves confronting the gross absence of the government in the world we live in today, the absence of regulators, the absence of the American state at the international stage, in the international stage in the way that we’ve thought that, how do I sort of capture it? I think, the election of Donald Trump in 2016 and now the election of Joe Biden has left many people bewildered. Trump, for obvious reasons, was sort of like this giant explosion on the scene. No one could really figure out what it was that he intended, what his policy was, and there was all that online trolling and everything else. And now, you have Joe Biden, and he, so he looks so manifestly feeble, and so very much the opposite of what you would consider to be executive power, in the way that you’ve considered it, the way that we’ve sort of imagined it.

And so I would say that, where I would say we are today is a place of profound societal confusion. We don’t really understand, we thought we knew what it meant to be America We’re increasingly disillusioned around what that even means. We don’t know what it means, we don’t understand. We question American power on the international stage, whether it’s with China, whether it’s in the US withdrawing out of Afghanistan, it doesn’t seem to be a coherent story I guess I would say, about what the nature of global power is, or not global power, the nature of the of the global system. Who’s in charge, that’s another one. Who is in charge. And in that way, the 2008 crisis begins to look less like the establishment coming in to provide order, and more like private interest looting the government ahead of a collapse. And I think I’m having a hard time articulating what I want to say, in part because we’ve heard so much bombastic language around collapse, Rome, etc. And I’m sort of allergic to that type of talk. But what I do feel is that every single day, people like me are waiting for the adults to enter the room. And with each passing day, I begin to feel less confident and less confident and less confident, and so you do have to wonder, is this what it’s like to live in a collapsing country, in a collapsing society? Is this what it is, where it just, you just become more accustomed to disorder, to misinformation, disinformation, discord, division, it just amplifies and amplifies.

Mike:00:43:01The looting continues on, the whole passing on the losses and socializing them. Each step has gotten larger in that sense. So you’re living through that, but you’re being warmed slowly. They couldn’t have taken the steps maybe that they took in COVID, had it not been preceded by the opportunity to have intermediate steps done in ’08 and the housing crisis. And I talk about that in that looting of the government sense. Each step gives more opportunity to take the next bold step. And so you’re in this constant decline. Go ahead. It’s really the way you’ve framed it Demetri, is kind of really making me think about when you think about it, this is a looting of the government. That really reframes it in a way that’s enlightening for me.

Demetri:00:43:55And you know, if you think about it as an information channel, there’s more and more noise in the channel. As the bailouts continue, they need to get bigger, and they need to get bigger. The looting and everything else, it creates more and more noise and at some point, the system can’t work. It can’t differentiate a signal from noise. And I see that in markets most obviously.

Mike:00:44:24We were just talking about Peter Keating from Ayn Rand’s The Fountainhead. The whole creation of noise around the signal so that the signal is gone, and there’s only noise.

Adam:00:44:40I think Trump sort of perfected that. What the GFC did in ’08 and what Trump did when he was elected or during his campaign, and then once he was elected, in many ways made what was hidden explicit. It seems to me, which I didn’t choose to see, or there weren’t enough sources for me to get to see around corners prior to 2008 or whatever, for me to see what was there to be seen and then in 2008, it was this thing that was hidden, was exposed. This is this is obviously not daytime television. I often allegorize 2008 for me as, before I was a child wandering Disney World thinking this was the real world, and after 2008 was like I wandered into the tunnels beneath Disney World and I saw Mickey Mouse buggering a small boy.

Demetri:00:45:50Beverley Hills Cop 3

Adam:00:45:52Yeah, and then Trump sort of made this idea of the crowd watching the crowd, mimetic desire, all of these lizard brain instincts that we have as humans, that we react to you in a social context. He made those explicit and in a way that was very uncomfortable for those of us who were comfortable with the norms and the intellectual integrity, or the set of philosophical principles that we thought we were operating in, and we thought that everybody operated in.

Richard:00:46:32But he’s more symptom Adam, wouldn’t you say? I think one of the things that happened, to Demetri’s earlier point, the mobile revolution and the social media and the exponential rise of social media which led to these information bubbles, means that everybody has their own narrative, and the ability to actually create a coherent narrative that actually brings people together, is farther and farther away from any kind of possibility because the information bubbles just keep feeding you what your biases tell you, that will keep you more engaged in these networks. And so Trump was a symptom of what’s happening in this, potentially Demetri is right, a decaying society, we hope not. But I mean, there’s a lot of signs that it was a crumbling empire to some extent. And I do feel that the Trump thing really is just a representation of this broader problem that just keeps getting worse, if we can’t find common ground in terms of understanding the establishment of reality. Because we don’t have a way to establish first principles knowledge of most of the facts that are exposed to us. We call them facts but we don’t know them from first principles. And so how do we combat that and arrive at some form of common ground there, I think is the real issue.

Demetri:00:48:04Yeah. Is that a question for me or just in general?

Richard:00:48:07It’s an open ended question.

Demetri:00:48:11I think it’s very hard. I want to actually…just hold that thought and you can ask again if I miss it, but I just wanted to ruminate a bit more on Donald Trump, because his candidacy created so many complex problems for conversation, for consensus. Even now when I talk about Donald Trump, I have this anxiety about bringing up his name, because I’m afraid that I’m immediately going to be categorized by whoever’s listening. And I do this to people as well, when I hear people bring up Donald Trump’s name, I’m like, are they got to go down this thing where they make everything about Donald Trump and the whole world, and all the evil things that have happened in the world because of Donald Trump? And certainly, I don’t see Donald Trump as being the source of all the ills. But I do see Donald Trump as being this really dark harbinger of destruction. And I think that given the fact that his candidacy lasted only four years and how much energy was put behind the de-throning him, getting him out of office by the establishment, and how they seem to have largely ignored everything that led to his presidency that got him elected in the first place. I can’t help but think that at the very least one of the possible futures that we could be living in, is one when we look back 20 years and we see, ah, that was the canary. And if we were going to get our shit together, it should have happened after that election, or after the end of that presidency. Well, we didn’t, and so this is why we got this totalitarian dictatorship 20 years later.

And so that deeply worries me, and I think part of the problem guys is that while the four of us might look at the folks that strolled into the Treasury and into the Federal Reserve and extracted effectively trillions of dollars in order to save the whole system and enrich themselves in the process, we are beneficiaries of that system. And we’re just not up there. But we’re high enough that we’re not simply willing to invest our lots with everyone else. Again, I’m being presumptuous about where all of you fit and how all of you feel, but that’s how I feel. And so it’s this weird thing where morally I’m outraged. And so when Donald Trump speaks, it absolutely resonates with me. And at the same time, I don’t want to burn it all down. Because I’ve worked really hard to get to this place in my life and I’m also not in a place where I can afford to have things burned out. And so that’s part of the problem, we’re kind of in the way of a solution, we’re in the way of our own solution. And if when you look back at FDR in 1933, his policies were very unpopular with elites and people who had worked to accumulate wealth. And yet you wonder whether or not, absent some type of socialized response and fiscal response, if the United States and there was a World War, there was preparation for the Second World War etc, would we have gotten out of it. And can we get out of our current predicament without some type of wealth redistribution?

And it’s kind of this thing where we might all agree that that needs to happen, but it doesn’t want to be us that takes the hit. Or it doesn’t want to be us take the hit if we can’t control the quality of the outcome, and it’s the game theory that gets in the way. So what was your question? Sorry, Richard.

Richard:00:52:09No, I guess I was just getting at the fact that yes, Trump really is a strong symptom, but yet again a symptom and not a cause and I think that the information bubbles and the exponential rise of social media has been really the main conduit through which we’ve arrived where we are today.

Adam:00:52:32So did the hyper-real state create Trump? Could he have emerged absent that context?

The Hyper-real State and Trump

Demetri:00:52:45Donald Trump, fascinating. Literally, if I could read one biography of the future, it will be the biography of Donald Trump by someone who had spent time with him in the Oval Office, accumulated years’ worth of notes and really had the intelligence and broad interdisciplinary interest to piece together all the different parts of some of what you just articulated.

