Listen to Episode

Read Episode Transcript

Yeah. You look a little drifty. You feel OK? Yeah, me, I'm great. I'm great. You look half a million, Richard, today. What's it like to be half a million richer, Jacob? You look like a failed hostage taker. Laugh it up, boy. Slap it up, boys. Laugh it up, boys. When you see my other projects drop, my God, you're gonna be crying again. OK, I can't wait. Why don't you take yes for an answer? Jakhal, I I've taken this for an answer. Welcome to the All in podcast with three miserable rich ******** who pull up the ladder behind him. Do you want to explain why it took us a month to produce a new episode Jakhal? What is this in your view? Hold on a second, attorney. Let me give you guys the TLDR. Jakal thought we all, in part, was his, and then he realized it wasn't. No. If you guys want to go there, we go there. I'm totally transparent. I requested, I requested to own 6% more of the all in podcast. No, no, no. Back up to the summit. Back up to when you wanted to kick me off the show. Back up before that. Where we. Oh my God. Are we really doing this? Yeah. We're gonna do it. OK. If you wanna do it, we do it. We can't talk about this for 45 minutes because what happened? So boring. So plan this. So boring. We plan the summit. Jakal doesn't like how I was concerned about the summit. And I ******* at him and, you know, I was negative to him. Finish the summit. And Jackal wants to kick me off the show. Yes. Brad gerstner. Bill Gurley would have higher rate comes to bullying sticking with me and Jacob getting into it. It wasn't. It was actually it started with Freeberg and Jacob getting into it. Kelly wanted me off the show. Alright, I'll do I get to explain the series of events or no, you wanted me off the show. True or false jakal I felt that if Friedberg if Friedberg wasn't enjoying his time here and was going to constantly complain every week about every detail why the show is not good, there was always the option for him to maybe do half the shows and have Brad Carson, or do half the shows or have Bill Gurley or rotate in. And so if he was going to be miserable all the time and worried about the show I gave him the option to have. Somebody else. Take his spot. Did you or did you not say that this is your show? You're the leader and you wanted me off the show. I never said that. I don't know. Nor would I say that I don't need to say that. You could summarily replace any of us. Effectively, you acted like we all work for you. It's your show. Sax. I don't think shamans replaceable just for the record. So that's true. He does think that I do not think tremonts replaceable, freeberg. I do think. I mean, I could pull up the Brad Gerstner episodes. I think they have slightly more views. So. But people love you. So we'll keep you told my mom and my wife that he thought I was replaceable on the show. Guys, I would like to jump in by just summarizing this so that we can move on. So basically what happened was we had an agreement that it was 25% each. There was a moment where Jacal believed that he deserved more. We had to sort through a lot of the underlying issues that caused them to believe that we got to a good consensus. We now have a signed agreement that governs how the show and other things around the show and offshoots of the show will work. We are 25% equal partners and now we can move on. So enough for the ********. Let's go. All good. And I love you all. I love you all too. I love you all too. To be clear, my position, I I do feel like this needs to be here was if we're gonna make it into a media company. My request was, listen, I think I own. I should have 10% more equity and I'll go to work every day and do the work and you guys can just show up. You guys agree to that? And then you guys said you don't want to do it. And I said, OK, fine. So here we are. We're back at square one, so let's just get to work. We just want to do a pod and we just want to talk. There's not going to be any more summits. It's not going to be any business here. It's just a pod. Other events I do have other pods. I do if I want to get paid, I'll do them over there. And here, it's just a pod that you see every week. So let's get into it. Everybody wants to talk about markets. Oh, by the way, if you guys want your intros, that's 1% each intros go do they get those are 1% each. So when you guys are willing to pay me my 1% additional equity, you get the intros. And when you want the all in Summit 2023, that's another we're gonna get an invoice each week from JL now you're gonna get it's gonna be prorated monthly. It's gonna be .8% equity per month vested. I just think it's so fascinating that we went through all of this. You know, I don't know storman drawing or whatever. This this like a month of not taping. And you know, and this, like, all this turmoil in our relationship, so you could get an extra 1% from us, 2% each, 31 two percent. I believe I should. Just so you know, I do this for a living, and if I do extra work, I believe I should. And if you want me to be the the de facto CEO of this, then I should get a little extra. We don't want that. And you don't want that. So that's fine. That's fine. This is just gonna be a project. We do it every week. And then all your griffs, whatever you're spinning out. The Production Board or whatever copycat app you're making you can ******* do. As in, as a side grift, here we go do the intros. Let's get going. Come on, let's go. I'm not. No, there's no 0 interest, no interest. Intros are out, but what about. Hey, everybody. Hey, everybody, I'll, I'll do a. Hey, everybody. Hey, everybody on the House. Hey, everybody. Hey, everybody. Welcome to us. Is that freebie free? Yeah. Pray for you. Let your winners ride Rain Man. David said that. We open sources to the fans and they've just gone crazy. Queen. Hey, everybody, welcome to another episode of the All In podcast. We're back for episode 84 with me, of course. The Sultan of Science, the Prince of panic attacks. The Queen of Quinoa himself, David Frieberg. How you doing, buddy? Great to be here. Great to be here. All right. And can you feel the tension? There's still a lot of tension. Quotation there. Jake, Paul and I will be hanging out tomorrow night. We'll we'll make it. Have you guys resolved it? I I'm cool. I'm cool. Fabric. I mean, I bought dinner. I think we're. He did buy me a wonderful dinner. Oh my Lord. After the Warriors game, shout out to the Warriors. Alright. And of course. With us is the Rain Man himself, David Sacks. How you doing, buddy? Good. You ready to go? Don't try and deflect this thing on to me. I was only tangentially involved, says the guy who spent 72 hours on contract. Very fair contract, so that we can move forward and then proceeded to break it in the 1st 15 minutes by slandering me in disparaging me. But OK, come on. That was good for ratings. Good for ratings. Yes, I thought your name was pretty great. He did the meme, the two buttons on the superhero trying to pick, and it was like Jason. That was good, making jokes, breaking the breaking the non disparagement clause and then of course the dictator himself from some undisclosed location in a European city. I don't know if I'm allowed to say that you want the Polygon batia. Welcome back boys. Episode 84, boys. Alright, well since we last convened, let's get all these on. Yes, the the all in Summit is finished. All the episodes have been released, including Palmer Luckey yesterday and here we go. The markets are in complete turmoil. Spy down 21% year to date. Does down 17% year to date. As Sachs has pointed out, that is not representative of what happened to growth stocks at the same time and. The May CPI went up and it was at 8.6. We also got to 75 basis point rate hike. Who wants to start here? Chamath? I mean, it's market, so maybe I'll just dump it to you first and then we'll go around the Horn, 2 sacks and then freeberg. Wow, there's a lot to say, so bear with me for a second, but. The thing that you have to do before you talk about what is happening now, I think it's probably useful to go back. And you have to really start at the end of the great financial crisis, and the reason is? There was a bunch of people coming out of the GFC who confused what the US government and some European governments were doing at the time. There was the risk of a huge financial contagion and so the US stepped in and the Federal Reserve started to use their balance sheet to buy toxic assets, right? And the ECB did that and I think Japan did that as well. Anyways, a bunch of banks did it. I mean a bunch of governments did it. And then there was this body of. Pseudoscientists certific economists who coined this thing called modern monetary theory, which basically said, hey, you can keep printing money and introducing it into the economy to smooth things out and to actually drive long term growth. And it turns out that a bunch of government officials fell for it. And if you Fast forward to 2022, so 14 years later, you know, governments around the world had printed something to the tune of about 3035 odd trillion dollars of money into the economy that should have never been there. So the thing to remember is like we have not necessarily just been obfuscating true supply demand in the last six or eight months when we've been talking about a recession or inflation. We've been actually doing it since 2008, it's just that it's been building up in the system. So one of the things that we have to realize is that all of that money somehow needs to get destroyed in some way, shape or form. If the true economic equilibrium is meant to be found, what is true supply? What is true demand in the absence of government sloshing money around trying to prop up things that should not be propped up, or buying votes, or all the griffs that these folks have engaged in in the last, you know, decade and 1/2 have to get undone. So that's the backdrop. So if you think about taking $30 trillion out of the global economy, you know, you're talking about almost, you know, I think it's 85 trillion is the world GDP. So like, you know, it's it's almost half of an entire year's worth of global GDP. It's going to take three years, probably, of the slow, meticulous, you know, running off of money, you know, not reintroducing new money. So it seems like we're at the beginning of the beginning of something that's going to be long and drawn out now that's separate from and that's separate from whether we're in a recession or not. That's just the bare market that we're in. Right. And so you have to look at asset prices today as a microcosm of a much larger trend that has to be about fake money pushing asset prices up. And now taking all that fake money out and finding out what the real price of something is, and I just don't think that takes six months. So for all the people that were, you know, fingers crossed, hoping that this would be the end of it, fed raises 75, we're done with this. They're going to raise 75 more. I just think that's not how it's probably going to be. It's going to take, you know? 2436 months. That may mean the bottom doesn't happen for another 18 months. So I think it's a, we're in, we're in for a lot of choppy market action, sex, three asset bubbles, clearly all you know being impacted. We had stocks, looks like that story was pretty violent. And we had crypto this last two or three weeks have been absolutely insane in terms of that asset bubble and now record high inventories for homes, record sales are now dipping below the average of the last 20 years and we're seeing mortgage origination just absolutely get crushed 6% mortgages. Just a couple of months ago it was two point X for some folks. So when you look at those three asset bubbles, do you buy? Jamats hey, we're going to see even more deprecation in these for another 18 months possibly. Or do you think we've? Taking such crazy action, and this has come down so violently that we're now bouncing along the bottom, bouncing along the bottom or 18 months of more pain. Well, the the stock market, especially growth stocks may have taken the majority of the carnage, but you're right, there are other asset classes and I think we're going to see the carnage start to rotate into those. So you're right, if you look at residential real estate now, the prices are at the highest they've been relative to median income since something like 2006, 2007 before that, sort of. The real estate crash that precipitated the Great Recession of 2008. So I think there are going to be more, more shoes to drop. I just want to build on Tamas point about root causes here. Milton Friedman once said that there's nothing quite so permanent as a temporary government program. The temporary government program was quantitative easing. We had this Great Recession of 2008 that could have turned into depression. They broke the glass in case of emergency. They started this QE, which is basically the government intervening to buy bonds in the market. They had never done that. Four and they loaded up their balance sheet. The crazy thing is that program will still continuing until last year. Why? I mean it was like on cruise control and so last year this was, it was, it was continued until last month and countries like Europe are still doing it, 9% inflation in Europe and they're still buying bonds, right. So you