Ray Dalio: Principles, the Economic Machine, AI & the Arc of Life | Lex Fridman Podcast #54

1. 0:00 – 15:00

   The following is a…

   1. LFLex Fridman0:00

      The following is a conversation with Ray Dalio. He's the founder, co-chairman, and co-chief investment officer of Bridgewater Associates, one of the world's largest and most successful investment firms that is famous for the principles of radical truth and transparency that underlie its culture. Ray is one of the wealthiest people in the world, with ideas that extend far beyond the specifics of how he made that wealth. His ideas that are applicable to everyone are brilliantly summarized in his book, Principles. They are also even further condensed on several other platforms, including YouTube, where, for example, a 30-minute video titled How the Economic Machine Works is one of the best educational videos I personally have ever seen on YouTube. Once again, you may have noticed that the people I've been speaking with are not just computer scientists, but philosophers, mathematicians, writers, psychologists, physicists, economists, investors, and soon, much more. To me, AI is much bigger than deep learning, bigger than computing. It is our civilization's journey into understanding the human mind and creating echoes of it in a machine. That journey includes the mechanisms of our economy, of our politics, and the leaders that shape the future of both. This is the Artificial Intelligence podcast. If you enjoy it, subscribe on YouTube, give it five stars on Apple Podcasts, support it on Patreon, or simply connect with me on Twitter @lexfridman, spelled F-R-I-D-M-A-N. This show is presented by Cash App, the number one finance app in the App Store. I personally use Cash App to send money to friends, but you can also use it to buy, sell, and deposit Bitcoin. Most Bitcoin exchanges take days for a bank transfer to become investable. Through Cash App, it takes seconds. Cash App also has a new investing feature. You can buy fractions of a stock, which to me is a really interesting concept. So you can buy of one dollar's worth, no matter what the stock price is. Brokerage services are provided by Cash App Investing, a subsidiary of Square and member SIPC. I'm excited to be working with Cash App to support one of my favorite organizations that many of you may know and have benefited from called FIRST, best known for their FIRST Robotics and Lego competitions. They educate and inspire hundreds of thousands of students in over 110 countries and have a perfect rating on Charity Navigator, which means the donated money is used to maximum effectiveness. When you get Cash App from the App Store or Google Play and use code LEXPODCAST, you'll get ten dollars, and Cash App will also donate ten dollars to FIRST, which again is an organization that I've personally seen inspire girls and boys to dream of engineering a better world. And now, here's my conversation with Ray Dalio. Truth, or more precisely, an accurate understanding of reality, is the essential foundation of any good outcome. I believe you've said that. Let me ask an absurd-sounding question at the high philosophical level. So what is truth? When you're trying to do something different than everybody else is doing, and perhaps something that has not been done before, how do you accurately analyze the situation? How do you accurately discover the truth, the nature of things?

   2. RDRay Dalio3:27

      Almost the way you're asking the question implies that, um, truth and newness have nothing... are almost at odds.

   3. LFLex Fridman3:35

      Oh.

   4. RDRay Dalio3:35

      And I just want to say that I don't think that that's true, right? So what I mean by truth- eh, truth is, uh, you know, what is the reality? How does the reality work? And so if you're doing something new that has never been done before, which is exciting and I like to do, the way that you would start with that is experimenting on what are the realities and the premises that you're using on that and how to stress test those types of things. I think what you're talking about is instead the fact of how do you deal with something that's never been done before-

   5. LFLex Fridman4:07

      Yeah.

   6. RDRay Dalio4:08

      ... and deal with the associated probabilities? And so I, I think in that, don't let something that's never been done before stand in the way of you doing that particular thing. You have a- Because almost the only way that you understand what truth is, is through experimentation. And so when you go out and experiment, you're going to learn a lot more about what truth is. But the essence of what I'm saying is that when you take a look at that, use truth to find out what the realities are as a foundation, do the independent thinking, do the experimentation to find out what's true, and change and keep going after that. So I think that the we- that when you're thinking about it the way you're thinking about it, that almost implies that you're, you're letting people almost say that they're reliant on what's been discovered before to find out what's true, and what's been discovered before is often not true, right?

