WTF Happened To The UK? | How Money Works

0:00When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at Indeed.com slash podcast. That's Indeed.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Propel Fitness Water With Gatorade Electrolites, Zero Sugar, and Vitamins, Propel hydrates Better Than Water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolites This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web. Like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks.

1:01Gemini and Chrome is here for it. Ready to make anything online makes sense? There's no place like Chrome. Check responses set up require compatibility and availability varies 18 plus. Two months ago, UK Prime Minister Kear Starmer signed an agreement that will transfer the sovereignty of the British Indian Ocean territory to the independent nation of Mauritius. This place is honestly barely worth mentioning. It has zero inhabitants apart from temporary naval personnel and its total land area is only 21 square miles at low tide. However, the steel once it is finished in the courts will have one big symbolic side effect. Losing this dot on the map at 71 degrees east will mean that for about 120 days next year, the sun will set on the British Empire. Now, for a lot of people back in the UK itself, this symbolic decline is not exactly surprising. 20 years ago, it was one of the fastest growing major economies in the world. But today, it's completely paralyzed because of some all too familiar problems. The collapse of a trading empire over financialization, single city centralization, housing

2:02unaffordability, wealth concentration, reckless privatization, corporate consolidation, brain drain, a perceived overdependence on the wealthy, a public private sector revolving door, resulting in limperisted regulation, a debt crisis and reactionary policy all fueled by the ideas that just don't work anymore. These problems are clearly not unique to the UK, but they saw what everybody else was doing and said, hold my warm beer and baked beans. We can do it better. The UK is now the best place to invest, creating 384,000 jobs. In this current job market, it is tough to get a job. Told, the British people, she wouldn't change the debt target. Well, debt's going up and spending's going up. Do you think a big influx of many in-airs to London would push off property prices even further? What is happening now? Terrible economic mismanagement. One of the common issues in the UK is that there are actually a few things that are working really well, which sounds like a good thing, right? The problem is to keep the few things that are working going other major sacrifices need

3:04to be made, which leaves most people worse off. The city of London and the surrounding metropolitan areas are still doing very well, as long as you don't look too closely. Which GDP per capita is some of the highest anywhere in the world, and the only countries that beat it have far fewer people, and normally a generous helping of oil or tax loopholes. London has roughly the same population, and the same GDP as all of Switzerland. And when counted separately from the rest of the UK, it's actually growing faster than the Swiss too. This is mainly because London is the second largest financial center in the world, only slightly behind New York. Now you might think that this doesn't really make much sense. New York has the New York Stock Exchange in the NASDAQ, which are almost as large as every other exchange in the world combined. And obviously they dwarf the London Stock Exchange. New York is also home to the two largest non-government banks in the world, and it has more than twice the population. But London punches above its weight, offering financial services that are really quite symbolic of the country's broader issues. Which is why to understand the current problems in the UK, you need to understand the basics

4:07of London's financial system. The finance industry in London isn't really concerned with trading companies. To do that, they would need successful companies in the first place. In fact, a lot of the largest British companies to go public in recent years have done it in America instead since the London Stock Exchange was too small to bother with. So where New York has built its financial center around financing the world's most valuable companies, London instead does most of its work providing financial services to the world's richest people. New York may be where institutions go if they need to make a lot of money. The London is where they go if they already have it. Now some of this is by coincidence. London is conveniently located between America and Asia, which, when combined with the Pound Sistoric Dominance, has made it a convenient time zone to use as a foreign exchange hub. According to the Bank for International Settlements, about 40% of global foreign exchange volume goes through London, which is more than double the runner up. London also dominates in wealth management, which is just finance, Bruce Speak, for shuffling rich people's money around to achieve certain goals and charging a fiana in the

5:08process. Now, they are obviously pretty damn good at this, because financial services are now the country's number one export. They bring in more money by consulting on how to move money around than they do by selling cars, machinery, oil, and precious metals combined. In 2023, the UK brought in the equivalent of $160 billion in revenue just from the services according to the city of London's own data. So what the fuck are these people actually doing? Well, you might think that the goals that wealthy international clientele have with their money is just to turn it into more money, right? But that's actually only a small part of the story. A Robinhood account could handle that part. The real money is made in alternative investments tax structuring legal structuring and providing a nice safe place to park cash, ill-garden or otherwise. London has been an incredibly popular place for some of the richest people in the world to base themselves because it really is a one-stop shop for anything they and their money would ever need. World class law firms to make sure that the family trusts is set up properly, ultra-luxury real estate to park a few hundred million dollars, international tax experts to structure

