Learning Without Scars
As a third-generation educator, it is easy to say that teaching and training are in the blood for Ron Slee. From his beginnings as a coach, through his time at McGill University, Ron developed a foundation for the work he does today. From working within dealerships, to operating a consulting company, creating a training business and running twenty groups, Ron has been directly involved in this Industry since 1969. Ron has been known as the industry expert for years, and has brought this expertise to bear through his training programs. Today, Ron provides specialized, job function based internet based subject specific classes, job function skills assessments, as well virtual seminars and webinars. These courses are designed for manufacturers and their dealers, as well as independent businesses in the construction equipment, light industrial, on-highway, engine, and agricultural industries through Learning Without Scars (www.LearningWithoutScars.com). This platform is a continuation of the work begun by Quest, Learning Centers which was established in 1996. This training is aimed at improving dealer parts and service operations through qualified people that are knowledgeable in using operational metrics and current market and operational best practice methods.
Learning Without Scars
Two People, One Transaction: The Naked Truth About Money
The economic revolution we've been waiting for isn't just coming—it's already here. In this eye-opening conversation, Steve Clegg brings decades of financial expertise to explain how artificial intelligence and cryptocurrency are fundamentally restructuring global commerce by eliminating the layers of middlemen that have traditionally absorbed 20-30% of transaction value.
Clegg's journey through international finance began in 1974 when, as a 24-year-old University of Chicago graduate, he wrote a paper identifying the three fundamental challenges of global commerce: exchange rate fluctuations, interest rate differences, and local pricing disparities. That paper caught the attention of Federal Reserve Chairman Arthur Burns, launching Clegg into a career managing foreign exchange for major corporations. Now, nearly five decades later, he's watching cryptocurrency solve those exact problems he identified as a young economist.
What makes this discussion truly compelling is how it connects technological innovation to fundamental economic principles. "There's no such thing as one-hand clapping," Clegg explains. "It requires two people exchanging goods and services." This core transaction—buyer and seller—has remained constant throughout human history, but the systems built around it have grown increasingly complex and extractive. AI and blockchain technology are now enabling a "great inversion," where technology supports rather than exploits commerce.
The implications extend far beyond finance. Manufacturing cycles have compressed from years to just seven months. Energy production is becoming decentralized through mini nuclear reactors. Local food production via hydroponics eliminates transportation costs that typically account for 50% of food prices. These advancements suggest a future where communities can become more self-sufficient economic entities.
Whether you're a business owner concerned about staying competitive, an investor trying to understand market trends, or simply someone wondering how these changes will affect your career, this conversation provides valuable perspective on navigating the most significant economic transformation of our lifetimes. The question isn't whether these changes are coming—it's whether you're prepared to adapt.
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Aloha and welcome to another candid conversation. We're going to go down a different path. Today. Our guest is Steve Clegg, who I have enormous respect for and what he's done with business, with systems, with thinking. So with that as a starting point, Stephen, welcome to Chicago, to Hawaii. Thanks, Rod.
Speaker 2:Stephen, welcome to Chicago, to Hawaii.
Speaker 1:Thanks, rod. We started to get ready for this and I said wait a second, let's just get going. Steve's always been of the opinion that the world depends on the transaction between two human people beings, and he doesn't see that changing, so let's use that as a starting point. You've used all kinds of AI in the last number of years.
Speaker 2:Where are you at with this stuff? We're automating a huge amount of the stuff that we're doing, so it's following that pattern, but AI has made it possible to more rapidly make this inversion that we've talked about in the past, which is that with artificial intelligence, you've got the economy. The human race has the ability to, you know, invert what has been a pyramid that has sat on top of transactions, where you have layers and layers of people supposedly assisting you in the exchange of goods and services, where the seller and the buyer are really not seeing a great amount of the benefit of that transaction compared to the pyramid that sits on top. But with artificial intelligence, what that does? It allows you to go back to the two-people transaction, which is the core of a viable economy. There's no such thing as one-hand clapping. It requires two people exchanging goods and services, and AI allows for the capability of supporting that transaction, so that sits on top of the pyramid, not at the bottom of the pyramid.
Speaker 2:And so rather than being exploited by the pyramid, it's being supported by the artificial intelligence.
Speaker 1:Let me pick on something that you mentioned. Between the buyer and the seller, there's two pyramids of people that are sucking some aspect of that transaction away, whether it's freight, whether it's customs, whether it's duties, whether it's trade, whether it's customs, whether it's duties, whether it's markups, whatever the heck it might be. But with ai, your premise is that's going to shrink, if not disappear altogether.
Speaker 2:Yes, and it. It's been possible in the past, I mean when I first got into the steel business. It's been possible in the past. I mean when I first got into the steel business. The steel mills back then had more people outside the plant than they had inside the plant and we were able to take Birmingham steel and make it the low-cost producer in North America for rebar and rod by, you know, having a superintendent, two superintendents, a plant manager and a salesman or two and one admin and everybody else was on the line. So basically, turning into the beginning of an inversion which allowed us to make rebar for about under $200 a ton, where at the time it was going for $600 a ton.
