What coronavirus means for the global economy | Ray Dalio

Transcriber: Ivana Korom Reviewer: Krystian Aparta

Corey Hajim: Are you there? Ray Dalio: Hi.

CH: Thank you so much for being here, Ray.

RD: Do you see me? CH: I see you.

You look great.

Thank you so much for being here, we really appreciate it.

RD: My pleasure.

CH: OK, so lay it on us, Ray,

how bad is it, how worried should we be?

RD: Well, I think you could look at this like a tsunami that's hit --

the virus itself and the social distancing.

And then what are the consequences in terms of the wreckage,

when you look at it?

And I think you have to think of that as incomes and balance sheets,

you know?

So it was a tremendous income hit.

And then the balance sheets losses.

And who has what savings and so on.

And then how is that dealt with.

In order to understand that,

you have to realize that there are these holes.

These holes in income,

and the holes in the balance sheets.

And then you have to realize

that there is the production of money and credit.

And who produces that money and credit.

OK, the money and credit comes in different flavors.

There is US dollar money and credit.

There is Euro-dollar money and credit.

And so when you look at the world,

and you're seeing it,

you're seeing a situation that is the same

as existed, really, in the 1930 to '45 period,

in that now we're seeing the production of a lot of debt,

a lot of borrowing by the government.

We're seeing zero interest rates

and not the traditional kind of monetary policy.

But the producing of a lot of money and credit --

so the Federal Reserve is buying the Treasury's debt.

And the Treasury is getting that money to, mostly, Americans,

in some imperfect but remarkably large way.

And the Europeans are doing the same

in their way.

That bank is a smaller bank,

because the world lives with about 70 percent dollars,

and only a small percent euro,

and they will produce theirs for theirs,

and there aren't many banks around the world.

And so the rest of the world

is going to have gaps, holes that won't be filled.

So if you think about that and you say,

"American printing of money and the borrowing

will leave us with a lot of debt and monetization,"

that's something interesting to talk about,

and we need to talk about that.

Who will pay these bills,

and how will that be shared,

will be something we need to talk about.

But you will know that you will get that money.

And the Europeans will get their versions of that money.

But we are in a new world.

And that world is most similar to the 1930-45 world,

and a lot of the world will not get that money in credit.

So there will be a big differentiation

as to which entities benefit and which entities don't.

And there will be a big collaboration as to how we will deal with that bill

and who will end up with what.

A big question of wealth distribution,

and all of that.

So that's the big thing that's going to be happening.

CH: How confident are you that some of that collaboration

can happen right now?

RD: We're now at one of those defining moments

that I've seen repeatedly.

The 1930-45 period, if you go back in history,

there's nothing new to this.

And it's a defining moment

in terms of how people are with each other.

So when you look at it,

will people come together

or, when it comes down to it, really,

will there be a taking care of oneself

and what does that define, and how will that go?

That will be, I think, a defining moment.

So I look at these histories.

If I can take a minute,

I'd like to just paint a template for you

that takes us, you know, over the last thousand years,

the things that have happened over and over again.

There was one pattern that I'd like to convey.

May I take a moment and do that?

CH: Absolutely.

RD: There are four things that are the driving forces

of our economy and our lifestyle and wealth.

And the first and most powerful is productivity,

which comes from people learning and inventing

and doing things well, just as Marko [Russiver] described.

OK?

And it grows slowly.

You know, one or two or three percent a year.

It grows slowly,

and it's not volatile, because knowledge isn't volatile.

But it grows,

and that raises our living standards over a period of time.

Then there's the short-term debt cycle.

The short-term debt cycle is, you know, recessions and expansions

and booms and recessions -- that.

They last about eight, ten years.

And then there's a long-term debt cycle.

And that long-term debt cycle,

which goes on about once every 50 to 75 years,

is when you begin a new type of money and a new type of credit.

That began in 1945.

The new world order at the end of World War II,

and with the Bretton Woods monetary system,

created a new monetary system in 1945, a new money.

So they wiped out, pretty much, the old money,

or they largely disposed of it,

and they began anew.

And that's the new world order,

which was the American world order,

and we have seen it,

and still, 70 percent of the money and credit that exists in the economy

is running by dollars,

and what you have, traditionally, is the breakdown.

And then the fourth influence is politics.

And politics is largely how we deal with each other.