go back to last year, the Fed bought 54% of the government's debt despite the fact that the economy was growing at like 5% GDP that it was bouncing back really strongly from COVID. That you had the stock market at all time highs and yet they were still intervening with this massive QE. And then when we got the the surprise 5.1% inflation print last summer, they didn't stop QE till the end of Q1. So you're right, they kept basically printing money and it's still going on and that's created massive distortion to the economy now. So the Fed I would say is the number one culprit here and Jay Powell is the number one culprit. But the number 2 culprit is the Biden administration. And I think Biden did three things. Very early on, in the first few months of his presidency to effectively tank his Presidency, number one, he canceled our energy independence on his first day in office, canceling the Keystone Pipeline and making it much harder to drill. And of course, energy inflation is 1 factor in this sort of overall inflation #2 he pushed through that last two trillion of stimulus on straight party lines, the AARP, the American rescue plant after Larry Summers said economists in his own party said this is going to create inflation. Don't do it. And then the third thing is, and no one really talks about this, is that Biden could have used diplomacy in 2021 to basically find an off ramp to this Ukraine crisis before it turned into a full-fledged war. And if you listen to the economists, the International Development economists like Jeffrey Sachs, he basically says that Biden polled his cabinet and said, listen, should we negotiate and compromise with the Russians? They all said no and Biden handed down the order, we will not compromise with the Russians. So. Now we have this massive war in Ukraine that's fueling food and energy inflation. It's gonna take his presidency. And I don't even think there was any debate in his cabinet about this. We may not be negotiating against Russia, but we're enabling them to print enormous surpluses. Meaning, I don't know if you guys saw, but there was an article today Janet Yellen is traveling around basically convincing folks to not include Russian oil. From a bunch of import bands so that these Russian oil tankers can be insured. Why? So that they can sell this oil to places like China and India, et cetera, rubles on A5 time five year high, the rubles at A5 year high. We push for all these sanctions. Europe gets on board and says we're gonna do it and we're going to take the lumps. And then we go around Europe and basically say, well, we kind of want to fight this proxy war, but at the same time, we want to try to fix inflation and we didn't mean to cause this and it's completely disorganized what's happening. So if you had 6 minutes. In the pool for when sacks would blame Biden for the economy. You win. Well, who, who do you blame? You? Well, we talked about quantitative easing starting in 2008 so that that goes over a couple of presents. And I guess the question I would have for you, sacks, is how much of the spending, the free willing spending, you know, you know, was from the previous administration because it doesn't. Running is a bipartisan problem. There's no question about it. But what do you want to make sure that we point that out? Yeah, for sure. And the Republicans only seem to find their principles on spending when there's a Democrat in the White House. I totally get it and I would like to see. More fiscal responsibility regardless of which party is in power. And I'd like to see the Republicans less be less hypocritical in their principles on this. But look, here's the thing. The economy was bouncing back strongly last year and Biden still pushed for this last two trillion in spending and then 1.2 trillion more on infrastructure and then remember the four trillion to build back better where mansion saved them from themselves. Exactly. I mean, what would have what would that have looked like? A free break you haven't spoken yet. Thoughts on? You know this? These asset bubbles, I guess, and then the buying of the bonds seemed completely unnecessary for some period of time. If we are acting as the 50% plus buyer of bonds, what kind of distortion does that create in the market? Because if the government's competing against other people in the marketplace to buy those bonds, how could they possibly be priced correctly? Let's just be very careful about our framing. There's the US Treasury, which issues bonds and raises capital on behalf of the US government for spending programs. Then there is the central bank, the Federal Reserve and our Central Bank's job is to #1 maintain liquidity in the capital markets so that businesses can invest in growing their their products and growing their businesses and the economy grows while not providing too much liquidity. That you end up with inflationary effects and inflationary effects means that there's too much money in the market and you see that money find its way into escalating prices on different. You know assets. And the Fed's long term goal to remember is to provide a stated goal of Jerome Powell in particular. Right now this changes over time, but generally the intention of the Federal Reserve is to make liquidity to make cash available to banks who ultimately make it available to businesses in such a way that there's enough cash in the system that the businesses grow and that people have capital to invest in growth while keeping inflation at 2%. So their long term target is 2%. Inflation. And it's also correct me if I'm wrong, for making sure that there's enough cash to support economic growth. So remember, last year you'll remember Stan Druckenmiller was very public about how insane it was that the Federal Reserve was still buying bonds. And so. So there's one way to introduce cash into the system is to make cash available as a loan to banks. And then those, you know, banks use that money to loan to businesses and it makes its way through the economy. Another way is for the Federal Reserve to step in and actually buy bonds, freeing up the money that other people would be. Why do you think to buy bonds to go and invest in other things so they're effectively forcing liquidity into the market by taking bonds out of the market? And last summer or Q2 of last year, Druckenmiller was pounding the table saying guys, the economic indicators on how quickly the markets are and how quickly the economy is growing relative to how much inflation there is indicates that we should stop buying bonds and we should stop injecting liquidity into the markets. This makes no sense. It is nonsensical and there was no strong point of view from the Fed at the time other than there was uncertainty about the the bounce back of the from the recession from COVID there was uncertainty about what else was happening in the economy. And yada yada. But the the numbers, the economic indicators were showing very clearly. The economy is growing at a robust pace, low unemployment and inflation is starting to pick up. Holy crap, it's time to cool it off. And the Fed made a judgment call and their judgment call really kind of was to keep going. And then we end up in this massive runaway inflationary problem where if you keep too much liquidity in the system for too long, you have inflation, even if you have economic growth. And now by pulling the money out of the system. Super, super fast. We reduced the inflationary effects potentially, but we take the economy because now all this money coming out of the market makes people are spending less and buying less and businesses have less to borrow. The borrowing costs are high and then that that's that's the big vacuum. Hold on, let me go to Chamath and then sex. I just think the the rate, the rate at which we pull the money out, which had to be really, really fast over the last few weeks can cause a recession. And that's the the, the biggest concern right now is will that actually trigger a massive recession or not that everyone's watching so chamath, I guess one of the things we need to clarify here is the actual mandate. Of the Fed, I was under the understanding that the Fed really was there to make sure of maximum employment and that, you know, low interest loans were available and price stability. These are the where the stated goals for a long time, not low interest rates or capital. Capital is availability to grow at moderate rates without exceeding inflation of 2%. That's OK. So maximum employment price stability was also in the original P growth because remember, we can't ever pay our debt if our GDP is not growing, OK while minimizing. While keeping inflation below 2% chamath whatever point you want to make, feel free to make. But also, I was just wanting to know from you, where did the Fed go wrong with their mandate, if at all, here? Because we do have maximum employment now, but we have out of control. Price stability. Look, here's the thing. You, you, you. I think we have to also be sensitive to the fact that the Fed operates on a certain class of data, and that data in the 21st century is pretty pathetic. Nick. You can probably find this, but there was an article, I think it was in the New York Times. That really walk through how CPI is calculated and it's a bunch of people that work for the government that walk around with iPads, building relationships with local businesses and all these random places all around the country and asking them to, you know, chitchat for 15 minutes and do these surveys. Now you would have thought that in 2023 or 2022, what the government would have said to, you know, Visa, MasterCard, American Express, all the payment rails, the banks and stripe, is send me a feed in the following structured. OK. So that I can actually have an absolute precise sense of inflation, because inflation really only occurs when a good or a service trades hands for money, right? And you calculate what did that thing trade at the day before and what does it trade for today? So you could get an absolute precise sense of it. Instead, we do this random sampling thing and it's active humans, etcetera. So if you read this article, your take away will be, Oh my God, this is very rickety and it drives an enormous hammer that we use. Try to manage the economy. That's the first thing. I think you need to buckle your seat belt because the next 3-4 five months of CPI will probably be very, very bad, 789 percent. Why? There are a handful of components that have gotten completely runaway #1. The biggest one is rent, and so rent works on a 3 month lag. We're going to reintroduce what the true owners equivalent rent is into CPI, so we can already forecast that CPI going up. Oil is at 105 bucks a barrel. Russia is basically trying to break the back of Europe by now messing with their Nat gas supplies. The German Energy minister yesterday said that if that happens, it could be a contagion equivalent to Lehman Brothers with respect to energy. When you play all of these things out, what you have is unfortunately rampant runaway costs that really have no mechanism to get back in check in the absence of some real governmental. Changes our policy on this Ukraine, Russia, war, you know how we intend to sort of work or cooperate or fight with China, all of these things have to get solved. So in the absence of that, prices are going to continue to go up. And So what does the Fed do? How does it throw away what little credibility it has left? When there's eight and 9% inflation prints and saying we think we're done for right now, you can't do that. So they will overcorrect because there is just going to be so much pressure. For them to act. All roads I think lead to lower equity prices and I think what David said astutely is. We've seen the first wave, but now it has to touch all these other areas, for example. We have gotten totally drunk on debt as a country one of the most. Obvious places where we've been serving alcohol far too late into the night isn't the financing of all these private equity leveraged buyouts, right? These are. These are sketchy companies that are sort of like, you know, teetering on insolvency at times where private equity comes in, levers up the balance sheet with debt, they price it right to the edge of what's legally allowed or what's financeable, and then they go do it. But that's all assuming the economy continues to grow. And so if all of a sudden you have some recessionary forces or prices go up and earnings don't. You'll have, you know, a contagion in the debt markets. You could have a contagion in the commodity market. So we're dealing with some really, really tough boundary conditions. Real estate. Most of most Americans have most of their net worth tied up in real estate. And if we see a 3030% correction in real estate, it could be a real problem, particularly with rising interest rates, inability to refinance sacks. The dual mandate is, hey, keep inflation 2% and then keep the unemployment rate reasonable, the unemployment rates, amazing with still so many jobs out there even with these layoffs. In fact, one might argue we made too many jobs available to the point at which people maybe aren't working as much or just you know, under working and and not taking advantage of these amazing jobs out there. Where do you see this going sax? Now that we can't seem to