Patrick Donohoe

Boost Your Wealth

TWSFF 09 | Investing In Yourself


Patrick talks about how to get a 10% raise for life by investing in yourself. People are spending their time away from their families, loved ones or even the things they love to do in exchange for money. The hard money they earned is invested in other things such as retirement plans. Instead of investing the money to other things, Patrick points out to allocate it to the most important one – yourself. As people grow and expand, investing in human life value assets will ultimately lead to more money.

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Boost Your Wealth

Financial Friday

The topic is how to get a 10% raise for life. Let me step back and explain why I feel like this is a focus that everybody should have, which is making more money, figuring out how to do that every year. First, I believe that humans are designed to grow. We are designed to expand, to solve new problems. We all have that within each of us. It may be at various levels and capacities based on our uniqueness. I see how much time people are spending away from their families, spending time away from the things they love to do, their hobbies. They do it to exchange time for money, for working. I get it. At the same time, I don’t know if individuals ever step back and analyze the process and the exchange. It’s essentially exchanging time for money. It’s exchanging time for value because the money comes because somebody values your experience, your skills, your abilities, your training. That connection sounds simple but I believe it’s very profound. The irony is that because it’s not understood, people then take a portion of what they’re making and they save it. They invest it in retirement plans. They give it to a money manager at Wall Street. They turn around and make measly returns.

TWSFF 09 | Investing In Yourself

Heads I Win, Tails You Lose

I believe that same amount of money, probably even so much less, can be invested to earn hundreds of percent per year in what I call the number one investment, which is you. What I mean by that is in the book I wrote, Heads I Win, Tails You Lose. This is something I covered there. I spent several pages in there discussing what’s known as the human life value, the HLV statement or Human Life Value statement. Most people are familiar with the financial statement. A financial statement is your assets, liabilities, income and expenses. I took a different approach, which is something I learned from some individuals that I have tremendous respect for, which is income comes from your human life value assets. It’s the training, the degrees, the certifications, basically what you’ve accumulated in which somebody is willing to give you money for because they find it valuable. Those assets are not static assets. Those are assets that can be enhanced or built. That is what’s going to ultimately lead to more money. As far as the hundreds of percent per year, which is essentially a billion of these assets with the investment and capital that you are allocating elsewhere.

We also have human life value liabilities. This is what’s also interesting is that when you identify what your assets are, you want to focus your time, your effort and your energy to those assets, which requires eliminating some liabilities or maybe even increasing liabilities. Increasing liabilities is essentially having others do the things that you’re not good at, that you don’t like doing. What that does, it gives you more time, energy and ultimately focus to enhance these assets. I’m not going to get into a lot of details there. Maybe a simple example is having someone cut your lawn. It’s going to cost you maybe $100 a month during the summer or shovel your snow. That’s the time that you can spend and put energy into stuff that you’d like doing or stuff that you’re good at.

I’m sure that you may be good at mowing the lawn. If you’re worth $100, $200, $300 an hour, why are you going to pay somebody $30 or why are you going to pay yourself ultimately and sacrifice the time you could have spent earning $100 an hour for $30 an hour? It’s a big loss in doing that. The idea is to invest in yourself and build your income. How you do it is interesting because there are so many ways to approach it. I would say some simple ways to approach it is to be familiar with what your market value is, your economic value. That can be easily done at, There are a lot of other sites that are popping up that will show you based on your experience, based on your certifications, your degrees, what you’re doing, your job title and so forth. What the median is, what the long tail, the other side of the bell curve, the high end, the low end. It’s going to show you other positions that may be in the same field that pay more than what you’re currently earning.

Humans are designed to grow, to expand, and to solve new problems. Click To Tweet

Those positions, you may have the experience for that or you may not. This is what gives you clues as to where to place the investments to build those human life value assets. It could be a management certification, a leadership certification, some leadership experience, management experience. It could be to do with software development or marketing and certification in certain elements of marketing. There’s a whole slew of things. What I would say is that approaching these types of websites, what you want to go in with is not necessarily the fact that you can make more money by having this experience. It’s also, is this a position that you would want to do? I believe that fulfilling work gives us vitality. It creates tremendous productivity. It’s getting into something simply because of money. I hear from dentists all the time who hate digging in people’s mouths but they do because they make a lot of money. That drains other elements of your life. As you’re doing some research and due diligence on what is available to you to make more money, take into consideration what I said, which is ensure that it is fulfilling and aligns with who you are.

Another investment you can make is in a different assessment. Assessments that actually tell you more objectively about who you are, what your strengths are, what your tendencies are, your instincts. This helps to understand yourself better and the value that you bring to the world. It may be engaging with people at a different level. It may be different positions as far as the style of communication that you like or dislike or how you work with groups or don’t work in groups. Knowing more about yourself is going to also enable you to work in certain positions.

TWSFF 09 | Investing In Yourself

Investing In Yourself: Fulfilling work gives us vitality. It creates tremendous productivity.


The approach here is simple. The approach is you’ve got to figure out how to make more money per year. Focus on 10% for now. It may cost you $1,000, $2,000, $3,000. Going to the investment return, if you make an investment of let’s say $3,000 a year and you make $100,000 a year as a salary, that’s significant but $3,000, if you can get a 10% raise because of that, that’s $10,000 in additional money. That’s a 300% rate of return more. My point behind all of this is that should be where the focus is. It’s figuring out a way to make more money or make the same amount of money with less time. I’ve written some eBooks that talk about this.

I’m in the process of doing a big research project associated with jobs, professions, contract work positions that pay more than $75,000 a year. You can do anywhere in the world. Also, a lot of it is part-time, 20 hours, 30 hours per week. My big drive when it comes to writing the book doing this podcast is to help individuals have more freedom, even more freedom than they have right now, more independence. Sometimes people wake up in the morning. They go to work. They go to an office because they think they have to. Because of how society is progressing, there’s so much opportunity to work from home, work on an island somewhere, work in a state or a place you want to live as long you have a good internet connection and do so on your terms.

Figure out a way to make more money or make the same amount of money with less time. Click To Tweet

It may not be available for everyone. Knowing that these positions exist can now create focus and ultimately a path to build your human life value statement to the point where you could have one of these jobs or one of these professions whether it’s contract work or a full-time position or a part-time position that’s remote. These opportunities are coming online more and more. I have a researcher that’s digging into this. We found hundreds of domestic, US-based jobs that pay over $75,000 a year. It’s exciting. We’re going to a whole book and eBook around that for your benefit. I wrote a little eBook that you can access at I know it’s going to help create some ideas. It’s going to create some motivation behind doing this because I know you can.

If you’re reading this and you’re thinking about how to make more money, hopefully, these ideas have resonated with you. Some of them are repeated in this eBook. They’ve already written, which is how to make 10% more for life. Here’s what you’re going to get as a result. If you make $100,000 a year and you’re getting the customary 3% raise per year because of inflation, cost of living, that amounts the total lifetime earnings over 30 years. Factoring in that 3% raise is under $5 million, so 30 years of that. If you’ve got a 10% raise every year instead of 3%, which is totally possible. It may not be every single year but averaging it out over that course of time. The 10% a year average amounts to $16.5 million. It’s more than $11 million more just by this being the primary investment as opposed to other types of savings, mutual funds, investments and so forth. Another few ideas, hiring a coach. I have two coaches right now. I’ve had a coach since I’ve started my businesses. I’ve graduated past several of the coaches. I found that some coaches didn’t necessarily have expertise in certain areas that I needed but not in others. I’ve had over a dozen in the last several years. Right now, I have two.

These two coaches are women. They’re very experienced with the relationship, very experienced with business and personal development. It’s the first time I’ve had women as coaches. They’ve been pushing me harder than my previous coaches. The accountability is so high. It’s incredible. I’ve seen so much growth in a few months, tremendous growth. Coaches are important. What’s an idea around getting a coach? I would reach out to the most successful people in your circle of influences or acquaintances and ask them who their coaches are. I guarantee that some of them have them.

You start to interview several and get clear on what you want from a coach. For me, it’s helping me communicate better, helping me have more balance in my life as well as accountability. It’s been huge and highly beneficial. A personal coach is another way in which you can make an investment. I hope you found some value in this. Hopefully, you can do what it takes. Take action now, do something, stop contributions to this, that or the other. Dedicate some capital to making an investment in yourself because I know that it’s going to pay off. I hope you enjoyed the episode. We will see you in the next episode.

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The Coddling Of The American Mind And Learning To Evaluate Ideas with Andy Tanner

TWS 10 | The Coddling of the American Mind


Together with Andy Tanner, we read deeper into Greg Lukianoff and Jonathan Haidt’s book, The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting Up a Generation for Failure. Andy is a renowned paper assets expert and successful business owner and investor who also serves as a coach over at Rich Dad’s Stock Success System. He pours out his thoughts and insights over what he thinks about the good, tackling how we draw the line when thinking until when protection and safety are always good and whether or not pain is bad. Andy gives a lot of important points to think about, emphasizing the ability to learn how to evaluate ideas.

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The Coddling Of The American Mind And Learning To Evaluate Ideas with Andy Tanner

I’m here with Andy Tanner. We are going to be discussing as a follow up to Greg Lukianoff‘s podcast called The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting up a Generation for Failure. It was interesting as you had posted something on social media and put the idea there which is what coddling is and what it isn’t. I happen to be interviewing the author.

I’ll get a book recommendation from Patrick because he’s always reading fascinating stuff. This one, we both were reading independently in kindred minds.

Thanks, everyone, for reading. How did you hear about the book?

The Rich Dad advisors, we do a book every six months and this one wasn’t in it. Robert had come across it and said, “Here’s another one.” We didn’t study it formally. He has a lot of books. He’s an insatiable student. He reads as much as anyone I know. He’s always got a book to recommend. I picked it up and started with the audiobook while I was on the treadmill. I found it fascinating because of the roles we have in our life as entrepreneurs, investors, coaches and parents. The one that hit me probably the hardest was the parents. When I thought about it, sometimes when you read stuff and you feel a good vibe on it, I always say, “Am I feeling a good vibe because of confirmation bias?”

In other words, “Do I believe this stuff and this guy singing my song? Am I reading it because it’s articulating a belief I already have well or do I like this because some books challenge what you believe?” Those are the best ones. The ones that say, “I’m believing differently now than I did before.” I think that’s true learning. This one is probably the former because it resonated a lot of what I believe politically already and the way I operate. Let’s put it on a spectrum. On one end of the spectrum, you have coddling, which would cause brittle bones with no resistance. The other end you have abuse, which is breaking bones. As a basketball coach, I have parents that see me on both of those spectrums. Some of them say I’m too soft, some of them say I’m too hard. Some of them like Goldilocks think I’m right. That’s very few.

All based on what you’re doing at the time. You have multiple perspectives analyzing how you’re coaching and how you’re leading. Some describe it as more toward coddling, others describe it as abuse.

In the book, it speaks a lot to academia. The idea that in academia, we’re dealing with words and ideas most of the time. Outside of academia, in the real world is where you get hit in the face. The idea is how weak our children. You can’t lump them all together into one. How do you do that? As an investor, do you want to be strong entrepreneurs? Is it easy for us? Is the world of competing and being an entrepreneur just a piece of cake where you don’t need any resistance to prepare you?

That’s the variable is the degree of what is resistance? What is the environment of learning? It says good intentions, what’s the intention? The intention is to protect. Is that a good thing? It is, but it’s in certain contexts. There has to be a certain situation, which protection is good. Is protection good always? That’s where it comes down to, where is that line? What is that environment where it is trauma? It’s disruptive or against a specific belief and how do you govern them?

Let’s talk about investing first. I don’t know how it is in other things. In the stock market and the options market, I don’t know anyone that has incurred losses. I don’t know anyone who hasn’t dealt with nervousness, fear, uncertainty and setback. You’re dealing with emotions of fear and greed and all those types of things and seeking reward one would risk. I will tell you my opinion is in that arena, you better have a strong spirit. You better have some guts and have some stick-to-itiveness. If losing money hurts, is that abusive? Losing money isn’t physical. No one has ever died because of bankruptcy. In this idea to protect the perfect little psyche, what resistance is required?

