On this week’s episode of the Stansberry Investor Hour, Dan invites an incredibly special guest onto the show.
He studied for years under Henry Kissinger at Harvard University…
He later helped pioneer the formulation of supply-side economics as Chairman of the Lehrman Institute’s Economic Roundtable…
And he’s widely regarded as America’s #1 futurist…
The one and only, George Gilder.
George is best known for many of his best-selling books including, Wealth and Poverty, Life After Television, Life After Google, and his latest work, Gaming A.I.: Why A.I. Can’t Think but Can Transform Jobs.
And today, Dan brings him onto the show to pick his brain in an exclusive one-on-one interview.
During his conversation with Dan, George discusses the real reason gold has stood the test of time as a currency… the one big mistake Satoshi Nakamoto made when he created Bitcoin… and some stunning facts about how leaving the gold standard opened the door for widespread abuse in the currency trading markets.
George is truly one of the leading economic and technological thinkers of the past 40 years, and we’re incredibly lucky to have him on the show today.
If you want a better understanding of what truly goes on behind the scenes with the world’s biggest banks and most influential governments, this is an interview you don’t want to miss.
Listen to Dan’s conversation with George and much more on this week’s episode.
Best Selling Author, Economist, & Co-Founder of Discovery Institute
George F. Gilder is Chairman of George Gilder Fund Management, host of the Gilder Telecosm Forum, Senior Fellow at the Discovery Institute, and a founding Member of the Board of Advisors for the Independent Institute. Described as "America's #1 Futurist," Gilder is one of the leading economic and technological thinkers of the past forty years, and author of twenty-one books, including Wealth and Poverty, Life After Television, Knowledge and Power, Life After Google, and his latest work Gaming AI: Why AI Can't Think but Can Transform Jobs.
3:08 – “The most important thing you do when you buy stocks is understand what the intrinsic value of that business is…”
3:55 – How exactly do you figure out a company’s intrinsic value? Dan explains the five financial clues he uses to find world-class businesses trading at great values in his Extreme Value newsletter.
10:22 – Dan shares a quote from today’s guest, George Gilder… “Wealth in its deepest form is knowledge. Wealth is created by the learning curves that result from a million falsifiable experiments and entrepreneurship by economic actors in mostly free market economies…”
13:12 – This week Dan invites George Gilder onto the show… George is chairman of George Gilder Fund Management, host of the Gilder COSM Forum, senior fellow at the Discovery Institute, and a founding member at the board of advisors for the Independent Institute. George studied under Henry Kissinger at Harvard University… helped later helped pioneer the formulation of supply-side economics… and is widely described as America’s #1 futurist.
15:30 – George explains exactly what he means when he says wealth is knowledge… “Wealth is knowledge… and we know that because, as Thomas Sowell told us, back in 1971, the neanderthal in his cave had all the physical resources we have today, every atom and molecule. The entire difference between our age and the Stone Age, is the accumulation of knowledge…”
19:00 – “The reason gold has been the prevailing money for millennia, is the time needed to extract an incremental ingot of gold has scarcely changed in 1,000 years… Gold is money because it reflects the continuity and scarcity and infinitude of time…”
20:52 – George shares the great mistake Satoshi Nakamoto made when he created Bitcoin…
25:15 – “Today, to reproduce the functions of gold, we have almost $7 trillion of currency trading every day. The world’s leading industry is not food, or clothing, or housing, or shelter, or medical care… It’s currency trading! And for all this $7 trillion a day, some 70x the value of all goods and services in the globe… you don’t even get valid currency values…”
31:20 – Dan asks George to expand upon some of his ideas… “What is the problem with the dollar? It’s supposed to be measuring time. It’s supposed to be measuring value. What is really being measured here?”
39:14 – “The narrative, George, is that the government and hyper-liberal companies like Facebook and Google are all in it together, but no? You disagree with that?”
46:02 – George shares a surprising view you likely haven’t heard before… “Israel and Taiwan are the centers of global capitalism and technological progress at the moment. All our major tech companies have their crucial R&D facilities and manufacturing plants in Israel. Intel is really an Israeli company…”
53:15 – George leaves the listeners with one final thought as the interview closes… “The economy is a learning process and if you are learning, you are growing, and you are acquiring wealth. And that is the crucial wealth you can assemble, that wealth of knowledge and learning…”
59:15 – We’ve got a relatively light mailbag this week. So, make sure you email [email protected] with any feedback, questions, or politely worded criticisms, to be featured on the show. One listener writes in with some kind words for Dan and the podcast, and another listener asks a question on how Ethereum contracts are enforced. Dan recruits the help of Eric Wade to help answer. Listen to his response to this and much more on this week’s episode.
Announcer: Broadcasting from the Investor Hour Studios and all around the world, you're listening to the Stansberry Investor Hour. [Music plays and stops] Tune in each Thursday on iTunes, Google Play, and everywhere you find podcasts for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here's your host, Dan Ferris.