get inflation under control and people are looking at their 401K they feel a lot poorer. But is the demand side gone yet? They have. Have consumers decided I'm not going to buy the next house, I'm not going on this vacation. $6 gas makes no sense. $7.00 gas makes no sense. I'm not going to go on this weekend excursion. I'm staying home. Yeah, I mean look, consumer confidence just had the biggest drop I think in 40 or 50 years. We, if you look at like right track, Wrong track polling for the country, only something like 24% believes that the country is on the right track. Right now if you pull people are we in a recession and they don't look at like, you know the quarter over quarter growth, they just look at what they're feeling 56% of the country are says we're already in recession. It's about 70% Republicans, about 50% Democrats. So the country is already hurting people already feeling it. And this is in psychological sacks. Or are they actually making decisions now to spend less? Well, I think it's both. I mean, you start with the real inflation and people feel it and they also hear about it in the media and then they start to adjust their their decisions. And this is the problem with fixing this is a problem with fixing an inflation problem, is that it's based on expectations. So once people start to expect inflation. Then businesses have to start operating as if there's gonna be an inflation rate next year. So they have to start raising prices. And it's actually very hard to put the horse back in the barn. And This is why I think the Fed is probably more likely to overshoot on raising rates is because if they really want to stop inflation now, they really have to slam on the brakes, and then that's going to lead to recession. And if they don't, then we end up with like a chronic sort of stagflation, airy situation where you get lower growth and inflation persists. So it's a bunch of bad. Options right now, and I think to the point freeberg is making earlier, you know, this Ray Dalio piece that he's published as a blog on LinkedIn. He said, look, what you want is a fed that is alert at the wheel and gently applies the accelerator or the brakes based on what's happening. And instead what we had is the Fed was asleep at the wheel. They should have started reacting gently to inflation last summer. Instead, they waited nine months and now they're slamming on the brakes. And this is a bunch of bad. Options, I think we, you know we are going to have a recession the way this unravel. Can I just make one suggestion? I want to put this out there because I sent it on our text and I anyone that's listening in DC please think about how we can change the way the Federal Reserve operates. But it doesn't make sense to have humans with subjectivity applying their subjectivity to a set of, as Chamath pointed out, infrequent data that comes in chunks and comes in spurts, and only having a mechanism of changing rates by 25% each month, or, sorry, 25 basis points once a month. We should have continuous real time monitoring of economic data and software, or AI, or some sort of informed set of models. Should then predict what inflation and economic growth rates will be as that data comes in, react in real time and on a daily basis, we should be adjusting the overnight rate in A1 basis point increment so we can have the ability to more quickly, more efficiently and in a higher resolution way. Yeah, smooth it out a smoother way and a higher resolution may make you adjustments. It's silly that we're still operating the way we did in a pre digital age as it is with a lot of industries and a lot of bureaucracy. But in this case, it's particularly prudent and it's becoming particularly important. And relevant as we're seeing right now with the stagflation risk that we're facing, we could have massive inflation and recession at the same time because if we had made smaller adjustments every day for a period of time as these economic data indicated that we should be making them more quickly, we would not be in this problem. And I don't think that having humans and their judgment should necessarily be the way that we drive. Yeah, but listen, we we don't need them making daily adjustments. I don't think the Fed can fine tune an outcome like that. I just think that they can't be asleep at the wheel for nine months. I mean we should have I running this friggin thing, I mean. Listen, I I don't, I actually don't think when you said that, you know, Congress needs to somehow change the the way the Fed does business. I actually think that the Fed has the correct mandate, which is the dual mandate of considering inflation and unemployment. We shouldn't be basically junking that up by adding a bunch of mandates. And actually, the administration has been trying to add mandates. They basically gave the Fed a mandate around climate change. They gave them a mandate around equity. Don't change the mandate. Don't change. The day of the trust can be multivariable. This will get too complex. The tools, the tools should change. Yeah, right. We really wanna focused fed and I think the administration has been politicizing the Fed by giving them a bunch of mandates that look, if you want to pursue those policies, do it at HHS, do it in the Interior Department. Don't basically confuse the Fed and make them pursue climate change or equity or what have you. I mean that is just bad part. That is not their remit right there. Their remit is controlling inflation. I really think this just comes down to the fact that for nine months they sat on their hands and ignored the inflation. Remember this word? Transitory. You know, we heard so much last year about inflation being transitory. How did they know that? You know, why didn't they start rethinking this? Quantitative easing. The headline from the Wall Street Journal says it all. How the inflation rate is measured. 477 government workers at grocery stores. Yeah. Software should be taking data from different feeds and software can learn. I don't agree with you. And what are the predictors of inflation and what are the predictors of growth and make a recommendation. I don't agree with you. That it needs to be real time. In fact, I think it would do more harm than good. But I do think that we can know these things without sampling in such a porous way. And you know, you can work with private companies to give you the feed of data to to allow you to do it. And now you know we're going to look, we've had a system of overcorrecting and under correcting for years. The problem is the stakes get higher and higher as the economy grows and becomes more complicated and we have more leverage and we have more leverage and we have more. Industries that are leveraged and more asset classes that are leveraged like housing. Because you, I mean this is such an by even a few points you could tank everything. I also want to tell you guys a quick story. One of the most interesting Canaries in the coal mine of all of this was two days ago. And what happened to Facebook? And this sort of ties a lot of this stuff together in terms of like economics, inflation, asset prices, equities, tech. We should we then we can try to talk about non sort of you know big tech but the everybody was saying, oh gosh, the market's going to rip on the open. You know we were closed for Juneteenth and then on Tuesday the market, you know the S&P was up like 250 basis points 2.5% and the NASDAQ was also up you know call it maybe 300 basis points roughly. But Facebook was down like 400 points, right? So it's a big spread. And why is that? And I was like, this makes no sense to me. What is going on with this price action? Everything was up, Apple was up, Google was up. And so I called around and you know, I was like, why is this happening? And this is the best explanation I got. When you look at who the incremental buyer is in the stock market, it tends to give you a sense of whether prices can go up or will continue to go down. And the poorest informed buyer tends to be retail and the most informed buyer tends to be these very large institutional hedge funds. Right. So there's a spectrum. And Facebook is an example of one of the of big tech that is poorly owned by retail. So it's mostly owned by smart money. And the case that smart money makes for owning Facebook is that it's got an extremely cheap price to earnings ratio, so you must own it. And what they said was that they, you know, looking at the tea leaves of consumer demand, what they actually re underwrote was that actually, it's not that the price to earnings was cheap, it's at the E in PE was just wrong. And if they pass through all of these increases in inflation and, you know, their earnings expectations into Facebook, it's actually more like fair value at a lower price. That's why they sold it so much on a day where the market was up. Now why is that important? Well, eventually you're going to touch all these other stocks. As well that are going to go through earnings revisions in this recession. This is where I think Wall Street has done a very poor job on behalf of retail. If you look at the average estimates of earnings, you will be shocked to hear that Wall Street actually has this year being record earnings next year, earnings continuing to go up. How is that you think possible? Wow, how is that, how is that if you were sitting here, how do you see, how do you see earnings continuing to go up into these prints like this when you cannot pass through? You know 8090% increases in energy and cogs and whatnot. How does that mean? I think the the what people would say is maybe they're gonna lower their costs and so with layoffs and and lowering salaries and lowering spend on advertising, you know the earning the E could go up. If people become start belt tightening and then we start having companies that are being run you know just more you'll have to, you'll have to sell fewer things because they'll be fewer people with jobs to buy things. But we have 10 million. Happening. So this is the weird thing about this recession is because we haven't let a lot of people immigrate into the country, but exactly so many jobs. Is that what you think? The consensus view on Wall Street is that basically a bunch of people get fired, and so that's why earnings continue to go up. Well, they stop hiring for two years in advance, right? Facebook said they were hiring for, like, 2024. They're hiring plans, were looking out two years. So now if they go on a hiring freeze, maybe there's, you know, that's the number one cost. I'm just putting out a theory. I'll give you the counterfactual. I think Wall Street's wrong. OK. And I think that earnings are gonna go down this year and we'll definitely go down in 23. And so I think what probably happens is the entire world of equities needs to get repriced at a lower price. And in that it's going to put enormous pressure on these cash burning nonprofitable tech companies, well, that's for sure. But in the ones that are profitable chamath, they're aware of this. Facebook just cancelled like two of their prototypes they were working on to save money. So that whole $10 billion into, you know, VR, I think they're trying to make that number look small, smaller sacks. What do you think? Well, I think you're bringing up a really interesting point with this, the 10 million you know job openings and now that that number is coming down really fast as companies close open Recs and they basically freeze hiring. So that number is going to come down very, very fast. But one of the major contributors to inflation is that the labor force participation has been very low. About millions of people left the labor force during COVID as a result of the stimulus checks and the freezing of rent and evictions. I mean look rents the number people's number one. Since they don't have to pay rent for a couple of years, a lot of them may not work or may not work as much. So we've had this problem where we really need about 2 million people to re enter the labor force. And if you describe inflation as too much money chasing too few goods, we need to increase production and productive capacity. And when you have millions of people dropping out of the labor force, you've got less goods and services being produced that people want. So just reducing the money supply is not going to get us out of this mess. We also need to improve productive capacity. Just to put a number on that, we we peaked in the 1999 ERA at 67% of participation in labor force and then it's been down in this low 60s, sixty 162 and it continues to be low, but that is the solution here. We get that 7%. That gap could get just the demand side because if if all you do is fix the demand side, what you're doing is you're killing the economy to reduce demand in order to bring it down prices. That's very painful. It's all pain, but what you also have to do is fix the supply side. You have to increase the availability of all the critical inputs into the economy. So Labor obviously is one of them, but also critical resources like energy, you know, oil, natural gas and so on. And that goes back to fixing the supply chain, hopefully getting a resolution of the situation in Ukraine, the war. So if we could fix those things as a way to improve the economy without creating more pain freeberg if the prices of just daily living