Ray Dalio: Principles, the Economic Machine, Artificial Intelligence & the Arc of Life
技术与编程心理与人性生物与进化AI 与机器学习音乐与艺术
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🔑 关键词
moneyprinciplesdongoingothersbestmakingsuccessfuldoingthinkingputbetterablewayscreditideasfuturedoesncomputerapp
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🎙️ 完整对话（1893 条）
Lex Fridman (00:00.000)
The following is a conversation with Ray Dalio.
以下是与雷·达里奥的对话。
Lex Fridman (00:03.320)
He's the founder, co chairman,
他是创始人、联席董事长
Lex Fridman (00:05.120)
and co chief investment officer of Bridgewater Associates,
以及 Bridgewater Associates 联席首席投资官，
Lex Fridman (00:08.560)
one of the world's largest
世界上最大的之一
Lex Fridman (00:09.840)
and most successful investment firms
和最成功的投资公司
Ray Dalio (00:11.920)
that is famous for the principles of radical truth
以激进真理原则而闻名
Lex Fridman (00:14.640)
and transparency that underlies culture.
以及文化基础的透明度。
Ray Dalio (00:17.880)
Ray is one of the wealthiest people in the world
雷是世界上最富有的人之一
Lex Fridman (00:20.760)
with ideas that extend far beyond the specifics
想法远远超出具体细节
Ray Dalio (00:23.160)
of how he made that wealth.
他是如何创造财富的。
Lex Fridman (00:24.920)
His ideas that are applicable to everyone
他的想法适用于所有人
Ray Dalio (00:27.400)
are brilliantly summarized in his book, Principles.
他在《原则》一书中对这些内容进行了精辟的总结。
Lex Fridman (00:30.660)
They're also even further condensed
它们还被进一步浓缩
Ray Dalio (00:32.760)
on several other platforms, including YouTube,
在其他几个平台上，包括 YouTube，
Lex Fridman (00:35.280)
where, for example, the 30 minute video titled
例如，30 分钟的视频标题为
Lex Fridman (00:38.600)
How the Economic Machine Works
经济机器如何运作
Lex Fridman (00:40.720)
is one of the best educational videos
是最好的教育视频之一
Ray Dalio (00:43.420)
I personally have ever seen on YouTube.
我个人曾在 YouTube 上看过。
Lex Fridman (00:46.560)
Once again, you may have noticed
再一次，你可能已经注意到
Ray Dalio (00:49.040)
that the people I've been speaking with
和我交谈过的人
Lex Fridman (00:50.600)
are not just computer scientists,
Lex Fridman (00:52.520)
but philosophers, mathematicians, writers,
Lex Fridman (00:55.040)
psychologists, physicists, economists, investors,
Lex Fridman (00:57.520)
and soon, much more.
Lex Fridman (00:59.600)
To me, AI is much bigger than deep learning,
Ray Dalio (01:03.000)
bigger than computing.
Lex Fridman (01:04.440)
It is our civilization's journey
Ray Dalio (01:06.200)
into understanding the human mind
Lex Fridman (01:08.160)
and creating echoes of it in the machine.
Ray Dalio (01:10.880)
That journey includes the mechanisms of our economy,
Lex Fridman (01:14.000)
of our politics, and the leaders
Ray Dalio (01:15.880)
that shape the future of both.
Lex Fridman (01:18.080)
This is the Artificial Intelligence Podcast.
Ray Dalio (01:21.200)
If you enjoy it, subscribe on YouTube,
Lex Fridman (01:23.560)
give it five stars on Apple Podcast,
Ray Dalio (01:25.640)
support it on Patreon,
Lex Fridman (01:27.080)
or simply connect with me on Twitter
Ray Dalio (01:29.240)
at Lex Friedman, spelled F R I D M A N.
Lex Fridman (01:33.840)
This show is presented by Cash App,
Ray Dalio (01:35.940)
the number one finance app in the App Store.
Lex Fridman (01:38.460)
I personally use Cash App to send money to friends,
Lex Fridman (01:41.200)
but you can also use it to buy, sell, and deposit Bitcoin.
Lex Fridman (01:44.640)
Most Bitcoin exchanges take days
Ray Dalio (01:46.440)
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Lex Fridman (01:48.680)
Through Cash App, it takes seconds.
Ray Dalio (01:51.040)
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Lex Fridman (01:54.360)
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Ray Dalio (01:56.120)
which to me is a really interesting concept.
Lex Fridman (01:58.880)
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Ray Dalio (02:03.120)
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Lex Fridman (02:06.080)
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Ray Dalio (02:09.840)
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Lex Fridman (02:11.680)
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Ray Dalio (02:14.360)
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Lex Fridman (02:17.320)
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Lex Fridman (02:20.760)
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Lex Fridman (02:22.480)
They educate and inspire hundreds of thousands of students
Ray Dalio (02:26.160)
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Lex Fridman (02:29.240)
on Charity Navigator, which means the donated money
Ray Dalio (02:32.200)
is used to maximum effectiveness.
Lex Fridman (02:35.540)
When you get Cash App from the App Store or Google Play
Lex Fridman (02:38.560)
and use code LexPodcast, you'll get $10
Lex Fridman (02:42.080)
and Cash App will also donate $10 to First,
Ray Dalio (02:44.800)
which again is an organization that I've personally seen
Lex Fridman (02:47.880)
inspire girls and boys to dream of engineering
Ray Dalio (02:51.400)
a better world.
Lex Fridman (02:52.480)
And now here's my conversation with Ray Dalio.
Ray Dalio (02:56.920)
Truth or more precisely an accurate understanding
Lex Fridman (02:59.600)
of reality is the essential foundation of any good outcome.
Ray Dalio (03:03.360)
I believe you've said that.
Lex Fridman (03:05.720)
Let me ask an absurd sounding question
Ray Dalio (03:08.640)
at the high philosophical level.
Lex Fridman (03:10.880)
So what is truth?
Ray Dalio (03:12.800)
When you're trying to do something different
Lex Fridman (03:14.960)
than everybody else is doing
Lex Fridman (03:16.760)
and perhaps something that has not been done before,
Lex Fridman (03:19.800)
how do you accurately analyze the situation?
Lex Fridman (03:23.520)
How do you accurately discover the truth,
Lex Fridman (03:25.440)
the nature of things?
Ray Dalio (03:27.320)
Almost the way you're asking the question implies
Lex Fridman (03:30.320)
that truth and newness have nothing, are almost at odds.
Lex Fridman (03:35.200)
And I just want to say that I don't think
Lex Fridman (03:37.360)
that that's true, right?
Lex Fridman (03:39.040)
So what I mean by truth is, you know, what's the reality?
Lex Fridman (03:43.600)
How does the reality work?
Lex Fridman (03:45.480)
And so if you're doing something new
Lex Fridman (03:47.800)
that has never been done before,
Ray Dalio (03:49.080)
which is exciting and I like to do,
Lex Fridman (03:51.320)
the way that you would start with that
Ray Dalio (03:54.000)
is experimenting on what are the realities
Lex Fridman (03:57.160)
and the premises that you're using on that
Lex Fridman (03:59.440)
and how to stress test those types of things.
Lex Fridman (04:01.880)
I think what you're talking about is instead
Ray Dalio (04:04.360)
the fact of how do you deal with something
Lex Fridman (04:06.320)
that's never been done before
Lex Fridman (04:08.040)
and deal with the associated probabilities.
Lex Fridman (04:11.160)
And so I think in that,
Ray Dalio (04:13.320)
don't let something that's never been done before
Lex Fridman (04:15.720)
stand in the way of you doing that particular thing.
Ray Dalio (04:20.160)
You have, because almost the only way
Lex Fridman (04:22.720)
that you understand what truth is,
Ray Dalio (04:25.160)
is through experimentation.
Lex Fridman (04:27.240)
And so when you go out and experiment,
Ray Dalio (04:29.440)
you're going to learn a lot more about what truth is.
Lex Fridman (04:32.320)
But the essence of what I'm saying is that
Ray Dalio (04:35.840)
when you take a look at that, use truth,
Lex Fridman (04:38.960)
find out what the realities are as a foundation,
Ray Dalio (04:41.720)
do the independent thinking,
Lex Fridman (04:43.560)
do the experimentation to find out what's true
Lex Fridman (04:47.120)
and change and keep going after that.
Lex Fridman (04:50.400)
So I think that when you're thinking about it
Ray Dalio (04:54.320)
the way you're thinking about it,
Lex Fridman (04:56.040)
that almost implies that you're letting people
Ray Dalio (05:00.600)
almost say that they're reliant
Lex Fridman (05:03.160)
on what's been discovered before to find out what's true.
Lex Fridman (05:06.480)
And what's been discovered before is often not true, right?
Lex Fridman (05:11.200)
Conventional view of what is true is very often wrong.
Ray Dalio (05:16.360)
It'll go in ups and downs and I mean, there are fads
Lex Fridman (05:19.800)
and okay, this thing, it goes this way and that way.
Lex Fridman (05:22.360)
And so definitions of truths that are conventional
Lex Fridman (05:25.880)
are not the thing to go by.
Lex Fridman (05:28.720)
How do you know the thing that has been done before
Lex Fridman (05:32.280)
that it might succeed?
Ray Dalio (05:33.880)
It's to do whatever homework that you have
Lex Fridman (05:37.840)
in order to try to get a foundation.
Lex Fridman (05:40.000)
And then to go into worlds of not knowing
Lex Fridman (05:43.080)
and you go into the world of not knowing,
Lex Fridman (05:45.200)
but not stupidly, not naively, you know,
Lex Fridman (05:48.920)
you go into that world of not knowing
Lex Fridman (05:51.160)
and then you do experimenting and you learn what truth is
Lex Fridman (05:54.960)
and what's possible through that process.
Ray Dalio (05:57.680)
I describe it as a five step process.
Lex Fridman (05:59.960)
The first step is you go after your goals.
Ray Dalio (06:02.080)
The second step is you identify the problems
Lex Fridman (06:04.800)
that stand in the way of you getting to your goals.
Ray Dalio (06:07.180)
The third step is you diagnose those
Lex Fridman (06:09.320)
to get at the root cause of those.
Ray Dalio (06:11.360)
Then the fourth step is then now that you know
Lex Fridman (06:13.760)
the exact root cause, you design a way to get around those
Lex Fridman (06:17.880)
and then you follow through and do the designs
Lex Fridman (06:21.080)
you set out to do and it's the experimentation.
Ray Dalio (06:23.900)
I think that what happens to people mostly
Lex Fridman (06:27.480)
is that they try to decide whether they're gonna be
Ray Dalio (06:31.120)
successful or not ahead of doing it
Lex Fridman (06:34.040)
and they don't know how to do the process well
Ray Dalio (06:36.160)
because the nature of your questions are along those lines
Lex Fridman (06:39.560)
like how do you know?
Ray Dalio (06:40.760)
Well, you don't know, but a practical person
Lex Fridman (06:43.680)
who is also used to making dreams happen
Ray Dalio (06:47.220)
knows how to do that process.
Lex Fridman (06:48.840)
I've given personality tests to shapers.
Lex Fridman (06:52.580)
So the person, what I mean by a shaper is a person
Lex Fridman (06:56.000)
who can take something from visualization,
Ray Dalio (07:00.320)
they have an audacious goal and then they go
Lex Fridman (07:02.980)
from visualization to actualization, building it out.
Ray Dalio (07:06.140)
That includes Elon Musk, I gave him the personality test,
Lex Fridman (07:10.320)
I've given it to Bill Gates and I've given it to many,
Ray Dalio (07:12.900)
many such shapers and they know that process
Lex Fridman (07:17.320)
that I'm talking about, they experience it
Ray Dalio (07:19.920)
which is a process essentially of knowing
Lex Fridman (07:22.440)
how to go from an audacious goal
Lex Fridman (07:24.420)
but not in a ridiculous way, not a dream
Lex Fridman (07:27.800)
and then to do that learning along the way
Ray Dalio (07:31.600)
that allows them in a very practical way
Lex Fridman (07:34.360)
to learn very rapidly as they're moving toward that goal.
Lex Fridman (07:38.240)
So the call to adventure, the adventure starts
Lex Fridman (07:42.240)
not trying to analyze the probabilities of the situation
Lex Fridman (07:44.680)
but using what, instinct?
Lex Fridman (07:48.120)
How do you dive in?
Lex Fridman (07:49.400)
So let's talk about.
Lex Fridman (07:50.880)
It is being a, it's simultaneously being a dreamer
Lex Fridman (07:54.960)
and a realist, it's to know how to do that well.
Lex Fridman (07:58.680)
The pull comes from a pull to adventure.
Ray Dalio (08:01.820)
For whatever reason, I can't tell you how much
Lex Fridman (08:05.160)
of it's genetics and how much is environment
Lex Fridman (08:07.680)
but there's a early on, it's exciting.
Lex Fridman (08:11.440)
That notion is exciting, being creative is exciting
Lex Fridman (08:15.440)
and so one feels that, then one gets in the habit
Lex Fridman (08:19.160)
of doing that, okay, how do I know?
Lex Fridman (08:21.440)
How do I learn very well and then how do I imagine
Lex Fridman (08:25.560)
and then how do I experiment to go from that imagination?
Lex Fridman (08:30.560)
So it's that process that one, and then one,
Lex Fridman (08:34.800)
the more one does it, the better one becomes at it.
Ray Dalio (08:40.120)
You mentioned shapers, Elon Musk, Bill Gates.
Lex Fridman (08:44.160)
What, who are the shapers that you find yourself
Lex Fridman (08:47.560)
thinking about when you're constructing these ideas?
Lex Fridman (08:51.120)
The ones that define the archetype of a shaper for you.
Ray Dalio (08:54.400)
Well, as I say, a shaper for me is somebody
Lex Fridman (08:57.400)
who comes up with a great visualization,
Ray Dalio (09:02.080)
usually a really unique visualization
Lex Fridman (09:04.720)
and then actually builds it out and makes the world different,
Ray Dalio (09:08.560)
changes the world in that kind of a way.
Lex Fridman (09:10.800)
So when I look at it, Mark Benioff with Salesforce,
Ray Dalio (09:14.640)
Chris Anderson with TED, Mohammed Yunus
Lex Fridman (09:17.920)
with social enterprise and philanthropy,
Ray Dalio (09:20.480)
Jeffrey Canada and Harlem Children's Zone,
Lex Fridman (09:23.520)
there are, all domains have shapers who have the ability
Ray Dalio (09:28.920)
to visualize and make extraordinary things happen.
Lex Fridman (09:32.440)
What are the commonalities between some of them?
Ray Dalio (09:35.000)
The commonalities are, first of all,
Lex Fridman (09:38.960)
the excitement of something new, that call to adventure,
Lex Fridman (09:43.280)
and then again, that practicality, the capacity to learn.
Lex Fridman (09:47.920)
The capacity then, they're able to be,
Ray Dalio (09:51.760)
in many ways, full rage.
Lex Fridman (09:53.640)
That means they're able to go
Ray Dalio (09:55.480)
from the big, big picture down to the detail.
Lex Fridman (09:59.360)
So let's say, for example, Elon Musk,
Ray Dalio (10:02.360)
he describes, he gets a lot of money
Lex Fridman (10:06.000)
from selling PayPal, his interest in PayPal.
Lex Fridman (10:09.600)
He said, why isn't anybody going to Mars or outer space?
Lex Fridman (10:14.000)
What are we gonna do if the planet goes to hell?
Lex Fridman (10:16.120)
And how are we gonna get that?
Lex Fridman (10:18.200)
And nobody's paying attention to that.
Ray Dalio (10:19.920)
He doesn't know much about it.
Lex Fridman (10:21.560)
He then reads and learns and so on.
Ray Dalio (10:24.400)
Says, I'm gonna take, okay, half of my money,
Lex Fridman (10:27.480)
and I'm gonna put it in there,
Lex Fridman (10:29.600)
and I'm gonna do this thing, and he learns,
Lex Fridman (10:31.240)
and blah, blah, blah, blah, blah, blah, blah,
Lex Fridman (10:32.200)
and he's got creative, okay.
Lex Fridman (10:33.400)
That's one dimension.
Lex Fridman (10:35.000)
So he gave me the keys to his car,
Lex Fridman (10:39.480)
but this was just early days in Tesla,
Lex Fridman (10:42.280)
and he then points out the details.
Lex Fridman (10:45.640)
Okay, if you push this button here, it's this,
Ray Dalio (10:48.720)
the detail that, so he's simultaneously talking
Lex Fridman (10:53.180)
about the big, the big, big, big picture.
