Hot Money (2021) - full transcript

With wit, satire, and historical context, Former NATO Supreme Allied Commander, General Wesley Clark and his son Wes Clark Jr. take us on a journey through the financial circulatory system ...

It's a free market economy

but it's also a
national security issue.

- Okay well I tend to think...
- You're going to be an independant

country, you need to be
independant of food.

I tend to think of
climate change

as a national security issue.

I do too.

They're not gonna
be able to do it

in time the way
they're doing it.

- And every time, well.
- Recognize and adapt

and change policies...
Okay, let's...



Let's look at ourselves
right now, okay?

Let's say this road we're on

is the American
political system.

And you see past
that bridge up there,

we have to get past that
bridge in the next minute,

except this is
what we're stuck on

because we can't get there.

And you know this
as well as I do.

I know people in
their 20s and 30s

that will not have kids,

because they're like,

"I'm not gonna subject a
human being to what's coming."

Do you think my children
who are 15 years younger

than that are somehow gonna go,



"God I always wanted
my kids to grow up

in Mad Max eating
lizards off the road

and murdering their neighbors
to get a glass of water."

I mean, things are
gonna break down.

Wesley
the passion that you

and so many others
have on us this

is what gives me
hope in democracy

and hope in the
future of the country.

That's what it's gonna
take to make change happen.

I think we're
living in a rigged system.

And I think it's very hard

to break out of that rigged
system because money talks.

- I drove down from San
Francisco yesterday on Highway Five

and it's bumper to bumper

for 300 miles on
Highway Five.

And you can think, God, that's
just a small part of it.

So we know in these
big urban areas

like the Los Angeles Basin,
metropolitan New York,

we know that, we live
here for convenience.

We live here because
civilization works,

but we also know it
is relatively fragile.

It depends on power,
it depends on water.

It depends on food, it
depends on warehousing.

It depends on security and
people following the rules

and obeying the laws.

And it only takes small
disruptions to that.

Whether through natural
disaster, through climate change

through organized
crime or through war,

through exogenous forces.

And you'd see catastrophe.

It's easy to
see how things can fall apart,

Long tunnels are now pitch dark.

Communications and telephone
systems have collapsed.

On motorways cars
simply pull over,

if they find a
place with a signal.

People now stand in line

outside supermarkets,
not to go in,

they're just hoping that
it will eventually open.

Combination of the weight
of scientific evidence.

And the dynamics of the
financial system suggest

that in the fullness of time,

climate change will threaten
financial resilience

and longer term prosperity.

All the money in the
world will not save us

once it starts to fail.

And then people will discover

that you can't eat
a flat screen TV

and you can't eat a
German luxury car.

What are we gonna do?

It's war.

And it's a much more serious
war than World War II

because if we lose,
we're all dead.

I mean, you'll already be dead.

So maybe it doesn't
concern you as much

but I don't want my
children to starve to death

You're writing me
off really early.

Please don't write me off
so early.

All right, 20 more years

Looks good doesn't it?

It does.

It's a great part of America.

It's like an American icon.

My generation was
the Beach Boys.

Yeah.

Surfing USA.

Yeah.

So, you know, tourist heaven.

Yeah.

But if I were a tourist
from another planet

and I was like, "Hey,
let's go visit earth."

And then my travel guy was like,

"well it's populated

by about 10 billion carnivorous
apes and they're armed."

- My goal is to see...
- Let's give you 20 more year

Is to see your children

grown, educated, married

and I wanna have
great-grandchildren, that's my goal.

Okay, if you wanna
have great grandchildren,

what you have to do is
you have to help build

that environment that
they're gonna survive in.

I want you to see the
facts as they appear to me.

I'm a national security guy.

That's what I've spent
my life working on

trying to protect
America, the constitution,

the way we live and our futures

for our children
and grandchildren.

I love my dad we're both
concerned about security.

We're both concerned
about the future

but there's definitely
a difference

in the generational
perspective of this.

Now I understand his generation
because they grew up,

right after World War
II, the baby boomers.

They grew up in a world that
was constantly improving.

More rights, more money.

The economy constantly expanded.

They saw us go from fairly
primitive industrial society

to what we have today.

There've been empires
that formed and collapsed.

And about 200 years ago,
mankind suddenly discovered

how to take energy more
effectively from the earth.

In the start of
the industrial age.

And it was coal
and it was England.

And it was a steam engine
that could use that coal

and it spread throughout
the whole world.

We have taken that energy

and built this
civilization from it

and the price that's being paid

is the carbonization
of the atmosphere

and climate change.

Yeah, that's the finale.

You know, when you
say in World War II,

everybody chipped in
and did their part.

And that was
seventy-five years ago.

Now we've been involved
in so far, a 19 year war.

And in that 19 year war,

we were told to go shopping

and to buy more stuff.

We were never told
to save anything.

We were never told to
contribute to a war effort.

They even cut taxes

when we went to war
That's right, twice.

Twice.

With gambling, the house always
wins and it's a rigged game.

It just is.

Not unlike the banking system

in our political
system nowadays.

It's all rigged. People don't

have an actual
choice in a lot of stuff.

Yeah, people have a
choice to go to Vegas.

When you ran for president,

I drove all over New
Mexico and other places.

All I could think
in 2003 was that,

we can't actually
build an economy

off stripping, gambling
and crystal meth.

And we've made a concerted
effort to do that

in this country for
the last 20 years.

You know, our business
caters to what people want.

American societies produced
enormous amounts of leisure.

They've tried to recreate
the feel of the Roman Empire

in the heart of Vegas.

And interestingly it's
like late Roman Empire.

So it's right, as
everything collapsed.

We have the smarts
and the know-how

and the conscience to know

we have to sustain
and protect this earth

because this is where we live.

So we love civilization,

but we've got to change

the way we're approaching
our economic endeavors.

The world is suffering

through the worst financial
crisis since 1930s.

There's been a
lot of damage done.

They hear $700
billion package,

and they immediately
think the next day

everything is gonna be better.

You're witnessing
so much wealth loss.

If you connect
the financial system

to the other possible
shocks that are out there,

you realize it's,
we're walking on ice.

Panic coming
through the phones,

on the floor, traders
just trying to rush

to get to the point of sale,

to get rid of their stock.

You know,
what people built up

over years and years and
years, has been erased.

At some point, you run a
risk that something goes afoul.

We're worried about Greek debt.

We're worried
about Italian debt.

Spanish debt.

I mean and so far, you
know, it's been finessed,

but, and you know,

you can't see what the U.S
Treasury is doing behind.

We're doing a lot with
the U.S Government

to keep the system working.

And you just don't know
what the limits are.

So if you think,

how can we lead the world
in fixing the economy

and fixing the climate?

You have to make
the investments now.

Because you can't wait
till you're like Somalia.

I mean, you may notice

Somalia doesn't have a lot
of infrastructure programs

that they fund.

They're not pushing the
boundaries in technology,

and that's not because
people in Somalia are stupid,

it's not just because they've
lived under civil war,

it's because they
don't have capital.

They don't have resources.

Capitalism is an
economic organization.

It's a way of
organizing the economy

that is focused on trying
to create future returns

over and above of the
investments I make today.

So it's all about expansion.

It's all about making
more in the future

than we currently have.

When you borrow money,

well, what happens is,

the banks would like
to charge you interest

not only for the risk,

but because they want the
capital to come back with babies,

not just to go and that's it.

Because they want to make sure
that capital is increasing

and that's how you build wealth

and that's how you
increase your assets.

And it's that debt
that has enabled

all of this to be here.

It's the accelerant
to economic growth.

Now, as long as the company

can service that
debt, it's okay.

But consumer debt,

if it can't be
serviced, is a problem.

Mortgage debt if it
can't be serviced,

as we've seen is a problem,

and national debt, if
it can't be serviced,

can be a national
security threat.

Alexa, how do we avert
a financial crisis?

Here's something
I found on Wikipedia.

A financial crisis is any of
a broad variety of situations

in which some financial assets

suddenly lose a large part
of their nominal value.

Preparing for the future,
when the future is unknown,

is obviously difficult,

but we are today taking steps

that are clearly going
to make things worse.

Finance is really
making big bets

on an uncertain future.

And you wanna be careful
about making too many bets,

especially when there
is some indication

that the future might be very
different from the present.

So much
of our energy's caught up

in the financial system

that we've neglected the
investment in real things

that are required to
take the country forward.

We do, we haven't really
come to grip with this yet,

because the economic system,

the political system just
doesn't wanna face it.

The economy has grown,

but debts, indebtedness
of households,

firms, banks, governments,

the debts of all these
actors in economic system

have increased
much more than GDP.

Really?

Yeah. So let's say,

I think maybe in
the 1970s or so the,

total debt of all these actors,
households, firms, banks,

government, the total debt
to GDP ratio was maybe of,

of the order 120%.

And now that has
increased very steadily

over time to about 290%. So...

So if no one got
paid for three years

and continued working
the whole time.

Exactly. Yup, yup.

And didn't eat or
drive cars or anything,

we could pay that debt?

Yeah. Yeah.

But does the debt matter?

Well, I mean, the
debt matters to some,

to the extent that
we have a system,

it is called capitalism.

And in that system,

laws are telling us that
debts have to be repaid.

How much debt do we need
to generate $1 of GDP?

For the economy to create
one extra dollar of income,

we need, we are relying
on $3.30 of extra debt.

An income is basically
wages plus profits.

That is what GDP is, you can
also call it differently.

You can say it is value added,
created by producing stuff.

And as a result of
emphasizing on the GDP,

we've ended up in a situation
where the market is going on.

There is some selling,
there is some buying,

but we really don't know
how well people are doing.