   7. LFLex Fridman5:11

      Right. Exactly.

   8. RDRay Dalio5:11

      Conventional view of what tr- what is true is very often wrong. It'll go in ups and downs, and, you know, I mean, there are fads and okay, this thing, it goes this way and that way. And so definitions of truths that are conventional are not the thing to go by.

   9. LFLex Fridman5:28

      How do you know the thing that has been done before, that it might succeed?

   10. RDRay Dalio5:33

       It's to do whatever homework that you have in order to try to get a foundation, and then to go into worlds of not knowing-And you go into the world of not knowing, but not stupidly, not naively, you know? You go into that world of not knowing, and then you do experimenting, and you learn what truth is and what's possible through that process. I describe it as a five-step process.

   11. LFLex Fridman5:59

       Yes.

   12. RDRay Dalio6:00

       The first step is you go after your goals, the second step is you identify the problems that stand in the way of you getting to your goals, the third step is you diagnose those to get at the root cause of those, then the fourth step is then, now that you know the exact root cause, you get, you design a way to get around those, and then you, um, follow through and do the designs you set out to do, and it's the experimentation. I think that what happens to people mostly is that they try to decide whether they're gonna be successful or not ahead of doing it.

   13. LFLex Fridman6:34

       Mm-hmm.

   14. RDRay Dalio6:34

       And they don't know how to do the process well, because the nature of your questions are along those lines, like, "How do you know?"

   15. LFLex Fridman6:40

       Yeah.

   16. RDRay Dalio6:40

       Well, you don't know. But a practical person who is also used to making dreams happen knows how to do that process. I've given personality tests to shapers. So the person, what I mean by a shaper is a person who can take something from visualiz- visualization, they have an audacious goal-

   17. LFLex Fridman7:01

       Mm-hmm.

   18. RDRay Dalio7:01

       ... and then they go from visualization to actualization, building it out. That includes, uh, E- uh, Elon Musk. I gave him the personality test.

   19. LFLex Fridman7:10

       Mm-hmm.

   20. RDRay Dalio7:10

       I've given it to Bill Gates, and I've given it to many, many, uh, such shapers. And they know that process that I'm talking about. They experience it, which is a process, essentially, of knowing how to go from an audacious goal, but not in a r- ridiculous way, not a, a dream, and then to do that learning along the way that allows them, in a very practical way, to learn very rapidly as they're moving toward that goal.

   21. LFLex Fridman7:38

       So the, the call to adventure, the adventure starts, uh, not trying to analyze the probabilities of the situation, but, uh, using what instinct? How do you dive in? So let's-

   22. RDRay Dalio7:49

       It is-

   23. LFLex Fridman7:49

       ... let's talk about it.

   24. RDRay Dalio7:50

       ... it, it is, it, it is being a ... it's simultaneously being a dreamer and a realist. It's to know how to do that well. The pull comes from a pull to adventure. For whatever reason, uh, I can't tell you how much of it's genetics and how much it's environment, but there's a early on, it's exciting.

   25. LFLex Fridman8:11

       Mm-hmm.

   26. RDRay Dalio8:11

       That notion is exciting.

   27. LFLex Fridman8:13

       Yes.

   28. RDRay Dalio8:13

       Being creative is exciting. And so one feels that. Then one gets in the habit of, of doing that. Okay, how do I know? How do I learn very well? And then, how do I imagine? And then, how do I experiment to go from that imagination? So it's that process that one, uh, one l- and when l- and then one, the more one does it, the one, more, the better one becomes at it.

   29. LFLex Fridman8:38

       Mm-hmm. You mentioned shapers. Elon Musk, Bill Gates. What ... Who are the shapers that you find yourself thinking about when you're constructing these ideas? The ones that define the archetype of a shaper for you?