Lex Fridman (10:56.020)
Okay, when does humanity going to abandon the planet?
Lex Fridman (10:59.920)
But he will then be able to take it down into the detail
Lex Fridman (11:03.480)
so he can go, let's call it helicoptering.
Lex Fridman (11:06.280)
He can go up, he can go down,
Lex Fridman (11:07.840)
and see things at those types of perspective.
Lex Fridman (11:09.800)
And then you've seen that with the other shapers.
Lex Fridman (11:11.560)
And that's a common thing that they can do that.
Lex Fridman (11:14.120)
Another important difference that they have in mind
Ray Dalio (11:18.440)
is how they deal with people.
Lex Fridman (11:21.120)
I mean, meaning there's nothing more important
Ray Dalio (11:24.280)
than achieving the mission.
Lex Fridman (11:25.960)
And so what they have in common is that there's a test
Ray Dalio (11:30.960)
that I give these personality tests,
Lex Fridman (11:34.080)
because they're very helpful for understanding people.
Lex Fridman (11:36.400)
And so I gave it to all these shapers.
Lex Fridman (11:38.720)
And one of the things in workplace inventory test
Ray Dalio (11:42.280)
is this test, and it has a category called concern for others.
Lex Fridman (11:45.880)
They're all having concern for others.
Ray Dalio (11:49.600)
This includes Muhammad Yunus,
Lex Fridman (11:51.280)
who invented microfinance, social enterprise,
Ray Dalio (11:54.760)
impact investing, as Muhammad Yunus received
Lex Fridman (11:57.320)
the Nobel Peace Prize for this,
Ray Dalio (11:59.640)
the Congressional Medal of Honor.
Lex Fridman (12:01.680)
One of the, a fortune determined,
Ray Dalio (12:04.280)
one of the 10 greatest entrepreneurs of our time.
Lex Fridman (12:08.960)
He's built all sorts of businesses to give back money
Ray Dalio (12:12.400)
in social enterprise, a remarkable man.
Lex Fridman (12:14.920)
He has nobody that I know practically
Ray Dalio (12:17.440)
could have more concern for others.
Lex Fridman (12:20.320)
He lives a life of a saint.
Ray Dalio (12:22.400)
I mean, a very modest lifestyle,
Lex Fridman (12:24.200)
and he puts all his money into trying to help others.
Lex Fridman (12:27.320)
And he tests low on what's called concern for others,
Lex Fridman (12:30.160)
because what it really, those questions under that
Ray Dalio (12:33.280)
are questions about conflict to get at the mission.
Lex Fridman (12:36.880)
So they all, Jeffrey Canada,
Ray Dalio (12:38.840)
who changed Harlem Children's Zone
Lex Fridman (12:40.560)
and developed that to take children in Harlem
Lex Fridman (12:42.920)
and get them well taken care of,
Lex Fridman (12:44.200)
not only just in their education, but their whole lives.
Ray Dalio (12:47.040)
Harlem, him also, concern for others.
Lex Fridman (12:49.560)
What they mean is that they can see
Ray Dalio (12:53.680)
whether though individuals are performing at a level
Lex Fridman (12:58.080)
that an extremely high level
Ray Dalio (13:00.640)
that's necessary to make those dreams happen.
Lex Fridman (13:03.520)
So when you think of, let's say Steve Jobs was famous
Ray Dalio (13:06.600)
for being difficult with people and so on,
Lex Fridman (13:09.840)
and I didn't know Steve Jobs,
Lex Fridman (13:11.160)
so I can't speak personally to that,
Lex Fridman (13:13.120)
but his comments on, do you have A players?
Lex Fridman (13:15.800)
And if you have A players, if you put in B players,
Lex Fridman (13:17.800)
pretty soon you'll have C players and so on.
Ray Dalio (13:19.840)
That is a common element of them,
Lex Fridman (13:22.080)
holding people to high standards
Lex Fridman (13:24.000)
and not letting anybody stand in the way of the mission.
Lex Fridman (13:28.320)
What do you think about that kind of idea?
Ray Dalio (13:30.120)
Sorry to pause on that for a second,
Lex Fridman (13:31.620)
that the A, B, and C players,
Lex Fridman (13:35.840)
and the importance of, so when you have a mission,
Lex Fridman (13:39.420)
to really only have A players
Lex Fridman (13:41.120)
and be sort of aggressively filtering for that?
Lex Fridman (13:45.280)
Yes, but I think that there are all different ways
Ray Dalio (13:47.400)
of being A players.
Lex Fridman (13:49.640)
And I think, in order to grade a great team,
Ray Dalio (13:53.180)
you have to appreciate all the differences
Lex Fridman (13:55.840)
in ways of being A players, okay?
Ray Dalio (13:59.320)
That's the first thing.
Lex Fridman (14:00.520)
And then you always have to be super excellent,
Ray Dalio (14:04.720)
in my opinion, you always have to be really excellent
Lex Fridman (14:07.420)
with people to help them understand each other themselves
Lex Fridman (14:11.960)
and get in sync with them about what's true about them
Lex Fridman (14:15.960)
and their circumstances and how they're doing,
Lex Fridman (14:18.080)
so that they're having a fabulous
Lex Fridman (14:19.800)
personal development experience at the same time
Ray Dalio (14:23.080)
as you're dealing with them.
Lex Fridman (14:24.460)
So when I say that they're all different ways,
Ray Dalio (14:27.740)
this is one of the then qualities,
Lex Fridman (14:30.600)
you asked me what are the qualities.
Lex Fridman (14:32.480)
So one of the third qualities that I would say
Lex Fridman (14:35.480)
is to know how to deal well with your not knowing
Lex Fridman (14:41.800)
and to be able to get the best expertise
Lex Fridman (14:46.440)
so that you're a great orchestrator of different ways,
Lex Fridman (14:50.380)
so that the people who are really, really successful,
Lex Fridman (14:53.840)
unlike most people believe that they're successful
Ray Dalio (14:56.720)
because of what they know,
Lex Fridman (14:58.480)
they're even more successful
Ray Dalio (15:01.600)
by being able to effectively learn from others
Lex Fridman (15:04.640)
and tap into the skills of people
Ray Dalio (15:06.840)
who see things different from them.
Lex Fridman (15:09.000)
Brilliant, so how do you win that personality
Ray Dalio (15:11.740)
being first of all, open to the fact
Lex Fridman (15:13.780)
that there's other people see things differently than you,
Lex Fridman (15:18.200)
and at the same time have supreme confidence in your vision?
Lex Fridman (15:22.320)
Is there just the psychology of that?
Lex Fridman (15:24.920)
Do you see a tension there between the confidence
Lex Fridman (15:27.300)
and the open mindedness?
Ray Dalio (15:28.560)
No, it's funny because I think we grow up thinking
Lex Fridman (15:31.600)
that there's a tension there, right?
Ray Dalio (15:33.200)
That there's a confidence
Lex Fridman (15:35.160)
and the more confidence that you have,
Ray Dalio (15:38.360)
there's a tension with the open mindedness
Lex Fridman (15:40.560)
and not being sure, okay?
Ray Dalio (15:43.620)
Confident and accurate
Lex Fridman (15:45.960)
are almost negatively correlated to many people.
Ray Dalio (15:50.120)
They're extremely confident and they're often inaccurate.
Lex Fridman (15:53.840)
And so I think one of the greatest tragedies of people
Ray Dalio (15:57.360)
is not realizing how those things to go together
Lex Fridman (16:00.220)
because instead it's really that by saying I know a lot
Lex Fridman (16:05.640)
and how do I know I'm still not wrong?
Lex Fridman (16:08.620)
And how do I take that the best thinking available to me
Lex Fridman (16:13.480)
and then raise my probability of learning?
Lex Fridman (16:16.640)
All these people think for themselves, okay?
Ray Dalio (16:19.560)
I mean, meaning they're smart,
Lex Fridman (16:21.520)
but they take in like vacuum cleaners,
Ray Dalio (16:24.000)
they take in ideas of others,
Lex Fridman (16:26.200)
they stress test their ideas with others,
Ray Dalio (16:28.840)
they assess what comes back to them
Lex Fridman (16:31.140)
in the form of other thinking
Lex Fridman (16:33.640)
and they also know what they're not good at
Lex Fridman (16:36.360)
and what other people who are good at the things
Ray Dalio (16:38.840)
that they're not good at,
Lex Fridman (16:39.840)
they know how to get those people
Lex Fridman (16:41.440)
and be successful all around
Lex Fridman (16:43.600)
because nobody has enough knowledge in their heads
Lex Fridman (16:46.960)
and that I think is one of the great differences.
Lex Fridman (16:49.600)
So the reason my company has been successful
Ray Dalio (16:53.400)
in terms of this is because of an idea
Lex Fridman (16:55.200)
meritocratic decision making a process
Ray Dalio (16:58.000)
by which you can get the best ideas.
Lex Fridman (17:00.920)
You know, what's an idea meritocracy?
Ray Dalio (17:02.840)
An idea meritocracy is to get the best ideas
Lex Fridman (17:05.860)
that are available out there
Lex Fridman (17:07.120)
and to work together with other people in the team
Lex Fridman (17:09.820)
to achieve that.
Ray Dalio (17:10.840)
That's an incredible process that you describe
Lex Fridman (17:12.640)
in several places to arrive at the truth,
Lex Fridman (17:15.400)
but I apologize if I'm romanticizing the notion,
Lex Fridman (17:18.640)
but let me linger on it.
Ray Dalio (17:20.880)
Just having enough self belief,
Lex Fridman (17:24.680)
you don't think there's a self delusion there
Ray Dalio (17:27.600)
that's necessary, especially in the beginning.
Lex Fridman (17:30.040)
You talk about in the journey,
Ray Dalio (17:31.800)
maybe the trials or the abyss.
Lex Fridman (17:34.640)
Do you think there is value to diluting yourself?
Ray Dalio (17:41.580)
I think what you're calling delusion
Lex Fridman (17:44.280)
is a bad word for uncertainty, okay?
Lex Fridman (17:48.880)
So in other words,
Lex Fridman (17:50.720)
because we keep coming back to the question,
Lex Fridman (17:52.800)
how would you know and all of those things?
Lex Fridman (17:55.040)
No, I think that delusion is not gonna help you,
Lex Fridman (17:58.640)
that you have to find out truth, okay?
Lex Fridman (18:01.480)
To deal with uncertainty, not saying,
Ray Dalio (18:03.880)
listen, I have this dream
Lex Fridman (18:05.360)
and I don't know how I'm going to get that dream.
Ray Dalio (18:08.120)
I mentioned in my book principles
Lex Fridman (18:10.160)
and described the process in a more complete way
Ray Dalio (18:12.920)
than we're gonna be able to go here.
Lex Fridman (18:15.060)
But what happens is I say, you form your dreams first
Lex Fridman (18:19.760)
and you can't judge
Lex Fridman (18:21.760)
whether you're going to achieve those dreams
Ray Dalio (18:24.600)
because you haven't learned
Lex Fridman (18:26.880)
the things that you're going to learn
Lex Fridman (18:28.680)
on the way toward those dreams, okay?
Lex Fridman (18:31.400)
So that isn't delusion.
Ray Dalio (18:33.840)
I wouldn't use delusion.
Lex Fridman (18:35.640)
I think you're overemphasizing the importance
Ray Dalio (18:38.740)
of knowing whether you're going to succeed or not.
Lex Fridman (18:41.680)
Get rid of that, okay?
Ray Dalio (18:43.240)
If you can get rid of that and say,
Lex Fridman (18:45.320)
okay, no, I can have that dream,
Lex Fridman (18:48.380)
but I'm so realistic in the notion of finding out.
Lex Fridman (18:52.680)
I'm curious, I'm a great learner, I'm a great experimenter.
Ray Dalio (18:56.440)
Along the way, you'll do those experiments
Lex Fridman (18:58.800)
which will teach you more truths
Lex Fridman (19:00.760)
and more learning about the reality
Lex Fridman (19:03.200)
so that you can get your dreams.
Lex Fridman (19:04.980)
Because if you still live in that world of delusion, okay?
Lex Fridman (19:08.400)
And you think delusion's helpful.
Ray Dalio (19:10.400)
No, the delusion isn't.
Lex Fridman (19:12.240)
Don't confuse delusion with not knowing.
Ray Dalio (19:14.520)
Yes, but nevertheless, so if we look at the abyss,
Lex Fridman (19:18.940)
we can look at your own that you describe.
Ray Dalio (19:22.060)
It's difficult psychologically for people.
Lex Fridman (19:24.200)
So many people quit.
Ray Dalio (19:26.080)
Many people choose a path that is more comfortable.
Lex Fridman (19:32.160)
The heartbreak of that breaks people.
Lex Fridman (19:34.640)
So if you have the dream
Lex Fridman (19:36.200)
and there's this cycle of learning, setting a goal,
Lex Fridman (19:38.640)
and so on, what's your value for the psychology
Lex Fridman (19:42.200)
of just being broken by these difficult moments?
Ray Dalio (19:45.440)
Well, that's classically the defining moment.
Lex Fridman (19:48.380)
It's almost like evolution taking care of,
Ray Dalio (19:51.720)
okay, now you crash, you're in the abyss.
Lex Fridman (19:55.440)
Oh my God, that's bad.
Lex Fridman (19:56.960)
And then the question is, what do you do?
Lex Fridman (19:59.320)
And it sorts people, okay?
Lex Fridman (1:00:00.400)
and your intellectual wants
Lex Fridman (1:00:02.720)
so that you really say they're aligned.
Lex Fridman (1:00:05.800)
And so to do that in a way to get what you want.
Lex Fridman (1:00:08.880)
So irrationality is a bad thing
Ray Dalio (1:00:13.360)
if it means that it doesn't make sense
Lex Fridman (1:00:16.480)
in getting you what you want,
Lex Fridman (1:00:18.200)
but you better decide which you you're satisfying.
Lex Fridman (1:00:20.200)
Is it the lower level you, emotional, subliminal one,
Lex Fridman (1:00:23.400)
or is it the other?
Lex Fridman (1:00:24.600)
But if you can align them.
Lex Fridman (1:00:26.080)
So what I find is that by going from my,
Lex Fridman (1:00:30.440)
you experience the decision, do this thing subliminally.
Lex Fridman (1:00:34.800)
And that's the thing I want.
Lex Fridman (1:00:36.040)
It comes to the surface.
Ray Dalio (1:00:37.720)
I find that if I can align that
Lex Fridman (1:00:40.360)
with what my logical me wants
Lex Fridman (1:00:42.640)
and do the double check between them
Lex Fridman (1:00:45.920)
and I get the same sort of thing,
Ray Dalio (1:00:47.920)
that that helps me a lot.
Lex Fridman (1:00:49.760)
I find, for example, meditation is one of the things
Ray Dalio (1:00:53.080)
that helps to achieve that alignment.
Lex Fridman (1:00:55.200)
It's fantastic for achieving that alignment.
Lex Fridman (1:00:58.480)
And often then I also want to not just do it in my head.
Lex Fridman (1:01:02.160)
I want to say, does that make sense?
Ray Dalio (1:01:03.600)
Help you.
Lex Fridman (1:01:04.440)
And so I do it with other people and I say, okay,
Ray Dalio (1:01:07.160)
well, let's say I want this thing and whatever.
Lex Fridman (1:01:09.440)
Does that make sense?
Lex Fridman (1:01:10.720)
And when you do that kind of triangulation,
Lex Fridman (1:01:13.640)
your two you's, and you do that with also the other way,
Lex Fridman (1:01:17.800)
then you certainly want to be rational, right?
Lex Fridman (1:01:21.240)
But rationality has to be defined by those things.
Lex Fridman (1:01:26.000)
And then you discover sort of new ideas
Lex Fridman (1:01:28.760)
that drive your future.
Lex Fridman (1:01:30.840)
So it's always, you're always at the edge
Lex Fridman (1:01:32.680)
of the set of principles you've developed.
Ray Dalio (1:01:34.360)
You're doing new things always.
Lex Fridman (1:01:36.160)
That's where the intellect is needed.
Ray Dalio (1:01:38.360)
Well, and the inspiration.
Lex Fridman (1:01:40.600)
The inspiration is needed to do that, right?
Lex Fridman (1:01:43.600)
Like what are you doing it for?
Lex Fridman (1:01:45.280)
It's the excitement.
Lex Fridman (1:01:46.960)
What is that thing?