And there's internal politics, and there's external politics.

The internal politics is, how do you deal with the wealth gap?

How do you deal with the values gap?

Do you have a common mission?

Do we have an American dream that we can agree on

and that we're pursuing that together,

or do you fight over wealth, and so on.

And so when you look at history,

that's what revolutions are in their various ways.

And there's always a revolution in one of these.

Sometimes those are peaceful revolutions

and sometimes they are disruptive.

But it's a wealth shift that needs to take place.

Roosevelt shifted policies and changed taxes and so on in that way.

And then in other countries,

there was the turning over democracy.

Hitler came to power because of that gap.

So how people deal with each other internally.

There's also external politics,

so that politics means between countries.

And you have a situation when there's a rising power

challenging existing power.

There is competition, and there is a risk of war.

And so how they deal with each other.

Whether there's a greater good,

or whether they are fighting with each other

is the defining moment.

There are always stress tests,

these big stress tests that come along once every 75 years.

And when they happen --

And this is a stress test.

And I think that what you're going to see is how we deal with each other.

There's enough wealth to go around.

But what do you do when you're outside the ring of support?

Let's say of the US dollar.

And what is that going to be like for those entities?

Or if you're within the ring of support, how will that bill be divided?

And how will we be with each other?

I think we're going to have to reconsider

who has what,

what is it about education, and so on.

So that's what we're in, I think.

CH: And I want to get to --

because you've written extensively about how capitalism needs to change,

and some of the things

that we should be thinking about and doing,

and I want to definitely get to that a little bit later on,

but I am curious right now, just from a practical level,

do you think that we're headed into a global depression?

RD: Yes, but I want to be careful about what I use -- the word.

CH: Absolutely.

RD: To be technical.

The word is an evocative word.

And it can be scary and so on.

So what do you mean by a "depression," OK?

Something like happened in the 1930s,

so just to repeat:

1929 to 1932, there was a fall in the economy.

And double-digit unemployment rates.

And a magnitude of fall in the economy, like, about 10 percent.

Do I think we're in that?

Yes.

How was that dealt with, 1933?

What they did is they printed a lot of money.

And the government came out with the same type of programs

that we're having now.

Yes, OK, same thing.

Interest rates hit zero.

Same thing, OK, same dynamics.

And then, there is --

That money causes an expansion from that point.

How long does it take for the stock market

to exceed its highs?

Or how long does it take for the economy to exceed its former highs?

A long time.

OK.

Do I think that's what we're in?

Yes, that's what we're in.

We've seen that happen repeatedly in history.

Saw it many, many times; it's just the most recent one.

And there's a structure to that.

So yes, this is not a recession.

This is a breakdown,

an operation that I'm just describing in terms of how it's dealt with,

the production of money and credit and all of that.

That's what we're in.

CH: And so you've talked about,

there are sort of four levers to recovery after a depression:

cutting spending, also known as austerity;

debt restructuring, or forgiveness;

redistribution of wealth through taxes, potentially;

and printing of money,

some of these things you've mentioned.

Will those things get us out of this situation,

since, as you feel, it's happened before?

But how would you think about balancing these tools right now?

RD: Yeah, those are the tools since eternity, basically,

since recorded history.

Those are the ones that operated,

and I think what you're going to see is a combination you're seeing,

of printing money and redistribution.

And I think it will last ...

These things happen pretty quickly,

they last maybe a couple or three years in terms of that process.

And then you have a rebuilding.

And they're dealt with with creativity.

The greatest force, through time,

is inventiveness, human inventiveness,

adaptability.

So you're going to see these restructurings happen,

and you're going to see the kind of inventiveness

that you just saw from Marko, OK?

And it's the power of that adaptation that is the greatest power.

I did a study,

which is on LinkedIn if anyone wants to see it,

and it goes back 500 years.

And it shows real GDP.

In other words,

the economic activity going back there.

And there's a line.

And you don't see these depressions, as we're calling them,

even on that line that barely wiggles.

When you go into it and you look at that piece,

that's what it looks like.

GDP falls 10 percent, unemployment goes up,

and it passes.

And because the greatest force is the force of adaptation

and inventiveness,

if we can operate well together.

So that's what I think it's going to look like

over this period of time.

It will pass,

the world will be very different,

there will be a new world order,

but it will pass,

and we'll be inventive,

because what we're dealing with now is just money and credit.

