The Myth of Money — David McWilliams on Wealth, Luck & the Rigged System
Money isn’t real. But interest rates can ruin you.
I just sat down with David McWilliams.
Economist, former central banker, and bestselling author of Money: The Story of Humanity.
In this episode you’ll learn
Why poor people pay higher interest rates than the rich
The 5 investing rules McWilliams wishes he knew at 20
How to build wealth without losing your humanity
We dive into the details later in the conversation.
Timestamps
00:00 The Myth of Money and the Rigged System
02:44 Investing Fundamentals: Learning to Invest
05:26 Understanding Interest Rates and Their Impact
08:12 The Role of Luck in Investing
13:42 Why Confidence Can Ruin You
16:21 The Happiness Problem Among the Wealthy
31:41 Cultural Perspectives on Money
41:59 Gen Z, Risk, and the New Economy
57:56 Bitcoin and Generational Wealth
1:02:20 The Link Between Wealth and Happiness
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Here’s the full transcript:
Metwally — That One Time Podcast (00:00.047)
The biggest myth is that money is real. It’s entirely imaginary. And I speak as a former central banker. Nobody’s in control. If I was 20 now and I knew that stuff, I think my life would be a lot easier. David McWilliams, economist, podcast host, and bestselling author of Money, The Story of Humanity. When I see everyone going one way, I tend to go the other way. Let’s talk about why poor people pay more than rich people. Because the system is rigged. Why? Because the difference between poor people and rich people when comes to money is-
David, thank you. great to be here. Great to be here. Thanks for coming. studio as well, by the way. Thank you. Beautiful. Really nice. Thank you. So look, if you were to be transported back to your 20 year old you with the knowledge you have today, what would be the five money hacks and tips that you would action to get ahead in a system that feels rigged against you? Yeah. Yeah. Well, the first thing is to learn how to invest really.
Understand stock market, hugely important. Understand the importance of interest rates, massively important. And understand when you’re lucky, when you’re being lucky. And understand when it’s luck and not your own smarts. And if you can keep those together. If I was 20 now and I knew that stuff, I think my life would have a lot easier. So let’s look at learning to invest. What does that actually consist of and what are the core principles of that? The core principles is you’ve got to find a stock.
that has not just a good story, but a really strong income. Because income’s the key. So the thing about it, you forget that money here in your hand like this, okay, is no use to you unless it generates more money in the future. That’s the key. So what you’re going to do is income, income, income. Understand maybe one sector. Decide you’re going to actually focus your mind on one sector. Second, it could be banking. The sector could be aviation. The sector could be pharmaceuticals. But understand that. Pharmaceuticals are good idea.
Why? Because we all get old, we need more drugs, those drugs are all licenses, they’re patented. So what I would say to anyone is spend the time to chill out, relax and understand one sector and become very good at that. Forget all the rest of the noise and don’t follow the trends. Okay. What about interest rates? You spoke about interest rates. Most important thing, why? Because interest rates are the price of money. If you don’t understand interest rates, you’ll end up getting crushed. What you find is that
Metwally — That One Time Podcast (02:27.566)
Poor people pay higher interest rates than rich people. Now why is that? That’s the key thing to understand, right? You think of payday loans, right? The poorer you are, the higher the rate of interest, the more you get screwed. So understand the rate of interest. Let’s talk about why poor people pay more than rich people with money, because that’s an interesting point. Because the system is rigged. The system is completely... I used to be an investment banker. I used to be a central banker. I know the system is rigged against poor people. Why?
Because poor people, the difference between poor people and rich people when it comes to money is time horizons, right? Rich people have longer time horizons, which is why you hear middle class people say, I’m going to do a university degree and in 10 years time I’m going to do that. Poor people, time horizons are truncated because they need money today. So poverty obliterates the future. So the key thing is that poor people are trapped in a constant.
constant state of financial anxiety, which is elevated by high interest rates and loan sharks understand that. So for somebody who is currently poor, but wants to get out of that space, how do they do it? How do they break themselves out of that rigged system against them? Well, first of you need a bit of luck. OK, that’s the first thing. But the second thing is you’ve got to understand that if you’re offered credit on ridiculous terms, run away.
Because the thing that kills people financially are interest payments. That’s what kills you. Because the higher the interest payment today, the more expensive the money is and the less likely you are ever to get out of that trap. So really understand that. What do you think about America trying to cap, talking about capping interest rates from the credit card companies? I think that’s crucial. think what you have here in the United States is a system that is rigged against
average person. And it’s no surprise that you have unbelievable inequality because that’s what the system is designed to produce. And I think that anything that tries to cap rates of interest for poorer people is essential. But the problem is you cannot cap rates of interest too much. Why? Because people have to willingly lend to each other. So there is a give and take. When you begin to see payday loan rates through the roof, you realize that that is a scam. mean, credit card.
Metwally — That One Time Podcast (04:54.702)
rates are what 26 % generally? Which is crazy. I mean, I’d start to speak for yourself, I can earn 40%. I’m just kidding. But you know what I mean? you’ve got to understand that the most viral, viral dilemma in finance is credit. And the price of credit is crucial. Because if the price of credit is too high, everything else is going to generate.
ridiculously low returns are no returns. Reading back through history, there’s a... Loaning money was, interest was legal. Yeah. Because did they know? Yeah, mean, I... This intuitively? I think it’s quite interesting because, you know, anti-clerical people will always say, well, the church lent money and they were the people who actually imposed these usury laws. But I think...