Dan Ferris: Hello and welcome to the Stansberry Investor Hour. I'm your host, Dan Ferris. I'm also the editor of Extreme Value published by Stansberry Research. Today, we will talk with the one and only George Gilder. I am so thrilled to have him here. He's forgotten more about technology and economics than most of us will ever learn. I can't wait to talk with him. This week in the mailbag, it's a light mailbag. We got some kudos from listener Bill S. and yet another [laughs] crypto question that will be answered by Eric Wade. And remember, the mailbag is a conversation. So, talk to me. Leave me a message on our listener feedback line, 800-381-2357, and hear your voice on the show.
In my opening rant this week, I'm going to talk about how we analyze stocks in Extreme Value for a very specific reason. I'll get to that and more right now on the Stansberry Investor Hour. So, I'm going to talk right now briefly about how we pick stocks in the Extreme Value newsletter. Most of the time, I talk about this very sort of top-down stuff and why I think the market's going to crash and why I think the level of speculative froth is just – has reached absurd levels today. But we just did a new presentation that's going to be out in another week or so. I want to get a little bit ahead of it here. So in the next week, there'll be a presentation. I'll give you a link to it.
But I'm really thrilled with it because, yes, it's a presentation to tell new potential subscribers about our newsletter and make them an offer. OK? But I'm really proud of it because there are two things in there that I never thought I would get to do in those kinds of presentations. I never thought I would get to talk about my five financial clues that I use as my primary screen to find new equity ideas, and I never thought I would get to use the word "value investing." Because people hear the word "value investing" and it just puts them straight to sleep. But we did this presentation and I talked about it, and we made it more exciting I think.
And I'm just really proud of that after [laughs] 20-odd years of this business, I finally get to sell the thing I do by actually talking about the thing I do. And it's really exciting for me. And I think it'll be exciting for everyone who gets to see the presentation – whether you buy the newsletter or not. But I really want everyone to see the information in that presentation. And basically, the parts that I'm talking about that I'm really excited about are value investing... is the first thing. The idea that the most important thing you do when you buy stocks is understand what the intrinsic value of that business is.
Most people, they go into the stock market and they hear something at a cocktail party – they have no idea what the business is, really. Who's running it, where they're based, where they're headquartered, how much revenue they have, whether or not they're profitable, or any of the five clues that I'm going to tell you about right now. It's just like a gambling exercise. Well, I say buying stock is – stock is a part ownership in a real business. And the five clues that I use to tell me – help guide me toward the better businesses, the really good businesses, are as follows. The first one, the very first thing I always look at – and this is just a habit that developed over several years – I wanted to know if they generated lots and lots of free cash flow.
Because the value of a business is based on all the excess cash you're ever going to take out of it for as long as you own the business. And really, for as long as the business exists. So, I thought, "Well, if that's what the value is based on, then you better darn well focus on businesses that generate plenty of it." and that's – free cash flow is after taxes, all expenses, all reinvestment necessary to maintain and grow the business. What the real cash profit that you're left over with, is free cash flow. And I like businesses that gush free cash flow. That's No. 1. No. 2 is margins. And I like businesses with consistent margins. In capitalism, it's competitive. And the tendency over time is for competition to winnow those profit margins down. And sometimes to 0 or less [laughs].
When you find a business that can maintain the same profit margin over a long period of time – and it's the consistency, not the thickness. Like, just Costco. It's like a consistent 12-ish, 13-ish percent gross margin. A consistent maybe 1.5, 2-percent-ish net margin just year-after-year-after-year on average over time. And I think that consistency shows that they're doing something that repeatedly – it repeatedly satisfies some desire in the marketplace. Something that the marketplace just feels like it can't quite get somewhere else. Or even if it can get some of it somewhere else, it wants enough of it from this business that those margins can be maintained consistently. The third one is just a good balance sheet.
This is just like common sense, right? I mean, how would you feel if you had like $1 million in debt and $10,000 in the bank? You wouldn't feel great. And your prospects... you wouldn't be like financially safe at that point. Right? You'd always have this thing looming over you. Well, what if you had $1 million in cash and $10,000 worth of debt. You wouldn't care about the debt. It would be meaningless because you could knock it out any time you wanted. Right? So that's one kind of great balance sheet. A company has a lot more cash than debt. Another kind is a business that – I mentioned Costco a moment ago. Something that just earns money so consistently. They're just cranking the cash flow out day after day, week after week, year after year, decade after decade in some cases – in many cases that we look at in Extreme Value... that they cover the cost of their debt like, you know, 5, 6, 10 – I've seen 20, 50 times over some companies.
So carrying the debt is like... maybe they don't actually have more cash on the balance sheet than debt. Maybe they have more debt. But it's because servicing the debt is easy for them. So great balance sheet. Gushing free cash flow, consistent margins, great balance sheet. The fourth one, I call shareholder rewards. And I've changed my tune on this over the years. Shareholder rewards are share repurchases and dividends. And mostly, I thought, "Well, research shows that equity investors over the long-term get like 40% or more from their returns from dividends." So, you'd better think about companies with a good dividend policy.