Money and credit is just digital.

I mean, there's no --

There is real good services, you know, those are real.

But everything else is just accounting.

And so when you change the digits,

and you work those things out,

and you work yourself through,

that takes, you know, a couple of years at most, kind of.

And then you come back into a restructured environment.

And it could be said that it is really healthy in many ways.

Because it is a stress test.

Because if you look at history, people have gotten --

sometimes they get weaker,

or they're not prepared in many ways.

Weaker in terms of,

maybe they don't build enough savings and they operate that,

or maybe they emphasize luxuries over necessities.

It's a reorienting type of experience

that, in many ways, makes us healthy.

Even appreciating the basics of life.

Chris Anderson: Ray, just popping in here

with a couple of questions from our online audience.

I mean, the main question early on

was just, how difficult do you think the days ahead are for the economy.

And you've answered that very vigorously.

Like, using that word, "depression,"

that's a very strong word.

Tell me if I have this right --

it feels to me like what you just said there

is stronger than most people in the market seem to believe.

The market is behaving as if,

you know, we've had the bad news,

and it sort of, kind of wants to come back

and a lot of people seem to think that within, I don't know, a year,

we'll kind of be back where we are.

You're saying, no, it's going to take longer.

Does that imply that there is basically

sort of some systemic shots that the market hasn't yet fully seen,

perhaps to do with the inability of some players to handle

the extreme levels of debt that are piling up right now,

as people can't work?

RD: Yeah, I can't speak for what everybody's thinking out there,

you know, the markets are off,

depending on what market and depending on what country you're in,

you know, something in the vicinity of 25 to 45 or 50 percent,

depending what currency you're managing.

And so if you're talking about emerging markets,

they're worse,

because they're not going to get as much, and so on.

I can describe what I see, OK?

We see something like 20 trillion dollars of losses.

OK, we see --

If you work that through, and you say you don't have money,

and you don't have credit,

your business can fail.

You know this, we see this all around us.

So there can be failures when there can't be payments.

And so the question is, who gets what check

to make those payments and get past it,

but we're going to have a giant restructuring of the IOUs

and we're going to work out.

When hospitals can go broke --

because this is terribly costly for hospitals,

and they will not fully recover their losses,

hospitals will go broke,

even though we know that they need them.

So you have to go entity by entity

through this.

And then you'll go through the process of who will pay.

So this is not --

You know, some people mistake this as --

There is a virus, and the virus may come and go, OK?

Maybe we never see it again.

I don't think that's likely,

but people tell me, but who knows.

But if it never came back again,

there will be those who are broke and who will have loss of income.

We're going to change how we operate, in a way.

The supply lines are going to change.

In other words, self-sufficiency.

What is self-sufficiency now going to mean?

Do we have enough of this and that?

We're going to restructure our economy.

And restructure the financial system

in ways that mean

we are not going to go back to the way it was.

CA: So do you see systemic threats to the financial industry

as great or greater than happened in 2008?

RD: Yeah, this is bigger than what happened in 2008.

I'll distinguish it.

In 2008, we had banks.

It's the same thing, meaning,

you have a certain amount of leverage,

things go down,

too much leverage means you're broke, in accounting terms.

So then you look around and you say,

who are the systemically important entities that you don't want to go broke?

Because, do you want to lose those banks at this time?

And then you can make up money and make up credit

and you can keep them alive in some way,

and you did it with banks,

and through the banks, there were the mortgages,

and that's what it looked like.

This is more complex than that,

because there are the banks,

and then there are those, all of those that are beyond banks.

All the little businesses,

all of those in all the different places that are beyond it.

And it's a bigger crisis.

And we have a less effective monetary policy,

because interest rates declines have reached their limit.

And just buying financial assets by the central bank

and buying the normal financial assets won't work.

They have to buy the debt of the government

and the government, or the many governments,

have to be effective in getting buying power and production

to those who need it around the world.

CA: I have one last question,

and then I'll be back at the end of the hour, Corey,

and it's back to you.

So, given how bleak that is,

people are asking, what kinds of industries, organizations, companies

have the best prospects of thriving, going forward?

RD: Well, you see, that's the beauty of it.

There are two types, basically.

There are those that are stable, meat-and-potatoes,

not-leverage kind of companies,

you know, the Campbell soup equivalent,

you know, everybody's going to use them all the time, kind of thing.