If you look back at real philosophy, like Thomas Aquinas and those sort of things, they understood that the road to poverty and servitude is high interest and is an indebted population. And they also understood that eventually, if you put your population in debt too much, they’re going to rebel. So if you’re a religious person, there’s a thing called Leviticus and Deuteronomy in the Bible. They have these things called debt jubilees. Now this was written, what, 3000 years ago. So it has always been
an issue for societies. And debt bondage is something that our great, our ancestors spoke about at length. Do you think we’re on the way to a debt jubilee in the Western world? I think we need something like that. I think that you need to reset the button here. You see in the United States, the level of political and social anxiety here is a function of an economy that doesn’t serve everybody. And I think there’s two ways of doing debt jubilees. One is to
orchestrated is mass default. But I do think, know, America is on the cusp of what I would call a mass extinction event financially, because there’s been so much money has been thrown at so concentrated sectors, few concentrated sectors. So when you look at it from an outside perspective, I think there will be some massive event in this in the course of the next two or three years here. Interesting. And you picked it pretty well last time. Yeah, well, I mean, all these cycles are the same.
Metwally — That One Time Podcast (07:20.462)
Because what you’re really trying to understand is what drives humans to take risk. And you’re really trying to understand at what stage is risk being mispriced and then how many people are mispricing the risk. One of the problems for us humans is that we’re social creatures. We chat and we influence each other. So as a consequence of that, money is a social phenomenon and markets are social phenomena. It’s very, very difficult to stand outside that.
not get caught up in the excitement of the day or the stock or the idea. I think what you really need for a permanent approach to wealth creation is distance and discipline, which is very hard. So would you say that, well, with that in mind, then the whole concept of efficient market theory is wrong? It’s bullshit. I mean, we know it is. It’s self-evidently. Why are they still teaching it? Because economists... Okay.
Economists suffer. So if you look at the history of economics, right, in the 19th century, economics was very influenced by biology, because biology was the science of the 19th century. It’s Pasteur, it’s Darwin, et cetera, right? The science of the 20th century was physics, and economists have always tried to make the study of humanity, which is what economics is, scientific. So we rapidly absorbed physics as our benchmark. Now what did that do? That made us...
infatuated by mathematical models. And why? Because it made us look clever. But the problem with models, if they don’t accord to human behavior, which they don’t, well then they’re worse than useless because their predictive capacity isn’t just possibly wrong, it’s absolutely wrong. So I think that’s the, it’s an academic cul-de-sac that economics has waltzed itself up. And we have to re-waltz out of it. Yeah. I mean, it makes sense. Like humans are biological systems.
human behaviour is a biological group system and it’s not going to behave like physics. It’s not clear. It’s messy. The nail in the head is messy. Messy is the word that describes all evolutionary systems and humanity is an evolutionary system that never really goes the way you think. Why? Because at the core of it is this creature, the human being. So, you know, it’s not...
Metwally — That One Time Podcast (09:47.534)
Darwin wasn’t all about the survival of fittest, he was about the survival of the most adaptive. And that really is something we talk about in the book quite a bit. I want to dig into this more, but I want to finish up the five tips we explored before, which was, you said, understanding when you’re lucky. Yeah. So one of the greatest mistakes you can make in finance, I think, is falling in love with your own success.
goes well to realize that sometimes you just are in the right place at the right time.
with the right strategy and it’s a luck. And there’s other times where you can really say, okay, I figured that out. But understand and appreciate the role of luck in life in general. That’s very important. I’ve been investing and learning about investing and money and finance since I was 18. And I bought my first stock, I I saved, I read,
The richest man in Babylon. You know that book? I haven’t read it, no. Basically, the core of that book, one of the core points of that book is pay yourself first. That’s the core thing I took out from that, which was take 10 % of what you earn and pay yourself, your future self. So I started doing that at 18. Very good advice. I saved $5,000, and I go to my dad. I go to dad. Hey, I got $5,000. What should I do? And it was 2008. And he goes, spend it. We’re in a recession. And I hooked him up.
That’s a bad idea. So I kept saving and I invested and I looked at three or four different stocks, picked one, bombed. Fuck. Pick the next one, bombed. Pick the next one, bombed. Just no good. No good. I broke even or lost. And I was like, this is this kind of sucks. And I stopped doing any investing and then joined Twitter.
Metwally — That One Time Podcast (11:52.0)
started following some people on Twitter that started giving good advice and good tips. And then I invested recently, this is a luck point, I wanted to invest in the AI, in AI a years ago. So I was looking at Nvidia, I was looking at Palantir, I was looking at a few different ones. Ended up picking Palantir just after IPO. Still got Palantir. That’s the first like 10X I’ve gotten.
Yeah. But I’m like, I didn’t know much about Palantir as a company. I bought it at IPO. It went from $20 to $8. And I thought, oh, god, here we go again. What do I do now? And my friend and I were talking. We both had it. And he’s like, would you buy it now? I’m like, well, yeah. Because I was thinking about selling it and just moving on. He’s like, would you buy it now? I’m like, yeah. He’s like, well, buy it now. I’m like, all right. So then I just dollar cost averaged into that, built a solid position, and now it’s 10x.
And my friend did the same thing. And we’re now sitting here with like a significant sum of money. And we’re like, what do do now? We have no idea where they’re going from here. And I would chalk that down to luck, but it’s making me more confident. Yeah, well, I mean, the thing about confidence is that confidence is something that is incredibly destructive, right? Because confidence...
probably results in us under appreciating risk and in some way getting rid of our cautionary nature. And the problem with confidence is that the more confident you are, the less likely you can discount the possibility of failure because you think it’s me, I’m a genius. So I think that, you know, always when you’re investing or even when you’re working, when things are going well, I mean, what I’ve always found in life is that nobody has a
You just have like a temporary monopoly, right? At that time, you’re good at what you’re doing. Somebody brighter, smarter, cuter, cheaper is coming for your lunch, always. So always appreciate that. think humility is one of the great things. It’s like, if things are going very well, they’re going very well for now. And never really discount this into the future. What I’ve noticed is I was extremely conservative for a long time.