But then, Warren Buffett comes along and teaches us all that, "Hey. The best thing you could do is find a company that can just reinvest at a high rate of return on their money and not have to pay it out in dividends." So that has actually led me to this idea that companies that pay out dividends are exercising some capital discipline. They're saying, "You know something? We can only reinvest so much in our business." Warren Buffett has 100 businesses he can reinvest in. He can keep money around. Plus, he's got re-insurance liabilities to worry about. He's got to keep lots of cash around. But other companies, they only do one or two businesses.
So they can't... The business grows and grows, and then they can only grow it so much. They can only reinvest so much, so they start paying it out in dividends regularly or repurchasing shares. And I think that is – it shows capital discipline, really. You don't want... Corporate managers are human beings. the money just burns a hole in their pocket the same way it does you and me and everybody else. Big sums of cash burn holes in your pockets. As soon as you get a big sum of cash, you're like, "Oh. Whoa. Boy. I could buy this. I could buy that." Corporate managers are the same way. You like it when they kind of keep the balance sheet not too bloated with cash and pay out those dividends.
So they're reinvesting enough in the business and the balance sheet is in a good, safe place – like we said, clue No. 3. But they're paying out some of this cash to... just to get rid of it, really. It's discipline. It's a good thing. And finally, return on equity. Return on equity. If a business or a bank account return on equity is just the interest rate you'd earn on all the money you left in it. And you'll hear like Munger and Buffett, Charlie Munger and Warren Buffett, talk about returns on capital, returns on equity, whatever. And they'll tell you that, over time, over the long-term, your returns are going to kind of converge to that number. Even if you paid up a little bit for the stock.
Because the business, as long as it has its competitive advantage, it can maintain what it's doing, they're always going to be able to get a nice, high return. A good business. Right? The ones that get nice, consistently high returns. Like 20% and above on the capital they reinvest. So that's it. Gushing free cash flow, consistent margins, good balance sheet, shareholder reward policy that makes sense and consistent, high return on equity. Those are our five financial clues that we use. We also have something called a Price Implied Expectations model. That'll be another rant for another day. It's a more complicated thing. But there's the five clues.
I'm just going to leave it at that because we have a great guest today. And before we get to him, I do want to quote from his book, 21st Century Case for Gold: A New Information Theory of Money that I want to talk to him about. And so, this quote is from George Gilder. And he says, "Wealth in its deepest form is knowledge. Wealth is created by the learning curves that result from a million falsifiable experiments in entrepreneurship by economic actors in mostly free market economies." I love that quote because it gets to the core of things. I like it when somebody can get to the core of things. "What is wealth?" Blah, blah, blah. It's this. It's that. It's land. It's gold. It's – wealth is knowledge.
Knowledge grows over time, so humanity becomes wealthier over time. Provided we don't interfere with the market forces that bring it all about and help create it. It's really a pithy quote. And Gilder's a pithy guy, man. I can't wait to talk to him. In fact, let's do that. Let's talk with the one and only George Gilder. Let's do it right now. [Music plays and stops] For the past few weeks, I've been urging my listeners to check out a presentation with Stansberry's lead crypto analyst, Eric Wade And many of you have. Time is running out, though. So for those of you who haven't had the time, you'll have a small window to still watch the presentation while it's still available by going online to cryptocash2021.com.
Why is the presentation so important? Well, because Eric believes there's a good chance you may never be able to get into bitcoin or other crypto opportunities he's recommending at low prices ever, ever again. Consider this upcoming catalyst that could send billions of dollars flooding into the sector. Ethereum, the second-largest crypto in the world after bitcoin – it's scheduled to receive a major update to its blockchain this week. The update will overhaul and optimize Ethereum's network transaction-free models. And it could be a major bullish catalyst. Goldman Sachs says Ethereum could overtake bitcoin. Wouldn't that be wild?
And that's not all. Former SEC chair Jake Clayton is urging the SEC to approve a bitcoin ETF. Well, a bitcoin ETF could give more traditional investors a way to invest in bitcoin that they're accustomed to and feel comfortable with. So they'll pour money into it. Once again, this is the last time I can share this opportunity here on my show. So for all the details, go online to cryptocash2021.com. That's cryptocash2021.com. [Music plays and stops] Today's guest, I'm very happy to say, is George Gilder. George Gilder is chairman of George Gilder Fund Management, host of the Gilder Telecosm Forum, senior fellow at the Discovery Institute, and a founding member of the board of advisors for the Independent Institute. He studied under Henry Kissinger at Harvard University.
He later pioneered the formulation of supply-side economics as chairman of the Lehrman Institute's economic round table, program director for the Manhattan Institute, and frequent contributor to the editorial page of the Wall Street Journal. Described as America's No. 1 futurist – I'll have to ask him about that – Gilder is one of the leading economic and technological thinkers of the past 40 years. He's written 21 books, including Wealth and Poverty, Life after Television, Knowledge and Power, Life after Google, and his latest work, Gaming AI: Why AI Can't Think But Can Transform Jobs. George Gilder, welcome to the show. We're really happy to have you here.
George Gilder: Great to be here.