Speaker 2:So the technology or the desire to do it, has been there, but there have been some big stumbling blocks and one of them has been just having the people content focused on the transaction rather than all the things that support it, and artificial intelligence is making that happen. And then the big breakthrough, also in addition to AI, has been the crypto technology, because now you're taking out the what has been a foreign exchange problem, a time differential issue, so you've got local pricing wherever you're sourcing from, local pricing from where you're selling, you've got the exchange rate issue, interest rate issue for any time delay and with crypto like an XRP or XLM, that all goes away. With crypto like an XRP or XLM, that all goes away. So you don't have to worry about all of those layers that are usually collecting anywhere from. In my experience, it's as much as 20 to 30% of every transaction is absorbed by them.
Speaker 1:So before we go much further, you opened up a whole bunch of new topics and subjects. First of all, our systems have to be a hell of a lot better, smarter, more capable, and that's a lagging event. There's not a lot of people in the systems world that know the clients that their systems are built for. They're more worried about making elegant systems and procedures and processes than they are in helping the client. And then you agree with that.
Speaker 2:Yeah, the programmers are myopic. They aren't even looking at the big picture there. What do you want me to do? So, AI is beginning to take care of that type of mentality, so you're going to be left with a very small percentage of people that have the knowledge in the background to achieve that.
Speaker 1:Yeah, and that takes me to some fundamentals. Back and forth with the question what do you do? And you ask people and most of them can tell us pretty easily what they do. Then the next question is how do you do it? Well, now there's a bit of a stumble, but they get there. And then the more telling question is why do you do it? And they really can't say because we're in a rut with work. You've got to work to get money. You've got to have money to pay your bills. You've got to have the ability to pay your bills to have a house and food and people are trapped.
Speaker 2:They're trapped and also they get paid for doing the same thing right over and over again. So that causes many people to gravitate to these very mind mindless jobs where they're not thinking they're just. This is what I do and this is experience I had with this guy that was missing teeth, he had wild hair and when we had this plant in West Virginia and they had a problem unloading we were making roofing materials, unloading the granules because the chute would get clogged up. So this guy would climb up into the rafters with a bunch of of uninsulated high voltage wires and pull on this chain as the granules are being unloaded. So I'm walking through this and this guy had been doing it for his whole career.
Speaker 2:That was his job. So he's up there pulling on it and we're looking at him there, with this guy that we're looking at and go, why do you have the chute bending at the end? And no one ever asked that question. Because I said you know, if you've got a flow, you're going to create a bottleneck. Yeah, so we had him cut the end end of the shoot off, so it just was a straight run. Um, and for 40 years this guy had been climbing up that ladder, up into the up into the ceiling, endangered life and pulling on this stupid chain in order to get the granules to move through because someone had put an end tip on the shoe.
Speaker 1:Yeah, that's the kind of obvious stuff that we're confronted all the time, and the dilemma is, one of the attributes that is missing in a lot of people is curiosity. You know why do we do that. But then you bring up another point just blithely and say crypto. And all of a sudden we're in a different world, and this morning on one of the business channels I was watching, they're talking about that. Christine Lagarde, who runs the European Central Bank, now used to be the, or the World Bank used to be the president of the European Central Bank now used to be the, or the World Bank used to be the president of the European Union. She's the one that's setting interest rates for the world, not the United States. And Jerome Powell this morning in Aspen or wherever the hell they have this meeting made a comment about maybe loosening up interest rates in September, and the Dow went up 900 points like in about 30 minutes.
Speaker 2:So here comes crypto and that's nation independent yes, and also the problem that you've got that when I went to University of Chicago, I wrote a paper on this topic.
Speaker 1:Okay, just for grins. What year was it that paper was written?
Speaker 2:I wrote it in 1974.
Speaker 1:Okay, so what is that? That's 50 years ago. Yeah, okay, go ahead.
Speaker 2:So I'd been working in Poland. I took a job as an assistant project manager because the western work crew had walked off and found that we were buying stuff, you know, from hungary, from east germany, and we had official exchange rates, black market exchange rates, and we that we're building this plant to ship to the US but we're buying locally, where you know. It was complicated and the challenge was, you know, dealing with all this. I came back and wrote a paper by hand, since I couldn't type, I could barely read what I wrote, and just laid out what the problem was, which was the challenge of local pricing interest. Know, how do you value this? And how do you, if you put investment, of which they were, the plant that I was a system manager on, that we're building, was $100 million investment on the Russian border.
Speaker 2:So what are they gonna book that? They gonna book that in US dollars, are they gonna book it in, you know, zawadis, or with the official rate, the unofficial rate, rubles? You know, god knows Right, god knows. So because of all that you had, you know there's bank issues, there's exchange rate interest, there's, because of the time, delays, there's interest costs, carrying costs and what I felt was because, at the time floating exchange rates. Interest rates were just emerging after the Britain Woods Agreement collapsed, so we're kind of unmoored at the time without gold and we were just sitting on the fiat currency. So I wrote the paper and said that the LIBOR market what became the LIBOR market in London was setting the price because of the dollar overhang, of what the value was and the interest rates associated with the US dollar, so freeze-frame LIBOR.
Speaker 1:What's LIBOR?
Speaker 2:It was the rate that was traded in London that people used as the primary interest rate. For a lot of contracts it was the largest international broker.