   30. RDRay Dalio8:54

       Well, as I say, a shaper, for me, is somebody who comes up with a great visualization, um, usually a really unique visualization, and then, uh, actually builds it out and makes the world different, changes the world in that kind of a way. So when I look at it, Marc Benioff with Salesforce, Chris Anderson with TED, Muhammad Yunus with social enterprise and philanthropy, Geoffrey Canada and Harlem Children's Zone, there are ... Uh, all domains have shapers who have the av- ability to visualize and make extraordinary things happen.
2. 15:00 – 30:00

   Brilliant. So how do…

   1. RDRay Dalio15:00

      more successful by being able to effectively learn from others and tapping into the skills of people who see things different from them.

   2. LFLex Fridman15:09

      Brilliant. So how do you, when that- that personality being, first of all, open to the fact that there's other people see things differently than you, and at the same time have supreme confidence in your vision. Is there, um, just the psychology of that? Do you see a tension there between the confidence and the open-mindedness?

   3. RDRay Dalio15:28

      No, it's funny because I think we grow up thinking that there's a tension there, right?

   4. LFLex Fridman15:33

      Right.

   5. RDRay Dalio15:33

      That there's a confidence, um, and the more confidence that, uh, you have, there's a tension with the open-mindedness and not being sure, okay?

   6. LFLex Fridman15:43

      Mm-hmm.

   7. RDRay Dalio15:43

      Um, confident and accurate are almost negatively cor- correlated in many people.

   8. LFLex Fridman15:49

      Mm-hmm.

   9. RDRay Dalio15:50

      They're extremely confident...

   10. LFLex Fridman15:52

       Yeah.

   11. RDRay Dalio15:52

       ... and they're often inaccurate. And so I think one of the greatest tragedies of people is not realizing how those things to- go together, because instead it's really that by saying, um, "I know a lot, and how do I know I'm still not wrong? And how do I take that, uh, the best thinking avo- a- available to me, and then raise my probability of learning?" All these people think for themselves, okay? Uh, mean- meaning they're smart.

   12. LFLex Fridman16:21

       Yeah.

   13. RDRay Dalio16:21

       But they take in, like vacuum cleaners, they take in ideas of others, they stress test their ideas with others, they assess what comes back to them in the form of other, uh, uh, thinking, and they also know what they're not good at, and what other people who are good at the things that they're not good at, they know how to get those people and be successful all around, because nobody has enough knowledge in their heads. And that, I think, is one of the great differences. So the reason my company has been successful br- uh, in terms of this, is 'cause of an idea meritocratic decision-making process by which you can get the best ideas. Uh, you know, what's an idea meritocracy? An idea meritocracy is to get the best ideas that are available out there and to work together with other people in the team to achieve that.

   14. LFLex Fridman17:10

       That's an incredible process thing you described in several places to arrive at the- the truth. But, uh, apologize if I'm romanticizing the notion, but let me linger on it. Uh, just having enough self-belief, you don't think there's a self-delusion there that's necessary? Especially in the beginning, you talk about in the journey maybe the trials or the abyss. Do you think...... there is value to d-deluding yourself.

   15. RDRay Dalio17:41

       I think what you're calling delusion is a bad word-

   16. LFLex Fridman17:45

       Yes.

   17. RDRay Dalio17:46

       ... for uncertainty, okay? So, I mean, in other words, 'cause we keep going back to the question, how would you know and all of those things.

   18. LFLex Fridman17:55

       Yeah.

   19. RDRay Dalio17:55

       No. I think that delusion is not going to help you, that you have to find out truth, okay? To deal with uncertainty, n- saying, "Listen, I have this dream and I don't know how I'm going to get that dream." I mentioned in my book Principles, and described the process in a more complete way than we're going to be able to go here, but what happens is I say you form your dreams first. And you can't judge whether you're going to achieve those dreams-

   20. LFLex Fridman18:24

       Mm-hmm.

   21. RDRay Dalio18:24

       ... because you haven't learned the things that you're going to learn on the way toward those dreams, okay?

   22. LFLex Fridman18:31

       Right.

   23. RDRay Dalio18:31

       So, if, that isn't delusion. I wouldn't use delusion. I think you're over-emphasizing the importance of knowing whether you're going to succeed or not. Get rid of that, okay?