You look at sports too.

It’s a perfect analogy.

If you coddled an athlete, how long are they going to be an athlete?

They’re not going to be an athlete at all.

As far as growth is concerned, it’s an interesting dynamic because we’re trying to avoid pain but yet pain is the way. Ryan Holiday said, “Obstacle is the way.” When there’s resistance, it could be painful but that’s a catalyst to growth. Is that absolutely true?

Let’s decide this. Let’s talk about pain. Is pain good or bad? That’s the first thing. We tend to want to not have any of it. No pain, no gain. How much pain is healthy? I think it has to do with damage. Your analogy of an athlete is great. It’s as if I resist, if I do the pushups enough, I’m sore the next day. The DOMS, Delayed Onset Muscle Soreness, it’s painful. It rips it out but that’s how the growth comes. Through pain comes the gain. It’s very true. You put astronauts into space, the biggest problem is there’s no resistance. You can kill someone with no resistance. It’s as lethal as if you shot him with the gun. Here you have the spectrum of abuse on one side, coddling on the other. One causes brittle bones. Others will break even the strongest ones. That’s what we’re here to figure out and talk about.

Let’s talk about the book, what’s the point of the book? The book is called The Coddling of the American Mind. It’s not saying that coddling is bad. If you coddle your child or if you coddled a baby, it’s saying the coddling of the American mind. What is he saying with that statement?

No one has ever died because of bankruptcy. Click To Tweet

The book deals a lot with academia. They’re saying, “Can an idea be harmful and damaging?” Do we need to protect people from ideas? For example, someone’s on one side of an issue, maybe there’s a rape victim and is going to speak. This rape victim might say, “I’m going to talk about being strong and saying, ‘You need to move on with your life and you need to understand that guy doesn’t have the power to take away your worth, take away your value. It was an episode. Get the help that you need, but don’t let that kid take control of your life.’”

There’s a big group of people who say, “If you give that message, that’s insensitive to the other rape victims.” It’s a very real conversation to have and say, “We’re going to boycott this speech because by being on campus, that validates the rapist in some way.” There were some ludicrous examples on one extreme that he gave. It’s a slippery slope into abuse. You don’t want to tolerate abuse. When you say the American mind, can words harm someone, sticks and stones may break my bones but names will never hurt me? Is that what it is or words will never hurt me? Being called names, name calling or ideas that are opposing to yours, are they harmful? Obviously his premise is no, they’re not.

Let’s go to the growth of the American mind, whatever it’s called in the title. What’s the growth he’s referring to? The American mind, it’s growing. How does it grow? Is it the same principle of resistance that applies to athletics?

He seems to think so. What doesn’t kill you makes you weaker. If it does it give you resistance, you become weaker. When you get into society, you have to function. In real life, there’s this thing called competition. As entrepreneurs, we see this competition and it hits you. It is a fight. If a person can’t stay in the fight and fight for what they believe, I’m damaged. The other thing is that sinister is it can also be a ploy to kill the dialogue. If you embrace the idea that coddling is a good thing, that’s a very good way to kill the dialogue of your opponent as a weapon. Let’s not let them hear this because it’s too harmful. Now, information has been controlled. That’s how cults happen. Information control forms people’s beliefs. If you control the information, people will only get one set of information and they’re not allowed to address an opposing idea because it could kill them and damage them. When you look at information as something as damaging, how do you ever find the truth if you don’t have it?

Greg is the CEO of FIRE, which is the Foundation for Individual Rights in Education. Where he creates through defending free speech. The free speech idea, which is essentially the openness of people being able to share ideas and information. That’s where it’s like some information and some ideas could be harmful. At the same time, what’s the difference between being harmful and resistance or something in contrast to a person’s beliefs? It comes down to everyone’s going to have a certain belief system of a certain perspective. Obviously having an exchange of ideas could potentially ruin a person’s beliefs. It could have them question certain things. It could have them maybe question to school in this sense. The idea that the school is sharing. It can create trauma. At the same time it’s like, “How is the protection of ideas being shared going to be traumatic?” because you could justify trauma on both sides.

If you look at free speech and we isolate that idea into just words, it’s easy to find the abuse and start there and work backwards. Yelling fire in a crowded theater when it’s a hoax, obviously is not a good thing. If it’s a credible threat on someone’s life, a bomb threat, that’s my freedom of speech. That’s a credible threat. That’s harmful. You start to back that off and you say, “Can words cause pain?” He talks about in the book a lot about Veritas. That in the search for truth though, ideas are going to have to be challenged. You move from threatening people or lying to the idea of honest dialogue that may be right or maybe wrong, but there has to be that fight. In a fight, there’s going to be stress. He sees that as a healthy thing. If someone says, “I’m uncomfortable talking about this, this is causing me stress.” Is it stress or is it damage? Is it permanent?” That’s where he says, “Our intentions are good. Don’t make people uncomfortable.” There are so many issues. There are race issues, religious issues, moral issues, political and all these issues that people are attached to. Yet if you isolate people in academia and decide which ideas are healthy and unhealthy. Sticks and stones may break my bones, ideas should not harm me.

It’s interesting to look at it. I interviewed Ed Griffin as part of this season. He’s big into the idea and the protection of the individual and that the collective is an abstract. That the collective doesn’t think like the individual thinks. Look at the fostering of the mind of a young person. We have our perspectives of the world and it’s a certain way. We have certain strengths. We have certain abilities. We have certain tendencies. Our children even when they’re young, we have a sense of stewardship over them. They’re individuals. They’re going to have a different way of looking at a lot of different things. Oftentimes as parents, you want to protect them. You want to make sure that they don’t get harmed. At the same time, how are they going to discover their individual personality, their perspective, their characteristics, their strengths and their talents? How are they going to discover that without the environment in which they’re challenged?

TWS 10 | The Coddling of the American Mind

The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting Up a Generation for Failure

Tribalism is primal. It takes seconds to happen. Certainly, from a sociological standpoint, we live in tribes as human beings. We have our political tribe. We have our work tribe. We have our religious tribe. All these family tribes. What happens is tribes do have group thinking. Libertarians, Democrats and Republicans all have a statement they make, “This is what we believe.” Any idea that opposes that is an attack on that group. The idea is to protect the people. This idea of coddling is another weapon to say, “It’s not up for discussion. I can’t discuss it because it might hurt our group or it kills the fight.” That’s how culture is a scary thing.

If you look at a Moonie’s Cult or other cults, you look at maybe a Hubbard type of figure, every one of them tries to control information. They say, “This is the information that’s good for you and this is information that’s harmful to you.” You can see there’s a trap in that is that a person will never escape into what could be the truth. Maybe they have the truth. Hopefully, they do but no one has all of it, at least we don’t think so. If you forbid conversation or information, you’ve now created a mechanism that will trap people from the truth. I can’t imagine that’s the way to protect the truth. Most of the times it’s the way to defend something it might not be or hide the truth.

When it comes to our evolution as people, as humanity, you’re either growing or you’re dying. You don’t sit stagnant in life. We’re compelled to move forward. It’s hard to argue. Then you have to define, “What is growth?” It goes to Maslow. What does Maslow’s Hierarchy of Needs show? It shows you first seek food, shelter and clothing. You seek safety. Safety is found in tribes, in groups. What’s next?

The highest part is self-actualization.

You can’t achieve self-actualization unless you have a sense of safety. There are the ego and the self-esteem side of things too. It’s interesting because we’re compelled to seek safety. We’re also compelled to love and also be empathetic, which is the self-actualization in a sense. Everybody is at different stages. That’s why when you look at a tribe, it’s full of individuals at different stages. In a sense, tribes both protect but they could also inhibit. When you look at academia, you look at the purpose of school and education, it’s not to memorize multiplication tables. What’s it supposed to do? It’s an environment in which your mind grows. It’s challenged. You have new information. It grows even more. It’s challenged even more. It grows even more. That’s the thing is I look at academia and these days it’s the subject matter. You don’t need half of it. Academia, for the most part, is teaching kids how to learn, but is it teaching them the right way to learn?

I can tell you not knowledge but like toughness. Another great book is Jay Bilas’ Toughness. He talks about what toughness is and the difference between a rock and a rubber tire. In academia, what’s interesting is young students, eventually are going to have to go out into the real world eventually. If we coddle, can they survive the world? That’s the big thing. Are they strong enough to deal with the realities of setback? One of the things in the book that’s interesting as he talks about the Generation Zs and these guys that were brought up on their phones and social media where the fear of being left out is traumatic.

The fear of not being liked on the Facebook page, the fear of seeing all your friends someplace where you didn’t get there. All this stuff causes all these anxieties that maybe you and I can empathize with. We didn’t get it drawn up. If we go back to pre-Columbus, Native Americans. What was the adversity for those kids? Starving, not being able to get the buffalo and getting beat up by the other tribe. Their idea of stress and difficulty was probably much more physical than social-emotional. We have almost no physical. You’re going to have the bullies and stuff but I’ll tell you, by and large, it’s more emotional toughness and emotional battles that these guys have to fight.

I don’t think it’s shutting off the social media. I think it’s learning to deal, to face it, not hide. Facing up, manning up, womaning up, adulting up or whatever you want to call it and not hiding from these little things that get magnified. He talks a lot about that in the book too is that by creating a safe place suggest that it’s horrible. It reminds me when someone went in to get some counseling and they said, “This is going to happen to this guy. I want to talk to someone.” It’s not like, “This is going to harm you. You’re going to have to work through this. This is going to get worse. You get PTSD.” He says, “No, I want to talk to someone. I feel like talking and I think I’ll be okay.” “No, you’re not okay. You’ve been harmed.” It’s crazy.

Where does it come from? Is the intention so that they’re safe and that they’re protected, they’re protected from harm?

Through pain comes the gain. Click To Tweet

Where I might disagree with what he said is he says, “Good intentions and bad ideas.” I’m not so sure they’re always good intentions because if you have an ideology, you’re against and you can create and paint it as toxic that gets it out. You don’t have to address it. You don’t have to debate it. You have to prove it wrong. You say, “It’s harmful. It’s out.” You can eliminate something from the public debate and the public dialogue by labeling it as toxic and people will be trapped in the ideology that the person refers. He says good intentions and bad ideas. Is that always good intentions? Are we always calling good intentions or is this a way to keep things out of a public dialogue by labeling it toxic?

Instead of going off on tangents, in the end what did we learn from it? What are some of the things you take away and say, “What is the right thing? What is not the right thing? Where do we draw line?” It’s a very gray area and it’s very situational.

I don’t have the answers to that or I’d write another book. Part of the value of reading a book like that is the mindfulness of it. It is when we’re in a situation like let’s say I’m coaching basketball. It’s like I can say, “On this side it’s coddling and on this side it’s abuse. I might not have the answer but if I think about it, I’ll probably get closer to it than if I don’t. At least I can consider it, “Are we coddling or are we being abusive?” If we don’t even ask the question and we go, “This is abuse every time or this is coddling every time.” At least the idea of having that spectrum to consider probably will make you a better father or maybe make you a better coach. Not a perfect one, but it will probably do a better job. As an investor and entrepreneur, it’s the same thing. I don’t want to be guilty of either one. That’s what I put on my Facebook page. I don’t want to be an abuser but I don’t want to be a coddler.

It is situational. Is it possible to know exactly what to do in every single situation? Probably not. That’s why I would say dictating policy around how you deal with resistance is concerning because you’re allowing one person or a group of people that have interests, that have a bias to take away your power, take away your ability to know how to act for yourself in that specific situation.

We’re probably biased. You and I both feel the power of an individual is very strong. When I’m on my podcasts addressing difficult issues and as an educator, my solutions are to the individual. Off and on my podcast, I have people who want a systemic solution. They go to Congress and they try to lobby for this law and that law. I go the opposite way. I said, “There’s nothing you can do about what Congress says. You as an individual, you can make decisions to better your life and improve yourself.” There’s always going to be that. It’s going to be an interesting experiment. I have a little basketball team that I coach. I’ll share the story. Half the people are going to think it’s awesome. Half the people are going to think I’m an abuser.