Metwally — That One Time Podcast (14:16.104)
And I would spend time around other people in my hometown. And there weren’t that many people that were really super successful. was a lot of people just worked normal jobs. There are a few business owners, small business owners, not like here. I’m exposed to the top 1 % of the top 1 % now. And I see the way they operate. But I started interacting with people that I didn’t think were very smart, but I found were becoming very successful. And I noticed a common trait.
that they were.
so unintelligent that they shot from the hip. Yes. I mean, it worked like a dog and it worked out. Yep. And I didn’t know what to do about that because I’m looking at these people getting way further ahead of me that I think are just almost like idiots and I’m not doing anything. So I had to consider readjusting my way of approaching things and shooting from the hip a little bit more. What are your thoughts around that? I think the first
mistake you might be making is obsessive relativity. So worried about where you are on the pecking order, the score sheet. I think that what makes you happy in life is never looking over your shoulder. I really believe this. I try to tell this to my kids. Don’t worry about the sprinters around you. Just be happy in what you’re doing. Be good at what you’re doing. Be content. Be decent with your mates. Don’t be a prick.
Okay, because there’s a high correlation between rich people and prickness, I’ve noticed. When I worked in investment banking, I was exposed to many, many very, very wealthy people. can really tell you hand on heart that not one of them were happy. Really? Yeah, they were obsessed with the score sheet. Okay. And it created a certain amount of inner anxiety that no paycheck or liquidity event
Metwally — That One Time Podcast (16:17.646)
could ever assuage. And that’s the reason I run an economics and stand-up comedy festival. And the reason I do that is you’ve got to be able to laugh at yourself and laugh at others around you. So what I would say to you is the mistake you’re making here in New York is trying to run with everyone. this was in Australia. This was years ago. Who gives a shit? Just do your own thing. Really do your own thing. Because when you get to my age, you’re nothing more than an accumulation of memories and experiences.
and observations. And the main observation you can make in life is that if you’re good at what you do, the money will flow every which way towards you. If you’re chasing cash as a shortcut to not being good at what you do, you’ll fail. And you will become, I think, unbelievably toxic inside.
You mentioned that you’re a combination of your memories and then you Alzheimer’s. Exactly. And then you don’t remember anything. But the good thing is there’s new drugs for that. So follow the Alzheimer’s drugs because you know, follow the drugs that are going to make the world’s middle class live longer and better. It’s a simple rule. I like it. Yeah, because that’s where we will spend, our societies will spend most money.
It’s funny you say that my friend started an Ozempic company and he’s killing it. Yeah. I have had now, again at my age, in the last month, more conversations about Ozempic and the new one, Monjaro, that it? It’s one of the ones made in the US. Yeah. And so many of my mates are going to destroy their beautiful outsized personalities.
which were entirely driven by boozing too much, eating too much, staying up too fucking late, not doing the right things. And now they’re all, yeah, I mean, my point is our Western societies will spend a phenomenal amount of our income in the future on ensuring that the ages between, let’s say, 60 and 90 are better. Definitely. One of the next one was being unlucky. Yeah, that happens all the time. I think, I think...
Metwally — That One Time Podcast (18:42.446)
Another thing to distinguish is between being unlucky and being stupid. So what we tend to do in life is the stupid decisions we make, we discount as being unlucky. And we tend to absorb ourselves of the decision. What’s the difference between the two? Well, I think that you have a certain amount of randomness in the world. And that is one of the whole points of investing, to understand that.
there is randomness and you cannot forecast everything. But I think what tends to happen to us is if you make a shitty decision, right, rather than say an actual fact, it was me, you think, I wasn’t that unlucky, was just the timing was wrong. The question is, why did you do it? I think this is, if you have a thorough sort of...
Metwally — That One Time Podcast (19:34.368)
Look internally at yourself. I think you realize that luck is just one thing, but in many, many cases, it’s us that make the bad decisions. So you mentioned in the rapid fire that you bought uranium stocks and then the earthquake caused Japan to... It’s just funny. I like to look back at these things. So I’m an economist. I could say, okay, global warming is happening.
2006. Overwarming is happening. The West is going to have to switch to either consuming less or finding a non-fossil fuel way of doing it or a very efficient one. And I thought nuclear. Unbelievably unloved. Everyone hated it, et cetera. And I thought, okay. I still do. I still do. The Aussies mine uranium. The Canadians mine uranium. So maybe if you buy a
little sort of smattering of these sort of mining stocks all be grand. And I think the logic is still good. But the problem was the portfolio was destroyed by, in effect, an act of God. that comes back to me. Your best laid plans rarely survive impact with the real world. I’m just looking at the... I was going to buy uranium ETF recently and I looked into it.
and it ran, it’s gone like crazy. There you go. So what was that? Since 2022, $11 to $50. Yeah. And of course I missed that. 2010 though. That’s me, that’s me. Yeah, yeah, yeah. So I think that was the great thing is when you’re chatting to people, always come back to your mistakes. Okay. It’s like, you see that portfolio? 2000, that was me. That is the obliteration of the McWilliams pension fund.
It’s the same thing as Bitcoin. I have been so wrong on Bitcoin because everything in my philosophical, my economical, my historical essence says this is horseshit. But I have plenty of friends who bought this at fives and tens and are now very wealthy.
Metwally — That One Time Podcast (21:55.726)
And they’re just going, na na na na na. So you’d be humble and realize that you don’t have the answers to everything. Yeah, the Bitcoin one’s a very interesting idea, which we can explore later for sure. So you had learning to invest, interest rates, know when you’re lucky, know when you’re unlucky, and there was one more. Yeah, know your sector. So go deep, not wide. Go deep in a sector so you understand that.
better than anybody else. Or at least you understand it as well as you possibly can. And then you have clarity. Whereas when you go wide, you’re just moving. You’re moving with the lads, you know? And that’s when you lose. And it’s not only you lose, you lose that sort of essence that you are in control. And that in itself is actually a very nice psychological place to be. So you spoke about the importance of interest rates being the most important thing you can understand.
Yes. How would you in your 20s wrap your head around interest rates and the concept and what actions does it trigger? OK. So understand that the interest is the price of money, right? In the sense that money has got its own value. It has become a commodity in and of itself. And number two, understand that very small changes in the rate of interest, because it is the discount rate of which all assets are discounted, can have
profound outsize impacts on wealth. These are really important things to understand. They’re difficult to understand, but my sense is that once you conceptualize the cost of money is the crucial foundational cost in society, then I think lots of things make sense. And if you can identify a down cycle in interest rates, can say, okay, inflation has peaked, it’s going down.