Speaker 1:The broken rate, yeah, okay.
Speaker 2:And so that was the center of the finance worldwide. So I wrote this paper and I got in some scream fest with some idiot professor. But then I got pulled in Milton Friedman and all these guys were teaching at that time there. So anyway they grabbed me and actually had someone translate it into something that was writable they could read. So anyway I got whizzed on this because people hadn't really thought about it that with a dollar overhang the last transaction determines the underlying value of the assets.
Speaker 2:That that's the key, the last transaction yeah, and I said, you know, one little transaction can set the value on the world market of the underlying assets yeah, and it.
Speaker 1:It really is amazing. Now I don't know, maybe you want to talk a little bit about Milton Friedman, because I think he's rather remarkable as an economist and as a teacher.
Speaker 2:Yeah, he was great. His view was we just dump all the data in there and we just crunch it.
Speaker 1:Yeah, and that's 50 years ago.
Speaker 2:That's 50 years ago. So he was at that time developing machine learning and then Black and Scholes those guys. I really went to Poland to make enough money to buy a seat on the Chicago Marketplace yeah, because there was beginning to trade the exchange and so anyway, I ended't end up not doing that but I wrote this stupid paper, didn't think much of it. It got quizzed by a bunch of the professors just brainstorming this and then kind of went on my merry way with a pissed off professor. He didn't agree with anything that I said. So I have a bunch of job offers in Chicago. I have one job offer in New York and Jim Bray, who was running BorgWarner at the time, goes you know, Steve, if you could take a job in the Midwest, in Chicago, here it'll be worse than the military. It'll be worse in the military. But if you go to New York they don't care how many, whether you have arms or legs or how old you are, it's all about talent. He goes you need to go to New York, you'll hate Chicago.
Speaker 1:So anyway, I took the job as Peter Grace's assistant at WR Grace and because I and in those days, wr Grace, and because I and in those days, wr Grace was an unbelievably powerful and successful yeah, it was one of the major, major corporations.
Speaker 2:So, anyway, I find myself in the biggest office I've ever had, up on the 46th floor of the Grace building, overlooking Manhattan, and they got all this crap on. There's a conference table, there's a conference table, there's a big desk, and they gave me two secretaries and I'm sitting there going what am I supposed to do with all this stuff? Exactly, what are you thinking? But anyway, they had no idea what they're doing. They're actually, it turned out, they're hedging their positions in the wrong direction, which seemed to be a common problem with everybody in those days, everybody. They didn't understand it.
Speaker 1:Yeah.
Speaker 2:So I built a model to manage that. So I took over their foreign lending and their foreign exchange in their foreign exchange and you have to remember, I showed up with a plastic suit and cowboy boots and they looked at me like I was a Martian and dragged me off to Brooks Brothers.
Speaker 1:Let me interject for a second. One of the things that not many people know is Steve graduated from the Air Force Academy, so the cowboy boots and the plastic suit, kind of fits.
Speaker 2:I mean, at the Air Force Academy, you really didn't need anything but jeans and a t-shirt other than your uniform. Yeah, exactly. So anyway, a couple of weeks into being there, I get a cough from this guy named Arthur Burns, and I don't know who he is. He just says you know, mr Clegg, I read your paper. I'm thinking what paper did you read? I don't remember having a paper that was. You know anybody would read, but I didn't know who he was. And he goes. I want you to come to lunch at the Bull and Bear at the Waldorf and I want to have a discussion about your paper with some of my associates. So no one had asked me to lunch. I'd been there a couple of weeks and thought, well, okay, great, so I tell my-.
Speaker 1:And so anybody who doesn't know, Waldorf Astoria is a very famous hotel in New York that's famous for all kinds of meetings the Bull and Bear Bar, you know it's a place that Sinatra went and had his old table in the corner. I mean, you're talking about a power space, so keep on going.
Speaker 2:So, anyway, I go down the hall and ask the economist who in the hell is Arthur Burns? And he says he's chairman of the Fed. You don't know that? Go for it.
Speaker 1:That's the Federal Reserve. This is Arthur Burns, who was the chairman of the Federal Reserve before Paul Volcker. Christ, we're going back a long way.
Speaker 2:So I show up there and he's got Paul Volcker, he's got a bunch of the other Fed presidents of the various banks which I had no real appreciation for, and it ended up being like a four-hour lunch.
Speaker 1:How old were?
Speaker 2:you, then I was 24.
Speaker 1:Yeah, imagine that. Okay, so let me translate that forward. You were basically paid to go and think and put that onto a piece of paper that somebody else could look at and say, well, it's no good or it's good or whatever. And if you bring it forward to today, that's what Silicon Valley has been doing the last 15 years. They bring people in, go Wozniak and creating Apple with Steve Jobs. You know they're bright, bright people with no real Hewlett Packard. That's kind of the melting pot of innovation in America and everybody comes here to do it.
Speaker 2:Yeah, it's wonderful, absolutely, and what I found was that for the people, that are actual thinkers. So, anyway, I went through and explained to him and at the end of this, arthur Byrne says to me that the purpose of the Fed is to ensure that there's liquidity so the banks can open in the morning. Yes, that's what the Fed's purview was At that time. At that time, and that is a really important thing, because there'd been financial collapses as a result of not being able to manage the liquidity in the market.