We were playing below our potential in a game. We were down by four. We should have been beating this team by 40. We weren’t playing our best. I called a time out. I align the kids up and I said, “This is a one-minute time out. We’re going to run a sprint during the time out and we’re going to get tired one way or the other. We’re going to get tired playing harder or tired sprinting.” They ran the sprint. As soon as they went back, they got back out and played. I called my second time out, I had to do it twice. The other team cell phones are coming, “This is going to be on YouTube. This crazy coach doing this.” What was interesting is after the second time out, that’s a lot of running for two minutes, to run sprints for two minutes. I didn’t care about the game. I thought, “We’re going to lose this game because I’m going to send them out tired.”

You wanted to take advantage of the environment to teach a lesson.

What I did is I looked them in the eye and I said, “I can write effort and tired down on a clipboard. I could put it on a chalkboard. I could try to explain what it feels to be tired. How many of you looked me in the eye and know what it means to give your all now and what it feels like to go to that place? You know what tired feels like. You weren’t tired before when I called a timeout, you had energy left to burn. Now you burned it. You know what it feels like.” That’s what it should have felt like when I called. It was interesting because I had parents mostly from the other team that were booing me and this and that. After I had two or three quietly come up and said, “If you’re ever looking for a player.” They thought it was great. One of those parents, I’m not coaching his kid. What’s going to be the test is this, 30 years from now, are they going to say, “My life is a mess because I had this abusive coach. He embarrassed me in front of everybody,” or are they going to say, “I learned the best lesson when I was thirteen years old?” Running for two minutes is not physically harmful. People do it all the time. You get tired. You recover. No one had a heart attack. No one has had a broken knee. Was that emotionally bolstering to that group or is that emotionally deteriorating to that group? Time will tell. I don’t know.

TWS 10 | The Coddling of the American Mind

The Coddling of the American Mind: If you forbid conversation or information, you create a mechanism that will trap people from the truth.


I think also you have the relevance of the person that’s controlling the environment at that time, making those decisions and influencing these decisions. This again comes down, maybe it’s the intention, maybe it’s leadership ability. You could easily have seen a person who could have been a jackass and have the kids sprint and yell at them. The example I always think of is it was like his platoon or some war movie where Nick Nolte was this jackass leader that nobody wanted to follow. You also had true leadership there as well. Why do people follow certain people and not others? I’m not sure if it’s a feeling, and knowing you, the kids felt like you knew what was in their best interest.

Maybe not, who knows? My opinion it was or I wouldn’t have done it.

It is very situational. We’re going to make mistakes. Perfection is an idea. Nothing is perfect. What’s the perfect way to deal with the situation? The perfect way is to accept imperfect but allow people to figure it out. That’s where I look at free speech zones. Maybe somebody comes on campus and gives wrong information.

How do they learn to evaluate the wrong information?

That’s my point is you have to have the experience where there are resistance and the ability for something false and something true to arise and for individuals to have that experience. If you rob that experience, I believe that it is that coddling. It does weaken an individual because they’re going to face resistance at some degree in the future and how are they going to deal with that?

The other thing it does is it eliminates gray because it teaches people to have a worldview of harmful and safe. We can categorize as, “That not safe, it’s out. That it’s safe, it’s in.” It eliminates gray and the ability to have a gray area to say not everything is dichotomist. You don’t want to have people seeing things in terms of who’s right, who’s wrong or even he’s good, he’s bad, harmful or safe. Here’s what’s interesting. He talks about a safe room. This blew my mind, he talked about announcing to students that, “I might do something that could trigger you if you don’t want to be around or go to the safe room and hold this teddy bear.”

Literally, a teddy bear is in the room. By framing that to a young mind, by saying what could happen is dangerous enough to require a bomb shelter. You’re now putting people it’s a nuclear freaking warhead. By sending that message, are we teaching people that words that sticks and stones are not only the things that break bones, but words can also devastate your soul or your spirit? It doesn’t seem intelligent to say, “Here’s information. Don’t read it,” because if that’s a policy, you’re not going to get to that veracity, that truth.

It’s not an absolute finish line. Things are always being discovered. Progress is always being made. What is true now may not be true tomorrow.

When it comes to our evolution as people and as humanity, we are either growing or dying. We don't sit stagnant in life. Click To Tweet

Your debate skills go out the window because there won’t be one.

That’s the thing is we have a saying that we use all the time because I’ve had experience in business where you had two conflicting ideas. There was so much resistance there. They didn’t want to be wrong and kept resisting. Those people are gone. I look for that now. I want them to pursue what’s right, but not be adamant about what their opinion is being right and being willing to be slightly wrong. That’s the thing. If you look at the dialogue, if you look at progress as an individual, we’re very limited. Having conversations, especially group conversations, where you have similar values and similar outcomes, multiple minds in there is a profound dynamic. However, if you essentially prevent people from being harmed, you’re never going to have that conversation, to begin with. The ideas will not come to fruition.

We’ve talked about it in the position of being the leader of your own investments, of your own company, of your own sports team or your own family as parents. I also thought a lot about this book in terms of whether I’m seeking out safety too often. Whether I coddle on myself by self-imposing restrictions on what I read or what I’m willing to listen to. I think no one gets out of cognitive dissonance. It’s the way we are built. Flipping that in my mind is the challenge of how open am I to have my beliefs changed and not be coddled and how might I be challenged? There are a couple of fun websites out there.

One of them that I thought was fascinating is they’ll take these severe issues like gun control or abortion or stuff and people will go there and say, “Please try to change your mind. I want to see if I can find empathy for the other side to change my mind.” It takes a lot of courage to do that because we become so entrenched. The news cycle is interesting because Walter Cronkite used to summarize everything that was important about 25 minutes and a couple of commercials. I don’t see the difference between Fox and MSNBC because I feel like both of them are telling their crowd what they feel is right.

It’s a validation of their own narrative night after night. It separates people good or bad. The tribalism that you mentioned with this idea that it’s usually one tribe and another tribe. They’re trying to limit this information coddled in their own group. What’s interesting about that is these two groups, they’re going to fight and they’re never going to have the chance to get out of that rut because they’ve lost the talent and ability to consider something else. What happens in tribalism is as soon as you put a label on a group, all of their individual merits are erased. For example, if you don’t like President Obama, he said he’s a Democrat. What type of father is he? He must be a bad one. What type of husband is he? Maybe he had some interns in there with them.

Who knows what type of cigars he smokes? He quit smoking when he was in there. What happens is when we get those divisions, we tend to erase all of the other merits that the individuals in that group might find. As I look at my friends who are Democrats, Republicans or Libertarians, I have friends in all three groups that if I was in trouble and my car broke down the middle of the freeway at 3:00 in the morning, I feel like I’d call them. Every single one of those guys would respond in the most benevolent manner willing to help even though they’re there in those different groups. Another part of this coddling of ideas is they’re bad people. They’re dangerous. You erase any merits they might have outside of that solitary issue. All of a sudden, the dean is unfit for office. All of a sudden, the dean of this college should resign because of this issue.

That’s what Greg and his organization defend with one of the authors of this book. That’s the biggest thing right now because kids going into college, think about the environment that they’re in. They had high influence based on parents, community, the city they grew up in or the state that they grew up in. They have a certain perspective of the world. They go into this environment in which it’s different because you have kids that are all different. In that environment, it’s grounds to make a lot of change because your mind is pliable. You’re highly influenced because it’s new. If you’re given one narrative, you’re given one label, then now you go into the real world, it’s going to be such a shock. It’s going to be beyond whatever crutches. It’s one of those things where it’s destroying an individual’s ability to think for themselves. They’re thinking in groups.

The evolution of the technology is interesting though because we live in an information age where ideas are thrown at you all the time. It makes sense that people that didn’t feel that’s a war because there isn’t information war controlling eyeballs and controlling ideas now that they would want to fight by saying, “This is an incoming missile. We can’t have these missiles pointed at us.” It’s such an interesting time to be alive.

TWS 10 | The Coddling of the American Mind

The Coddling of the American Mind: Perfection is an idea that nothing is perfect.


It’s fun at the same time. There’s information overload. It’s what we experience on a daily basis relative to 60, 70 years ago. It’s unbelievable and it continues to change. I would say going back to some of the main points, “All human beings are flawed. All groups have flaws but they all have strengths.” The environment in which people where discussion can take place, where exchange can take place. That’s how you grow. That sounds Utopia-ish but at the same time, it’s one of those things where the freer a person is, the more growth that exists.

If I want to run away from coddling, the further away I run for coddling, the closer I get to the abuse. If I want to run away from abuse, the further away I get from abuse and coddling. The invitation for me in reading this book was to begin to see both of those extremes and try to come back to a larger awareness in each individual person, situation and role that I play. Try to find a healthy place in the middle where there’s enough resistance to grow the bones but not enough resistance to break them.

This is such a great point because the coddling is what shows a sense of nurturing.

Everybody is dangerous.

At the same time, if you have that intention and the idea but yet you allow for resistance. I’m talking more like a parent right now. If you allow for that resistance and difficulty because you understand how growth occurs, that’s like right there in the middle.

We usually start off talking about investing. We always come back to our kids. It’s a big challenge in this environment and yet the competitiveness of it. I see parents that schedule up every bit of their kids. “No Fortnite allowed because you’ve got to get the piano done. You’ve got to get this done. You’ve got to be prepared to get in this college.” They overtrain in order to try and make them strong enough to compete. They’re scared their kids would fail. The other end of the spectrum are these people that just coddle. I’ve seen it in sports where parents are so afraid to have their kids lose a game. It’s insane to lose a game. They’re sandbagging that goes on where teams with huge talent will go and play in leagues with almost no talent so they can get their trophy. It’s incredible to me.

We were talking previously about your boys. You talked about your experience with playing basketball. You played at the University of Utah. You had a team but you didn’t play high school. The reason why is because you said you were cut. It was interesting how they did the cuts, big cuts and then a small and then the one last person cut. You went through that for three, four times.

I got cut seventh eighth, ninth, tenth, eleventh, twelfth and once in college before I made it.

You can't achieve self-actualization unless you have a sense of safety. Click To Tweet

It could be described as traumatic. At the same time, what did that create inside of you? How did that start to form who you are and what you’ve pushed for?

I’m not the only person that might have tried out for play and didn’t get the lead. As investors, learning to understand that failure isn’t fatal. Failure is not the end of everything. Did it hurt? Absolutely. Did it affect my self-esteem? Absolutely. At the same time, those were gifts in a way because you learned that you don’t win every race and everything isn’t roses all the time. He talks about in this book that there’s a resilience that is inside of people, evolutionary or God-given, one of the other, to where there is a resilience built in where people can deal with the cancer diagnosis and figure it out.

You can control whether someone comes on campus to speak but you don’t control when you hear the news that you’ve got cancer or when you’re being sued by a competitor and it’s unfair. If you can’t handle a simple idea being brought on campus, what’s going to happen when you’re in a lawsuit or when you get cancer or when your child gets cancer? You can’t coddle your kid against cystic fibrosis. You can’t coddle them. There are certain things in life that can’t be coddled. What makes us think that an idea can hurt these kids when there are so many more things that are so much more emotionally severe, infertility, loss of a child, lawsuits or failures in business?

These coddlers, how devastating was it to try out every single year and get cut? It was devastating. It’s not something that I couldn’t rebuild on top of the rubble. What about a failure in business? What about a failure in investment? You get into bigger stuff. What about health failures? What happens when you lose a child? There is definitely a resilience that can be strengthened or weakened inside of us. It’s finding that point where you bend but not break. Where pain is a good thing, not a harmful thing. Too much lifting can be degenerative and cause your bones to hurt but not enough to be degenerative and cause your bones to hurt. Where do you find it? I don’t know. It’s food for thought. For every investor and parent, where are you? Do you want to be coddled? None of us want to be. I don’t know.

This probably resonates with most people. It’s one of those things where these principles apply to so many different aspects of life. We have talked about kids. We talked about sports, business or politics. It applies to everything.