And then, there are the innovators.

The innovators like, we're talking about Marko.

You had Marko on before.

And that new innovation,

those who can adapt well and innovate well,

and don't have balance sheet problems,

in other words, they have strong balance sheets

so they're going to be able to play the game without having that.

They will be great winners.

And so there's always new inventions,

new creativity,

that is the new adaptation

that becomes a company and an entrepreneur.

And they're going to do great,

plus the stuff that we're always going to need.

Those are the things that are going to do great.

CA: Thank you, Ray.

Corey.

CH: Thank you, Chris.

So I guess I'd like to stay with the market for a minute.

Obviously, it's something that interests so many people.

The state of the market doesn't always correlate

with what's going on in the economy.

And the market and its players have changed so much

over the past, you know, 70 years or so,

70, 90 years.

So many more algorithms, and machines and passive investing.

And how do you think that affects how the market is behaving right now,

how it's going to recover over the next, you know, few years,

as the economy recovers?

RD: The basic fundamentals

of money credit crisis,

who has what income,

who has what expenses,

who has what balance sheet,

and how do we deal with money and credit --

those things, which people often lose sight of,

because they happen only once in one's lifetime.

This period, you have to go back to the 1930s as the last period.

Those fundamentals of what a bank is,

and the associated process,

have existed all through time.

Then it's, like, technology changes.

Technology evolves.

And so the capacity to take one's thinking and to put them in algorithms --

we've been doing this for 25 years.

The way we operate is to take a principle,

"How would I deal with that situation,"

and write it down, put it into an algorithm,

and then, because the capacity to think has been radically enhanced,

because the human mind has a capacity problem.

It's unique in inventing.

But it can only process so much in so [much] time.

So when worked in partnership with the computer,

which has the capacity to take that thinking

and replicate it and do all of that leverage thinking,

and thinking in advanced way,

that is the advancement of our time.

And so you're seeing that.

So when you think algorithmic,

you know, you've got to break it down as to what it is.

Is it sensible cause-effect relationships that are being dealt with?

It all comes back to "Do you have understanding,

and are you successfully betting on a cause-effect relationship?"

Because that's the only way you're going to make money.

But the computer can do it, process that thing,

in a much more advanced way.

So that's what's going on.

There will be people

who will make the mistake of just applying machine learning

to the markets.

And that generally won't work because of certain things.

I guess I should explain, because you asked, so ...

On algorithmic decision-making,

there are two ways you can get your algorithm.

You can specify the instruction to the computer and have it follow that

and that will enable your thinking.

Or you can have the algorithm come from putting a lot of data

into the computer,

and asking, "Computer, what would you do, and what's your algorithm?"

The key difference between those

is do you have understanding of the cause-effect relationships?

You must have understanding of the cause-effect relationships

to know what to believe in.

Because you can't always get that in your sample size.

For example, what's happening now,

you could not have run your computer

and have it in your sample size,

because you would have to go back to the 1930s

to have an analogous period.

So what you --

It is how you do that,

but the capacity to learn, to invent,

and to get, you know, that leverage in decision-making,

is greater than ever before.

And that's the power of our time.

Some will do it well, some will do it poorly,

but it really comes down to do you have the understanding

of those cause-effect relationships,

so that you know how to place the right bet.

CH: But that's very different from the passive investment market,

which is such a huge part of it now,

and that's where most people,

you know, the average person has their money.

And I know that everything is changing day-to-day,

but I also know that everyone is going to have this question

on their minds.

So I'm going to ask you --

I'm not going to ask for specific investment advice,

but everyone's thinking about their 401(k)s.

Do you have any general thoughts

about how people should approach this time period with that kind of money?

RD: Yeah.

First of all ...

an investor must understand

that they probably will not be able to play the game well.

They probably will not be able to decide how to move in

and out of things.

In order to be successful in the markets,

it is more difficult than getting a gold medal in the Olympics.

You wouldn't think about competing in the Olympics,

but everybody thinks they can compete in the markets.

But there's more money competing.

It's like a zero-sum game

and there's more money doing it,

and the worst thing you could do

is think you can time all of these movements.

I guarantee you, the game is a tough game.

We put hundreds of millions of dollars into the game every year.

And it's tough.