of which. Transportation and housing and healthcare are now the top three, I believe. Groceries and healthcare, I think, have flip-flopped a couple of times in the last decade in terms of costs. If those things go up, would that make people want to go back to work to pay for those things? Or does it create capitulation where people say I'm moving in with my cousin, I'm going to lower my balance sheet? What is your prediction? There are more people going to go to work or do we still have this, you know, call it 10 million people in the country who just don't want to go to work? I've mentioned this in the past, but I think there's more. There's another kind of interesting outcome of this. We we've had several months in a row of pretty significant increase in consumer credit. And I think the the reason is things are getting more expensive. People generally do not like to reduce their spend on stuff or they're living their lifestyle. Once you get used to a lifestyle, like going out to dinner once a week or going to the movies every weekend, and you create a budget and you create a life experience around that model around that, it's very hard to say, OK, I got to cut budget now and I got to reduce my life. I would rather say I'm going to keep doing that. Or at least there's some inertia or some momentum to keep spending on the things that you've been spending on. And the way you do that in a model where you don't have as much income or you have less income and things are getting more expensive as you take on more debt. And so there is a little bit of a nervousness that I have had that people's response generally the consumer response to inflation and to a kind of a shifting. Income environment like this is not necessarily to cut as quickly but take on more debt and keep keep buying and so I am a little nervous about that. But I do think obviously at some point everyone has to figure out ways to generate income. There have been a lot of these kind of ancillary markets that are typically the 1st to go, these extra services markets where people you know have found other ways to make money, side hustles and whatnot. May or may not be as robust as they have been historically, and so people may need to go back for more secure, stable income. And and these jobs get filled. I like I mean as we all know there's an opportunity and this is the whole concept I think behind build back better. It's not super thoughtful in terms of the approach I think based on my understanding of where that money is supposed to go because it doesn't create long term jobs, but there is an opportunity to build new manufacturing and new infrastructure jobs in the US right now that could enable a healthy transition here. But that legislation needs to be done smart it it can't be done. That's like, hey, let's build a bunch of bridges and then a bunch of contractors make a bunch of money and no one has any long term jobs out of it. We've got to find ways to spend money on creating long term sustainable, you know, new industry here. Yeah. And job openings, 11.4, it's come down about 6:00 or 7%, so you know it's gonna be trailing, but it's for sure we're seeing it in our industry with the hiring freezes that, you know, we're going to work through those open jobs. What are the chances that inflation gets under control in the next year? And should the Fed go for like the 1% slam on the brakes? There was some talk about that. Obviously, they went from 1570. Remember a lot of the elements that we were kind of saying, Oh my gosh. Can't believe the climate prices. So you know, wheat is down, I think 30%, lumber is down, 50% gas prices are coming down. So you know there there are some of these, you know, commodity spikes that we've experienced over the past couple of quarters, particularly recently that are really that have had a significant part of the fueling effect on the inflationary trickle down into ultimately end products and whatnot. And those are coming down. You know, there's a real question. With how quickly that flows through the economy and flows through to the price of goods that that consumers ultimately end up paying for, the gas prices right now are the biggest concern, right? Like unless you can get gas prices under control, that always, always has a massive impact on spending on consumer spending, which drives a recessionary cycle. And so that if I'm the Biden administration, I'm first and foremost, I don't care about the general inflationary indicators as much as I care about getting the price of gas down. That is a super, super critical. Number to fix is this. Are these gas prices going to change how Americans look at What Car they buy because they're gonna get worse. Time we had that, they're going to get people started looking at not buying SUVs. We could have $7.00 gas. There was a picture, actually, I tweeted in California, there was a $7.11 gas broadly. Broadly, we could have $7.00 gas all throughout the country. But Jackal the, you know, remember the average automotive automobile in the US last for 12 years. That's how often people change out their cars. So that's 8% of the fleet being changed per year. Yep. And the interest rates for auto loans have spiked like crazy now with this change in the Fed rates. And as a result, the delinquency on auto loan portfolios has spiked like crazy. And so, you know, yes, sure, theoretically people will think about buying an electric car, but most people aren't thinking about that on average for five or six years from now because that's the average of a 12 year cycle, right? Five, five years from now. Wait till all these poton bikes need to get repossessed. Well, all these actually the, the, the wait. For cars in the overpricing of course has ended in the last two months and there are multiple cars now on the market, 2530 K for A50 plus mile per gallon car. I think this is actually one of the Silver Linings coming out of this is people might actually stop buying as many SUV's or, you know, I think our average is in the low 20s right now in Europe is in the high 40s. The problem is like, you know, every other for miles per gallon. Part of the government acknowledges that you have to really ring, fence and protect consumers, right? Like if you look at the securities. Laws, they're meant to protect them at all costs. And, Jason, you know, you've been frustrated by some of the rules that haven't changed. And when they changed, they changed so slowly. But the reason is because sometimes that you want people to make good decisions and if you, you know, give them a bunch of firepower, they're just going to spend it. And, you know, what we really did was we gave folks just a ton of money. And what did they do? They acted rationally, they spent it, and now we have to take it all back. And that's that's. I don't think that's going to be as easy or as simple as people think. What percentage of the money supply do you think is in excess right now in the United States? Well look, I told you this because I wrote this in my annual letter, but it's it's stunning that, you know the reason the stock market went up dollar for dollar was actually tied to the growth in the M2 money supply. The correlation was .92. So for every dollar the that that the Fed printed, the stock market went up by $0.92. So you know, it stands to reason that if the Fed is going to take 3 to $5 trillion of value out then we have to rewrite the equity markets by three to $5 trillion at a minimum and then you have to re rate and rebaseline for earnings and so that's probably another 20 or 30%. Let's talk about the end game here. The rates go up, people stop buying homes, people go back to work. And energy prices come back down because people are not buying as much of it. Spending goes down and people rebalance and that takes a year. The job openings could also disappear, by the way. I mean, like you're going down 400,000 a month is what? Yeah, you're the, you're assuming that all of a sudden like demand is stable, but it's not necessarily stable. And in demand and in a demand contraction, yes, people get fired, but then also new job openings change, right? There's fewer of them, they're they're more specific in the way that people salaries go down, right. That's another reason go down. That's the piece I'm waiting for that to me that would be, I don't know if you guys have early warning signs, but the two early warning signs I have in my, you know, job of investing in early stage companies is when people, well what's the average salary for an engineer? If that hasn't gone down by now, then it's a lagging indicator, right? That would be to meet capitulation. Salaries go down or people instead of laying people off sacks, they do a salary cuts out of company. That is really hard to do, right. That's that's normal. I don't think they do liquidation preferences and deals. Right. I think the way the salaries come down is that startups freeze their hiring plans where they lay people off, and all of a sudden the war for talent subsides easier to hire people and so there's no need to keep raising up. Are you seeing that? Yeah, I think we're seeing the beginning of it. But I gotta tell you, I mean I think that startups have not fully embraced or or realized what's what's happening. I just got back from the CO2 summit over the past couple of days. This was an event that was hosted by Cotu, you know, whose founders are Philippe and Thomas Laffont, very smart guys, very smart investors who've been public market sort of hedge fund investors for a long time, but also have a large venture fund to do growth stage investing, some of the takeaways from that conference. So some of the more vivid lines that stuck with me is that one of the speakers said that he said that when it comes to runway for startups, three to four years is the new two years. Because if you just have two years of runway, you're going to need to raise in a year. And in a year from now we're going in the middle of a recession, they're predicting, they're forecasting that capital availability is going to decline about 75%. The amount of money that's venture money that's available to the ecosystem down by 3/4, so. If you try to raise in that environment, either you're not gonna be able to or investors are gonna, you know, have all the leverage, you're not gonna get terms that you like. So they were recommending three to four years of runway. So that is not what I think a lot of companies are planning for possible. The other thing that the other really vivid take away is that they did some polling of the startup founders who are in attendance. OK. And what the numbers basically showed is a is a contradiction. On the one hand, the founder sort of understood. That intellectually that we're headed into a downturn, we're headed to a recession. And so the polling reflected that. On the other hand, if you ask the founders how they're going to react to it, what are you going to do about it? You gonna cut head count or are you going to accelerate your business to beat competitors? Everybody said, oh, we're going to out accelerate our competitors. So everybody thought that there are the exception. In other words, everyone understood we're headed for this massive recession. It's going to be really bad, but we're going to be the one company that doesn't need to cut. We're actually going to grow, we're going to accelerate during the downturn. So there was a real contradiction. And how founders are interpreting this advice. And I have to tell you, when I talk to founders in our own portfolio, what I see is, you know, we've now done multiple meetings where we lay out what's happening in the economy and they get it, they understand it. And when we do a board meeting, they're like, OK, we're going to go look at our plan and we're going to reevaluate and we're going to make major cuts. We're going to bring our burn multiple down to, you know, where it should be. But then, you know, when you check in with them a couple of months later and you're like, where are you on the plane? I haven't taken the medicine. It's or or the medicine. Like a 10% cut and I'm like, it's like 10% of performance review. Yeah, like 10% should be doing every year anyway. Yeah, you get rid of the the bottom, the the see performers, you promote the A's and B's and you get rid of the seat. So. No one really wants to take the medicine yet. And you know, it's a problem. I mean, Sequoia has this great chart called survival of the quickest that we should put up on the screen and it shows 2 lines. One company is the one that takes the medicine right away, brings their burn down to where it should be, and then they're able to grow from there and they really will out accelerate the competitors. But then there's the company that basically delays and waits. And what happens is by the time they finally get religion to make the cuts, it's too late because even after they make the cuts. They don't have enough runway on the other side. They burn the capital. Yeah, they burn the capital and then they're in a death spiral. So I think, you know what what companies need to think about is this is a 75% reduction. Imagine if you did $100 million round last year, right. If you go try to raise next year, the recession, that $100 million round might look like a $25 million round. So imagine if you're burning an extra 25 to 50 