You know, when
we were kids, $1 of debt,

pretty much created $1 of GDP.

Oh wow.

So, you know, it's
like Keynesian economics,

you put the money
into social projects

and it recycles back
into the economy.

But today it takes
more than $3 of debt

to produce $1 of GDP.

And that's all occurred
in the last like 30 years.

Wow.

So in order to
create more money,

you've gotta create more debt.

Three times as much debt.

That's insane.

More than three
times as much debt.

It's that access to
credit and the kind of ability

to take on lots and lots of
debt that hasn't been able

to sustain this kind of
trend in consumption.

So there is a very,
very strong relationship

between increases in income

and increases in
carbon emissions.

In the U.S, which is
already kind of the most

disproportionately
high energy producing,

high consuming country per
capita spending grew 42%

overall from 1990 to 2008.

With a 300% increase in
spending on furniture,

an 80% increase on clothing
and a 15 to 20% increase

on vehicles, housing and food.

Despite the fact that
wages were pretty stagnant

over that time period.

So this is the
Wall Street Bull,

which is a symbol of
a positive market,

which means more people
are spending money,

than spent it the day before.

Our democracies basically
have become dependent

on the idea that there will
always be more to go around

that we can expand,
expand, expand.

We know that there's
fundamental uncertainty.

We just don't know what
the future will hold.

Over the course of my career,

I've worked in
mathematical modeling.

I was a space physicist for NASA

and I was on pretty
big projects.

I was on the Hubble Space
Telescope team as a scientist.

I was on mission to Mars
as a space physicist.

And so I'd worked on in
some pretty big areas.

When people say, well,

how do you know that the
climate models that we have now

will be accurate
in 30 years time?

What I can tell you is that
the models that we were working

on 30 years ago are actually
unbelievably accurate.

What's happened
with the atmosphere,

is we're seeing this type of
instability, kind of like,

you know, if you had a
top just standing there,

it'll just fall over.

And so you're
seeing that type of,

that type of wobbling
and instability.

I don't exactly know how
unstable things are going to be,

but to me, it's the
volatility and the instability

that's even more
concerning than just

the pure temperature
rise over time.

Let's say that inflation
were to go over the top,

stock market crashes.

Let's say there are all kinds
of sanctions on exports.

You can't even export your tech.

You know, all you're left with,

to survive is you
and your environment.

You know, one of my goals
this year was actually

to get more educated
on climate change.

And I took the path

that I was gonna see both
sides of the argument.

And what was interesting
to me was I could find

very little in the
climate denial space.

The more I read, the
more I see around me,

the more I get concerned.

The officials
came out and said,

we're gonna have to
release the dams.

And I remember
looking at my husband

and looking at my daughter
and the dog and the house

and thinking, am I in
the middle of some movie?

So I'm 5.8.

And the water reached
to about right there.

Until it happens
to you, you don't,

you don't believe
that this can happen

in the United States of America.

And all of your financial
stability is gone.

So if we have, God forbid,

any other emergency that
comes up and believe me,

that is a source of a
traumatic kind of panic

that sets in when we go, Oh,

you know, what if
something happens,

what if there's
another emergency that,

that arises, then
we have no funds.

Never did I ever
imagine that everything

that I would work so
hard for would be taken

from me in a matter of hours.

And so I do believe
that climate change

is going to have a
huge economic impact.

And what wealth you
have can be eradicated

in a matter of hours.

We had a house
up here on the hill

that my wife wanted
to get out of

because it was dangerous
for the fires, you know.

Yeah.

And the climate change,
everything's getting crispy,

so we'd better get,

to somewhere where we're
not gonna get burned up.

Yeah.

So we moved to
this beautiful place

and the fire didn't get us.

But the debris flow after
the fire wiped us out, man.

We had like mud four
feet here, huge rocks.

You were here, right?

- Oh we were.
- How did you get out?

Rescued by helicopter man.

Jesus.

I said, you know, I said,
my wife, we, you got a sheet?

And she said, yeah.

I said, what are you
gonna do with the sheets?

I said, I'm gonna write,
help out there, you know.

She said maybe make it SOS,
I say that's a good idea.

Went out there and
drew SOS, in the mud.

And pretty soon,

They come, they let a
guy down, and they said,

we weren't sure if it was
a SOS or an area code,

it looked like it
could have been 805.

And I said, well I gotta
work on my esses man.

But we were lucky, you
know, we could afford to...

Well people died, people
died in this, right?

Oh! Terrible, people were
washed right through our place.

And we were the lucky ones.
You know, we had the money,

to refurbish this place.

I know, yeah.

But you know, imagine,

people, you know, struggling
all over the world

with this climate change.

That's the way It starts
it's, you read about it

and It seems far away.

But then something happens
and bang it's right on you

- and it gets very personal.
- That's right.

Hey, I hope you went
quick, that's all I can say.

I hope you went quick.

Oh my gosh.

Words can't describe it.

Words can't describe it.

Global systems of finance
are deeply connected

and based on housing finance

in places like
the United States.

So if you get in a
situation where a homeowner,

can't, can't pay an
insurance premium,

can't hold on to their
mortgage, for that reason.

Defaults on a mortgage,
goes into foreclosure.

You have kind of, your
setting in motion,

the sort of early
parts of the story

that we know is a very familiar
one from 2007 and 2008.

And we're not
particularly good,

at preparing for difficult
times way in the future,

when in fact we've got
difficult choices right now.

When you survey
people in the U.S

and in the UK about sources of
stress, it's work and money.

Alexa, how do I solve
our economic problems?

Sorry,
I don't know that.

We're heading off the cliff,
in terms of climate change.

There's a real urgency on this
now that cannot be denied.

I grew up in the heart of the
military industrial complex.

My father became a general,
after I went off to college.

I went to the foreign
service school at Georgetown.

Madeleine Albright was one
of my advisors in college

and I thought, I know
how the world works.

There are people in charge.
There's some with a plan.

There's someone running stuff.

When my father was head of
NATO and I got to go over there

and visit and hear the kind
of questions that senators

and congressmen
were coming up with.

I realized, whoa, no
one's running anything.

And the mistake that the
great majority of us make,

is that, there are groups
of people running things.

Someone has a master
plan, there's a cabal

or a conspiracy behind
it all that's running it.

And it's just not the case.

Hey Wes.

How was the conference?

Good.

Good.

No, I think,
well I think they,

I think they really wanted
to hear what's going on

and what the challenges are.

Yeah.

And that's what I gave them.

Kind of reading this thing
about Venezuela you see.

What happens when an
economy collapses.

Total collapse.

I mean, is it, was it just
initially the oil prices or...

They've tried to make
it a populist democracy.

You know, where now
Maduro is, is a dictator,

but you know, supposedly
people like him,

but in an actual
fact Cuba's in there.

And I was down about six
months ago in Colombia.

And they were telling
me that actually,

the Cubans are going up
to the Venezuelan army

and they're disarming them,

because they don't
trust the Venezuelan.

This is the way you
take over a country.

You're getting rid of,

you know, you put your
security forces in,

and then you build up
your extra military force.

And then you go to the military

that might be loyal
to the country

and say, give us your weapons.

So a lot of Venezuelan
militaries become refugees.

Oh wow.

They were disarmed and sent
out of the country, yeah.

And there's millions of
people that are just there.

They lived there,
they were born there

and they're
struggling to survive.

It's a, I mean, we're heading
in that direction already,

before we've even had
the economic breakdown.

With armed groups
in the streets.

You had 20,000 armed people
in the streets yesterday.

Well that was just
a demonstration.

Brought guns, you don't
bring guns to a demonstration,

unless you're demonstrating
you'd like to kill people

that don't agree with you.

Venezuela can be an
example of what happens

when civil society breaks down

because you don't have stable,

transparent rule
of law government,

and you don't invest in your
infrastructure the right way.

In many ways, Venezuela
is a leading indicator

of the challenges that
will face the whole world.

Many like Erin
Burgos feel they have no choice.

What was once one of Latin
America's wealthiest countries,

is now its most
chaotic and dangerous.

But that's what happens
in these countries.

But by these countries,
you mean countries

that have incompetent
leadership.

Countries that are failing

to take care of their people.

But they compensate for that by,

setting up repressive
mechanisms,

to ensure that they
stay in power.

I just worry about it
happening in the United States.

We have a country like
Venezuela where the first thing

that collapsed is their
energy infrastructure.

- Yeah.
- And then now we're finding out

that it's not just electrical

and oil pumping now their water
infrastructure is collapsing

and this is a country
that's tropical,

that's filled with water.

The energy sector has
not received the training

or investment it needs, and
the experts were kicked out.

They said the energy sector

in particular the oil
sector is collapsing.

And that was a major source
of revenue for the country.

At the same time, you have
significant drought in a country

that has a lot of water,

which means the
dams cannot produce

the same electricity
as they used to.

So you have collapse of
the electrical sector,

along with the oil sector,
along with civil society.

And this means you also have

collapsing water infrastructure,

because even if
you have the pipes,

if you don't have electricity,
you can't operate everything.

So severe strain, which
means food shortages,

riots, lack of money,
this is a major problem.

United States and
Europe is rich,

but if we choose to under
invest in our infrastructure

and if we choose to not
prepare for the future,

we could suffer these
kinda consequences as well.

The impact of climate change

is not a straight line function.

It's clearly

a progression that
is accelerating

in magnitude very dramatically.

And so any lapse at
this point in responding

is going to have, I
think, a critical impact

down the road, much sooner
than we would anticipate.

This is a crisis
waiting to happen.

It's a slow moving crisis
in front of our eyes.

So when you see in a movie,

an asteroid's gonna
hit us in six months,

but Mr. President
we've been working

on this potential
problem for six years.

