Is AI the Next Big Threat to Our Financial System? James Rickards Explains
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The official timekeeper of the highly anticipated call of duty black up six is set to release a special edition back up six watching and accessory collaboration shop the design scene and inspired by the game from the same military style field watch detroit martial wares inside the campaign the aviator sunglasses is puled from C I A Operative russian athletes in game look this collaboration brings the air tics of the new black up six story straight er wrist in wardrobe IT even arrives with custom paging and a free gift with your purchase a movement in call of duty black up six bottle opener key chain, according to the wall street journal movement, is on the path to becoming a heritage brand while gear patrol hails the automatic watches as mechanical masterpieces own a piece of gaming history shop the exclusive special dish collaboration at M V M T dot com slash B O six that's M V M T dot com slash B O six this is the rich dad radio show the good news and bad news about money. Here's Robert kear. Cy.

well, this is Robert kill sari. And welcome to the rich dad radio show. Things are changing so fast. You don't know what all news and new news, but we have a very a person I respect tremendously.

I consider him my friend, and I guess today he's James records and we're going to talking about his latest book here, money GPT, and talk about a timely book, especially for somebody like me, because what Jimmy combined here is AI. Everybody is talking about ChatGPT and all this of but AI the effect upon the banking system and the financial markets. And so he not owns the gym, explain artificial intelligence, but he goes into great the depth of the structure of our financial systems.

And the spoke is really a warning. And I thank jim for sending me what they call an advanced readers copy in A C. A. I've torn IT apart until all my friends are about IT, and there's still entitle me talking about a gym. They were welcomed to the rich time radio show.

Thank you. I will graduate with you, you know? Ah, thank you.

Were holding up the book down. I thought the cover was powerful, but you're page markers. We've been more careful. So like it's funny.

You run into a lot people to get read the book, but you and some have, some have you can tell pretty quickly, but you clearly you went through that. So very, very grateful for that, but thank you. IT is great to be with you.

Well, it's it's in depth in a few words. I think it's a very powerful book and IT takes time to absorb that. Your messages inside there especially love your entry of your special note to me when I got this book was something new to worry about in the capital markets.

Sunny ways, I guess, money. GPT, which stands for a generated pre train transformers. So, jet, what inspired you to write money? GPT.

well, now IT takes a while to produce a book robbert it's available for period and amazon right now, but IT takes a year or longer when you got to write the book and you know editing and you're you're an author and you're very family with the process. But you go back to um kind of the fall of twenty twenty two after GPT four, which is A A chat room.

But it's basically give you a prompt or give you a get, write a whole essay, write a book for you if you want to. And IT was was all the headlines, every newspaper website, everywhere you looked IT was all about A A I and GPT um and I was similar wither. I mean i've designed uh uh A I system is for the CIA have been working in A I for fifteen years.

I was familiar with that. But what's happening now is no this GPT feature is is a breakthrough. We talk about that in the book.

Um so I just kind of cried out for a books now a lot of book coming out on the I I stay in my lanes and when I say my lanes, I mean capital markets, the banking system and national security. AI is very powerful. GPT is powerful.

There are all kinds of applications. IT will probably cure some m diseases that all the smart people in the world working together couldn't find certain molecular connections that a good AI system actually can find within our processing power. But I don't t talk about that.

I mentioned passing, but that's not my area of expertise. Basic taking what I know about AI and GPT, and we explained on plane english mean the lot of things that they are quite tech to go. But with a little little effort you can put in plain english and think is very clear to the reader.

But I apply IT to again the three hours I mentioned capital markets, the banking system and in particular nuclear warfighting strategies and and national security. And it's not a demand gloomed. ook. I'm not saying it's going destroy the world to take over the world to said, I talk a little bit about that in the conclusion because there are other people saying that and I look at that and examining and actually reach the conclusion that that will not happen that day.

I will not take over the world you can create an A I system given up power and say, you know, I want you to solve, you know climate change or war or something like pad so yeah, it's kill everybody on earth and then there won't be any more worse. So but I explain why that's not going to happen, but that's in the conclusion. But but the main part of the book, it's not doing and gloom, but as you correctly said, is a warning.

So is a powerful yes. Is IT new some of its very new canna do a lot of good, yes, but I can also do a lot of harm. And I don't want to you know and I don't really talk about the stock market that much in the sense of stocks going up.

You know you look at the S M P. I find the dow Jones you know up, up, up the next tech one hundred certainly. You know I mean pine of video, don't buy the video.

I don't get into whether it's a bubble. I personally think that might be, but I I don't really talk about that. The book this the stock valuations of AI companies are driving the stark market hire, my opinion, and and above all, territory.