So what the individual investor needs to do

is know how to diversify well.

So the word that I would --

Know how to diversify well and in a balanced way.

The greatest mistake of all investors

is to think that what has done well lately

is a better investment,

rather than more expensive.

And what has done worse lately is the worst investment,

"get me out of it,"

rather than "it's cheap."

And unless you know how to deal with the differences of those,

which most people don't,

they're going to be in trouble.

So understand that wealth,

total amount of wealth in the world,

essentially doesn't change very much, OK?

And that one thing goes up, another thing goes down.

And to know how to diversify.

To diversify it in asset classes,

to diversify it in countries.

To diversify it in currencies.

To know how to diversify that well,

so that you have wealth diversification, is important.

Do not think that cash is a safe investment.

Most people think, "Look, I just want safety.

And those bonds aren't giving me an interest rate," and so on,

"So where do I get safe?"

Cash is a seductive investment,

because it doesn't have as much volatility.

But it taxes you and your buying power about two percent a year.

And so cash is almost always the worst investment.

So you have to think about that.

You should think a little bit unconventionally.

Do you have a little bit of gold?

Do you have a little bit of,

in case this monetary system breaks down and money is redefined,

do you have a little bit of that?

I can't get into all the different ways that one can diversify well.

I try to convey those things in my books,

or posts on LinkedIn, particularly.

But I would say, diversify well,

be humble, don't market time

and be conscious of the dangers of cash.

CH: Right, that's great advice.

I want to ask one more, sort of, big-picture question

before we start getting into how we should fix capitalism.

We can talk about that in a minute,

tackle that one.

But I have been reading your series on LinkedIn,

"The Changing World Order."

It's really fascinating.

I'm curious what you think about,

there's been, sort of, this retreat from globalization

as something we should all get behind,

and I'm curious what you think about that in terms of our recovery.

This seems like something

that is going to require a coordinated effort,

you know, financially, spiritually,

in so many different ways.

If we retreat from globalization right now,

does that make everything harder going forward?

RD: If we retreat from globalization,

which we certainly will do,

it will certainly make things very hard.

And so we get down to comparing idealism

with reality.

So when you say globalization, will that --

who will write what checks to people in countries

that will be outside of their domain?

And there are large numbers of those people.

You know, my wife and I are trying to help people in Connecticut.

And you know, I can rattle off all that is, what a job that is,

and so on.

And so, when you have congresses and presidents

and they start to say, who will we help,

and how will that be,

and what will that mean,

it gets down to real practical questions.

And the reality is,

a lot of those people won't be helped.

And then you'll deal with,

how will they behave for each other?

One country's vulnerabilities, another country's opportunities.

In such times, this is the case, because --

You know, Graham Allison

wrote a book about the Thucydides trap,

and he reminds us,

over the last 500 years,

there have been 16 countries

in which there's been a rivalry of an empire challenging another.

In 12 of those cases, there have been wars.

Because, at the end of the day, there's not even a global legal system.

Power is what is the currency of that.

So when you get into how do you resolve the dispute

as to who gets what,

that becomes a very complicated question.

So I'm a globalist.

Meaning, I have a dream and a wish

that the best of the best can operate together

and work together for that common good and so on.

But it's dying,

because we're in an interconnected, fragmented world.

The fragmentation of this,

"Can I depend on somebody else to give me something I need?"

Or "Can I depend on them not taking advantage of me?"

No, you can't make those dependencies anymore.

And that exists within countries as well as between countries.

CH: Yeah, I mean, it seems like, you talk about productivity

and the importance of productivity for us all to have a better life,

and it just seems like on a global level,

the same should hold true.

If we're all focused on being more productive together,

and in that interconnected way,

we'll all do better,

as opposed to, kind of, hoarding one asset

or one set of resources.

RD: You're certainly true.

That has always been true, but never more true than today.

And at the same time,

read history.

And understand the mechanics

and the issues and the challenges of this.

This separation began before we had

this isolation of the United States relative to the rest of the world.

This deglobalization

began before we had this that fosters more of it, right?

And it happened for reasons, OK?

So don't overlook those reasons,

and don't overlook the reading of history,

just because we wish it can happen.

If you want to wish it happens,

everything is all dependent

on the behavior of those

who have their hands on the levers of power.