In real life the asteroid
takes everybody out.

The same goes for
climate change.

The same goes for a whole
host of issues we have

because when people
see something on TV

and look, politics
is a confidence game.

When people look at the
politician and they go,

he must know what
he's talking about

or she must know what
she's talking about.

That doesn't mean there's
an actual plan with any kind

of systemic machinery behind
it to produce results.

As the water start to recede

the financial costs will add up.

Are you tired of living
in a home like this

when you really wanna be
living in a home like this?

Let's check it out.

We've got tons of
waterfront property,

and more coming every day.

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For those of you that
went to the mountain

and enjoyed that 16 feet
of brand new, fresh powder,

nice job.

But as you can see, we've
got a hot front coming in,

so tomorrow there's gonna
be 155 degrees Fahrenheit.

So you might wanna
break out those Speedos.

You read the big
article about Peter Teal,

who's the guy who's made
the big fortune off tech,

has bought and built bunkers
in New Zealand, right?

Because their plan is
we're all gonna die,

and then they're gonna
ride it out somehow

even though they won't.

But there's the belief that
their money will insulate

and shelter them
from what's coming

and for all these people...
For climate change

Who predicted doomsday.

Yeah I mean, I've
heard, you know,

I've heard climate change
likened to a world war.

You know, the difference
is that we know a lot more

about what's coming.

Come on down to our
luxury survival condo

and don't let the
Armageddon get you down.

So unless you can
produce thousands of years

worth of water and air and food
in your underground bunker,

you're not gonna make it.

And the most likely
outcome will be that

the construction workers
probably non-union

that you paid to build
this bunker for you

know exactly where it is.

And they have access to all
the tools to dig you out of it

like a truffle.

The sooner people start
using their money as a tool,

instead of a goal in life,

the faster we're gonna
be able to dig ourselves

out of this hole.

Okay, so dad, we've,

I know you don't
wanna pay attention

- and you don't wanna be...
- I do.

Filmed with miniatures,
because it could, you know,

you don't wanna look like
the guy in Dr. Strange Love

or any other...
Exactly.

Retired General
playing with things...

That's exactly
what it looks like.

But, look, we need
to set up something

that people can
understand how it works.

We have like a grocery
farmer, another store here

a bank, a homeowner, and
then emergency services

and over here's like nature,

or we'll even say
foreign country

or Africa, or somewhere else.

So, but the first thing
I gotta do is change

how everything's set up,

because we need the bank

in between

the country club
and everybody else.

We have a huge financial
system compared to what the,

what I can call the real economy

that is where people work
and produce, and live.

What we were talking
about was trying to explain

capital, structures
and insurance

and financing and mortgages
using children's toys.

So we have money...
Is it gonna work?

I don't know if it's
gonna work.

First thing is, the
grocery store is a business

and it makes money,

and they deposit the
money in the bank.

Okay. Boom.

Okay?

John works at the grocery store

and he gets paid by
the grocery store

and he decides he
wants to buy a house.

Okay.

He doesn't have enough
money from his earnings

to buy a house, but he goes
to the bank and the bank said,

"Oh we'll give you the
money, to buy the house,

and in return, you'll
give us an IOU."

We have to look at the house

is it, does it pass inspection?

Yeah, pass inspection.

And can you afford it
based on your monthly income?

Well,

The answer, say yes.

- Yes.
- Okay, good.

So here's a mortgage.

Okay, so here's the money and...
And by the way, this is just

like a real bank,
because in the real bank,

they're not sure can
this guy pay for it?

Just tell him yes, tell
him yes, come on,

- lets get the money.
- So it depends on paying.

We typically think that
bank takes deposits from us

and then lends it out.

The balance sheet equates
one entry on this side,

another entry on that side, has
sort of claims to come back,

and if it's really
comes back as expected,

they make a return on that.

And it's basically making
money out of thin air.

In the old days,

I would put this
mortgage, and I would say,

"This is an asset for me,

"because you're gonna
pay me every month

"to pay this
mortgage off," right?

So you're telling all
your buddies you had that.

Well, I found a better
way to make money, okay?

So the bank takes the IOU,
and the bank sells the IOU

into the what's called
the secondary market.

- Okay.
And it gets a fee for that.

Then once I have this
mortgage and maybe the mortgage

for many other houses
in the neighborhood,

and ideally from other
neighborhoods as well,

I throw this into what we call
a special purpose vehicle,

which really, in legal
terms, is typically a trust

or a corporation, these
assets-shielding devices,

and then you issue claims

against these new legal
shells to investors.

They package these IOUs
up so there's many of them,

and they sell them to people
like insurance companies

or foreign banks, and
they can be leveraged.

Which means I can make
loans off these things,

which are loans.

Yes, because you
have leverage here.

So you can make more loans.

So the system always
generates cash.

They can reduce their risk

because they're not
just buying a mortgage,

they're buying a
package of mortgages.

In some cases, they're
just buying a slice

of the interest rate off
a package of mortgages.

And so, all of these
are called derivatives.

And everything works, as long
as there's an expectation

that the loan will be repaid,

that John will, at the
right time each month,

give the bank money to pay
down his share of the IOU.

So the old way the
banking system worked,

it used to work that the banker
would look you in the eye

and say, "Are you credit worthy?"

"Can I trust you?"

The banks really
aren't keeping

the mortgages on
their books anymore.

They're selling those mortgages

so that they can be repackaged

as other kinds of
financial instruments.

So, they're able to
sort of pass the buck,

pass the risk off
to the next person.

Depending on how they're
rated by the rating agencies,

these are reputable
investment opportunities

for retirement funds, sure.

Yeah, pension funds,
sure, put 'em in here.

So the investors
are buying an interest

in the cashflow that
comes from the homeowners

into the pool that
we've created,

but have sort of a claim
against this house as well

because this cashflow is backed

by the mortgage
against the home.

So something as
illiquid, as formidable

as this building and
the land it stands on

can become a globally
tradable financial asset

through appropriate
legal coding.

This is your loan.

It travels through this system.

The bank has the loan,

Sells it, it becomes a security.

It becomes part of
the balance sheet

of money market mutual funds.

These money market mutual
funds then basically exchange

your loan, your
collateral, your house

in a collateralized cash
deal, and the whole purpose

of both the cash and the
collateralized cash deal

is that it allows
the various actors

to operate in derivative markets

and make very high rates
of short-term return.

Today, debt is
treated like an asset.

It can be traded
globally, right?

So we made a huge jump from
let's say the 12th century

when the first assignable
notes came about,

to treating debt as an asset

that we can just trade
on a global market.

At the bottom,
there's tangible value.

The same value is used, not
just one time, but two or three

or four times in the
financial sector trading.

It is not going for productive
investment in firms.

It is also not going
to finance and fund

climate change mitigation
and de-carbonization.

Money creates more money.

Wealth creates more wealth.

And this is a circle,
and it just rolls on.

At the end of the
day, it's our houses,

the value of our houses,
which are backing this up.

The IMF has called it "the
shadow banking system."

"Shadow" here doesn't
mean that it is illegal.

It also doesn't mean that it
is necessarily shady and so on.

It is just that it is shadow
because there are no rules.

It's hardly any rules.

It's sort of almost the Wild
West of the financial sector

And a problem with
the derivative market

is there is no market.

So it's like one-on-one
swaps between bankers.

It's like you and I say,

"Hey, I know what bank
you're working for,

"and so I've got some bonds,

"and I want you to
insure 'em for me

"in case the interest
rate changes.

"Would you insure
these bonds for me?"

"How much would you charge?"

You tell me a price.

I say, "That's a good deal."

"I'll get a bonus for
setting up the insurance.

"You'll get a bonus"

"for taking in the money
to do the insurance."

But I work at
a different bank.

It's a good deal.

And I heard you
just bought those.

And I figure I could
also get those,

'cause I know a guy in
Saudi Arabia or China

that would pay two cents more,

and I could make
50 grand off it.

You wind up so far
from the underlying.

The thing is, it's like the
old insurance principle, it's

"How many people can insure
one person's house"?

Can each person in the
neighborhood put a $100,000 policy

on that house and each
person collect $100,000

when the $100,000
house burns down?

As Americans,
we're shortsighted,

and we don't think long-term

and financial literacy
was not this complicated

100 years ago. You had
a little bit of money,

and probably didn't even
have a bank account.

You paid your bills, and
you passed bills around.

And you kept it
under the mattress.

Right, or you kept
it under the mattress.

Shh, that's not where mine's at.

The critical derivatives for
our financial markets today

are actually the ones that
brought down the financial system

in 2008 were the
credit default swaps

and the collateralized
debt obligations.

And the credit default
swap is basically

a kind of an insurance contract,

which basically says, "If
some assets in the markets"

"decline in value, the
insurer has to pay me a fee."

And the beauty of the CDS,
the credit default swap,

was that you didn't have
to hold the asset yourself.

It's like me taking out

a fire insurance on
my neighbor's house,

and if that house burns
down, I get the premium.

The value of these
financial transactions

is much, much larger than
the tangible, real capital,

which is basically the
houses of the families,

the households,
the notional value

of the derivative
market is $600 trillion.

And that is about let's say,

eight to 10 times as
large as global GDP.

So an American city with

how many trillions of dollars

of real estate
value right there,

or at least hundreds
of billions,

will no longer be there.

Like, how does that work?

How does that work in
the banking sector?

How does that work in
the insurance market,

the re-insurance market,

what's been collateralized
off that real estate?

This is not just
different actors,

exchanging in different markets

or in different
legal transactions,

our financial system is such
that we have huge banks,

mega banks, too
big to fail banks,

very often operating both
sides of the same market.

