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The McAlvany Weekly Commentary
with David McAlvany and Kevin Orrick

May 1, 2019

“It’s not merely that the system is broken, but that you had better be organizing your life in such a way that these types of programs can fail and it’s of little consequence to you. Don’t merely bemoan another governmental boondoggle, get your butt in gear and organize your life to be sustainable without government or Washington, D.C. involvement.”

– David McAlvany

Kevin:Dave, we’re both getting back from road trips. It’s nice to have you back.

David:It’s good to be back. I was giving a speech up in Seattle, and I checked my phone after I was finished. It had been vibrating in my pocket the whole time. Somebody was sending me text messages. It was one of those moments.

Kevin:And you had forgotten to turn the buzz off.

David:Exactly, so it’s kind of blowing up in my front pocket, mildly distracting as I’m speaking. At first I see a picture of a fire engine in front of our house, and then I scroll back and I see, “Dad, if you got the earlier message about the house on fire, we’re okay, it didn’t burn down, but our pizzas were ruined.”

Kevin:(laughs) One of your kids?

David:That’s right, it was one of my kids who grabbed my wife’s phone and had been texting me while I was speaking. It was one of those things where sometimes you get the message, sometimes you don’t. Sometimes it’s a little too late. And in this case, it didn’t really matter.

Kevin:It reminds me, I was down in Austin when you were up in Seattle, and we were talking for a group of people who are very, very deliberate about their health. It was the Paleo conference. When people would walk by our booth or come to the talk, they would say, “Now, what is a financial company, especially a gold company, doing at a health conference?” I would just tell them, “We were invited here by the people who put the conference on because, really, health is simply energy management. There is a certain amount of energy that comes in, a certain amount of energy that goes out. And if you have more depletion than you have coming in, that’s called disease and death.” So we were trying to show them that gold captures the energy of a financial system. You were actually working on a different route. You were talking more information management at a home school conference.

David:That’s right. When we look at refinements, we look at improvements in our approach to life, it seems natural when you look at the world through a different lens and allow for a different thought process to be explored. We have both been at the conference in Austin, Paleo Effects.

Kevin:The last three years.

David:It has been challenging to learn and grow when other people ask a different set of questions. That was happening at this education conference I was at. You’re right, it’s information management, and Seattle this year was about educators, home educators, specifically, but the speakers came from far afield, some of them as far as Zambia, bringing a variety of ideas – old, new, methodology, the goals of education – and I found my very best conversations were with 8-year-olds, 10, 11, 12, 13-year-olds.

Kevin:That curiosity is still there.

David:Oh, it’s fantastic. I love it when a precocious young teen looks me straight in the eye, asks me a direct question about my presentation, and it’s a question that shows that they were not only listening but they grasped what I said, and are on the next level of engagement there in that mode of analysis and critique. This was a refining moment for me, a refining process, and frankly, a humbling experience.

Kevin:It’s one of the reasons these parents are home schooling. That curiosity can be ingrained early on. I don’t know that the public school system necessarily always attains that.

David:Sometimes it happens and you find parents that are very engaged in that sphere and the results can be very positive. But in this environment, I was humbled, I was encouraged, because I see in the sharp minds of these youths the creativity – the creativity to bring life, to bring innovation, to bring change, to bring a very constructive impact in all spheres, whether that is public policy or medicine, or farming, or what have you.

It was a reminder to me that when I tend toward cynicism and suspicion, and occasionally that happens, frankly, I’m spending too much time with adults and I’m not spending enough time with children. I guess one of the things it also did, reflecting on the weekend, it makes me appreciate more deeply what my parents are doing in Asia with a variety of orphanages and children’s homes. I can see how the energy and the curiosity are absolutely inspirational to them.

Kevin:Speaking of energy management, when energy is put into another human being and they know you care, there is a complete difference than just trying to sell a product or sell a new educational theory. These kids probably knew, and like with your parents at these orphanages, there is a tremendous amount of energy that is going into their lives.

