All-In with Chamath, Jason, Sacks & Friedberg - E84: Markets update, crypto collapse, Russia/Ukraine endgame, state of the podcast

Hey, Kyle, you look a little grifty.

You okay?



I’m great.

I’m great.

You look half a milli richer today.

What’s it like to be half a milli richer?

Jay Kyle, you look like a failed hostage taker.


Laugh it up, boys.

Laugh it up, boys.

Laugh it up, boys.

When you see my other projects drop,

you’re going to be crying again.


I can’t wait.

Why don’t you take yes for an answer, Jay Kyle?

I’ve taken yes for an answer.

Welcome to the All In podcast

with three miserable, rich bastards

who pull up the ladder behind him.

Do you want to explain why it took us a month

to produce a new episode, Jay Kyle?

What about the, whoa, hold on a second.

Attorney, let me give you guys the TLDR.

Jay Kyle thought the All In pod was his

and then he realized it wasn’t.


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.

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 going to do it.

Okay, if you want to do it, we do it.

We can’t talk about this for 45 minutes

because what happens-

It’s so boring.

So boring, so boring.

We plan the summit.

Jay Kyle doesn’t like how I was concerned

about the summit and I bitched at him

and you know, I was negative to him.

Finish the summit.

Jay Kyle wants to kick me off the show.


Brad Gerstner, Bill Gurley would have higher rates.

Here comes the bullying.

I didn’t think it was me and Jay Kyle getting into it.

It wasn’t.

It was actually, it started with Friedberg

and Jay Kyle getting into it.

Jay Kyle wanted me off the show.

All right, I’ll, do I get to explain

the series of events or no?

You wanted me off the show.

True or false, Jay Kyle?

I felt that if Friedberg,

if Friedberg wasn’t enjoying his time here

and was going to constantly complain every week

about every detail of why the show is not good,

there was always the option for him

to maybe do half the shows

and have Brad Gerstner 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.

Nor would I say that.

I don’t need to say that.

You said you could summarily replace any of us.

Effectively, you acted like we all worked for you.

I never said that.

It’s your show.

Sax, I don’t think Chamath’s replaceable,

just for the record, so.

That’s true.

He does think that.

I do not think Chamath’s replaceable.

Friedberg, 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.

But J. Cal 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 J. Cal believed

that he deserved more.

We had to sort through a lot of the underlying issues

that caused him 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 of the bitching, 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 do feel like this needs to be out 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 agreed to that.

And then you guys said, you don’t wanna do it.

And I said, okay, fine.

So here we are, we’re back at square one.

So let’s just get to work.

We just wanna do a pod and we just wanna talk.

There’s not gonna be any more summits.

There’s not gonna be any business here.

It’s just a pod.

I have other events I do.

I 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 it.

Okay, good.

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 one.

We’re gonna get an invoice each week from JCal now.

You’re gonna get, it’s gonna be prorated monthly.

It’s gonna be 0.8% equity per month vested.

I just think it’s so fascinating

that we went through all of this,

you know, I don’t know,

Sturm und Drang or whatever,

this like month of non 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%.

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 de facto CEO of this,

then I should get a little extra.

Yeah, 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 know,

you’re spinning out from the production board

or whatever copycat app you’re making,

you can fucking do 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, zero intros.

No intros.

Intros are out.

But what about, hey, everybody?

Hey, everybody.

I’ll do a, hey, everybody.

Hey, everybody on the house.

Hey, everybody.

Hey, everybody.

Welcome to us.

Is that free for me?

Free for you.

Hey, it’s free for you.

You let your winners ride.

Rain Man, David Satterthwaite.

I’m going all in.

And it said, we open sourced it to the fans

and they’ve just gone crazy with it.

Love you guys.

Queen of quinoa.

I’m going all in.

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 Friedberg.

How are you doing, buddy?

Great to be here.

Great to be here.

All right.


Can you feel the tension?

There’s still a lot of tension.

There’s still tension.

There’s still a little tension there.

Jekyll and I will be hanging out tomorrow night.

We’ll make it.

Have you guys resolved it?

I’m cool with it.

I’m cool with Friedberg.

I mean, I bought him dinner.

I think we’re good.

He did buy me a wonderful dinner.

Oh my Lord.

After the Warriors game.

Shout out to the Warriors.

All right.

And of course, with us is the Rain Man himself,

David Sacks.

How are you doing, buddy?


You ready to go?

Don’t try and deflect this thing onto me.

I was only tangentially involved.

It says the guy who spent 72 hours on-

Oh yeah, I wrote the contract.

You did write the contract.

I wrote a very fair contract so that we can move forward.

Just to be clear.

Yeah, and then you proceeded to break it

in the first 15 minutes by slandering me

and disparaging me, but okay, whatever.

Oh, come on.