Lex Fridman (1:01:47.800)
The adventure, the curiosity, the hunger.
Ray Dalio (1:01:49.800)
What's, if you can be Freud for a second,
Lex Fridman (1:01:52.720)
what's in that subconscious?
Lex Fridman (1:01:55.000)
What's the thing that drives us?
Lex Fridman (1:01:57.400)
I think you can't generalize of us.
Ray Dalio (1:02:00.000)
I think different people are driven by different things.
Lex Fridman (1:02:02.640)
There's not a common one, right?
Lex Fridman (1:02:04.800)
So like if you would take the shapers,
Lex Fridman (1:02:07.960)
I think it is a combination of, subliminally,
Ray Dalio (1:02:13.040)
it's a combination of excitement, curiosity.
Lex Fridman (1:02:18.400)
Is there a dark element there?
Lex Fridman (1:02:20.000)
Is there demons?
Lex Fridman (1:02:21.800)
Is there fears?
Lex Fridman (1:02:22.840)
Is there, in your sense, something dark that drives them?
Lex Fridman (1:02:25.960)
Most of the ones that I'm dealing with,
Ray Dalio (1:02:27.960)
I have not seen that.
Lex Fridman (1:02:29.720)
I see the, what I really see is,
Ray Dalio (1:02:33.280)
ooh, if I can do that, that would be the most dream.
Lex Fridman (1:02:37.680)
And then the act of creativity.
Lex Fridman (1:02:40.280)
And you say, ooh.
Lex Fridman (1:02:41.400)
So excitement is one of the things.
Lex Fridman (1:02:44.200)
Curiosity is a big pull, okay?
Lex Fridman (1:02:47.960)
And then tenacity, you know, okay, to do those things.
Lex Fridman (1:02:51.760)
But definitely emotions are entering into it.
Lex Fridman (1:02:55.360)
Then there's an intellectual component of it too, okay?
Ray Dalio (1:02:58.760)
It may be empathy.
Lex Fridman (1:03:01.160)
Can I have an impact?
Lex Fridman (1:03:02.800)
Can I have an impact?
Lex Fridman (1:03:04.440)
The desire to have an impact.
Ray Dalio (1:03:06.040)
That's an emotional thrill, but it also has empathy.
Lex Fridman (1:03:10.280)
And then you start to see spirituality.
Ray Dalio (1:03:12.760)
By spirituality, I mean the connectedness to the whole.
Lex Fridman (1:03:16.000)
You start to see people operate those things.
Ray Dalio (1:03:18.360)
Those tend to be the things that you see the most of.
Lex Fridman (1:03:22.360)
And I think you're gonna shut down this idea completely,
Lex Fridman (1:03:25.480)
but there's a notion that some of these shapers
Lex Fridman (1:03:29.560)
really walk the line between sort of madness and genius.
Lex Fridman (1:03:33.480)
Do you think madness has a role in any of this?
Lex Fridman (1:03:36.960)
Or do you still see Steve Jobs and Elon Musk
Lex Fridman (1:03:40.280)
as fundamentally rational?
Lex Fridman (1:03:42.160)
Yeah, there's a continuum there.
Lex Fridman (1:03:43.960)
And what comes to my mind is that
Lex Fridman (1:03:47.720)
genius is often at the edge,
Ray Dalio (1:03:52.960)
in some cases, imaginary genius,
Lex Fridman (1:03:56.440)
is at the edge of insanity.
Lex Fridman (1:04:00.240)
And it's almost like a radio that I think,
Lex Fridman (1:04:02.880)
okay, if I can tune it just right, it's playing right,
Lex Fridman (1:04:06.720)
but if I go a little bit too far, it goes off, okay?
Lex Fridman (1:04:11.920)
And so you can see this.
Ray Dalio (1:04:14.720)
Kay Jamison was studying bipolar.
Lex Fridman (1:04:17.360)
What it shows is that that's definitely the case,
Ray Dalio (1:04:22.000)
because when you're going out there,
Lex Fridman (1:04:23.600)
that imagination, whatever, is at the,
Ray Dalio (1:04:26.400)
can be near the edge sometimes.
Lex Fridman (1:04:29.000)
Doesn't have to always be.
Lex Fridman (1:04:31.280)
So let me ask you about automation.
Lex Fridman (1:04:33.320)
That's been a part of public discourse recently.
Ray Dalio (1:04:38.400)
What's your view on the impact of automation,
Lex Fridman (1:04:41.800)
of whether we're talking about AI
Lex Fridman (1:04:44.240)
and more basic forms of automation on the economy
Lex Fridman (1:04:46.960)
in the short term and the long term?
Lex Fridman (1:04:49.120)
Do you have concerns about it, as some do,
Lex Fridman (1:04:52.720)
or do you think it's overblown?
Ray Dalio (1:04:55.360)
It's not overblown.
Lex Fridman (1:04:56.200)
I mean, it's a giant thing.
Ray Dalio (1:04:57.480)
It'll come at us in a very big way in the future.
Lex Fridman (1:05:01.280)
We're right at the edge of even really accelerating it.
Ray Dalio (1:05:04.440)
It's had a big impact, and it will have a big impact.
Lex Fridman (1:05:07.880)
And it's a two edged sword,
Ray Dalio (1:05:09.400)
because it'll have tremendous benefits.
Lex Fridman (1:05:14.480)
And at the same time, it has profound benefits
Ray Dalio (1:05:18.580)
in employment and distributions of wealth,
Lex Fridman (1:05:21.420)
because the way I think about it is,
Ray Dalio (1:05:25.160)
there are certain things human beings can do.
Lex Fridman (1:05:27.560)
And over time, we've evolved to go
Ray Dalio (1:05:31.880)
to almost higher and higher levels.
Lex Fridman (1:05:34.360)
And now we're almost like, we're at this level.
Ray Dalio (1:05:36.960)
You know, it used to be your labor,
Lex Fridman (1:05:39.120)
and you would then do your labor,
Lex Fridman (1:05:41.400)
and okay, we can get past the labor.
Lex Fridman (1:05:42.960)
We got tractors and things,
Lex Fridman (1:05:44.240)
and you go up, up, up, up, up,
Lex Fridman (1:05:46.160)
and we're up over here,
Lex Fridman (1:05:47.320)
and up to the point in our minds,
Lex Fridman (1:05:50.000)
where okay, anything related to mental processing,
Ray Dalio (1:05:55.080)
the computer can probably do better,
Lex Fridman (1:05:57.320)
and we can find that.
Lex Fridman (1:05:58.560)
And so other than almost inventing,
Lex Fridman (1:06:01.900)
you're at a point where the machines
Lex Fridman (1:06:05.460)
and the automation will probably do it better.
Lex Fridman (1:06:09.680)
And that's accelerating, and that's a force,
Lex Fridman (1:06:12.840)
and that's a force for the good.
Lex Fridman (1:06:15.480)
And at the same time,
Lex Fridman (1:06:17.880)
what it does is it displaces people
Lex Fridman (1:06:20.720)
in terms of employment and changes,
Lex Fridman (1:06:22.800)
and it produces wealth gaps and all of that.
Lex Fridman (1:06:25.240)
So I think the real issue is that
Ray Dalio (1:06:28.000)
that has to be viewed as a national emergency.
Lex Fridman (1:06:32.160)
In other words, I think the wealth gap,
Ray Dalio (1:06:35.240)
the income gap, the opportunity gap,
Lex Fridman (1:06:37.640)
all of those things that force
Ray Dalio (1:06:40.440)
is creating the problems that we're having today,
Lex Fridman (1:06:43.940)
a lot of the problems, the great polarity,
Ray Dalio (1:06:47.120)
the disenfranchised,
Lex Fridman (1:06:49.120)
not anything approaching equality of education,
Ray Dalio (1:06:54.800)
all of these problems,
Lex Fridman (1:06:56.620)
a lot of problems are coming as a result of that.
Lex Fridman (1:06:59.360)
And so it needs to be viewed really
Lex Fridman (1:07:02.520)
as an emergency situation
Ray Dalio (1:07:05.440)
in which there's a good work,
Lex Fridman (1:07:08.400)
good plan worked out for how to deal with that effectively,
Lex Fridman (1:07:13.400)
so that it's dealt with effectively.
Lex Fridman (1:07:17.160)
So because it's good for the average,
Ray Dalio (1:07:21.640)
it's good for the impact,
Lex Fridman (1:07:23.120)
but it's not good for everyone,
Lex Fridman (1:07:24.440)
and that creates that polarity.
Lex Fridman (1:07:25.960)
So it's gotta be dealt with.
Ray Dalio (1:07:27.800)
Yeah, and you've talked about the American dream,
Lex Fridman (1:07:30.020)
and that that's something that all people
Ray Dalio (1:07:32.720)
should have an opportunity for,
Lex Fridman (1:07:34.080)
and that we need to reform capitalism
Ray Dalio (1:07:36.680)
to give that opportunity for everyone.
Lex Fridman (1:07:39.360)
Let me ask on one of the ideas
Ray Dalio (1:07:43.520)
in terms of safety nets that support
Lex Fridman (1:07:46.280)
that kind of opportunity.
Ray Dalio (1:07:47.840)
There's been a lot of discussion
Lex Fridman (1:07:49.040)
of universal basic income amongst people.
Lex Fridman (1:07:51.760)
So there's Andrew Yang, who's running on that.
Lex Fridman (1:07:55.400)
He's a political candidate running for president
Ray Dalio (1:07:57.880)
on the idea of universal basic income.
Lex Fridman (1:08:00.480)
What do you think about that,
Ray Dalio (1:08:01.880)
giving $1,000 or some amount of money to everybody
Lex Fridman (1:08:05.640)
as a way to give them the padding,
Ray Dalio (1:08:09.360)
the freedom to sort of take leaps,
Lex Fridman (1:08:12.400)
to take the call for adventure,
Lex Fridman (1:08:14.240)
to take the crazy pursuits?
Lex Fridman (1:08:16.800)
Before I get right into my thoughts
Ray Dalio (1:08:19.200)
on universal basic income,
Lex Fridman (1:08:20.520)
I wanna start with the notion that opportunity,
Ray Dalio (1:08:26.800)
education, development, creating equality,
Lex Fridman (1:08:31.800)
so that people say there's equal opportunity
Lex Fridman (1:08:36.240)
and is the most important thing.
Lex Fridman (1:08:39.760)
And then to find out what is the amount,
Lex Fridman (1:08:43.120)
how are you going to provide that?
Lex Fridman (1:08:45.080)
How do you get the money into a public school system?
Lex Fridman (1:08:50.300)
How do you get the teaching?
Lex Fridman (1:08:52.400)
The fleshing out that plan to create equal opportunity
Ray Dalio (1:08:57.680)
in all of its various forms
Lex Fridman (1:09:00.580)
is the most pressing thing to do.
Lex Fridman (1:09:03.000)
And so that is that.
Lex Fridman (1:09:06.240)
The opportunity, the most important one
Ray Dalio (1:09:08.360)
you're kind of implying is the earlier, the better.
Lex Fridman (1:09:11.440)
Sort of like opportunity to education.
Lex Fridman (1:09:14.480)
So in the early development of a human being
Lex Fridman (1:09:17.820)
is when you should have the equal opportunities.
Ray Dalio (1:09:20.120)
That's the most important.
Lex Fridman (1:09:21.080)
Right, in the first phase of your life,
Ray Dalio (1:09:24.240)
which goes from birth until you're on your own
Lex Fridman (1:09:27.860)
and you're an adult and you're now out there.
Lex Fridman (1:09:31.600)
And you deal with early childhood development, okay?
Lex Fridman (1:09:34.680)
And you take the brain and you say, what's important?
Ray Dalio (1:09:38.040)
The childcare, okay, it makes a world of difference,
Lex Fridman (1:09:42.680)
for example, if you have good parents
Ray Dalio (1:09:44.740)
who are trying to think about instilling the stability
Lex Fridman (1:09:48.760)
in a non traumatic environment to provide them.
Lex Fridman (1:09:52.100)
So I would say the good guidance
Lex Fridman (1:09:53.800)
that normally comes from parents
Lex Fridman (1:09:55.840)
and the good education that they're receiving
Lex Fridman (1:10:01.360)
are the most important things in that person's development.
Ray Dalio (1:10:06.240)
The ability to be able to be prepared to go out there
Lex Fridman (1:10:10.400)
and then to go into a market
Ray Dalio (1:10:12.800)
that's an equal opportunity job market,
Lex Fridman (1:10:15.880)
to be able to then go into that kind of market
Ray Dalio (1:10:19.040)
is a system that creates not only fairness,
Lex Fridman (1:10:22.840)
anything else is not fair.
Lex Fridman (1:10:25.000)
And then in addition to that,
Lex Fridman (1:10:27.160)
it also is a more effective economic system
Ray Dalio (1:10:30.440)
because the consequences of not doing that
Lex Fridman (1:10:33.740)
to a society are devastating.
Ray Dalio (1:10:35.760)
If you look at what the difference in outcomes
Lex Fridman (1:10:38.600)
for somebody who completes high school
Ray Dalio (1:10:40.960)
or doesn't complete high school,
Lex Fridman (1:10:42.560)
or does each one of those state changes.
Lex Fridman (1:10:45.880)
And you look at what that means
Lex Fridman (1:10:47.800)
in terms of their costs to society, not only themselves,
Lex Fridman (1:10:52.120)
but their cost and incarceration costs
Lex Fridman (1:10:54.720)
and crimes and all of those things.
Ray Dalio (1:10:57.520)
It's economically better for the society
Lex Fridman (1:11:00.760)
and it's fairer if they can get those particular things.
Ray Dalio (1:11:06.200)
Once they have those things,
Lex Fridman (1:11:07.760)
then you move on to other things.
Lex Fridman (1:11:09.280)
But yes, from birth all the way through that process,
Lex Fridman (1:11:13.160)
anything less than that is bad, is a tragedy and so on.
Lex Fridman (1:11:18.920)
So that's what, yeah,
Lex Fridman (1:11:20.400)
those are the things that I'm estimating.
Lex Fridman (1:11:22.200)
And so what I would want above all else is to provide that.
Lex Fridman (1:11:27.360)
So with that in mind,
Ray Dalio (1:11:28.720)
now we'll talk about universal basic income.
Lex Fridman (1:11:30.840)
Start with that, now we can talk about UBI.
Ray Dalio (1:11:33.280)
Right, because you have to have that.
Lex Fridman (1:11:34.920)
Now the question is what's the best way to provide that?
Lex Fridman (1:11:39.080)
So when I look at UBI,
Lex Fridman (1:11:41.360)
I really think is what is going to happen
Lex Fridman (1:11:43.880)
with that $1,000, okay?
Lex Fridman (1:11:46.280)
And will that $1,000 come from another program?
Lex Fridman (1:11:50.540)
Does that come from an early childhood developmental program?
Lex Fridman (1:11:54.200)
Who are you giving the $1,000 to
Lex Fridman (1:11:57.200)
and what will they do for that $1,000?
Lex Fridman (1:11:59.720)
I mean, like my reaction would be,
Ray Dalio (1:12:01.920)
I think it's a great thing that everybody
Lex Fridman (1:12:04.060)
should have almost $1,000 in their bank and so on.
Lex Fridman (1:12:07.760)
But when do they get to make decisions or who's the parent?
Lex Fridman (1:12:10.680)
A lot of times you can give $1,000 to somebody
Lex Fridman (1:12:14.000)
and it could have a negative result.
Lex Fridman (1:12:15.760)
It can have, they can use that money detrimentally,
Ray Dalio (1:12:19.320)
not just productively.
Lex Fridman (1:12:21.080)
And if that money's coming away
Ray Dalio (1:12:22.920)
from some of those other things
Lex Fridman (1:12:24.480)
that are gonna produce the things I want
Lex Fridman (1:12:26.440)
and you're shifted to, let's say,
Lex Fridman (1:12:28.840)
to come in and give a check,
Ray Dalio (1:12:30.400)
doesn't mean its outcomes are going to be good
Lex Fridman (1:12:32.580)
in providing those things
Ray Dalio (1:12:33.720)
that I think are so fundamental important.
Lex Fridman (1:12:36.540)
If it was just everybody can have $1,000 and use it
Lex Fridman (1:12:39.580)
so when the time comes.
Lex Fridman (1:12:40.420)
Use it well, right.
Lex Fridman (1:12:41.240)
And use it well, that would be really, really good
Lex Fridman (1:12:44.240)
because it's almost like everybody,
Ray Dalio (1:12:46.640)
you'd wish everybody could have $1,000
Lex Fridman (1:12:48.440)
worth of wiggle room in their lives, okay.