   24. LFLex Fridman18:43

       (laughs)

   25. RDRay Dalio18:43

       If you can get rid of that-

   26. LFLex Fridman18:44

       Yeah.

   27. RDRay Dalio18:44

       ... and say, "Okay, no, I can have that dream," but I'm so realistic in the notion of finding out, I'm curious, I'm a great learner, I'm a great experimenter, along the way, you'll do those experiments which will teach you more truths and more learning about the reality, so that you can get your dreams. Because if you still live in that world of delusion, okay?

   28. LFLex Fridman19:08

       Yeah.

   29. RDRay Dalio19:08

       And you think delusion's helpful. No, the delusion isn't...

   30. LFLex Fridman19:12

       (laughs)
3. 30:00 – 45:00

   Ah, nice. …

   1. RDRay Dalio30:00

      y- you know, and what happens is they lend it to somebody else who's got better ideas, and they cut a deal, and then that person with the better ideas is gonna pay it back. And if it works well, it helps resource allocations go well, providing people l- like the entrepreneurs and all of those, they need capital. They don't have capital themselves, and so somebody's gonna give them capital and they'll give them credit and along those lines. Then what happens is it's not managed well in a variety of ways. So I did another book on principles, Principles of Big Debt Crises, that go into that. And it's free, by the way. I m- put it free online, um, on-

   2. LFLex Fridman30:42

      Ah, nice.

   3. RDRay Dalio30:42

      ... as a PDF. Uh, so if you go online and you look, uh, Principles for Big Debt Crises is under my name. You can download it in a PDF or you can buy a print book of it. And it goes through that particular process. And so you always have it overdone in always the same way. Everything, by the way, almost everything happens over and over again for the same reasons, okay? So these debt crises all happen over and over again for the same reasons. They get it overdone. The, in the book, it explains how you identify whether it's overdone or not. They get it overdone, and then you go through the process of making the adjustments according that, and then, and it explains how they can use the levers and so on. If you didn't have credit, then you would be sort of, everybody'd sort of be stuck. So, um, credit, uh, uh, uh, i- is a good thing, but it can easily be overdone. So now we get into the que- what is money? What is credit?

   4. LFLex Fridman31:40

      Yeah.

   5. RDRay Dalio31:41

      Okay? You get into money and credit. So if you're holding credit and you think that's worthwhile, keep in mind that the central bank, let's say it can print the money. What does that prom- They, you, you have an IOU, and the IOU says you're gonna get a certain number of dollars, let's say, or, uh, yen or euros, and that is what the IOU is. And so the question is, will you get that money and w- and what will it be worth?

   6. LFLex Fridman32:07

      Mm-hmm.

   7. RDRay Dalio32:07

      And then also you have a gov, a, a government which is a participant in that process-

   8. LFLex Fridman32:12

      Right.

   9. RDRay Dalio32:13

      ... 'cause they want, they are on the hook. They owe money. And then will they print the money to make it easy for everybody to pay? So you have to pay attention to those two. I would suggest, like you, you recommend to other people, just take that 30 minutes and it, and it, and it comes across pretty clearly. But the m- my conclusion is that of course you want it, and even if you understand, um, it and the cycles well, you can benefit from those cycles rather than to be hurt by those cycles. Because I don't know, uh, the way the cycle works is somebody gets over-indebted, they have to sell an asset, okay, then I don't know may- That's when assets become cheaper. How do you acquire the asset? It's a whole process.

   10. LFLex Fridman32:59

       So again, maybe a- anoth- another dumb question, but, uh-

   11. RDRay Dalio33:03

       There are no such things as dumb questions to me.

   12. LFLex Fridman33:06

       Oh, there you go. But what is money? (laughs) So you've mentioned, y- you know, credit and money. It, uh... Another thing that if I just zoom out from an alien perspective and look at human civilization, it's incredible that we've created a thing that's not, that only works because currency because we all agree it has value. So, uh, uh, I guess my question is, how do you think about money as this emergent phenomenon, and what do you think is the future of money? You've commented on Bitcoin, other forms. What do you think is, uh, its history and future? How do you think about money?