The big banks, they don't
necessarily know how much risk

their counterparty bank
in some other country

- is willing to undertake.
- No one really

understands the legal
interdependencies

that are built into
these contracts,

and that can
ultimately bring down

the entire financial system.

The system is so complicated

that the accountability is lost.

So the real value
is actually here.

These are all the transactions

which are built on top
of the real economy.

Then there's Dougherty.

The small town of
Dougherty is not,

not a whole lot there today.

Just it was a town that
once had a general store

when I was growing
up, had the church,

had a post office, but
you know, not anymore.

Agriculture and rural
America has gotten a preview

of the automation
that's about to hit

the rest of the country
in the next 10 years.

We're here at the town
square in Dewitt, Arkansas.

And if you look around, I mean

there's not a ton of
bustling businesses here,

but one of the
busiest businesses

is Department of Human Services.

So when we define the real
economy, let's not forget farms.

88% are still
small family farms.

So this is a grain storage bin

on my parents' family farm.

This is my dad's place.

He's gonna be 87, mom's 85.

They've lived here since 1956.

So, a lot of years.

And we are a team.

How many times you have
to have intense rains,

heat spells, freezings at the
wrong point to get the crops

to not come in once?

We do protect our farmers,
we give them crop insurance

and the crop insurance
is subsidized.

We have agricultural
extension services,

and they pay for that, but
they probably don't pay

the full cost of that.

It's a free market economy but,

it's also a national
security issue.

Federal crop insurance program

was started as a
response to the effects

of the dust bowl and
the Great Depression.

Many, many areas throughout
the United States were,

were severely affected
by the Dust Bowl,

many farmers lost everything.

In addition to most of America

being devastated
by the depression,

farmers acutely suffered
during that time.

Many parts of the plains

were just completely
filled with dust.

Many crops were lost
due to the weather,

the extreme weather,
due to insects.

But it's the large
scale like my dad said,

the large scale events that
everybody kinda worries about,

like a big drought.

I think that our
aquifer in some places

is down to like 20% and
then a lot of places at 50%,

and we're actually
using more water than

we have at any other time.

We have our pumping plants in

and we're building on canals

and this is actually
the first phase.

We're trying to get water
to this, this Indian bio

and then we're gonna use that
for the main water supply.

In Arkansas, we're gonna
have a drought event,

every growing season.

It doesn't matter,
if we just came

like this last flood
that we had here,

as soon as we came out
of that flood event,

we were irrigating because our
soil is, it's not real deep.

We have what they call a
hard pan underneath it,

pretty close to the surface

Which helps with
the rice growing.

Yes, very helpful.

It just gets more
expensive every day.

We thought we were gonna have

a lot of infrastructure
money maybe to come about,

but it hasn't come about.

And its federal infrastructure
money that coming?

Well, the way that was
originally set up was that,

the federal government was
gonna be responsible for 65%

the state 10, and our
local district, 25.

And there's a lot of
people benefit from this

other than just the farmers,

but that's, who's
got to pay for it

'cause those are only the ones

that's actually using the water.

And I'm assuming
we'll have to do

a whole bunch of
stuff like that.

As temperature rises and
rain patterns change.

When every person we've
talked to about farming

and different methods of farming

whether it's till or no
till or organic or not.

Each piece of land is different.

And each little
community is different.

And the ecosystem
there is different.

So how can a giant JP Morgan,

how can they service
a community like this?

- Well, and why would they want to?
- Yeah.

That's the rest of the story.

I mean, that's not
gonna be a profit center

for them to come out
here and look at a man

that's farming
2,000, 3,000 acres.

They're looking for
20, 50,000 acre farms

to where they can justify
spending some time on them.

The relationships with the
banks they've gotten big too.

But it used to be
these smaller banks

and they knew your
dad and his dad.

If you went to a farm sale and
"Hey I liked this tractor."

And it was $27,000.

You just call the bank
and say, "Hey, I need it."

"Okay, it's in your account."

60 years ago if you made a
crop, you made money period.

If you made a crop,
you paid all your bills

and you could send
your kids to school

and you buy your groceries.

You were okay.

Today, you can make a
crop and lose your assets.

Everybody out here,
it's all family and,

I mean, if you were 30
years ago when we did this

we get all, a
combine was $35,000.

And now a combine is $400,000.

When you're looking
at machines that,

so by the time you
have your headers

and your everything
to go with it

being upward close to
half a million dollars.

Where else is
someone else buying

half a million dollar equipment

and I'm barely making ends meet.

It gets more
challenging every year.

The cost of production
and agricultural costs

or just to be a farmer
and even a small farmer

are almost cost prohibitive

unless your family has been
in farming for generations.

Thank God almighty for
such a good looking crop

while others have
had to struggle.

Oh, here's some fellows.

Yeah, that's who
we're riding with.

Y'all be riding with him.

Alright, thanks Zach.

See you there.

Farms are similar
to owning a house.

You've gotta clean the gutters.

You've gotta sweep the sidewalk.

And the same thing with a farm

you've got certain maintenance
that have to be done

on annual basis to keep
it in a working order.

Before automation, everything
in here is handwritten.

24th, 1955.

Yep. And everyday...

And that's everything that
happened during that day

all the money that came in.

They made four loans.

Like this is, these are the
loans that we made that day.

And you see the size of
the loans; $150, $500.

The countryside across America

not just in our rural community
but other rural communities

used to have a lot of
small community banks

that were very plugged
into their communities

and to the people
that live there.

And trying to help them

grow their businesses
and their lives.

So just afraid of what the
landscape holds going forward.

You're just a number,

you're CUSIP number
on a bond security

and here's where you
mail your check now.

It's getting harder and
harder for those farmers

to stay in business because
they cannot get the funding.

Because with each year
of them incurring loss

and then no hope of...

The prices don't get
better the next year

regardless of the type
of natural disasters

and things that happen.

And so the farmer gets
further and further behind

and we've had several
farmers that are actually

going out of business.

They're having to
sell their equipment

and turn the farm over
to someone else to farm.

It's actually something
that I have no control over.

And none of us around
in England, Arkansas

have any control over.

And at the last
one, like in 2008

when they were saying that,

"The banks wouldn't have money
to loan to your farmers."

And I had several
farmers that were just

pulling their hair out.

They were just, "Are you
gonna be able to loan me

enough money to
finish this crop?"

And I finally told him,

"Just go home and
watch Andy Griffith

and quit watching CNN and Fox."

And said, "You know,
as far as I know"

we're gonna have the money and
we're gonna take care of you

"and you need to quit
watching all of those..."

Stuff to scare you.

Yeah. That you
have no control over.

So a couple of weeks later,
he came back and said,

"You know that was
the best advice

I've gotten so far this year."

The rainfall amounts, we
don't get an inch anymore.

It's either three
inches or nothing.

Everything is extremes.

Many of those restrictions
on banks are being peeled back.

So we still have
trading in derivatives.

It's not, we don't
know what it is.

There's hundreds of
trillions of dollars

maybe 600, maybe 800 trillions
of dollars of derivatives

on currency exchanges
that can't be covered.

It's like after 1980s it was,

"Oh, Gordon Gekko
is a great guy.

He taught us greed is good."

Look what it's gotten us.

It's a cycle in America.

You have to create wealth.

You can't create wealth

by just taking it from
other people through taxes.

People have to be
incentivized to create wealth.

And this has been the great-
Okay, but wait a minute

This has been
the great virtues

of Western democracy
for 300 years...

But it's also been the
massively misunderstood.

So go back to the
post-civil war United States

and the growth.

The growth was made off land

that people were literally
killed and chased off of

and they're like, "Hey man,
look at all this free land."

And that's how money was made.

You have to resolve that we
can do better going forward.

American capitalism can
be pretty heartless.

If you look back at
the American Civil War

and what happened
right afterwards,

we industrialized America,
we went into the Gilded Age.

People look at these
"robber barons" and said,

"This can't last."

And we ended up in the
progressive movement.

This is the age of Reagan.

The Reagan era
was the relaxation

of the administrative state.

It was the sort of, let
big firms get bigger.

It's let's make money.

Let's do it all with money.

Let's let charities
take care of people.

Forget about
government programs.

And that's run since
Reagan was elected.

Thank you very much.

I was raised red.

I was raised in a red family.

I grew up in the '80s.

Fell in love with Ronald Reagan.

I idolized Reagan.

I saw Reagan and I
said, "I want his job."

In fact, my parents told me
I mailed him a dollar bill.

I defaced the dollar bill
with my picture on it.

The maxim is,
Doveryai, no proveryai

trust but verify.

You repeat
that at every meeting.

But I wanted to
be in politics.

I wanted to be the first woman,
president of United States.

I thought it was fascinating.

We can leave our children

with an unrepayable, massive
debt and shattered economy

or we can leave them liberty

in a land where every individual

has the opportunity to be
whatever God intended us to be.

People like to say
economics is a science

but it really follows politics.

Keynes came out and looked at
it, he saw the political need.

That's how we understood
macroeconomics.

Friedman came out
and looked at it

and he saw deficit spending

and he saw government control
and he saw high taxes,

and he said, there has
to be a better way.

He reinvented
classical economics.

They called it
Neoliberal Economics.

Quoted Milton
Friedman and said that,

that how the economy
of the United States

oughta be judged by the
number of imports that we have

and not exports.

And I thought maybe this
was a typo or something.

And so I asked him, I said,
"I mean, are you for real?"

Trickle-down economics
starts in 1980.

It's right around in there.

Late '70s, we get into it.

But the bottom line is,
has two parts to it.

First fire the cops.

Not the cops on Main Street,
the cops on Wall Street.

Turn them loose.

Let those banks do
whatever they wanna do.