6:12holding companies in all the wrong places, London really does it all. And this is one other thing that makes London really popular. A 2017 study by the University of Amsterdam tracked the transfer of money into low tax and low regulation jurisdiction to find out where it was all ending up. Now, they did a whole lot of nerdy math in detailed forensic accounting, but I want to play a little game. I want to see if you can recognize a pattern in this research. Some of the top destinations for this money was the British Virgin Islands, Bermuda, the Cayman Islands, and the Marshall Islands. Now, since I can already hear Patrick Boyle furiously typing in my comment section, yes. Most of the business done in London is above board. And even these legitimate operations have become dependent on a foundation of questionable cash. For example, Lloyds of London is a little bit like a stock exchange but for ensuring things. It's a mark where underwriters and brokers come together to create contracts for complex, unusual, or high-risk things like ships, satellites, and basically anything that you couldn't go to Geico for. One of the reasons... When you need to build up your team to handle the growing chaos at work, use indeed sponsor

7:16jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at ND.com slash podcast. That's ND.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for indeed sponsor jobs. Propel Fitness Water With Gatorade Electrolites, Zero Sugar, and Vitamins, Propel hydrates better than water. To help you get the most out of your workout and get back to your best self, what propels you? Propel with Gatorade Electrolites. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online makes sense? There's no place like Chrome.

8:17Mac responses set up require compatibility and availability very 16 plus. Since this industry has remained so dominant in London, it's because insurance takes a deep pool of capital and amicable regulations. Sometimes insurance brokers will want to write a policy for an oil tinker that may or may not be a buddy by US State Department sanctions. That's obviously not going to fly in New York, but London has always been a little bit more accommodating. The old team at micro did a great video recently on exactly how shady that whole industry can be. What's important here is that the shadiest part of a shady industry is conducted in London. Now I know it's not exactly breaking news that London's financial system has been used for some unsavory purposes. And that's not the point of this video. The problem is now that London has become the only reliably growing component of the UK's economy, which means that the government has routinely and consistently made sacrifices to keep it churning, often by neglecting the rest of the country. This has obviously been bad for regular people who have been left behind by the games of the global financial system. It's been bad for traditional industries in the country, and in a cruel twist of irony,

9:20it hasn't even been good for the city itself. The millionaires and billionaires that London panored so hard to accommodate are now leaving in record numbers. So it's time to learn how many works to find out how the UK let it get this bad. This week's video is sponsored by BoothDev, a platform I've actually been using myself to brush up on my back and skills. BoothDev is learning to solve one of the biggest issues with learning to code online. Boredom. It's built a platform that feels more like a game than a course. Using smart design to keep you engaged while you're building real coding skills that actually matter in a job setting, it's all focused on back-end web development. So you'll be writing a ton of code from day one in languages like Python, Go, and Type Script. The lessons balance theory and practice, and unlike a lot of tutorials that just explain concepts, BoothDev makes sure you're constantly applying what you learn by working through real projects. I've been going through their data structures and algorithms in Python course, and I genuinely think it's one of the best structured coding courses I've ever used. You earn XP, level up, unlock spells in your spellbook, and yes, there's even an AI wizard

10:22bear named Booth who guides you when you're stuck. He doesn't just give you the answer. He asks the right questions to help you figure it out, which honestly helps stuff click faster for me. Also worth noting, the content is free to browse in guest mode, so you can explore the courses before paying. If you don't want access to the interactive parts, like hands-on coding, progress tracking, and AI help, there's a paid membership, but they offer a full 30-day refund policy no questions asked if it's not for you. So if you're serious about learning back in development and want to actually enjoy the process, go check out Booth.dev. You can try courses for free, and if you decide to go all in, use my code MoneyWorks to get 25% off your first year on the annual plan. That's MoneyWorks, and the link is right below the video. The UK has made major sacrifices to make themselves attractive to global billionaires. They have deregulated financial systems, been light on investigation and enforcement, and allowed for widespread investments into things like housing which have pushed out regular brits. This all happened in less obvious ways too. The UK's currency, the pound, is the most financialized currency in the world, which

11:25is just a finance-bro way of saying that it gets used for selling financial transactions more than it gets used for, well you know, boring stuff like buying goods and services. The Great British pound is the fourth most-treated currency after the US dollar, the euro, and the yen. But both American and Europe have a much larger overall economy, and trade volumes balance out the speculation. Japan is also still a much larger economy than the UK, but the currency is also used to pull a lot of financial f**kery like the yen carry trade where investors will borrow money at low interest rates in Japan, exchange those yen for something like American dollars, and then use the money to invest in global markets, hopefully profiting off the difference between high market returns and low interest rates. Now you may not believe it, but there are real consequences to turning your currency into poker chips to play in the casino of global markets. It means that the pound is highly susceptible to big swings and value over relatively minor changes in the real economy. What this does is makes it harder for real expert businesses like Rolls Royce, Jet engines to make deals without paying a premium to hedge against currency fluctuations between