   13. RDRay Dalio33:51

       There are two things that money is for. It's a medium of exchange, and it's a storehold of wealth.

   14. LFLex Fridman33:59

       Yes.

   15. RDRay Dalio34:00

       That's, that, that... So money, you know, the... So you could say something's a medium of exchange, and then you could say, is it a storehold of wealth, okay? So those, the... And money is that vehicle that is those things, and can be used to pay off your debt. So when you have a debt and you provide it, it pays off your debt. So that, that's that process. Um-

   16. LFLex Fridman34:28

       And it's, uh, um, s- uh, I apologize to interrupt, but it only can be a medium of exchange or a store of wealth when everybody recognizes it to be of value.

   17. RDRay Dalio34:37

       That's right.

   18. LFLex Fridman34:38

       Right.

   19. RDRay Dalio34:38

       And so you see in the history and you, around the world and you go to places. Um, I was in, um, an island in the Pacific in which they had, as money, these big stones. And literally, they were taking a boat-

   20. LFLex Fridman34:56

       Mm-hmm.

   21. RDRay Dalio34:56

       ... this, this, this big carved stone, and they were taking it from one of the islands to the other, and it sank. The, the, the-... piece of this big stone piece of money that they had, and it went to the bottom, and they still perceived it as having value. So that e- it was, even though it was in the bottom, and it's this big hunk of rock, the fact that somebody owned it, they would say, "Oh, I'll, I'll own it for this and that." I've seen, uh, beads in different places, shells converted to this in mediums of exchange, and when we look at what we've got, you're exactly right. It is the notion that if I give it to you, I can then take it and I can buy something with it, and that's... So, it's a matter of perception, okay. And then we go through then the history of money, and the vulnerabilities of money. And what we have is, um, there's, through history, there's been two types of money. Those that are claims on something of value.

   22. LFLex Fridman35:57

       Mm-hmm.

   23. RDRay Dalio35:58

       Uh, like the connection of, to gold or something.

   24. LFLex Fridman36:01

       That's right.

   25. RDRay Dalio36:02

       Um, that, that would be. And, or, they just are money without any connection, which, and then we have a system now, which is a fiat monetary system. So that's what money is. Then it will last as long as it's kept of value and it works that way. So let's say central banks, when they get in the position of, like, they owe a lot of money, like we have the, in the case, it's increasingly the case, and they also then are a bind, and they have the printing press to print the money and get out of that, and you have a lot of people who might be in that position. Then you can print it, and then it could be devalued-

   26. LFLex Fridman36:42

       Mm-hmm.

   27. RDRay Dalio36:42

       ... in there. And so history has shown, forget about today, history has shown that no currency, um, has la- ha- every currency has either ended as being a currency, been, or devalued as a currency over periods of time, long periods of time. So it evolves and it changes, but everybody needs that medium ex- of exchange, and everybody needs that store hold of wealth, so it keeps changing what is money over a period of time.

   28. LFLex Fridman37:12

       But so much is being digitized today, and there's these ideas that are based on the blockchain of Bitcoin and so on. So if all currencies, like all empires, come to an end, what do you think will, um, do you think something like Bitcoin might emerge as, as a common store of value, uh, store of wealth, and a medium of exchange?

   29. RDRay Dalio37:37

       The problem with Bitcoin is that a- it's not a, an effective medium of exchange. Like, it's not easy for me to go in there and buy things with it. And then it's not an effective store hold of value because it has a volatility that's based on speculation and the like. So you, y- it's not a very effective saving. That's very different from, um, Facebook's pro- of a stable value currency, which would be effective as both a medium of exchange and a store hold of wealth, because if you were to hold it, and then it, the way it's linked to, number of things that it's linked to, would mean that it could be a very effective store hold of wealth. And then you have a digital currency that could be a very effective medium of exchange and store hold of wealth.

   30. LFLex Fridman38:26

       Mm-hmm.
4. 45:00 – 1:00:00

   Mm-hmm. …

   1. RDRay Dalio45:00

      me. They didn't happen in my lifetime before.

   2. LFLex Fridman45:02

      Mm-hmm.