You can almost buy anything and it’ll go up. Why? Because the discount rates going down. During COVID, I had a really specific example of this. During COVID, I was watching them print money at the wazoo. Yeah. And I’m like, this can’t end well. That was my first thought. And everyone’s getting these, like in Australia, everyone’s getting these $750 a week checks. Oh money for doing nothing. And I was like, no.
Metwally — That One Time Podcast (24:21.198)
This is no good. So I started reading. I read a book about modern monetary theory. And then I read Big Debt Crisis by Ray Dalio. And I came to the conclusion, and the interest rates were at about 1 % at the or 0 at the time. Yes. And I thought to myself, this is not going to stay this way. And the only way is up. And because of that,
I’d ended up buying an investment property in Australia. It was a bit outside of my price range, but I could make it work at the low interest rates. And I made the call to fix the interest rate at like 2.79%, even though it was a percent higher than what I would have paid at a floating rate. And that decision was the best decision I could have made in that moment, because then I had three years of basically
controlling this property for free almost. And if the interest rates had gone to the 8 % that they were ended up being at, I would have been cooked. That’s why I say interest rates are the key and people don’t understand that. People go off and worried about the technological this and knew that or if nothing’s new under the sun. There’s three types of investors. If you look at this, there’s a guy who can actually pay his capital and his interest, that type of borrower.
There’s the guy who can just pay his interest. And then there’s the guy who needs capital gains to pay everything. Okay. So typically in a cycle, the hedged investor comes in earliest. Then you have the speculative investor, who’s the guy who needs interest rates to stay low. And then you have the guy who needs capital appreciation to stay high, there’s Ponzi investor. And once you understand that there’s those three, the question is never be Ponzi or speculative.
Right? Because that’s when you make mistakes. And that’s when your capital could have been wiped out. Interest rates at 8%, you’re gone. Yeah, I would have been... I mean, I had savings, but it would have eaten me alive for a while and I would have had to really press to sell. I did end up selling it because the fixed rate was going to floating and I’m like, ah, I got to get out of this. So I sold it and I probably made some money and it was a reasonably good outcome. But I think back to...
Metwally — That One Time Podcast (26:46.574)
that version of me at that moment that said, I think this is the move and that sometimes you look at your past stuff and you have to thank yourself. I don’t dare you were understanding interest rates. That’s it. And that’s the only advice I think you need at the very beginning. And then you can pick up bits and pieces and you know, it’s like anything you you can stumble across something really.
That just goes through the roof. But there’s two things. One is making a bit of money. The second thing is preserving that money. Preserving the money is really crucial. Well, that’s where I’m at with my friend now, where we’re looking at the Palantir stocks going, what do we do now? You know, nobody ever lost money by selling too early. You can never lose money by selling too early. You might lose a little bit of upside. You can never lose money.
Metwally — That One Time Podcast (27:45.49)
If you had $5,000, $25,000 or $100,000 in your 20s, how would you approach your investment decisions differently? You mean if I had lots of money when I was young? So let’s just say you’ve saved your first $5,000. What would you do? then if you saved your $25,000, what would you do if you saved $100,000? I think you should always go for the most unloved child.
Really, go for sectors and assets that everybody else has flogged because the cyclical nature of humanity and investment means that there is nothing, nothing more profitable than buying cheaply. And there is nothing more deleterious to your wealth than buying expensively. So that’s what I would do. Try and find unloved.
ugly ducklings, because they do turn into swans. Do you know much about like Warren Buffett’s investment philosophy? Not a huge amount. I avoid the messianic approach to life. When somebody appears like the Messiah, they lose interest for me. Okay. But look, I know everything about him in the sense that I’ve read his newsletters, I’ve read his... I mean, his job, you know, from what I can see about Warren Buffett is, buy, hold,
walk away. Stop worrying about ups and downs and hold because you think the company or the sector or the asset or the country is a well-run piece of financial real estate. And I think that’s fair enough. Also, there’s loads of other things to be getting on with in life that we worry about money. You’ve got to live. For sure. The core point I was going to explore was that he shifted his investment philosophy from buying
cheap companies, bad companies, cheaply to buying good companies at an okay price. And then as he got older, as he got a bit older and that made him multiples more money than he ever could have made buying the cheap companies that were distressed but had a lot of assets on the balance sheet. Yeah. mean, I mean, again, you know, you look at someone like Buffett, you’ll see, as you explained,
Metwally — That One Time Podcast (30:10.382)
He changed his philosophy as he got older. Whereas you asked me in your 20s, what would you do? in your 20s, you’ve got to go for the big... Biggest swings. you’re of the opinion that it’s you get older, you think, okay, well, can I afford to lose this? Yeah, no, I can’t because the financial horizons are, you know, becoming, not minimizing, but becoming smaller. So that’s the idea. I think that it also kind of accords to the way in which you...
we live in general. Like you’re wilder when you’re younger, which is why being young is great fun. I mean, I’ve gotten crazier as I’ve gotten a bit older. Am I? Yeah. So, $5,000, what would you do specifically? I think I would go back into pharma, as I said to you before. So you would invest in stocks? Yeah, I think we’d invest in stocks. think because what we’re finding is just look at what’s happening in this society and where people are spending money.
You know, I would just again, look at, so actually I think a company like Intel could be quite interesting. Unloved, strategically very important. I’d say government taking a big chunk of it. America can’t afford to lose the chip war as a general geo-strategic play. And maybe that’s quite a good company to look at. Okay. So you would look at, you would say $5,000 you’d invest in one individual stock in an unloved.
Yeah, but try to make sense. mean, you take your intel to this world, you know, and you think, okay, has been hammered over the last five years. They’re getting flogged by Nvidia. Very bad management decisions, etc, etc. But there is a reason that the US Treasury is taking 10 % of this asset because they will not let it fail. So if Uncle Sam was behind it, just go along for the ride. Okay.