David:There is a 13-year-old girl who comes to mind. She was adopted from China. She was fortunate to survive the one-child gauntlet and now navigates a new world, still with challenges related to a uniquely functional hand – she is missing a thumb and a few inches of – I forget if it is the radial or ulna. Which one is on the inside? Obviously, I didn’t study anatomy closely enough. The irony was that she was there holding me to task on a dozen topics and she was seamlessly flowing from one question to the next.

Kevin:This is 13 years old.

David:I’m under her phantom thumb until her curiosity is sated. Later in the conversation I asked her about what she loved and what she hated about her hand, and it sounded to me like she had the blood of Sun Tzu running through her veins because her response was, “The element of surprise.”

Kevin:Okay, now, that is not a victim mentality at all.


Kevin:You asked her what she loved or hated about that and she said, “The element of surprise.”

David:She said people too often stare at her hand and they discount the whole person on the basis of a functional limitation. She said she loves to win coming from out of the blue. I thought, “This – this is amazing.”

Kevin:One of the things that I think discourages people from getting involved with what you are talking about, the educational side, or orphanages, or in this case adoption, is that there are so many people who you can’t touch. And so the question is, what can you affect?

David:My dad has always responded to my “why” question – and it is actually a series of questions – “Why Asia? Why Asian Pacific Children’s Fund? Why did you and mom set that up? Why not retire in Rosemary Beach, Florida instead of the Philippines?” He would say, “Well, I’m not retired, thank you very much.” But his reference and his answer is always the same. You find the starfish stranded on the beach, and he would say, “You can’t save every child in the world, but like the starfish, the ones that you put back in the water – they sure do appreciate it.”

Kevin:That one at a time, that one at a time, and you have to figure that your steps are probably guided to the one that you should be affecting.

David:I spoke on topics at the conference mostly relating to the Legacybook related to family culture, organizational ethos, dealing with generational baggage, handling life’s unexpected disturbances and crises, the things that might take you off of your legacy objectives.

Kevin:And you were talking almost continually. We had one presentation down in Austin. You had, what, four or five?

David:Five presentations in two days, each of them an hour long, and then spending time at the booth talking to folks. It was very, very busy. It’s a good thing I’m an extrovert and enjoy processing things verbally. Kevin, when I was with you last time in Austin there were so many anecdotes of personal health crises. We were at the booth and talking to people mulling around. The personal crises that they described, they were not victims either, and rather than running away from pain, and away from uncertainty, we found people over and over again who were running through it. They were finding solutions. When the medical establishment was unable to help they took charge. This is one of the things I like about what Keith and Michele Norris have done there in Austin with the conference they organize, Paleo Effects. They have created a venue where the aspirational healthy, those who need or want health and wellness – they are taking personal responsibility for their well-being, for their welfare and the trajectory they are on. So there is this similarity, like the home educator, there is a difference in who is responsible for what, and there seems to be a greater pro-activity in moving toward a goal.

Kevin:You may recall, Dave, three years ago when you first were asked to speak for the Paleo conference. We saw all these people who had turned their lives around by turning their eating and their health habits around. Like you said, they had taken personal responsibility.

So that first year we were there looking at that. The second year we came, and I didn’t even waste time, as I met people I just said, “Tell me your testimony. Tell me your story.” Every person at that conference had a story. Some were still in the process of the story. Some would have been dead by the time we had turned around to the next conference had they not have changed their diet. So it is very inspiring.

David:Well, as you might suspect, when I am listening to a story and there are certain aspects of it that resonate either with my own life or something that I have discovered along the way, the details kind of get lodged in. In talking to a young man who comes from the financial markets and resource development, he and his wife, this couple from Canada, are bringing their kids into a family business and have allowed their kids to see the world that encompasses everything from the hard work of ranch management to what ordinarily only a private equity scion would understand, participating in resource development, royalty participation, growing businesses, selling them off for the parts and pieces of value. I was sitting there talking to his daughter, as well, but it is not every day that you meet an 18-year-old girl who is not graduating from high school, but she is graduating from a reputable U.S. university with a degree in economics.

Kevin:At 18 years old.

David:And is shortly to begin applying what she has learned, both at home and in the university setting, to the family business, which is so cool.

Kevin:It reminds me of little Crystal over at the Orphanage in India, Dave. She was home schooled and she already had her college degree, I think, by the age of 17 years old, and was working on advanced studies beyond that.