million more than you should be according to your burn multiple, you're basically burning the next round. Forget about the fact that the last round. Gave you all this cushion. Think about how much of that next round you're burning and if you reorder your thinking around that, it could lead to a change in behavior. Anecdotally, I'm seeing people come back from rounds where they were expecting 40 or $50 million in some cases, like with 250K in revenue, 500K in revenue, they were living in a 203 hundred times revenue kind of world. It it was just insane and you know they're now coming back. With $10 million caps, $15 million caps on their notes, I was offered $100 million. At a 50% discount, and I said call me when you get to 65 and that's the best company, that's literally the best company, that's the best and the best founders to bet on, right of of probably most private companies is they don't like that valuation chamath, what does that valuation 40 at 50% off, it's less of a judgment on, but it's just more an observation that we're at the beginning of the beginning again, we're at the beginning of the beginning, OK? For all of us that lived through the 2000, this was four years. Of sheer hell and a grind. Now we have $30 trillion that we have to work through the economy, a recession we have to overcome, a war we need to end. And people all of a sudden assume that two or three rate hikes and five or six months of headlines are enough. And on the margin, maybe they're right, but from my perspective, you know, it's less a judgment on, but it's just an observation that we're at the beginning of something that just fundamentally has to take some amount of time to work its way through the system. And so I don't understand why anybody would give up their liquidity in this moment right now. Why would you, why would I, why would I give up $100 million of cash in my bank account? I would not do that right now. Does the cash, the caps, the cash gives you so much optionality, it's basically so much optionality. So you're going to be looking for distress and this is the thing. So you have a huge amount of capital leaving the ecosystem. Like we know Tiger is basically out. I mean, they were the basically the default provider of growth stage capital over the last couple of years. So you have a lot of liquidity leaving the system and then the liquidity that's in the system is waiting for distress. So you're right. And there's a quarter, I mean, like we talked about, there's a quarter trillion dollars of quote, UN quote, dried powder. I mean, I know. Bob thinks that people are gonna give that money back, but there's never been this much. There's not there's not much, a lot of that's deployed. They're not going to give it back. I just deployed. Yeah, look at that. That tiger fund. Tiger raised a new $12 billion fund that was announced in March and TechCrunch, we covered it on the show a month ago. Yeah. The TechCrunch an article saying was ready deployed in six months. So I wasn't on that show. Oh, that was the one where where you would take out, try to replace you with Brad Gerstner. And we should, we should do the show weekly going forward instead of monthly. It might be better to keep up with these trends. OK. Jake, how you made a good point there. We go back this for a second. You said that founders were their sole anchored on this world if 2 to 300 times AR evaluations. Let me just tell you where the new valuation levels are and this is obviously in flux, but I'm pretty sure the valuation levels are at 20 to 30 times AR. That's for a company that's growing 3X year over year, 3X year over year, that's the best of the best. The reason how you get the 10X next year is basically yes, exactly. And and the way that you get there is that if you look at like the the multiples. We're like the best public SaaS companies that are like, say a 40% grower, like a snowflake, they're at 8X. Yeah. So, you know, so basically giving more credit for the higher growth rate, right. But they really have to have that 3X growth. So, you know, if you're a founder, think about the fact that when you try to go raise next year, assuming you're the best of the best, you'll get 20 to 30 times the AR now think about your spending, not last rounds money, you're spending the next rounds money. If you could just reorient your thinking that way. You'd burn a lot less money. Yeah it the the. I literally had a deal you know in the 30 and 40 range. And and Angel investors who'd never early stage Angel investors seed funds that did not look at multiples are now asking me because when I send a deal memo to 10,000 people for my syndicate people hit reply. People are hitting reply now and saying I did the math on this. This is the multiple, this is this, this is the burn multiple. They're actually doing the math so we all of a sudden have discipline. I have not seen in this investor class in the 10 years I've been doing it. So that is to me, one of the great Silver Linings here. I think people are going to do a better job with their personal balance sheets. They're gonna invest less than speculative stuff and they're going to invest more in the actual builders who have discipline. So we're going to see this massive swing to discipline and we're going to flush out all the people who don't have product marketing could think about all those folks like what's happened in the last six months. It's like they've been long unprofitable. Back it's got smoked by 75 to 85%. They've been long crypto that's gotten spooked by 65% more. Yeah. I mean, if they weren't using a calculator, then they sure as hell should be using a calculator now to figure out. No, I mean people. Well, you think about it. There's a whole group of investors who have only known the up market. There's a whole group of founders who only in the growth market. If you're under 40 years old, you don't understand what you're about to experience. And here we are. Let's that's a perfect time to segue into crypto bitcoins. Price is down 71% from the all time high 69 K in November of 2021. Bottomed out at 17,000 or so. On June 18th the theorems price down 78%. And if you look at the craziness since the last all in episode, you know this three AC 3 Arrow Capital. There are crypto hedge fund that was letting people basically loan out their crypto. They are basically closing a $10 billion crypto hedge fund at its peak. They're insolvent. According to the reports, Terra Luna collapsed. The founders and employees at that company are not being allowed to leave South Korea. Doesn't mean they're guilty, but it's certainly not looking good. And there is a whole situation with Solana and a company built on top of it, so lend, which is not Solana, it's an application built on top of it. I talked to Vinny Lingham, our friend, earlier this week about it. They had a whale who had tried to loan out 100 million, and they had to freeze their account because they thought the downward pressure, since there's not many buyers in crypto right now, could collapse, Alana. So thoughts on Krypta writ large, what is this going to look like, sacks? Over the next year for crash all over again, I mean basically you had an extremely promising technology. I mean it is a promising technology of course and it is a future you know technology platform, but the. Price action got totally decoupled from the level of progress in the space, and people were not valuing these things based on real customers, real usage and real use cases. But it was became, you know, very speculative. And again, all of this was fueled by the excess liquidity that was pumped into the system. So, you know, we've said it before that crypto is like a liquidity sponge. It sucks up and there's a lot of excess liquidity. It's sucks up that liquidity. But now that sponge is getting wrung out and, you know, part of the problem is with interest rates. Going up, you know it's one thing when you have negative real interest rates and and and and you can't earn a return on your money then you start to get you. Basically people start to push the envelope and invest in more and more speculative things. But as you can get a real return in like they'll say there's like a real risk free rate. Now there's alternatives for all that cash. And then you got the problem of leverage as well which I think over the last few weeks the crypto space was heavily over levered and a lot of people got March and called and wiped out. That's the contagion that's occurred. People were levered up 510 times their Bitcoin on these roads. Wait till these token sale things get litigated. I mean the amount, God, the amount of grift by so many of these venture firms in running these sketchy deals where they would put in some amount of money. This is my understanding of the scam because it was explained to me you put in a little bit of equity at some crazy price. And then you get these tokens and apparently there's no like, you can just sell these tokens day one. And So what happens is like you you price the equity, but it's meaningless because really what you're getting is the right to get some amount of these tokens. The price is crazy. You sell it and then you just kind of walk away and apparently, you know, you do these deals where you just rinse and repeat this thing. Well, wait till that gets exposed. I mean that seems like a total. The firm that did this the most, injuries and Horowitz Chris Dickson I think was. Considered like the best investor last year or the year before because of all these token returns. I I gotta wonder when they go now that this people are losing money that's when people start suing. I mean what is it going to look like if they were what what do you think their marks looked like last year versus right now? I mean and all these coins like looking back in the review mirror and saying, hey, you bought all these coins, you flipped some number of coins. I mean to your point your mouth like what is the litigation? Path and the. The the shadow economy that was created. What if there's an article, there's an article, and I think it was in Bloomberg about folks trying to figure out how to get. A lawsuit filed against Binance and the problem was that they didn't even know what entity to sue. It's not clear who owns what, and you know what owns the other and who the ultimate look through ownership structure is and and and it doesn't mean that Binance is guilty of anything, but the article was just, you know, showing how there was a US investor who lost $1.2 million who wanted to file a lawsuit, and they have every right to do that. Couldn't even find the corporate entity to to actually file this lawsuit against. So if that's what's happening in a trillion dollar market, there's going to be a lot of pain. It's a lot of oversight that's that's that freeberg what is this gonna do to regulation in crypto at this point because crypto regulators now gonna or regulators are going to just be looking at this going wow look at all the pain and suffering and when a local DA. Gets, you know, five or six of their people complaining they lost money in Terra Luna, whatever it is. This is like the perfect opportunity for them to collect a pelt and get some crypto kit and, you know, hold them responsible and get some great headlines. I mean, what do you what do you think happens from this point forward in the crypto land? What you just said. OK, there you have it, folks. But what about regulation? I guess that's the next piece because all of these entities have taken a very the SEC last July or August published this kind of initial opinion letter. But remember, there's also the CFTC, there's a bunch of regulatory authorities in the United States. That have a longer process than governments ex us that have had a much more kind of stringent point of view that there's a lot of casino like gambling going on with these things and that's it. There's no functional utility. There's not a it's not is it a security if there's no underlying business, if it's not a security, then it's just a bet on something. If it's a bet on something, it's gambling. It's, you know, obvious that if it's a security, it has to be governed by the SEC. If it's a future or commodity, it's the CFTC. And the problem is we need Congress to pass some legislative. Framework that puts the puck in one side of the of the arena rink or the other. Yeah. And otherwise. Otherwise all this Gray is going to exist for a long time. And people, you know, if if if governments really hate it when retail investors lose money, well watch out because they just had $2 trillion of money in the US we have a lot of other regulators that can prosecute cases like the DFS in New York. This is the the Department of Financial Services. They are a pretty litigious prosecutorial group. I mean they go after scams and people praying on consumers and retail investors in a very aggressive way, often outside of the purview of the SEC. They often coordinate with the DOJ or the SEC in in evaluating enforcement decisions. But they they will prosecute and I think that there is a. You know, as you said, a lot of opportunity when people have been grifted out of their money for politically motivated and you know, people that generally have kind of the right point of view that are in a position to prosecute, to go after. The offenders. So you're right, there