$25,000. Would you still buy one stock? Would you buy a few stocks? you look at property? Then you start, know, beginning the process of saying, do we have sort of a Microsoft that’s just going to just crank out this sort of stuff all the time? Right. And then you go for a few Spivy ones. And countries are interesting. know, look at a country that’s turned around. mean, you take something like Argentina, you know, say actually, well, you know, country stories are fascinating.
Metwally — That One Time Podcast (32:36.876)
regional stories are fascinating. So don’t always, for example, just go for stocks, just buy an ETF of a certain country, because you think that country’s changed. Would you suggest that somebody, if you’re in your 20s, build a buffer first before looking to invest outside of the buffer?
In your 20s, no, wouldn’t be too concerned. Also in your 20s, see, for example, we’re talking a lot about the United States, think about what is going on in the world. Think about where the global economic activity is happening. It’s not happening here, it’s happening in Asia. The Asian century is upon us. Interesting.
There is, it’s very, very, look at this tariffs and all these sorts of stuff. It’s all the result of the fact that America’s losing the competitive war to a much more streamlined, more ambitious, more hardworking beast called Asia. And specifically the South China Sea ring. Have a look there, know. Don’t get all caught up in just the homeland, you know?
And $100,000, how would you approach $100,000? $100,000 if you had it, means you’ve been a combination of lucky or good, so you need to begin the process of switching away from stocks and buying yield. Right? Buying income. So at $100,000 you think income is a better play? Yeah, well if you think like what’s the US long bond at the moment? Is it five? it? Yeah, five or six? Yeah, so that’s easy money. The United States isn’t going...
There will be defaults within the United States, but the United States is not going to default. So go to the Irish pub down the road, you’re making five or six percent. Five or six percent’s better than working. It really is. Yeah, I wish I’d moved here five years ago and had gotten one of those 30 year to 1 % home loans. That stuff is crazy. We don’t do that in Australia. It’s like three years max. Yeah, but this is America. America, mean America’s relationship with money is...
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Off the scales, interesting, because in the DNA of the Americans, as many observers noted in the 19th century, is a dexterity with money that no other country really has. What is it? I don’t know. It’s in the DNA here. It’s profound. It’s something cultural. It is something inherited. It is the pioneer spirit. Americans have it.
I mean, more than Europeans. Australians as well. Yeah. But I’d say Aussies are closer to Yanks than we are. And I mean, something that I have observed over the years coming here, that, you know, in the United States, losing is an essential part of your story. Europe, like in Oz, if you’re a tall poppy in Europe, you get cut down.
Here there’s a forgiveness, which I always find really attractive. It’s funny, they also kind of love it. If you failed, it’s a win. It’s reinvestment. You made those mistakes again. Yeah. basically, in Europe, if you failed, you are tarred and stained and you smell. In the United States, if you have failed, you have tried, you have...
persevered and you have the gumption to go again. And that I think is an essential difference between both societies. And it’s actually part of the cultural DNA which makes America so attractive for people to come to. Because it is exciting and because it’s financially exciting. But the downside of the Americas, the American dream is only a dream.
It’s only the very few. Hollywood, whatever, has been very good at selling it over the years. If you look at social mobility, European countries have much higher levels of social mobility. But we just do it slowly. don’t eulogize over the big winner, whereas here it is. know, America is a reality TV game. It is a reality TV game. yeah, yeah. Whereas Europe’s a documentary. I like that analogy. Yeah.
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I mean, it feels like a movie when I’m walking down the streets here. That’s why we all love it. Yeah. It makes no sense. Yeah, but if you think about it, but America is shiny floor, afternoon reality TV. Europe is a documentary. That is the key difference between both places. You mentioned not following trends. Yes. And,
a big fan of Warren Buffett as you’ve probably begun to notice. And he’s said famously, be fearful when others are greedy and greedy when others are fearful. So what are the key frameworks to understand what to look for in those times? There are six phases of bubbles and they are always the same. The first phase is what they call displacement, where something real happens. So some technology disrupts the system and it’s real.
Then you get the second phase, which is the excitement phase, where people are chatting about it. The third phase is the gearing phase, where people are leveraging up about it. You can see this in every stock. The fourth phase is the mania phase, which is where we get up here. This is the Buffett idea, when everyone is excited and greedy, you become fearful. And the fifth phase, the Germans call it Turschlospanik, means shut door panic, when in fact everyone panics.
to get out. So if you look at those five, five, maybe six phases, right? That’s what Buffett is talking about. That if you have the discipline to sell high, you will have the capital to buy low. And that’s kind of human nature. That’s more about the way in which you look at the world. But it’s very, very difficult because every broker is screaming at you to buy.
your mates are in the bar talking about FOMO events. I bought it at Tenner, it’s now 10X, nah, nah, nah, nah, You these are all real human ideas. The challenge I’ve found with that cycle is when you’re in the, it goes, to despair, right? The bubble ends, it goes to despair, and then it builds up again. How do you build the mental fortitude to act?
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Contrarily at the top and at bottom. That’s a character trait. That’s a trait. it learned skill? Yeah, you’ve got to be a bit of a loner. So you don’t think you can learn that as a skill? I think you can learn it. How would you learn it? I think you learn it through looking at cycles and being as disciplined as you possibly can be. And when somebody says this time is different, it’s not. Something’s too good to be true, it’s not. I mean,
I think it was JP Morgan had a great expression, nothing so undermines your financial judgment as the sight of your neighbor getting rich. Right? So keep that in the back of your head all the time. Well, the 2008 financial crisis is something that you were pretty well known about, Yeah. You and, what’s his name?