David:And I realize that this is not a method that applies to everybody. Not every family can do this.

Kevin:But it’s the curiosity that you are addressing, Dave. Always stay curious, always stay adaptable.

David:That’s right. When I think of our Commentary, when I think about what we do each week – we offer critique, we offer analysis, on the Weekly Commentary, but it is so important to bear in mind why we ask the questions we do. We are curious, but it is not curiosity as armchair critics, but it is as men that want more fully to lean into life. We want to discover value. We want to pursue truth in such a way that we find health and flourishing in all aspects of life, and our curiosity is not limited to economics and finance.

There are categories of human action that if regarded as a priority, and given time and attention, will yield flourishing in ways that money and financial resources could never touch. I would say everything is important. What we hope to do with the Commentary is cross-reference. There are lessons to be learned in one area of life that when cross-referenced with other areas of life provide an amazing real-time opportunity.

Kevin:Let’s go ahead and look at this from a physical to a mental, even to a spiritual passage, because really, the conference that I was at down in Austin, Dave, that you were not able to attend because you were doing the one up in Seattle this year, was all about health. Again, it was changing the diet. A lot of these people were Paleo. Paleo is just simply eating meats, and vegetables, and cutting out sugars and carbohydrates. There were others, though, who had used keto or other types of things. Whatever worked for them, they were very, very deliberate, but it was a physical change.

Now, you have done things over the last couple of years to work that direction. You’re coming up on the Alcatraz Triathlon. That’s the physical side. But the conference that you were at, you have the same kind of deliberate action, but it was more toward an educational bent.

David:So what we are continuing to talk about today is alignment of resources. You told me about a family that moved from New York to Wisconsin and was very deliberate about, in this case, mom, a radiologist, is leaving her profession in New York – you didn’t mention Manhattan, but I just had assumed so – and they leave that for more of a rural existence surrounded by trees, and it is a totally different lifestyle for a family that had hitherto been in the city. Again, they are asking questions and trying to align resources toward a certain end.

Kevin:And you tried to do that with the legacy book. When you wrote the legacy book, that was your goal.

David:The Intentional Legacywas written to encourage an alignment of all of our resources, when you’re looking at tangible resources, when you’re looking at intangible resources, bringing those in alignment toward particular legacy objectives. Your objectives might differ from mine.

Kevin:Yes, I’m not going to do the Alcatraz swim. Sorry. (laughs)

David:(laughs) But clarifying where you’re going and what choices enable the process to move along – that’s critical in the equation. There is an opportunity to unify heart, mind, body in ways that bring about health, that bring about transformation in our lives, but also in our relationships, and yes, maybe even in our finances.

Kevin:I talked to a man named Greg at the Paleo conference a couple of days ago, and I asked him, “Could you put in one sentence why you’re here?” Virtually everyone flew in for this conference. He said, “Gosh, that’s a good question. I’ve not had to put it into one sentence, but I guess if I had to do that, I would say, “Five years ago, I learned through reading a book by Mark Sisson that I needed to take responsibility for my own health, for my own life. I just boil it down to taking responsibility. That’s all.”

David:I guess for those who have listened to the Commentary for any length of time, you know there is a philosophical thread that is woven through everything that you and I talk about.


David:So we can talk about Medicare. We can talk about Medicare being insolvent by 2026.

Kevin:And be a victim of that.

David:And we can appreciate the implications of Social Security being insolvent just a few years later, 2035.

Kevin:That’s when you turn 60, Dave.

David:Thank you, that great reminder. It’s on the horizon. But the larger point is about human action, not system critique. What do you do in light of that?

Kevin:Yes, because you’re not going to change that.

David:That’s right. So what is next in terms of a series of choices you make to ensure that your personal system dependency doesn’t jeopardize your flourishing? Yes, I care about Social Security. Last year it cost 853 billion dollars. That didn’t include the disability benefits of another 147 billion.

Kevin:So that adds up to a trillion. That’s amazing.

David:And I care about Medicare. So we’ve got hospital outpatient drug benefit expenditures totaling 740 billion dollars this last year, 2018. The Associated Press reports that 45% of the federal budget, excluding interest payments on the national debt, go to these two things – Social Security and Medicare. What we are talking about is a template for analysis and a starting point for engagement and action. What do you do in light of this?