But that's not what the books about the books about. Okay, well, what is IT? How does that work and what are the dangers? So what are our friend investors are is a warning about how this might backfire. And I make, well, I think it's an important point, Robert.

People were about technology, that mouth functions, you know you you build a an algorithm, you build a model, uh, you give a lot of processing power and you put that out there and IT IT messes up somehow. IT doesn't work, right? And I said, I make the point that actually A I will work exactly as intended.

It's not that there will male function to actually we're perfectly and that's the danger because the developers don't understand the interaction between human nature and AI so they can write all the code and get the algorithms. Ms, right and deeply. Yer new networks.

And again, I explain all that in the book, but there's a part of human nature that you cannot code, you cannot program. It's call a good instinct, intuition I call a common sense. But believe or not, that's A A branch of logic and philosophy that no one's been able to code.

We can code deductive logic, which is premise, a minor premise and a conclusion. We can code inductive logic, which is you look around enough examples, you can infer what might exist based on all examples. You say they have flaws, but we can do that.

But there's a third branch of logical abducting logic. And sounds technical, but I really does boll down. A common sense can code IT. But we all, we act as humans, and that's not going away. So what happens when you have a computer system that's designed to drive to a certain goal, but you have human nature, which is prone to panic and running for cover sea, and you combine the tube? That's what we talk about in the book.

And what's absolutely brilliant, and I would say essential, ring something for somebody like me who doesn't understand AI and arabia is in your invidia and all this and you jump in up and down. But you also like, shut ling the duck of the cards. You go to the internal workings of the banking system and the markets. And so it's a combination of AI banking and markets. And your warnings are worth paying attention to because you that what you say here is that A I lacks human instincts, or as a would make a different when you call that is common sense.

common sense. Yeah, a good example of Robert. There's something, again, I was the technical term, but explained in plain english, is called the fallacy of composition.

Or what is the value of composition? What that means is that there are certain things that make perfectly good sense for individual to say, as an individual that be out. This is a good thing to do.

Everybody does IT. You destroyed the markets. So against simple metaphor for that, I say you are at a baseball game, and in front of you is a little time than that, which you can see as well as you would like.

So you stand up. Okay, you stand up and and you you can see Better. When you stand up, you can see Better. But now the guy behind you can see. So he stands up, and the guy behind him stands up.

Next thing, you know, sixty thousand baseball fans are standing up and everybodys very sad, because none only are you in the same position, but everyone standing up. So in other way, the thing that makes sense for one person stand up to get a Better of you falls down when everybody does IT know. What does that mean in terms of markets? Well, let's say stock markets crashing.

You may remember a march twenty, twenty three and march twenty twenty, not that long ago, stock mark felt thirty percent in one month, thirty percent in one month. So what do people do in that situation? Well, a lot of them really, hey, you know, I know what's going on. And I went to some stocks, go to cash, go to the sidelines, waited out and went over.

I'll come back and and buy stocks again, something that you never want to own stocks, but you might get out, go to cash and and then come back in later you see you on the sidelines a well, okay, that can be a very good individual strategy that can save you a lot of losses and lets you get in back into the market at a very good entry point. But what if everybody does IT? If everybody does the same thing, you end up in the world of all sellers.

No buyers and the stark market goes straight down, closed to the circuit break ers that shut the market, shut the market again. And if IT gets Better up, they want to shop the market for fifteen minutes, they'll actually close the market. When you close the stock market happened, by the way, I mean, I like very few people know in one thousand nine and fourteen in the beginning where where one the new stock change was closed for five months from August through december one thousand and fourteen to take a little classified as in the newspapers like meet me on on new street behind the stock market, bring your stock certificates and bring cash.

And they called the curve market because they were trading stocks or cash on the curve. But the point is, what people think of liquid listed equities suddenly turn into private equity and something you don't know but you can't trade IT. Well, that's that's what happens now that dynamic of human nature has always been around and go back to no integrity that that that has been around.

But what happens when you combine that with A I? And that's really the point of the book. So now more and more, we've turned over our trading decisions to A I. And I tell people, you know, you go to a typical financial advisor, they're sitting there a computer screen and they say, ah well, tell me how old you are, you married you, even the kids, and how much you have in savings and where do you retirement goals and they ask you all this and you think you're getting this site customize consultation.

All they do is plugged IT into an algorithm and the computer spits out here your standard portfolio, sixty, forty and ten years and now should be eighty twenty said people don't realized that financial advisers are just looking at computer programs and giving you a pretty much about package response to your questions. So we have already had and there are hedged phones out there. They are using a ee to pick socks like they don't.