We should never apologize for this podcast because resistance is going to have a business. Resilience is a prerequisite. The strong survives in a world that competes. You can’t eliminate the competition because it’s the way life goes.

The first four months of the year, we’re talking about capitalism. The reason why I wanted to get this on is because obviously, it’s a different situation but it’s a very similar principle because of the notion of capitalism. It’s one of those things where you have commerce. You have the exchange of ideas and capital. You’re going to have success and you can have failure. Free market capitalism doesn’t exist because you have political influences. You have monetary policy influences. That’s the thing is if you look at where we’re at as a state of the economy, we’ve had artificial coddling of institutions of certain businesses of money in general where people put money to invest in hope for some future. People have been coddled when it comes to commerce due to the coddling of the actual institutions that are serving them. I look at how applicable these ideas are in that instance. This comes down to maybe where we end, which is if you continue to coddle, you have very weak bones. When resistance happens, you have breakage.

TWS 10 | The Coddling of the American Mind

Toughness: Developing True Strength On and Off the Court

What’s interesting is there are both ends of the spectrum in capitalism. There’s abuse because he who has the gold makes the rules. There’s a great way to think about it is when you think about capitalism, if you want to take the other side of the argument, talk about the evils of it if we dare do that. What Superman’s greatest superpower? He’s got an X-ray vision. He’s strong.

He can detect if the person is telling the truth.

I’ll tell you what I think it is. It’s his heart because if you change Superman’s heart, he becomes the world’s greatest villain. He is still the world’s greatest superhero. If you have capitalism and you have evil people begin to grow. You have greed. You have those things. You have no benevolence. There is a range but yet if you coddle, it’s as bad.

They’re very similar if not identical principles.

The thing that’s beautiful about capitalism is it allows for the tremendous potential for someone to be the greatest they could be. You look at a Warren Buffett and Bill Gates, you look at the amount of money, half of their wealth are given away. They both made that pact. They have that club they started where a billionaire can join and say, “We’re going to give half our money away minimum.” They will give far more than that. Certainly, guys like Steve Jobs, when I look at what my kids learned in that iPad, they’ve contributed in their products as well. There is ambivalence. On the other side, the Bernie Madoff’s of the world, they deserve to be in prisons because they have broken rules.

You have rules that protect people’s rights and that’s where you look at the environment though. You’re not going to ever have perfection. You’re always going have a Bernie Madoff.

Here’s what’s tough. Here’s probably a truth that we fight against. It depends on what your definition of because it’s an idea that’s manmade, the idea of fairness. If you go into the Serengeti and you watch any other species, do they have fairness? Do chimpanzees have fairness? The one mother who got their daughter eaten by the lion when they weren’t looking, that’s not fair? The death of your chimp is a fair game out there. We’re not willing to accept that as human beings because we’re smarter. We’re not animals but yet we are animals. It is an interesting idea that the pursuit of fairness is a great pursuit, but defining what it is, that’s tough. Every human being wants to be treated fairly.

Do you teach your child life is fair and you should expect it? Even though we all want it and even though we want to pursue it, it’s so difficult because life isn’t fair in how we’re born. Some people are born with higher IQs, some with low IQs. Some of us have to work harder for what we get than the smart kid. Other people are limited physically. The way you’re born genetically, the genetic lottery isn’t equal. Unless you want to get into eugenics someday, which we probably don’t want to do. How do you make it all fair by the nature of birth? You’re going to have abuse, coddling and unfairness in between. It’s tough.

You have the environment and humanity has amazing things about it. It also has a lot of frailties and weaknesses. That’s most fair environment is where I would say people’s rights are protected if you were able to act, learn and grow. It’s hard to find because there are lots of different circumstances and situations.

Things are always being discovered. Progress is always being made. What is true now may not be true tomorrow. Click To Tweet

Equal opportunity is very important to fairness and yet we have an inequality in the ability to capitalize. You can throw out an equal opportunity but individuals might not be able to equally capitalize because of what they’re starting with. How do you subsidize? That’s where we start to coddle maybe, I don’t know.

The things that you can do though is essentially have certain environments in which ideas can be expressed. That was the point of the book.

You can’t suppress ideas in the name of protection.

That’s where people start to understand themselves and understand growth and what their strengths and abilities. It has to go through a refining process.

It’s a great question and an invitation for discussion is, “What is harmful and what is the power of resilience? Are we not resilient enough to withstand an idea and a speaker on campus that disagrees with us? Are we not strong enough and resilient that is abusive and breaks our bones?” He says, “Let’s put the pause button on here and understand that we might be taken this too far,” in his opinion, obviously, we have. For that reason, it’s a very healthy discussion because I didn’t realize how pervasive it was. The things he was siding and the sheer volume of cases and losing in their jobs over two words in an email that got blown up and the fear of your colleagues and being tenured. It was incredible. I had no idea what was going on in academia. I didn’t realize there were safe rooms and trigger words. My son in his school might be saying now this might cause you mental harm if you want to go to the safe room, go ahead. That’s unsettling that level of coddling. I probably liked it because I agreed with it. I confess.

My disagreement with academia in general and a lot of different aspects of it. This is the next generation of those who are going to be in the world, be producing things, starting businesses or solving problems. It’s one of those things where in order to solve a problem, you have to be able to face some adversity. If the environment of which they’re transitioning from a home life where they’re highest protected. Kids in generations to the environment which is the in-between before they get into the real world. If that is how the programming is taking place, they’re not going to be fit for most businesses. They’re not going to be fit for most for most jobs because if they cling to this notion of tribalism. This is the idea and everybody has to believe that certain way. They’re afraid of being wrong. They’re afraid of getting hurt, that person that solves problems.

That’s not resilient. It’s an awesome discussion. Thanks for having me.

Thanks for reading. We’ll see you next time.

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About Andy Tanner

TWS 10 | The Coddling of the American MindAndy Tanner is a renowned paper assets expert and successful business owner and investor known for his ability to teach key techniques for stock options investing. In 2008, Andy was key in helping develop and launch Rich Dad’s Stock Success System, which teaches investors advanced technical trading techniques to profit from bull and bear markets. He serves as a coach to Rich Dad’s Stock Success System trainers and as the Rich Dad Advisor for Paper Assets. He is currently authoring an upcoming Rich Dad Advisor book on paper asset investing.

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Tony Robbins Platinum Partners Finance And Economics Summit

TWSFF 08 | Tony Robbins


Nothing makes us grow more than learning. Patrick takes us into his experience over the last Tony Robbins Platinum Partners Finance and Economic Summit he attended, highlighting three major takeaways that impart great wisdom that contributes to success. He shares what he learned about focusing on the positive, finding the balance between certainty and uncertainty, and knowing the emotional cycles that exist in financial markets – from the big to the small.

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Tony Robbins Platinum Partners Finance And Economics Summit

Financial Friday

I’m going to condense my experience over the last Tony Robbins event that I attended. This is a special one. This is for Platinum Partnership, an inner circle group of Tony Robbins and they do it once a year. It’s purely based on finance and economics. He had speakers like George Bush, Clinton, Bernanke, Greenspan, Ray Dalio, T. Boone Pickens and a lot of other professional investors. I’m going to give you my top three takeaways. However, you can look for the playlist or the videos I did. It basically has four videos I did while I was at the summit that goes through in detail some of the things that I was learning. I’m going to highlight the top three. The first one was interesting. This is a big thing that we all can work on and it’s always going to be the case, which is the idea of focus.

This room was filled with successful people in all walks of life. They have a few billionaires in there. I got to talk to a number of people and it’s probably the most high-level group I’ve ever been around, especially the number. There are about 300 of us there. It was one of those things where it kept coming up over and over again. It’s the notion of focus. Oftentimes, how we’re conditioned is we focus on the things that are not going right or we focus on the problems. We focus on the pessimistic side of things as opposed to what we actually can control and focus on, which is what’s going good, what’s going right. What that does is it provides a different state of mind in regards to how we analyze things, how we take advantage of opportunities, how we experience life. Ultimately, the amount of money or success that you achieve, you’re always going to have that instinctive side of you that is looking for what’s wrong. It’s protecting you. It’s looking out for danger so that you don’t get harmed or hurt. What it tends to do is affect our mind that we’re always focused on the negative, the bad, not necessarily the good. There’s always something good going on.

When the focus is there listing things, you’re grateful for or singing out loud a list of those things that you’re grateful for. Thinking about the blessings that you have or thinking about what is going right and list those, it’s amazing what type of mindset that creates. That’s one of those keys to understanding opportunity is that if you have a pessimistic attitude, you’re not going to see opportunity. Therefore, mindset is key. I know that’s general, maybe it’s not necessarily financial but in my experience, it leads to financial. I have dozens of employees. I have lots of responsibility on my shoulder. I’m a parent, I’m a husband. It’s one of those things where there’s always pressures. There’s always something that’s not going as I want. However, there are amazing things that are going on. When my focus is there, my attitude is so much different. I show up differently, I played differently. I experience life differently. Take that as my first big takeaway.

Second is interesting. This is where I’m determining as the balance of certainty and uncertainty, which I’ve talked about before. Here’s an interesting quote and it’s deeper than I thought when I actually first heard it. The quote is, “The quality of your life is in direct proportion to the amount of uncertainty you can comfortably live with.” Uncertainty as he describes it, it’s variety. It’s adventure. Those are some uncertain things. Uncertainty is what makes life exciting, not boring. Uncertainty can also be very negative if you think about it but at the same time, uncertainty is having fun adventures, surprises, roller coasters, going on trips, exploring new places, learning something new, being with new people. Those are experiences that give life a lot of vitality. If everything was the same over and over again, that repetition is boring and we don’t deal with that well.

We are conditioned to focus on things that are not going right as opposed to what is going good. Click To Tweet

The idea is how do you balance certainty and uncertainty? How I look at it is something that Tony uses, which is looking at your financial life with a bucket mentality. I call it a hierarchy in the book I wrote, Heads I Win, Tails You Lose. I talked about the hierarchy of wealth. It’s a very similar concept where you fill up that first bucket, that safety bucket or certainty bucket and it has assets that we’re not going to lose money. Assets that are protected and insured grow to an extent but also allow you peace of mind so that you can start to experience uncertainty and that variety. You do it in a responsible manner and the uncertainty applies to you but it could be having those adventures, doing vacations, doing fun things with your family. The uncertainty could also be pursuing a different position, applying for a new position, applying for a new job. It’s expanding your resume and being more valuable to your employer or another employer, researching things about yourself. It’s basically doing things that are different than they currently are.

That uncertainty is where I believe that he’s referring to. The quality of your life as you’re taking on these new things and you’re growing and expanding, that uncertainty is essentially reinforced and accentuated by a balance of certainty. That was cool to think through because in the end, we’re all looking for a high quality of life. A high quality of life is not redundant things that you’re doing on a day-to-day basis. It’s doing things that are exciting. The pursuit of that is always going to give this fulfillment and excitement. However, to be enjoyed I look at having a foundation, having an offset of certainty when it comes to your financial life.

TWSFF 08 | Tony Robbins

Tony Robbins: A high quality of life is not about doing redundant things on a day to day basis. It’s doing things that are exciting.


The third thing was interesting. This was brought up a number of times, which is the emotional cycles that exist in financial markets, big markets but also small markets. Sentiment is vital to understand. It’s interesting how we approach things sometimes because when you’re approaching it as a third party observer, we tend to look at things rationally, analytically. However, when we’re in the actual experience, when we’re not observing, we’re actually in there. It’s more of an emotional game than anything else.

One of the speakers was a manager of I think $100 billion, $20 billion, $30 billion. His name’s Howard Marks. He went through and talked about his new book that’s out I believe. It’s one of those things where you would assume that big traders, whether it’s hedge fund traders or VC funds or whomever, that they have it together and they’re not emotional when you have volatility. He basically made the case that they always are. One of the most difficult things in their world when it comes to investment is making decisions based on fundamentals being in line. However, it’s also adding the variable of emotion. If a certain emotional state is not present, that could be a no buy or a buy signal. It’s interesting. I think we’re in this euphoric state where people are bidding up and buying for the sake of it.