Speaker 1:Okay, so let me attribute that to the fact that we moved away from the gold standard. When we had the gold standard, there was much more stability in the banking system.
Speaker 2:Yes, it's $34. People knew what it was the dollar, even though they may have been printing the dollar. They could always be exchanged. At the time I think it was $35 or $34 or something. But once Nixon went off of it because Johnson had done two things, he got into the Vietnam War and printed money like there's no tomorrow. And then he started the Great Society and didn't realize he had turned a tiger loose that just ate up money. He stepped on growing ate up money. So they started printing as fast as they could and so that caused this massive amount of underlying inflation. And they couldn't support that with gold because the Fort Knox was getting emptied out very quickly because people didn't believe that the dollar was worth $34, so they're arbitraging it.
Speaker 1:Yep.
Speaker 2:And so that meant that they had to come up with a solution and, to the credit of, at the time, arthur Burns, but really Paul Volcker, what emerged was the dollar tied itself to a barrel of oil, and that lasted up until December of this year. But from that meeting for 15 years people at the Fed contacted me because I ran WR Grace's foreign exchange. And then Marshall, who was running Avis at the time, contacted me. They had a mess on their hands, funding their fleets worldwide and pricing, interest rates and all that. So I took over that at Avis at, again, a very young age, running and funding their fleets worldwide, running and funding their fleets worldwide. So I got a huge amount of experience in looking at sourcing automobiles from one country, investing in facilities to provide, you know, at the airport or whatever, rental both of cars and also trucks at the ports and undercarriages, and it was a really great education. But a lot of people couldn't get their mind around kind of a three-problem issue, which was interest rates, exchange rates and pricing.
Speaker 1:So let me try and put that into a little bit more clarity this way. If everybody in America went to their bank and asked for cash that represented what their bank balances were, how much cash do you think the banks would be able to give to people as a percentage of the total bank account value it used?
Speaker 2:to be, they had to have assets and not necessarily liquid assets. Right yeah, one dollar for every ten dollars that they had out in circulation.
Speaker 1:So ten percent. So if I went to the bank and I had a hundred dollars, all the banks in America are required to be able to give me $10 back.
Speaker 2:That used to be the case, but because of leverage and forward contracts, that leverage moved up to about 70 times and that's what caused the collapse in 2008. Right, right.
Speaker 1:And okay, stay with that one for a second. What was the primary cause of the 2008 collapse?
Speaker 2:But what they were doing was they're using math to calculate portfolios and they're taking it out and selling it to Secondary investors.
Speaker 2:People that were unsophisticated, similar when interest rates started floating. This was pretty funny that even when I was at WR Grace, the Swiss came and wanted to make loans they would give us. I just remember this. I can't remember which Swiss bank it was, but these guys were quite sharp. He comes in and he says well, you need money, we will lend you at the time, which was a lot of money, a $100 million line and we're only going to charge you 1%. And so I did. The guy who wasn't the brightest bulb comes to me and says, yeah, this is a hell of a deal. And I said you've got to be out of your mind.
Speaker 1:You're paying a million dollars for nothing.
Speaker 2:What they're going to do is, you know I said we won't be able to pay it back. We're in the midst of a massive inflation and they're betting that you know the dollar will depreciate and they're going to make a fortune relative to whatever their dollar holdings are. But because of that, they took that offer to pretty much every fortune 500 company in the US and I think every one of them fired their CFOs. I quit in about two years. It was just like I mean, yeah, america was total rubes.
Speaker 1:Yeah, we've had this thing forever, though, steve, and money has been the underlying transaction. So I go back to the first manufacturer was a blacksmith transaction. So I go back to the first manufacturer was a blacksmith and you had a horse and I'm a knight and I needed horseshoes. So there's only one guy in town that I could go to and he was a big, strong son of a gun. His attribute was muscles. Today, the attribute is brains, and schools today have tried to normalize everything. They've dumbed it down and they've been preaching the same mantra for about 20, 30 years, when the world has changed now the schools are so out of date and exactly.
Speaker 2:It's really sad. And the education, um, just the tools to be educated aren't? They're not being taught it. It's like learn this and then they burned it with. You know kind of worthless things that aren't really adding to their education or broadening their scope of understanding.
Speaker 1:It's kind of sad that people are so out of touch with how these things are applied and how do they fit within a business or a community or developing an economic viable entity. It's like the guy in West Virginia that's gone up into the rafters with his live wires and there's a bend in the tube at the bottom that you get rid of it. He's not needed up there anymore. Yeah, but I'll lose my job if you take it. Yeah, yeah, yeah, you know it's really funny. I guess that's an interesting mindset. Everywhere I've been, I've worked myself out of a job and that allowed me to grow. But most people look at their job as sustenance and you've heard me say this. Very few people look over the wall. We're all on ruts. So here comes crypto. It's going to replace currency everywhere in the world. It's just a matter of time, and that neutralizes currency. So one of the three legs of your paper from 1974 or whatever it solved the whole problem Precisely.