So whatever the dots that listeners should be connecting, it not merely that the system is broken, but that you had better be organizing your life in such a way that these types of programs can fail, and it is of little consequence to you. Don’t merely bemoan another governmental boondoggle. Get your butt in gear and organize your life to be sustainable without government or Washington, D.C. involvement.

Kevin:And the word that continues to come to mind is a deliberatelifestyle. I have watched your family, Dave, through the years, deliberately move forward on things that most people don’t even think about. And when you are deliberate, you are also pro-active. Most of our day, oftentimes, is in reaction mode to things. It’s like this young 13-year-old girl you were talking about – the element of surprise. You can either be pro-active and say, “I know I’m going to be surprised,” or you can be reactive and always be on the tail end of the next action.

David:I think one of the things that is difficult about being deliberate is that it is not a one-time deal. You’re constantly deliberating because things change. People change, people grow, and so there are necessary mid-course corrections. When you come up with a model, understand that life is going to break it. It’s just the way it is.

Kevin:And you do have to react, but you can be pro-active in that.

David:That’s right. I think the overlap in the two conferences we attended this past week is in the dispositions of the people who were attending. I recognize there are some personalities that are moving away. They are reactively stepping away from something. And there are other personalities that tend to be pro-actively moving toward something. I think my bent is probably more the latter, but whatever the case, there is a sequence which is similar – diagnosis, prescription, action, iteration – and then it gets repeated.

Look, you and I have different bodies. You said you’re not interested in the Alcatraz try, as much as I’ve tried to convince you (laughs).

Kevin:What is the water – 58 degrees? 57?

David:55-56 is what they are estimating. No two bodies are the same, and the prescription piece – that portion of that little diagnosis, prescription, action, iteration – becomes more personalized. We can imagine this because we can now see it. Biotech is showing us how we can customize a treatment for a unique DNA strand, so no two people are likely to want or to need exactly the same thing, whether that is personal healthcare or personal financial care or intentional educational choices. I think what is critical here is the level of engagement – that’s the critical thing – leading to that process of diagnosis, prescription, action, and iteration.

Kevin:Well, you’re not always going to stay in control, but you can ask the question. It is interesting, you said diagnosis, prescription, action, iteration, and then repeat. It actually can be boiled down even shorter. I have a fireman friend in L.A. and I asked him, “What happens when you get into a situation? You’re going into a new situation every single time you go to a fire or an accident.” He said, “I ask what’s happening, and then I ask, what needs to happen?” That’s it.

David:(laughs) That’s right!

Kevin:What’s happening? What needs to happen? Of course, he then does what needs to happen.

David:Okay, for those of you who don’t know William of Occam, you need to know William of Occam, because what you just applied was Occam’s Razor.

Kevin:Occam’s Razor.

David:You took something that was complex and you made it more simple, and that’s okay because we don’t need diagnosis, prescription, action, iteration, repeat. We need, what’s happening, and what needs to happen? We have a good friend, Patricia Bragg. I remember her talking to us one time about her father, Paul Bragg. You may know her because of Bragg’s Amino Acids, and she has various products.

Kevin:Yes, Apple Cider Vinegar that I drink every day.

David:That’s right. This family transformed the health and wellness landscape probably more than any other single family in the 20thcentury, when you consider all the people they influenced and educated. Paul met a very sickly teenager. He was speaking publicly, he was sort of a health crusader, if you will. His daughter, Patricia, is the same way. But he met this very sickly teenager, a 15-year-old boy, public speaking, engaged with him one-on-one afterward about what he wanted out of life, and what changes he would need to embrace – diet and exercise, those being really key elements.

This young man listened, and he put it into action. His name was Jack Lalanne. And he listened, he engaged the process, he educated himself, and then he educated others, and Lalanne became an exercise and health guru. Again, it was diagnosis, prescription, action, iteration, or more simply put, what is happening and what needs to happen?

Kevin:You said this earlier – you said some of your favorite conversations this last weekend were with young people – 10, 12, 14 years old.