   3. RDRay Dalio45:02

      But when I researched them, they happened in other places or other people lifetimes. So for example, I remember, uh, 1971, the dollar, there was no such thing as a devaluation of a currency.

   4. LFLex Fridman45:16

      Mm-hmm.

   5. RDRay Dalio45:16

      I didn't experience it. And with the dollar was connected to gold, and I was watching events happen and then you get on, and any, that definition of money-

   6. LFLex Fridman45:26

      Mm-hmm.

   7. RDRay Dalio45:26

      ... all of a sudden went out the, the window because it was not tied to gold, and then you have this devaluation. And so, and then, or, or the first oil shock or the second oil shock.

   8. LFLex Fridman45:38

      Mm-hmm.

   9. RDRay Dalio45:38

      Or so many of these things. And what I, but almost always, I realized that they, um, um, when I looked in history, they happened before.

   10. LFLex Fridman45:49

       (laughs) Okay.

   11. RDRay Dalio45:50

       They just happened in other people's lifetimes, which led me to realize that I needed to study history and what happened in other people's lifetimes, and what happened in other countries and places, so that I would have timeless and universal principles for dealing with that thing. So I've... Oh yeah, I've been s- you know, the implausible happening, but it's like a, a one in a hundred year storm.

   12. LFLex Fridman46:17

       Right.

   13. RDRay Dalio46:18

       Okay? Or it's, or, um ...

   14. LFLex Fridman46:20

       They've happened before.

   15. RDRay Dalio46:22

       Yeah, they've happened.

   16. LFLex Fridman46:23

       Just not to you. Let me talk about, uh, if we could, about AI a little bit. So you've, uh, at Bridgewater Associates, uh, managed about $160 billion in assets. And our artificial intelligence systems algorithms are pretty good with data. What role in the future do you see AI play in analysis and decision-making in this kind of data rich and impactful, uh, area of, uh, investment?

   17. RDRay Dalio46:57

       I'm going to answer that not only in investment, but I give a more-

   18. LFLex Fridman47:01

       Generally.

   19. RDRay Dalio47:01

       ... all-encompassing rule, uh, for AI. As I think you know, for the last 25 years, uh, we have taken our thinking and put them in algorithms, and so we make decisions that c- the computer, um, takes those-... criteria algorithms, and they put them, uh, they're in there and it takes data, and they operate as an independent decision maker par- in parallel with our decision-making. So for me, it's like there's a chess game playing, um, and I'm a person, uh, with my chess game, and I'm saying, "It made that move, and I'm making the move, and how do I compare those two moves?"

   20. LFLex Fridman47:42

       Yes.

   21. RDRay Dalio47:42

       So, we've done a lot. But let me give you an, a rule. If the future can be different from the past, and you don't have deep understanding, you should not rely on AI.

   22. LFLex Fridman48:00

       (sighs)

   23. RDRay Dalio48:00

       Okay? Those two things.

   24. LFLex Fridman48:03

       Deep understanding of...

   25. RDRay Dalio48:05

       The cause-effect relationships that are leading you to place that bet, in anything. Okay? E- anything important. Let's say if it was do surgeries, and you would say, "How do I do surgeries?" I think it's totally fine to watch all the doctors do the surgeries. You can put it on, uh, uh, take a, um, a digital camera and do that, convert that into AI algorithms that go to re- robots-

   26. LFLex Fridman48:33

       Mm-hmm.

   27. RDRay Dalio48:33

       ... and have them do surgeries, and I'd be comfortable with that. Because if it'll do the, if it keeps doing the same thing over and over again, and you have enough of that, that would be fine, even though you may not understand the algorithms, because you're, if the thing's happening over and over again, and you're not asking... The future would be the same.

   28. LFLex Fridman48:51

       Yes.

   29. RDRay Dalio48:52

       That appendicitis, or whatever it is, will be handled the same way, the surgery, that's fine. However, what happens with AI is, for the most part, is it takes a lot of data and it, um, with a high enough sample size-

   30. LFLex Fridman49:09

       Mm-hmm.
5. 1:00:00 – 1:15:00

   Yes. …

   1. RDRay Dalio1:00:00

      and your intellectual wants, so that you really say they're aligned.