Speaker 2:Crypto solves the pricing issue, it solves the time issue, it reduces the transaction costs. So you're not spending anywhere from 20 to 30 percent of every dollar that you do overseas just to make the transaction happen. All that's gone, it's instantaneous, it's documented. You know the money's going to be there at the other end, so letters of credit and things of this nature are not necessary.
Speaker 1:And that just stay there for a second. I don't want to get political, but with Biden's administration they didn't want to have anything to do with crypto. Here comes Trump and in the first six months, crypto's open.
Speaker 2:Well, they didn't want to have anything to do with it, because you're going to destroy what people have been doing arbitraging all this and the politicians have been participating in this bullshit. Big time, big time. So anytime money. You know, this was interesting when george bush and George Bush the father of the son dug into this whole 9-11. And they discovered that the trades in the Chicago Exchange were being I think it was shot over to Belgium or the Netherlands and then shot back to the floor. So there's this delay. So it meant that Europe was front-running our market and placing bids in front of whatever the transactions were.
Speaker 1:They were buying futures and they had inside information to make money with.
Speaker 2:Yeah, and so they've been doing it and Bush makes a mistake of announcing this and feeling like he's discovered something. And of course, he quickly shut his mouth because a lot of people this was a big gravy train for a lot of powerful people yes, having had operations in Poland, I bought a bunch of plants in Canada and elsewhere around the world is that corruption is rampant everywhere. It's just part of every economy.
Speaker 1:Yeah, this has probably been true for 10,000 years with humankind, but it's still distressing the level of corruption and the masses, the level of corruption and and we're the masses, the unwashed brethren we have. No, we haven't got any chance. We're not even at the table. You're not at the table and.
Speaker 2:But also people don't appreciate it the mob. You know whichever one bad mouths the mob, but the mob's role is been a facilitator to protect their group from the abuses of politicians and the police state. So this is. You know, you got checks and balances in the US Constitution, but the economy has a check and balance also and. But with crypto, a lot of these things will disappear, except for movement. So the mob usually controls trucking rail. But with crypto, a lot of these things will disappear, except for movement. So the mob usually controls trucking rail. Anything that has to be moved is an opportunity to put a toll on it and demand rent.
Speaker 1:Yeah, it's kind of funny. I don't mean this in a bad way or a good way, it's just an observation. Japan very clean, safe, not much crime. It's a joint venture between the government and the mob.
Speaker 2:Yeah, my brother ran the home shopping network out of Taiwan in China. Oh, hello. And he spent half of his time with the triads in China and the triads in Japan. Otherwise you couldn't get goods moved, you couldn't get them into port, you couldn't get them distributed.
Speaker 1:I don't remember what the excuse was, but I had to go into St Louis. And when the mob dissipated out of New York, bonanno went to Vegas. A lot of people went to Kansas City. A lot of people went into St Louis, a lot of people went into st louis and somebody said to me run, you know, it's cheaper to get somebody killed here than to break an arm. They said come on, that's ridiculous. Yeah, go to st louis, you know you don't have to get. All of this leads to, from my perspective, is cleanliness of any transaction, and it requires, then, talent. You take all the noise away, all the influence peddling away. Now it's up to your skills.
Speaker 2:Yes, it's two people exchanging goods and services on the line and there will be some friction to the extent that there's movement, but it won't be from the pyramid that's been sitting on top of the poor consumer and often the abused seller.
Speaker 1:So, prince, lead that into a little bit more common things and let me frame it After World War II, trade in the world was meant to prevent anybody else from joining the Soviet Union, so anybody who was one of our allies. We wanted to help them financially, we wanted to help them economically. We wanted to help them economically and we did it with trade. So we have all of these things where India is 400% in tariffs or that kind of stuff. Here comes Trump and he's kicking the legs of that milking stool and all of us are falling on our ass and saying, wait a second, you can't do that, don't do that milking stool and all of us are falling on our ass and saying wait a second, you can't do that, don't do that Right, they've been living off this.
Speaker 2:It's like, yeah, the world's been on welfare. It's the same thing as currency, isn't it? Yeah? So after World War II, what happened is they printed all this money to fund the war. Yep, so Marshall, to his credit, came up with a brilliant guy, brilliant, brilliant guy. He came up with Like a brilliant guy, brilliant guy.
Speaker 2:He came up with an idea that we have this money. The rest of the world has to be redeveloped. We can continue producing and push this money out there as the world's currency to generate the growth that's necessary to replace everything that was destroyed during the war and that worked up through Kennedy. It began to shake when JFK took position to his demise, actually, that the Fed was contributing to had lost sight of its true role, which was, as Arthur Burns described, it's just making liquidity available tomorrow morning, and you had a CIA that evolved from the military secret service, that was no longer operating totally to the benefit of the United States, and so JFK started threatening it. He wanted to get us out of the Vietnam War, he wanted to disband the CIA, and he also wanted to disband the Fed. So once he announced that he was going to disband the Fed, he was assassinated down in Dallas two weeks later.
Speaker 1:Yeah, imagine that. So, putting all this stuff together, it's still money and power that rules everything. We don't give a hoot who's in power.
Speaker 2:It doesn't matter. I mean, in Illinois the Democrats control it, but the Republicans and Democrats come together, decide who's more likely to win whatever election, and it's really a division of contracts. Yeah, who's going to get this, who's going to get that? Yep, might as well be in a mob meeting.