Michael Saylor, I guess he’s the American version of you. He’s certainly richer. He made a bit more money conceptually. I want to explore how you approached the contrarian decision making during that time and your experience of being a contrarian and how you managed to maintain.
mental fortitude in your decision Yeah, well because you’re definitely the subject of a huge amount of income in fire because you’re basically pissing on the parade. You’re saying when there’s a huge amount of invested interest, there’s lots of money, you’re the guy who’s going on TV and saying, guys, this is all gonna go to crash and we’re gonna go bust. The society is gonna implode. That’s not popular because what you’re doing in effect is you’re trying to warn people.
And there’s a lot of people making lots of bread on the upside. that’s a problem. It just struck me. I’d spent many years working in emerging markets and I’d seen this economic ebb and flow, whether it was in Argentina, whether it was in Israel, whether it was in Serbia, Russia. I’d seen the same type of
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human follies and frailties in that cycle, up and down cycle. And then of course you realize you’ve got the humanity area of it. And then of course you’ve got the assessment nonsense of banking. So the best way to rob a bank is to run it. So if you understand that basic idea that bankers will always over lend. Why? Because it’s in their interest to do so.
So the way in which you destroy a banking balance sheet is not from the outside, but from the inside. And I suppose banking was the area I understood more than any other areas. That’s why I was talking about find your sector and understand the balance sheets. So banking should be a two or 3 % business as a general rule, right? You’re lending money. So if the rate of interest is two or 3%, let’s say four or five, it can’t be more than that, right? And if...
unless you get some credit cards maybe. Yeah, but if you see banks coming in with 30 % growth, you know they’re doing something wrong. You know straight away that deep in the balance sheet is a fraud, typically a fraud, or something that could be regarded as a fraud. And that’s really what...
having really worked within a bank, it just struck me, okay, that these are very, very dangerous, leveraged organizations that are masquerading as safe deposit boxes. And that was a sort of a eureka moment I had in the early 2000s. And thereafter, everything kind of made sense. Everything fell into place. So the stronger the revenue growth, the more likely the implosion of the balance sheet.
So that makes me think the best stocks in Australia are the big four banks. You know about this? No. So there’s four banks in Australia that are absolutely crushing and have been staples for many years and they just throw off billions of dollars in cash. Australia managed amazingly to sidestep the global financial crisis. Kevin Rudd.
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Was that Kevin Rudd? It was Kevin Rudd. But I suspect it helps to be China’s quarry as a general rule. So you have this very strange kind of yin and yang between Western and Eastern Australia. And Western Australia is a quarry. Eastern Australia is a casino. Right? And that’s how it is. mean, is one of the greatest polluters in the world with a very, very good marketing department.
It’s true though. That’s why we kind of love you. I I look at the others and say, you guys are getting away with it. We just do it with a smile. Yeah, you do it with a smile. So just quickly though, I love doing this podcast. If it’s positively impacted you in some way and you would like to support us, please subscribe. By subscribing, it allows us to build a much bigger base of listeners, which results in better guests, better production.
and a better show overall. Alternatively, please take a look at the affiliate links of the products that I use and love in the comments below and consider purchasing using those links. They’ll give you a discount and they’ll also provide the podcast a small kickback. These are two very easy ways for you to support us as we continue to grow the podcast that we absolutely love doing. Thank you for your support and now back to the episode. We’ve explored some ideas around
the strategies and the disciplines to making money work for you and understanding money in your 20s. And you’ve recently stated that Gen Z’s are the propulsive force shaping society. Yeah. Well, you have to be because the Gen Z’s is, there’s a lot of them. B, I think, so for example, you know,
A couple of years ago there was this sort lamentation about the millennials, right? And then you look at the millennials, you think, well hold on a these people, millennials created Facebook, millennials created Google, millennials created the tech industry, right? This is not some generation that was slovenly, you know, it was actually an incredibly inventive generation. And I think that Gen Z, which I’m talking about my own children,
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I think will also be a transformative generation. But I think they’re endemically much more entrepreneurial than mine who are Gen X who could actually get jobs. And what I see is a generation that is almost Victorian in their innovation. People forget the Victorian age was highly innovative, highly experimental. And you talked about the expression, the side hustle.
In the side hustle didn’t exist when I was young. Didn’t need to. Didn’t need to. But now, mean, we’re moving into what I would call a post-corporate world. That corporations are being disrupted all over the place. AI, one example, but increasingly hyper competition from Asia as well is destroying the corporation here. And what we’re finding, I think, is we’re in the middle of an intergenerational disruption, which...
will have profound impacts on everything. Society, politics, geography, relationships, psychology, all these things. I think we’re going through a 1920s type reorganization of society. What happened in the late 1920s? Yes, that’s my mass extinction event I told you about at the very start. And the elixir of that is the generation, the Gen Z generation.
Every generation, I’ll give you a good quote, an old communist, Tony Ben, English communist that I interviewed when I was doing TV years ago, said one thing very interesting, and I was quite young, he says, young man, you’ve got to understand that the old and the young have something in common. They are both bullied by the middle-aged. And I think that’s really the truth. Okay? What makes you middle-aged? What age period is middle-aged? I think, you know, it’s 40 to...
maybe 45 to 65. You know, you’re beginning to be at the peak of your powers professionally. Your network is also at the peak of its powers. You’ve got confidence that you didn’t have when you were a youth. You’ve got experience, all that sort of stuff. But all economic policy is driven for and by the interests of the 45 to 65, which is exactly what’s happening now, right? In the United States, in Europe, in Australia. And so in effect, the elderly,
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The very old and the very young are bullied by the middle-aged. And again, that’s something to kind of get your head around as a Gen Z-er. I also think that I came back to the idea of investing yourself back yourself. The only way in which you can not just make money, but have a full life is having an innovative urge in yourself. And that comes from what’s going on between your ears. That great creative engine.
called the human brain. And I think that’s what I tell my kids, that’s what I tell my kids’ mates when they come and chat to us is back yourself all the time because the corporate world is over and we’re moving into a much more...
a much less secure world and a much more...
amorphous, ill-defined, disruptive period. Why? Because technology has been unleashed at a pace that is so rapid, at a time when the world itself is in a state of flux. And therefore the only thing you can depend on is yourself. Which is an unfortunate, you know, it’s quite dystopian if you want to get really philosophical about it. But you have to be realistic that you cannot hide
What I look at is that the 20th century was all about trying to ensure people against risk. And the 21st century is all about trying to explain people how to embrace risk. And that’s a completely different mindset. And that I suppose my training as an economist can see that. It seems like a lot to work through. I mean, you’ve also mentioned that
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They’re highly educated, they work more and they’re lonelier. and you’ve also mentioned previously just before that there was a view that the Gen Z millennial generation are lazy entitled. But they’re not. But there’s a system. Yeah, there’s a system. There’s a middle aged have rigged the system against them. And they will ironically become those middle aged riggers in time. Can’t wait for my time.