David:Yes, legacy is about what you do with the resources you have, and you’re connecting the present moment to a very consequential future. My fourth presentation in Seattle was specifically for young people. They asked me to construct one that was almost like a pre-marriage financial consultation, specifically to lay out the options and the techniques of managing financial resources prior to marriage in such a way that during a career and family phase of life when you have so many different things going on, you’re already in motion toward long-term financial objectives.

Kevin:So setting up something when you’re 15, 16, 17 years old, before you get married.

David:That’s right. And it’s just thoughtfully engaging the process of what you are doing, and of course, really, it boils down to a fancy word for savings, which is capital. Without capital you don’t have the basis of capitalism and the ability to either start your own businesses or invest in a variety of investments. But when you are thinking of financial freedom, you have to start with the basic, which is capital.

So there are a range of prescription options, and I left it open for the unique strengths, or the idiosyncratic interests in the crowd to develop around these ideas, back to action, iteration, customizing an approach consistent with an individual’s resources and with an individual’s objectives.

Kevin:And it’s not always the same answer, the different diets of the people that I talked to this last weekend, it really is an individual type of thing. So when you ask the question, “What’s happening, and what needs to happen,” you also need to be adaptable to what is actually appropriate for you.

David:That’s right. When Jack Lalanne was following in Paul Bragg’s footsteps, it was real simple. It was avoid sugary foods, and avoid processed foods, and eat more vegetables. So a part of that was no meat. And sorry to say, for those vegetarians out there, I am 100% carnivore. I do eat vegetables, but the whole Paleo or Keto or whatever, that works very well for my body type. In terms of energy, I feel wonderful. So sorry, that doesn’t work for me, that Paul Bragg to Jack Lalanne move toward vegetarianism. But exercise? Yes. Rest? Yes. Quality, non-processed food? Yes.

Kevin:So it’s not a single rubber stamp – same thing.

David:That’s right. No one has a physical system that is exactly the same and I would say many of us are geared differently in terms of our emotional, psychological, intellectual, spiritual makeup, as well. There was theme that was developed in one of the presentations at this education conference that I was at. A gentleman from Zambia talked about eupraxia. Praxis comes from the Greek word that means action, so eupraxia is, with that beginning phrase, right action. What is the best possible action?

Kevin:What needs to happen.

David:And this was a conversation in the context of drawing on a model of education that inspired the opening of Harvard College in 1636. Mr. Harvard spent 1700 pounds and dedicated his whole library to creating Harvard College. That endowment there at Harvard, unimaginably, 38.3 billion dollar endowment, one of the wealthiest colleges in the world. If you want to go to Harvard, 4.04 is the average GPA, and the average SAT scores come in between 710 and 800 on the verbal and written, and 720 and 800 on the math.

So, no slouch to get in, but know that the basis of this university was creating a system that not only trained the mind well, but it was toward this issue of eupraxia – right action. You needed to see, not only right contemplation, but what are you going to do with it? So right action may be differently defined by particular objectives, your objectives being different than mine, but action is nevertheless required. Action, iteration. Iteration – what do I mean by that word? Iteration, doing something slightly differently a second or third or fourth time, underscores that some things you try, and sometimes you fail.

Kevin:It reminds me that your dad loved what Churchill said, and he would repeat it over and over and over. It’s the old, “Never, never, never, never, never, never, never give up.” Right? You never give up. You’re going to fail, but never give up.

David:Right. So failure is only a tragedy if you don’t learn from it, if you don’t iterate, if you don’t try again with what you just learned.

Kevin:There you go.

David:So I have to be quite frank. I am intolerant. I’m particularly intolerant of quitters. To end action and to accept failure and a complex that comes with it, whether it is despondency or victimization – you know what? I think these are people who are perfectly suited for the nanny state. I think they are the people who are best suited for the system taking care of them because they have forgotten that they actually have to pick themselves up by their own bootstraps and take care of themselves.

Kevin:And this is really a political theme right now that is coming into this next election.

David:But I tell you, by contrast, I am particularly inspired by people that are engaged, that move toward the pain, that learn to be okay with imperfection, and even with failure, in the process of trial and error.