will be, there will be a lot of action on this over the next couple of years. And then Chamath is right. The way it gets resolved is a congressional act. But by the way, I'll just point out in the year 2000, Congress passed what was called the Commodity Futures Modernization Act. And that CFM was really meant to kind of, quote, bring commodities and futures into the digital age and they started working on it in 1996. It took four years to get it done. Within four years. It was already out of date and a lot of what was going on with respect to how exchanges operate and the types of. Contracts are being created. It was already missed. So, you know, the problem we have here is that by legislating the state of the market today, without creating enough flexibility in how enforcement action can be pursued and how things can be interpreted in the future, you could end up in a similar situation where people just find and run around and the whole thing repeats itself in the next few years. Because, guess what? People will always want to gamble, and grifters will always want to grift. And so there will always be a way to try and scam people out of their money. Yeah, and that's just. Hello? Hello by the way, are you? Jake's always going to want a Jackal, so you're saying that you're calling everybody download? Calling you can get the after gym? Before we pivot, if you want a perfect example of this, and this is just a lesson to founders out there, if you feel like you're in a Gray area, you probably are. People were like, oh, NFT's, you know, they're just trading cards, yada yada. And it's not a big deal that somebody had open sea, decided to front run the market or they just bought a trading card ahead of everybody else. Who cares? Well, you know, who cares? Turns out the Southern District of New York pairs and they are pretty serious group of people. Former employee of NFT Marketplace Open Sea was charged in the first several digital asset insider trading scheme. So just because insider trading didn't exist as a concept for NFT's before, congratulations doesn't exist in crypto. I mean if they want to really find the honeypots here, I mean it's the worst kept secret in crypto. How much insider trading? Is going on amongst the organizations that run the exchanges and their side pockets that they use to to manage liquidity. I mean this is the, it's the biggest thing that's been happening in crypto. If you're wondering why people were spending hundreds of thousands of dollars on a board app or whatever, like there might have been some shenanigans going on here. And I mean no, but Jason it's not, it's not illegal. This is my understanding though. It's not illegal to front run crypto trade. So most of these organizations that that run an exchange. Right. Compete for order flow and they're able to just look at that order flow and then they front run the trade and they're on the other side of that. So they're always making money and so they were making 10s of billions of dollars. All these exchanges were. Yeah. And then I guess the question becomes sacks, you know, in terms of since you're an attorney, like how you interpret this stuff there. There may not be a law on the books about front running FT, but there are laws on the books about fraud and NFT and conspiracy to, you know, grift people out of their money. So this is all going to come crashing down and the discovery is going to be next to the Southern District of New York. Actually subpoenaed any of these exchanges. All hell would break loose. Ohh no they are. You could be sure that's in process if they go after one NFT flipper they not, no problem. Forget NFTS. I'm saying coins crypto like that's the huge market and they will. They're turning over these cards because you know they like to work. They like to flip their way up to the top person. But what we're not talking about January 6th here. We're talking about gas in the Ukraine next. Hello. Hey. Oh, that's a little reference for you. Listen now that we're now that we're an hour and 10 in and we've we've kind of like broken the ice and we're we're friends. I feel good. I feel like you wanna redo as a team again you you wanna redo our intro so you not being such a *****. I don't care. I don't care. I don't. Can we just move forward? I think we all understand. I thought I'd like to be recognized. You said that you were workshopping in intro. So do you want to do your intros at the end of this or not? I'm not doing the intros. No, I'm not. Strike on interest. No, I didn't. They were. Here's what it was you wanted to the intro and extra point. No, no, it's not about the point. That was a joke. I I wanted to do intros. I didn't know coming into this how sensitive people would be. And then Sax is like I need to have in the contract. An under sparging NDA and I'm scared about the things I said so spike content needs to be a bit. Took that out. You were the spike content guy you were the most concerned about, right? No no we no we have an agreement around it's a good it's a good rule. Non disparagement. He didn't want to have in there. I oh he didn't want he wants to. I took it out again to disparage you day and night. I mean he's pretty honest. I took it out because I thought you would be more sensitive about accusing others of disparaging you. I my this whole show is you disparage. You have an intro or not? I don't have interest prepared. No, I'll do interest next episode, I promise. Everybody. I wanted to take the temperature of my besties. I don't know if people are sensitive right now. You want me to make a joke about Brad Gerstner? We got real **** to talk about. Can we talk about Ukraine and World War three? It's not all about our narcissistic nonsense. As for David over teenage boys running amok? Go ahead. So something happened in the last week that I think it's pretty disconcerting. I mean, just intellectually speaking, we all know that wars that go on and on have a tendency to escalate. And there was an example of how this could happen over the past week, Lithuania. Is now essentially stopping the flow of goods from the Russian mainland to another part of Russia called Kaliningrad, which is called an oblast. It's a little area, but it's outside the Russian mainland. It's basically between Poland and Lithuania, and so goods go by rail from the Russian mainland to Clinton grad, and they've been stopping these goods because they say they're under EU sanction. The problem is, listen, when you think about a sanction, a sanction. Is me not buying goods from you because I don't like what you're doing? That's fair game. Everyone has a choice over who they want to buy from. But this is not that. This is Lithuania deciding to stop goods going from Russia to Russia. And so the Russians say this is a blockade, I think, with some justification. And blockades are understood to be an act of war. So you've got Lithuania basically engaging in this active escalation against Russia. We always thought it would be Poland. But it's right, exactly. And remember, Lithuania is is a member of NATO. They have an Article 5 guarantee. Now think about the upside versus downside of this action. In terms of from the western point of view, the upside is this has absolutely no impact on the outcome of the war. This is not going to help anyone in Ukraine to blockade Kaliningrad and prevent coal and building materials and steel from reaching clinic grants can have any impact on the war. So there's zero upside to this. From a military standpoint, but the downside is that you now have Lithuania and Russia getting into it, and if they get into a war, then we are instantly pulled in under Article 5. We're in the middle of war three. So this is the kind of dangerous escalatory act that has no upside, only downside for us. And my view on it is that we have to tell, we have to instruct frankly, our Treaty allies not to engage in these types of dangerous acts because there's a huge externality we could be pulled in. This is very dangerous. And I just wonder if the administration is on top of this. Did they give the green light to the Lithuanians to do this or were they caught by surprise? And what is their reaction to acts like this? You know, what I worry is that we're conducting foreign policy by virtue signaling where we just say, who are the good guys and who are the bad guys? And, you know, if the Russians are the bad guys, Lithuanians are the good guys. So therefore, this is OK. It's like playing cops and robbers on a global stage. I think we need to be asking the question, is this smart? Or is it dumb? Is this prudential or is it reckless? Is this in our interest or is it not in our interest? And, you know, I really got to wonder. About who's minding the store on this day, 120? And it feels like this is just doesn't have an ended site. Is there an ended site here? What's the end? I mean the, the the end. What is important is want. Yeah. What are the two parties want at this point? I mean, the people in Russia are suffering during this. The people in the Ukraine are being murdered in Ukraine are being murdered. I mean, how does it end at the problem is that Biden engaged the United States in a proxy war without our real explicit discussion, number one. And then #2 is then we pulled and we pressured Europe. To really draw a hard line, but then now are kind of working around it so that the countries that suffer the most are Europe. Now. I think you starting to see the tea leaves though. Last week there was a group of European leaders, I think it was Macron, Draghi. And I can't remember if it was the German Chancellor or not and one other person who went to Ukraine and if I had to bet, I think the message was kind of like, alright, listen, like we need to find an organized datant here because there is, you know according to Europe a Lehman like situation in terms of economic contagion that could manifest over the next months. So I think that the end game is probably some. Organized, negotiated, datant and ceasefire. I don't think anybody will be happy with it, but I think by and large, Russia is. And has one, you know, meaning they've won economically, they're selling oil like it's not, you know, like it's going out of style. It's just not selling it to Europe and to America. You know, they're selling it to China, they're selling it to Africa. They're selling India is fine with it. They'll, they'll take some also chamath they've won. They're winning on the battlefield. There was an article in the Washington Post, there was an article in the Washington Post in the last week or so, and the Washington Post is basically the House organ of the Washington establishment and the The BLOB basically saying that. Hopes are dimming for Ukraine on the battlefield. The Russians have now won 20 to 25% of the country. They've won that Eastern, that Donbass region. They've done it with the help of Russian separatists in Ukraine. And the amazing thing in this article was that they were saying that the Ukrainians were days away from running out of ammunition, despite the 40 billion that we just appropriated to them. Where did that money go? And the and conversely, they're saying Russia is having just unbelievable casualties and they're running out of weapons and they are obviously out of Kiev. Now, and they're in the Donbass mostly, so I don't dress like anything. The Russians, the, the, the. So listen, I, I said on this pod, they said they're out of tanks right there and then and the troops. So they've they've adjusted their strategy and they've, they're, they're they're learning, they're adapting to this new kind of warfare, this asymmetric warfare where you can take out a tank with a drone, you know? Yeah. But but look, you know, remember on this pod, three weeks into the war, everybody who was in favor of this proxy war was saying how great it was and they were saying it was going to lead to a new birth of freedom. In the West that it was strengthening our alliances. You had Francis Fukuyama predicting that we were gonna win the war and it would lead to this rebirth of freedom. In the West, we should have known at that moment everything that Fukuyama basically predicts. The opposite is true. It's like -, 1 correlation. And remember I said three weeks in that we were potentially. I think Putin made the mistake in the first weeks of thinking this be a cakewalk, but that we were making the mistake of thinking the next phase would be a cakewalk. And sure enough, here we are. Russia has now won. The eastern part of the just, just to build on what you said, you know, we engage in economic sanctions. And I was the first one to say, hey, this could really work and this could be a road map for how to do it. And it turned out this is the road map for how not to do it. You can't on the front door, say, here are these sanctions and then walk around the back door and basically open the door for them. These, these sanctions were so porous as to be like Swiss cheese. We focused on virtue signaling acts like confiscating a plane or a boat or a house, but we didn't. Focus on the structural things. We needed to actually, you know, make the mandate that we believe to be just to come to life. And so Russia's completely worked around it. Their economy effectively, you know, is thriving. So what have we gained was a thriving, I mean I don't know that