Dan Ferris: All right. So I'd like to focus on the topic of money. Specifically, what you've written about gold – your case for gold – in the 21st century fascinates me. Because I've never heard anyone say these things about the value of money – where the value of money comes from. And specifically, this idea of money as information. And it fascinates me. To me, I always related – I've always heard it related as, "Well, the value of gold comes simply from – it's the cost of bringing this thing and the capital investment of bringing this thing out from the Earth, its relative scarcity and its other properties of divisibility. And it's fungible. All gold is the same," and so forth. You know these things. Right? But you say that it's time to sort of upgrade and bring this thing into the 21st century and that gold is information. That money is information and gold is a good form of money.
George Gilder: Well, that's more or less right. Let me do my formula quickly for you. The key insight is that wealth is knowledge. And we know that because as Thomas Sowell told us back in 1971, the neanderthal in his cave had all the physical resources we had today. Every atom and molecule. The entire difference between our age and the Stone Age is the accumulation of knowledge. And if wealth is knowledge, what is economic growth? It's learning. And I've been an expert on learning curves for 25 years or 30 years. Learning curves are the most thoroughly documented phenomenon in business strategy. All the consultancies batting on learning curves.
And learning curves are ubiquitous across the economy. From lines of software code to trucking miles to insurance policy dollars to transistors on microchips... Moore's Law, the famous Moore's Law, is just another learning curve. And the reason learning curves are ubiquitous across the economy is, growth – economic growth – is most fundamentally learning. If new knowledge, new information, is not being accumulated, there is no real economic growth. You could print money, but you can't really print learning. And if growth is learning, then what's money? Money is the measuring stick that is not a magic wand for central banks as it's been used today. It's a measuring stick for value.
And it's ultimately, like all other measuring sticks in the Système International in Paris, from the kilogram to the mole to the lumen to the ampere... all these measuring sticks are ultimately based on a frequency. Time... and money is ultimately time. It's tokenized time. It's the way this 24 hours a day immutably distributed to all human beings equally, that money is ultimately time. And when the central banks just wantonly print money, they're trying to steal from the future. And they're stealing from our children. They're stealing from our pensions. They're stealing from our savings. They're depleting our future in order to pay off cronies in the present. That's essentially what's going on today.
Dan Ferris: So how does gold fix that? I know that's a very basic question. It's asked over and over again. But in fact, both gold and bitcoin fix this, do they not? Do they fix it by some other way than their scarcity?
George Gilder: The reason gold has been the prevailing money for millennia is that time to extract an incremental ingot of gold – incremental troy-ounce of gold – has scarcely changed in 1,000 years. In the olden days, a man with a sieve in a river could pan ingots of gold. Today, you build multimillion-dollar factory to mine over 10 years with modern-sized mechanic extraction gear and you mine ever-deeper loads the more capital you apply to it. And so, today it takes about the same amount of time to extract an incremental ounce of gold as it did 1,000 years ago. Gold is money because it reflects the continuity and scarcity and infinitude of time. And the reason bitcoin does not yet suffice as money is because it's capped. Gold is not capped. Gold, you can always mine more gold. You move from the mining slag heaps to mining ever-deeper loads to extracting gold from the seas to mining on the moon with Elon Musk.
I mean, gold is not capped. And the great mistake that Satoshi made when he defined bitcoin... was an act of genius, and it was a huge step forward. But the great mistake was to cap it. And if you cap money, then the price of money changes with the demand for it. So it's not a measuring stick. It becomes a volatile, speculative asset. And that is what bitcoin is. It's useful and it can be a haven, a value asset. But essentially, it's a speculative asset. And gold remains the only money. I think digital money is going to emerge from the current cryptocurrency efflorescence.
They're going to arrive at an uncapped form of money that can accommodate fractional reserve banking that can respond to the real need for more money for investment. Not by changing the value of the measuring stick but by increasing the volume of money. This is what Milton Friedman never really understood. And as a result, we've had just tremendous confusion over the nature of money over the last 30 years that hasn’t been dispelled to this day. Which is embodied in bitcoin and many of the other cryptocurrencies that think scarcity is the crucial factor. But it's not scarcity you want. It's accuracy. You want an accurate measuring stick that responds to the actual resource that remains scarce when everything else grows abundant – namely the passage of time.
Dan Ferris: And yet, George, it sounds like you're telling me the created scarcity from bitcoin being the problem.... that the scarcity – it's relative. Because you refer to the infinitude before – you talk about scarcity and infinitude today.
George Gilder: Yeah. That's the paradox of money. It's got to be scarce, but also it's infinitely into the future. And time is what... it has to partake of those conflicting properties of time. It's both scarce and actionable and opens in an unlimited horizon into the future.
Dan Ferris: Right. So, we learn – we create real wealth by learning. That changes. That grows. Bitcoin doesn't grow. So, it's got this crazy volatility. But gold grows.
George Gilder: Yeah. Gold grows.
Dan Ferris: Gold grows.
George Gilder: And so, we got to – I think it's not impossible to create digital gold. But we haven't quite done it yet.
Dan Ferris: Yeah. There are different folks working on that in different ways. But we're not quite there. So when does the – Jim Grant has called the U.S. dollar the Coca-Cola of currencies. When do people issue Coke for [laughs] digital gold? When does Coke finally go out of style?