I would tell you, like, for example, right now --

I've been going to China for a long time,

and the Chinese, in many ways, are helping,

in many ways, things that are needed in this crisis and all that.

To even say that

is a politically challenging thing, OK?

Because we're in a world that is so fragmented

that even to publicly say "thank you,"

and "thank you" to many people and many companies --

It's almost dangerous to say "thank you" to those who are helping,

because we're now in an environment in which there are enemies.

And who is evil?

And do you fall into that category?

And so, the history of these

is there's demonizations of different people.

OK?

Now you must see it around you.

It exists.

And so how we come out of this will be how we behave with each other.

CH: Yeah.

That's such an important point,

and I think all of us here would say "thank you"

to, you know, the different people helping out in this situation.

We do need each other.

I do want to get to this issue of capitalism.

Because when we talked a few days ago,

you mentioned -- and earlier in this conversation as well --

how, you know, this period of time we can emerge stronger and better

than before.

And about a year ago, you wrote a piece

about how capitalism needs to be reformed,

focused a lot on the wealth gap, the growing wealth gap

and the problems that that's causing.

So what's our opportunity here,

what changes can we make?

RD: Well, you know, what I was seeing was,

do we want the outcomes that we're getting,

that the system is producing?

Do we have --

What is our American dream?

What is that?

We're not even almost talking about that.

When I was growing up --

So again, I was born 1949,

right after the new world order was created.

New world order was created 1945.

In 1945.

And that was when there was the breakdown of the system

and then we had a new world order.

We didn't have as much debt,

we came back [from] the war,

and there was an environment of equal opportunity.

And that notion of equal opportunity.

And there was an American dream.

And there was a harmony

and a going through it together.

And by the way, that's not a one-off.

If you read histories,

you see these periods of collapse and clash and fighting,

followed by these periods of --

You know, you construct the balance sheets,

you change the system and then you begin a new system

and you come back and you work together.

And then I'm seeing, around me,

children in school and education systems in poor neighborhoods

are sharing --

They don't have adequate resources.

There's no excuse.

And so the idea that the profit system can accomplish everything

is not right.

Because resource allocation goes to those who have the resource.

And so throughout all history,

you go back hundreds of years,

you see that any system

works for those who tend to control the system.

So let's say we have a capitalist system,

and we have entrepreneurs,

and you acquire money, and all that.

And then, working with those in government,

and they have a symbiotic relationship

and it works well for them.

So it's self-perpetuating,

because the education of those who are those,

is better than the education of those who aren't those.

So, for example,

in our system, those in the top 40 percent

on average, spend five times as much money on their children's education

than those who are in the bottom 60 percent.

And so it becomes self-perpetuating.

And so when I look at that,

I'm saying, "I'm a capitalist,

please understand, I'm a capitalist, I believe in the system,

I believe you can increase the size of the pie

and you can divide it well,

and if we talk about how to do that effectively,

we need to do it."

But there comes a time that there needs reforms.

And those reforms have to create productivity.

It doesn't mean just give money away.

It means, how do you make those people productive,

so that they're also psychologically productive

as well as physically productive

and producing output.

You need to do that system.

And so for reasons I wrote on that page,

that post --

it's on LinkedIn if people want it --

that you need to restructure it.

Now we are restructuring it, OK?

It's the inevitable consequence of what we're doing here.

We will come out of that.

There has been a tremendous transfer of wealth,

whether people realize it or not,

through the production of all of that borrowed money.

And all of that producing of money,

that is a big force.

We will come out of here,

and the thing we will talk about over the next couple of years,

and probably sooner rather than later,

is how we do that restructuring.

And my worry now is the same as my worry then.

Whether that will be done in a civil, bipartisan way

that will both increase the size of the pie

and divide it well,

rather than damage the economy,

because you lose productivity.

There are certain things that are great investments,

education is a great investment.

The more people you have that are well-educated,

and you have equal education,

the more people you are going to have

who have the chance to compete with each other,

and raise that over a period of time.

It's a hell of an investment.

It will produce more productivity than it ever will cost,

if it's done well.

But what happens is,

states and localities think of it as a budget item.

So they look at expenses.

And they penny-pinch on the education.

Because if you're in a rich town, your kids will get a good education.

And if you're not --

And a large percentage of the population is losing that.

So that has to be engineered well,

so that they are productive,

as well as divide the pie well,

and everybody believes that the system is fair.