Richard:00:53:10It’s a tall order, Demetri because anybody with those characteristics would not have hung around enough in the Oval Office to be able to…who knows maybe he’s…

Demetri:00:53:23It’s a fascinating figure because he was so…one of the interesting concepts that I’ve been flirting with recently has been, not well, I don’t know what we would call it?? Biomechanical cyber-organisms stuff, but like human beings have always been cyborgs to some degree or another. Like when I have a pen in my hand, like my brain maps to that pen. I can write. This is the problem with drinking. I just forgot what I was got to say. But it was an interesting point about…anyway, to bring it back, what I wanted to say about Trump is that what I think is so fascinating about him is that he was the perfect guy for this moment. He had such an intuitive. This is what I was going to say. He is almost like, his hand is like intuitively part of the network of the stream of outrage. He knew how to use it. He knew how to speak to people, and he harnessed it incredibly well. And that speaks to a problem I think, and now he was President, well, he wasn’t President when he did it. But increasingly, that type of power accrues to lower and lower layers of the network. And at the limit, it would be every single node of the network would have the capacity to destroy the entire system. And that’s the world we’re moving towards. And it presents real issues for that tension between centralization, and decentralization, between totalitarianism and liberty. And we all see it. We all want to live, those of us at least who, the four of us for sure, most people in the US, want to live in a world where we have freedom, and yet we recognize that in the type of world we’re living in, and then we’re moving forward, increased destructive amounts of power accrue to the individual, whether we’re talking about the ability to print a synthetic bio weapon, or hack into a water filtration system for a town.

So how do you navigate that tension, and that for me is one of the biggest problems. I don’t have a solution for that. We’ve been living now for years with these threats, none of which ever really materialized. There has been no 9/11 type moment that comes so far out of the blue that creates sheer panic. The pandemic was not one of those. I mean, this also is something that I have to recognize which is again, our experience, the pandemic was very different to most people’s, because we had the means and the ability and the situation to be able to ride it out pretty comfortably, and very comfortably to be honest. So that’s one issue that we could talk about, talking about again this divide between those who are in a position to solve the problem, and those who have the outrage to solve it, or who are financially motivated to solve it. There’s a disconnect there.

Adam:00:56:37Don’t you think that part of that is…that in a time where it is generally acknowledged, either explicitly or implicitly, you don’t need to have to sit and ruminate or talk with friends about this to arrive at this kind of conclusion. But I’m connecting to this idea of Ben Hunt fiat news or fiat reality, where we all now have the ability to create our own reality, because you can find online any material that you’d like, backed by people with meaningful credentials to support virtually any viewpoint. And so, in a time when nothing is real, there is no truth, as you say, the fundamentals were blown up in a way. They’ve been blown up on several occasions since. It’s been made very clear that fundamentals no longer are central to the premise of capital allocation or prudent action in furtherance of an objective. Then, if everybody internalizes that, it becomes explicit very quickly that this is a zero sum game, and the only objective should be to basically embrace the pirate code. Like take what you can, give nothing back. In an environment where this is the held truth, what type of person rises to positions of power? What character traits that allow a person to be more likely to rise to a position of power? It’s the ability…and I’m riffing now. But perhaps you can lie with…

Richard:00:58:39With sociopath, being a sociopath is really the…

Adam:00:58:43That’s what I’m converting to. The qualities of being sociopathic are what allows you to get the most out of the system in the current state. And by virtue of this, the fact that this is the context we all are realizing that we operate in, that’s no longer something to be condemned. Instead it’s something to admire.

Demetri:00:59:09So there you go, by the way, again, Simon Michailovich, love Simon, he talks about this a little bit. What I would say, is that the person that rises in such a society, in a society that’s increasingly coming apart, where looting becomes increasingly possible, is someone who gives permission. Someone who comes in and says, go ahead and loot. I support you in your looting. I support you in the destruction and the unraveling of the state, in everything that was holy which is no longer holy. It’s all unholy, it was all lies, it was all wrecked up. So loot. I think that’s the sort of person that becomes elected or comes up in such a system, a destroyer. And I think that’s what Donald Trump was. I just don’t think that he was effective…

Adam:00:59:54It’s not just Donald Trump. It’s Elon Musk, It’s Marc Benioff, all of them, whatever, and I’m not a Musk hater or whatever, I think the law is messed up. But, just this fiat news and the ability to sort of navigate and control the crowd, watching the crowd and sculpting the narrative in order to…

Demetri:01:00:18 The difference I would say though is, Donald Trump was President of the United States. I’m not picking on Donald Trump because of the man that grew up Donald J. Trump, lived for seventy years until he was elected president. He put on the costume, he came out on the stage dressed in character, or like in the character that we all, because when Barack Obama put on the vestiges of the Presidency he became a different person. We’ve mythologized that role. And especially after the end of World War Two and the beginning of the Cold War, you had massive expansions in the power of the executive. And he put all of that on and all of this awesome power, and started tweeting bullshit, and trolling people and saying crazy shit and accusing, saying lock her up. And I mean, the kind of stuff that, it was, you could hear the screaming terror of the established class of the Washington Consensus. So that’s what made Donald Trump so historic. He’s going to be someone that people will study in his presidency as a moment in time will be something that…

Richard:01:01:33It’s what it says about the state of the country. So sorry to interrupt there Demetri, but I think you’re getting, it is back to the canary in the coal mine. When someone rises to the highest job of the greatest superpower on earth, there are a certain level of criteria that you expect from this person. And the fact that he rose to that job, I guess what everyone questions is, what does this say about the country? What does it say about the society that allowed such a character to rise? What are some of the deep ingrained grievances that forced some of the electorate to flip the bird to the establishment, to the elites, to the coastal elites and say you know, that we’ve been forgotten Middle America. It’s the lack of empathy that allows a large portion of the US society to be feel like you’re left behind it. I think it’s all those symptoms that I think make it kind of unbelievable. What does this mean about the US? How could we let it get to this point, I think is where you’re getting that.

Demetri:01:02:46Well, I would just say though, I think that even here as I’m sitting and I’m talking about it, because it’s been now, how long since he left office?

Richard:01:02:57Six months.

Demetri:01:02:58It was more than just right, it was more than just there are things that we expect. We mythologize the American system. I don’t use that term lightly. We mythologize American democracy. We mythologize the Capitol, and we mythologize the presidency. We have stories that we tell about George Washington, all the way through, all the Presidents. This is something we’re ingrained in from when we’re children in school. So I just think that this is…I think what he did is going to have profound repercussions, just like George Bush’s invasion of Iraq, just like the 2008 crisis. I think these are all powerful moments. In terms of what allowed this to happen, it’s the same stuff we’ve been talking about. It is the hypocrisy, the violation of principles led ultimately to the manifestation of an individual who could inhabit the office and the costume of the most important mythological role in our entire governing system. Because we wrecked it. We, I mean, we, those in positions to loot, looted in broad daylight. So of course, the population was like, well, then fuck those rules, fuck you.

Richard:01:04:14It ties back to the Great Financial Crisis. It definitely does because that’s when the whole charade was exposed to such a large extent that everybody who felt they were left behind and theoretically Obama was the candidate of change, and he let down so many people that I think there was a large cohort that voted for him that ended up voting for Trump. A lot of the swing voters in some of the purple states. I’m just a little cognizant, there are a couple of things. I wanted to place this conversation three steps backwards looking at the globe. So putting all that we’re talking about in context with the perception of the declining US and the rise of China. And I wanted to put China particularly, and I do want to ask you about Russia as well. But this idea that has been floated around over times of lucidity trap, that eventually there’s going to be a clash. And particularly it seems like Taiwan would be the most likely hotspot from a miscalculation standpoint, not because the US and China would deliberately fight a hot war over Taiwan. But the idea like in World War One, The Guns of August, now everybody miscalculated how everybody else was going to react then, and they just kind of tripped into a war sort of thing.

And so I was reading something recently about Ian Bremmer talking about how TSMC, the big chip manufacturer would be the equivalent to a Lockheed Martin, to the US in the beginning of the Cold War, and the fact that the US is currently partnering up with TSMC and having them build a huge factory in Arizona for I think $20 billion or something like that, and then telling the executives there that they can’t export the high technological chips to mainland China, and that that might be perceived by China as the US crossing a pretty relevant red line in the geopolitical sphere. I know I went there a little long there, but I just wanted to contextualize as to how some of our perceptions go in terms of the geopolitical clashes that might be on the horizon.

Potential Geopolitical Clashes

Demetri:01:06:39Yeah, so one of the things that came to mind is, two things, an image of us as like a fighter on his heels. We’re still backpedaling. We’re trying to figure it out. We’re trying to figure out where we are, whether we’re in the game or not in the game. The Chinese Communist Party has had a very clear vision, strategy, and its implementing, it’s going forward. So I think this is a concern. Something else I think which is important in terms of how to manage this, and you’ve brought up the civics trap, I’m not entirely convinced by this thesis. I just think there’s just not enough data to make the case that whenever you have a rising power and a declining power that you’re going to have outright war and conflict. I don’t buy it. It’s full of caveats. Obviously, the first being the most recent example, which is the US and the UK, for reasons that again, it’s like, reasons why, but I think right now I don’t think the US can win a war with China. When I say win, what I mean is if you consider war with China…there’s no way in which that ends well for anyone.

Richard:01:07:58Pyrrhic Victory, anybody who wins is got to win a Pyrrhic Victory.