Lex Fridman (1:12:51.680)
And I think that would be great.
Lex Fridman (1:12:53.960)
I love that.
Lex Fridman (1:12:55.040)
But I wanna make sure that these other things
Lex Fridman (1:12:58.360)
that are taken care of.
Lex Fridman (1:12:59.420)
So if it comes out of that budget
Lex Fridman (1:13:01.360)
and I don't want it to come out of that budget
Ray Dalio (1:13:04.120)
that's gonna be doing those things.
Lex Fridman (1:13:06.000)
And so you have to figure it out.
Lex Fridman (1:13:08.840)
And you have a certain skepticism
Lex Fridman (1:13:10.500)
that human nature will use,
Ray Dalio (1:13:13.980)
may not always, in fact frequently,
Lex Fridman (1:13:16.800)
may not use that $1,000 for the optimal,
Ray Dalio (1:13:19.680)
to support the optimal trajectory.
Lex Fridman (1:13:21.960)
Some will and some won't.
Ray Dalio (1:13:23.800)
One of the big advantages of universal basic income
Lex Fridman (1:13:27.380)
is that if you put it in the hands,
Ray Dalio (1:13:29.680)
let's say of parents who know how to do the right things
Lex Fridman (1:13:32.400)
and make the right choices for their children
Ray Dalio (1:13:34.960)
because they're responsible
Lex Fridman (1:13:36.080)
and you say I'm gonna give them $1,000 wiggle room
Ray Dalio (1:13:38.920)
to use for the benefit of their children.
Lex Fridman (1:13:41.440)
Wow, that sounds great.
Ray Dalio (1:13:43.300)
If you put it in the hands of let's say an alcoholic
Lex Fridman (1:13:47.480)
or drug addicted parent who is not making those choices
Ray Dalio (1:13:52.160)
well for their children
Lex Fridman (1:13:53.840)
and what they do is they take that $1,000
Lex Fridman (1:13:56.360)
and they don't use it well,
Lex Fridman (1:13:58.100)
then that's gonna produce more harm than good.
Ray Dalio (1:14:01.040)
Well put.
Lex Fridman (1:14:02.220)
You're, if I may say so,
Ray Dalio (1:14:03.840)
one of the richest people in the world.
Lex Fridman (1:14:06.820)
So you're a good person to ask.
Lex Fridman (1:14:09.120)
Does money buy happiness?
Lex Fridman (1:14:11.300)
No, it's been shown that between,
Ray Dalio (1:14:14.760)
once you get over a basic level of income
Lex Fridman (1:14:18.800)
so that you can take care of the pain
Ray Dalio (1:14:21.920)
that you can, health and whatever,
Lex Fridman (1:14:24.240)
there's no correlation between the level of happiness
Ray Dalio (1:14:28.120)
that one has and the level of money that one has.
Lex Fridman (1:14:32.080)
That thing that has the highest correlation
Ray Dalio (1:14:35.780)
is quality relationships with others, community.
Lex Fridman (1:14:39.680)
If you look at surveys of these things
Ray Dalio (1:14:41.760)
across all surveys and all societies,
Lex Fridman (1:14:44.740)
it's a sense of community and interpersonal relationships.
Ray Dalio (1:14:49.660)
That is not in any way correlated with money.
Lex Fridman (1:14:52.600)
You can go down to native tribes in very poor places
Ray Dalio (1:14:57.320)
or you can go in all different communities
Lex Fridman (1:15:00.480)
and so they have the opportunity to have that.
Ray Dalio (1:15:03.200)
I'm very lucky in that I started with nothing
Lex Fridman (1:15:06.980)
so I have the full range.
Ray Dalio (1:15:08.320)
I can tell you I'm not having money
Lex Fridman (1:15:12.280)
and then having quite a lot of money
Lex Fridman (1:15:13.920)
and I did that in the right order.
Lex Fridman (1:15:16.040)
So you started from nothing in Long Island.
Ray Dalio (1:15:17.880)
Yeah, and my dad was a jazz musician
Lex Fridman (1:15:20.620)
but I had all really that I needed
Ray Dalio (1:15:23.160)
because I had two parents who loved me
Lex Fridman (1:15:25.800)
and took good care of me and I went to a public school
Ray Dalio (1:15:28.920)
that was a good public school
Lex Fridman (1:15:30.760)
and basically you don't need much more than that
Ray Dalio (1:15:34.080)
in order to, that's the equal opportunity part.
Lex Fridman (1:15:36.920)
Anyway, what I'm saying is I experienced the range
Lex Fridman (1:15:40.720)
and there are many studies on the answer to your question.
Lex Fridman (1:15:44.620)
No money does not bring happiness.
Ray Dalio (1:15:48.220)
Money gives you an ability to make choices.
Lex Fridman (1:15:52.560)
Does it get in the way in any way
Lex Fridman (1:15:57.520)
of forming those deep, meaningful relationships?
Lex Fridman (1:16:00.560)
It can.
Ray Dalio (1:16:01.600)
There are lots of ways that it makes negative.
Lex Fridman (1:16:03.320)
That's one of them.
Ray Dalio (1:16:04.480)
It could stand in the way of that.
Lex Fridman (1:16:06.200)
Yes, okay.
Lex Fridman (1:16:08.480)
But I could almost list the ways that it could stand.
Lex Fridman (1:16:11.720)
It could be a problem.
Lex Fridman (1:16:12.840)
Yeah, what does it buy?
Lex Fridman (1:16:15.420)
So if you can elaborate, you mentioned a bit of freedom.
Ray Dalio (1:16:19.580)
At the most fundamental level,
Lex Fridman (1:16:21.400)
it doesn't take a whole lot but it takes enough
Ray Dalio (1:16:25.320)
that you can take care of yourself and your family
Lex Fridman (1:16:30.320)
to be able to learn,
Ray Dalio (1:16:35.840)
do the basics of, have the relationships,
Lex Fridman (1:16:40.280)
have healthcare, the basics of those types of things.
Ray Dalio (1:16:44.480)
You know, you can cover the patients.
Lex Fridman (1:16:46.580)
And then to have maybe enough security
Lex Fridman (1:16:50.320)
but maybe not too much security.
Lex Fridman (1:16:52.320)
That's right, yeah.
Ray Dalio (1:16:53.440)
That you essentially are okay.
Lex Fridman (1:16:57.760)
Okay, that's really good.
Lex Fridman (1:17:00.680)
And you don't, that's what money will get you.
Lex Fridman (1:17:04.160)
And everything else could go either way.
Ray Dalio (1:17:06.580)
Well, no, there's more.
Lex Fridman (1:17:08.000)
There's more.
Ray Dalio (1:17:08.820)
Okay.
Lex Fridman (1:17:09.800)
Then beyond that, what it then starts to do,
Ray Dalio (1:17:13.520)
that's the most important thing.
Lex Fridman (1:17:15.120)
But beyond that, what it starts to do
Ray Dalio (1:17:18.020)
is to help to make your dreams happen in various ways.
Lex Fridman (1:17:22.840)
Okay, so for example, now I, you know, like in my case,
Ray Dalio (1:17:29.200)
it's like those dreams might not be just my own dreams,
Lex Fridman (1:17:32.080)
they're impact on others dreams, okay?
Lex Fridman (1:17:35.760)
So my own dreams might be, I don't know,
Lex Fridman (1:17:40.400)
I can pass along these, at my stage in life,
Ray Dalio (1:17:43.640)
I could pass along these principles to you
Lex Fridman (1:17:45.360)
and I can give those things or I could do whatever.
Ray Dalio (1:17:49.840)
I can go on an adventure, I can start a business,
Lex Fridman (1:17:54.880)
I can do those other things, be productive,
Ray Dalio (1:17:58.040)
I can self actualize in ways
Lex Fridman (1:18:00.720)
that might be not possible otherwise.
Lex Fridman (1:18:05.200)
And so that's my own belief.
Lex Fridman (1:18:07.880)
And then I can also help others.
Ray Dalio (1:18:11.000)
I mean, this is, you know, to the extent when you get older
Lex Fridman (1:18:13.640)
and with time and whatever, you start to feel connected,
Ray Dalio (1:18:17.080)
spirituality, that's what I'm referring to,
Lex Fridman (1:18:19.960)
you can start to have an effect on others
Ray Dalio (1:18:21.840)
that's beneficial and so on, gives you the ability.
Lex Fridman (1:18:24.480)
I could tell you that people who are very wealthy
Ray Dalio (1:18:29.120)
who have that feel that they don't have enough money.
Lex Fridman (1:18:32.320)
Bill Gates will feel almost broke
Ray Dalio (1:18:35.200)
because relative to the things he'd like to accomplish
Lex Fridman (1:18:39.040)
through the Gates Foundation and things like that,
Ray Dalio (1:18:41.760)
you know, oh my God, he doesn't have enough money
Lex Fridman (1:18:44.160)
to accomplish the things he wishes for.
Lex Fridman (1:18:46.440)
But those things are not, you know,
Lex Fridman (1:18:49.240)
they're not the most fundamental things.
Lex Fridman (1:18:51.560)
So I think that people sometimes think money has value.
Lex Fridman (1:18:56.240)
Money doesn't have value.
Ray Dalio (1:18:58.480)
Money is, like you say,
Lex Fridman (1:18:59.920)
just a medium of exchange at a store all the while.
Lex Fridman (1:19:02.960)
And so what you have to say is,
Lex Fridman (1:19:05.000)
what is it that you're going to buy?
Ray Dalio (1:19:07.400)
Now, there are other people who get their gratification
Lex Fridman (1:19:10.120)
in ways that are different from me,
Lex Fridman (1:19:12.440)
but I think in many cases,
Lex Fridman (1:19:14.640)
let's say somebody who used money to have a status symbol,
Lex Fridman (1:19:18.920)
what would I say?
Lex Fridman (1:19:20.240)
Or that's probably unhealthy.
Lex Fridman (1:19:22.240)
But then, I don't know, somebody who says,
Lex Fridman (1:19:25.120)
I love a great, gorgeous painting
Lex Fridman (1:19:28.120)
and it's going to cost lots of money.
Lex Fridman (1:19:29.960)
In my priorities, I can't get there.
Lex Fridman (1:19:35.240)
But that doesn't mean, who am I to judge others
Lex Fridman (1:19:38.520)
in terms of, let's say, their element of the freedom
Ray Dalio (1:19:41.040)
to do those things.
Lex Fridman (1:19:42.160)
So it's a little bit complicated.
Lex Fridman (1:19:43.920)
But by and large, that's my view on money and wealth.
Lex Fridman (1:19:48.920)
So let me ask you in terms of the idea of,
Lex Fridman (1:19:53.840)
so much of your passions in life has been
Lex Fridman (1:19:56.640)
through something you might be able to call work.
Ray Dalio (1:19:59.880)
Alan Watts has this quote.
Lex Fridman (1:20:02.000)
He said that the real key to life, secret to life,
Ray Dalio (1:20:06.440)
is to be completely engaged with what you're doing
Lex Fridman (1:20:08.960)
in the here and now.
Lex Fridman (1:20:10.600)
And instead of calling it work, realize it is play.
Lex Fridman (1:20:14.200)
So I'd like to ask, what is the role of work
Lex Fridman (1:20:17.920)
in your life's journey, or in a life's journey?
Lex Fridman (1:20:21.600)
And what do you think about this modern idea
Lex Fridman (1:20:24.040)
of kind of separating work and work life balance?
Lex Fridman (1:20:28.920)
I have a principle that I believe in is,
Ray Dalio (1:20:31.200)
make your work and your passion the same thing.
Lex Fridman (1:20:33.520)
Okay. Okay.
Lex Fridman (1:20:35.360)
So that's a similar view.
Lex Fridman (1:20:38.320)
In other words, if you can make your work and your passion,
Ray Dalio (1:20:40.360)
it's just gonna work out great.
Lex Fridman (1:20:41.960)
And then of course, people have different purposes of work.
Lex Fridman (1:20:45.840)
And I don't wanna be theoretical about that.
Lex Fridman (1:20:48.640)
People have to take care of their family.
Lex Fridman (1:20:51.000)
So money at a certain point is the base,
Lex Fridman (1:20:54.920)
is an important component of that work.
Lex Fridman (1:20:57.680)
So you look beyond that, what is the money gonna get you
Lex Fridman (1:21:00.160)
and what are you trying to achieve?
Lex Fridman (1:21:02.040)
But the most important thing, I agree,
Lex Fridman (1:21:04.800)
is meaningful work and meaningful relationships.
Ray Dalio (1:21:07.640)
Like if you can get into the thing that you're at,
Lex Fridman (1:21:10.360)
your mission that you're on,
Lex Fridman (1:21:12.480)
and you are excited about that mission that you're on.
Lex Fridman (1:21:15.800)
And then you can do that with people
Ray Dalio (1:21:18.360)
who you have the meaningful relationships with.
Lex Fridman (1:21:21.920)
You have meaningful work and meaningful relationships.
Ray Dalio (1:21:25.320)
I mean, that is fabulous for most people.
Lex Fridman (1:21:30.840)
And it seems that many people struggle to get there,
Ray Dalio (1:21:34.640)
not out of, not necessarily because they're constrained
Lex Fridman (1:21:39.040)
by the fact that they have the financial constraints
Ray Dalio (1:21:41.280)
of having to provide for their family and so on.
Lex Fridman (1:21:45.760)
But it's, I mean, this idea is out there
Ray Dalio (1:21:50.120)
that there needs to be a work life balance,
Lex Fridman (1:21:51.880)
which means that most people,
Ray Dalio (1:21:54.240)
we're gonna return to the same things,
Lex Fridman (1:21:56.240)
most doesn't mean optimal,
Lex Fridman (1:21:57.800)
but most people seem to not be doing their life's passion,
Lex Fridman (1:22:01.920)
not unifying work and passion.
Lex Fridman (1:22:04.960)
Why do you think that is?
Lex Fridman (1:22:07.360)
Well, the work life balance,
Ray Dalio (1:22:08.760)
there's a life arc that you go through.
Lex Fridman (1:22:12.920)
Starts at zero and ends somewhere in the vicinity of 80,
Lex Fridman (1:22:17.920)
and there is a phase.
Lex Fridman (1:22:19.080)
And you could look at the different degrees of happiness
Ray Dalio (1:22:22.280)
that happen in those phases.
Lex Fridman (1:22:23.880)
I can go through that if that was interesting,
Lex Fridman (1:22:25.600)
but we don't have time probably for it.
Lex Fridman (1:22:27.640)
But you get in the part of the life,
Ray Dalio (1:22:30.160)
that part of the life,
Lex Fridman (1:22:32.600)
which has the lowest level of happiness is age 45 to 55.
Lex Fridman (1:22:38.600)
And because as you move into this second phase of your life,
Lex Fridman (1:22:44.960)
now the first phase of your life
Ray Dalio (1:22:46.360)
is when you're learning dependent on others.
Lex Fridman (1:22:48.920)
Second phase of your life is when you're working
Lex Fridman (1:22:51.680)
and others are dependent on you
Lex Fridman (1:22:53.440)
and you're trying to be successful.
Lex Fridman (1:22:55.560)
And in that phase of one's life,
Lex Fridman (1:22:58.120)
you encounter the work life balance challenge
Ray Dalio (1:23:01.360)
because you're trying to be successful at work
Lex Fridman (1:23:04.000)
and successful at parenting
Lex Fridman (1:23:05.560)
and successful and successful in all those things
Lex Fridman (1:23:08.440)
that take your demand.
Lex Fridman (1:23:10.080)
And they get into that.
Lex Fridman (1:23:11.240)
And I understand that problem in the work life balance.
Lex Fridman (1:23:15.320)
The issue is primarily to know how to approach that, okay?
Lex Fridman (1:23:20.080)
So I understand it's stressful, it produces stress
Lex Fridman (1:23:24.160)
and it produces bad results
Lex Fridman (1:23:25.680)
and it produces the lowest level of happiness.
Ray Dalio (1:23:28.080)
In one's life.
Lex Fridman (1:23:29.120)
It's interesting as you get later in life,
Ray Dalio (1:23:31.880)
the levels of happiness rise
Lex Fridman (1:23:33.760)
and the highest level of happiness
Ray Dalio (1:23:35.880)
is between ages 70 and 80,
Lex Fridman (1:23:37.640)
which is interesting for other reasons.