Speaker 1:It's yeah, yeah, and, and all of this stuff with the Texas redistricting has exposed, you know, boston, I don't know what this is Massachusetts, it's Connecticut, it's pretty much all.
Speaker 2:The Northeast has zero Republican representation.
Speaker 1:With 40 to 60% of the population voting for it.
Speaker 2:Yeah, and half the people are Republican. It doesn't make any sense, and so they're talking about Texas. I mean, they've opened up Pantera's box, Illinois. You've got more people voting Once we actually get the real count. I live in Illinois, so I got 18 ballots at our house that I could have just walked in and dropped off without anyone asking for 50 people, you know, for people that had lived here over the last 50 years. I'm sure some of them were dead, but in Illinois it doesn't matter.
Speaker 1:Well, there's the In Hawaii. I can see the place from where I lived, my window. There's a drop box. It's at a bus terminus and the only time there's people there is when they're getting on or off a bus. So I can go to this drop box at 10 o'clock at night. There's nobody there but chickens and rats and put in 100,000 ballots. I mean hell, what is this crap?
Speaker 2:And they're shipping them in. I mean, all that was found, but that's been going on. If you read Carroll's book on LBJ books, I don't think he ever won a fair election. They always had boxes of ballots waiting in the wings to make sure that if he didn't have enough votes he could deliver.
Speaker 1:What's really interesting, though, steve, in my naive little world is, slowly but surely, all this stuff is getting exposed, so more and more people are able to think about it, and people don't really give themselves the opportunity to think anymore, and people don't really give themselves the opportunity to think anymore.
Speaker 2:Now that's the reason. After they figured out that they could brainwash people, move them in a direction with television programs, you had the CIA. I mean the government was always present at all the news stations, but that was primarily because of World War II. They didn't want anything to disclose, so they had a good reason to start. But then they stayed there and as that evolved more recently, it kind of started with George W Bush because of 9-11, but then Obama unleashed the CIA, giving them full reign to operate in the US and do the same crap that they're doing overseas taking down states. So they applied all that to the US. I mean just my background as one of my majors at the Air Force Academy was Soviet Studies and the head of the, Colonel Vassilov, was head of the Russian house for the military. So anybody that was a defector or whatever coming across would come to the Air Force Academy, be put in base housing. Oh, really, right after the war. Oh, this is in. I went there in 68.
Speaker 1:Oh my God, so it was there for 30, 40 years. Yeah, I'll be damned.
Speaker 2:So and he would come and these guys back then they were kind of, yeah, his dad had been one of the white Russian generals, but he had gotten gunfights in Moscow and come back wounded and crap like that.
Speaker 1:That's the only city in the world that I'm uncomfortable Moscow. There's too much going on and it's too visible. Yeah, if there's too much going on and it's too visible, yeah, it's okay. So translate that into today with artificial intelligence, and then let me bring in robotics. Now, okay, one of the guys that writes blogs for us. His name is ed gordon, and he's written about 20 or 21 bestsellers on the new York Times. One of them was called Future Jobs, and his premise was that by 2030, 50% of the American workforce, which is about 90 million people, will not have the skills to be employable. You think that's true or false?
Speaker 2:I think actually it depends on how this shakes out, but if you're going to have a job. This is why the economies that can be created with AI and also having the ability to generate your own energy in a local market efficiently, like a mini nuclear reactor or battery storage or all the things that are available today Once you do that, you've got hydroponics, you can manufacture all your building materials and you can supply everything that you need. And if you look at the aircraft carriers today or the Air Force, they're flying whole factories onto bases around the world and aircraft carriers have a whole floor of printing machines, so any part that they need on an aircraft carrier can be printed.
Speaker 1:Yeah, my grandson's on one right now on the aircraft carrier can be printed.
Speaker 1:Yeah, my grandson's on one right now and there's, you know, a football field and a half. Yeah, 5,000 people, 200 airplanes, and you know they don't need to come back to shore for three submarines, nuclear submarines. I mean this whole world, that way has really changed. And then you look at our supply chains. You and I were. We're into dealers, we're into manufacturers, we're into communications companies. We're still using voicemail and we're still having voicemail answered in india right, that's all going to end, of course.
Speaker 2:And also you have to look at elon musk everyone you know I'm a big fan of elon musk, but when you look at what he's done in factories, yeah, and also his speed of manufacturing used to be the manufacturing. If you had a production line, you'd build it and you'd have to, you know, use it for like 20 years before you really got your money back. Yeah, it was fixed line. Then in the I'd say it started in the 80s where it began to move to variable manufacturing so you could have, rather than just one type of car, you could have multiple types of cars going down the production line. The same line, yep, and it's the same thing.
Speaker 2:I was involved with spring manufacturing, wire form. So to solve that, it came up, I thought we could automate a machine, which we did, and then we ended up getting into some top secret projects where we're building airplane wings and doing stuff like that with basically a machine learning capability, and so that has progressed. Now you add AI to that and you can optimize. But just what we're doing by using different technology, we are able to sew a wing using carbon fiber, making a stronger wing, more flexible, much lighter, weighing about 40% of a regular wing, and you can do that with three people. It took about two days versus 21 people working.