If you have a pessimistic attitude, you're not going to see opportunity. Click To Tweet

An example that they did at this event was they bid up the price of $100 bill. This is a room full of successful people and Tony made the claim, “Who are my risk takers out there? Who are my ballers out there?” A couple of people raised their hand and he auctioned off a $100 bill. Somebody offered a $150, $200, $500, then it got to a $1,000 then $5,000. Here’s the catch, the person that bid the highest had to pay and got the dollar bill but the runner up didn’t get the bill but still had to pay. It was fascinating. The bidding got up to $50,000 and then $100,000. The $50,000 guy had to pay same with the $100,000 guy but the $50,000 guy didn’t get everything.

I want you to look at going from $50,000 to $100,000 the guy knew it’s a lot of money but then he didn’t know how much the $100,000 guy was going to bid after that. It could have gone to $1 million. It’s one of those things were in the actual mix, the emotions, the stuff that’s going on in your brain is not rational because the rational thing would have been not to bid more than $100 for a $100. Have your experiences some other way. These guys may have been the billionaires in the room. I have no idea. All of the money went to charity but regardless, I would rather not have that experience and paid $100,000 for that. There would be way more beneficial than that.

My point is this is where emotions come into play. With where our world exists, there is a certain emotional state collectively when it comes to assets being bid up, whether it’s real estate assets, whether it’s commodities, whether it’s stock. It’s an emotional game. The emotion is nonsensical from a more greed standpoint or fear of missing out standpoint as opposed to a sell-off, “I’m running to the hills.” Those are two different emotions. Howard Marks does a great job of talking about that emotional cycle.

This is one last thing as we get into this idea of the emotional game, which is something they made me think. I’ve looked at the fundamentals of our economy. I look at how much debt is out there, how much productivity is out there, which is not that much at all. Peter Diamandis, this guy is one of those thinkers. He went 10:00 at night, three hours long and his energy level is high as could be the entire time. It was fascinating and he talked about so many different subjects. I cover some of them on the video that I mentioned. Peter made the case that life in the next ten years, there’s going to be more economic growth, more prosperity than the previous 100 years combined. His argument was how quickly technology is growing but also the exposure to societies and markets that are not online.

Uncertainty is what makes life exciting and not boring. Click To Tweet

The statistics are showing 4.5 billion people will be online in the next ten years. It’s fascinating to think of it, whether it’s India as an emerging market. Africa is an emerging market. China is the same thing. In the Middle East, it’s the same thing. It made me think about what my frame of references when it comes to, whereas an economy with productivity is like. What are our debt situation both short and long-term is like? What’s going to happen as a result? I don’t play markets, but at the same time, I’m curious because the markets are part of our life. They fund the companies that we all use. Looking at consumer sentiment when it comes to being alive, it’s going to be interesting to see what the next ten years hold.

From a transportation standpoint, from a communication standpoint, our lives are going to change quickly and it’s exciting to me. At the same time, it could definitely be disruptive to whether it’s companies, economies or governments. Looking at that, whenever emotion is high, especially fear and running to the hills, that’s where all the opportunity exists. The last thing I was going to talk about is Ray Dalio. Ray Dalio runs one of the biggest hedge funds in the world. The minimum investment you can make with him is $1.5 million. He’s done very well for himself but what’s interesting is his thoughts in regard to economic cycles.

He has some theory associated with economics and the best way to handle so much progress when it comes to technology and potentially the employment situations we can find ourselves in, where technology is going to take over a lot of employment. He has some amazing thoughts there. Those are on the videos of on YouTube. There are four of those videos. Go check those out. Research Patrick Donohoe in there or Paradigm Life, put The Wealth Standard and that should pop up. There are four of those, it says Tony Robbins’ Platinum Partners, day one, two, three and then day four and five. I hope you like them. Thanks for everyone.

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Understanding The Markets, Washington, And The Economy with David Stockman

TWS 09 | The Markets


David Stockman is an American politician and former businessmen who served as a Republican US representative from the State of Michigan from 1977 to 1981. He is the ultimate Washington insider-turned-iconoclast. David reveals some of the secrets that politicians tend to hide while sharing the milestones in his life that brought him to understanding markets, the economy, fiscal policy, and monetary policy. He takes us back to the events that changed the economy in history to that of the financial crisis in 2008, sharing what he understood about Wall Street and how things came to be from then on. Tying it up to the issue at the heart of capitalism and the prosperity it creates, he talks about the markets and creative destruction.

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Understanding The Markets, Washington, And The Economy with David Stockman

TWS 09 | The Markets

The Great Deformation: The Corruption of Capitalism in America

I have the pleasure and the honor to have David Stockman on with me. David, welcome.

I’m happy to be with you.

For those of you who don’t know David Stockman, he is an American politician and former businessman who served as a Republican US representative from the State of Michigan from 1977 to 1981. He also served as the director of the Office of Management and Budget under President Reagan. David is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become director of the office that under President Reagan. After leaving the White House, he had a career on Wall Street. You’ve had quite the experience, David. You also authored an incredible work, which I would say a treatise of what your principles really are called The Great Deformation: The Corruption of Capitalism in America. You also have a book that you just released, Peak Trump: The Undrainable Swamp and the Fantasy of MAGA.

David, thank you for your work over the years. I’ve followed you for a long time. The empath in me cringes sometimes and I see you on TV trying to advocate principles of liberty, principles of free market and certain monetary policy principles, fiscal policy principles. It doesn’t seem to get through. Honestly, it says a lot about who you are that you continue to advocate for principles you believe in despite the resistance you get most often. Give the audience an idea of what are the milestones of your life that brought you to the point where you understood what you do about markets, the economy, fiscal policy and monetary policy.

You summarized my career at length. Half of the time I was a politician and half of the time, I was an investment banker on Wall Street, so I never had an honest job in my whole life. I learned something big during that two-phase career and that is about debt. Washington loves debt because you can keep the can down the road and put the cost on future generations and pretend that the interest carry is not all that bad and you can get away with. There are no offsetting institutions and principles that mitigate against that. You’re going to end up with a $22 trillion national debt that we have. As I show in my new book, Peak Trump, we’re heading for $40 trillion before the end of this coming decade and that will be just a devastating burden on the economy. As near as I can project, it would amount to about 140% of GDP. We only know of three economies that have more government debt than that are Japan, Greece and Italy. It doesn’t bode well for where we’re heading, especially because we have this oddity in our demographics here in America and that is the Baby Boomer. It was a giant aberration in terms of the number of babies that were born in 1946 when I was born.

In 1962, there are 80 million people. If you do a little math, you’ll realize that all of them will be retiring in the 2020s. In the early 2030s, they’ll be hitting the Social Security trust funds and Medicare and a lot of the other so-called welfare state supports massively just in terms of numbers. What politicians don’t let you know or maybe don’t even know and don’t acknowledge is that it’s a built-in Ponzi scheme, Social Security and the rest of the welfare state. They build in higher and higher real benefits over time relative to what people earn during their working career and put into the trust fund. It’s nothing like insurance, it’s nothing like actuarial balance. It’s a Ponzi. If you have this debt already baked into the cake and you have the demographics baked into the cake and then you have this escalation of real cost per beneficiary, you’re in big trouble. That’s what the politicians have ignored. Wall Street used to know a lot better. Back in the ‘50s, ‘60s and the ‘70s, you had a decent level of prosperity. Wall Street understood a little bit about what sound money was in what fiscal rectitude was.

If you got heading off the deep end, it happened in 1967 or 1968. It was Johnson’s, Guns and Butter. It’s the Great Society on the Mekong River. It was a disaster, but finally, Wall Street rose up and said, “You can’t do this.” They forced Johnson to raise statutes to balance, which is out of control. William McChesney Martin who was the chairman of the Fed at the time believes, “You can’t print your way to prosperity.” We were on the grades and we had a recession and people learned their lessons. I say all this because after 1971, when Nixon took us off of the gold standard, it was mainly nothing to do with the magic of gold. It had to do with discipline on the central banks and the financial system. It’s accountability and discipline. You couldn’t create credit and money at will in any quantity. That went away and it took a little while for people to realize that we were on a total fear system and nothing could stop the central bank if they want to print like crazy.

Wall Street learning to love money burning because, in the short run, it helps to inflate financial assets. It made interest rates lower. It made capital rates and our P/E multiple times and everybody lived happily ever after except Main Street. Here is the point where the rubber meets the road. Since Greenspan took over the Fed in 1987, we had been off in something I called bubble financer Keynesian central banking. In which we’ve had tremendous booming prosperity on Wall Street and increasing stagnation and flat-lining failure on the Main Street. Let me give one statistic on that and then we can move on because it summarizes what I learned through my years in Washington and in the second half of my career in Washington. If you go back to the days right before the great crisis that shook the rafters in September 2008, everybody thought the world was coming to an end. If you look at where Main Street was as measured by industrial production and that’s everything. That’s manufacturing, that’s energy, coal mining, oil shale and all the utilities, gas, electric, water. It’s a fundamental measure of output on the Main Street economy.

You couldn't just create credit and money at will in any quantity. Click To Tweet

The reason I dwell on it is that if you go to the level that existed in November 2007 and compare it to where it is now, we gained 3% in the last eleven years. That’s the same thing. If you divide that out by eleven years, you might as well fall flat. Look at where the NASDAQ-100 was on November of 2007. NASDAQ-100 is the leading edge of the casinos or the stock market. You take the inflation out of it. We’re talking apples to apples here because of the industrial production is physical and it has inflation in it. On an inflation-adjusted basis, the NASDAQ-100 last fall peak up to 200% and Main Street production output is at 3%. That doesn’t make any sense because often the price of equities and other financial assets reflect the output and income capacity and growth of Main Streets. What we have is a totally bifurcated economy on unbelievable prosperity down on Wall Street and that’s a great bubble that’s gearing the labs.

Trump made a mistake of embracing it. The stagnation and increasing resistance to growth on around Main Street because we have so much debt. We can get into that but the amount of debt, not just on the government sector that I talked about, but also in the business and financial institutions, add up in total to $70 trillion, which is three and a half times net income. I don’t think that stable is sustainable, but it does mean that you’re lugging so much debt that growth becomes harder and harder. That’s also why we woke on a ten-year rolling basis. Our real GDP growth rate now is 1.5% compared to 3% to 4% back in the heyday before 1971 when Nixon took us down the path we’re on. That’s some big-picture views that I put together and assess over my years in Washington and then on Wall Street.

The first thought that comes to mind is I think it did work relatively speaking for bankers over the last years. At the same time, if you look at the fundamental side of things. I don’t think most people understand the fundamentals. If you will dig to look at what occurred 2008, it started with Greenspan and what he started to do, especially with the dot-com bust. It comes down to the artificial influence of markets because markets are supposed to be a clearinghouse. If you look at profit and you look at capital and you look at valuations, you buy companies that are profitable, that have good cashflow and that have good fundamentals. You don’t buy those data. They’d have poor operations and poor balance sheets and poor financial statements.

If you look at what has been done is the injection of capital into society. It has artificially increased the demand and the flow of capital into businesses. That’s why a lot of the bond issuing by corporations to buy back their stock is just one example of that manipulation. It’s not understood from the average American’s perspective because they don’t have this background in economics, unfortunately. A lot of the stuff that’s happened has been, not necessarily behind the scenes. What’s occurred into the narrative around it that you explained is that this is a good thing. That we’re here to save the economy, we’re here to bail out banks and we’re here to do this and this for your benefit, but ultimately it was just to the benefit of them.

TWS 09 | The Markets

Peak Trump: The Undrainable Swamp And The Fantasy Of MAGA

This is where I want to get into the idea of capitalism and economics. I interviewed a guy who wrote a book called The Coddling of the American Mind. The book is about the higher education system and how free speech has gone from one side of the spectrum where the epitome of free speech and now it’s the complete opposite. The Coddling of the American Mind is trying to protect those from emotional harm than anything else. What it does is it robs people of the experience of figuring things out on their own. The point of capitalism and economics fundamentally is to have a system in where things are innovated and solutions come up. People are able to express themselves through capital and through resources, but if they fail, they’re out of business or they learn. That’s ultimately been completely removed from the equation in most cases and has created what we have now.