Lex Fridman (1:23:39.440)
But in that spot,
Lex Fridman (1:23:41.400)
and the key to work life balance
Ray Dalio (1:23:45.520)
is to realize and to learn
Lex Fridman (1:23:49.000)
how to get more out of an hour of life, okay?
Ray Dalio (1:23:53.760)
Because an hour of work,
Lex Fridman (1:23:56.840)
what people are thinking is that they have to make a choice
Ray Dalio (1:24:00.560)
between one thing and another.
Lex Fridman (1:24:02.520)
And of course they do.
Lex Fridman (1:24:04.720)
But they don't realize that if they develop the skill
Lex Fridman (1:24:08.320)
to get a lot more out of an hour,
Ray Dalio (1:24:11.320)
it's the equivalent of having many more hours in your life.
Lex Fridman (1:24:14.680)
And so, that's why in the book principles,
Ray Dalio (1:24:17.480)
I try to go into, okay, now,
Lex Fridman (1:24:19.360)
how can you get a lot more out of an hour?
Ray Dalio (1:24:23.320)
That allows you to get more life into your life
Lex Fridman (1:24:25.920)
and it reduces the work life balance.
Lex Fridman (1:24:28.040)
And that's the primary struggle in that 35 to 45.
Lex Fridman (1:24:32.920)
If you could linger on that,
Lex Fridman (1:24:35.120)
so what are the ups and downs of life
Lex Fridman (1:24:37.880)
in terms of happiness in general
Lex Fridman (1:24:39.960)
and perhaps in your own life
Lex Fridman (1:24:42.960)
when you look back at the moments, the peaks?
Ray Dalio (1:24:47.720)
It's pretty much the same pattern.
Lex Fridman (1:24:50.040)
Early in one's life tends to be a very happy period,
Ray Dalio (1:24:54.400)
all the way up and 16 is like a really great happy,
Lex Fridman (1:24:58.800)
I think like myself, you start to get elements of freedom,
Ray Dalio (1:25:03.400)
you get your driver's license, whatever, but 16 is there.
Lex Fridman (1:25:08.720)
Junior year in high school quite often
Ray Dalio (1:25:10.560)
could be a stressful period
Lex Fridman (1:25:11.760)
to try to get thinking about the high school.
Ray Dalio (1:25:13.760)
You go into college,
Lex Fridman (1:25:15.280)
tends to be very hot happiness, generally speaking.
Ray Dalio (1:25:18.440)
Freedom.
Lex Fridman (1:25:19.280)
And then freedom, friendships, all of that.
Ray Dalio (1:25:22.600)
Freedom is a big thing.
Lex Fridman (1:25:24.200)
And then 23 is a peak point kind of in happiness,
Ray Dalio (1:25:30.680)
that freedom.
Lex Fridman (1:25:31.680)
Then sequentially, one has a great time,
Ray Dalio (1:25:35.000)
they date, they go out and so on,
Lex Fridman (1:25:36.600)
you find the love of your life,
Ray Dalio (1:25:38.920)
you begin to develop a family.
Lex Fridman (1:25:41.560)
And then with that, as time happens,
Ray Dalio (1:25:44.400)
you have more of your work life balance challenges
Lex Fridman (1:25:48.040)
that come in your responsibilities.
Lex Fridman (1:25:50.120)
And then as you get there in that mid part of your life,
Lex Fridman (1:25:53.920)
that is the biggest struggle.
Ray Dalio (1:25:56.520)
Chances are you will crash in that period of time,
Lex Fridman (1:26:00.040)
you'll have your series of failures,
Ray Dalio (1:26:02.440)
that's when you go into the abyss,
Lex Fridman (1:26:05.520)
you learn, you hopefully learn from those mistakes,
Ray Dalio (1:26:09.000)
you have the metamorphosis, you come out, you change,
Lex Fridman (1:26:12.440)
you hopefully become better
Lex Fridman (1:26:14.520)
and you take more responsibilities and so on.
Lex Fridman (1:26:17.240)
And then when you get to the later part,
Ray Dalio (1:26:20.760)
as you are starting to approach the transition
Lex Fridman (1:26:24.560)
in that late part of the second phase of your life,
Ray Dalio (1:26:28.560)
before you go into the third phase of your life,
Lex Fridman (1:26:31.200)
second phase is you're working, trying to be successful.
Ray Dalio (1:26:33.800)
Third phase of your life is you want people
Lex Fridman (1:26:37.640)
to be successful without you, okay?
Ray Dalio (1:26:40.480)
You want your kids to be successful without you
Lex Fridman (1:26:43.920)
because when you're at that phase,
Ray Dalio (1:26:46.400)
they're at making their transition
Lex Fridman (1:26:48.640)
from the first phase to the second phase
Lex Fridman (1:26:50.560)
and they're trying to be successful
Lex Fridman (1:26:52.000)
and you want them to be successful without you
Lex Fridman (1:26:53.920)
and your parents are gone and then you have freedom
Lex Fridman (1:26:58.680)
and then you have freedom again.
Lex Fridman (1:27:00.640)
And with that freedom and then you have these,
Lex Fridman (1:27:03.720)
history has shown with this, you have friendships,
Ray Dalio (1:27:06.760)
you have perspective on life, you have different things
Lex Fridman (1:27:09.640)
and that's one of the reasons
Ray Dalio (1:27:11.080)
that that later part of the life can be real.
Lex Fridman (1:27:13.720)
On average, actually, it's the highest.
Ray Dalio (1:27:16.160)
Very interesting thing, there are surveys
Lex Fridman (1:27:19.840)
and say, how good do you look and how good do you feel?
Lex Fridman (1:27:24.560)
And that's the highest survey.
Lex Fridman (1:27:28.360)
Now, they're not looking the best
Lex Fridman (1:27:30.400)
and they're not feeling the best, right?
Lex Fridman (1:27:32.160)
Maybe it's 35 that they're actually looking the best
Lex Fridman (1:27:35.080)
and feeling the best, but they rank the highest
Lex Fridman (1:27:38.520)
at that point, survey results of being the highest
Ray Dalio (1:27:41.080)
in that 70 to 80 period of time
Lex Fridman (1:27:44.200)
because it has to do with an attitude on life.
Ray Dalio (1:27:47.200)
Then you start to have grandkids,
Lex Fridman (1:27:48.960)
oh, grandkids are great
Lex Fridman (1:27:50.760)
and you start to experience that transition well.
Lex Fridman (1:27:54.680)
So that's what the arc of life pretty much looks like
Lex Fridman (1:27:57.800)
and I'm experiencing it.
Lex Fridman (1:28:00.920)
You've lived it.
Ray Dalio (1:28:02.360)
When you meditate, we're all human, we're all mortal.
Lex Fridman (1:28:05.760)
When you meditate on your own mortality,
Ray Dalio (1:28:09.600)
having achieved a lot of success on whatever dimension,
Lex Fridman (1:28:14.600)
what do you think is the meaning of it all?
Lex Fridman (1:28:17.040)
The meaning of our short existence on earth as human beings?
Lex Fridman (1:28:22.120)
I think that evolution is the greatest force
Ray Dalio (1:28:25.120)
of the universe and that we're all tiny bits
Lex Fridman (1:28:30.320)
of an evolutionary type of process
Ray Dalio (1:28:33.480)
where it's just matter and machines that go through time
Lex Fridman (1:28:38.000)
and that we all have a deeply embedded inclination
Ray Dalio (1:28:43.000)
to evolve and contribute to evolution.
Lex Fridman (1:28:48.480)
So I think it's to personally evolve
Lex Fridman (1:28:52.000)
and contribute to evolution.
Lex Fridman (1:28:54.260)
I could have predicted you would answer that way.
Ray Dalio (1:28:56.200)
It's brilliant and exactly right.
Lex Fridman (1:28:59.360)
And I think we've said it before, but I'll say it again.
Ray Dalio (1:29:02.920)
You have a lot of incredible videos out there
Lex Fridman (1:29:05.440)
that people should definitely watch.
Ray Dalio (1:29:07.520)
I don't say this often.
Lex Fridman (1:29:08.780)
I mean, it's literally the best spend of time
Lex Fridman (1:29:11.560)
and in terms of reading principles
Lex Fridman (1:29:14.000)
and reading basically anything you write on LinkedIn
Lex Fridman (1:29:16.120)
and so on is a really good use of time.
Lex Fridman (1:29:18.480)
It's a lot of light bulb moments,
Ray Dalio (1:29:20.640)
a lot of transformative ideas in there.
Lex Fridman (1:29:22.680)
So Ray, thank you so much.
Ray Dalio (1:29:24.800)
It's been an honor.
Lex Fridman (1:29:25.640)
I really appreciate it.
Ray Dalio (1:29:26.640)
It's been a pleasure for me too.
Lex Fridman (1:29:28.080)
I'm happy to hear it's a use to you and others.
Ray Dalio (1:29:32.840)
Thanks for listening to this conversation with Ray Dalio
Lex Fridman (1:29:35.920)
and thank you to our presenting sponsor, Cash App.
Ray Dalio (1:29:38.840)
Download it, use code LexBodcast.
Lex Fridman (1:29:41.360)
You'll get $10 and $10 will go to FIRST,
Ray Dalio (1:29:44.480)
a STEM education nonprofit
Lex Fridman (1:29:46.240)
that inspires hundreds of thousands of young minds
Ray Dalio (1:29:49.200)
to learn and to dream of engineering our future.
Lex Fridman (1:29:52.600)
If you enjoy this podcast, subscribe on YouTube,
Ray Dalio (1:29:55.540)
get five stars on Apple Podcast, support on Patreon
Lex Fridman (1:29:59.000)
or connect with me on Twitter.
Ray Dalio (1:30:00.880)
Finally, closing words of advice from Ray Dalio,
Lex Fridman (1:30:04.240)
pain plus reflection equals progress.
Ray Dalio (1:30:08.280)
Thank you for listening and hope to see you next time.
Lex Fridman (20:01.280)
And some people get off the field
Lex Fridman (20:04.720)
and they say, oh, I don't like this and so on.
Lex Fridman (20:07.320)
And some people learn and they have a metamorphosis
Lex Fridman (20:12.800)
and it changes their approach to learning.
Lex Fridman (20:16.140)
The number one thing it should give them is uncertainty.
Ray Dalio (20:19.360)
You should take an audacious dreamer,
Lex Fridman (20:23.960)
guy who wants to change the world, crash, okay,
Lex Fridman (20:28.680)
and then come out of that crashing and saying,
Lex Fridman (20:31.720)
okay, I can be audacious
Lex Fridman (20:35.200)
and scared that I'm gonna be wrong at the same time.
Lex Fridman (20:39.680)
And then how do I do that?
Ray Dalio (20:41.000)
Because that's the key.
Lex Fridman (20:42.400)
When you don't lose your audaciousness
Lex Fridman (20:44.560)
and you keep going after your big goal,
Lex Fridman (20:46.880)
and at the same time you say,
Ray Dalio (20:48.400)
hey, I'm worried that I'm gonna be wrong,
Lex Fridman (20:50.640)
you gain your radical open mindedness
Ray Dalio (20:53.780)
that allows you to take in the things,
Lex Fridman (20:56.120)
that allows you to go to the next level of being successful.
Lex Fridman (20:59.560)
So your own process, I mean, you've talked about it before,
Lex Fridman (21:02.580)
but it would be great if you can describe it
Ray Dalio (21:05.260)
because our darkest moments
Lex Fridman (21:06.600)
are perhaps the most interesting.
Lex Fridman (21:07.980)
So your own with the prediction of another depression.
Lex Fridman (21:13.120)
Economic depression.
Ray Dalio (21:14.480)
Yes, I apologize, economic depression.
Lex Fridman (21:17.160)
Can you talk to what you were feeling, thinking,
Lex Fridman (21:22.320)
planning, strategizing at those moments?
Lex Fridman (21:24.600)
Yeah, that was my biggest moment, okay?
Ray Dalio (21:28.820)
Building my little company.
Lex Fridman (21:30.840)
This is in 1981, 82.
Ray Dalio (21:34.080)
I had calculated that American banks
Lex Fridman (21:36.680)
had given a lot more money to, lent a lot more money
Ray Dalio (21:40.920)
to Latin American countries
Lex Fridman (21:42.120)
than those countries were gonna pay back,
Lex Fridman (21:44.040)
and that they would have a debt crisis,
Lex Fridman (21:46.720)
and that this had sent the economy tumbling,
Lex Fridman (21:49.880)
and that was an extremely controversial point of view.
Lex Fridman (21:53.520)
Then it started to happen, and it happened,
Lex Fridman (21:55.600)
and Mexico defaulted in August 1982.
Lex Fridman (21:58.800)
I thought that there was gonna be an economic collapse
Ray Dalio (22:02.440)
that was gonna follow
Lex Fridman (22:03.360)
because there was a series of the other countries,
Ray Dalio (22:05.640)
it was just playing out as I had imagined,
Lex Fridman (22:08.160)
and that couldn't have been more wrong.
Ray Dalio (22:11.000)
That was the exact bottom in the stock market
Lex Fridman (22:14.080)
because central banks eased monetary policy, blah, blah, blah,
Lex Fridman (22:17.440)
and I couldn't have been more wrong,
Lex Fridman (22:19.120)
and I was very publicly wrong and all of that,
Lex Fridman (22:21.940)
and I lost money for me, and I lost money for my clients,
Lex Fridman (22:24.840)
and I only had a small company then,
Lex Fridman (22:27.880)
but these were close people, I had to let them go.
Lex Fridman (22:32.080)
I was down to me as the last person.
Ray Dalio (22:35.680)
I was so broke I had to borrow $4,000 from my dad
Lex Fridman (22:39.960)
to help to pay for my family bills, very painful,
Lex Fridman (22:43.120)
and at the same time, I would say it definitely
Lex Fridman (22:46.960)
was one of the best things that ever happened to me,
Ray Dalio (22:50.460)
maybe the best thing from happened to me,
Lex Fridman (22:52.320)
because it changed my approach to decision making.
Ray Dalio (22:55.060)
It's what I'm saying.
Lex Fridman (22:56.360)
In other words, I kept saying, okay,
Lex Fridman (22:58.960)
how do I know whether I'm right?
Lex Fridman (23:01.000)
How do I know I'm not wrong?
Ray Dalio (23:02.840)
It gave me that, and it didn't give up my audaciousness
Lex Fridman (23:07.480)
because I was in a position, what am I gonna do?
Ray Dalio (23:10.680)
Am I gonna go back, put on a tie,
Lex Fridman (23:13.280)
go to Wall Street and just do those things?
Ray Dalio (23:16.520)
No, I can't bring myself to do that, so I'm at a juncture.
Lex Fridman (23:19.600)
How do I deal with my risk and how do I deal with that?
Lex Fridman (23:22.000)
And it told me how to deal with my uncertainties,
Lex Fridman (23:25.200)
and that taught me, for example, a number of techniques.
Ray Dalio (23:28.760)
First, to find the smartest people I could find
Lex Fridman (23:31.740)
who disagreed with me and to have quality disagreement.
Ray Dalio (23:35.200)
I learned the art of thoughtful disagreement.
Lex Fridman (23:37.420)
I learned how to produce diversification.
Ray Dalio (23:39.680)
I learned how to do a number of things.
Lex Fridman (23:41.800)
That is what led me to create an idea meritocracy.
Ray Dalio (23:46.080)
In other words, person by person, I hired them,
Lex Fridman (23:48.440)
and I wanted the smartest people
Ray Dalio (23:50.320)
who would be independent thinkers
Lex Fridman (23:51.760)
who would disagree with each other and me well
Lex Fridman (23:55.000)
so that we could be independent thinkers
Lex Fridman (23:57.560)
to go off to produce those audacious dreams
Ray Dalio (24:00.200)
because you have to be an independent thinker to do that,
Lex Fridman (24:02.480)
and to do that independently of the consensus,
Ray Dalio (24:05.480)
independently of each other,
Lex Fridman (24:06.920)
and then work ourselves through that
Lex Fridman (24:08.800)
because who know whether you're gonna have the right answer?
Lex Fridman (24:11.400)
And by doing that, then that was the key to our success.
Lex Fridman (24:15.720)
And the things that I wanna pass along to people,
Lex Fridman (24:18.240)
the reason I'm doing this podcast with you
Ray Dalio (24:20.860)
is I'm 70 years old,
Lex Fridman (24:23.160)
and that is a magical way of achieving success.