Just buy your time, just don’t go bust for the next 10 years. So with that in mind, I want to understand your view on how millennials and gen Zs are able to best approach.
money and success with a system that’s rigged against them and a fundamental dream that underpinned Western society of a home you can own, upwards economic mobility, affordable higher education, employment and career security and a family and the ability to retire comfortably. What do we do? you’re going to have it all. But that’s what was on offer in society. In the 70s and 80s. That was the minimum standard. And it was achievable. And I can see that in my generation for most of my mates.
came from a very normal background in Ireland, lower middle class, would say, parents, like my dad worked in a factory, mom was a teacher, that would be typical for our road. And yes, all of us managed to kind of shuffle along and things kind of worked out because we had this extraordinary support of wind behind us, which was exactly what you’ve articulated there. So you don’t think that’s the default state of?
Western society. That was just a lucky moment in time. now we’ve turned that into a default state. think it’s a lucky moment in time. think that never underestimate that the year you were born has a profound impact on your life and that generational stories are different. So for example, today or tomorrow, Gen Z experiences today, very different from a millennial, very different from a Gen Xer, very different from a boomer.
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that history is experienced differently and the world is experienced differently based on what year you were born in. I just happened to be lucky to have been a kid in the 1980s, which was kind of a cool decade. Yeah, that seemed like pretty chill. Yeah, chill, was relaxed with the Cold War stuff going on, but America we knew would defend us eventually. And also there was a sense that the world, know, was pre-phone, music was probably better.
Drugs were probably better. Have you ever tried fentanyl? That’s good shit. When I first saw fentanyl, anoxy and all those things on the streets in Canada and on the west coast here, I was really shocked. You don’t see that in Europe. It hasn’t come to Europe. I don’t think it will because I think people... It’s too messed up.
generally happier with their lives, maybe? Yeah, mean, inequality is something that Americans do with gusto, with great enthusiasm. Damn. It’s true though. Gusto is such a funny word to use in that sentence.
Yeah, I mean, given that it’s all stacked against us, what do you think? It’s not all stacked against you, no, it’s not all stacked against you. What do we have as our advantage? this horseshit victimization idea, right? It’s all stacked against somebody in Gaza. That’s fucking stacked against you. That’s, you know, are somebody in Afghanistan, are somebody in Africa. That shit’s stacked against you, right? Here, living in the United States, it’s not all stacked against you, but there is. It’s relatively stacked against you compared to your...
Look, there was a conveyor belt of upward social mobility in my generation called the housing market. And that allowed people to live and save at the same time in a place which
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was almost guaranteed to go up in value. But more importantly, you could get your foot on that ladder as a young man or a young woman or as a young couple based on three or four times your income. That sort of essential promise. About 10 to 12 times. Yeah, that essential promise has been broken. And that’s the result of financialization. And that is a societal crime committed by my generation and the boomers against Gen Z and the millennials.
Now you can’t say, well if the Gen Zers and the Millennials wait long enough, we’re going to croak it and you guys are going to be the biggest inheritors of wealth the world has ever seen. But the problem is you’ve got to live in the meantime, right? You can’t pack... You guys are living much longer. Hey, we’re living much longer and you can’t say, well, then my 60s are going to be great. So just wait for Viagra and my old man to die. You what I mean? You got to...
And who knows, they might give all the money to a mistress or something. and he might end up being cryogenically frozen. Like all the guys out on the West Coast who want to live forever, you know, the Don’t Die movement, all that sort of I’ve had some of his team on the podcast. know, dying’s a choice. Give me a break. We’ll find out. Give me a break. I choose not to die, I tell you. So, my point is, I think that the...
imperative for Gen Zers now is to be far more entrepreneurial than their parents ever were. Because the shift in society has been a shift in risk and insurance. Our generation shows insurance. Your generation are being forced to embrace risk. that’s going to make you much more innovative, much more creative.
And I think much more culturally and societally experimental generation. that’s good thing. We’re very open. We’re all right, well, guess we’re doing this now. Yeah. I mean, I’ve never seen more adaptive creatures than Gen Z. And the key to evolution is adaptation. Good point. Good point. Speaking of adaptation and wealth transfer. Yeah.
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We’d in a scar very soon. By the way, I’m just thinking, my phone is binging all the time. So we have to close this down. Yeah, I’m watching the time. Speaking of wealth transfer and... I lost what I was going Adaptation. Yeah. Bitcoin as a potential generational wealth transfer vehicle. Okay, so I am terrified by Bitcoin because it makes no economic sense to me.