In terms of the things I look at, I don’t pay that much attention to the way that they’re paddling all the snowflakes on college campuses but I totally understand that. At another level, at the level of the macroeconomy and Washington policy and Wall Street, it’s the same thing. Wall Street wants to be cargo. We saw the Christmas Eve and they had a hissy fit because they finally said, “After eight years of negative real interest rates, the money market rate, the Fed funds rate is less than inflation for eight years running.” They finally said, “We’re going to normalize interest rates. This big bloated balance sheet we have that inflated with stock and bond market is going to continue on automatic pilot.” That’s what follows it. They have a hissy fit and the next thing you know, it does a U-turn. The Fed-heads are out there singing about, “We can be patient. We can defer delay.” I said, “What are they thinking about? They have been deferring for ten years.” We’ve had unreal Central Bank policy. Go grab this balance sheet level and it’s manipulation of interest rates in the yield curve. Yet, we get just a modest correction or wakeup call a couple of weeks before Christmas Eve. At the big sell-off on Christmas Eve, all of a sudden, all the crybabies on Wall Street are asking for their safe room.

If you go back to 1970 or even the mid ‘80s, when I left Washington, the Reagan administration when I was budget director and I joined Salomon Brothers, which was a rough and tough place then. It was run by John Gutfreund. He was called the king of debt. It was a huge trading house with all debt securities. You didn’t see this snowflake attitude on Wall Street. People expected that there were going to be cycles. That they were at risk if they’re going to chase the latest and greatest stock bubble phenomena. There was no presumption that if there’s a big meltdown, Wall Street would be bailed out or that we would get to a situation like 2008 when Morgan Stanley was insolvent. It should have been forced into Chapter Eleven. Merrill Lynch was insolvent, it was put into a shotgun marriage. The Bank of America didn’t want to buy Merrill Lynch, but they were forced but it and Merrill Lynch should have gone bankrupt. Frankly, Goldman Sachs could have gone bankrupt as well. All of them were way over their skis with all kinds of sticky, risky, long-term assets that they were funding with overnight money. The panic came in, the overnight money dried up. They faced over putting crisis they couldn’t get out of and the market should have been allowed to work.

What I said in my previous book, which I think still is a lesson that’s been lost because we’ve had this phony stock recovery. The recency bias obscures everything that we allegedly learned back then. What I showed is, there was no danger of a meltdown in the banking system on Main Street. There were no lines with the banks other than a few high that were in the subprime mortgage business that should have gone out of business anyway. The key point is the bailouts were of the big Wall Street gambling houses. It wasn’t of the banking system. We should have allowed the crisis to burn out in the canyons of Wall Street. All those firms who will be gone on there, they would have been reorganized. The same people that were running them, then we’ll be running the reorganized Wall Street now. All of their phony wealth had been built up and now consist of some realistic appreciation about the danger of too much debt and risk and too much gambling down in the canyons of Wall Street, but none of that happened. If we did the snowflake thing, Wall Street will go to all these banks, the same way with the car companies and a lot else in the US economy. As they say, it was a wasted crisis.

We did nothing but double and triple down on what Greenspan had already been doing, which was bad enough. Now the Central Banks led by the Fed have painted themselves into a corner. Let me just give one little illustration of how aberrant all this is. If you listen to what I call bubble vision and let’s say CNBC are both the same, you would think that everything is normal and stable and will forevermore be when in fact, we’re in a giant crazy experiment. Anybody who looks at it objectively with historic notions of sound finance and financial discipline will say, “What are they doing?” On the eve of the Lehman bankruptcy, September 15, 2008, the balance sheet in the Fed was $138 billion. It had taken 94 years from when the Fed opens its doors in 1914 to build that balance sheet off into Ohio State and test and business cycles and so forth. It had taken 94 years to build that up. Even then, it wasn’t perfect and you were creating separate bank credit out of thin air. In the next 94 days after Lehman went under, Bernanke and his merry money creditors at the Fed created 145% more balance sheets in 94 days that all their predecessors had gone into previous 94 years. They took the balance sheet and earned $30 billion to $2.2 trillion in 94 days.

After they had supposedly rescued the economy when the only thing they did was suspend the laws and supply and demand and financial discipline. After they’d done that, they kept on going and they invented Q2 and Q3 and the twist and other central bankers baloney. They eventually took the balance sheet to $4.5 trillion. That means that in roughly nine to ten years, they create $3.5 trillion of Central Bank credit out of thin air and pumped into Wall Street. That caused the price of bonds to soar because of all of this artificial demand from the debt. They paid for it with something for nothing digital credits made out of thin air. When the bond markets soared and long-term interest rates went lower and lower beyond the 1.35% here and even lower abroad, that’s the capitalization rate for all financial assets. When the long-term interest rate gets pushed down before the board, the P/E rate or the price-to-earnings ratio is the inverse of its source for equities. The stock market waves off and then you get all kinds of financial derivatives, options and futures and the whole rest of the complex going for a huge ride.

The point of capitalism and economics fundamentally is to have a system where innovated solutions come up. Click To Tweet

They didn’t fix anything. They violated even more laws than anybody had done before and get on the financial laws. They created with the third-grade bubble of this century that we’re in right now. I want to relate this because I don’t think it’s sustainable. I think we’re going to have an even bigger and more thundering crash for some reasons that we can get into. The reason I call my book Peak Trump is that Trump, for all his defects and lack of preparation and know-how to do the job that he was running for, at least he called it one big crowd ugly bubble during the campaign. When he was elected, the S&P 500 was 21.40. Fast forward to two years, the peak was 29.40. The problem is that big fat ugly bubble now became the trance of Trump and economics. It was a huge mistake to embrace that bubble in the economy that went with it because they’re both going to go down for the count. They’re going to splatter over the White House and Donald and all the rest of it and we’re going to be in for big-time crisis in the years ahead.

What keeps circling through my mind is it’s like a violation of the principles of humanity or behavior. We’re here having an experience of life and we learn by going through difficult things and learning how to make decisions and being responsible and being self-reliant. That cycle happens throughout our entire life. Going to the example I was using, it’s evident that the higher education model, the coddling of a mind, ruins and destroys the mind. It’s not allowed to have the experiences that form their perspective, their intuition, their opinions and figuring things out using a rational brain. It’s the same thing monetarily where you had these companies and you also had influences that failed, yet you didn’t allow them to fail and it magnified the problem.

It’s not even making the problem worse. It’s worst times two because now they didn’t learn and they’re going to just keep using the exact same behavior that they used before. Now, it’s a much bigger problem and it affects the whole world. It’s not the US. This has gone through the entire world. What happened is it’s on the backs of the American people. The citizens meet Main Street as they are called, but the unfortunate thing is that the majority of people don’t know what economic policy is and monetary policy. They’re just following what the status quo has been for the last 30 or 40 years. The unfortunate thing is that we’re past the point of no return as far as having to learn a lesson the hard way. That’s part of making mistakes. It’s a little difficult in the transition and it’s unavoidable. I agree with you. It’s a matter of time. That’s just one of those things where it just keeps sputtering along and people were like, “If I believed you or if I stuck to the fundamentals and principles ten years ago, then I wouldn’t have made any money.” What the view is right now and one of the things where in hindsight, the lesson is always learned. It’s never learned in foresight.

This gets to the issue of the heart of capitalism and the prosperity that it creates, is the money and capital markets. That’s where the financial flows crisscross. That’s where capital is raised. That’s where savings are put to work. You need very honest, efficient and discipline money in capital markets. If you have those, it will spread out to the rest of the GDP and the Main Street economy. The great trade market economist Joseph Schumpeter has this concept of creative disruption and that’s all capitalism progresses. Buggy whips go by the wayside and you get a horn on your automobile, your Ford, your model-T or whatever it is. That is important, but creative disruption is not working efficiently and productively if the financial markets are falsified by central bank manipulation and intervention. When they’re falsified and you get stock prices that are way too high, people are rewarded for doing the wrong thing where they should be doing something else.

I use this as a way of working up to Amazon. Amazon is turning the retail world upside down. It’s an amazing machine. In some ways, created a destruction like there’s never been before, but the stock market is so out of control because of the central bank manipulation that Amazon is drastically overvalued. It doesn’t produce any profit. The profits that you make are nothing to do with that big eCommerce business, the profits that may come out with the cloud business and that’s a tiny piece of it. The people running Amazon from Jeff Bezos are being told, “Don’t worry about pricing for profits, simply price for expansion, a price for sales growth or price in order to destroy the next industry that you decided to penetrate.”

TWS 09 | The Markets

The Markets: An artificial influence is always going to create unintended consequences.


It trades off and on at 150 or 200 times income. It trades multiples of cashflows that never made any sense of history. As a result of that, we’re not getting just creative destruction, we’re getting just pure destruction where it’s all these empty malls and all these failing retail chains. All these people whose livelihood was invested in the bricks and mortar retail sector are being prematurely thrown overboard or impaired and injured. Amazon is going too fast because Amazon is way overvalued. These are maybe worth the peak, but if the company were valued rationally and a preset template or preset type of machine, it might’ve been worth $5 billion.

At $5 billion, he would have one kind of business model and growth strategy, a modus operandi for Amazon and $150 billion is one that is something totally different. All the people who work for it will have some piece of the action in the stock options and so forth. If you take that example and you multiply it over and over by hundreds and thousands of times and we’re getting all kinds of bad signals to all our economies. People are making bad decisions and at the end of the day, they’re going to meet less growth, less prosperity, lower living standards and more trouble down the road. The worst case is the signal for Washington. If you tell the politicians and I was one of them for more fifteen years so I understand the mindset. If you tell him that you can borrow almost unlimited money at less than 2% interest, they’re going to borrow as if there’s no tomorrow. They’re going to say, “Debt spend is bad things. How many will get to the deficit in the volume buy?”

We’ve been kicking the can for 25 years and it’s because they have been totally mis-signaled and misled. The reason I know that’s true is that I was there. When I became the budget director in January 1981, the tenure bond rate is 16%. The 30-day trade rebill 20%. Our mortgages were up in the high tens and the bank rates are up for pushing 20%. In that environment, the deficits and debt scared the hell out of politicians because at least they could do the math. If you borrow $1 trillion and you’ve got a 15% bond yield, that’s $150 billion a year of interest you’re going to have to pay. It’s going to squeeze out your favorite book or project for education or some do-gooder thing that all the politicians glom onto. Some favorite war has happened to the warmongers so they’re either domestic do-gooders or foreign warmongers, but they want money and they don’t want to have to spend it on interest so they get reasonably disciplined or prudent fiscally if there are real interest rates.

We can call it price discovery and we can call it honest pricing, but the systematic effect are in central banking. I used the word because it means they’re trying to run the economy on the theory that capitalism was a total failure on its own. We’re constantly stumbling far in the recessions, depressions and all kinds of organizations, which is total baloney but that’s the view. Therefore, they’re in the middle of what I would call the central nervous system of capitalism. It’s Wall Street. It’s the financial markets and they should get out of there. They should let interest rates find their own level. Let supply and demand clear the market. If the stock market gets all enthusiastic, let there be a couple of crashes and let a few people be carried out on their shield. By the way, we have the greatest prosperity known to man. In 1870 to 1914, real GDP growth of 4% per year on average for 44 years. There’s nothing like it since and we had no central bank. We had nobody saying what the interest rate should be and we had nobody targeting GDP or the equation rate or anything else. We had just capitalism well.

It all comes back to that principle of accountability. When you have signals or you have influences, it’s an artificial signal. It’s an artificial influence and that always is going to create unintended consequences and they’re everywhere. You mentioned some empty malls and so forth. I’m not going to argue that Bezos or some of these tech guys have created value because they have, but at the same time, what value has been destroyed somewhere else? If I look at my local economy here where I’ve had a hard time trying to hire people over the last two years because there are hundreds of tech companies here now and they are not profitable. They price everything with tremendous amounts of VC funding or private equity funding and I can’t afford the developers. I can’t afford the project managers. It’s insane how much wages have been pushed up.