Kevin:Well, just look at the company that your father started back in 1972. How much has this company changed through the years? We have been consistent with the gold and the silver, but that’s the only thing we’ve been consistent with.

David:I think in our company’s 47-year history, the markets and the climate have radically shifted at least four times.

Kevin:Yes, at least.

David:So had we not paid attention to the systemic changes, the environmental changes around us, had we not been willing to adapt, I don’t think we would still be here. There is no guarantee that we see another 47 years, but had we not been engaged, and I think we still are, had we not diagnosed, prescribed, acted and iterated through those decades, we would have been toast. Too often we conceive of something in an idealized fashion and we press forward without paying attention to the environmental changes, whether it is the market changes or the personal changes that occur through time. I understand that change is hard, it can be uncomfortable, but it is necessary. Whether it is an organization like the family or an organization like a business, or you, as a person, as a singular organism, a living organism is constantly changing.

Kevin:And that is also looking through the front windshield instead of the rear view mirror. If you think about many of the things that we have been doing, Dave, over this last ten years during the time that central banks have been flooding the markets with liquidity and keeping interest rates unnaturally low, many of the mechanisms that you have set up for the company are really for the next major downturn. We’ve had them over and over and over. But so many people right now are thinking, “No, this time is different. Things are just going to continue the way they have been.”

David:Yes, I think it is important what you said earlier because this applies, the whole what is happening, and what needs to happen? We’re asking the question and our curiosity is not just bent on sitting back in an armchair, smoking a pipe, and kind of contemplating our navels. This is not just an intellectual project. It is driving toward action. What is happening, and what needs to happen? It makes me think of our investment community today. They love to extrapolate the period that we are in today and we are just finishing, sort of the rear view mirror, as you say, and make it seem as if that determines a near-certain future. Because it has worked up to this point, it will work forever, so it is believed.

Kevin:But is it all purchased with something that cannot be sustained, which is future debt. It is the future earnings. Debt has to be paid.

David:This goes back to our question earlier of what is this all about? Whether it is health or education.

Kevin:It’s energy management.

David:Energy management, information management. You look at these two things in a similar way. And our financial system, the financial markets, are on borrowed time. Just like our social and health safety nets are on borrowed time. We know where the clock runs out on some of these systems, but those who are locked into the system can’t imagine the implications of unsustainability, in large part because they don’t want to. But when you look at the financial markets and see central banks straining to maintain the status quo, putting in a massive fight and committing massive resources, energy and information, to maintain the status quo, like pushing a stone up an ever-steepening incline. What’s next is very different than what has been.

Kevin:And being around these very healthy people at this conference who were not really healthy people before they changed, the only difference between the person who is still dying of a disease that they could take responsibility for, and the person who has done something about it, oftentimes is just a simple action, like giving up processed sugar. In this particular case with the financial cycle side of things, giving up living in debt.

David:I think there are many listeners who come onto our program and others, and they are kind of information junkies. They love to collect data and it feels good to have an insight into what is happening. It is sometimes easy to fall into the trap of being very educated, but not being very motivated. In other words, you get all the answers, but you don’t do anything with them, and I think that is a bit of a trap.

We are grateful today that we haven’t had to deal with the ramifications and consequences of a system which is under pressure and under strain. We’re on borrowed time. But we haven’t had to deal with the ramifications and consequences prior to this. It is like the sugar-holic, it’s like the junk food addict. There are no questions being asked today of sustainability. It is not worth entertaining them as long as you have the rush of blood to the head. It keeps you feeling fine as long as the system is still functional.

Kevin:Dave, two weeks ago – I don’t think I mentioned this on the Commentary before – I had an amazing experience. I was with a friend and I literally choked. I was eating soup and a piece of hominy went down my windpipe.

David:You almost died!

Kevin:I almost died. And this time I knew I probably would had he not have been there. He performed the Heimlich maneuver on me. But I’ll tell you, it’s amazing how clear things are when you have a minute, maybe a minute-and-a-half to live. The clarity of crisis – oftentimes everything else falls away and you understand what is important.

David:Right. Crisis is one of those things that clarifies things for us, whether it is a health crisis, a financial crisis of either a personal nature or systemic, relational crisis. Post-mortems tell you what you needed to know and what actions you might have taken.