thriving is how they would describe their economy right now. Yeah, I mentioned this in their identifying record rubles or five year high, Jason. They're selling gas, they're selling phosphate, they're actually making a market and the prices have doubled and tripled in those commodities because the flow has been restricted. So because they're restricted opposite of what we tried to do. And by the way, I'll point, I'll, I'll point out something that I pointed out in February, which was the biggest concern for me at the time when we stopped allowing trading in the securities of Russian. Companies, we yanked away $400 billion of market cap that was held primarily by pension funds and retirement funds in the US and Europe and gave that value to Russia for free. We basically said here you go here all these securities, we're no longer allowed to trade in them. So guess what, you guys can trade in them, you can have got, they got all of their gas and energy and nickel and mining companies for free. I think it's such, it's such a good point dollars for these companies, we believe them. We ripped the stock out of retirement funds and we gave it to the Russians and said here you go, Putin, take all of these securities for free and enjoy. Oh, and by the way, because of our idiotic sanctions and the way we're employing them, the commodity prices are going to double and triple and all these companies are gonna have record profits this year. Happy ******* birthday. The rubles up 5X. It's not up 5X. But yeah, it's a great point, because if Putin had retaliated against the West by nationalizing 400 billion of Western assets in Russia, everyone would have been up in arms. But he didn't have to do that. Because we just gave him. We gave the 400 billion totally. I mean, how did this policy make sense? It's this policy of conducting again, conducting foreign Russian securities. I'm I'm freaking BlackRock. I own a billion dollars of Russian securities. the US government just took it out of My Portfolio that my clients own stakes in and gave it to the Russians for free. They're gone. ****. Crazy, I think. Listen, I think we've got like a A2 level problem on this Ukraine War One is that our policy hasn't made sense. We should have been using diplomacy last year to avoid it. This we had all these false hopes around strengthening the West and the Western Alliance by allowing this war to happen. We then, instead of trying to shut it down through a negotiated settlement, we try to use as a proxy war to weaken Putin. Instead. It's done the opposite. So there's a whole series of policy failures here, but there's another deeper level to the failure, which is the personnel. Who are implementing these policies? The Washington establishment. The BLOB who've been of both parties, the the sort of UNI party who've been implementing these policies. There has been no dissent within the Washington establishment. The only guy who really spoke up in a decisive way was John Mearsheimer, the professor of international relations from the University of Chicago, and he was treated as a pariah by the BLOB in the Washington establishment. Everything he predicted has come true, he says. Years ago, years ago, predicted the US was leading. Crane down the primrose path. And the result was that Ukraine was going to get wrecked. And so it has. Can I just read the first paragraph of this Bloomberg article that I just posted? Russia's current account surplus more than tripled in the first four months of the year to 95.8 billion, the central bank said, as prices surge for oil and gas imports and imports plunged under the weight of sanctions. Well, you know, if you're Putin and you're looking at this, you're like, wow, maybe I should be under sanctions more often. Totally. You know, what country should I? Late next, because this is sanctions. All that sanctions were was a restriction on the free market. And when you restricted the free market, you basically created a spike in price. But the market, his market could still operate with a narrower set of trading partners. He is selling energy to certain trading partners. He's selling phosphates, he is making money, they are exporting product, and they're making more because certain people can't buy and they've got to go drive the price up elsewhere. So not not only did our sanctions package not work and not only is the Treasury treasurer. Treasury, sorry, flailing around now. Trying to find even more backdoors, we actually opened a very dangerous precedent, which is now we allowed oil to settle in currencies that are not just the United States dollar and now Russia and China are trading and settling in CNY. That's not good for us. This is not how you preserve the integrity of the reserve currency of America. I don't understand the EU of cutting all of their energy and then becoming dependent on Russia, then creating a ban and sanctions, but then they made a carve out that. Will delivered by pipeline. Janet Yellen has been negotiating this carve out. We have been enabling Russia to sell. We know the EU passed this legislation. Jason. Look, look in the Wall Street Journal today. The article is there reading CNBC right now about it. Like the EU passes landmark sanctions package in May, but they also allowed the stuff that's coming by pipeline for some reason to be a carve out. If the EU wants to contain Putin from invading countries on their doorstep, they got to actually become energy independent. That's the the beginning and end of this. Popular and this is the problem with populism. That's not popular. It's not popular to continue to have to to to have energy independent. Nuclear was not popular. And so the politicians, the legislators responded in a short sighted way to the popular opinion of the day. And this is the challenge, absolutely, yes. Huge mistake on Germans part. They closed three nuclear reactors of sentiment in Europe, got highly affected by these environmental groups. Exactly. That's my point. But in the US I think the people of the country want us to be energy independent. And and it's elite opinion that bought into these foolish ideas that basically we should cancel energy independence, we should cancel the Keystone Pipeline job number, cancel new drilling. America should be a net energy exporter, 100%. Job number one is to be energy independent. And job number 2 is to move to a renewable now. And there's another piece to this. You wanna do this in sequence? Yeah. So when he came in, he said that he was gonna make the Saudis a pariah on the world stage. Now he's going hat in hand to them to try and get them to produce more, lower the price. So what was the point of this foreign policy? It it was contradictory. He cancels our energy independence. He basically insults the salt the Saudis on which we're even more dependent for oil. And then he basically refuses to engage in diplomacy in Ukraine. These policies are contradictory. Even if your goal was to basically isolate the Russians, you would then want to improve our relationship. Hundred were Saudi and you'd want to produce more of our own oil, 100%. Yeah, you, you, you. He overplayed his hand, for sure. I mean, you, you can't not have heat in the winter in Germany and the Germans. And by the way that's coming, you think things are bad right now, wait until winter and then. And that's only gonna increase Putin's leverage. And that's when you're gonna see a real fracture in the Western alliance. This idea that Ukraine strengthened the Western Alliance, I think you will start to see the fractures come this winter national. I mean, Germany's gotta put those nukes slow. The slow March of nationalism will continue and this will be another catalyzing event. Turn your nukes back on German and and and and I also think that, you know, and thinking about the Western Alliance, I think that, you know, countries like Germany and France are really gonna question US leadership. When they have basically a huge economic recession and they're wondering how they're going to heat their homes in the winter. But I think in the US it's time to reevaluate some of the alliances that we've gotten ourselves in again with this Lithuania situation, do you really think that Lithuania would be basically poking that big Russian bear if they didn't have the US standing behind them as a bodyguard? No way. They would be much more circumspect and prudential and the and the fact of the matter is that these Eastern European countries, the Baltic countries. And Poland, they have enmities, they have friction with Russia going back hundreds of years. And these guys, basically they have very provocative attitudes towards Russia and our alliance with them can draw us in. So we have to really keep a close lid on that. We do not want them making moves on their own because we could get drawn into a World War here. And by the way, to your point, setbacks also, you know, there continues to be. Escalating issues with debt and concerns about debt repayment across the EU. And while Germany is, you know, looking to the US for support and worried about energy prices, they're going to end up having to foot the bill to support a bunch of these EU Member nations that are facing debt crises. And we'll continue to face significant debt crises over the years ahead. I mean, Greece made a payment recently, but Greece's debt to GDP still over 200%. Italy is at 155%, Portugal is at 134. I mean, the numbers are pretty solid. And as rates you saw today, you know, it was, yeah, the, the, the, the spread on it. Italian debt has spiked over the last couple of weeks, spiked Bridgewater, Basically's biggest short short. He's got another friggin crisis to fight now. And I think you're right, the the Western alliance is more than just a military at this point. There's this, you know, do I really want to be the economic savior over and over again of my smaller Member States and guess who's going to benefit in all of this? China. Like, they're gonna look at this fracturing and they're gonna be like, great. By the way, just Speaking of Speaking of China for a second, you know, we talk and we, we bloviate about our desire for energy independence and, you know, we exclude Tesla from, you know, any sort of major meaningful legislation. We trumpet, you know, these companies that are just completely, woefully behind in building energy independence. We think about like a gas tax holiday but as like kind of like a, you know. Something that still needs an act of Congress to pass, even though Congress has said they have absolutely no intention of passing it. Meanwhile, we keep losing our footing to China. Just today, C ATL, which is one of the largest battery manufacturers, announced a pretty meaningful improvement in their 3.0 battery design. These guys are now building batteries that can go 1000 kilometers in both of the major you know. A compositions that really matter and MPC and LFP and and I just look at these things and I'm like wow we cannot actually get capacity funded to build domestic battery capability. Because we're too busy kind of basically virtue signaling on things that don't matter and in return nothing happens. China continues to lap us. We it's really, it's a really bad state of affairs. We are, we are in a very odd. In terms of government effectiveness. If you think about China's foreign policy, how have they lost out by not being part of all these conflicts? Have they lost out there? They're buying prices of oil? That were nine months ago to 18 months ago. And so there, not only has Russia's output price been capped, but that's OK. China's input cost has been capped and so they don't suffer the same rate of inflation that the rest of us do. So to your point, David, you know, our quote UN quote, you know, exclusionary sanctions were ineffective, they were porous. And we allowed our largest competitive frenemy, if you will, to basically be able to, you know, drive their entire economy. At 30 to 40% of the discount to what we have to pay to do the same, right when, when when China goes abroad, they go abroad in search of economic resources and economic development. That's the point of Belton Rd. They don't insert themselves in these middle of these conflicts that they don't understand. They were never involved in the Middle East. They were never involved in, like, policing, you know, all these different countries. That has cost us a fortune. And now the bill is finally coming due in the form of this inflation. We're going to have some form or another of austerity in this country, and it's partly because of this highly militarized foreign policy in which we have set ourselves abroad to be the world's policeman. We can no longer afford to do that. Can I make a generalization such you react and tell me if this is true or not? If you have a country that has existed in some way, shape or form, you know the the borders could be blurry, but roughly. For hundreds and hundreds of years and in some cases thousands of years. Where internally? The population of that country views themselves. You know, in a great way they they they don't feel like their country is a meaningless nothing country. Any attempt to economically humiliate such a country tends to have failed in the past and will continue to fail. And there tends to be. Other countries who view it as one of these things where, well, if