And so here we are now, 40
years into the age of Reagan

and people are looking
at what it's done, okay.

It's made a lot of
people really wealthy.

We won the Cold War
during that period.

Not necessarily because of
that, but we won the Cold War.

And America became
this supreme power.

But for the people of America,
it hasn't been so good.

I know, their real
wages went down.

Real wages went down and
people in this country look back

and they wanna make America

as great as it was in the 1950s.

That's when the marginal
tax rate was 91%.

I know.

Ronald Reagan, my
mother loved him.

She watched him every
Sunday night on GE Theater.

At the end, he would say,
"At General Electric,

progress is our most
important product."

What would
wrong Reagan say,

if you told him that GE spends
more money on stock buybacks

than it does on R&D?

In 1950, stock
buybacks were illegal.

They were considered
market manipulation.

Now, investment analysts
look at that company and say

"A lot of companies
are really smart.

I think their stocks
gonna continue to grow up

because they've got a really
great stock buyback program."

It does nothing for the economy.

The average American is...

they're living in
the GDP of 1980.

Yeah.

I mean, yeah, clearly
the world has changed,

and the commodities you can buy

are not the same commodities,

but in terms of your
let's say average

to the extent that we can
measure living standards,

living standards
have not improved.

Firms finance their investment
out of their profits,

that's what people think.

Now, if you look at the 500
biggest U.S corporations,

50% of the profits
are paid as dividends,

50% of the profits are
useful buying back stocks.

All the profits
dissipate, are gone.

So how do they finance
their investment?

If they...
Debt!

Debt.

The president
expressed surprise

about the collapse on
the markets yesterday.

He's still enduring popularity
as much to the economic boom

that America has enjoyed
under his leadership.

More people are working
than ever before in history

where our productivity is up

so is our manufacturing
product up.

There is no runaway inflation
as there has been in the past.

So as I say, I don't
think anyone should panic

because all the economic
indicators are solid.

But the warning
signs have long been there

in the closed factories in
many American small towns.

I mean, there is this notion

of billionaires
creating employment,

and that is
trickle-down economics.

The problem about that
is that in history,

it has never happened.

There is no such thing as
trickle-down economics.

It simply doesn't exist.

It really
is voodoo economics.

When you put the smartest
people in the world in finance

which is what we've done

for the last 25 years
in this country,

you can't hold back their
imagination and their creativity.

The speed and scale of
global economic change

has overwhelmed the
national systems

of rules and regulations.

So our first test
is to agree tougher

and more transparent supervision
of banks, hedge funds

and what is known as the
global shadow banking system.

And so when you
get right down to it,

I'm a licensed banker.

And so when the regulators
come to my bank,

we're very simple little bank.

They look for the SOP,
they look for due diligence

on projects we've done.

It's pretty easy.

You go to a big bank, Wells
or JP Morgan or Goldman,

and you're a regular like,

"What is this? I see these
emails and..." I mean,

they don't understand it because
they're not working in it.

They didn't invent it.

- Sure.
- It's like trying to teach people

a theory of quantum gravity

when they've had a high
school physics course

and they're inspecting
Stephen Hawking or something.

The earth is
like a bounded natural system

that can't expand forever.

The beauty of the legal code

and derivatives are a
product of the legal code

is that we can expand it
how far we want, right?

So we always create
new types of assets,

we create new types of
legal tricks in the end,

and the two systems are
not easily compatible.

If you're very rich and
you gamble with your money

and you lose it in Las Vegas,

that is what you want
and it's your problem.

But here, if they lose their
money here, it is our problem.

The market can't punish

for things it doesn't
know anything about.

And they haven't
factored any of the risks

that all this could change.

Natural disaster could
have major repercussions

for our financial system,

just because they will have
an effect on the asset values.

The new law

allows the 12
federal reserve banks

to issue additional
currency on good assets

and thus the banks that
reopen will be able to meet

every legitimate call.

It is sound currency

because it is backed
by actual good assets.

And so what happens is
that there's an event.

And then when the event
happens, then everybody wakes up

and sadly there's what we
call in a financial system,

contagion, and people
unload, they unload stocks,

they try to get their
derivatives repaid.

They want their insurance
policies cashed.

And the market
starts to unravel.

When the market
starts to go down,

the plugs get pulled everywhere.

And so what you're dealing
with in climate change,

it's not only the direct impact,

but also the possibility
of contagion.

Economic contagion.

- Economic contagion.
- Financial.

Yep.

Those views are
merely forecasts,

and as always will
evolve with the arrival

of new information.

Mike, they're on the
bell, hold the bell.

the bells.

We actually have made it clear

that we will bail out
these financial actors.

We will bail them.

This cannot be sustained.

If it runs only because
the central banks go in

and buy assets, right?

Recently it was
proposed that the

European Central Bank

should also start buying
shares of companies.

So not only debt, but shares.

So we're effectively
socializing the obligation

to create financial returns

for the holders
of capital assets.

And that can't go on forever.

Even though every
politician says,

"This is the most important
election in your lifetime."

These forces aren't tamed or
unleashed by a single election.

In the news in the
last couple of weeks,

we've read about
the coronavirus.

And dude, China's acting like

this is like
zombie apocalypse.

I'm actually kind
of afraid of that

- corona virus, man.
- Yeah. No, I don't wanna get

on a plane.

Do we have a government
that's competent enough

and organized enough to
handle that kind of response?

No, man. I mean,
we can't even handle

like homelessness
in the city of LA.

You know what I mean?

Like we can't even figure out
how to properly fund anything,

let alone a pandemic.

Americans live
under the illusion

that they're incredibly
different from other people.

When I was in college
just everything started

to melt down in the Balkans,

everyone's like, "These
people are savages."

"They've been fighting each
other for hundreds-of-years."

It's like they just came down
out of the trees or something.

Then you're there
and you realize

these people live in houses
that have electricity

and two-car garages
and refrigerators

and not only
children in college,

but several generations that
have gone through college

and they all spoke
the same language.

And these people

Killed each other.

They committed genocide,
250,000 killed, rape camps,

concentration camps,
ethnic cleansing.

This was a plan to
ethnically cleanse Kosovo

and get rid of the
Albanian population.

Are we going to stand for that?

Is France going to stand
for that? I don't think so.

Like many countries

as a system starts
to break down the,

in their case, it was
the communist system,

and in our case, our
capitalist system

is starting to break down

and people turn on each other
because some leaders think

"Everybody's upset right now
and I can motivate my group"

"to take stuff from
another group."

Europe has
not seen displaced people

in these numbers since
the Second World War.

And those are the kinds of
things we have to worry about

with climate change,
because it happens when,

resources start to get tight,

and everybody's a human,
everybody's prone to these things.

We've pre-cut boards that
we can put over the windows

in the event that there are
looters and things like that

to protect the house.

Yeah. You saw what
you want right?

We knew they wanted.

The UN said just two weeks
ago, a billion within 30 years.

Okay. A billion displaced
people, a billion refugees

because they can't grow their
food the way they used to

because of the drought
or because of floods

or because of
collapse of systems.

How much
worse is this gonna get

before it gets better?

I think the general view

is this is going to
continue deteriorating

for the time being,

the next rains are
a long while off.

For the world, this
is a very bad thing

because it's billions
of people dislocated,

massive economic consequences.

Can you have a
society that's been

as successful as this one
has in a material sense?

And can it transform itself?

You know, in the past empires
haven't been able to do that.

What would these Romans say?

Could they help us?

Unlikely.

Unlikely.

The heritage of
America is Roman.

All the men who wrote their
constitution had studied

the history of Rome,

I mean, the Senate it's Roman.

And it's failing us just
like the Roman Senate failed.

You know, there was a
Greek philosopher who said

that governments
go through cycles.

They go from a
democracy to oligopoly

to dictatorships
and they collapse.

I know we're talking
about Aristotle but..

Actually it wasn't Aristotle,
it was a different guy.

No, it was Aristotle.

No, it was maybe
it was Polybius,

I forget who it was.

I'll bet you cash,
it's Aristotle.

'Cause we're in Vegas, I will
bet you cash it's Aristotle,

because Aristotle came
up with the definitions

of the three kinds
of governments

and their alter egos.

So you have a democracy
which when it goes bad,

becomes a mobocracy.

You have a monarchy,

which when it goes
bad becomes a tyranny

and you have an aristocracy,

which when it goes bad
becomes an oligopoly.

He's building on the
work of a predecessor.

What's the name of
the predecessor?

We have to find that out.

I don't
know, you tell me.

We'll find it.

I don't know, I
have to look it up.

Wealth was
obtained largely through trade,

into the warehouses
full of goods

from all over the
empire and beyond.

It was the wealthy few
rather than the many,

who benefited from the riches

and vast resources
of the empire.

This imbalance and the
irresponsible behavior

of public officials,

would become major reasons
for Rome's eventual decline.

Okay, so dad
and I had this bet

and I need you to
see if I'm right

- or he's right.
- Okay.

It's about Aristotle.

Oh boy.

I know, I know.

So I was like well,
Aristotle described,

the death of democracy
and what happens

to different forms of
government as they decay.

Well you see Alessia, I know
from also from your studies,

that the collapse
of the Roman Empire

was mainly a huge, gigantic,

enormous, humongous,
financial collapse.

At some point, the emperors
had just run out of money.

There are lots of
different theories

why the Roman
Empire did collapse.

I think what we know now,

is that there has been
a long economic decline

before the Roman
Empire collapsed,

before the German
hoards came down

and conquered Italy,

and conquered Rome,
ultimately, right?

So the question is what triggered
the long economic decline?

Disparity between
the rich and the poor.

Onistorus and Miliorus they...

Yes, you're
speaking Latin now.