Ray Dalio (24:28.000)
If you can create an idea meritocracy,
Lex Fridman (24:30.920)
it's so much better in terms of achieving success
Lex Fridman (24:34.040)
and also quality relationships with people,
Lex Fridman (24:36.640)
but that's what that experience gave me.
Lex Fridman (24:38.920)
So if we can linger on a little bit longer,
Lex Fridman (24:41.560)
the idea of an idea meritocracy, it's fascinating,
Lex Fridman (24:44.880)
but especially because it seems to be rare,
Lex Fridman (24:48.020)
not just in companies, but in society.
Lex Fridman (24:50.920)
So there is a lot of people on Twitter and public discourse
Lex Fridman (24:54.280)
and politics and so on that are really stuck
Ray Dalio (24:56.960)
in certain sets of ideas, whatever they are.
Lex Fridman (24:59.900)
So when you're confronted with an idea
Ray Dalio (25:03.420)
that's different than your own about a particular topic,
Lex Fridman (25:09.040)
what kind of process do you go through mentally?
Ray Dalio (25:12.720)
Are you arguing through the idea with the person,
Lex Fridman (25:16.040)
sort of present is almost like a debate,
Ray Dalio (25:18.320)
or do you sit on it and consider the world
Lex Fridman (25:20.980)
sort of empathetically?
Lex Fridman (25:22.680)
If this is true, then what does that world look like?
Lex Fridman (25:27.280)
Does that world make sense and so on?
Lex Fridman (25:28.800)
So what's the process of considering
Lex Fridman (25:30.480)
those conflicting ideas for you?
Ray Dalio (25:32.840)
I'm gonna answer that question,
Lex Fridman (25:35.200)
but after saying first, almost implicit in your question
Lex Fridman (25:39.120)
is it's not common, okay?
Lex Fridman (25:42.420)
What's common produces only common results, okay?
Lex Fridman (25:47.040)
So don't judge anything that is good
Lex Fridman (25:50.080)
based on whether it's common,
Ray Dalio (25:51.600)
because it's only gonna give you common results.
Lex Fridman (25:53.560)
If you want unique, you have a unique approach, okay?
Lex Fridman (25:57.160)
And so that art of thoughtful disagreement
Lex Fridman (26:00.440)
is the capacity to hold two things in your mind
Ray Dalio (26:05.120)
at the same time.
Lex Fridman (26:06.560)
The, gee, I think this makes sense,
Lex Fridman (26:09.700)
and then saying, I'm not sure it makes sense,
Lex Fridman (26:13.360)
and then try to say, why does it make sense?
Lex Fridman (26:17.560)
And then to triangulate with others.
Lex Fridman (26:20.160)
So if I'm having a discussion like that
Lex Fridman (26:22.460)
and I work myself through and I'm not sure,
Lex Fridman (26:26.560)
then I have to do that in a good way.
Lex Fridman (26:29.240)
So I always give attention, for example,
Lex Fridman (26:32.200)
let's start off, what does the other person know
Lex Fridman (26:34.360)
relative to what I know?
Lex Fridman (26:36.120)
So if a person has a higher expertise or things,
Ray Dalio (26:39.840)
I'm much more inclined to ask questions.
Lex Fridman (26:42.240)
I'm always asking questions.
Ray Dalio (26:43.840)
If you wanna learn, you're asking questions,
Lex Fridman (26:46.640)
you're not arguing, okay?
Ray Dalio (26:48.480)
You're taking in, you're assessing when it comes into you.
Lex Fridman (26:51.840)
Does that make sense?
Lex Fridman (26:53.000)
Are you learning something?
Lex Fridman (26:54.080)
Are you getting epiphanies and so on?
Lex Fridman (26:56.000)
And I try to then do that if the conversation,
Lex Fridman (27:00.160)
as we're trying to decide what is true,
Lex Fridman (27:02.800)
and we're trying to do that together,
Lex Fridman (27:04.560)
and we see truth different,
Ray Dalio (27:06.200)
then I might even call in another really smart,
Lex Fridman (27:10.320)
capable person and try to say, what is true
Lex Fridman (27:13.280)
and how do we explore that together?
Lex Fridman (27:15.400)
And you go through that same thing.
Lex Fridman (27:17.640)
So I would, I said, I describe it as having open mindedness
Lex Fridman (27:22.600)
and assertiveness at the same time,
Ray Dalio (27:25.000)
that you can simultaneously be open minded
Lex Fridman (27:28.560)
and take in with that curiosity
Lex Fridman (27:30.920)
and then also be assertive and say,
Lex Fridman (27:32.600)
but that doesn't make sense.
Lex Fridman (27:33.840)
Why would this be the case?
Lex Fridman (27:35.640)
And you do that back and forth.
Lex Fridman (27:39.040)
And when you're doing that kind of back and forth
Lex Fridman (27:41.520)
on a topic like the economy, which you have,
Ray Dalio (27:44.800)
to me, perhaps I'm naive,
Lex Fridman (27:46.640)
but it seems both incredible and incredibly complex,
Ray Dalio (27:51.160)
the economy, the trading, the transactions,
Lex Fridman (27:54.680)
that these transactions between two individuals
Ray Dalio (27:57.720)
somehow add up to this giant mechanism.
Lex Fridman (28:00.320)
You've put out a 30 minute video.
Ray Dalio (28:03.400)
You have a lot of incredible videos online
Lex Fridman (28:06.520)
that people should definitely watch on YouTube,
Lex Fridman (28:10.080)
but you've put out this 30 minute video
Lex Fridman (28:11.680)
titled How the Economic Machine Works.
Ray Dalio (28:14.640)
That is probably one of the best, if not the best video
Lex Fridman (28:19.120)
I've seen on the internet in terms of educational videos.
Lex Fridman (28:22.400)
So people should definitely watch it,
Lex Fridman (28:24.280)
especially because it's not that the individual components
Ray Dalio (28:29.280)
of the video are somehow revolutionary,
Lex Fridman (28:31.940)
but the simplicity and the clarity
Ray Dalio (28:33.600)
of the different components just makes you,
Lex Fridman (28:36.200)
there's a few light bulb moments there
Ray Dalio (28:37.760)
about how the economy works as a machine.
Lex Fridman (28:40.880)
So as you described, there's three main forces
Ray Dalio (28:43.160)
that drive the economy, productivity growth,
Lex Fridman (28:45.200)
short term debt cycle, long term debt cycle.
Ray Dalio (28:48.340)
The former, productivity growth is how valuable things,
Lex Fridman (28:52.300)
how much value people create,
Ray Dalio (28:56.180)
valuable things people create.
Lex Fridman (28:57.420)
The latter is people borrowing from their future selves
Ray Dalio (29:02.100)
to hopefully create those valuable things faster.
Lex Fridman (29:05.220)
So this is an incredible system to me.
Ray Dalio (29:07.420)
Maybe we can linger on it a little bit,
Lex Fridman (29:09.980)
but you've also said what most people think about
Ray Dalio (29:14.180)
as money is actually credit.
Lex Fridman (29:15.700)
Total amount of credit in the US is $50 trillion.
Ray Dalio (29:20.580)
Total amount of money is $3 trillion.
Lex Fridman (29:24.100)
That's just crazy to me.
Ray Dalio (29:26.060)
Maybe I'm silly, maybe you can educate me,
Lex Fridman (29:28.540)
but that seems crazy.
Ray Dalio (29:30.980)
It gives me just positive human civilization
Lex Fridman (29:33.460)
has been able to create a system that has so much credit.
Lex Fridman (29:37.140)
So that's a long way to ask,
Lex Fridman (29:40.900)
do you think credit is good or bad for society?
Ray Dalio (29:45.060)
That system of that's so fundamentally based on credit.
Lex Fridman (29:49.180)
I think credit is great,
Ray Dalio (29:51.300)
even though people often overdo it.
Lex Fridman (29:54.580)
Credit is that somebody has earned money.
Lex Fridman (29:58.940)
And what happens is they lend it to somebody else
Lex Fridman (30:04.820)
who's got better ideas and they cut a deal.
Lex Fridman (30:07.020)
And then that person with the better ideas
Lex Fridman (30:09.500)
is gonna pay it back.
Lex Fridman (30:10.540)
And if it works well,
Lex Fridman (30:11.980)
it helps resource allocations go well,
Ray Dalio (30:15.680)
providing people like the entrepreneurs
Lex Fridman (30:18.340)
and all of those, they need capital.
Ray Dalio (30:20.500)
They don't have capital themselves.
Lex Fridman (30:22.180)
And so somebody is gonna give them capital
Lex Fridman (30:24.020)
and they'll give them credit along those lines.
Lex Fridman (30:26.580)
Then what happens is it's not managed well
Ray Dalio (30:30.180)
in a variety of ways.
Lex Fridman (30:31.860)
So I did another book on principles,
Ray Dalio (30:34.460)
principles of big debt crises that go into that.
Lex Fridman (30:38.660)
And it's free, by the way,
Ray Dalio (30:39.660)
I put it free online as a PDF.
Lex Fridman (30:43.880)
So if you go online and you look principles
Ray Dalio (30:47.060)
of a big debt crisis is under my name,
Lex Fridman (30:48.900)
you can download it in a PDF
Ray Dalio (30:50.660)
or you can buy a print book of it.
Lex Fridman (30:52.900)
And it goes through that particular process.
Lex Fridman (30:55.780)
And so you always have it overdone in always the same way.
Lex Fridman (31:01.500)
Everything, by the way,
Ray Dalio (31:03.100)
almost everything happens over and over again
Lex Fridman (31:04.960)
for the same reasons, okay?
Lex Fridman (31:07.080)
So these debt crisis is all happened over and over again
Lex Fridman (31:09.700)
for the same reasons.
Ray Dalio (31:11.100)
They get it overdone.
Lex Fridman (31:12.580)
In the book, it explains how you identify
Ray Dalio (31:14.400)
whether it's overdone or not.
Lex Fridman (31:16.100)
They get it overdone.
Lex Fridman (31:17.500)
And then you go through the process
Lex Fridman (31:19.280)
of making the adjustments according that
Lex Fridman (31:21.580)
and it explains how they can use the levers and so on.
Lex Fridman (31:25.340)
If you didn't have credit,
Ray Dalio (31:27.220)
then you would be sort of everybody sort of be stuck.
Lex Fridman (31:30.860)
So credit is a good thing,
Lex Fridman (31:35.340)
but it can easily be overdone.
Lex Fridman (31:37.220)
So now we get into the, what is money?
Lex Fridman (31:39.800)
What is credit?
Lex Fridman (31:41.020)
Okay, you get into money and credit.
Lex Fridman (31:43.260)
So if you're holding credit and you think that's worthwhile,
Lex Fridman (31:46.540)
keep in mind that the central bank,
Ray Dalio (31:48.780)
let's say it can print the money.
Lex Fridman (31:50.480)
What is that problem?
Ray Dalio (31:51.980)
You have an IOU and the IOU says
Lex Fridman (31:55.020)
you're gonna get a certain number of dollars, let's say,
Ray Dalio (31:58.020)
or yen or euros.
Lex Fridman (32:00.220)
And that is what the IOU is.
Lex Fridman (32:02.660)
And so the question is, will you get that money
Lex Fridman (32:05.860)
and what will it be worth?
Lex Fridman (32:07.860)
And then also you have a government,
Lex Fridman (32:10.500)
which is a participant in that process
Ray Dalio (32:13.020)
because they are on the hook, they owe money.
Lex Fridman (32:16.380)
And then will they print the money
Lex Fridman (32:18.540)
to make it easy for everybody to pay?
Lex Fridman (32:20.940)
So you have to pay attention to those two.
Ray Dalio (32:23.140)
I would suggest like you recommend to other people,
Lex Fridman (32:26.400)
just take that 30 minutes
Lex Fridman (32:28.940)
and it comes across pretty clearly.
Lex Fridman (32:31.540)
But my conclusion is that of course you want it.
Lex Fridman (32:35.140)
And even if you understand it and the cycles well,
Lex Fridman (32:39.860)
you can benefit from those cycles
Ray Dalio (32:42.180)
rather than to be hurt by those cycles.
Lex Fridman (32:45.360)
Because I don't know the way the cycle works
Ray Dalio (32:48.620)
is somebody gets over indebted,
Lex Fridman (32:50.420)
they have to sell an asset.
Ray Dalio (32:52.300)
Okay, then I don't know,
Lex Fridman (32:53.580)
that's when assets become cheaper.
Lex Fridman (32:55.700)
How do you acquire the asset?
Lex Fridman (32:57.380)
It's a whole process.
Lex Fridman (32:59.240)
So again, maybe another dumb question, but...
Lex Fridman (33:03.820)
There are no such things as dumb questions.
Ray Dalio (33:05.980)
There you go.
Lex Fridman (33:06.820)
But what is money?
Lex Fridman (33:07.920)
So you've mentioned credit and money.
Lex Fridman (33:13.200)
Another thing that if I just zoom out
Ray Dalio (33:16.440)
from an alien perspective and look at human civilization,
Lex Fridman (33:19.400)
it's incredible that we've created a thing
Ray Dalio (33:22.720)
that only works because currency,
Lex Fridman (33:27.380)
because we all agree it has value.
Lex Fridman (33:31.360)
So I guess my question is how do you think about money
Lex Fridman (33:36.360)
as this emergent phenomenon?
Lex Fridman (33:38.920)
And what do you think is the future of money?
Lex Fridman (33:41.720)
You've commented on Bitcoin, other forms.
Lex Fridman (33:44.480)
What do you think is its history and future?
Lex Fridman (33:48.600)
How do you think about money?
Ray Dalio (33:51.340)
There are two things that money is for.
Lex Fridman (33:55.100)
It's a medium of exchange and it's a storehold of wealth.
Ray Dalio (33:59.820)
Yes.
Lex Fridman (34:00.660)
So money, so you could say something's a medium of exchange,
Lex Fridman (34:06.800)
and then you could say, is it a storehold of wealth?
Lex Fridman (34:11.280)
And money is that vehicle that is those things
Lex Fridman (34:17.000)
and can be used to pay off your debt.
Lex Fridman (34:20.840)
So when you have a debt and you provide it,
Ray Dalio (34:25.040)
it pays off your debt.
Lex Fridman (34:26.880)
So that's that process.
Lex Fridman (34:28.760)
And it's, I apologize to interrupt,
Lex Fridman (34:31.200)
but it only can be a medium of exchange or store wealth
Ray Dalio (34:35.080)
when everybody recognizes it to be of value.
Lex Fridman (34:37.680)
That's right.
Lex Fridman (34:38.640)
And so you see in the history around the world
Lex Fridman (34:41.400)
and you go to places, I was in an island in the Pacific
Ray Dalio (34:48.320)
in which they had as money these big stones.
Lex Fridman (34:53.660)
And literally, they were taking a boat,
Ray Dalio (34:56.760)
this big carved stone,
Lex Fridman (34:59.320)
and they were taking it from one of the islands to the other
Lex Fridman (35:01.560)
and it sank, the piece of this big stone,
Lex Fridman (35:06.880)
piece of money that they had, and it went to the bottom
Lex Fridman (35:10.120)
and they still perceived it as having value
Lex Fridman (35:13.560)
so that it was, even though it was in the bottom
Lex Fridman (35:15.960)
and it's this big hunk of rock,
Lex Fridman (35:17.820)
the fact that somebody owned it,
Ray Dalio (35:19.280)
they would say, oh, I'll own it for this and that.
Lex Fridman (35:21.920)
I've seen beads in different places,
Ray Dalio (35:25.480)
shells converted to this and mediums of exchange.
Lex Fridman (35:28.880)
And when we look at what we've got, you're exactly right.
Ray Dalio (35:32.480)
It is the notion that if I give it to you,
Lex Fridman (35:35.120)
I can then take it and I can buy something with it.
Lex Fridman (35:37.960)
And that's, so it's a matter of perception.
Lex Fridman (35:40.700)
Okay.
Lex Fridman (35:41.540)
And then we go through then the history of money
Lex Fridman (35:44.880)
and the vulnerabilities of money.
Lex Fridman (35:47.520)
And what we have is there's, through history,
Lex Fridman (35:50.840)
there's been two types of money.
Ray Dalio (35:52.880)
Those that are claims on something of value,
Lex Fridman (35:58.200)
like the connection to gold or something.
Ray Dalio (36:01.680)
That's right.
Lex Fridman (36:02.520)
That would be.
Ray Dalio (36:03.520)
Or they just are money without any connection,
Lex Fridman (36:07.480)
and then we have a system now,
Ray Dalio (36:08.840)
which is a fiat monetary system.