Even the managers don't pick the site to just say, okay, use artificial intelligence in gp t to build a portfolio. Some of those portfolios have actually performed pretty well in the early days. But again, you get back to the question, what happens when everyone's doing? And so we, as investors, have handed over a lot of our decision making, a lot of our investment decision making to computers now.

And the computers are programmed by people who are maybe expert engineers and developers, but they don't necessarily know that much about market. It's not the way you and I and lot of other people do. So now you get back to the panic, which always happens.

So if we six, seven years, almost like clock ork, and what does the computer say? IT says, sell everything, go to cash and go to the sidelines. He does.

But where a human might watch that say, you know, things are going down a lot. Maybe now the time to dip my toe in the world, maybe now the time to come back. Maybe i'm a contrary.

Maybe I want to be a buyer and everyone else is a cell and you can make money doing that. But my point is that the common sense so is talking about but the computers don't do that. They're all programs to do exactly the same thing.

So now you have a panel which could be a thousand reasons you don't even need to pick a reason. They're plenty of them IT starts. But because we've handed over the computers, the computers just sell, sell, sell, go to cash, go outside the there are no buyers know boy's dipping their town in the water, nobody's standing you up to this wave and the market goes straight up. That's the danger is human nature, which those has been around with A I, which is new, the combination. And that feedback could destroy the markets.

right? So I would say the reason this book is so important, it's an early warning system that you will be ahead of nine, nine percent of public simply because you explain both financial markets and how AI interacts with that were as right now people are looking at as separate entities. And one of the first things you I picked up reading this book here is a difference between a banking crash in a market crash.

So we can all, we can all see a stock market crash, a realistic crash, a borne crash, but we cannot see a banking crash. And I think that's one of the most pathetic message is side. This book here is we talk about silicon valley bank, and nobody reported about IT and what you covers, how sick valley bank, nearly one more time brought down the world.

So we come back with with them. James records his book, here is money GPT. This is a timely book, especially for those if if he wanted get ahead of the next crash, we'll be right back.

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So welcome back, Robert, here. Like in the rich dad radio show, it's today we have a longtime friend when I respect and as you know, on this brand new world of social media and youtube and all this, there's a lot of questions out there and you've got to be able to get through the fog and gym records. As a person i've followed for years, i've been on the same stage with him.

And I sit there and listen to him because I called the firehose of information. I don't know how he does, but he can talk and think at the same time. But he's been the adviser to the White house, to the congress defence department and the CIA.

This man is he knows what he's talking about. So if you're looking for an authority on youtube, is shame records and this site here and today, we're talking about this very timely book is called money gp. t. And what he so brilliant does is almost simple enough for me to understand. You can see a i'm highlighting everything in here because it's how the internal banking system works, how markets work and how AI works and is really a warning that if this happens, what do you do next? Because as jim says, A, I doesn't have human instincts is just react so so jim, what other concerns do you have about is AI and combined with with the markets and then banking, and it's kind of an interesting combination.

Yeah, you make a good point, Robert, about capital markets and banking people tend a mission together. They say it's often as but they are actually very different arenas of activity. And of the two, banking is more important because that we all care about our stockpile follows in the forming case.

And that, and I talk about some of the dangerous, but banks are actually where money is created. Everyone starts about the fed. The fed s is printing all this money.

The fed is printing trillion of dollars what they are, but they they do IT by buying security of banks and they send the money to the banks that does come out of thin air. Then the banks give IT back to the fed as excess reserve. So it's it's tens of trillion of dollars on the bound shi.

But the kind of sits there IT doesn't do the economy and good the money that helps the economy comes out. Commercial banks, they create money too. So run on the bank and all the connections among the banks is actually the regulator's greatest future. They don't want to sequences collapse of banks.

and we saw that in the great question. Now rupture you the about the sv b silicon valley bank, right? They weren't not supposed to do that, were they? They weren't supposed to bail them out one more time and they broke ed the law. Yes, I think this .

i'm everything well, that's right. And you know this all an investigation, but IT looks at where is here's the thing that people don't understand. You know you have hundred thousand and two hundred thousand in the bank, your face and short.

Well, you are up to two hundred fifty thousand dollars you know per account. Ninety seven percent of the deposits and silicon valley bank were not. Fdc ensured they were over that limit.

There were entities, including some some bitcoin and the media is some big soyo on valley firms that had billions of dollars in in solon valley bank, ninety seven percent were uninsured. But there's a good way to know if your bank is safe. And I look at the ratio, insure deposits to total deposits.

If that numbers under you know like thirty percent or so, watch out because that's vulnerable to a run. So we all remember grainy black, White pictures from the one thousand nine and thorium, you know, usually men in overcoat with the doors lined up in the rain to get their money out of a fAiling back. Well, that was true.