Demetri:01:07:59Exactly. And I also feel, again, the caveat being I don’t speak Mandarin. I’m not a China expert, which is a big caveat. But I feel from everything I’ve studied of China, and I have studied quite a bit as someone who, again, doesn’t speak Mandarin, is not a professional student on the subject. I do get the sense that their commitment to this, to taking from Taiwan, and also their commitment to rising and challenging the United States, it’s not negotiable. And so I don’t see the US in terms of politically speaking, being able to muster the type of support to fight a war, let alone a prolonged war with China. So the way I see this, in a hot war of any sort, I believe that this war, it’s currently being fought, there is a war going on between the US and China. It’s being fought in the halls of parliaments in Western Europe, and in the boardrooms of corporations across the United States and the West. That’s where it’s been fought, that’s where it continues to be fought. And if the US wants to really be able to stop this and save much of the open western, liberal, democratic, international order that has developed over the last X number of years, I think it has to start there. And that means building a strong working coalition with western governments, and it’s not clear that’s going to happen, because we live in a time where national interests and nation state politics are actually rising in importance. And as international relations and international cooperation, international institutions are frayed. And you see this whether it’s with Germany or maybe…I’m forgetting what country also recently came out making, what western country made comments in favor of Beijing or at the very least in favor of cooperation of the sort that we would think is not strategically viable.

So I think that’s the game. The opportunity is really in mustering a coalition. And unfortunately, I don’t really see, because America doesn’t seem to have a coherent sort of whole of government approach to this problem, and one that they can articulate to the American public in order to create a broad base of support. I don’t see when and how we’re going to get there. I pray and hope we will. But we continue to be hobbled by our own internal divisions to get our act together on this issue. Does that answer your question? There’s still so much uncertainty in this relationship. We don’t actually know how it’s going to work out.

Adam:01:11:04Let’s assume though that we’re in a period of competition. I don’t know whether Trump explicitly set us on this path, or whether we were on this path and Trump just named it, but clearly we moved at some point from co-opetition to competition that profoundly shifted the equilibrium state and the game theoretic decision tree, moving forward. And so in a state of competition, how does the US navigate the situation where we’ve got potential hostility in the direction of China? We’ve got more potential hostility facing Russia. How do you perceive some of the more recent capitulations? Maybe I’m using that word a little bit too loosely, but certainly accommodations that we’ve seen from the Biden administration in the direction of Russia. How do we navigate this potential flanking hostility? And if we don’t navigate it effectively, what are the potential flashpoints that you see that people should be watching to hint at potential escalation?

Navigating Potential Hostility

Demetri:01:12:29Well, Josh Wolf has talked about something which I think is interesting if I don’t misinterpret what he means, which is that there’s a real opportunity for Hollywood and for filmmakers to spin a story that basically explains to the American people where they find themselves, so that in other words the political support for a reframing of the American relationship to China, and therefore the political wellness needed to reorient the US policy in order to bring on allies and form a coalition, could come from the private sector I suppose.

Adam:01:13:10What does that story look like? What is the most constructive narrative look like in your opinion? Do you have any intuition?

Demetri:01:13:19I had Josh Rogan on my show not long ago. Do you guys hear that episode?


Demetri:01:13:26Have you guys read his book?

Mike:01:13:29I have.

Demetri:01:13:30I’ve read a lot of books on China. And I’ve spoken with a lot of people on China and read a lot of articles and listened to a lot of podcasts. No one articulated the dynamic as it currently exists better than Josh. He basically depicted an environment in which we are currently at war with China and don’t know it. And you can really see it when you have the details laid out, all the different ways in which it feels like this organization, this insurgent organization which is the Chinese Communist Party, that was born out of a civil war, is wrapping itself around western international institutions, and squeezing increasingly, and cutting off the oxygen levels. And we are so busy fighting with ourselves that we don’t see that. Now, again, I don’t know how to tell that story in a film. I don’t even know how all of that comes together. I think we’re living in that. I mean, we’re seeing that whether it’s Joe Rogan, not Josh Rogan, Joe Rogan or even lots of commentators on the left, we increasingly talk about China in adversarial terms and in moral terms. That’s also very important.

Adam:01:14:51Do you think we have strong moral ground from which to…

Demetri:01:14:55No, that’s the problem. We don’t have strong moral ground. This goes back to nihilism. It goes back to it’s all bullshit.

Adam:01:15:05You’ve used this term in previous episodes. I really like it and I’ve stolen it. Just full disclaimer. You use the term financial nihilism. What is that? What is the ontology of that and what are some potential ways that could unfold both politically and economically in your opinion?

Financial Nihilism

Demetri:01:15:33Well, I think the first time I used it, I’ve used it before this, but I think the first time I used it in an episode was actually when I had Ben Hunt and Grant Williams on together. And I think the episode was called Financial Nihilism, and I think the subtitle was price discovery in a world where nothing matters. And that’s where I began to sort of come to this view particularly in markets, because I’d seen it in other areas of society. But I think we’ve all sort of struggled with this. We talked about it before when it came to this idea of this notion of value investing, this idea that you can identify empirically what is underlying value that exists independent of price. Then you can determine whether you want to purchase it or not based on the relationship between value and price. This was also inspired by the way from a documentary called The Price of Everything, which is about the art world. And now of course, in the art world price is value. You have some subjective value when you sit and look at your $100 million mural, but its value is entirely in its price and vice versa. That’s not a utility that you can derive from it. I’m certainly not getting 100 million dollar’s worth of value.

To go back to financial nihilism, I think the way that it’s manifesting is kind of the way that I’ve been talking about a number of these other phenomena in general. When it comes to markets, you see it when you look at these mean stocks. People piling in, creating, like the whole thing of narrative investing, what’s so incredibly nihilistic about it, is not that people are investing in something because they think it’s going to go up. But because they’re investing in something because they believe that the narrative about it is convincing enough, that other people will also feel that it’s convincing enough that the thing will go up.

Adam:01:17:40But there’s more to it too. It’s not even just that. In my estimation or observation it’s also, I’m not even really in this to make money, I’m in this to beat the man, or that’s a secondary or tertiary objective. I’m in it to stick it to the hedge funds.

Richard:01:18:01But it’s really being ready to lose money at it, because no one’s sticking it to the hedge funds. There’s a handful of retail investors that maybe made some money there, but it’s most likely, and people wear it as a badge of honor to show the Robinhood account losing money on these trades and this be the personification of flipping the bird to the man, whereas the man is actually making money off all this because it’s riding the hordes and the synchronization of the retail investors as a factor, as an investment factor, because the signaling mechanism of markets as we knew before is completely broken.

Demetri:01:18:38Yeah, it’s like if your arm gets blown off, and you just come and start showing your friends. Isn’t this gross, look at this. Let’s get serious, your arm just blew off, you know. And so, there is that of course. But there’s also this real investment strategy that’s being deployed by, I don’t even know how many people. It’s not like a niche thing. It’s how people invest in crypto incidentally, this is how people invest in crypto. They invest in crypto unless you’re…and even if you’re buying Bitcoin, it is a narrative thing. But it is like the god meme to quote Lily Francus, within the crypto space. But this is how you’re investing, you’re not investing, I did an episode on this, on Etherium. And while, we can explore the legitimate technical impediments to the thesis of moving to EIP 1559 are particular to moving to proof of stake. And some of the valid economic arguments. Ultimately, I want to do an episode purely from the perspective of what is this from a narrative perspective, and does it make sense speculating in it, because the narrative sounds good. And I was also aware of that sort of hypocrisy or whatever you want to call it. That’s why I did the episode. But this is how people invest. They are increasingly investing along these terms. So the question is, what kind of economy comes out of that? What sort of economy in the real world manifests from a capital markets allocation layer where you’re not investing based on any reference to underlying reality, where you’re going to get an increasingly noisy channel, that doesn’t work?

Adam:01:20:31But isn’t that the state of affairs for basically every public corporation with access to capital markets at the moment? Like where the discount rate is zero. The hurdle rate for any new marginal investment is effectively zero, high yields. Even BB- companies are able to issue five or 10 year paper at sub 3% rates. If there’s no consequences for malinvestment, then the only objective, like the rational investor seeks the best Ponzi.

Mike:01:21:13I think the hurdle rate I would take issue here with because hurdle rate has to incorporate the supply of money, so it’s not zero. … No, you can’t because if you just printed 40% of the world’s currency last year, that is a debasement of the currency. Your hurdle rate is not zero based on the interest rate. It’s your corporate treasury based on the dilution that just occurred and the future dilution that is going to occur. So you have to take that. I guess probably, I don’t know if it enhances your thought or not, but it’s actually not a zero hurdle rate, it’s higher. So you have to reach more and more speculative ventures in order to try and offset that as well.