   2. LFLex Fridman1:00:05

      Yes.

   3. RDRay Dalio1:00:05

      And so to do that in a way to get what you want, so irrationality is a bad thing if it, if it means that it doesn't make sense in getting you what you want. But you better decide which you you're satisfying. Is it the lower level you, emotional/subliminal one, or is it the other? But if you can align them, so what I find is that by going from my, your, you experience the decision, do this thing, subliminally-

   4. LFLex Fridman1:00:34

      Mm-hmm.

   5. RDRay Dalio1:00:34

      ... and that's the thing I want, it comes to the surface.

   6. LFLex Fridman1:00:37

      Mm-hmm.

   7. RDRay Dalio1:00:37

      I find that if I can align that with what my logical me wants, and does, do the debel- double-check between them, and I get the same sort of thing, that that helps me a lot. I find, for example, meditation is one of the things that helps to achieve that alignment. It's fantastic for achieving that alignment.

   8. LFLex Fridman1:00:58

      Mm-hmm.

   9. RDRay Dalio1:00:58

      And often then, I also wanna not just do it in my head, I wanna say, "Does that make sense?" Help y- y- and so I do it with other people-

   10. LFLex Fridman1:01:06

       Mm-hmm.

   11. RDRay Dalio1:01:06

       ... and I say, "Okay, well, let's say I want this thing," and whatever, "does that make sense?" And when you do that kind of triangulation, your two yous, and you do that with also the other way, then, um, you certainly wanna be rational, right? But rationality has to be defined by those things.

   12. LFLex Fridman1:01:26

       And then you discover sort of new ideas that, uh, that drive your future. So it's always, you're always at the edge of the set of principles you've developed. You're doing new things always.

   13. RDRay Dalio1:01:36

       Right.

   14. LFLex Fridman1:01:36

       So that's where the intellect is needed. <|agent|><|en|>

   15. RDRay Dalio1:01:38

       Well, and the inspiration.

   16. LFLex Fridman1:01:39

       (laughs)

   17. RDRay Dalio1:01:40

       The inspiration is needed to do that, right? Like what are you doing it for?

   18. LFLex Fridman1:01:45

       So what is that thing-

   19. RDRay Dalio1:01:46

       It's the excitement-

   20. LFLex Fridman1:01:47

       What is that thing? What, what's there?

   21. RDRay Dalio1:01:47

       ... the adventure, the curiosity, the hunger.

   22. LFLex Fridman1:01:49

       What's, uh, if you can be Freud for a second, what's in that subconscious? What, what's the thing that drives us? The cau-

   23. RDRay Dalio1:01:57

       I, I think you can't generalize of us. I think different people are driven by different things. There's not a common one, right? So, uh, like if you would take the shapers, I think it is a combination of, subliminally, it's a combination of excitement, curiosity-

   24. LFLex Fridman1:02:18

       Is there a dark element there? Is there, is there demons? Is there fears? Is there, in your sense, something dark that drives them?

   25. RDRay Dalio1:02:24

       Most of the ones, most of the ones that I'm dealing with, uh, I have not seen that.

   26. LFLex Fridman1:02:29

       Yeah.

   27. RDRay Dalio1:02:29

       I, I, I see the, what I really see is, "Hoo, if I can do that-"

   28. LFLex Fridman1:02:35

       (laughs)

   29. RDRay Dalio1:02:35

       "... that would be the most dream." And then the act of creativity-

   30. LFLex Fridman1:02:40

       Got it.
6. 1:15:00 – 1:28:00

   (laughs) . …

   1. RDRay Dalio1:15:00

      and so they have the opportunity to have that. I'm very lucky in that I started with nothing, so I had the full range.

   2. LFLex Fridman1:15:08

      (laughs) .

   3. RDRay Dalio1:15:08

      I can tell you, I, I, you know, by not having money but, bu- b- and then having quite a lot of money and I, you know, I did that in the right order. Okay?