There was things happened today. IT happens in instantaneous time. We do IT on an iphone.

We take an iphone, we say, send the money here. And then we teach our friends that get your money out. That happens.

You don't need to stand in line at all, happens almost instantaneously. So the banks are are very vulnerable. And h, we talk about, again, the same idea that A, I, in this context, everything's faster, quicker at a control.

The regulators can stay on top of the regulators. Det, was so compile bank after the fact, where did they do? They guaranteed every bank deposit in america.

This is your point, rose. They said, forget the insurance. Forget the two hundred and fifty thousand.

It's all good, by the way. They didn't say that on friday night. Friday night said they said, I don't think over to fifty. We're giving you like a do bill like and are you will get back to you.

But by sunday night, forty eight hours later, they said, no, we guarantee everything and the fed guaranteed every treasury note in the in the world, even though they were were seventy cents on the dollar because insure trace are going up at the time. They say, we're guarantee we'll take him for a hundred cents on a doll. Here's here's your mind.

So they have nothing left in the bagger tricks. Once you guarantee all the bonds and all the deposits, what else can you do when the next banking panic comes? And I talk about how that is coming and how A I will contribute to that.

But there's not too more aspects of about quickly where that one is. And then your national security have a separate chapter of nuclear war fighting. And this is something I studied since the late one thousand and sixty, and the scholarship has been around since late one thousand and fifties.

Herman kon, paul, that's a hand kissing jer. And others spend a lot time in this. The theory hasn't changed. I mean, we're still in the world of mutual short destruction.

Where are you know, you you won't shoot first because i'll shoot back and will both you get blown up. And so that will stop a nuclear work. The fact is there have been a couple near misses, and I talked about them in the book.

And on both occasions, we and the soviet union, at the time russia, basically have been moving up the escalating latter. And IT is a letter, I go up, you go higher, I go hier, we were climbing a latter to nuclear anio lation. And in in the two cases, I mentioned two cases that the third was cute missile crisis.

The other two are less well known. Some officer won a lette coronal in the soviet army, and the other one, a lootenant general in the U. S.

Army, had orders basically to escalate the nuclear war. They disobey the orders, and the nuclear war was avoided. So, you know, you have military backline, you know, you dissipate.

Order is lightly. But the russian had actually worked on there. He, he had a system.

IT was an A I system. This is the point. IT was an A I system. IT gave a launch one.

He said he launched the nuclear missile, but he had worked on me, said, you know, this system some problems, and i'm not going to tell my superiors. I just hope for the best. He was betting this country, and we avoided nuclear war.

In the U. S. Case the kgb had looked at a war game, but they thought the war game was real. So the us.

And data was staging a nuclear war game, but the kgb thought IT was a real escalation to nuclear war, and they were ready to launch. And IT was the us general who said, no, a dial down. Let's let's cool or jax, let's stop the war game at this level and tell us so it's hard.

It's just a game. But in both cases, officers, senior officers, did not follow orders to sapte their standing instructions and avoid IT nuclear war. What is that? It's instinct.

It's good. It's common sense, is exactly what computers cannot do. A computer would be programmed to keep going up the escalator latter and blow up the world.

So um again, the warning is is not that this doesn't work, is something that I doesn't work. IT actually works exactly as a program IT does what is supposed to do. The problem is, was supposed to do lax. Common sense creates enormous danger.

right? But talk about a common sense. The reason I liked you are a whole thing on silicon valley bank here is they bailed out the richest people on plant earth.

That's where are. And what you were saying in this book that was genet yelling, I wonder, wear a planet SHE stepped off of. But anyway, SHE basically SHE failed after Richard guys on earth.

But what you're saying here SHE only did that because the whole system was set to come down. And does that great. He was.

I call a cry crybaby weekend. And what I mean by that is friday night actually do the right thing. But now that the all the billion airs, all the so kind of billionaire entries, pe, they all called the White house.

They said, we know now where the ones getting her, we're going to shut down most is that start a film anyway, by the way but we get the same, all the startups, the payroll in the rent and that White house said, okay, let's fix IT and they did, but they went against other principles, all the laws, and they basically built off the billion. That's exactly what happened. And there's one, one less shaped around, and I just mentioned quickly, but you going to help people enjoy reading.

There's a lot there. It's on bias, censorship and basically I call a confabulation that's a fancy work for lying. And I said, you know, so who who were the gay he who were the gay keeps, you know, you get A I GPT um APP on your iphone is that takes about a second to download IT but who with the gatekeepers who who are actually developing well, we know who they are.