Adam:01:21:54Well, yeah, you’ve extended the right tail so you’re incentivizing risk seeking and speculation because not participating in the right tail, then there’s this FOMO aspect or potential to get left behind whether it’s in the housing market or…

Mike:01:22:13Your treasury is left behind if you take the point of view, I’m going to stick it in treasuries and earn 0%. You have been debased to some degree. Anyway, that’s not the main point of this, but continue on. I don’t want to derail the main point.

Demetri:01:22:29I don’t know where we were exactly.

Adam:01:22:33It’s sort of the gamification of… go ahead.

Demetri:01:22:37I was going to say, you said something that made me think about what kind of…so in this type of a system, what type of economy do we get? And what we get is the continuation, but to extremists of a phenomenon we’ve been seeing for the last several decades, which is that we move from an economy that creates things to one that extracts value. Becomes from one that’s creating value to a zero sum economy where it’s just, money’s getting shifted around, and it’s accumulated. The claims on property, the claims on wealth are accumulating to a smaller and smaller part of the network. And the network is no longer functioning as an integral part of the growth of the economy, but rather as a way of shifting claims around.

Richard:01:23:27Yeah, the principle economic activity is rent seeking.

Demetri:01:23:30Right. Rent seeking and people know that intrinsically, they may not understand it, like millions of voters may not understand it. They know they’re getting fucked.

Adam:01:23:39Exactly, yes.

Demetri:01:23:41So that feeds into and this is something that I had said, this is a phrase that I talked back in the day with my radio show, maybe or even, maybe a little later with Capital Account, probably maybe 2012 or so. But the idea was that by suppressing interest rate volatility, that was analogous to suppressing electoral volatility at the ballot box, so to speak. The idea that North Korea is electorally non volatile, but it’s politically unstable. Just like Saudi Arabia. Italy is incredibly volatile but it’s politically stable. It’s way more stable than North Korea. So the suppression of interest rates causes stability begets instability.

Adam:01:24:29Yeah. It’s like the political Minskyism, right?

Demetri:01:24:31Right. So it leads to instability which we recognized in 2008. But it also leads to political instability. Because if you increasingly make it impossible to compete in the marketplace and fulfill that power process, because this, an episode I did very early on in the show, really the first 30 episodes or so were dedicated to me exploring things that had been on my mind for a long time, and I did an episode was just a monologue, where I read from Ted Kaczynski’s Industrial Society and its Future, the Unabomber Manifesto. And one of the things that he talks about in this largely insane, momentarily brilliant thing was about the power process. Actually spent most of his time talking about the power process, it wasn’t the stuff that I find most interesting, with the power process being the process by which human beings exert their will upon the world. And there is a correlation between the ability to project power, and happiness and fulfillment and contentment.

When your life is determined entirely by other people. When you need to, if you want to buy a home, if you have to go to a bank and ask for the money and they can tell you no, your credit is shit, we’re not going to give you a loan, versus someone else who can go pay cash for that. That’s a completely different type of experience to have in the world. And when more and more people are increasingly unable to experience that power process in the economy, there is one place where they can still exert power that’s at the ballot box. So you end up having people that elect destructive agents of chaos to come into the office of the presidency or into the halls of Congress, because they don’t give a shit. They’re no longer invested, they’ve got nothing to lose and on top of that, for a little behavioral psychology, people get to a point where even if they have something to lose, they’re so indignified, that they’re willing to let it burn.

And to that point, to bring it back to politics, I and I know lots of people who felt this way, even though it may not have been in our interest, macro picture, to have an agent of chaos in the White House, there was a part of me that enjoyed watching him skewer all those other politicians, call out all the hypocrisy, call out all the bullshit. And I got a lot of satisfaction from that. And there was this tension, I could feel it when the results were coming in and everything else. I was like, do I want him to be president or don’t I want to be president? If he is president, at least there’s the upside, that I can watch this theater continue, because there is some satisfaction I get out of it.

Adam:01:27:17That’s a really interesting point. I know that I have on many occasions articulated a similar view. But this is the nihilistic state which is, I have children, I have young children at the time and I was at this point where I would rather that we achieve this critical state and move through it before my children come of age and need to be adults in what I know will emerge from the cataclysm. So can the cataclysm just come sooner rather than later. I saw some of Trump being like, while he’s clearly a deplorable human being. And I mean, it’s funny because we’re all Canadians and we don’t really subscribe to the same sort of party.

Mike:01:28:09Two of us are Canadians.

Adam: 01:28:12Yeah. I don’t know how you identify. But there wasn’t the same, but certainly there was like, if we could just get past this fourth turning, I’m going to use that very loosely, sooner than later, that would be preferable. And maybe Trump is a catalyst for us to move through that more quickly rather than continuing to kick the can down the road. It’s the anticipation of crisis that is the causes anxiety, even maybe more than crisis itself.

Demetri:01:28:47Yeah, I think we’re also fat and happy, is the unfortunate truth. And this goes back to the point about how many of us who have the means, the know-how, the connections to facilitate the type of change that’s required? How many of us are willing to do what it takes to get us there because of how much we have to lose? And I think about that quite a bit. I don’t know. Because, absent that, you can’t solve the problem democratically. You need a strong man. And sometimes I kind of feel like I’m willing to close my eyes, ok doctor given the shot, and I just want to find somebody who I can trust to administer me…

Adam:01:29:40Demetri, walk me through that because I’m not sure I follow the logic. It seems like as we move from a society that has a relatively even income or wealth distribution, let’s call it a prosperity distribution so we don’t need to get into the semantic details of whatever that means, but a relatively even handed prosperity distribution to one that is extremely concentrated like the one that we have today, we haven’t really seen since the late 1920s. Why is it politically intractable or why do you perceive it as intractable politically to have a situation where there’s a sufficient, like a critical mass of people who feel like they have nothing to lose, they’re willing to take that medicine or take that shot, and the narrow sleeve of wealthy elites just don’t have the political capital or political votes to see that through or to prevent it rather.

Money and Power

Demetri:01:30:51What I’m suggesting is that when you have money you have power. Again, that’s not perfect, because connections are very important. But what I’m suggesting is that as arrow of time moves forward, the wealth and power accumulates in a smaller number of hands, and people who might be doing well now will not be doing so well. But while people are doing well, it’s hard to get them to give up those comforts, or to take the risks or to bear the costs necessary to reform the system. Because there are no guarantees that it will reform.

Adam:01:31:31We’re not quite at the point where wealth is concentrated sufficiently narrowly to…

Demetri:01:31:40What I’m suggesting is that we might have passed a certain point where the wealth is concentrated so much that there’s no sort of organically democratic solution, but rather this is going to happen at the elite levels of society, and that there’s going to be…and I think we’re seeing this in a way.

Adam:01:32:07So it’s 100% regulatory capture now.

Demetri:01:32:10I think it’s effectively total regulatory capture. We’re seeing now something along the lines of a sort of battle of elites. I think what we’re seeing is the old and the new guard. And that’s where a lot of the conflict is occurring. It’s people that made their wealth. Now, I’ve talked about this as well, we’ve gone through cycles like this in American history. The Civil War was one of those examples. The Civil War happened because the North industrialized. The reason was slavery, but the ability to fight a war against the South and win was because the Union had become powerful and had accumulated so much power. Incidentally, the accumulation of power by the Union, and its ability to influence tariffs in the United States was one of the primary reasons why the South was so enraged against the North. So this was a transferring of power to a changing of the guard. Similarly, in the early 1920s, the industrialists had amassed a massive amount of wealth and power, and that accrued to their children. So you were seeing a transformation of the culture in the elite layer of society from a nationalist industrialist society to one of international elites who identified as such.

And I think today, we’re seeing something similar with respect to Silicon Valley money. People that made their wealth in this sort of startup world and in technology companies like Google, Amazon, these are the new elites. And so all of that is sort of changing. And I think we’re living through that at present.

Adam:01:33:53So I feel like I’m sort of dominating the conversation, but I’m really having a lot of fun and enjoying this conversation. So, I’d love to keep it going. Both you and Richard touched on something a little bit earlier in the discussion that I think is a really interesting thing to explore, which is this idea of how do we see truth and how do we seek a shared narrative? Or let’s use a shared story in the modern age. In a situation where you can Google anything, and Google knows your biases and proclivities because of your previous search history and its AI. And the way you frame the question is going to drive the search to go in a certain direction. What that means is you can quite literally find substantive evidence for almost any view that you want to take, backed by credible experts, maybe not with Cochrane Reviews, but seriously backed by credible experts with strong intuitive narratives, decent research published in reputable publications. How do we seek truth in this type of environment and does it even matter? But let’s start with how do you seek truth?