Kevin:Wouldn’t you have loved to read the post-mortem before the financial crisis in 2008?

David:That’s right. So crisis is not bad, it simply signals that certain elements in the system that are long-term nonfunctional need to be addressed. If they go unaddressed, the post-mortem may be all that future generations have to go on. That may be the post-mortem – how did he die? – that may be all they have to learn from.

Kevin:Well, I’m glad I’m breathing, and it was really an amazing experience, to be honest with you. Looking back, I wasn’t nearly as panicked as I probably should have been (laughed). I just heard a man speak this morning, Dave, who has been either a professional or a college coach of football all of his life. He shared something that really made me think of adaptability. He said, “When I started coaching, one of the other coaches told me, ‘You’ve either been fired, or you will be. If you want to go into this career, you’ve either been fired, or you will be.’” And he had been fired many, many, many times, and he was asked at the end of the talk, “Who is the best coach alive?” And he said, “Well, I would have to say right now, Bill Belichick.” And then he said, “Bill has been fired.” (laughs)

David:(laughs) Well, adaptability is one of those things you learn in the process of being fired, but you can choose it long before you get fired, too. I think this is one of those things, just to go back to what you said, you had about minute. You could adapt to that if you wanted to. If you wanted to learn to train yourself to hold your breath for three minutes, three-and-a-half minutes – my little brother sent me an email yesterday. He said, “Dave, two weeks from now I’ve got my test. It will be the 35-meter test, but I need to pass the three-and-a-half minute mark, which I’m comfortably at now. So far, I’ve only gone 22 meters, 35 is the next destination.

Kevin:I appreciate that, but I will tell you, when you choke on food, you haven’t had the time to actually take a deep breath to start with.

David:Very true, that’s fair.

Kevin:So unfair comparison.

David:No, but we do fight like we train, and the fact of the matter is, you kept a very clear mind, and you followed your protocols. You don’t know this, maybe you haven’t thought about this, but the fact that you are a pilot, and you know that when something goes wrong there is a series of things that you need to do

Kevin:Right. You cannot panic.

David:And you automatically stepped into the three or four things – can you clear it on your own? That’s not going to work. Do I have somebody to help me? In a very calm and composed way, you put your hand on your friend’s shoulder, indicated that you needed help. It was what it needed to be.

Kevin:And it saved my life. Yes, it really saved my life. But another thing about this college coach who had been fired many times, he was humble. It’s very hard to be humble sometimes when you’re in a sport where you’re continually getting the guys to win the game, but he was humble and adaptable. He always stayed curious. What’s the new system? These coaches – when you watch football you start to realize, a coaching style only works so long before you have to change the style. You’ll have a West Coast offense work for a while, or various types of things will work for a while until the defense figures out a way to counter them.

David:One of the things that I mention in the book, one of the points on disturbance or crisis, is that crisis is preparation for the next crisis. I think the better way of embracing crisis is not only learning from it, but it’s the way of curiosity, the way of humility, what you’re describing. Explore the suboptimal in the systems you are engaged with and figure out what you – what you – can improve. Change isn’t easy because, frankly, departing from the security of the known and going into the unknown, is psychologically where we tend to set up our resistance. But when a system is gradually failing and signals are there, you can choose to take note and correct, or you can go on to the point even of existential crisis.

Kevin:We were talking about setting things in place for the next crisis here at the company. The only reason we can do that is because we have seen crash after crash after crash. I can start remembering my first year here, 1987, the stock market was hitting all-time highs. Then it crashed. Everyone before that happened thought that things were going to continue forever. Your dad didn’t, but everybody else did. Then we had the crash in 2000. Then 2008. So there is a predictability of unsustainability.

David:The comments that we discussed a few weeks ago with Minneapolis Fed President, Kotcherlakota. The amazing aspect of Fed intervention in the markets here before – before – there is any indication of recession present. The system is under sufficient pressure that that is now an understandable conversation for our central bankers to be having. So think about what our guest Richard Duncan has said. You don’t want to find out what the consequences are of the liquidity and credit excess in this particular cycle, because in his mind, it is beyond Thunderdome, if you remember Mad Max.