them, then why not us? And then they sort of, you know, in a, in a backhanded way, support everybody so we end up in this odd situation where we are picking fights we cannot win. Totally and and the consequences for us are economically really damaging. Right. And then the consequences for everybody else to stay on the sidelines is like economic prosperity. That doesn't make any sense. Right. Let's go to your to you. You're afraid that Russia is going to roll over more countries and that you have this existential risk that this dictator is going to attack more countries. So if you're living in Eastern Europe, you might have a different view of it. Yeah. So you might very much accept and want some help from, you know, NATO and other folks who. But you're not getting that help. That's the problem with that. That's the sad part about all. If it's poorly executed, it's not working at this point in time. Yeah. I mean, it's a valid critical. If you look at the EU, OK, as an entity, they have almost the same GDP and output as the US and if you compare them to Russia, their economy, their, their GDP is 10 times greater than Russia. They are rich. They can afford to allocate a few percent of their GDP of their government budget to defense. They shield to defend themselves, they really should. And so this idea that we have to go over to Europe. And bankrupt ourselves to defend rich Europeans, they should be picking up 100% of the cost of that 100%. I don't know why we're paying for rich Europeans when our country is massively in debt. Why aren't we passing the bill to them for that? Yeah, yeah, we're absolutely. Yeah. Do we have to spend that much money to to do that? No. And then obviously the wars in the Middle East were me pick up on this world policeman idea. What kind of policing works the best community policing. When the policemen are from the neighborhood and they know all the players, they understand the subtlety of the of the area. Exactly. the US has made itself the world's policeman. We parachute into areas that we don't understand. We did in the Middle East. It was very ineffective. What we should do is let the regions deal with the problems themselves. 1st and we should be the policemen of last resort, not first resort. Let the Europeans take the lead. They should be paying for their own defense. You know, we could still have NATO, but they should be paying for it. They should be the first responders, and if they can't handle it, then we can back them up. But this idea that we need to be on the bleeding edge of all these conflicts, bankrupt, bankrupting ourselves, it's a foolish idea. Energy independence is a solution to all of this. We wouldn't have to deal with these despots if we didn't, if we had energy independence. So we're getting, we're getting circles run around us by China, Jason, on the innovations front. Circles run around by China on the innovation front. Example. I just told you the ATL battery that they just announced today. Yeah, it's incredible. Yeah. I mean, battery technology is we have a lot going on there as well. I mean, it seems like the battery technology. Issue has been solved for EVs for some time now. I mean, if an EV can go 200 miles and we can build them at scale, which seems like we're on the precipice of, we're going to be good. You don't need more than 200 miles on average. It's just a luxury every mile after that, given how fast superchargers are working. So just practically speaking, 95% of Americans will do just fine with a electric car that does 200 mile range and the other 5% can do a hybrid or can still burn oil. We just need to get more. We have to be more serious about the miles per gallon. Right now we are just absolutely. Abhorrent and our use of fuel in this country, it's just crazy that we have low 20 miles per gallon as our average when other countries are 304050, you know, or 30 and 40 because we like our, you know, seven seat Suburbans, which is ridiculous because 99 out of 100 missions in that suburban are done with one or two people in it. The fact that our ubers, you know, in our lifts or whatever are coming with giant Suburbans with one person and it is just I have a I have a Fiat E500 here like a little mini. It's incredible. Yeah. Synchrony. I mean, yeah, I mean, This is why, I mean, this is the path if we can just, if you just think about it, if we were to double our miles per gallon, there are cars right now that are doing 5055 miles per gallon. We really have to be more punitive in terms of tax. Give me the give me the forecast jakal, what's going to happen with Biden? Ohk. OK, so can you give me your give me your scorecard. Give me your grade. How's he doing for Biden? OHS. It's disastrous. I mean, I think the only thing more disastrous than Biden would be having Trump do a second, third and fourth term, 100%. So but so play it out. Play it out. Well, I don't think he's going to run again. I think they're gonna have. You don't think that's going to run again? I think they're. I think between then and now, if the economy keeps going the way it's going, he would be a lame duck and impossible. And I think he might say, you know what? I'm gonna retire to spend time with my kids and my golden years. And they might convince him that him running again is a really bad idea. And Kamala Harris is a disaster as well. She hasn't proven anything in the first two years. Yeah. Who would the Dems put up? JKL? JKL as a Democrat? Who would you want to have put up? I think it's gonna be DeSantis versus Newsom. IN24I. Yeah. I but sorry. Explain that. OK. So which part of it, Newsom or Santos? You said. How does how does Newsom get the nod? OK. Here. So Newsom has a very weak challenger. And in California, it's a + 30 devastate. Hold on. Please win. Alright, so he's going to handle the win reelection in California. He's already not. He's not even campaigning for reelection in California. He's he's already campaigning to be president. The thing that he did that was politically smart, and I say this not as a fan of Newsom, but this is someone who's analyzing the politics of it is that he went on true social and he basically counter your Republican lies. And so he's positioning himself as a fighter for progressive values. And the reason why that's going to be flattering to the democratic base is that when the Democrats lose. Big in November, they're gonna have, there's gonna be a reckoning and they're gonna have to understand why they lost. And the fact of the matter is that ideologues never blame themselves or their agenda. They are going to say that it was not communicated well and that we needed a basically a better communicator who was a fighter. And so they will basically pin the blame even more on Biden. And so Newsom is positioning himself as that sort of democratic, progressive fighter. If you go back, remember when Michael Avenatti like they were, you know, progressive or talking about him? As a presidential candidate, for a brief minute they swooned over him. Why go to jail? Yes, he's in jail right now. He's a total grifter scumbag. Total grifter scumbag. But you gotta remember, CNN had him on there every day because he was a fighter. Jake Paul says his name in the funniest way possible. I remember poker game when, like, Helmuth said, he had known numbers on the Jacob. What's this guy's name? Say his name? Michael avenatti. I don't know how I never met these. Michael Avenatti, right is a disaster. It's an interesting concept. Yeah. Zach, can you giving the Dems will give you some of the nod. Can he actually win in some of these these middle states? Well, you gotta remember this is true for both parties, that the general electorate does not pick the candidates. The parties pick the candidates and the base of the party picks the candidates. They want someone that can win Pennsylvania. They want someone that can win Florida they want, but yes and no. So if you remember when? When, bill. Clinton pulled the Democratic Party back to the center in 1992 and yeah, the whole Democratic Leadership Council. And they really remade the Democratic Party at that time as a more centrist party. They had just come off 3 disastrous presidential elections, so Reagan and 80 and 84 and then Herbert Walker Bush in in 88. So, you know, it took three big losses for them to rethink. I don't think progressives are going to rethink their agenda, you know, based on one midterm loss, even though I think it's going to be gargantuan. Later this year. So I think they need more losses to really reevaluate their agenda. I mean, look, the activists in the party are deeply invested in their agenda. They're just not going to give it up. They're going to blame it on a communication problem. They're going to say let's find a new messenger, and Newsome will seem like a younger, fresh face. So I think that's how it could happen. And if you look at the Democratic bench also say can he also, who else they got is the issue also judge, Judge Warren Buttigieg and AOC, if they wanna go full like crazy, left would be. And then if they wanna go more moderate, that's not that doesn't win an election. You gotta find someone that can win the election. So I agree, I agree, but it's gonna be that the governor of a big state, which is as of now 100 million, $100 billion surplus looks good for him. So, yeah, I mean, Gavin, it's a scenario. It's a scenario. But look, I think the Republicans will the Republicans field Trump after January 6th? And I I think the answer is no. And it's too shameful right to to do that. I I think that, look, I think Trump's problem is he won't stop talking about the last election. And I think elections are always about the future and the Republicans ultimately going to nominate a candidate who represents the future and the Republicans want him as going out there trying to steal an election. Again, no look. If you look, if you look at, if you look at straw polls, OK, if you look at straw polling, DeSantis now is beating Trump in straw polls in the Republican Party. Jonathan Chait, who is a pretty smart liberal, definitely not a Republican, but he's a sometimes is very smart observations. Remember the whole 0 COVID thing? Anyway, he has an article just today talking about how DeSantis has now eclipsed Trump within the Republican base. And if you look at the numbers within, if you if you poll Fox News viewers and likely Republican primary. Voters. DeSantis is up a couple of points in the straw polls, but among Fox News viewers, he's up like 10 to 14 points. So in other words, the Republican base, the activists who are the influencers, they already have moved from Trump to DeSantis. No, they love him. Yeah, yeah. So I think I feel the 5th DeSantis runs. He's going to run. He's going to win a landslide. This is why I say it's to Santos versus Newsom, I think. But look, it could be DeSantis versus Biden. It could even be Trump versus Newsom. I think the configurations that win for the Republicans, I think if Biden's on the ticket, I think any Republican wins. I think if it's DeSantis versus Newsom, I think DeSantis wins. I think however, and this is sort of the nightmare scenario, I think it's something like a Newsom versus Trump. I think Republicans could lose that just because, you know, the people, people, people think about the future, they they. They want that. They don't want to be reminded of the past. And so I think there's risk there. No more insane and deranged. Can't you can't have trying to stay to year olds running for president. No more. Great. Yeah, yeah. Alright. Not nothing against opportunity. Five years old would be good for me. Alright. This has been a this has been a very long episode. Wow. Yeah, we'll we'll considering how much sax is gonna spike it. We'll get it back down to 45 minutes. Alright? Everybody's amazing. I love you guys. It's really nice going anywhere. Everybody relax. We're back. I'm not going anywhere. You're gonna need a Wrecking Ball to Take Me Out of here. You gonna send in the National Guard? Jackal. Jackal. We don't wanna get rid of you, but now all we need is 3 out of four votes. So, alright, good luck. Vote me off that. We never wanted to get rid of you, jakal, but we knew we had to do certain things to get you to act right. Oh my gosh. My hair. Brought a knife to a gunfight. He came to negotiate. You guys. And you have to give me two points. That's fine. Jacob came to negotiate the Treaty of Westphalia and he left with half a Snickers bar. It's fine. It's fine. You guys don't get no more interest for you. That's actually more for all in summit. No more intro. Hold back our payment. By the way, I'm about to get on a call with our lawyers. We're gonna get the account set up, get all the money transferred from your submit your luck with that. Yum, Yum Yum. Good luck with that money that's long gone. I put that on the Warriors. I tripled it for good. Alright, everybody, we'll see you next time on the all. Love you boys. Bye, bye. Bye, bye, bye. Let your winners ride. Rain Man David Sasha. We open sources to the fans and they've just gone crazy with it. Besties? Play a dog taking out your driveway. Ohh man. We should all just get a room and just have one big huge order because they're always useless. It's like this, like sexual tension that they just need to release stuff out there. Beat, beat. See what we need to get merchants?