Lex Fridman (36:10.940)
So that's what money is.
Ray Dalio (36:12.680)
Then it will last as long as it's kept a value
Lex Fridman (36:17.840)
and it works that way.
Lex Fridman (36:19.140)
So let's say central banks, when they get in the position
Lex Fridman (36:23.780)
of like they owe a lot of money,
Ray Dalio (36:26.220)
like we have in the case, it's increasingly the case,
Lex Fridman (36:29.780)
and they also in our mind and they have the printing press
Ray Dalio (36:33.700)
to print the money and get out of that.
Lex Fridman (36:36.700)
And you have a lot of people might be in that position.
Ray Dalio (36:39.480)
Then you can print it and then it could be devalued in there.
Lex Fridman (36:43.420)
And so history has shown, forget about today,
Ray Dalio (36:46.860)
history has shown that no currency,
Lex Fridman (36:52.180)
every currency has either ended as being a currency
Ray Dalio (36:56.380)
or devalued as a currency over periods of time,
Lex Fridman (36:59.900)
long periods of time.
Lex Fridman (37:01.420)
So it evolves and it changes,
Lex Fridman (37:03.540)
but everybody needs that medium of exchange
Lex Fridman (37:06.300)
and everybody needs that storehold of wealth.
Lex Fridman (37:08.780)
So it keeps changing what is money over a period of time.
Lex Fridman (37:12.360)
But so much is being digitized today and there's this ideas
Lex Fridman (37:18.820)
that are based on the blockchain of Bitcoin and so on.
Lex Fridman (37:22.580)
So if all currencies, like all empires come to an end,
Lex Fridman (37:27.660)
what do you think, well, do you think something
Ray Dalio (37:30.060)
like Bitcoin might emerge as a common store of value,
Lex Fridman (37:34.340)
a store of wealth and a medium of exchange?
Ray Dalio (37:37.860)
The problem with Bitcoin is that it's not
Lex Fridman (37:43.660)
an effective medium of exchange.
Ray Dalio (37:44.920)
Like it's not easy for me to go in there
Lex Fridman (37:47.460)
and buy things with it.
Lex Fridman (37:49.100)
And then it's not an effective storehold of value
Lex Fridman (37:52.060)
because it has a volatility that's based on speculation
Lex Fridman (37:56.020)
and the like, so it's not a very effective saving.
Lex Fridman (38:00.020)
That's very different from Facebook's
Ray Dalio (38:03.500)
of a stable value currency,
Lex Fridman (38:05.620)
which would be effective as both a medium of exchange
Lex Fridman (38:09.100)
and a storehold of wealth.
Lex Fridman (38:11.140)
Because if you were to hold it
Lex Fridman (38:12.860)
and the way it's linked to number of things
Lex Fridman (38:15.700)
that it's linked to would mean
Ray Dalio (38:17.460)
that it could be a very effective storehold of wealth.
Lex Fridman (38:20.780)
And then you have a digital currency
Ray Dalio (38:22.480)
that could be a very effective medium exchange
Lex Fridman (38:24.980)
and storehold of wealth.
Lex Fridman (38:26.780)
So in my opinion, some digital currencies
Lex Fridman (38:29.940)
are likely to succeed more or less
Ray Dalio (38:32.800)
based on that ability to do it.
Lex Fridman (38:35.060)
Then the question is what happens?
Ray Dalio (38:37.940)
Okay, what happens is do central banks
Lex Fridman (38:40.740)
allow that to happen?
Ray Dalio (38:42.640)
I really do believe it's possible
Lex Fridman (38:44.860)
to get a better form of money
Ray Dalio (38:47.060)
that central banks don't control.
Lex Fridman (38:49.760)
Okay, a better force of money
Ray Dalio (38:51.980)
that the central banks don't control.
Lex Fridman (38:54.540)
But then that's not yet happened.
Lex Fridman (38:57.820)
And we also have to,
Lex Fridman (38:59.660)
and so they've got to go through that evolutionary process.
Ray Dalio (39:03.460)
In order to go through that evolutionary process,
Lex Fridman (39:05.700)
first of all, governments have got to allow that to happen,
Ray Dalio (39:09.140)
which is to some extent a threat to them
Lex Fridman (39:11.520)
in terms of their power.
Lex Fridman (39:13.100)
And that's an issue.
Lex Fridman (39:14.620)
And then you have to also build the confidence
Ray Dalio (39:17.540)
in all of the components of it
Lex Fridman (39:20.500)
to say, okay, that's going to be effective
Ray Dalio (39:23.580)
because I won't have problems owning it.
Lex Fridman (39:28.580)
So I think that digital currencies
Ray Dalio (39:30.940)
have some element of potential,
Lex Fridman (39:35.200)
but there's a lot of hurdles
Ray Dalio (39:37.700)
that are going to have to be gotten over.
Lex Fridman (39:39.860)
I think that it'll be a very long time,
Ray Dalio (39:42.820)
possibly never, but anyway, a very long time
Lex Fridman (39:46.140)
before we have that, let's say,
Ray Dalio (39:47.960)
get into a position that would be
Lex Fridman (39:51.860)
effective means relative to gold, let's say,
Ray Dalio (39:55.120)
if you were to think of that.
Lex Fridman (39:56.300)
Because gold has a track record of thousands of years.
Ray Dalio (40:00.740)
All across countries, it has its mobility,
Lex Fridman (40:04.820)
it has the ability to put it down,
Ray Dalio (40:06.500)
it has certain abilities.
Lex Fridman (40:07.580)
It's got disadvantages relative to digital currencies,
Lex Fridman (40:12.140)
but central banks will hold it.
Lex Fridman (40:14.100)
Like there's central banks that worry about others,
Ray Dalio (40:18.420)
other countries, central banks might worry
Lex Fridman (40:20.220)
about whether the U.S. dollar is going to print or not.
Lex Fridman (40:23.020)
And so the thing they're going to go to
Lex Fridman (40:24.860)
is not going to be the digital currency.
Ray Dalio (40:26.980)
The thing they're going to go to is gold or something else,
Lex Fridman (40:30.740)
some other currency, they got to pick it.
Lex Fridman (40:32.780)
And so I think it's a long way to go.
Lex Fridman (40:35.380)
Well, you think it's possible that one day
Ray Dalio (40:37.260)
we don't even have a central bank
Lex Fridman (40:39.140)
because of a currency that doesn't,
Ray Dalio (40:42.940)
that cannot be controlled by the central bank
Lex Fridman (40:46.300)
is the primary currency?
Lex Fridman (40:49.000)
Or does that seem very unlikely?
Lex Fridman (40:50.700)
It would be very remote possibility
Ray Dalio (40:57.960)
or very long in the future.
Lex Fridman (41:00.440)
Got it.
Ray Dalio (41:01.480)
Again, maybe a dumb question, but romanticize one.
Lex Fridman (41:04.240)
When you sit back and you look,
Ray Dalio (41:06.080)
you describe these transactions between individuals,
Lex Fridman (41:09.840)
somehow creating short term debt cycles,
Ray Dalio (41:13.940)
long term debt cycles, there's productivity growth.
Lex Fridman (41:17.520)
Does it amaze you that this whole thing works?
Ray Dalio (41:22.400)
That there's however many million,
Lex Fridman (41:25.360)
hundreds of millions of people in the United States,
Ray Dalio (41:27.800)
globally over seven billion people,
Lex Fridman (41:30.200)
that this thing between individual transactions,
Ray Dalio (41:34.200)
it just, it works.
Lex Fridman (41:36.200)
Yeah.
Ray Dalio (41:37.080)
It amazes me.
Lex Fridman (41:38.480)
Like I go back and forth between being in it
Lex Fridman (41:43.400)
and then I think, like, how did a credit card,
Lex Fridman (41:48.000)
how is that really possible?
Ray Dalio (41:49.600)
I'm still used, I look up credit card, I put it on,
Lex Fridman (41:52.520)
the guy doesn't know me.
Ray Dalio (41:53.880)
Yeah.
Lex Fridman (41:54.720)
It's all strangers. It signs, okay.
Ray Dalio (41:57.100)
We're making the digital entries.
Lex Fridman (41:58.660)
Is that really secure enough and that kind of thing?
Lex Fridman (42:01.080)
And then it goes back and it goes this and it clears
Lex Fridman (42:04.280)
and it all happens.
Lex Fridman (42:05.520)
And what I marvel at that and those types of things
Lex Fridman (42:09.680)
is because of the capacity of the human mind
Ray Dalio (42:14.240)
to create abstractions that are true.
Lex Fridman (42:19.000)
It's imagination and then the ability to go from one level
Lex Fridman (42:23.400)
and then if these things are true,
Lex Fridman (42:25.680)
then you go to the next level and if those things are true,
Ray Dalio (42:28.880)
then you go to the next level.
Lex Fridman (42:30.200)
And all those miracles that we almost become common,
Ray Dalio (42:33.700)
it's like when I'm flying in a plane
Lex Fridman (42:36.440)
or when I'm looking at all of the things that happen.
Ray Dalio (42:39.520)
When I get communications in the middle of,
Lex Fridman (42:42.600)
I don't know, Africa or Antarctica
Lex Fridman (42:45.040)
and we're communicating in the ways where I see the face
Lex Fridman (42:48.720)
on my iPad of somebody, my grandkid and someplace else
Lex Fridman (42:52.560)
and I look at this and I say, wow, yes, it all amazes me.
Lex Fridman (42:58.080)
So while being amazing, do you have a sense,
Ray Dalio (43:01.620)
the principles you described,
Lex Fridman (43:02.920)
that the whole thing is stable somehow also?
Lex Fridman (43:06.120)
Or is this, are we just lucky?
Lex Fridman (43:08.440)
So the principles that you described,
Ray Dalio (43:11.600)
are those describing a system that is stable, robust
Lex Fridman (43:16.880)
and will remain so?
Lex Fridman (43:18.560)
Or is it a lucky accident of our early history?
Lex Fridman (43:22.920)
My area of expertise is economics and markets
Lex Fridman (43:26.000)
so I get down to like a real nitty gritty.
Lex Fridman (43:28.840)
I can't tell you whether the plane
Ray Dalio (43:30.280)
is gonna fall out of the sky
Lex Fridman (43:32.280)
because of its particular fundamentals.
Ray Dalio (43:34.960)
I don't know enough about that
Lex Fridman (43:36.380)
but it happens over and over again
Lex Fridman (43:37.960)
and so on, it gives me faith, okay?
Lex Fridman (43:39.760)
So without me knowing it.
Ray Dalio (43:41.300)
In the markets and the economy,
Lex Fridman (43:43.800)
I know those things well enough, in a sense,
Ray Dalio (43:47.440)
to say that by and large, that structure is right,
Lex Fridman (43:53.600)
what we're seeing is right.
Ray Dalio (43:55.120)
Now, whether there are disruptions
Lex Fridman (43:58.060)
and it has effects that can come,
Ray Dalio (44:01.200)
not because that structure is right,
Lex Fridman (44:03.200)
and I believe it's right,
Lex Fridman (44:04.600)
but whether it can be hurt by let's say connectivity
Lex Fridman (44:09.640)
or journal entries,
Ray Dalio (44:11.200)
they could take all the money away from you
Lex Fridman (44:13.480)
through your digital entries.
Ray Dalio (44:15.360)
There's all sorts of things that can happen in various ways
Lex Fridman (44:19.120)
that means that that money is worthless or the system falls
Lex Fridman (44:23.620)
but from what I see in terms of its basic structure
Lex Fridman (44:26.840)
and those complexities that still take my breath away,
Ray Dalio (44:30.200)
I would say knowing enough about the mechanics of them,
Lex Fridman (44:33.560)
that doesn't worry me.
Ray Dalio (44:34.840)
Have you seen disruptions in your lifetime
Lex Fridman (44:37.040)
that really surprised you?
Ray Dalio (44:38.240)
Major disruptions? Oh, all the time.
Lex Fridman (44:39.800)
This is one of the great lessons of my life
Ray Dalio (44:42.200)
is that many times I've seen things
Lex Fridman (44:46.520)
that I was very surprised about
Lex Fridman (44:50.460)
and that I realized almost all of those
Lex Fridman (44:54.920)
I was surprised about because they just,
Ray Dalio (44:57.600)
they were just the first time it happened to me,
Lex Fridman (45:00.240)
they didn't happen in my lifetime before
Lex Fridman (45:02.620)
but when I researched them,
Lex Fridman (45:04.660)
they happened in other places or other people lifetimes.
Lex Fridman (45:08.240)
So for example, I remember 1971, the dollar,
Lex Fridman (45:13.520)
there was no such thing as a devaluation of a currency,
Ray Dalio (45:16.720)
it didn't experience it
Lex Fridman (45:18.520)
and the dollar was connected to gold
Lex Fridman (45:21.120)
and I was watching events happen
Lex Fridman (45:23.160)
and then you get on and that definition of money
Ray Dalio (45:26.520)
all of a sudden went out the window
Lex Fridman (45:29.060)
because it was not tied to gold
Lex Fridman (45:31.340)
and then you have this devaluation.
Lex Fridman (45:34.200)
So and then, or the first oil shock or the second oil shock
Ray Dalio (45:38.720)
or so many of these things.
Lex Fridman (45:41.840)
But almost always I realized that they,
Ray Dalio (45:47.340)
when I looked in history, they happened before,
Lex Fridman (45:50.080)
they just happened in other people's lifetimes
Ray Dalio (45:53.000)
which led me to realize that I needed to study history
Lex Fridman (45:58.280)
and what happened in other people's lifetimes
Lex Fridman (46:00.880)
and what happened in other countries and places
Lex Fridman (46:04.120)
so that I would have timeless and universal principles
Ray Dalio (46:07.760)
for dealing with that thing.
Lex Fridman (46:09.360)
So I've, oh yeah, I've been, you know,
Ray Dalio (46:11.960)
the implausible happening
Lex Fridman (46:13.860)
but it's like a one in a hundred year storm, okay?
Ray Dalio (46:19.080)
Or it's or.
Lex Fridman (46:20.960)
They've happened before.
Ray Dalio (46:22.160)
Yeah, they've happened.
Lex Fridman (46:23.100)
Just not to you.
Ray Dalio (46:24.400)
Let me talk about, if we could, about AI a little bit.
Lex Fridman (46:28.160)
So we've, Bridgewater Associates manage
Ray Dalio (46:32.880)
about $160 billion in assets
Lex Fridman (46:37.680)
and our artificial intelligence systems algorithms
Ray Dalio (46:41.200)
are pretty good with data.
Lex Fridman (46:43.640)
What role in the future do you see AI play
Ray Dalio (46:48.000)
in analysis and decision making
Lex Fridman (46:50.240)
in this kind of data rich and impactful area of investment?
Ray Dalio (46:55.240)
I'm gonna answer that not only in investment
Lex Fridman (46:57.880)
but I give a more all encompassing rule for AI.
Ray Dalio (47:04.440)
As I think you know, for the last 25 years,
Lex Fridman (47:09.440)
we have taken our thinking and put them in algorithms
Lex Fridman (47:13.640)
and so we make decisions.
Lex Fridman (47:15.680)
The computer takes those criteria, algorithms,
Lex Fridman (47:20.120)
and they put them, they're in there and it takes data
Lex Fridman (47:22.960)
and they operate as an independent decision maker
Ray Dalio (47:27.280)
in parallel with our decision making.
Lex Fridman (47:29.520)
So for me, it's like there's a chess game playing
Lex Fridman (47:33.200)
and I'm a person with my chess game
Lex Fridman (47:36.360)
and I'm saying it made that move and I'm making the move
Lex Fridman (47:38.840)
and how do I compare those two moves?
Lex Fridman (47:40.680)
So we've done a lot but let me give you a rule.
Ray Dalio (47:43.800)
If the future can be different from the past
Lex Fridman (47:47.960)
and you don't have deep understanding,
Lex Fridman (47:53.960)
you should not rely on AI, okay?
Lex Fridman (47:59.280)
Those two things.
Lex Fridman (48:00.520)
Deep understanding of?
Lex Fridman (48:02.440)
The cause of fact relationships that are leading you
Lex Fridman (48:05.120)
to place that bet in anything, okay?
Lex Fridman (48:08.280)
Anything important.
Ray Dalio (48:10.240)
Let's say if it was do surgeries
Lex Fridman (48:12.080)
and you would say, how do I do surgeries?
Ray Dalio (48:14.680)
I think it's a good idea to do surgeries
Lex Fridman (48:17.200)
but I think it's totally fine
Ray Dalio (48:19.280)
to watch all the doctors do the surgeries.