We're here having an experience of life and we learn by going through difficult things and learning how to make decisions. Click To Tweet

That’s one of those things where it seems good on some measurements because of what artificial demand is doing. At the same time, you’re not looking at the unintended consequences. I don’t think a lot of those consequences have manifested. On paper they have whether it’s a default of automobile loans, whether it’s the student loan bubble. They’re yet to manifest, but those are going to be some of those signals like, “Maybe it was good over here, but look at all the crap and chaos it caused over here.” That’s where I would say that difficult time is ahead of us. We all have it in our prayers that hopefully at this point, they understand the fundamentals of it and make the right decisions. You can’t just keep deferring the fundamental issue. The fundamental issue is you use debt to manipulate behavior, manipulate prices and manipulate growth and it wasn’t true growth. That’s what hopefully people will get, but time will tell.

You’re getting right to the heart of the trouble with bubble finance. There’s a lot of hidden rot in the financial and operating economy as the bubble gets larger and larger. People don’t see it either because it’s a new phenomenon or because there’s a suspension of disbelief. There’s been such a huge boom in the total value of the equity market and the bond market together that it’s generated enormous amounts of investible venture capital. Now, venture capital is flowing in tens of billions of investible funds. They’re looking for every top of maybe startup they can find and they’re all being funded. These are what I call burn babies. They are not paying the rent and the lights and the payroll out of revenue, they’re paying it out of venture capital. We’ve seen it before but this time it’s going to be the worst ever.

When the market goes into a big correction and the venture capital world dries up and freezes up and there are no third, fourth, fifth rounds or new fundings, all of a sudden, all of these burn babies out there are going to run out of cash. They’re going to turn off the lights, nail the door shut, get out of dodge and it’s going to cause a huge negative sucking sound. Voices like Brooklyn or Silicon Valley or Austin, Texas or a lot of others. For instance, take my favorite, WeWork. If there was ever a poster boy for the insanity of the current bubbles, it’s WeWork. They raised billions of dollars in the junk bond market and elsewhere to buy fixed office building assets that have a long life of 40 years or to lease them on long-term leases and to improve them will all kinds of fancy gigs. They attract people to come in and they’ve got all kinds of flavored coffee and all the rest of it there. On the other side, their tenants are on one week, 30-day or three-month leases. That is the most mismatch book in human history and it would never see the light of day if you have financial discipline. When the money is flowing in unlimited ways, the risk is totally ignored. You create a ridiculous oddity aberration like we were.

I’ve been to WeWork and they’re cool. They have a cool office space. It’s open. It’s a cool concept. I’m not saying that they’re not creating value, but at what price and what’s the consequence of how they’ve done it. That’s the point you’re trying to make. There are good sides to it, but nobody ever focuses on the bad and what the consequences are. It’s super convenient to order stuff from Amazon instead of having to go to the store. At the same time, it’s like, “What is that done the way in which they’ve been able to fund that and do that?” The consequence of being able to do it in the way they’ve done it hasn’t necessarily been manifested yet. That’s going to be worse than having the benefit of what they offer as a product.

I’m not pointing that WeWork is a bad idea. It’s a great idea but it can mismatch your work. You can’t be writing twenty-year leases on one side and day-tenancies on the other side. If you want to do it that way, then you’ve got to charge your tenants in the arm and the leg so you build up reserves. When the next downturn pumps, half the people occupying desks in WeWork are going to be gone. They’re going to be ionized because they’re burned babies. They have no revenue, they have no profit and they have no reason for being that only if they could raise capital because at the moment, anything goes. Now, you get a half-empty office building on twenty-year leases and all your tenants are disappearing or bankrupt. You’ve got a mess.

TWS 09 | The Markets

The Markets: The ignorance of individuals has been preyed on. Ultimately, we’re the ones who are going to have to pay a big share of the price.


I have one final question for you. If you had 60 minutes inside of a room of your choosing with Alan Greenspan, Ben Bernanke, Janet Yellen and Powell, what would be some of those first questions you would ask them or statements you would make to them?

For me it wouldn’t last very long because I would say, “You’re dead wrong and you’re not needed.” The idea of activist central banking and setting every price on the meal curve from overnight to 30 years, which directly or indirectly they attempt to influence. This idea of a Central Bank board is counterproductive. It’s negative and it’s not needed. We should go back to the banker’s bank that was created in 1940. You’ll see a legal Fed to buy any government debt, not bonds or anything. It did not have any mandate of full employment or 2% inflation. It was simply meant to be a backup source of liquidity to regional banks. Liquidity was to be provided to commercial banks only if they presented sound collateral based on receivables or finished inventory that could be converted to cash. What you need are central bankers where they would pair green eyeshades that could work through balance sheets and financial statements and determine whether or not the collaterals that are being brought to the window is sound and mostly loanable. We didn’t need Alan Greenspan and we didn’t need Ben Bernanke and his PhD and all these ridiculous models that they used. We didn’t need any of that. We need good accountants and lending officer. I would say, “We don’t need you but thanks for your service.”

It’s one of those things where they have this iconic status it seems. I look at the core and root of the problem and the unfortunate thing is the awareness that people have regarding monetary policy and the role of a Central Bank is nonexistent. It’s going to take some hard times for people to wake up. That’s behavior in general. When you start to experience pain, you’re like, “I don’t like that. I should change what I’m doing to get the pain.” That’s when change happens. As a society, it’s unfortunate that the narrative that we’ve been fed for the last 30 years is that all of this is good for us. That’s the saddest part. The ignorance of individuals has been preyed on. Ultimately, we’re the ones that are going to have to pay a big share of the price, but time will tell.

It’s bad and it’s also good because they put their credibility on the line. They said they fixed everything. We know what we’re doing. We need a monetary policy and geniuses on the Federal Open Market Committee and we’ll make everything better. When this bubble collapses, they will not be able to rescue the market. People are going to lose trillions of dollars. They’re going to be mad and angry. Some people are going to be totally financially ruined and there is going to be a day of reckoning then maybe the way will be open. We understand this to tell the American public. We don’t need this massive central bank intervention. It’s got to be house clean with echoes building and a totally curtail back to its original mission. There’s a chance that it could happen, but it will be painful getting from here to there.

David, thank you so much for your time. This has been a fascinating dialogue. I appreciate you teaching me and teaching the audience. What’s the best way we could support you? What’s the best way to follow you and see what you’re up to?

The lesson is always learned in hindsight; it's never learned in foresight. Click To Tweet

If you’re interested, I have a daily blog. You can Google it and sign up. It’s a modern subscription-based service or you can read my books. My newest is Peak Trump: The Undrainable Swamp and the Fantasy of MAGA. It’s important to understand what’s going on right now because we’ve all been totally misled by all the boasting and bragging coming from the White House about the Trumpian economy. It’s a house of cards and a house of debt.

Thank you for what you’re doing. Thank you for your service. We’ll talk to you next time. Thank you, David.

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About David Stockman

TWS 09 | The Markets

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He is the author of The Triumph of Politics (1986), New York Times best-seller The Great Deformation (2013), TRUMPED!: A Nation on the Brink and How to Bring it Back (2016), and most recently, PEAK TRUMP: The Undrainable Swamp and the Fantasy of MAGA (2019). He is the editor of David Stockman’s Contra Corner:


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The Pursuit Of Financial Certainty And Happiness with Will Street – Part 2

TWS FF 7 | Financial Certainty


In this second part of Financial Friday, we are still with wealth strategist Will Street as we move on to talking about the pursuit of financial certainty and happiness. We examine a scintillating article published by the Business Insider, detailing a woman’s insight by studying 600 millionaires on the effects of where you choose to live to building wealth. We discuss the importance of putting one’s happiness and where they find meaning in life to the equation of wealth-building. Learn how to balance financial certainty and security with real life, taking into account friendships, family, and environment. Know that we don’t have to give up the enjoyment of right now to the mirage of the good life in the future.

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The Pursuit Of Financial Certainty And Happiness with Will Street – Part 2

Financial Friday

We are in part two. We started with part one last episode. We’re going to continue with a scintillating article. I’m here with my friend, Will Street. It’s an interesting article from Business Insider. It is the insight a woman had by studying 600 millionaires and she discovered where you choose to live has two effects on your ability to build wealth. First off, we’ll recap the last episode. What did you think of the last episode? How did you like that discussion?

To recap it a little bit, it was good because we talked quite a bit about building wealth in the right way and building it from the base up and talking about uncertainty. Where a lot of people go wrong is they thirst after this uncertainty, but they seek it out without having the proper foundation in place. Not every financial decision is going to pan out. If you’re out and about in search of success or financial freedom or whatever that means to you and when you come across one of those scenarios where it doesn’t pan out. If you don’t have the right foundation to fall back to, that’s when things become difficult for people. You shared a couple of examples of some of those failures, the Puerto Rican fish farm. You got to do the due diligence. Things aren’t always going to work out. In fact, often things don’t work out exactly according to plan. The best that you can do is put yourself in a position to weather the storm and to have the right type of foundation, the right base and to keep moving forward.

You should always try to live within the possibilities, not the limitations – Will Street Click To Tweet

The other point that you made that I thought was super compelling was this idea about tier two. We used as examples a couple of tier two assets, real estate investments, starting a business. The investment in ourselves and finding something that drives us. Finding something that gives us purpose and meaning and the value that it brings as we feel that sense of drive to get out of bed and make it happen. If that’s what is driving us, more often than not, we’re going to have a whole lot more in the tank to be able to push forward and be successful.

It’s the distinction between escaping. Most people are pursuing retirement, which is the escape of what they’re doing because they wouldn’t choose to spend all of their time working in what they’re doing. They’d rather spend their time somewhere else. They’re trying to escape from that. We advocate the discovery of doing meaningful things. I referenced some Tony Robbins material that says that the most fulfilling life comes from discovering that meaning and then spending 50% to 60% of your time doing that, not all of it. That’s where you look at people that retire and are miserable or people that achieve tremendous wealth and then decide to take their own life.

Where that true, that core meaning wasn’t discovered. Money or success or something else they thought was going to help them to discover it, where it’s the other way around where you can discover it without achieving wealth. This is something that’s not talked about when it comes to financial planning or financial advice or what you should do with your money and I think that it’s a tragedy. Most typical retirement planning solves for a specific end, which I don’t think is the end that people are seeking. Let’s get into some typical financial advice by a woman who studied 600 millionaires and she discovered where you choose to live has two effects on your ability to build wealth.

Here are a couple of her claims. She says the key to wealth building is to live in a home that one can easily afford. If you live in a pricey home and neighborhood, you will act and buy like your neighbors. The more affluent the neighborhood, the more the residents spend on almost every conceivable product and service. If you’re high income-producing, high-consuming neighbors roll up to the driveway in a BMW or a Mercedes-Benz, it’s likely you’ll feel the urge to do the same. The pressure to keep up with the Joneses can also be affected by lifestyle creep. The tendency to spend more whenever one earns more. First off, let’s take her perspective. What is she saying? What is she trying to allude to when it comes to a person’s ability to build wealth?

One of the natural tendencies we have as humans is we value community. Click To Tweet

The common expression that you hear is somebody who’s house-poor. She’s saying, “Don’t be house-poor. Don’t spend or don’t buy a house that uses up more than a certain percentage of your disposable income. That’s a term that is somewhat familiar is this idea being house-poor. That’s the first piece, the size of your mortgage relative to your income. The second is if you live in this neighborhood and you see the neighbor across the street rolled up in a new 7 Series BMW, my 3 Series is not adequate anymore. I need the 7 Series. I need the S-Class Mercedes. I can’t resist that urge. If I see that my neighbor has something that I don’t, I’ve got to keep up with him or her. We’ve got home automation, swimming pool in the backyard, we’ve got it all. Pickleball court is the latest. “My neighbor’s got the pickleball court. I need the ball court. I’m going to spend it, even if it means I’m spending now what I would otherwise save.”