Yeah, yeah Latin.

Massive amounts of inequality

may not be politically
sustainable.

Governments fund themselves
through either debt,

or through taxation.

In Rome you would basically go

and try to squeeze
more returns out of

provinces that you occupied,

or you might launch another
war to get the returns,

to feed Rome and
feed those who were

running the system overall.

And I think that's
the common denominator

because we live in a quite
different system today, right?

So today it's our central banks

who are doing the
rescue operation.

One thing about the
financial markets,

one of their real power is,

if they can pull forward
action from the future

to the present, if
there's credible policy,

after all, most of
what central banks do

is effectively that.

So big trees fall hard.

The market can
adapt to anything,

as long as there's clarity,

transparency and honesty

and I don't think
we're getting that.

There were a lot of things
that caused the problem,

but, I mean, essentially,

the structure of Rome

held together for
a good long time,

until finally it just ran out

of economic wherewithal
and leadership.

Politicians were bought,

what the founders of
our republic warned us

about over and over that
if you get really wealthy

and you lose your moral
character, it's over.

Well, that's where we are.

Because we are very
close to a moment

in which we could
start slowly going down

and if we are not very careful,

we will go down faster and
faster and faster and faster.

Roller coaster.

It will be a lot of fun, maybe.

You know the
ancient malediction,

may you live in
interesting times.

So, that's how
it ended last time.

Except this time, it
won't just be barbarians,

it'll be the planet
itself that's on fire.

There's still
active fire in that area.

Monitor the conditions
and know what you'll do

if the fire threatens

In the smoky
aftermath of the worst start

to fire season
anyone can remember,

while some search for solutions,

others want someone to blame.

Probably should take a
break and let it settle in,

take an intermission.

Financial ingenuity has
been part of this system

since the Dutch invented the...

Okay,

- But a lot of it
- liability company

- isn't financial
- and Lloyds of London.

But dad, listen.

People get pretty...

Everybody thought Bernie
Madoff was a genius.

Yeah.

Foreign investors looked
at the United States

and said, "the United
States they're the best.

"That's the safest place in
the world I can put my money".

I mean, we've
had, I don't know,

five, six biblical-like events.

We're continuing to have them,

so I need to
question the validity

of the value of, and viability

of my land long-term.

A little over seven years ago,

Hurricane Sandy
blew through here,

causing tens of billions of
dollars in property damage,

and since then, New
York has built more,

bigger, taller and more
expensive, because we, the people,

are on the hook for the
cost of the insurance

if another hurricane comes
and hits New York City.

The National Flood
Insurance Program

is a federally-run public
program of insurance.

It's run by the Federal
Emergency Management Agency.

It provides flood insurance
for virtually all homeowners

and small businesses
in the country.

So this is pretty
unusual, actually.

Most other countries
have private markets

for flood insurance,
but the U.S does not.

It's a supplementary
policy that is subsidized

by the government, and so all
citizens are, to some extent,

footing the bill for
coastal property owners.

In order to build a huge
condominium development

in a flood plain in New
York City, you, of course,

need a lot of capital.

Municipal actors in New York
City are very interested

in continuing to promote a
version of New York City,

in which as much of the
available land remains viable

for continued
economic development,

because property taxes are so
important there, as elsewhere.

Well, the original program

of the National Flood
Insurance Program

was supposed to stop
construction in very high risk areas.

Areas where water
moves with velocity,

particularly flood
ways along the river,

where water moves the
same rate as the river,

hurricane-zoned areas, where
the storm surge comes in.

The building is,

it's almost impossible to
build a really safe building

against a 14-foot wall
of water coming in at you

in a storm surge.

There's a lot of vested
interests that don't care,

construction
industry, for example.

They'd like to build
a house on a beach

while the tide is out, as
long as they can sell it

before the tide comes back in.

And once they've
sold it, of course,

the risk is now somebody else's.

The ways in which financial
actors securitized mortgages

in the run-up to the
last financial crisis

is still going on.

So the building
contractors all want

to minimize the flood program.

The town wants to minimize it,

wanna hold down the
elevations on the maps

and fight that every
map that comes out

by the National Flood
Insurance Program,

that causes problems,
delay in implementation,

maybe never implementation.

The coastal communities

are on some of the most
valuable land in the country,

And as a consequence,
people are gonna fight

to protect their
investment position.

I thought, okay, the
city's not requiring me

to have flood insurance.

My realtor didn't tell me I
had to have flood insurance.

Honestly, you don't
look at the flood maps

when you move into
a neighborhood.

You fall in love with the
house, and 85% of the people

in my neighborhood
were not insured.

Shelter.

The United States
is uniquely vulnerable

to building into
disaster-likely,

physically vulnerable areas,
because of our reliance

on local rule, particularly
for zoning decisions.

That's part of our bedrock
of the United States,

state rights and local rights,

and it's actually has
a lot of advantages,

but it has a major disadvantage,

which is that local
governments depend on revenues

that are coming from their
buildings, from their residents

who are building and
living in their localities,

and that means that all residents
benefit from development.

The politics of provision
are so tied up with land values

in the United States, that
if property values go down,

then the tax assessments
adjust to reflect that,

and you're bringing in less
revenue for the tax base,

which means less investment
in local amenities

and schools and local
public transportation.

In Texas, we don't
have state income tax.

That's another reason
why you wanna live here,

because it's cheap, but people
are taxed on their land.

The maps that are in
existence for where a 100

or 500-year flood will
happen are so outdated

and no longer accurate, the
risk and the cost of that risk,

even within the insurance
industry, is not as accurate

as it needs to be, in
order for us to appreciate

what the cost of climate is.

Insurance actors
have found ways

to take an insurance
policy and securitize that,

and transfer it to kind
of capital risk markets,

so they're not really
holding the bag,

which means that they're
willing to underwrite more

and more property,

which means that people
can kinda continue to build

in risky areas.

I don't think anyone
would wanna come in

and look at the house and
come through salt water

and wanna buy it.

- This is my nest egg.
- Yeah, this is your nest egg.

This is how I'm gonna help
my kids and my retirement.

But now, because you
bought it in an area

where there's rising sea level,

maybe that nest
egg's not so secure.

In order to convert
his nest egg to cash,

he's gotta be able
to sell the house,

but now nobody will insure
the next 30 year mortgage.

What happens to John?

John's lost
his retirement nest egg.

Okay, so John is now
literally John on the street.

The nice house
that we're gonna buy

in Florida to retire...

This was their
house in Florida.

They were gonna move to Alabama.

Okay, well,
they're not moving.

They may still move to Alabama.

They may be living
in a trailer park.

Flood involves
the U.S government

in this really peculiar way,

fire is privately underwritten,

so it's private insurers

and what's happening
with fire risk,

is that some of the
primary insurers

are going out of business,

in events like the
California wildfires,

that can put an insurer
out of business,

if they have
outstanding liabilities

that exceed what
they can pay off.

Then
we started talking

and you told me
about buying a house

in Sausalito.

So what happened?

So we call the insurance
company two days before,

two or three days before

and let them know we're
gonna close in a few days.

And they call us back and say,

"Hey, we can't
insure that house"

And I'm like, "what?"

And they're like " yeah, it's
on a list of neighborhoods"

"that we don't insure anymore"

So these entire neighborhoods
are gonna be uninsured

and they also told us,

they don't know if
they're gonna reinsure

the current owner
of the house either.

That's an entire,

billions of dollars of
houses across the state,

that it's gonna have
an insurance problem.

The insurance companies
are insuring for one year.

So as things get worse,
the insurance companies

are definitely not
going to be able

to come to the rescue
of these homeowners.

These latent,
hidden climate risks

that might exist in
different places,

in different housing markets,

should they burst,
could take down

the entire financial system.

And right now this house
is listed for $49,000.

At the peak of the market,
it went to about $250,000.

It's not only the owners
that lose their assets,

it's the financial
intermediaries that lose

their claims against them.

It's those that bought
the secularized mortgages

and other assets that
are linked to them,

just as we've seen
in the 2008 crisis.

And unless we're prepared
to continue to write

the same check over
and over again,

we need to start to scrutinize,

are we hardening the utilities
and the infrastructure

around these homes sufficiently,

so they can weather these
storms going forward?

Or should we in fact not permit

the investment of capital,
that is going to be subject to,

climate change conditions
in a negative way

and we need to think about that.

No, that's the
really scary thing

because we're not, you
know we're not hardening

any of our infrastructure.

I mean, not yet.

It's very expensive.

There's guys thinking about it,

but nobody's done it yet.

Well, from an oil
company standpoint,

most of the major assets
in the United States

and actually globally,
are on the coastline.

From that standpoint, the
facilities are as vulnerable

as people's homes.

So there's a lot of
offshore infrastructure

in the Gulf of Mexico,

but that comes on shore
to a lot of pipelines

that are right at the coastline.

And so as the coastline erodes,

those pipelines become
noticeable and vulnerable

and have to be buried deeper,

or infrastructure put
around it to protect it.

So indeed, yeah, hardening
of infrastructure,

utilities and fires have
been associated with that,

or the pipelines.

People are worried about how
to protect those going forward.

Nature's gonna be
eroding the foundations

of our economy.

So, sometimes I'm out
in a place like this,

and I imagine what it
would be like to come here

with no money in my pocket,

fleeing an economic meltdown,

'cause you know look, we
do have plenty of land,

but if I had to survive out here

and didn't have the money

to buy something to
provide me power,

some way to get water,

out of a fairly dry land,

while we love pristine nature

and we like to hike in it,

hunt in it, camp in it,

all those things we do

thanks to the technology
that you bought at the store.

The tent, the gun,
the flashlight,

the lighter, these things are
made in human communities,

in factories, not by
people on the run,

not by people out of capital.