Its facebook or mea. It's google, it's OpenAI, which is part of microsoft and microsoft, apple said the gatekeepers now think about and go back four years. They lie to us about covet, about masks, about vaccines, about social.

They lied about climate change, they lied about the war in ukraine, they lighted about everything. So these people been lying to us continually for five years. But so think we're supposed to trust them on AI.

I don't think so. Me this is the point. I give some very concrete examples. The the google AI system you get this so I get your .

book is just filled with accies that are IT takes a while to weave through IT. So well written, but simple enough to me to understand, but hate of being politics up to this. But it's like, it's like koala sixty minutes covered up for her. I mean, what's going to our yeah.

that wasn't. They couldn't use A I, but they had shoes good of fashioned and they didn't cut, cut and paste answers in a way that made sense. But by the way, I can do that none only that.

But then I talk mothers and shop to one AI can do a totally fake j pal press difference. J pal is the chairman of the federal, of course. But within and this soft works IT, by the way, I should match everything I talk about the book.

It's not like, og, five years now. This could be a problem. Like, no, this is a problem today. This technology is being used today. But you could take a thousand hours of jpl press companies and that's available, and thousands of hours of his voice and some the economic club of new york, and basically create a fake press conference by japan where he says, no, i'm going to raise interest strates when everyone thought he was gonna wer them and started a financial we talk about how that can happen.

This book here is worth studying because they'll build out calamo, they'll bail out trump but gym records and they're not going to bail us out. So what you have here is the escape plan. So you have an early warning system in case the fed goes gooey on us and the whole things are to come down like a house of cards.

I think the best thing is your your prescriptive, your prescriptions on how to protect yourself in case AI fires off is simple enough for all of us to follow. And I took IT to heart all the steps. He said, prepare just in case AI fires off. And the banking system not going to save us, they'll save common hour trump, but not us. So it's a very, very important .

book that I still copy, my old boy scout handbook around when I was done years old. So i'll survival, how to build a stretcher turn to get, how to make IT, whatever IT was all about survival. So money, gp. T is a survival manual for the financial nuclear .

world landscape. yeah. So so jm, is that enriched? We study, you know, I get some feedback pushed back, but I like to study.

So this was a book we studied before. IT was called the creature from jackal Allen. It's above the fed.

And you can see I study this book here. I got about one hundred people together. We started at IT for three days, and G, L, red graph in came in and talk to us.

So with you are permission, i'm going to suggest to the rich dad company that this become the next book we study, because IT is today. IT is up today, is what's happening today. You, what these criminals did here and these guys are doing here, nothing really changed, except is gone faster.

So with your permission, i'm going to use, your book comes out. I have about one hundred people come together. We all read IT. We study IT, and i'm gonna if you would come in for about an hour to answer any questions, because that the depth of your, you put IT simply enough, but the depth of your knowledge is underived. So what I like to do is going about one hundred people, we study this book, and then you come in via zoom and they can ask you questions and all this because they'll be a Better inform question then for me right now. But this book is today's book.

Well, thank you. And i'd be glad to do that. Just work out a day. I would be glad to comment with your study group that would be fun. And I know I know we would get great questions to from your group.

Yeah, there's the more I read the book, the more I understood IT, but the more than you understand IT. Because your depth of simplicity, what you always talk about, this complexity and simplicity, and the complexity you made as simple as possible, but is still complex. So for those of you who are part of rich dad community, we will come to phoenix.

Will you study this book, this book in depth together? And you'll be far, I have the thunder ing heard of there as a panic can run for the gates. So jim, thank you very much for all your years of friendship and your contribution to the education of humanity. I appreciate.

thank. Thank you.

Thank you. And for those of you would be right back with the great final word from rich dead.

So once to go, I thank James records. You know, he's been a friend of rich had for years. And again, as you guys know on youtube, there's a lot of quacks and charleton and fakes out there. But when I wanted to get, what I want to understand was really going on in the markets and banking system, James records, I my wish, checking his youtube site.

And as such, as you do the same thing, and I invite you, if you're interested in doing a books study with Richard dad will probably held after the elections are over and probably being this january ary or february, it's a books study and people say, well, how can you charge money but people study books because it's worth IT that you get together with people who want to learn. And I want to study, want to get ahead. And I say that because I just came back from hawaii, and most of my friends and hawaii had never heard of George soros, they never heard of the bricks, and they definitely did not hear any AI. So the one hundred and nine percent of people, I would say I sound of sleep, but if you want to be on those one percent that's moving ahead and profiting for what's gonna in the future, please join us for this box study with gem rex book. Thank you all for support the rich and channel.

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