One of the natural tendencies we have as humans is we value community. We value friendships. We value relationships. If you live in a certain neighborhood, you want to be a part of that. I don’t think there’s anything wrong with it. She categorized that the wrong neighborhood, then you are most likely going to spend more than you make and you’re going to get into financial trouble. That’s what she’s alluding to. You’re not going to save and then you’re going to affect your future or ruin it, or both. Consider billionaire investor Warren Buffett. He lives in a modest house worth 0.001% of his total wealth. This is a commonly held perspective. I understand the accumulation of wealth. If you spend less, you’re going to accumulate more. It’s hitting on the financial principle, not the lifestyle and the meaning behind where you live and the memories and the experiences. It approaches it from a purely economic standpoint.

TWS FF 7 | Financial Certainty

Financial Certainty: Your home is not an asset because it does not produce cashflow.


The thing with economics is it doesn’t take into consideration human behavior. She’s saying that human behavior, you’re going to spend less and you’re going to have more to accumulate. Is there anything that’s lost? This is where we’ll pivot to the other side of the coin when it comes to home ownership, the home that you live in. I’ve heard it as your home is not an asset. Robert Kiyosaki talks a lot about that because your home doesn’t produce cashflow. Someone else isn’t paying your mortgage, you are. You’re putting money into the maintenance and you’re putting money into upgrading this and upgrading that. You have to have Mercedes-Benz and BMWs. I look at the value of living in a nice neighborhood, the value of living in a nice home and what value that provides you when it comes to lifestyle, meaning, memories, family, etc. What do you think of the other side of the coin? How could you say, “I see what you’re saying, but here’s another opinion?”

I see what you’re saying is this idea. It’s the Dave Ramsey budgeting. Is budgeting generally a good idea? To tip our cap to her a little bit, it would be generally should you not spend every disposable dime that you have on a mortgage? The flip side of that coin is that also doesn’t mean that you should live in a studio apartment if you don’t have to. You don’t need to live in a trailer park if you don’t have to. There’s something to be said about a good safe neighborhood with good schools and a good community feel where it’s safe to walk on the sidewalks at night and spend time together as a family. The other flip side to this hyper-focus on budgeting and saving and as most people probably do, you probably have met people in the past who are hyper-focused on saving a nickel. They drive 30 miles to save a nickel on gas. The rational person would be like, “What did you do? Why did you do that?”

Your environment has more to do with your experience of life than you think. Click To Tweet

The flip side there is you can take it to the extreme, where generally, are there some good core principles there? The flip side to that is the happiness piece, the safety piece, the security, the peace of mind. Especially when you consider how much time you spend at home with your family and the experiences all of us want to have with our families. Your house is the key component of that. You can do all that without obsessing over the neighbor’s car and making sure that you put in the pickleball court that’s slightly bigger than your neighbors.

These are all good points. I’m going to continue on with this perspective, hitting on some different things. I understand this person’s point of view and she makes valid economical points. At the same time, if you look at what life is about according to me and it’s different for everybody. I’ve had lots of clients. There’s a period of time within a year that they had divorces, eight or nine people all got divorced and they were around the same age as me. One, in particular, hit home to me because he had made the statement, “All the work I’ve done, everything I’ve done has all been for my family and now they’re gone.” He built tremendous wealth. He worked all the time. I look at that and his intention was genuine. His actions didn’t necessarily correspond to that. You look at a home and where you live. It’s like, “That’s what gives life meaning is the memories and things you can do with your family.” I’d also say the friendships that you have.

TWS FF 7 | Financial Certainty

Financial Certainty: Your environment has a lot to do with the ideas that are in your mind, the expectations you have of yourself, and the questions you ask others.


If you look at living in an affluent neighborhood, it’s affluent for a reason. They may drive BMWs or Mercedes-Benz, but the conversations that I’ve had with people in my neighborhood, I would not have had in another neighborhood. I look at my neighbor next door. I’ve had some fascinating conversations with him. He runs a microfinance bank and he consults with countries. He does a lot of work in Myanmar, Asia and Africa. It’s fascinating to have these conversations with him. He’s a computer programmer by trade. Those are the conversations. Those are the things that you can learn and be inspired by people. I have a neighbor that lives across the street and he’s been a successful attorney. What he knows and the books that he’s read. I have incredible conversations with him and we’ve made other friendships as well. I look at what’s the price of those relationships? What’s the price of those friendships? What ideas have they given that would not have come by living in a neighborhood that was 0.001% of your income? I looked at that and there are many intangibles associated with it.

Getting to this person’s point, how can you have both? How can you be responsible? How can you have the experience of life right now, not waiting 30 years or 20 years down the road to retirement where you are able to have the permission slip to experience life? This comes down to your financial education. It’s understanding a financial statement, money in, money out. If you can’t afford the neighborhood, it isn’t, “We have to live in another neighborhood.” It’s asking the question, “How can I live in that neighborhood? How can I live in that home?” That starts to engage a part of your brain where you start to look for opportunities. You may not be able to live there at this point or this point, but at some point, you may be able to live there. It’s the pursuit of that because you figured out ways to make more money. I look at the home that we live in.

We’ve lived in the same neighborhood for many years. This is the third home in the neighborhood, but I lived on the outskirts for a number of years. We almost moved a few times, especially during the financial crisis but it’s because this neighborhood is somewhat affluent neighborhood and it’s because I had established relationships there. I had friendships there and I wanted to also have a nice house for my family and also a happy wife because happy wife equals happy life. It was one of those things where I could have taken the money that went into a house and invested it. I would have had more money, have more cashflow, at the same time, I wouldn’t have had the experiences with my family.

You look at what that does to your soul, what that does to your drive. It can affect many different things. That’s the conversation that’s not typically had with these types of articles. They give you this, “Step one is to make sure that your mortgage payment is less than 20% of your earned income,” which are always technical steps and there’s merit to some of those. It’s disempowering because it almost assumes that you’re at the income level you’re going to be for the rest of your life and you better deal with it. If you want to retire one day, you better scrimp and save and not enjoy life until you’re 65. I don’t think that’s the right mentality. They may not say that’s what they mean. That’s the feeling you get.

You're one idea away from a totally different life. Click To Tweet

That’s where the motivation comes from where in order to build wealth, you don’t figure out how to earn more and be more valuable, but you scrimp and save based on the money you are earning. That’s the only money you’re going to earn. That money there is going to somehow compound and grow and you have enough money to live for the rest of your life at 65. It’s a narrative that is disempowering. Looking at our perspective, it doesn’t mean that you need to go out and buy a beautiful home and BMWs and Mercedes, but you need to start asking different questions. There’s merit to her perspective. There’s also merit to the other perspective. Hopefully, you’re seeing that. You sit on the edge. It’s up to you to determine what’s right for you at this point.

I can resonate with a lot of what you said about the neighborhood that you live in. For us, we moved a few years ago. It wasn’t to try and get into some fancy neighborhood where we wanted to be surrounded by a bunch of gazillionaires or anything like that. For us, it was family. We live within about a mile or so of my wife’s two brothers. The result of that is we live in a neighborhood that we love, that we’re comfortable with, that’s a good neighborhood. The interaction with our kids among their cousins and holidays and things like that, it’s a completely different dynamic.

The thing that’s interesting is for me, I didn’t grow up like that. It’s one of those things where I would have been stuck in that old mentality. I would have imposed this artificial ceiling on myself that, “We can’t do that. We got to take where we are right now, assume that that’s our maximum and operate from that level and below. We can’t do that.” My wife helped me stretch a little bit and see opportunity, meaning and value. Now that we’re there, my kids are having a completely different experience as kids from what I had. The family is so much more critical, so much more part of their everyday lives than it was for me. I wouldn’t trade that for anything. It’s huge.

Your environment has more to do with your experience of life than you think. It’s the environment, whether it’s where you live, the culture of your office and the social networks that you’re in. Those are environments and that environment can make life miserable or it can totally empower you. It can also stretch you. I’m going to give you one example. This was a long time ago, but after my sophomore year of college, I went to a hockey camp in Minnesota. It was sponsored by the Anaheim Ducks. It was a humbling experience because I was in an environment of these Triple-A players. There are a couple of pros there, it was a camp where it was training but also spotlight. I remember getting out onto the ice the first time and the speed that they were warming up. For me, it’s the speed of a game where it was all out. What it did, it raised my level of play because I was in an environment that stretched me. I believe that anybody can be stretched. Anybody can make more of a difference tomorrow than they did now.

A lot of it depends on the environment that you’re in. Some of it depends on your internal drive and what you want for life, your vision, your mission. Your environment has a lot to do with the ideas that are in your mind, the expectations you have of yourself, the questions you ask yourself and the questions you ask others. You’re one idea away from a totally different life. You’re one decision away from a totally different life. Your environment influences a lot of that. That’s why I try to go to events. I try to participate in mastermind groups. I try to be around individuals who are inspiring, who are pushing the limits, that doesn’t settle for the status quo. That inspires me, it helps me stretch. If I didn’t have that, it would be more difficult for me to do that. What do you think of part two?

We dissected it pretty well. There’s always a second side or even a third.

Life needs to be valued and celebrated. Click To Tweet

It’s one of those things where I find it disheartening sometimes that people sacrifice the enjoyment of life right now for what I consider a mirage of the good life in the future. Sacrificing now, I don’t think you’re suddenly going to have an amazing life when you retire or you achieve success. Life needs to be valued and celebrated.

I think so much of those limitations are mental. I can remember as a kid growing up where I had some friends who were better off than we were financially. They came from amazing families. I got to see from the inside. I had friends whose families were awesome and who included me in a lot of what they did, vacations and stuff like that. I got to be able to see it from the inside. My parents were that limiting frame of mind. They would refer to my friend’s families. It was with some jealousy and with, “We could never afford to do that. It’s nice that they can do those types of things, but we can’t do any of those things.”

I was living in an environment where I was hearing all these limitations, but I was spending a significant amount of time within these other environments where I was seeing everything that was possible. It’s not like they were burning $100 bills for the fun of it because they had so much money. It wasn’t anything like that. They prioritized what was important to them and they lived within that framework. Early on in my teenage years, I consciously made the decision what I wanted. I wanted out of where I was, that mindset, those limitations. I wanted to gravitate toward what my friends’ families had. The number one reason why I went on to become an attorney was that my best friend’s dad was an attorney. I saw the family dynamic. I saw the lifestyle. I saw what they did together as a family and what I didn’t do. I bee-lined it straight for that.

The idea was nurtured over the course of time, but it may have come in one experience. Those ideas can come frequently if you’re in the right environment. That happened to be the circumstance at the time for you. You can intentionally be in certain environments that can inspire you, stretch you and push you beyond what you consider your limitations. Hopefully, this has been a valuable episode for you guys. It’s setting the stage for some future ones that we’re going to do when it comes to investment and also some other financial strategies. Thanks for joining us. Make sure you go and listen to our past episodes as well as our primary episodes. We’ve had some awesome ones, G. Edward Griffin, Lawrence Reed, it was fun interviewing those guys. The topic’s capitalism so learn about capitalism. We’ll see you on the next episode. Thanks.

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About Will Street

TWS FF 7 | Financial Certainty

Will earned his Bachelor of Arts degree from Brigham Young University in 2005. After graduating from BYU, Will attended the University of Iowa College of Law and received his Juris Doctor in May of 2008. Will began practicing law with the law firm of VanCott, Bagley, Cornwall & McCarthy the oldest and one of the most well-respected law firms in the State of Utah. Will’s practice focused primarily on consumer finance-related litigation, consumer finance transactions, sale and purchase agreements, NDA’s, RFP’s, teaming agreements, security agreements, creditor’s rights in bankruptcy, and estate planning. Working directly with clients to analyze a problem, develop a solution, and working to ensure a successful resolution are what Will enjoyed most about being an attorney. Will comes to Paradigm after nearly six years in the private practice of law.

After his exposure to the Infinite Banking concept and seeing that his legal training would be directly relevant to his role at Paradigm, Will made the decision to leave his practice. Paradigm allows Will to continue to do what he enjoys most – develop client relationships, dissect problems, create solutions and work collaboratively with the client towards a successful resolution. Originally from the Tri-Cities area of Eastern Washington, Will currently resides in Salt Lake City with his wife, Sunny, and their three children.


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