Speaker 2:Yes, it was actually 21 days. Yeah, so that's just for a wing section. So I mean the automation and the capabilities of this and the lights out opportunities that exist, both from running the factory to security, to movement of goods, safety on the highways, safety in the air all these things are going to be very beneficial. But you still have, the economy revolves around two people exchanging goods and services, so people are going to have to figure out what do they have that someone else wants?
Speaker 1:Yeah, and again, that's something that's alien to most of it, because of learning without scars and because of what my daughter does in a school district. Every student in america has a test in grade four and grade eight and many countries have the same test on english and arithmetic and in 2024, 70 couldn't read at grade level and 72 could not perform mathematics at grade level. That's an indictment of education. That is so, and it's scary actually because we're dependent on those kids, those schools, to create work ready employees.
Speaker 2:But the schools have. Unfortunately, with what's happened with schools, it's turned into a job in layers and layers of mismanagement.
Speaker 2:And, unfortunately, the young teachers that come in enthusiastic I wanna teach kids. They have to go through this gauntlet of seniority and it's not based on talent, it's based on a bunch of bullshit. And you've got teachers and, having experienced this, I was fortunate that, like for the Air Force Academy, I think I had 10 kids in my class. Oh, that's magnificent. And same thing at the University of Chicago the classes were just a handful of kids, the school was small and you can learn. But these webinars, there are these big groups. Everyone's just sitting there and if you can't track what the guy is saying, you're out of luck.
Speaker 1:My daughter teaches in middle school grades 6, 7, and 8, and she has six classes every day and maybe 50% 60% of the students are English as second language and her class size is 40, on the small side, and you know, quite honestly, you can't teach anything to people with that many people in the room.
Speaker 2:Not with kids They've got, they have too much energy and if they don't have the energy, you're going. You got a bigger problem.
Speaker 1:Yeah, yeah, yeah, exactly. So we come out half the population is going to be displaced. What's society going to do to support those people?
Speaker 2:Well, I think that's where Fossey and these guys, especially now that people are coming out about the Comtrails that are covering the US and other countries, as they're dumping a bunch of this toxic stuff on top of the population, but they have some expectation that somehow, magically, the population's going to be reduced and Good luck, good luck. So I feel as if that, if you think in terms of economic viability there are. What I think will emerge is there'll be communities that materialize, that are, you know, like the Amish or other groups that materialize. This is a way of life and we can support each other, where everyone has a meaningful job, from teaching to growing food, to animal husbandry, to manufacturing, and do that at the local level. And that local level could be a remote location up in Alaska, it could be on Mars and it could be a two, four block area in a city, but these economic systems will emerge because of energy and AI and optimizing the resources locally available to feed, house and employ a viable economic community.
Speaker 1:Yeah, you mentioned the Amish. The province of Saskatchewan in Western Canada has serious religious groups, no disrespect. But 40,000 acres, 60,000 acres, and it's a family, it's completely self-contained. They grow their own food, they make their own clothing, they teach their children the whole thing. And one of the things that I found intriguing I'm working with John Deere dealers up there and the guys would come in and they'd buy John Deere equipment. John Deere had a test place up there too, a town called Rosetown, saskatchewan, south of Saskatoon, and after the planting season was over they'd trade it back. In Harvest season comes, I'd buy a new business, trade it back in, and so the Canadian dealer made a lot of money because they could sell it in the state's low hours, three months old, get a hell of a price. You know it's pretty clever all the way around.
Speaker 1:My grandparents emigrated from England to Alberta, in a place you can't grow a rock, so I'm not a good example, but it's true. We're going to example. Nuclear energy and the power we need to have to drive AI, nuclear energy is going to be required. How many electricians are we going to need? I mean, there's new jobs that are going to be created.
Speaker 2:The job opportunities are going to be huge as this all emerges, and it's not going to be done all by robots.
Speaker 1:Oh no, the remedial stuff, the stuff that you know. There's a lot of jobs that exist, that it's a waste of human talent.
Speaker 2:It is and it's not putting. Humans have the ability to think yeah, and their life thing is that people, um, if you move in one direction, which it seems like the canadians and europeans are going back to, that which is, um, life isn't valued, but societies that revolve around life, um, build communities. Yeah, yeah, but unfortunately communication. One of my sons did a documentary in India looking at remote villages and the introduction of cable vision and how it just destroyed cultures that had been there for 5,000 years. The kids ran to the cities because they saw much bigger opportunities. So you lost the pattern of, as you got older, you took care of the children and then you had your whole social system all structured and maintained, and that all got destroyed in literally a matter of a year or two at these villages as they acclimated to sitting in front of the television, transfixed and then luring the kids away to jobs in the city.
Speaker 1:Yeah, I mentioned my grandson's in the Navy and he wanted nuclear engineering. He's doing nuclear engineering, astrophysics. He's 19 years old and I'm chatting with him and saying okay, what are you going to do with this? Say, you leave the Navy and it's 10 years from now and you're 30, what are you going to do? He said well, you know, fusion will be commercially viable then, where you'll have a device about the size of a softball or a hardball and that'll be all the power you need for your house. So maybe I'll go work for the Department of Energy and Elon Musk and space travel will be such. Maybe I'll go live on Mars and work with him. I mean, here's a kid who's 19 years old and when I went to university and I'm 16 years old, I didn't know whether I was punched, board or shot out the back end, like, what are you going to do for the rest of your life? Don't ask me.