We can get there.

Am I optimistic that we will get there?

You know, I don't know.

I would say, I'm 60-40 pessimistic

that we'll be good enough with each other to do that.

But there's that possibility.

This is our test.

This is our stress test.

CA: Ray, there's so much interest in this question

of how we emerge from this,

whether it's genuinely possible to rebuild the economy

in a way that's fairer.

I just want to read one last question, this one's from my Twitter feed.

"Do you think that the current crisis

is showing that low-paid and/or unskilled workers

are what holds countries together,

even more so than banks and hedge funds?

And if so, as part of the rebuilding,

can we build an economy that raises their interest higher?"

RD: Those --

The heroes are those kind of people.

OK, really.

But it takes everyone, OK?

It takes the efficient allocation of resources for --

As you probably have seen behind the scenes,

we see those who control a lot of resources

being able to make contributions.

We're giving 60,000 computers to poor students,

so that they can learn.

You know, the difference between a rich and a poor student

is having a computer and having the ability to learn.

And I want to thank those who would be embarrassed

and almost afraid to hear it

of how they contributed to that process.

And at the same time, those other people,

who are every day serving in so many ways,

so it's good character and it's that --

You know, when people came back from war,

they built the greatest generation.

It's that type of character that brings our country together,

but each has to recognize their roles in doing that.

So there's a CEO

and then there's somebody who's really a great hero

on the front lines,

and they better damn work well together, so yeah.

And then, they have to have usefulness.

And we've got to appreciate them.

We have to establish -- just the reality, I think --

that there is a level of basics.

Basic education,

basic health care --

Basics that you cannot fall below.

OK?

Otherwise, when you go below that level,

there is no opportunity,

and actually, the costliness of it,

in the form of crimes and incarceration.

Like, to bring it personal,

our mission is to help high school kids

who dropped out of high school and can have jobs,

to get them in that high school and through that, in jobs.

And we believe that we can do that and save a lot of money,

because the average cost of incarceration,

it goes from about 40,000 dollars a year up to 120,000 dollars a year,

depending on the form.

And if you get them in and move them into a job,

you're going to save a lot of money,

and we could do that cost-effectively.

But philanthropists can't do this alone.

The amount of money is enormous.

So if our country did those kinds of things, I think ...

I think it would be great.

CA: Wow, thank you for that, Ray.

Corey, what do you think?

Have you got any other questions there before we wrap up?

CH: No, I think we're good,

I mean, I think we're going to get through it,

I guess is what we're saying,

but we also have an opportunity here

to make some changes and do better and emerge stronger.

And as you said,

take a look at things and the structures that we have in place

and see where we can improve,

but it's going to take a collective action and cooperation.

CA: Yeah, Ray, I'm definitely inspired

by the actions that you're taking as a philanthropist

in this moment.

And some of your peers,

you know, there are amazing stories out there.

I was really struck by Jack Dorsey's announcement yesterday

of his huge philanthropic contribution.

And, I mean, that's awesome, but equally important, I was --

RD: But it's not nearly enough.

CA: Exactly, and I'm --

CH: It would be good to see more.

CA: I'm kind of dismayed, in a way,

to hear you say that you're 60/40 leaning pessimistic,

like, it feels like your voice

in these conversations that are going on in the corridors of power

and you know, where the big money is,

around whether this turns into fundamentally, cooperation

between countries and between companies

and between, you know, big-money controllers,

or whether it turns into a fistfight,

is so important.

And hearing you talk about the gratitude

we should be feeling towards some aspects, let's say,

of what China has done,

the extent --

Do you find yourself in conversations,

like, raising this, trying to take the view that,

"No, no, no, you're needlessly sparking friction here,

take a more generous view"?

Because it feels to me like there's so much at stake

between how many people are trying to nudge

that type of conversation

versus the hostile, fearful conversation.

RD: I think there's a general mistaken belief --

I communicate a lot with the people that you're saying,

people in positions of power,

whether they're both in government or other places, and so on.

I think what you basically have to realize

is that very few people are making decisions

based on the quality of the argument.

That most people are --

Most of those are in a war of some kind

or have a particular objective.

And that the information that comes out,

even in the media --

you know, you could almost see which side each media outlet

or each person is on.

How many people do you really believe

don't have a side?

Almost everybody has --

they're on one side or another side.