Seeking Truth

Demetri:01:35:36Yeah, I don’t know. That’s the honest answer. Because the process by which I come to know what is true or to at least operate with that basic presumption that this is somehow true, is itself a mystery to me. I can deconstruct it philosophically, but ultimately the way in which I navigate through the world and the way in which I interact with things as being fixed or real, is not entirely subconscious. And because the nature of our lived experience is changing so much, one way to think about it is that we’re spending, the world that we live in today’s increasingly one that gets filtered. Now, we’re going to run into some issues of language here, but it’s increasingly a world made for our minds, as opposed to a one made for our integrated mind, body, soul.

And in that world, it becomes much more difficult to talk about what is or what is not true, and to solve for truth, because then truth becomes… solving for truth becomes a problem of logic, a problem of epistemology, a problem of creating protocols and grappling with the uncomfortable truth about axiomatic, about non axiomatic foundations to our conception of what is real.

Adam:01:37:16Yeah, which among all of the potential truths, at the limit basically, all of it is not axiomatic, is subjective.

Demetri:01:37:26Exactly. We’re grappling with that today and I think the vast majority of us don’t know it and those of us who do know it are mostly unaware of it. And I don’t know what the answer to that is. The blockchain space has an interesting contribution to make here, and they’ve made it and have been making it and trying to work through this problem when it comes to the problem of money, whether it comes to actual processes by which it’s decentralized at a station. But I don’t know, man. I think it’s a weird time because I’ve talked about this, and I talked about it on this podcast as well, or this live stream. I’ve talked about it on the Grant Williams podcast. I’d be curious to know what you guys think about this.

Mike:01:38:20Well, I think in order to get the shared narrative, the emotional saliency of whatever the event is that causes that lightning strike of commonality, is probably things that have been things like revolutions, like they’re significant events that catalyze the population in that one direction, you have all this noise we’ve talked about, which really kind of pollutes the opportunity to have a shared narrative. So the level to actually have a shared narrative, the catalytic nature of that event, grows as the noise grows, is that … to me…

Demetri:01:39:06The catalytic nature of that event grows as the noise…sure. Because the noise is like the tinder, and after the event is the spark.

Mike:01:39:15And so the event has to be that crisis/necessity/change type of event which makes it larger and larger and maybe more and more of an outlier, if it has to occur amongst that noise in order to get that shared narrative is what I’m coming to. How do we create that as a society?

Adam:01:39:31 I love this, but I think for me, this is sort of the second part, which is, does the truth even matter? Because what you’re talking about is how do we crystallize a narrative or how do we galvanize a critical mass of belief in a narrative in order to take some sort of necessary action, and I want to go there, but I want to also talk about the fundamental nature of reality. Is truth something that’s worth pursuing? Is it possible to pursue in most domains in the modern era?

Demetri:01:40:10What are we talking about truth? I mean, do we talk about epistemic truth? Are we talking about revelatory truth? Because those two things are not necessarily one and the same.

Adam:01:40:22So I don’t mean like what is the mass of the Higgs Boson? Things that are measurable or…but epistemic truth.

Demetri:01:40:30You don’t mean like the mass of the Higgs Boson. You don’t mean?

Adam:01:40:36I don’t mean that. I mean like, things that we need to…basically what I mean is inductive truth. Things that you can’t measure and mathematically quantify, but rather things that, a variety of things might be true, we need to perform experiments in order to determine what is most true.

Mike:01:41:00The challenging thing there’s truth is probably transient in this, there’s a truth for the time.

Adam:01:41:06If it’s transient there’s another layer below it that is, what are the dynamics that change the state of truth?

Demetri:01:41:15I don’t fully follow. When you say the dynamics that change the state of truth.

Adam:01:41:22I’m reacting to Mike’s statement that inductive truth or the truth of a situation that you need in order to be able to make some sort of fundamental decision, might change through time because the facts, the information that you use to make that decision changes through time. But there’s always a sample at which the information is true and then there’s a model you use to make a decision. But it’s never that the facts are not facts.

Demetri:01:42:02Wait, are you drawing a distinction between the facts and the model that you run them through, in order to determine what you should do? I guess I’m not fully following although this probably was inevitable because I’m a lightweight. I guess I don’t fully follow. I mean, for me when I think about truth, and I don’t know if this is where you were going? It sounds like it’s probably not. But I do think that one of the problems that we’ve run into is that we don’t know what’s true, other than what we believe to be true. And it’s really because that’s what’s conviction. It’s actually interesting because I think one way to think about truth is, how sure are you of it under a wide variety of circumstances? I think that, again, something I’ve talked about, the way I view the world is that, the tools of reason and science can give us a really great and theoretically perfect understanding of the simulation that is running in our minds and in the world. But it can not tell us anything conclusively about ontological truth or base reality. The only thing that could possibly give us that is our own conviction in some revelatory message that we receive about the nature of things. And so that’s where I draw a distinction between revelation and epistemic truth. And I don’t ridicule revelation because I’ve had revelatory moments that weren’t couched in any type of religious ideology. But we’re very much the way that I’ve seen, I’ve read in the Bible or other places about something being revealed to someone, felt very much like that, absent all the Christian, Jewish, Muslim, whatever connotations. And so, I don’t know if that makes any sense.

Adam:01:44:23No, that’s sort of truth as illumination.

Demetri:01:44:26Yeah. Illumination truth is for me, like I had that in the in the process of my grappling with brain surgery and radiation and dementia, everything. There were things that I ultimately deep down felt that I knew to be true, that I felt no need to convince anyone else of, that I had no need to articulate anyone else that fundamentally changed me, in a way that felt like they had been literally inserted in my head. And I didn’t try to draw any larger conclusions from those things, but I found those things to be more deeply true and resonant as someone who had spent my life deconstructing the world philosophically.

Adam: 01:45:05 So let me give you an example.

Mike:01:45:07I’m curious, what were they?

Adam:01:45:08Actually, that’s a good.

Demetri:01:45:10Well, one of them was about love and gratitude. That was very much like a tape cassette that was inserted in my head after my brain surgery that felt, now someone could come and tell you that that was sung by camera and schism. It sure didn’t feel that way, felt like I had a tape inserted in my head and it was repeating a message that had something to do with nothing, that I thought about love, I heard the word. I knew what love was, I had no concept of gratitude. And so that was an example of that. Then there were less articulatable examples of just feeling like my life was not some haphazard consequence of colliding atoms. There felt to be some hidden order. And that again was part of that process, that long year of cure and recovery and everything that I went through. And again, someone looking at the outside of all of this and could say, well, that was because you just went through brain surgery, you had this, but I’m just not convinced of that. And that doesn’t mean that I felt the hand of God. What I felt was that the world truly was, I became aware of a truth, which is that the world, in a way that I understood intellectually prior to that point, but which I hadn’t felt in my body, which is that the world really is so fundamentally different than I thought it was, that we perceive it to be and that the nature of my own existence is something that is so awesome that I can’t possibly understand it, in the minutiae of day to day. And this is what people experience when they get in a deeply meditative states, or when they take psychedelics.

And so, there’s truth that’s revealed to us, and then there’s truth that we can discover for ourselves. And I don’t think those two things are necessarily true, but I think the one that we discover for ourselves is part of a mental technology and we can harness, to project power and navigate the world or rather this simulation of what it is that is the world. It doesn’t give us meaning and there’s an absence of meaning, a deep, profound lack of meaning in society today which speaks to nihilism, which again, science and epistemology and all that shit, which is great, and I love it, is not going to solve. And so if you don’t acknowledge that, you end up having a vacuum of faith, and that they’re in enter the destructive elements of…

Adam:01:48:03Nature abhors a vacuum.

Mike:01:48:07Yeah, the epistemological paradox.

Richard:01:48:11Yeah, I was going to say there’s the stuff that you can derive from first principles like the mass of the Higgs Boson, or anything that can be calculated with the set of shared axioms that we have, through science and all that. And then there’s the subjective truths that are oftentimes shared through narrative and through storytelling and through…

Adam:01:48:36But this is what I want I really want to zero in on that very specific thing, because there’s a whole class of truths that is not shared story, but is rather a set of experiments that converges on some probabilistic reality, right? It’s a Cochrane Review in the medical profession. It is any properly or well formed experiment in the social sciences. It is an attempt to emerge a phenomenon, an unobservable phenomenon in some probabilistic way and say, most likely things are this way or things are this way this percentage of the time.

Demetri:01:49:34 Yeah. Logic or mathematics is what provides that, it’s not obviously science because in science we have to have observations. But again, that’s a technology of the mind.

Adam:01:49:40No, but I don’t I think I’m talking about the type of truth where you gather observations but where the observations are not measuring something fundamental to the universe. They’re sort of measuring something subjective. And that subjective thing may be contextual. There may be confounding variables.