Lex Fridman (48:21.920)
You can put it on, take a digital camera and do that,
Ray Dalio (48:28.320)
convert that into AI algorithms that go to robots
Lex Fridman (48:33.960)
and have them do surgeries and I'd be comfortable with that
Ray Dalio (48:37.080)
because if it'll do the,
Lex Fridman (48:38.800)
if it keeps doing the same thing over and over again
Lex Fridman (48:41.240)
and you have enough of that, that would be fine
Lex Fridman (48:44.280)
even though you may not understand the algorithms
Ray Dalio (48:47.040)
because if the thing's happening over and over again
Lex Fridman (48:49.440)
and you're not asking, the future would be the same.
Ray Dalio (48:52.000)
That appendicitis or whatever it is
Lex Fridman (48:54.200)
will be handled the same way, the surgery, that's fine.
Ray Dalio (48:57.600)
However, what happens with AI is for the most part
Lex Fridman (49:03.000)
is it takes a lot of data with a high enough sample size
Lex Fridman (49:09.600)
and then it puts together its own algorithms.
Lex Fridman (49:13.240)
Okay, there are two ways you can come up with algorithms.
Ray Dalio (49:16.200)
You can either take your thinking
Lex Fridman (49:18.400)
and express them in algorithms
Ray Dalio (49:20.640)
or you can say, put the data in
Lex Fridman (49:23.640)
and say, what is the algorithm?
Ray Dalio (49:26.280)
That's machine learning.
Lex Fridman (49:27.920)
And when you have machine learning,
Ray Dalio (49:30.640)
it'll give you equations
Lex Fridman (49:32.080)
which quite often are not understandable.
Ray Dalio (49:35.160)
If you would try to say,
Lex Fridman (49:36.160)
okay, now describe what it's telling you,
Ray Dalio (49:38.400)
it's very difficult to describe
Lex Fridman (49:40.160)
and so they can escape understanding.
Lex Fridman (49:42.960)
And so it's very good for doing those things
Lex Fridman (49:46.280)
that could be done over and over again
Ray Dalio (49:47.960)
if you're watching and you're not taking that.
Lex Fridman (49:49.960)
But if the future is different from the past
Lex Fridman (49:53.080)
and you have that,
Lex Fridman (49:54.000)
then if the future is different from the past
Lex Fridman (49:56.880)
and you don't have deep understanding,
Lex Fridman (49:59.080)
you're gonna get in trouble.
Lex Fridman (50:00.720)
And so that's the main thing.
Lex Fridman (50:03.160)
As far as AI is concerned,
Ray Dalio (50:05.360)
AI and let's say computer replications of thinking
Lex Fridman (50:09.080)
in very ways, I think it's particularly good for processing.
Lex Fridman (50:13.560)
But the notion of what you want to do
Lex Fridman (50:18.280)
is better most of the time determined by the human mind.
Lex Fridman (50:23.040)
What are the principles?
Lex Fridman (50:24.480)
Like, okay, how should I raise my children?
Ray Dalio (50:27.520)
It's gonna be a long time before AI,
Lex Fridman (50:29.960)
you're going to say,
Ray Dalio (50:31.160)
it has a good enough judgment to do that.
Lex Fridman (50:33.120)
Who should I marry?
Ray Dalio (50:34.720)
All of those things.
Lex Fridman (50:35.600)
Maybe you can get the computer to help you
Lex Fridman (50:37.440)
but if you just took data and do machine learning,
Lex Fridman (50:40.120)
it's not gonna find it.
Ray Dalio (50:41.320)
If you were to then take one of my criteria
Lex Fridman (50:44.440)
for any of those questions
Lex Fridman (50:47.280)
and then say, put them into an algorithm
Lex Fridman (50:49.680)
and you'd be a lot better off than if you took AI to do it.
Lex Fridman (50:53.160)
But by and large, the mind should be used
Lex Fridman (50:56.960)
for inventing and those creative things.
Lex Fridman (51:00.520)
And then the computer should be used for processing
Lex Fridman (51:04.000)
because it could process a lot more information,
Ray Dalio (51:06.920)
a lot faster, a lot more accurately
Lex Fridman (51:10.280)
and a lot less emotionally.
Lex Fridman (51:12.240)
So any notion of thinking
Lex Fridman (51:15.120)
in the form of processing type thinking
Ray Dalio (51:17.720)
should be done by a computer
Lex Fridman (51:19.640)
and anything that is in the notion
Ray Dalio (51:21.560)
of doing that other type of thinking
Lex Fridman (51:23.480)
should be operating with the brain,
Ray Dalio (51:26.800)
operating in a way where you can say,
Lex Fridman (51:29.920)
ah, that makes sense.
Ray Dalio (51:31.360)
You know, the process of reducing your understanding down
Lex Fridman (51:35.600)
to principles is kind of like the process,
Ray Dalio (51:38.840)
the first one you mentioned,
Lex Fridman (51:41.600)
type of AI algorithm where you're encoding your expertise,
Ray Dalio (51:45.600)
you're trying to program, write a program,
Lex Fridman (51:47.920)
the human is trying to write a program.
Lex Fridman (51:50.400)
How do you think that's attainable?
Lex Fridman (51:53.560)
The process of reducing principles to a computer program
Ray Dalio (51:58.560)
or when you say, when you write about,
Lex Fridman (52:03.560)
when you think about principles,
Ray Dalio (52:05.800)
is there still a human element
Lex Fridman (52:07.440)
that's not reducible to an algorithm?
Ray Dalio (52:12.160)
My experience has been that almost all things,
Lex Fridman (52:17.560)
including those things that I thought
Ray Dalio (52:19.560)
were pretty much impossible to express,
Lex Fridman (52:23.720)
I've been able to express in algorithms,
Lex Fridman (52:27.600)
but that doesn't constitute all things.
Lex Fridman (52:31.120)
So you can express far more
Ray Dalio (52:36.640)
than you can imagine you'll be able to express.
Lex Fridman (52:39.360)
So I use the example of,
Lex Fridman (52:41.040)
okay, it's not, how do you raise your children?
Lex Fridman (52:43.920)
Okay, you will be able to take it one piece by piece.
Lex Fridman (52:48.280)
Okay, at what age, what school?
Lex Fridman (52:51.600)
And the way to do that, in my experience,
Ray Dalio (52:54.880)
is to take that and when you're in the moment
Lex Fridman (52:59.960)
of making a decision or just past making a decision,
Ray Dalio (53:04.960)
to take the time and to write down your criteria
Lex Fridman (53:09.000)
for making that decision in words.
Ray Dalio (53:11.840)
Okay, that way you'll get your principles down on paper.
Lex Fridman (53:16.360)
I created an app online call,
Ray Dalio (53:19.840)
it's right now just on the iPhone, it'll be on Android.
Lex Fridman (53:23.280)
I tried getting it on Android, come on now.
Ray Dalio (53:25.320)
Let's get it on Android.
Lex Fridman (53:26.640)
It'll be, in a few months it'll be on Android.
Ray Dalio (53:28.600)
Awesome.
Lex Fridman (53:29.440)
But it has an app in there
Ray Dalio (53:31.600)
that helps people write down their own principles.
Lex Fridman (53:35.160)
Because this is very powerful.
Lex Fridman (53:37.160)
So when you're in that moment
Lex Fridman (53:39.320)
where you've just, you're thinking about it
Lex Fridman (53:41.520)
and you're thinking your criteria
Lex Fridman (53:43.120)
for choosing the school for your child
Ray Dalio (53:46.080)
or whatever that might be,
Lex Fridman (53:47.640)
and you write down your criteria
Ray Dalio (53:49.680)
or whatever they are, those principles,
Lex Fridman (53:52.200)
you write down and that will at that moment
Ray Dalio (53:57.440)
make you articulate your principles in a very valuable way.
Lex Fridman (54:02.160)
And if you have the way that we operate
Ray Dalio (54:04.840)
that you have easy access,
Lex Fridman (54:06.480)
so then the next time that comes along,
Ray Dalio (54:08.800)
you can go to that,
Lex Fridman (54:09.920)
or you can show those principles to others
Ray Dalio (54:12.000)
to see if they're the right principles.
Lex Fridman (54:13.920)
You will get a clarity of that principle
Ray Dalio (54:16.920)
that's really invaluable in words
Lex Fridman (54:19.080)
and that'll help you a lot.
Lex Fridman (54:21.120)
But then you start to think,
Lex Fridman (54:23.040)
how do I express that in data?
Lex Fridman (54:26.080)
And it'll shock you about how you can do that.
Lex Fridman (54:29.320)
You'll form an equation that will show the relationship
Ray Dalio (54:33.360)
between these particular parts
Lex Fridman (54:35.040)
and then essentially the variables
Ray Dalio (54:38.440)
that are going to go into that particular equation
Lex Fridman (54:41.560)
and you will be able to do that.
Lex Fridman (54:43.120)
And you take that little piece
Lex Fridman (54:45.160)
and you put it into the computer.
Lex Fridman (54:48.080)
And then take the next little piece
Lex Fridman (54:49.920)
and you put that into the computer.
Lex Fridman (54:51.960)
And before you know it,
Lex Fridman (54:54.080)
you will have a decision making system
Ray Dalio (54:56.280)
that's of the sort that I'm describing.
Lex Fridman (54:58.120)
So you're almost making an argument
Ray Dalio (55:00.560)
against an earlier statement you've made.
Lex Fridman (55:03.160)
You're convincing me.
Ray Dalio (55:04.200)
At first you said,
Lex Fridman (55:05.440)
there's no way a computer could raise a child essentially.
Lex Fridman (55:10.000)
But now you've described making me think of it.
Lex Fridman (55:12.160)
If you have that kind of idea meritocracy,
Ray Dalio (55:16.080)
you have this rigorous approach
Lex Fridman (55:17.600)
that Bridgewater takes with investment
Lex Fridman (55:19.280)
and applied to raising a child.
Lex Fridman (55:21.880)
It feels like through the process you just described,
Ray Dalio (55:24.920)
we could as a society arrive at a set of principles
Lex Fridman (55:29.120)
for raising a child and encode it into computer.
Ray Dalio (55:33.880)
That originality will not come from machine learning.
Lex Fridman (55:39.280)
The first time you do,
Lex Fridman (55:40.800)
so that the original, yes.
Lex Fridman (55:42.280)
That's what I'm referring to.
Lex Fridman (55:43.200)
But eventually as we together develop it
Lex Fridman (55:45.960)
and then we can automate it.
Ray Dalio (55:47.280)
That's why I'm saying the processing
Lex Fridman (55:50.160)
can be done by the computer.
Lex Fridman (55:51.800)
So we're saying the same thing.
Lex Fridman (55:53.240)
We're not inconsistent.
Ray Dalio (55:54.920)
We're saying the same thing.
Lex Fridman (55:56.440)
That the processing of that information
Lex Fridman (55:58.600)
and those algorithms can be done by the computer
Lex Fridman (56:01.240)
in a very, very effective way.
Ray Dalio (56:03.560)
You don't need to sit there and process
Lex Fridman (56:05.280)
and try to weigh all those things in your equation
Lex Fridman (56:07.680)
and all those things.
Lex Fridman (56:09.040)
But that notion of,
Lex Fridman (56:10.800)
okay, how do I get at that principle?
Lex Fridman (56:13.760)
And you're saying you'd be surprised.
Lex Fridman (56:15.720)
How much you can express.
Lex Fridman (56:18.880)
That's right.
Ray Dalio (56:19.720)
You can do that.
Lex Fridman (56:22.080)
So this is where I think you're going to see the future.
Lex Fridman (56:25.800)
And right now we go to our devices
Lex Fridman (56:30.960)
and we get information to a large extent.
Lex Fridman (56:35.640)
And then we get some guidance.
Lex Fridman (56:37.480)
We have our GPS and the like.
Ray Dalio (56:39.640)
In my opinion, principles.
Lex Fridman (56:42.400)
Principles, principles, principles.
Ray Dalio (56:43.800)
I wanna emphasize that.
Lex Fridman (56:44.960)
You write them down.
Ray Dalio (56:46.480)
You've got those principles.
Lex Fridman (56:48.280)
They will be converted into algorithms for decision making.
Lex Fridman (56:52.720)
And they're gonna also have the benefit
Lex Fridman (56:55.200)
of collective decision making.
Ray Dalio (56:57.360)
Because right now,
Lex Fridman (56:58.880)
individuals based on what's stuck in their heads
Ray Dalio (57:01.880)
are making their decisions in very ignorant ways.
Lex Fridman (57:05.200)
They're not the best decision makers.
Ray Dalio (57:06.960)
They're not the best criteria.
Lex Fridman (57:08.880)
And they're operating.
Ray Dalio (57:10.040)
When those principles are written down
Lex Fridman (57:12.520)
and converted into algorithms,
Ray Dalio (57:14.840)
it's almost like you'll look at that
Lex Fridman (57:16.560)
and follow the instructions
Lex Fridman (57:18.240)
and it'll give you better results.
Lex Fridman (57:20.720)
Medicine will be much more like this.
Ray Dalio (57:23.760)
You can go to your local doctor
Lex Fridman (57:25.560)
and you could ask his point of view and whatever.
Lex Fridman (57:27.840)
And he's rushed and he may not be the best doctor around.
Lex Fridman (57:31.400)
And you're gonna go to this thing
Lex Fridman (57:33.360)
and give that same information
Lex Fridman (57:35.160)
or just automatically have it input in that.
Lex Fridman (57:37.760)
And it's gonna tell you, okay, here's what you should go do.
Lex Fridman (57:41.440)
And it's gonna be much better than your local doctor.
Lex Fridman (57:44.240)
And that, the converting of information into intelligence,
Lex Fridman (57:50.000)
okay, intelligence is the thing.
Ray Dalio (57:52.680)
We're coming out with, again, I'm 70
Lex Fridman (57:55.760)
and I wanna pass all these things along.
Lex Fridman (57:57.920)
So all these tools that I've found need to develop
Lex Fridman (58:03.240)
all over these periods of time,
Ray Dalio (58:04.960)
all those things I wanna make available.
Lex Fridman (58:07.440)
And what's gonna happen as they're going to see this,
Ray Dalio (58:10.960)
they're going to see these tools
Lex Fridman (58:13.400)
operating much more that way.
Ray Dalio (58:15.000)
The idea of converting data into intelligence.
Lex Fridman (58:20.040)
Intelligence, for example, on what they are like.
Lex Fridman (58:23.880)
Or what are your strengths and weaknesses?
Lex Fridman (58:25.400)
Intelligence on who do I work well with
Lex Fridman (58:28.280)
under what circumstances?
Lex Fridman (58:29.440)
The personalized.
Ray Dalio (58:30.280)
Intelligence.
Lex Fridman (58:31.360)
We're gonna go from what are called systems of record,
Ray Dalio (58:35.680)
which are a lot of, okay, information organized
Lex Fridman (58:38.280)
in the right way, to intelligence.
Lex Fridman (58:41.600)
And that'll be the next big move, in my opinion.
Lex Fridman (58:46.680)
And so you will get intelligence back.
Lex Fridman (58:49.920)
And that intelligence comes from reducing things
Lex Fridman (58:52.200)
down to principles into.
Ray Dalio (58:54.120)
That's how it happens.
Lex Fridman (58:55.480)
So what's your intuition if we look at future societies?
Lex Fridman (58:58.880)
Do you think we'll be able to reduce a lot of the details
Lex Fridman (59:06.640)
of our lives down to principles
Lex Fridman (59:08.280)
that would be further and further automated?
Lex Fridman (59:10.200)
I think the real question hinges
Ray Dalio (59:12.760)
on people's emotions and irrational behaviors.
Lex Fridman (59:20.920)
I think that there's subliminal things that we want, okay?
Lex Fridman (59:25.920)
And then there's cerebral, conscious logic.
Lex Fridman (59:30.000)
And the two often are at odds.
Lex Fridman (59:32.920)
So there's almost like two you's in you, right?
Lex Fridman (59:36.680)
And so let's say, what do you want?
Lex Fridman (59:39.920)
And your mind will answer one thing,
Lex Fridman (59:42.280)
your emotions will answer something else.
Lex Fridman (59:44.680)
So when I think about it, I think emotions are,
Lex Fridman (59:47.920)
I want inspiration, I want love is a good thing,
Ray Dalio (59:52.320)
being able to have a good impact,
Lex Fridman (59:54.040)
but it is in the reconciliation of your subliminal wants
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