Kevin:He would almost recommend just throw money at it as long as you can because this is going to be horrible (laughs).

David:Right. For many of our listeners, and for us, as well, it sounds like sort of a philosophical compromise, just go MMT on everybody because you’re afraid of the consequences of a market come-uppance.


David:But you can see in the Fed’s pro-activity that they want to keep going what is ultimately unsustainable. I am 44. My 40thbirthday inspired me to take more time and pay more attention to stress management and heart health. So four years ago I went to a heart specialist, the best university research hospital in the country, and he gave me the same advice as Kotcherlakota (laughs). I don’t have any heart issues, and statistically I’m in a pretty good place, but the doc said statin drugs would improve the odds of maintaining the status quo.

Kevin:So a little like a Fed guy is going to say, “Let’s just go ahead and throw money at it, it seems to work for everybody.”

David:Maybe we lower rates and just help it a little bit here so we never discover what is statistically a low probability but could happen.

Kevin:So you don’t have a heart problem right now, but let’s throw a statin at it anyway.

David:Well, he didn’t know that I had done a blood panel with a research clinic in Berkeley, California which showed my blood type doesn’t respond to the statins. For me it doesn’t work anyway. I don’t have the issue, number one. Number two, it doesn’t help me, even if I was taking it. So the doc moves on to the next patient, the nurse is there kind of going through diagnosis, prescription, and I mention this blood panel and the ineffectiveness of statins in my case. She persists. The science was clear. Everyone would be helped by statins.

Kevin:So shut up and take them.

David:So here’s the rub. The system is not a system. It’s individuals, and unique cases, which each need to be treated as such. And it goes without saying that I chose very different prescription. I listened to her, I heard the diagnosis (laughs). Why would I take the drug? I don’t need to. Perhaps in time that will reflect folly. I get that. There may be a price to be paid, but choices that we make do matter, and I made my choices. I chose this particular path and I’ll own the consequences.

Actions we take set us on a particular course, and I’m comfortable being wrong. And if I need to iterate, I can. I can move toward being more right over time. But what we have is a medical system that homogenizes case studies and then universalizes prescriptions. And it gives me the sense that I’m better off staying curious and doing some extra homework myself. We can be aggregated into the system but let us not forget, we are each unique agents.

Kevin:One of the things that really struck me when I was talking to this man, Greg, whose life had changed over the five years. He said he probably would have been dead. He was on the wrong road until he changed his life. But I asked him, “Could you reduce this down to a single sentence?” And he did. He said, “I took responsibility.” I think we need to ask each listener to do the same thing, Dave, because it is individual, there is not a rubber stamp that you can just say is the right approach. But oftentimes we live our busy lives without actually reducing into a single sentence what is important, what is the priority, what is the effect that we would like to have?

David:Yes, if I boiled down the idea of legacy, it is that all the little choices you make matter. They reflect who you are. They reflect your value set. Our individual legacies will reflect the choices that we have made, and some people are going to default to choices that others have made for them, whether that is the state, or the doctor, or the financial markets, your stock broker who says, “Look, just stick with it for the long haul.”

This could be described as circumstantial determinism, where somebody just says, “You know, it is what it is, I’m just kind of going with the flow.” Others will own the choices in a more hands-on fashion and engage the process of growth and trajectory setting in the first person.

Kevin:This applies to a number of things. This is health, this is finance, this is education – you name it.

David:That’s right. Whether it is finance, educational philosophy, health, intellectual growth, engaging with curiosity, leaning into our potential seems to be the better choice. That is why I enjoy the Austin conference, and this year the Seattle conference, so much.

Just a final word, perhaps, of encouragement to you as a Commentary listener. You’re similar in this way. You wouldn’t be engaged with our podcast if you weren’t searching, if you weren’t iterating, if you weren’t making mid-course adjustments.

Kevin:What’s happening? What needs to happen?

David:As and when necessary. And I respect you for that. I experience, frankly, a lot of hope, a great deal of hope, that the system is only mismanaged from the top down. Our solutions, our iterations, our improvements, stemming from personal commitments to change, to growth, to maturity, ultimately benefit the system as we share what we have learned, and serve those around us in their process of growth and maturity.

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