12:27when they make a deal and when it actually gets paid for. But at least all of these sacrifices have made them a hub for global billionaires, right? Well just late last week, one of UK's richest residents John Fredrickson announced that he would be leaving the country and moving to somewhere that was more accommodating to him and his business interests. In a quote he said that the country had gone to hell, just like his native home Norway. Now according to the Human Development Report, Norway has the second highest living standard of any country on earth, so this does seem a bit confusing. Some have speculated that what he actually meant by gone to hell like Norway was that they would dare to levied taxes on him, like Norway. The coverage of Mr. Fredrickson's great sea change has mostly been focused on the dozens of service staff that will no longer have a job tending to him and his residents in the UK. It's also been focused on what could be the most expensive home sale in the country's history as he moves out of his Chelsea estate called and I promise I didn't make this up, the old rectory. I'm sorry, Fry, but astronomers renamed Uranus in 2620 to end that stupid joke once

13:29and for all. Well, what's it called now? You're rectum. Anyway, this is not an isolated incident. Fredrickson is joining a wave of high net worth individuals moving out of the UK. In fact, according to a report by Henley and partners, an international law firm that specializes in dealing with wealthy families, the UK is now losing more wealthy people than China, even though they have 13 times as many people overall. The number one reason for this great exodus is that a lot of these people are not actually from the UK to begin with. They moved there because they were attracted to the services it provided without asking for much in return. But now that the country is trying to get a little bit more serious about raising tax revenues from these same people, they are once again shopping around for a new place to call home. Overwhelmingly, these people are moving to the UAE, thanks to a combination of its low taxes and this team focused on international services. There's an old saying that if someone will cheat with you, they will cheat. When you need to build up your team to handle the growing chaos at work, use indeed sponsor jobs. It gives your job post the boost it needs to be seen and helps reach people with the

14:32right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at Indeed.com slash podcast. That's Indeed.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsor jobs. Propel Fitness Water with Gatorade Electrolites, Zero Sugar and Vitamins. Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolites. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had opened for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up require compatibility and availability varies 18 plus.

15:34On you. Now this isn't how relationships work, but the same idea applies here. For a long time, the UK built up its domestic pool of capital and the financial hub by attracting wealthy people that weren't overly loyal to their home country. Now that those people are showing loyalty to them, they are pulling a shocked Pikachu. What the real question is, does it even matter? If these people really weren't paying their fair share of taxes in the first place, what harm is there in them leaving? If anything, they will vacate houses which could add much needed supply to the real estate market. Right? Wrong. For starters, the houses they are selling are not exactly ready to be picked up by promising first time home buyers. High-end real estate in central London has taken a hit with more listings in lower demand, but these properties are still worth several million dollars on the low end. For probably though, capital flight is hitting the UK harder than it would ideally like. All of those industries that depend on moving money around have less money to move around, and that's hurting one of the fewer career paths that can still genuinely let working class people get ahead in the UK.

16:36Now I know it might be hard to shed a tear for the British finance bros, but they still put a lot of that money back into the regular economy, so even though it's not a great system, it's become one of the few lifelines people have left. Now in the long term, this could push for a more balanced economy, but in the short term, it's going to suck. The UK has become like a shopping mall filled with nothing but luxury boutiques and tax accountants. It makes a lot of money while there are rich people around, but once they leave, it doesn't have much left to offer. A shopping mall filled with a wider variety of stores is going to be a lot better for a lot of people in the long term, but nobody really wants to commit to the rebuilding process. Wealthy people leaving the UK might not have paid their fair share, but they still pay a lot through things like value added taxes and just providing liquidity. Redirecting the UK away from just financial services means that political opposition can just point to these people leaving as a sign of a country in decline and highlight all of the jobs that housekeepers are losing. It would be a long, slow and politically challenging task even when the rest of the economy

17:36was strong, but the government now has a lot of debt, high borrowing costs and timid political support, which are all going to make doing what needs to be done much, much harder. A lot of the service level issues that get the most attention can be traced back to not wanting to upset these people. Chronic underfunding of services, or reliance on immigration to fill skilled shortages, and rising costs of living are made worse by not reinvesting or regulating in the right areas. There are hours of detail about how exactly this is played out, but that's what Gary's economics is for. The point is, if you don't want to end up like the UK, just remember, trying to be the lowest bidder for the globally in their money is quite literally a race to the bottom. If you are from the UK, don't worry. It could be worse. You could be from California. Wait. F**k. Don't watch this video next to find out how Australia made all of these same mistakes and yet somehow hasn't had to face any consequences for it. Yet. And don't forget to like and subscribe to keep on learning how money works.

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