00:00What's the sweat on Social Security?
00:02Do we really have to risk losing a check on Social Security into the 2030s?
00:09Well, we know that the trust fund is going to start running out of money.
00:13And therefore, whoever is going to be president after this administration in 2028, he or she
00:19will have to figure out together in a bipartisan way what to do about it.
00:23You can, how to say, length and retirement age, you can raise payroll taxes, you can
00:27cut benefits, you can do a combination of all those things, but definitely we have to
00:31do something about it.
00:32It just popped into my puny head.
00:33He wasn't picked by a task force for Chairman Walsh.
00:37What an oversight that was.
00:39Let's go to Noel Rubini from, I believe it's four years ago, no beef with getting older.
00:43In 1960, there were five active workers for every retired and disabled worker in these
00:49United States.
00:51Well, it's gone to three to one in 2009, headed towards two to one in four years.
00:56Instead of moving forward, we have slipped backward out of Fortune magazine in 2022.
01:03So the clock is ticking.
01:04I mean, we're moving on.
01:05Do you get the sense the politicians have any understanding of what's going to happen the
01:10first Wednesday of November in 2028 when we got to start really fixing this?
01:16Well, you know, the politicians always kick the can down the road until something becomes
01:20critical.
01:21They prefer to avoid it.
01:22And as we know, Social Security has been for a long time the third rail of American politics.
01:27So we'll have to deal with it like we did a few decades ago by creating commission at that time
01:32was run by Alan Greenspan.
01:34This time around somebody else and they'll come with sensible ideas.
01:37We have to increase retirement age.
01:39We have to increase payroll taxes or have the corporates that winners pay for the workers
01:45or we'll have to cut some benefits.
01:47So any combination of those things is going to have to happen at some point down the line.
01:51Eric Bautrin has just pointed out to me that Senator Tim Kaine, a Democrat from Virginia,
01:55and Senator Bill Cassidy, a Republican from Louisiana, have proposed a plan to save Social Security
01:59by borrowing a one and a half trillion dollars to invest in the stock market, which would grow
02:04over 75 years to pay future benefits.
02:06Does that sound like something that could work or is that kind of craziness?
02:10Well, there are some ideas in the past about, unquote, privatizing Social Security.
02:15And in countries that have sovereign wealth funds because they're running fiscal surpluses
02:20and current account surpluses, they can build up net foreign assets like Norway does,
02:24like in the Gulf they do, to create something of a buffer for the future.
02:28The problem with the U.S. is we run a fiscal deficit and a large current account deficit.
02:32So if you borrow more to invest in the stock market, yeah, you get that margin.
02:36Some returns because the returns on the stock market will be higher than what you pay
02:39on that borrowing, but it's a gimmick.
02:41At the end of the day, you have to do something else.
02:43That's not going to solve the problem.
02:45It's one step in one direction, but it's not going to be enough.
02:48OK, not the solution.
02:49In the meantime, inflation is getting in the way of everyone's best laid plans.
02:53You look at price increases in elderly health care, for instance, home health care.
02:57Because of immigration curbs, it's outstripping, far outstripping the rise in college tuition.
03:02You can see there.
03:03Although, of course, the absolute costs of each is comparing apples with oranges.
03:06Nouriel, are Gen Xers and Millennials all going to work until we're 90 years old because
03:10we need to pay for six-figure college tuition as well as 24-7 care for our parents?
03:15Well, in principle, yes.
03:16The problem is going to be that with AI, eventually, we're going to have long-term
03:20permanent tech unemployment.
03:22It's going to happen only slowly, but it's going to happen in the next 20 years.
03:25So even if you increase the retirement age, the problem is going to be a large chunk of
03:29the population is going to be replaced by AI and robots in the next 20, 25 years.
03:33So increasing retirement age is not going to be a solution.
03:37It's true that with higher potential growth, debt ratio tend to fall because it's debt to GDP.
03:42So our fiscal condition is not as bad as it would be in a situation where growth is lower.
03:46But at some point, we have to do something.
03:48But eventually, we need some form of universal basic income for everybody.
03:52Well, they work, and once they retire, and we're already on the way to that.
03:56One evening at Davos, you and I sat at a bar, lovely old German bar.
04:00There was a public official down three seats down from us who didn't participate, but listened
04:04in.
04:05And you framed out 07, 08, 09.
04:09Can you use 08, 09 or frankly, 2000, 2001 is an analog for this exuberance we have now
04:16in the stock market?
04:17Well, I've become more optimist.
04:19Of course, there is fraughtiness.
04:21There'll be excesses.
04:22But I think that this AI revolution is the most important in human history in terms of tech
04:26innovation.
04:27But you just told us we're going to lose all our jobs.
04:29Yeah, but suppose that growth goes from two to four by the end of the decade, and then
04:34it's going to be 6% by 2040 or 10% by 2050, because we're going to get to AGI.
04:39Then with growth doubling every five years at 10%, you can tax the winner, redistribute
04:43everybody to everybody else and make everybody better off.
04:46So that's going to be a factor we'll have either exposed to redistribution, that is universal
04:51basic income, or we'll have it ex ante.
04:54Ex ante means some form of socialism, essentially.
04:56The government is going to take over some fraction of the big tech firms, as they're already
05:00willing to do, five, 10% of it.
05:02We create the sovereign fund that way, and we create the Marxian socialism.
05:06We're going already in that direction, effectively.
05:08Okay, this is a very gloomy picture that you're painting here.
05:10That rings true with your Dr. Doom kind of...
05:12No, it's not gloomy.
05:14It's optimist.
05:14With 10% growth and machines doing all the work, we don't need to work.
05:18It's only in the world of scarcity that the life, dignity is based on the work.
05:22We've got to go to break.
05:23Stay around.
05:24Argentina or Spain?
05:27I root for Argentina, because there are many Italians in Argentina, and Italy do not qualify.
05:32This will be good.
05:33We're going to talk about the old world of Noir Rubini when we...
05:35I'm curious, Dr. Rubini, do you practice what you teach?
05:39Meaning, you know all these economic theories inside and out.
05:42You understand why things happen the way they do.
05:43As an individual, do you manage your finances in a way that aligns with them?
05:47Or is there some element of irrational behavior in how you look at your own finances?
05:51I'm reasonably rational.
05:53I've never traded in my life.
05:54I've never bought any individual security of any sort.
05:57I invest for the long term.
05:59I have a diversified portfolio, mostly of equities.
06:01If everything were to go in a severe recession, I'll move some of it into liquid assets and so on.
06:06But I think that most people, they're not sophisticated investors.
06:09They should just buy and hold until they retire, rather than day trading or maybe
06:13stock or crypto or other stuff that makes them lose money.
06:16So you're very much a buy and hold guy.
06:18Yeah.
06:18You don't touch it at all.
06:19Absolutely.
06:1920 seconds.
06:20They're in my ear here.
06:21Talk crypto.
06:22The young want to know about crypto.
06:24You and I love crypto so much.
06:25120 to 60.
06:27Is it going to 30?
06:28Most likely, yes.
06:30Most likely, yes.
06:31I mean, really, listen, crypto is not a cryptocurrency.
06:35They're not a means of payment.
06:37They're not a unit of account.
06:38They're not a stable store of value.
06:39They're not a single numerator.
06:40So calling them crypto currency is actually a misnomer.
06:43Whatever they are, they're not really neither an asset or a currency.
06:46It's mostly a bubble.
06:47It's a Ponzi game for most of them.
06:49ourcot deal and change our視 mente. Okay. Thanks a lot now.
06:49be on the left. We'll
06:49cut these things. Thanks a lot.
06:49My eyes are about colours.
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