George Gilder: Well, Coke is really – it's delusional today. I mean, here is how to think of this. Here we talk about fiat currencies as somehow being valid money. But when gold was – when the world was on the gold standard, until about 1971 most of the time, we experienced the greatest economic growth in the history of the world. It accommodated the Industrial Revolution. It impelled the British Empire where the sun never set. And today, to reproduce the functions of gold we have almost $7 trillion of currency trading every day. The world's leading industry is not food or clothing or housing or shelter or medical care. It's currency trading.
And for all its $7 trillion a day, some 70 times the value of all goods and services in the globe traded every day, you don't even get valid currency values. You get central... just accommodate the endless manipulations of the measuring stick by central banks. And by government, who rule the central banks. And so, to replace the gold standard we have $7 trillion a day of currency trading. And most of the profits go to about 11 banks, and there are people all around the world who play this lottery. And it hardly manages to contrive a stable environment for world trade.
Well, currency trading went up 30% over the last three or four years. The world economy flattened. So, we have a hypertrophy of finance. While we can no longer manufacture because of this spurious fear of climate change, we just shuffle currencies massively and pretend it's economic growth. All economic growth comes from learning. Learning does proceed. And it can be measured by time prices. And the time it takes in hours of work to buy goods and services. And time prices had been steadily improving because of the constant learning that proceeds in defiance of the monetary manipulations of governments around the world.
Dan Ferris: So I'm glad you mentioned time again, because as I read your work on gold, it seemed to me I had always thought of time as just another of the ingredients in the cost of bringing gold out of the ground. But you've separated it into something altogether on its own and made it the most important feature of that cost. And I've just never heard anyone do that [laughs] before. It's very interesting to me.
George Gilder: Well, Hayek really wrote the – "Money comes from information" – really comes from Hayek. And "Money is a measuring stick," comes from Hayek. All I did was scrutinized more closely, "What's the meaning of a measuring stick?" Because in technology, what makes trade work around the world are all the measuring sticks in Système International in Paris. The second, the meter, the kilogram, the lumen, the ampere – all those measuring sticks that allow you to make a microchip in Taiwan and have it assembled in Shenzhen and made into a system in Tel Aviv and built into a computer.
And so, all measuring sticks ultimately rely on a frequency. Really, the speed of light limit is the foundation of all the measuring sticks. And money is another measuring stick, as Hayek and von Mises both pointed out. And the great debauch of money in recent years is the term "money" into a sovereign... as to an instrument of sovereignty. That's what people claim. This is bizarre. Money was gold, which was available anywhere in the world. You could screw up your money in relation to gold and you paid the penalty. But money always had that root in gold, which derived its consistency as money from its continuity of the time to extract it. That's my thesis.
Dan Ferris: So if fiat is a bad measuring stick, we're saying, I want to immediately jump to the idea of Wittgenstein's ruler. Are we measuring a table with a ruler or is the table measuring the ruler? And it sounds like – and I think that gets where, the worse the measuring stick, I think the worse that gets. So what is it that... lots of people use dollars. They've used them for a long time. It must be – it must be OK at measuring. But if it's bad, what is it that is being measured? You see where I'm headed with this Wittgenstein's thing? What is the problem with the dollar? We think it's supposed to be measuring time. It's supposed to be measuring value, right? But what is really being measured here?
George Gilder: It's measuring the appetites of governments to pay off their supporters and to endow their bureaucracies and their administrative states and their Communist parties and other parasites that afflict the world economy. That's what money has become. This illusion grew that it was an instrument of sovereignty. Everybody says this as if it's plausible. A monetary measuring stick cannot be an instrument of sovereignty. It's a measuring stick. It's a reflection of reality. And the amazing – what's amazing to me... I have two points. One is, the dollar and all the other currencies have been manipulated and twisted and debauched as an instrument of central banks and governments.
But at the same time, amazingly, the entrepreneurs of the world have seen through the veils of money, the fogs of war, to actually continually advance technology, and technology is continuing to advance. And all these indices that you read about in the newspapers and that are calculated by huge buildings full of accountant economists in Washington and New York and London, around the world – these purchasing power parities, these inflation adjustments, these GDP deflators, these CPIs, all give way to a single concept of time prices. And the time prices show interesting realities. And measured by the time it takes for a worker to earn the 50 key commodities that sustain human life. The growth of the Chinese economy for the last 20 years has been about 12% a year in time prices.
Almost twice as fast as even the Chinese government has claimed. The Chinese Communists don't have any idea of the real vibrancy of their entrepreneurial economy that they're now attempting to suppress. And our economy as well has not grown... about one-third or to one-fourth as fast as China. But still, it's been growing a lot faster than our CPIs have estimated. And William Nordhaus of Yale, who won the Nobel Prize a couple of years ago for his worst idea – which was taxing carbon. But he actually showed how all these efforts to measure economic growth are just vastly misconceived. When he studied the real price of light and time prices, the time a worker has to spend to light a room from the time of the fires in the caves of the caveman through the candles at Versailles through, well, oiled labs and kerosene and on into fluorescent bulbs and now LEDs, the progress of light increased hundreds of thousands of times faster than any economist calculated.