It's all about capital.

So here's what happens,

capital is gonna flow to where
it can make the most money

for the capital owner.

A town like this,

which was a silver mining town,

is a good example
of foraging theory,

where if you're an animal or,

and these things translate
into the human world as well,

and you've got a choice
between two things,

one that's easy to get

and one that's hard to get.

If the easy thing to
get is worth more,

that's what you're gonna go for.

So that's what
produces boom towns,

because at one point the silver
was really easy to get to

and worth something

and then when the
silver market crashed,

well, it wasn't worth anything.

So they moved on, to find the
next easiest thing to mine.

These patterns of capital
do not change over time.

Capital is always gonna
seek the greatest return

and as soon as that
return isn't paying off,

it's gonna pull up stakes
and go somewhere else.

The way to define
capital is the money

that is going to be used
to create something.

People are very myopic.

They are just looking at
what's in front of their face

and the portfolio
that's right there,

how they're gonna make
money in the short term.

How you doing Frank?

So look, we look
around and it's like,

this is all the capital,

this is all the
capital in the world,

headquartered right here.

Right.

And I'm assuming they
all wanna live past 2050

and so we gotta change over.

Are they beating down a
trail to your door to invest?

No, they're not.

We have to search for the
right type of investors

for our projects.

And when we do find the
investors for our projects,

it's extremely difficult
to create the value

or pull out the value for our
projects that the investors

recognize immediately.

If somebody can get 15% on
their money doing derivatives,

why would they wanna
get 5% on their money

doing renewable?

Because they would be able

to use the investment
tax credit.

Everybody wants a return

and everybody wants to
maximize their return.

And the only groups that I
know can maximize their return

for renewable energy
projects today,

are the wealthy individuals
that have passive income.

And, what do we think of
as like wealthy individuals?

So I think a lot of Americans
think if someone has $500,000,

they are a wealthy individual.

I'm talking about
people who have

hundreds and hundreds of
millions of dollars of net worth.

So minimum, a hundred
million dollars of net worth.

I would say so, but
there's not many people

maybe less than 1%
of the population

that has that type of
investment portfolio,

or investments generating
passive income.

Any more comments?

That's pretty close
all right, pretty close.

Perfect.

All right.

So when there's not investment

in the market towards
the technology

that would help for
climate solutions,

and renewables and clean energy,

then that trickles
down into the entire,

the entire life
stream or life cycle,

you know, the whole
flow of business.

Lord Keynes, who was the
founder of macro economics

asked the question,
why do people invest?

And honestly, there's no answer.

He called it animal spirits.

I can tell you people
are risk averse.

And after 2008, they're
even more risk averse.

When I go to these
business conferences

and I see my friends,

I asked the guy who's worth
a hundred million dollars,

I said, what are
you working on now?

He says, you know,
he said, I'm just,

I'm pretty happy where I am

and you know, I've got
the house in Mexico

and we're looking
after the grandkids,

and I mean, he's not
investing in taking risks.

He's not creating jobs
for the rest of us,

at least not directly.

That's the animal spirits
that are out there

in too much of the business
community right now.

So the only way you
can replace that

is with government leadership.

The Erie Canal, the
Transcontinental Railroad,

the Panama Canal,
the space program,

the interstate highway system,

in no case did a group of
entrepreneurs get together

and say, hey let's build the
interstate highway system.

No, it was a dream
that Ike pushed in 1955

that came from a study done

during World War
II that showed that

you needed these highways for
national security purposes.

This is no partisan policy.

No one has a monopoly on truth,

and on the facts that
affect this country,

we must work together.

The United States is
highly dis-aggregated.

We have 50 states, one nation,

many counties, many regions,

tens of thousands of cities

they all have a voice
in how things are done.

And it's hard to get us to
collaborate on certain projects,

unless we all align and
agree it's necessary

and we feel some
urgency to get it done.

If the Australian
military study,

the U.S military study,

and the British military
study are all correct

we've got about 30 years

if we don't do anything
until civilization collapses.

Which I'm guessing doesn't
have a good rate of return.

Correct?

So Wes there are actually those

who would tell
you that we may be

beyond the tipping
point already,

I don't subscribe
to that, by the way.

If you do subscribe to that then

it almost makes
the investment in,

you know wind and
solar, not pertinent.

What's the most
valuable thing in the world?

The most valuable thing,

it's oil reserves in the ground.

It's worth more than the
GDP of the United States,

more than the stock market,

more than the stock markets
of all the Western countries,

it's oil in the ground,

and the people that have that
oil, they want it to be used.

Whatever you hear
about Saudi Arabia

saying they're
going to, you know

move beyond a petrol
based economy, yell, yell,

but they're going to
move at their pace

and they need those petro
dollars to get there.

The societal costs right
now are much greater

than the economic costs of
taking it out of the ground.

So you have to recognize
the societal impact

and you have to make the people

who are producing
it and selling it,

and the people who are buying it

pay the full cost of using it.

And that, that means a tax.

But we didn't even do
that with security though,

because I mean, realistically

we've subsidized the oil
industry for 50 years

by knocking over governments,

by protecting shipping
lanes for it, oil lanes,

so we couldn't even do
it when it came to like

having them pay for their
own extraction and security.

It's true.

But one of the reasons we
couldn't do it is because,

we didn't really
have the alternative.

What's the sound?

We didn't really have the
alternative technically.

Engineers
worked under fire

to douse oil
pipelines set ablaze

by retreating Iraqi troops.

Animal fats, and tallow
could no longer supply

the ever growing need for
candles and lubricants.

Whale oil, which had long
been the chief illuminant,

was becoming scarce.

Yet the demand for artificial
light was increasing.

In 1850, a lamp capable
of efficiently burning

a refined product of
petroleum was invented.

Oil!

Oil!

Early oil production,
they used steam power

for the drilling,
for the riggings

of different pieces
of equipment,

and that steam power
probably was produced

by burning wood or coal.

So you'd use wood
or coal to get oil.

Today, we use
electricity to get oil.

We use gas to get oil.

So we use one form of
energy to get another.

And that's one of the
interconnected aspects

of energy that's kinda
surprising for people

is how interdependent is.

We don't have an economy that
runs on one form of energy,

we have an economy that
runs on many forms.

Part of this equation,

certainly in the short term

to this time period
you're worried about,

is modulating consumption and
adjusting cultural behavior.

But people aren't
talking about that,

no one wants to blame anybody.

If you wanna blame industry,

well, industry exists because
people buy their things

or use their things.

So they're the
ultimate consumers.

Are we gonna carbon tax them?
Are we gonna punish them?

Or maybe part of
the equation is,

we all accept responsibility

and we get a cultural
change to take place here

to go back to where we were
20, 30 or 40 years ago.

We might, but that's hard.

The vast majority of our
individual impact comes from,

housing, transport and food.

These are kinda big
structural issues

that can't really be
addressed adequately

by changing the brand
of paper towels you buy.

We live in an energy
consumption society.

And the way to look at things,

we have to be aware that
nothing comes for free.

We have to be aware that
everything costs energy,

whatever you do.

This is not what public
space looks like in the U.S,

but I noticed here
in the Netherlands,

everybody's riding
bikes everywhere.

Yeah. Yeah.

And that doesn't
strangely require gasoline.

Nope.

The question
is, can we replace

fossil fuels with
renewable energy?

And this is a very
tricky question.

It raises enormous debates

and people get angry when
you asked them this question,

because it is not
clear what you mean.

If you mean that you can
satisfy people's greed

with renewable energy,

then the answer is no.

If you mean renewable
energy could produce

a sufficient amount of
energy in order to survive,

then the answer is yes.

We are in an energy efficient
home now, that we've rebuilt

that our household use
alone is twice the size

of the average American,

that woke me up,

I can't count the
number of trips

that I've taken around
the world for business,

but that two
international trips,

was equal to one year of
utility energy in my home.

And that really had me
thinking about travel.

It had me thinking
about what I eat.

Another
surprise for many people

is how much energy we
use in the food system.

And
complete dinners.

In
the United States,

we use 100 quadrillion
BTU of energy a year.

A BTU is our British
thermal unit.

One BTU is about the energy
content of a kitchen match.

So in the United States, we use

100 billion million kitchen
matches of energy per year.

10 quads, 10 quadrillion
BTU is for the food system.

One of those quads is
in the food itself.

Food is a form of energy.

We're ingesting at one quad
of food energy into our bodies

for 330 million
Americans every year.

The other nine quads is for
the rest of the food system.

This is in the agrochemicals,
the fertilizers and pesticides

diesel for tractors, the
energy for refrigeration,

the energy for drying
crops at silos,

warehouses, transportation,

plus the energy to
cook at our homes.

Pies are done.

Three or
four quads of that

is just for the cold chain.

That's the refrigeration system:

Refrigerated trucks,
refrigerated warehouses,

and refrigerators and freezers
at our homes and businesses.

The energy embedded
in the cold chain

of the food system
in the United States

is more energy than
entire countries

like Switzerland and Sweden
consume in a year combined.

The energy embedded in the
edible food we throw away

is also enough to power
entire countries elsewhere.

Sadly, we throw away like

a fourth to a half
of our edible food.

Okay so
Michael, here we are.

We're surrounded by water.

Yeah.

And what's
the relationship

between water and energy?

The water energy
relationship is twofold.

One is we use a lot
of water for energy.

We use water to
cool power plants,

we use water to
irrigate biofuels,

we use water for oil
and gas production,

we use water to make
steam at refineries.

In fact, if you look all up and
down the energy supply chain

water's at every step.

Our well went dry.

Dead.

Yeah, that's dead.

This is where the water,
that would be the full mark.