And when something doesn’t make sense to me, I run a mile from it. What we notice about Bitcoin is, so for example, in the book I talk about money’s been very much like a language. So what gives money its extraordinary power is its usability, which is a wee bit like the English language. The reason the English language is interesting is the default language for most of the world. So its very use gives it power, which is why, for example, the dollar,
is powerful because it’s very used because it’s accepted. You can have a conversation about the price of the dollar in the back of a cab in Kenya with the taxi driver and he’ll know it. He won’t know that about sterling or the euro. So it’s that very ubiquity gives the dollar power. And looking at the language analogy, the interesting thing about Bitcoin is Bitcoin is the Esperanto of finance, right? It is a language. So Esperanto is a language that was invented in the
beginning of this century to create a new language which would be widely spoken. What you found was that the people who were into Esperanto and learned it, they were obsessed by it. But the rest of the world didn’t give a fuck. It’s the same shit with Bitcoin. Bitcoiners are obsessed by it. The rest of the world doesn’t give a shit. Right? Why? Because it’s a fad. Because what I describe as crypto in general,
Bitcoin is part of the crypto family, though they, like all movements and cults, have fights. The fights within the culture are much more interesting than the fight to the culture against the rest of us. you know, crypto is a lobby group. You’ve to understand that it’s a very, very well-financed lobby group. And the objective is to lobby regulators to replace money, state sanctioned money, private money. If you look at the
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battle of history of money has always been a battle over who controls it. The private sector or the state. And we’ve evolved to a situation where the state holds money because to give it away is giving away the most potent weapon the state has, which is the ability to print money. So there’s no political world that I can see where the state
abandons this extra-ordinary power and cedes it to the private. It would be like ceding the army or the police force. Vigilantism. Oh, well, let’s go down that road. I don’t see that. So that’s why Bitcoin doesn’t make any sense to me. the humility in me understands that I’ve been wrong about this. had I, believe me, I was offered it at four or five dollars many years ago, I thought, no, I’ll just be throwing my money away.
and now I’d be swanning around Chelsea here, the spankiest apartments and whatever. So, you know, be humble. I don’t understand it. It keeps going up. It’s not too late. I bought it at about 30. I have a little stash of it just to be in and That’s not bad. It’s not bad. It’s about two years ago. But I’m only in for the ride. Yeah. I’m not a believer. Yeah. But you know, sometimes being in for the ride is enough. It’s enough. Exactly.
So wrapping up, you mentioned at the beginning that a lot of people who are wealthy are also really unhappy. what do you think the trick is to being wealthy and happy? I think it’s pretty simple. You go back to the basic things that make humans tick. You ask me about niceness at the top. Generosity.
Understanding.
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being sensitive to other people’s foibles and their fears and their anxieties. This is what makes us, humans are a social creature. What makes us tick are other humans. That’s why we’re chatty, we’re sociable, we network, we go out, we get hammered, we do all the stupid things, we say, I’m never doing that again. And then you’re like, fuck, that’s right. Okay. The beauty of humanity is the fact that we live together. One of the problems with the wealthy is they hoard money.
And when you start hoarding money and hoarding time and worried about people taking it off you, you lose the very essence of what it is to be human, which is to share. Can you be wealthy and generous at the same time? Absolutely. Do to get wealthy first to become, then become generous? can you do them both at the same time? I think I say in the book that money doesn’t change humanity, it animates our original characteristics. So I have some very wealthy friends.
who are very generous and they use their wealth in a generous way. I also know some mean fuckers, right? Who as they get richer, get more mean. So the money is kind of animating or in some way amplifying their original deficient or in other cases, successful personalities. So when I met
When I was an investment banker, know, investment banking is a heist to try and keep money away from poor people. Right? That’s what it is. It’s called wealth managers. What wealth managers are doing is they’re trying to take the beauty of money, which is its usability, out. They’re trying to hoard it. They’re going to take it out of the system. Right? And take their carry. And take their carry. That’s why we’re all the clients yachts. The great expression. Right? Because we have them. We’re the brokers. We make all the money. So...
I think once you understand that, you can understand the futility of running after money for money’s sake. It’s a really futile exercise. And I’ve met those geezers at the end of their lives, loads of money. Depressed. Miserable. They’re absolutely miserable. But what’s also miserable is being poor. So let’s not be too evangelical about it. There’s nothing, there’s no fun in poverty.
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at all. But there’s probably a lot of anxiety in being wealthy because once you get to a certain phase, you’re worried financially, you’re worried about other people taking it off you. So you’re in a constant state of anxiety. So I think that the key thing is, I come back to it, we probably conclude here, is to understand that what makes us happy are other people.
surrounding yourself with decent other people, having a few giggles, doing things you probably shouldn’t do, but ultimately sharing your life with people. And sometimes the pursuit of money leads to isolation. And we know that the worst form of torture for humans is solitary confinement and isolation. Why? Because we’re social creatures. So that’s the thing I think you should be very wary of.
David, thank you. So. Adam, thank you. What are you excited about at the moment? You want to let the listeners in on? What I’m excited about, I’m going actually on an Aussie book tour next week. I haven’t been in Aussie for a long time, so I’m going to book tour to Australia, which should be lovely because I haven’t been down on it for ages. I’m also going to New Zealand, which is a country I’ve never been to. Go to Queenstown if you can make it. Really? One of the best places in the world. Give me your tips. South Island, North Island. Well, I’ve only been to the South Island and it’s.
etched into my memory forever. Queenstown. Queenstown. Queenstown and Wanaka. Okay. Unbelievable. You’ll see it and you’ll go, I get it. I get it. Cool. And where can people find you if they’re interested? Okay, so on Twitter it’s at David Mac W or you can download the David Mac Williams podcast, which is two a week trying to make economics. Yeah, it is busy. Digestible and comprehensible. Or if you’re really adventurous, come to the world’s only.
economics and stand-up comedy festival, is called Kilkenomics. It’s in Kilkenny on the 6th to 9th of November. It’s Ireland as we love it. It’s dark. It’s wet. It’s cold. The bars are full. The nights are late. What’s not to love? Great. And my last question for you is, why do think we’re here? You and me are humanity. We have to have a good time. You think so? It’s the primal screamer approach to it.
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Enjoy it. Just enjoy it. Have a pint. Enjoy it. enjoy it. Sorry, I you. Enjoy it. Have a pint. It goes quickly. So realize when you’re young, it goes quickly. So enjoy it. Cheers, Thank you. And if you enjoyed the episode, please go to YouTube. Search That One Time with Adam and Oli. Click Subscribe, like the video, and leave us a comment. Come on. Cheers, man. Thanks.