They just completely... well, they wrote about dark satanic mills and dismal projections of Malthusian exhaustion. Technology advanced just hugely faster than anybody estimated. And the amazing thing is that that continues today. So we have – I have an upside story. But we are – but governments are really pressing the envelope today. They're provoking needless wars. They're fining and punishing leading tech companies for illusory, privacy invasion and other... we're just abusing, both China and the U.S., are now abusing their technology sector wantonly because they're – because their political power is what is their prime motivation beyond... rather than the welfare and prosperity of the world.
Dan Ferris: Right. Pure power mongering. Do you think there is, though, a legitimate – there's legitimate backlash in what you might call, a term from Life after Television, "dominetic." There's a legitimate backlash, isn't there not, against this technology? You made the point in that book, even, "We've got all this wonderful technology and look what the hell we're doing with it."
George Gilder: I think there is a backlash. But I don't – I think the backlash is against the effect of constant and intrusive government regulation on our tech sector. I think these tech leaders – when government intervenes, government has the guns. Government has the tanks. So when the tech sector comes – when the government comes in and mandates some absurd requirement like network neutrality, to neuter our networks, and tries to deprive all of the benefits from telecom infrastructure, I think the tech sector succumbs to government pressure and tries to appease whoever is in control. Google hired Trump conservatives for their political lobby during the Trump Administration. Now they're hiring Black Lives Matter ideologues. They do what the government demands.
Dan Ferris: But the narrative, George, is the government and hyper-liberal companies like Facebook and Google are all in it together. But no? You disagree with that.
George Gilder: I mean, Peter Thiel founded Facebook pretty much. He brought Zuckerberg to California. Zuckerberg's a libertarian kind of Silicon Valley-type. They don't particularly want to regulate hate speech and fake news and all these delusional categories that can't even be defined. The government says they got to regulate this stuff, and they hire people coming out of college. And our colleges are now centers of indoctrination and leftist ideas. Engineers don't want to look at hate speech. They're interested in bits and bytes and Shannon capacity limits and [laughs]...
Dan Ferris: Yeah. That's right.
George Gilder: It's just our culture has become anti-manufacturing and anti-technology to some degree. And the tech companies are just trying to accommodate their political rulers. And Dorsey at Twitter is a leftist twit. That's true. But the reason these people are behaving as they are because every few months, some government body fines some $5 billion for some violation of some elusive regulation that doesn't have any real meaning. They're just trying to appease their bosses.
Dan Ferris: All right. So where do you – so then, knowing what I know about you, you wouldn't regulate these companies at all. You don't think they're monopolies out of control.
George Gilder: Oh, no. The government administrative state is a monopoly completely out of control now. I mean, they're just printing money and buying whatever they want, usurping resources at will. And they are adopting a new kind of mercantilism, and they're just completely out of control. Stealing the future from our kids.
Dan Ferris: One might almost say a real monopoly comes out of the barrel of a gun.
George Gilder: Absolutely. You got it right.
Dan Ferris: Well, by way of Chairman Mao. Right?
George Gilder: Is that what he said?
Dan Ferris: Yeah. [Laughs] Well, he said government comes out of the barrel of a gun.
George Gilder: He got almost everything wrong, but he knew the ultimate source of his own power. It wasn't his marvelous thoughts.
Dan Ferris: Oh, yeah. Those folks knew what they were up to. They knew how to – they knew how to do the evil, awful thing they were doing. They were ruthlessly efficient at it. So I don’t know. I guess I'm fascinated with the difference of your views and this common narrative. Because I keep hearing it again and again and again. From people – and it's interesting to me, throughout this whole COVID episode, how otherwise Libertarian folks said, "Well, OK. Maybe we really do need to, get the government involved. And maybe Facebook and Google really are quashing our freedom of speech, and maybe we really do need to regulate them." But you say no.
George Gilder: No. I mean, our government educational institutions are suppressing our freedom of speech.
Dan Ferris: Absolutely.
George Gilder: Massively, all across the country.
Dan Ferris: And private ones too.
George Gilder: Well, the private ones too. But the private ones – you can start new private ones. But with the government loans essentially taking – nationalizing our entire educational system, trillions of dollars of government debt. And the government administrators of all these colleges just took the money and ran. They didn't improve education with these trillions of dollars of loans for students. They took the money and created new departments of gender studies and diversity and affirmative action and Black critical whatever it's called. And all this teaching indoctrinating in various government fantasies designed to divide the people and render them more manipulable and more subject to the administrative state.
Dan Ferris: It almost seems like it's done on purpose.
George Gilder: Well, it is the strategy – the currency strategy of the Democratic Party in Washington, is to divide the country and conquer it by creating a grievance mentality. Having everybody resent the billionaires who own the giant corporations and pretend that these people – these people... they're illiquid. The money, it's not income that they're making these billionaires as they call them. They're mostly illiquid. And if they sold their shares most of the time, the shares would drop in value as fast as they sold them. It's just a false model of how a capitalist economy works. And we are now in the process of solely strangling the golden goose, and it's a tragedy.