Demetri:01:50:11What do you mean measuring something subjective, I’m not following. What do you mean you’re measuring something subjective?

Adam:01:50:18The effectiveness of Cloroquin in the treatment of COVID, or the effectiveness of certain types of cataract treatment.

Demetri:01:50:32That’s fine. Yeah, you’re conducting a scientific study.

Adam:01:50:34Yeah, inductive reasoning. But you can imagine like you move out from the physical world into more subjective spaces, political or sociological or whatever. And it becomes more subjective because it’s by survey or it’s by observation and the observation contaminates the conclusions. Like most of the world is like that.

Demetri:01:51:01All the world I would contend is like that. But I think what you’re talking about is the trouble of moving from, let’s say, studying bacteria in a petri dish, and running scientific experiments at a university with 60 college students answering a 60 question survey.

Adam:01:51:23Or does NYMBYism, Mike and I were arguing about this yesterday. Does NIMBYism, what is the magnitude of the effect of NIMBYism in the extent to which municipalities are able to build new residences? New household formation. What is the impact of that? I can Google with my question, Mike can Google with his question. Mike can find 50 articles that support his view on that. I can find 50 articles that support my view on that. How do we converge on a truth? And this is unbelievably important because we need some sort of convergent truth in order to create policy to effect a certain objective.

Demetri:01:52:12So it sounds like what you’re talking…what is NIMBYism?

Adam:01:52:15Not in my backyard.

Demetri:01:52:19Alright. So what you’re talking about is, we’re not talking about isn’t even something that people would talk about as truth. What you’re talking about is really different opinions and beliefs.

Adam:01:52:32No, there’s got to be some fundamental relationship between certain policies and certain outcomes, or maybe there isn’t.

Demetri:01:52:41Policy is almost entirely political. I mean, there is policy that we make based on science, but the vast majority of politics is based on inner, interagency power dynamics.

Adam:01:52:57No. I agree with all of that. But my point is, once you set the objective which is set by special interest groups, you need a model to understand how a certain policy response is likely to lead to the objective that you are targeting?

Demetri:01:53:15Yeah, but I think we can all agree that that’s all bullshit. Like, I will draw a distinction between what we have traditionally thought of as being observable, and fact versus fiction, and the idea that like if the Obama administration passes health care, we’re going to save 50 million lives by the year 2030. Everyone knows that’s bullshit. No one has any clue what those numbers are going to be.

Adam:01:53:45No, but can we the direction right? Do we know what the sign is?

Demetri:01:53:48Maybe but we’re horrible at that. And you guys work in literally the most difficult business in order to make projections, is because you know that when human beings are in the picture it becomes impossible to forecast.

Adam:01:54:03We agree by the way. I think we all agree with this point. But it does prompt the question, how does one make decisions or set policies? Is it exclusively arbitrary?

Demetri:01:54:16No, first of all, I think again I want to distinguish between…Again, I’ll bring up my dear past Wilt, who had hired me, Wilt Hildenbrand who I said he used to say, we used to do these meetings with the executives of the company, and I would get to be part of those meetings. And I remember, he would say we had some really big, spent a lot of money on something. And so we had to spend all this money, millions of dollars on focus groups. Is that we’re got to spend all this money on focus groups, or do whatever the fuck we want to do anyway. You know what I mean?


Demetri:01:55:02Like Steve Jobs built the iPhone and decided what went in that based on what? On focus groups, no. Based on feeling, based on what Bill Gates said, subjects was based but I don’t agree with that. I think the type of stuff you’re talking about is something that no one seriously takes credence in. They use it as a tool of propaganda and of persuasion. We use those types of statistics to raise money and to convince people to…

Richard:01:55:36It’s narrative. It’s a narrative story.

Demetri:01:55:38It’s a story.

Richard:01:55:41It’s eminently unknowable.

Demetri:01:55:44Yeah, it’s just…

Adam:01:55:46Ifeel like this is epistemic nihilism.

Demetri:01:55:50A great Example in Bitcoin. The stock to flow model in Bitcoin, it’s a perfect example. It’s a Schelling Point. That’s the other thing, nihilism, the crypto community uses that term, Schelling Point. They’re like, let’s construct the Schelling Point and let’s aim at it. They’re not naturally converging on a Schelling Point. They’re saying, let’s concoct a compelling Schelling Point and then let’s all fucking fire at it. Okay, that is nihilism.

Adam:01:56:21It’s the same with the meme stocks. Exactly.

Demetri:01:56:24Yeah, exactly. And so like, I’m being nihilistic I suppose or cynical in how I’m describing this, but the corner the questions perhaps to ask is what happens when the entire society is woke to that reality, what happens? How do you effect policy? We’re living in it.

Mike:01:56:49No, we haven’t seen the end of the movie.

Demetri:01:56:51We’re living in that reality. GameStop, we’re living in this reality. Doge Coins, the classic perfect example of nihilism. It’s a pure worthless bullshit thing, anyway…and by the way, when the Bitcoin community says fiat money is a shit coin, but hey, you know what? Your Ponzi is no different than my Ponzi so invest in my Ponzi. US dollar’s a Ponzi, Bitcoin is a Ponzi, but what makes your Ponzi better than my Ponzi? It’s all about how many people we can corral into the Ponzi. So there’s kind of like this naked awareness of how we come to consensus reality.

Mike:01:57:35So we’re in a massive narrative war.

Demetri:01:57:38Yeah, it’s a narrative war. Exactly.

Adam:01:57:41I want to make sure we give, Richard’s like got 15 other themes he wants to explore. Richard, come on man, take this in…

Richard:01:57:51We’re at the two hour mark. So I want to be cognizant of Demetri’s time. I don’t know how much longer he can go especially after the…

Demetri:01:57:59When you see my wife coming through the driveway. Probably 20 minutes, she texted me and she’ll probably….When you see a Jeep Wrangler coming through then you know.

Adam:01:58:12 Okay, perfect. Go for it. Richard. Come on man.

Richard:01:58:16After this epistemological rabbit hole…

Demetri:01:58:21This epistemological gap between us…

3D Chess

Richard:01:58:24Yeah, we took a little detour, I was just going to tie it back to geopolitics, if we can maybe to wrap it up. We were discussing this the other day Adam, the 3D chess and the idea of how Russia plays into the bipolar US/China world and how China is doing to the US what the US did to Russia in the 1970s. And what I mean by that is the Kissinger and Nixon’s rapprochement to China to isolate it, to drive a wedge between China and Russia, and visiting China for the first time and sort of how that kind of made the USSR even more isolated a decade before its crumbling. And how Russia right now as the junior partner in the in relationship, is flipping the positions with China and now the two of them finding this antagonistic role to the US’s interest and finding alternatives to the SWIFT system and all these other geopolitical interests that make it even harder for the US to rally the rest of the Western world towards finding some form of cohesion. I wonder if you might comment on how you see this three part game, these three moving players in what we might consider to be an equilibrium that we might find if at all.

Richard:01:58:24Yeah, we took a little detour, I was just going to tie it back to geopolitics, if we can maybe to wrap it up. We were discussing this the other day Adam, the 3d chess and the idea of how Russia plays into the bipolar US China world and how China is doing to the US what the US did to Russia in the 1970s. And what I mean by that is the Kissinger and Nixon’s rapprochement to the China to isolate it, to drive a wedge between China and Russia and visiting China for the first time and sort of how that kind of made the USSR even more isolated a decade before it’s crumbling. And how Russia right now as the junior partner in the in the relationship is flipping the positions with China and now the two of them finding this antagonistic role to the US interest and finding alternatives to the swift system and all these other geopolitical interests that make it even harder for the US to rally the rest of the Western world towards finding some form of cohesion. I wonder if you might comment on how you see this three part game, these three moving players in what we might consider to be an equilibrium that we might find if at all.

Demetri:02:00:17I think we have talked about this, but we didn’t really talk about Russia. I do think that this has been, and it continues to be America’s game to lose. And unfortunately, the way in which we seem to be losing it at the moment is in failing to lead. And why are we failing to lead? Because we’ve significantly damaged our moral credibility. And so it becomes very difficult to finger wag at the Russians when the stuff that we accuse them of doing, we’ve been doing forever. And in our moment of, again, to bring it back to the point about consensus reality and the Schelling Points, and how people now in markets have an awareness around how price is created, and about the role of narrative and actively engage in it. Similarly, 2001, the war in Iraq significantly damaged US international credibility, moral standing and also domestic moral standing. So you have a big chunk of the population that just isn’t willing to go along with the bad China, bad Russia narrative. And it has to be increasingly nuanced in order to work.