Speaker 2:You know I keep saying to people now I'm trying to figure out what I want to do when I grow up. There's some friends of one of my sons that there's these twin brothers that they were masters At 12 years old. They were chess masters and also they were being picked up. They were living in Manhattan at the time. They'd be picked up in a limo to go down to Wall Street to build black boxes for trading. Yeah, and they're 12 years old. So just when you're talking about that, ron, one of them said oh yeah, he's going to get into this whole space opportunity.
Speaker 1:Sure enough, he's one of the key guys on Elon Musk's space program. So the moral of the story with.
Speaker 2:That is today. Those kids are on social media. They're wasting their time. They've lost their. It's just. The day is being eaten up with this more addictive behavior.
Speaker 1:Yeah, one of the things that happens to me, and I get annoyed with it, is every month I get a summary every week too of my my phone time. You spend an hour and a half more this month than you did last month, and you spent two hours less this month than last month. Good work, you know, you know.
Speaker 1:And then then we pay insurance based on how many miles we drive, and there's so many, so many things. And so here comes dealers and here comes artificial intelligence and go back to your premise the transaction between a buyer and a seller. Our supply chain has too damn many people in it, even still today.
Speaker 2:Yes, All that's going to get. All that double handling, triple handling, will be removed, either with local manufacturing, the last mile, or just efficiency. We had one company we work with. They shipped 250 jobs over to China to make, you know, cutting tools and they built a plant. And they built a plant and brought the business back and replaced those 250 people with 20, producing four times the amount.
Speaker 1:Yeah, well, the other thing you mentioned, hydroponics, earlier on. Transportation cost is about 50% of the price of food and spoilage Exactly. So if I bring hydroponics in, I can have vegetables and fruits grown right where the population center is. Here we go.
Speaker 2:Healthy, without all the pesticides, and all the chances for Yep.
Speaker 1:Yep, you know I'm a bit of a maniac on those types of thing. With microchondrial I want to get dna testing. That's a little different than the average bear, but you know it's. There's so many things. You know, I, with zentoro, what you do and winsby, what debbie does and what we do with learning. You know I'm I. The last couple of months I talked to a lot of salespeople equipment salespeople, parts and service sales managers what are you going to sell next year? You've heard me do this. Yeah, they say oh, I got to wait until the end of the year. I said, really, Do you, do you have a list of customers? That you said, oh yeah. Do you know the equipment they have in there? Oh yeah, Do you know how much they buy in parts and service? Oh yeah, you got life cycle statistics from your manufacturer. Oh yeah. Well, how come you don't know that Georgia's going to replace?
Speaker 2:that loader backhoe in April and you're already talking to them now about getting it on order. Yeah, and Ron, also. This is great about what we've done with Zentoro. We can forecast 12 months out and we are off on equipment sales, unit sales. This last couple of years we've been off maybe 1%.
Speaker 1:And think about that. You and I have talked about it. That's a good news. Bad news, bear. From my perspective, the reason it can be so accurate is because nothing changes.
Speaker 2:Nothing changes. It's all predictable because whatever programs they put in or opportunities or things that they pick up, statistically it's almost foreordained. And it's foreordained because the real driver of this whole economy is customer retention, and that requires engagement. Engagement requires two people. And now we're back to the original premise. Right, and that's been true for as long as there's been an economy, going back probably a million years.
Speaker 1:Yeah, and I remember a Harvard business review article in the eighties that customer retention was the single, single most important element on profitability. And then you know the other one and you go to dealers. I can ask 100 dealers what's your customer retention? They haven't got a clue.
Speaker 2:I asked 150 of them does anyone in this room know what their customer retention is? And nobody spoke up. Nobody knew. They said does anybody know? And somebody in the front row goes no.
Speaker 1:So we're going to have to end it there because we're out of our, pretty close to our time for people to be able to stay with us. So we'll do it again. But you know, people need to start evaluating their lives, their jobs, the good and the bad, the likes and the dislikes, and start getting serious about life. We just we become victims to things much too easily. In my opinion and you know I tease everybody only the good die young. So I'm here for a long time. And you know I tease everybody, only the good die young. So I'm here for a long time. But you know, I'm only not good because I challenge everything. And the good news is I was raised by my grandmother and she never said no, so that's kind of cool, you know. Thank you very much. There's a couple of things in here Two people buyer and a seller, crypto spending and about 20-year cycles.
Speaker 2:End of the war 1980, lbj Biden with his. We're down to a seven-month production cycle for manufacturing.
Speaker 1:Really.
Speaker 2:Seven months now. Yeah, from start to finish, you can design a truck, a car, whatever you want, and go into production and have it road ready. You may have to run through government tests or something, but actually performance capable, it can be done.
Speaker 1:And that's what's happening. Let me leave it with that and thank you, steve, for this. I think it's been an interesting conversation. I hope everybody who's listening that this is provoking some thinking. I look forward to having you with us at the next Candidate Conversation, mahalo.