It's not a fantasy
apocalypse movie landscape.

It's now and it's real.

So the grid might be strained

if you don't have water
available for cooling,

at least the way we have
most power plants today,

where they use heat,

they then need a
water for cooling.

Modern forms of like solar
panels or wind turbines

don't need water coolings.

The average life for PV
panels is what, 20 years?

20, 25 years.

20, 25 years.

- Maybe 30 years, yeah.
- So the people who say,

well, it takes seven
years of energy

to produce this PV panel,
but then you're getting,

that means you're getting 18
years of energy free.

So you've cut down.

Even then you're getting 18
years of energy for free.

So me John Q Public,

I'm like, hey man,

I wanna put some money
into your solar farm.

No, not until the government
gets involved with things,

puts us into a pari passu
position with fossil fuels.

I've got a lot of friends

who are in the
renewable business,

and there's a really
big problem in terms of,

you know, you've got the
power purchase agreement,

you've got all the
permitting done,

You've even got
interconnect agreements,

except what's happening is,

grid companies are delaying

and not letting
them on the grid.

What's going on with that?

I think one of the
challenges we have is,

who has access to
the infrastructure

and democratizing
the infrastructure

is a way to open it up so that

more solutions can
be brought forward.

This is something that we did

with telecommunications
in the 80s with AT&T,

AT&T had built out all
the wires and poles,

and they were
required to open up

their infrastructure
for other companies.

And that's why we have
so many phone companies,

and long distance companies
now that we didn't have before.

The same thing could happen

with democratizing the
electrical infrastructure.

More solutions would be
plugged in more wind and solar,

and we have more
technologies along the way.

And this is where
long range planning,

stable governance really matter.

Kind of what I'm hearing is,

it's not a technology problem.

No, not a technology problem.

It's not an
engineering problem.

- No.
- It's a financial engineering problem.

Energy poverty, lack
of food, income inequality.

So it's up to us now
to form the policy

that is going to
help bridge this gap.

In 1941, when the
United States went to war,

and people saved tin
cans and aluminum

and gave up, women gave
up buying nylon stockings,

and everything was done
for the war effort.

But the war was there,
was right in front of us.

And young men were being
drafted and sent overseas,

and casualties were coming home.

And this is different.

It requires the same type of
reorganization or commitment.

But why didn't
they call on me?

I could have done something.

That was then,
and this is now.

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Michael, you are now in
charge of the United States

Energy policy and
you have free reign.

How would we make
the transition?

For national security reasons
and for economic reasons

and for environmental reasons

there are many
reasons to do this.

We need to harden, improve
and expand our grid.

Maybe even using the
interstate highways.

We already have the rights
of way and put lines

above ground or below ground,
create a national network.

And then it will span and
reach to the sunny windy areas,

and already connects
to the urban areas.

And once we have the network,

we can plug in whatever we want,

build the infrastructure first,
then the energy will follow.

But we have to put a
price on pollution.

We'll take the money from
the price on pollution

to clean up the trash.

So let's take the United States

6 billion tons of CO2 a year,

put in the atmosphere.

And let's say we're
willing to pay

I don't know, $30
a ton to remove it.

That works out to if I
do my math correctly,

$180 billion a year.

Sounds like a lot of money.

That's less than what we spend

on just dealing with
trash from cities.

Why not spend another couple
hundred billion cleaning

up the waste in the atmosphere.

Let's take the CO2
and put it into the soil.

Like, let's pay farmers
to take the Co2

out of the atmosphere
into the soil.

We need to get more of that
national security mindset.

If you have a built
to last strategy,

then you do want to look at

what's happening in
these longer horizons

and it's absolutely critical.

It's gonna take
all forms of energy

and all people to move us
through this transition.

Otherwise, I don't think
we actually stand a chance.

I'm trying to get
rid of this car,

but it's like quitting
smoking, it's not easy.

You are so used
to certain things

that it is very difficult.

The Romans had done
a lot of bad things

to the ecosystem.

Yeah.

But, they had not
destroyed it as we could do.

- FEMA estimates for every
dollar spent on hazard mitigation

you save $4 in disaster
recovery costs.

So we're already
spending the money.

There's the sense that
it's perhaps too expensive

to prepare for climate change,

but we are already
spending the money.

We're spending it after
every disaster hits.

When I was growing
up, there was the draft.

So everybody thought they had
an obligation to the country.

If you went to a land-grant
college you were drafted.

Now it's different.

The trust in government's gone,

the obligation to
government is gone.

If we could take some of
that spirit of patriotism

and service and rebuild
it into doing something

for the environment.

This entire thing
is built out of carbon

that comes out of
the atmosphere.

We need a hundred
thousand young people

to give up part of their summer

and form up and
really work this.

We could control
these pine beetles

that are destroying the forest.

We could plant new trees, but
it should be done not only

for pay as a guaranteed job,
but it should also be done

for every citizen's obligation
to take care of the land.

That's what I'd like to see.

It sounds like you're trying
to inspire a whole generation

of people to pay for it.

Well, it sounds like something
that old guys would say.

Whoa.

Baby baby.

Can you smile for us?

That's a good noise.

It's made me want to be more
of a fighter for her sake.

The transformation is
potentially exciting,

because we can think not only

about losing things that
we have always wanted

but also letting go of things

that we perhaps
don't benefit from.

We can lose in order to
transform into something else.

It's not as kind of confident
that things will be okay,

but it finds possibility
in a ways that

things will have to change

in kind of really dramatic ways.

And so we are looking
at diversifying the types

of crops that we are
wanting to plant,

and also work with
conservation type programs

to help preserve
species and habitat.

And let nature take it's course

and bring back
species that we need

and that the crops actually
need to be productive.

We don't want a
hurricane or a tropical storm,

they're already geared up
the crops are turned in.

They wanna go ahead
and get finished.

People wanna know where
their food came from.

Well, at some point maybe
people will wanna know

where their banker
lives and who he is.

And do I have a
relationship with him

that when I need some
money to fix something

I can maybe find
somebody to help me?

Yeah, I mean,
it's not a matter of

the government
telling banks what to do,

or telling us what we can do.

No, I mean, there's still
lots of possibilities.

We should have smaller banks
basically split them up,

and not make them
too big to fail.

If they make mistakes, they
should fail without causing

a total systems crisis.

And probably what also needs
to be done is introduce rules

which make it impossible
for the financial sector

to create within the
financial sector itself

so much additional debt.

We have to somehow correct
this market imperfection.

If you want to
have a derivative,

if you want to hedge
your risk fine,

but you must have exposure
to the underlying asset.

I remember
I was watching on TV

after a major flood
down in Florida,

and they were interviewing
this guy and he said,

"My father rebuilt twice, my
grandfather rebuilt twice."

And he says, "And I'm
gonna rebuild again".

And the reporter turned
into the camera and said,

"That's the American way".

Well, I thought the reporter
should say, that's stupid.

You can't keep doing
it over and over again

that's the definition
of insanity.

So it's basically trust
in the monetary management

and trust in the future
productivity of a country

that gives us trust
in the currency.

Not the idea that there
are some gold barons hidden

in the federal reserve.

And so there is a
point of resistance

at which governments
aren't going to be,

have access to capital
to address the problem.

We're rich.

You know, the fear is,

if we cannot bail out
the system anymore

it will come crushing down
with huge side effects.

The hope and that
sounds a little cynical

but I think the hope is
we probably can reorder

our system only after a crash.

And I think that human
history is such that

we are unable to make
really fundamental change

in the way we live and the
way we organize ourselves

without such a crash.

Nobody wants it, and I'm the
last person who wants it.

And if I think back to the
1930s, and I'm German, right?

And you think about
what the repercussions

of a major crisis can be.

We just don't know how
we would get out on

the other end of the tunnel.

I think without this
crisis, I just don't see

enough political leverage
to fundamentally alter

the way we organize
our financial system.

When climate change happens,

there will be real problems
and it will be real,

as you said, there will
be real scarcities,

and it will be real migrants
coming, and there will be an...

And that's what I,

and then will really be
broke because it'll be

after you've had that collapse
of the inverted pyramid.

And then it's like, then it's

like asking Somalia to
fight climate change.

Yeah, yeah.

So your
criticism would be

that we're not facing reality

and not adapting to it?

That's correct.

My answer to that is, I
still have faith in democracy.

I believe we can
do it as a people.

I believe we can
do it as a society.

And I believe we can
take the institutions

of the United States that have
served this country very well

for over 200 years, and
move into the 21st century

and still help lead
mankind forward.

It's an article of
faith, but it's the faith

that motivates action.

We have almost all the tools

and all the financial resources,

and all the institutions that
could solve this problem.

It's the kind of challenge that
could bring mankind together

in a way we've never been
brought together before.

I wish there was
more conversation,

more guys on the opposite
side talking together.

Because everybody as we feel,

there are people feeling
opposite from us

that are just as righteous
and all of that stuff.

But we ought to get
together to see...

The thing if you get
together with people like this,

what you find is
the disagreements

- are pretty narrow actually.
- Yes, that's what I mean.

The people are mostly
agreed on like 95%.

Yeah.

But, but there are
forces in the culture

that want to sharpen and
popularize those disagreement.

Yeah.

It's a human nature issue.

Okay?

So what sells?

Tell me, what sells?

What do you pay attention to

when it's happening around you?

You gotta find people...

Conflict, conflict, conflict.

- It's true. It's true.
- That's it.

To create that
kind of a dialogue

between a father and a son,

that love thing, I
mean, this is my kid.

You guys must have some
wild conversation man.

It's what gets me.

- I totally...
- This is the basis

- disagree with that.
- Of democracy and capitalism.

No, I disagree with that.

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