That was good for ratings.

Good for ratings.


I thought your meme was pretty great.

He did the meme.

The two buttons of the superhero trying to pick.

That was good.

That was good.

And I was like, Jason.

That was good.

Making jokes, breaking the non-disparaging 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.

Jamal Thapaliapatiya, welcome back, boys.

Episode 84.

What’s up, boys?

All right, well, since we last convened-

Let’s get it on.

Yes, the All In Summit is finished.

All the episodes have been released,

including Pomerleki yesterday.

And here we go.

The markets are in complete turmoil.

Spy down 21% year to date.

Dow’s down 17% year to date.

17% year to date, as Sax has pointed out.

That is not representative of what happened

to GrowthSox 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 markets.

So maybe I’ll just dump it to you first

and then we’ll go around the horn to Sax and then Friedberg.

Well, 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, specific 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,

governments around the world had printed something

to the tune of about 30, 35 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 grifts

that these folks have engaged in

in the last decade and a half have to get undone.

So that’s the backdrop.

So if you think about taking $30 trillion

out of the global economy,

you’re talking about almost,

I think it’s 85 trillion is the world GDP.

So it’s almost half of an entire year’s worth of global GDP.

It’s gonna take three years probably

of the slow, meticulous running off of money,

not reintroducing new money.

So it seems like we’re at the beginning of the beginning

of something that’s gonna 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 bear 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 fingers crossed,

hoping that this would be the end of it,

Fed raises 75, we’re done with this,

they’re gonna raise 75 more.

I just think that’s not how it’s probably gonna be.

It’s gonna take, you know, 24, 36 months.

That may mean the bottom doesn’t happen

for another 18 months.

So I think it’s a, we’re in for a lot

of choppy market action.

Saks, three asset bubbles, clearly all,

you know, being impacted.

We had stocks, looks like that story was pretty violent.

Then 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 2.X for some folks.

So when you look at those three asset bubbles,

do you buy Chamaths?

Hey, we’re gonna see even more deprecation

in these for another 18 months possibly,

or do you think we’ve taken such crazy action,

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 stock market, especially gross stocks

may have taken the majority of the carnage,

but you’re right, there are other asset classes.

And I think we’re gonna 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.

So I think there are gonna be more shoes to drop.

I just want to build on Chamath’s 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 a depression,

they broke the glass in case of emergency,

they started this QE, which is basically

the government’s ability to do business

with the government.

And then 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 before.

And they loaded up their balance sheet.

The crazy thing is that program was still continuing

until last year, why?

I mean, it was like on cruise control.

And so last year-

No, no, no, it was continuing 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 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 distortions in the economy.

Now, so the Fed I would say is the number one culprit here

and J-PAL is the number one culprit,

but the number two 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 the number one factor

in this sort of overall inflation.

Number two, he pushed through that last 2 trillion

of stimulus on straight party lines, the ARP,

the American Rescue Plan, after Larry Summers said,

economists in his own party said,

this is gonna 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 pulled 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 tank 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 bans

so that these Russian oil tankers can be insured.


So that they can sell this oil

to places like China and India, et cetera.

The ruble’s at a five-year high.

The ruble’s at a five-year high.

We push for all these sanctions.

Europe gets on board and says,

we’re gonna do it and we’re gonna 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 right now.

So if you had six minutes in the pool

for when Sachs would blame Biden for the economy, you win.

Well, who do you blame?

Of course the president’s responsible.

We talked about quantitative easing starting in 2008.

So that goes over a couple of presidents.

And I guess the question I would have for you, Sachs,

is how much of the spending, the freewheeling spending,

was from the previous administration?

Because it does seem like-

Overspending is a bipartisan problem.

There’s no question about it.

But what-

I just want to make sure that we point that out, yeah.

For sure.

And 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

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 2 trillion of spending,

and then 1.2 trillion more on infrastructure.

Thank God we didn’t do that.

And then remember, the 4 trillion to build back better

where Manchin saved them from themselves?


I mean, what would that have looked like?

Freeberg, you haven’t spoken yet.

Thoughts on these asset bubbles, I guess,

and then the buying of the bonds

seem 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’s the central bank, the Federal Reserve.

And our central bank’s job is to, number one,

maintain liquidity in the capital markets

so that businesses can invest in growing 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 assets.

And the Fed’s long-term goal, 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,

and 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 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 otherwise using 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,

or 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 bounce back from the recession from COVID.

There was uncertainty about what else was happening

in the economy and yada, yada.

But 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 reduce the inflationary effects potentially,

but we tank the economy

because now all this money coming out of the market

means people are spending less and buying less

and businesses have less to borrow.

The borrowing costs are high.

And then that’s the big vacuum.

Hold on, let me go to Chamath and then Sachs.