   4. LFLex Fridman1:15:16

      So you started from nothing in Long Island?

   5. RDRay Dalio1:15:17

      Yep. And my dad was a jazz musician, but I, I, but I-

   6. LFLex Fridman1:15:21

      Yeah.

   7. RDRay Dalio1:15:21

      ... had all really that I needed because I had two parents who loved me and c- took good care of me and I went to a public school that was a good public school and basically, you know, that you, you don't need much more than that in order to... That's the equal opportunity part. Anyway, what I'm saying is, know I experienced the range and s- and there are many studies on the answer to your question. No, money does not bring happiness. It bring... Money gives you an ability to make choices.

   8. LFLex Fridman1:15:52

      Does it get in the way, in any way, of forming those deep, meaningful relationships?

   9. RDRay Dalio1:16:00

      It can. There are lots of ways that it makes negative... That's one of them. It could stand in the way of that, yes. Okay? But I could almost list the ways (laughs) that it could stand... it could be a problem.

   10. LFLex Fridman1:16:12

       Yeah. What does it buy? So if you can elaborate, you mentioned f- uh, a bit of freedom.

   11. RDRay Dalio1:16:19

       At the most fundamental level, doesn't take a whole lot but it de- takes enough that, um, you can take care of your- yourself and your family to be able to learn, do the basics of... ha- have the relationships, have health care, the basics of those types of things, you know, you can cover the basics. And then to have maybe enough security, but maybe not too much security?

   12. LFLex Fridman1:16:52

       (laughs) That's right, yeah.

   13. RDRay Dalio1:16:53

       That y- that you, um, uh, uh, uh, essentially are okay. Okay? That is, that's really good.

   14. LFLex Fridman1:17:00

       Yeah.

   15. RDRay Dalio1:17:00

       And you don't... That's what a l- that's what money will get you.

   16. LFLex Fridman1:17:04

       And everything else is, uh... could go either way.

   17. RDRay Dalio1:17:06

       Well-

   18. LFLex Fridman1:17:06

       There's no correlation with-

   19. RDRay Dalio1:17:07

       No, there's more.

   20. LFLex Fridman1:17:07

       There's more.

   21. RDRay Dalio1:17:08

       Okay? Then beyond that, what it then starts to do... That's the most important thing.

   22. LFLex Fridman1:17:14

       Yes.

   23. RDRay Dalio1:17:15

       But beyond that, what it stents to, uh, wants to do is to help to make your dreams happen in various ways.

   24. LFLex Fridman1:17:22

       Mm-hmm.

   25. RDRay Dalio1:17:22

       Okay? So for example, now I th- I, uh, you know, like in my case, it's a... Those dreams might not be just my own dreams, they're, they're impact on others' dreams. Okay? So uh, um, my own dreams might be, um, I don't know, I can pass along these... at my stage in life, I could pass along these principles to you and I can give those things or I can, um, do whatever it... I, I can go on an adventure, I can, uh, start a business, I can do those other things, be produc- I can self-actualize-

   26. LFLex Fridman1:17:59

       Mm-hmm.

   27. RDRay Dalio1:18:00

       ... in ways that might be not possible otherwise.And so, that's, that's my own belief. And then in adu- and I can also help others. I mean, this is, you know, to the extent when you get older, and with time, and whatever very ... you start to feel connected, spiritual, spirituality, that's what I'm referring to. You can start to have an effect on others that's beneficial and so on. Gives you the ability. I could tell you that, um, pe- people who are very wealthy, who have that, uh, feel that they don't have enough money. Bill Gates-

   28. LFLex Fridman1:18:33

       Mm-hmm.

   29. RDRay Dalio1:18:33

       ... will feel almost broke because relative to the things he'd like to accomplish, uh, th- through the Gates Foundation and things like that, you know, oh, my God, he doesn't have enough money to accomplish the things he wishes for. But those things are not ... you know, they're not the most fundamental things. So, I think that people sometimes think money has value. Money doesn't have value. The money is, like you say, just a medium of exchange at a store, although-

   30. LFLex Fridman1:19:02

       (laughs)

Episode duration: 1:30:20