So I think the problem for the US is less that China and Russia are collaborating, or that China and Russia spread disinformation in the United States. But it’s more that the US has lost the ability to (1) corral local domestic political support for international policies, and (2), to corral international support for policies, to create a coalition. And we saw, the first time we saw that was in Gulf War Two, in the war in Iraq. The US had a really hard time and pushed through a policy internationally, didn’t have the full support of the United Nations. And I think that’s the problem that we face, that we can’t go it alone. We tried to go it alone in the early 2000s, it didn’t work. We’re actually weaker relatively now than we were then, and core coalitions are weaker. We couldn’t fight a war against Iraq, and win that war. Yeah, we won the war but what does that mean when you lose the peace? So why would we be able to do that against the Chinese? The Chinese see that, they saw that. They took lessons from that, just like they’ve taken lessons from everything else.

So that’s the problem where we’re at, and it brings us back to the problem of credibility, moral standing, and getting our house in order. We can’t look, maybe perhaps to Josh’s point. And to the point of historians who have contemplated this out in the open. Erecting a black and white image of a foreign foe can be very powerful in corralling domestic support. But ultimately you need to corral domestic support and you need to get your house in order. Whether you use an outside force to do that or not, it’s a different story. But you need to be able to build internal coalitions in order to build external coalitions, and those are the two things that you need in order to fight a war. And I do feel like the US is at war with China and Russia. We’re at war with these countries, we’re in a cold war with them but what defines a cold war is increasingly what it used to be, because this now involves actually kinetic type events like cyber-attacks. I don’t know if cyber-attacks fall into the exact definition of what constitutes a kinetic action in the military jargon?

Richard:02:04:41There are  implications when the Colonial Pipeline is held hostage, or the largest meat producer in the US also can’t unlock their systems to distribute protein. Absolutely. I do see your point there very clearly. It is a borderline hot war with Russia.

Demetri:02:05:08And because we don’t have rules of the road when it comes to conflict on the international stage in cyber, we’re in one of those places where if someone dropped an atom bomb that would have clearly been an act of war. Whether we had established rules around the use of nuclear weapons or not, it would have been a war. But you know, the world we live in today, we are constantly intruding on other countries networks, other countries corporations, their databases. The US is doing it, the Chinese are doing it, the Russians are doing it. On the one hand, the US doesn’t want to set up rules, because they benefit from the anarchic nature of the system and their ability to operate in it, as the most effective powerful agent. But anyway, and this brings up another problem, I’m sort of meandering everywhere now. We talk about the US in your three body system of China, Russia, and the US. What we haven’t really touched on is the fact that as these three institutional actors duke it out in cyberspace and anywhere else, but let’s focus on cyberspace. They’re not atomic entities, there are molecules or compounds. We are smaller units within that system. So we are the collateral damage of the fraying institutional order.

And so, again, I don’t know how any of that plays out or what the right policy is, but part of the reason why that’s also not getting addressed is because, again, you have to look at some of this as interest group politics. And in the US, there are people who are aligned with seeing the world increasingly in the form of nation states or nation state power projection, and other people who don’t get a piece of that action and want to be able to live in a world where they have data sovereignty, privacy, etc. And those are just one just one of an innumerable… struggling to put out words, an innumerable number of examples where, of politics at work and the need to be able to come to political consensus, there’s no easy answer. I think part of the reason I’m struggling is because there’s no easy answer, I want to give you one, but it really isn’t.

Adam:02:08:07But I mean, we’re used to, we grew up in a world where the nation state was a reflection of a shared story. And the shared story was an expression of at least a critical mass of overlapping Venn diagrams on the expression of underlying values. And in a world that’s dominated by enterprises, where the political system is hijacked by a small number of very wealthy actors through regulatory capture, the nation state has fallen to the back row and instead what matters is global supply chains. It’s the flow of goods and it’s the flow of capital. And so there’s this tension don’t you think, between those who want to preserve a world order that is predicated on values and some form of nationalism, and I mean nationalism in the most positive constructive way that you can mean it, versus based on commercialism, where really, the only objective that matters is maximizing global aggregate GDP growth instead of maximizing global median prosperity or a large number of other potential objective functions that we might choose to focus on as societies.

Richard:02:09:55I think the economic incentive question is definitely part of it. But the fact that the US only manages to really look two years ahead on every new electoral cycle, whereas the Chinese are always thinking in multi decades. And the fact that the Chinese have felt they’ve been slighted by the West since the Opium Wars, since the mid 19th century, and they feel that they have a bone to pick with the West and they feel like they want to reassert their prominence in the world, and they won’t allow the pettiness that we see in our society today to take their focus away from their ultimate objective. And so the fact that they can have something akin to an emperor today, whereas the US and a lot of the Western societies are always in this political tussle that seems to be increasingly polarized doesn’t really help us rally against the set of common objectives that we might have in trying to establish at least common ground to then make a front against what we might perceive as a looming shadow if not attack, but then sort of find this perhaps equilibrium, which may never be something that we could arrive at, but is an objective unto itself because it then helps us to reduce the volatility around the outcomes that we might have globally, if that makes some sense.

Adam:02:11:42Maybe, but ask a question too.

Mike:02:11:46You’re got to make your statement Richard. We rehearsed it…

Demetri:02:11:53I think we’re at that point in the happy hour drinking after work experience where the brain starts to get foggy for all of us.

Richard:02:12:05It’s quite possible. Yeah.

Adam:02:12:07That could be very perceptive.

Richard:02:12:12Yeah, I think this is Dimitri’s way of helping us wrap.

Adam:02:12:17That’s the voice of experience right there.

Demetri:02:12:23I listened to my last two answers to you, and that’s what was the separate monologue in my brain was like the noise and this channel is increasingly growing.

Mike:02:12:34 All right, perfect. Now we can let it fly boys. Now the Magic two hours is right here.

Adam:02:12:40That’s right. Exactly. All the magic happens after two hours 15 minutes.

Demetri:02:12:47Maybe I should ask you guys something now. How about that? You want to wrap it up with me asking?


Demetri:02:12:55It doesn’t necessarily have to be financial or political or anything?

Mike:02:13:00Not at all. Anything…

Demetri:02:13:05Well, actually, you guys, we were talking before we got on the air about the Cayman Islands, because both of you guys are in the Caymans.

Adam:02:13:14Mike and I, yes.

Demetri:02:13:16How long have you been?

Adam:02:13:19A year or two.

U.S. Politics, From the Caymans

Demetri:02:13:25So how do you guys view all of this political stuff from living in the Cayman Islands? How do you view your political investment in this situation? Do you feel like you’re basically, even if you want the US to thrive, etc, but do you feel less physically invested? I don’t mean financially. I mean, because you’re so detached, you’re not like in the US. Do you feel like you’re able to ride this situation out with less anxiety and concern than let’s say, people living in the US.

Mike:02:14:11 I’ll start, I would say that from a personal day to day life, from a physical perspective, it’s much easier to observe it, but from an overarching where are our families, what is the future of our children, even where we are in the travel and the business connections we have, obviously we’re keenly interested in both the global stage and ergo, the US as the main actor in the global stage representing sort of Western values. So there’s a lot at stake I think globally for you know, I’ll call it Western civilization, and the life is we would know it growing up in Canada and having a lot of US influence. So whilst the day to day isn’t quite there, there’s certainly, crime level is much lower here and I’m sure there’s certain areas of the US that would emulate a Cayman experience. But the global stage, the global actors, the implications to other countries, the interrelationships all make the US stage…

Demetri:02:15:19Are you trying to diversify financially, and otherwise to try and have a safe haven, in the event that shit gets out of control?

Mike:02:15:30We’re here, we have that. If it gets out of control, it would be naive to think that some little island in the middle of the Caribbean Sea or the Canadian context would be that much better or that much safer.

Adam:02:15:46Well, no I mean. We’re protected by the fact that the people that hold the power in the US that are able to effect the degree of regulatory capture that we observe, derive a massive amount of their wealth from the ability to hold their wealth in offshore jurisdictions. Actually, I say that. In reality, Cayman Islands is not really where that wealth ends up being held, this ends up being a neutral jurisdiction where mostly financial funds end up holding and trading and then it gets disseminated and taxes paid in the relevant jurisdictions and that’s a role that Cayman has played, but certainly tax neutral jurisdictions, more like Ireland for example, would be a place where a massive amount of offshore corporate wealth and quality power is derived and wielded from, and so to the extent that we’re sort of in that umbrella, then we’re in a way protected because we’re sheltered by the fact that the wealth and power relies on the rules around this in this way.

I would also say that, for me, if you ask Mike and I this question you’ll get completely different answers. Mike will take a libertarian stance and I will take a financial nihilist stance, which is I don’t like this game. I prefer a world in which everybody pays a very substantial amount of tax, where the tax system is highly progressive, where we do our best to mitigate the wealth accretion from luck, and reward the wealth accretion from productive capacity but that productive capacity or the wealth that accrues in that productive capacity is recycled back into the economy of debt. Because you pass that on to your heirs, why? They haven’t earned it. I prefer something where wealth is recycled to debt, where luck is…

Demetri:02:18:08But the why would you move to the Cayman Islands?