I think capitalism usually moves around the world. It's center, actually, for the United States... move to Israel, surprising. For Israel and Taiwan are the centers of global capitalism and technological progress at the moment. All our major tech companies have their crucial R&D facilities and manufacturing plants in Israel. Intel is really an Israeli company. It's the fastest grown... comes from Mobileye, which is their autonomous car division and their best way for fab is in Kiryat Gat and Israel there. Their research facilities are all over Israel. And Gelsinger – Pat Gelsinger, the new head of Intel – understands that.
And their best chip designers have been in Israel. It's where we – our economy, our government, our universities all had a revulsion against industry, manufacturing, technological progress. We're all paying fealty to this fantasy of climate change. That's the ultimate – that's what governs our current Administration in Washington, is an effort to suppress CO2. The Chinese aren't so stupid. That's why they're willing to provide us solar panels if we insist on cluttering our landscape with solar panels which don't even produce energy. They just – they cost more to process the erratic energy that they yield –
Dan Ferris: And are made of toxic waste, by the way, too.
George Gilder: Oh, yeah. They're made of toxic waste. I mean, we're just doing things that are so incomparably stupid that it's amazing that technological progress advances as fast as it is. And it continues to advance, partly from Israel, partly from Taiwan, all the computer industry, all of infrastructure for manufacturing our Smartphones and devices... is really in Taiwan. And Shenzhen, a lot of it – people complain that China hurt the United States. China bailed out the United States' tech sector and manufacturing sector when we chose climate change as our sovereign goal.
Dan Ferris: [Laughs] I agree with everything you just said. I think climate change is a silly thing to focus on and very damaging to our economy and just our way of life. You started talking about – you mentioned Thomas Sowell when we started talking. And I'm reminded of how he discussed ideas that feel good – the policy based on ideas that feel good and sound good – versus what actually works. And I have always wondered. When I attend like a Libertarian type of event, like the freedom fest or something, I almost feel like Libertarians are too scared of ideas that sound good and don't work. And I almost feel like they're too scared of government. They don't – and in fact, I would even say that most Libertarians don't believe deeply enough in the actual... the power of free markets.
George Gilder: Yeah. I think that's right. I agree. Gale Pooley– Gale Pooley, who was a real genius behind the current time price movement, Gale Pooley with Marian Tupy of...Gale is a discovery in BYU, Hawaii. And he did a presentation, a brilliant presentation, on time prices at Freedom Fest this year with about 20 people in the audience. And time prices show how entrepreneurs irrepressibly continue to advance despite all the slings and arrows inflicted on them by all these administrative nomenklatura that run our economy. And it's really... but when I made the claim that, "We don't need a lot of" – Freedom Fest this year was really advocating increased government regulation of Big Tech.
Dan Ferris: I believe it.
George Gilder: It's amazing. I really was astonished. Here, these are people talking about seceding and complete anarchy and they were talking about increasing regulation of these supposed monopolies which are no more monopoly than Microsoft used to be or IBM before Microsoft or Standard Oil or all these companies that were not monopolies and were not really benefited any way by the so-called anti-trust.
Dan Ferris: And dramatically reduced time prices of the things that they are creating.
George Gilder: That's right.
Dan Ferris: In every case.
George Gilder: That's right.
Dan Ferris: When I looked at the Standard Oil history, I was amazed at the drop in the price of a barrel of oil or –
George Gilder: 95%.
Dan Ferris: Yeah, from tens of dollars to pennies.
George Gilder: Yeah. I know. [Laughs]
Dan Ferris: Incredible. And yet, they were some evil market force. They were using their market power. There was no argument to be made for that whatsoever in the one measuring stick, the one term that meant anything. And yet, here we are. We have this regime where we believe –
George Gilder: And we're doing it again.
Dan Ferris: We just believe it. We believe in breaking up big companies. We don't like the bigness of them for some reason. All right, George. We've covered a lot of ground here. And I have a final question that I ask all my guests. Whatever's on your mind. You can go far and wide with your answer. Usually, we're talking about finance and stock-picking and things, but whatever's on your mind. And my final question is always the same. If you could leave our listener with a single thought today or a single idea, what might that be? I can't wait to hear what it is from you [laughs].
George Gilder: Well, I think I'll go back to my... that, really, the economy is a learning process. And if you are learning, you are growing and you are acquiring wealth. And that is the crucial wealth you can assemble – that wealth of knowledge and learning. And economic growth is not like learning. It is learning. But it proceeds through the darkness of time. And so, it's not certain. It can't be certain. If you try to guarantee growth, you suppress it. Because growth is always surprise. Shannon said, "Information is surprise." I say economic growth is surprise. If you guarantee it, the surprises of learning are suppressed.
And so, government guarantees actually suppressed growth. And that is the crucial thing to understand. There's no guarantees in life. And it proceeds in the darkness of time. And money measures the progress of time. And money is tokenized time. It's the way we administer the scarcity across a whole economy and have transactions that reflect the fundamental reality of our lives, which is the speed of light and the span of life or the limits in this infinite universe.