And the idea of being able to see things from both sides

and come together,

is, in this time and through history,

perceived as almost being weak

or a threat.

Because you've got to get on one side or the other side

and so on.

And so it's not easy to just say --

Like, all the people, and China for example, I would say,

"Thank you very much,"

you know how many respirators and masks and all these things

that have come?

But almost that's politically challenging.

Because there will be people out there,

and threatening, why am I doing this?

People will be out there and they will say,

"OK, he's a China lover" or "he's an enemy,"

"he goes on the other side."

Because there will be people on the other sides, and those people --

And so I think I'll turn to you, Chris.

You have a forum.

Bring in the other sides, OK?

Bring in those that are those who,

let's say, have the most offensive policies that you think

that are in positions of power.

And have that together,

so that you can have thoughtful disagreement.

I'm a believer in thoughtful disagreement.

Open, thoughtful disagreement

to try to get at the right answer and have collectiveness.

But it isn't easy in this world.

CA: Well, that's a good challenge to us,

and I'm also a believer in [thoughtful] disagreement,

I think, Corey, we're passionate disbelievers

in the spreading of irrational hatred.

Like, instinctual irrational hatred

and I feel like the stakes are so high right now, that if --

RD: But will you fight for that?

In other words,

when somebody's going to punch back --

Because this is what's needed.

If somebody's going to punch back

because you're saying something that's true

and controversial,

that will be the test --

Can you punch back for collective, you know,

decision-making comment,

decision making and then punch back?

CA: I'm not going to say punch, I'm going to say fight back, absolutely.

RD: OK, fight back, that's good.

CA: With every fiber we have.

If it means that we look weak or we're a threat, so damn well be it,

because you know, this is the moment.

I mean, everyone is impacting everyone else.

We have a shot to nudge each other to be our better selves.

And to look at the stories of inspiration,

the stories of humans reaching out to humans,

of companies doing incredible things,

letting go of the profit motive for a moment,

of countries trying to help each other --

there are stories about that.

I think we need to amplify some of those stories more.

And we're certainly down to do that.

We're trying to do that every day.

And Ray, I loved hearing you talk about some of the good things

that China is doing, all the rest of it.

Thank you for your voice and for spending this time

and for being, you know, honest and vigorous with us.

And thank you, everyone, for listening.

RD: I appreciate it.

CA: A big damn deal.

If you're listening, it sounded like you just got a warning

that this could be a multiyear recession, depression.

That's scary, and more than ever, we need to be in this together,

as we've said again and again.

RD: Well, in conclusion, -- I know we're wrapping up --

yes, I believe this is a defining moment,

we will get through it fine,

we will be restructured in important ways.

So that's fine.

And thank you for, you know,

sharing ideas worth considering, you know.

CA: Thank you, Ray.

Thanks so much, everyone, for listening.

Corey, we've still got more days to the week.

There's an amazing program tomorrow,

we're going to take a much more global look there

that I'm superexcited about.

We have a report from the head of LabourNet,

which is an organization in India looking at mobile workers

who just are facing this horrific situation right now,

where they're having to, in the lockdown,

having to maybe walk home hundreds of miles,

or face police action.

We've got a report right from the front lines there

as to what that's like

in a country with a very different set of trade-offs

they're having to make between lockdown

and giving the most impoverished a chance.

And then, a wide-ranging discussion with Fareed Zakaria,

who, you know, has this global view --

you will have seen him on CNN --

he's got this very broad-ranging global view

as to how to think about this thing.

And to compare the different responses of different countries.

I think it's going to be an amazing conversation,

I urge you to come back for that.

CH: It's so amazing --

you know, we were talking about this in a meeting this morning --

this is a crisis that the whole world is going through together,

and I think that's what's so unusual about it

and there's so much to dig into,

so much to learn about how it's affecting everybody in different ways.

So I'm glad we're continuing.

CA: Thank you, everyone. Thank you, Ray.

And you can see a recording of this, if you didn't [see] the whole thing,

by going, I think it's to go.ted.com/tedconnects.

And if you want to look at Ray's work on this,

just google Ray Dalio LinkedIn,

and there's a whole series of resources there.

That's "Dalio" with one "L."

Ray, thank you so much for this.

This was really, really, really interesting.

Thank you so much. Thanks, all.

CH: Thank you.