Mike:02:18:12Good question.

Adam:02:18:14Because it’s the hate the game, don’t hate the player. So if this is the game we’ve got to play and the middle class is going to pay all the taxes…

Demetri:02:18:23It brings me back to the point I made earlier which is that the game theory gets in the way of solutions, which is that the people who are in a position to provide solutions, or who are educated enough to see the problem, are also not motivated enough to do anything about it. Because they’re better off from a personal standpoint of simply taking care of themselves and their family, and from the periphery writing about it, commenting about it, but really they have no skin in the game.

Adam:02:18:51Well, yes with the caveat that…

Demetri:02:18:56Look, I’m making that point for myself as well.

Adam:02:18:59It’s all good and you made it earlier and it was a valid point. I guess what I would say is that in a situation where everybody suffered equally, I would be very content with that. What I’m not willing to do is suffer alone.

Demetri:02:19:10I agree. And that’s what I’m saying.

Adam:02:19:14I guess my point is what I want, is a situation where everybody does suffer.

Richard:02:19:21You just gone Soviet on us. I just want to make sure that everybody heard…. Logically, I just want to make sure that … we’re finding common ground and that…

Demetri:02:19:35I want to point out though that I agree. So there are two things here. I feel the same way. I do think also if I were being honest, and this is my point about like some authoritarian coming in and just giving it a shot, because my instinct is to constantly resist if you’re going to try and take what I’ve built, or what I’ve earned for myself. So that is one thing, separate from what you said, but just taking what you said, I agree and I feel the same way. The problem is that there are no guarantees in life. So that is impractical in its practical application. It is your resistance or my resistance to a solution, when in fact we understand that a break from this is necessary, because no one can give us a guarantee that the money will be redistributed fairly, or that we won’t be screwed in the process of handing our power over. Or basically being asked to do, or what is being asked of us is to hand over our weapons, hand over our shields, hand over the tools that we’ve accumulated and created in our lives in order to give us some amount of power to operate the system. To hand this over to a central party who will then redistribute it all out fairly, in order to keep the whole system from breaking.

And unfortunately, the game theory breaks down there, because you don’t trust the central counterparty here. Because the central counterparty has been proven to be untrustworthy. Like this is the central problem we deal with.

Mike:02:21:10And this is what I come back to, what I was trying to get to earlier, with the lightning bolt in order to motivate everyone to actually take the shot, grows larger and larger to some extent against some common evil or some common event, in order that we all finally catalyze in the same direction.

Demetri:02:21:30Well, so this guy that I’m having on the show on Monday, this is something that he talks about. He talks about it in terms that made me uncomfortable, and not just uncomfortable, I think it’s one thing to feel uncomfortable because I can feel uncomfortable if it’s something that I think is the right direction. I feel a little bit more than just uncomfortable, I don’t fully agree with his solution or with his diagnosis, all aspects of it, but I do agree with parts of it, or with the general observation that individuation in society has become a malignancy, the individual has gone from being sort of a source of positive combinatorial ideation and growth to being a source of destruction decay. And we see it in, to Adam’s point, this is not empirically demonstrable. But I think there are rising levels of narcissism in our society.

Adam:02:22:45Yes we are. By virtue of the fact that you asked that question…

Demetri:02:22:52Now I have to ask thequestion of like, can we continue to scale a developed, technologically advancing society with this level of personal freedom, and wealth? I don’t know. And I don’t know what that means for what are the compromises that we have to make between personal freedom and the collective good?

Mike:02:23:25And why would we make them? And why would we make them? What would be the motivating factor to make them?

Demetri:02:23:30And why would we make them when? Why would those of us who are comfortable in the current game, why would we make them? Why would it make more sense to make those decisions? When we run the math, we’re more likely to survive and our kids to survive, if we just hold on to our own power than to simply hand over this…

Adam:02:23:51That’s true, but it’s like picking up nickels in front of the steamroller. You’re kicking the can because you don’t want to have to go through the hard times personally, and you’d prefer if your children didn’t have to go through it, but you know the hard times are coming.

Demetri:02:24:11Maybe you feel yourself and your family from them. The question is how much wealth do you need in order to do that, which is also why you tend to find that people, the more wealth they have the more obsessive they get about the most low probability risk outcomes. They’ll build insane bunkers in the unlikely event that the whole United States gets nuked, and they can live for 30 years underground with pristine, artificial waterfalls.

Richard:02:24:51The mentality of scarcity. I think the zeitgeist has moved completely into the scarcity mentality. And so, to answer Mike’s question, how might we walk that back, maybe it would have to be sort of this concerted effort to get the zeitgeist back to something more akin to abundance.

Mike:02:25:13Maybe it is and maybe we have the technological revolution and we’re going to have nuclear fission and we’ve got endless energy. Or maybe it’s the world wars and the great depression that formed the greatest generation that set the stage for the selflessness and the suffering around a set of principles that we are still benefactors of today. We’re soft.

Richard:02:25:41I just want to acknowledge we’ve gone fullFourth Turning and I’m reminded of the meme that hard times make strong men strong, strong men make good times, good times make big man and big man makes hard times. And so we’ve gone full circle on Fourth Turning and we’re coming up on two and a half hours and I’m wondering where we might find a sliver of optimism to wrap this in a sort of positive note, but I don’t think it’s meant to be.

Mike:02:26:07What do you mean, the optimism is the fact that the cycle continues and there will be a mass … of that generation will catalyze for the future. And Adam, it might be your kids, it might be my kids and that’s the privilege that they’re going to have to go through that.

Demetri:02:26:23100% agree with that. And I’ll add to that, too, because something I said earlier which was like maybe this is just what it feels like to live in collapse. We have this idea in our heads that the outcome that we dread is so horrific we don’t want to even sort of contemplate it. And yet, we know that human beings have lived through that over and over and over again in their lives, and we’ve survived all of those situations. And we also know that people get acclimated to every sort of environment. You get used to things, people live right now in Syria. I don’t know what the current situation is at the moment but for the most of the last 10 years, that country has been torn apart by war. And people who lived in a peaceful, cosmopolitan city found themselves living in a demolished warzone. Oh, there’s the Wrangler.

Mike:02:27:29All right, well, we’re wrapping.

Richard:02:27:30The accountability of mankind I think is also the silver lining and the fact that we might be at the cusp of the four turnings. It’s always darkest before dawn, and we might just be seeing a glimmer of hope on the horizon. Is that where…to be continued.

Demetri:02:27:51If you want to know my honest feeling on this, I think when it comes to things like hope, that’s like for us individually in our own lives and it’s to have perspective, to understand that your life ends. Don’t take it too seriously. You don’t know how long you’re going to be around, and it’s not got to be that long, anyway. And just get comfortable with that. Whether we die from a nuclear explosion or whether it happens because we’re diagnosed with cancer or we die in a car accident. These are scary tough things and you can let them get you down. I’m not saying you guys. You can let them get you down but life is hopeful, fundamentally in the fact that it is like, and we have an opportunity to live it and I think what’s difficult about these types of conversations when it comes to those types of questions is that, they are inherently out of our control. So it’s important to focus on the things that we can control and that’s my sort of answer to that.

Adam:02:28:59I can’t think of a better place to wrap up the conversation honestly. So I’m got to leave it right there. Demetri, this is just as much fun as I expected it to be. Maybe even more fun. Thank you so much for off-roading with us the way that we off-roaded it. I can’t wait to do this again.

Mike:02:29:21Where can everybody find you Demitri?

Demetri:02:29:23What did you say?

Mike:02:29:24Where can everybody find you? Give them all the areas.

Demetri:02:29:28Yes, so you can follow me on twitter @Kofinas with a K, and you can check up the Hidden Forces episode library and all the past episodes we’ve done and all the supplemental material etc at

Adam:02:29:46By the way, your supplemental material is astonishing man. Holy shit, I just can’t get over the amount of prep and all the summary and the links and the extra stuff so…

Demetri:02:30:04All these are books I’ve read in the course of, like you can’t even see them all.

Adam:02:30:14That’s incredible.

Demetri:02:30:18So all the way up. And those are just some of them. I just love reading, is the lesson. So I enjoyed doing the prep. I thank you guys. I had a lot of fun.

Richard:02:30:28Really appreciate your time Demetri. Thank you for coming and have a great weekend.

Mike:02:30:36Cheers and here’s to the glimmer of hope not being the oncoming train in the tunnel. Cue the music.

Demetri:02:30:43Alright guys.

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*ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.