Dan Ferris: Brilliant. I love that answer. Thank you so much. And thanks for being here.
George Gilder: Well, thank you for interviewing me. It's a great opportunity. Thank you so much. And by the way. Our COSM Conference with Peter Thiel, Kai-Fu Lee, Newt Gingrich, Niall Ferguson all will be at November 10 to 12. COSM technology. And it's a great conference, and we'll get a lot more of these themes discussed in the future of technology illuminated at this conference at Bellevue, Washington, November 10 to 12. COSM. C-O-S-M. Thank you so much.
Dan Ferris: Excellent. All right. Thanks, George. Bye-bye. [Music plays and stops] That was invigorating for me. I hope it was for you too. I've been wanting to get George on the show. I met him a couple of years at the Stansberry meeting that we have every year – the Alliance meeting in our conference. It's a three-day event in Las Vegas. And we're going to finally do it again this year. It feels like we haven't done it forever, even though we just skipped one year. And I met George and he said, "Sure. E-mail me. Call me." And we finally got him on. And there is no one else like him. I highly recommend his book, Life After Google. We didn't get into those topics so much because I really wanted to talk about gold and money.
And you can find – the book about money, it's free. It's on the Internet for free. And you can find it easily. Just, all you have to do is google the title of it. You could probably just google George Gilder gold. But it's called The 21st Century Case For Gold: A New Information Theory of Money, by George Gilder. And it's a free, 106-page PDF available online for anybody to read. It is fascinating. I highly recommend it. I promise you you'll see ideas about gold and money in there that you haven't seen in other places. All right. Wow. That was wonderful. It's time to do the mailbag. Let's check it out. Let's do it right now. [Music plays and stops] I've talked about inflation plenty on my show with crazy government spending and, frankly, how the government could care less about you and your financial situation.
But today, I have to share a truly unsettling fact. Thanks to actions taken by the U.S. government, 40% of U.S. dollars in existence right now were printed in the last 12 months alone. Let me say that again. 40% of all the U.S. dollars in existence right now were printed in the last 12 months alone. This is astounding. There is an astounding $29 trillion in U.S. debt outstanding. It's hard to even imagine what that means. Let's put it in context. If you made $1 every second, it would take you 32 years to reach $1 billion. But it would take you another 31,000 years before you reached $1 trillion. If you make a dollar every second. This is incomprehensible.
And yet, our political leaders talk about trillions of dollars in new additional programs without batting an eye. And people are waking up to the reality that the government is not interested in protecting the value of your savings. And you should too. There's a brand-new interview that you should watch if you're concerned about inflation and the U.S. dollar. Just go online to inflationinterview.com. Again, that website is inflationinterivew.com. Check it out. [Music plays and stops] In the mailbag each week, you and I have an honest conversation about investing or whatever is on your mind. Just send your questions, comments, and politely worded criticisms to [email protected] I read as many e-mails as time allows and I respond to as many as possible.
Or give us a call at our new listener feedback line, 800-381-2357. Tell us what's on your mind and hear your voice on the show. Kind of a light mailbag this week. Bill S. writes in for – he's a new listener. He says, "I've recently gotten into the stock market, and I just really like your Investor Hour so much. There's always something new to learn. It's so interesting. You have great guests, and you are personable and nice to listen to. I really appreciate all the hard work you do to make the show so great. Thank you. Bill S." Well, thank you, Bill. Thanks for the kudos. And next and, unfortunately, last this week we have Mark G. And Mark G. – he doesn't even have a question for me. There's no questions for Dan this week. They were all for Eric Wade.
And Mark G. says, "I just finished listening to episode 216 where Eric Wade spoke of an Ethereum contract to loan money and said, 'It can't be changed. It's private and secure.' Great. But how is it enforced if his friend doesn’t follow the provisions of the contract? Does he have to take his friend to court, take his firstborn or take a lien on some tangible property written into the contract? Mark G." I sent this question to Eric Wade and he shot back with a quick answer. He says, "DeFi" – that is, decentralized finance – "and smart contract lending operate, simply put, more like a pawn shop than a credit card at this stage in that the vast majority of the loans are collateralized."
So, you implied – and you were right, Mark G. There is collateral involved. And when there's collateral involved, you can... pawn shop just keeps the collateral if you don’t pay them back. Right? I hope that helps. That's another mailbag and that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. We provide a transcript for every episode. Just go to investorhour.com, click on the episode you want and scroll all the way down and click on the word transcript and enjoy. If you like this episode, send someone else a link to the podcast so we can continue to grow. Anybody you know who might also enjoy this show, just tell them to check it out on their podcast app or at investorhour.com.
And do me a favor, would you? Subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. Follow us on Facebook and Instagram. Our handle is @InvestorHour. Follow us on Twitter. Our handle is @Investor_Hour. If there's a guest you want me to interview, drop me a note at [email protected] or call the listener feedback line. 800-381-2357. Tell us what's on your mind and hear your voice on the show. Until next week. I'm Dan Ferris. Thanks for listening.
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