I just want to say one thing,

the rate at which we pull the money out,

which has had to be really, really fast

over the last few weeks, can cause a recession.

And that’s 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 low interest loans were available

and price stability.

These were the stated goals for a long time.

Not low interest rates.

Capital is available for the economy to grow

at moderate rates without exceeding inflation of 2%.

That’s the goal.

So maximum employment, price stability

was also in there.

Maximize GDP growth,

because remember, we can’t ever pay our debt

if our GDP is not growing

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 right now,

but we have out of control price stability.

Look, here’s the thing.

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 walked 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 chit chat for 15 minutes

and do these surveys.

Now, you would have thought that in 2023 or 2022,

what the government would have said to Visa, MasterCard,

American Express, all the payment rails,

the banks and Stripe is,

send me a feed in the following structured way

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.

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 subjective, humans, et cetera.

If you read this article, your takeaway will be,

oh my God, this is very rickety

and it drives an enormous hammer

that we use to try to manage the economy.

That’s the first thing.

I think you need to buckle your seatbelt

because the next three, four, five months of CPI

will probably be very, very bad.

Seven, eight, 9%.


There are a handful of components

that have gotten completely runaway.

Number one, the biggest one is rent.

And so rent works on a three month lag.

We’re gonna reintroduce what the true

owner’s 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

or policy on this Ukraine-Russia war,

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 gonna 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 gonna 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

is in the financing of all these private equity

leverage buyouts.

Right, these are sketchy companies

that are sort of like 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 a contagion in the debt markets.

You could have a contagion in the commodity market.

So we’re dealing with some really tough boundary conditions.

I mean, most Americans have most of their net worth

tied up in real estate.

And if we see a 30% correction in real estate,

it could be a real problem,

particularly with rising interest rates,

inability to refinance.

Saks, the dual mandate is, hey, keep inflation 2%

and then keep the unemployment rate reasonable.

The unemployment rate’s 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, underworking

and not taking advantage of these amazing jobs out there.

Where do you see this going, Saks, now

that we can’t seem to get inflation under control

and people are looking at their 401ks,

they feel a lot poorer, but is the demand side gone yet?

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 gas makes no sense,

I’m not gonna 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.

If you look at like right track, wrong track polling

for the country, only something like 24%

believes that the country’s on the right track right now.

If you poll 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 says we’re already in recession.

It’s about 70% Republicans, about 50% Democrats.

So the country is already hurting,

people are already feeling it.

And this is gonna-

Is it psychological, Saks,

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 decisions.

And this is the 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 wanna stop inflation now,

they really have to slam on the brakes

and then that’s gonna lead to a recession.

And if they don’t,

then we end up with like a chronic

sort of stagflationary 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 was making earlier,

you know, this Ray Dalio piece

that he just 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, you know, we are gonna have a recession.

The way this unravels-

Can I just make one suggestion?

I wanna put this out there

because I sent it on our texts

and 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

that 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 a one basis point increment.

So we can have the ability to more quickly,

more efficiently,

and in a higher resolution way-

And smooth, yeah, smooth it out.

A smoother way and a higher resolution way

make these 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 particularly important and relevant,

as we’re seeing right now

with the stagflation risk that we’re facing,

where 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 this thing.

Yeah, but listen,

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.

Software could.

I mean, we should have AI running this frigging thing.

I mean, what’s like-

Listen, I actually don’t think,

when you said that Congress needs to somehow change

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.

It just can’t be multivariable.

This would get too complex.

The tools should change.


Right, we really want a focused Fed.

And I think the administration

has been politicizing the Fed

by giving them a bunch of mandates.


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.

That is not their remit, right?

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 evidence.

Remember this word, transitory?

You know, we heard so much last year

about inflation being transitory.

How’d 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.


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 allow you to do it.

And now, you know, we’re going to,

look, we’ve had a system of over-correcting

and under-correcting for years.

The problem is the stakes get higher and higher

as the economy grows and becomes more complicated

and intertwined with other economies.

And we have more leverage.

And we have more industries that are leveraged

and more asset classes that are leveraged, like housing.

Because if you’re off 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 can try to talk about non sort of, you know, big tech.

But 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 that 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 gonna touch

all these other stocks as well

that are gonna 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 even possible?

Well, I actually have a feeling.

How do you see earnings continuing to go up

into these prints like this,

when you cannot pass through, you know,

80, 90% increases in energy and COGS and whatnot?

How does that happen?

I think what people would say

is maybe they’re gonna lower their costs.

And so with layoffs and lowering salaries

and lowering spend on advertising,

you know, the E could go up.

If people start belt tightening

and then we start having companies that are being run,

you know, just more for the bottom line.

You’ll have to sell fewer things

because there’ll be fewer people with jobs to buy things.

But we have 10 million job openings.

So this is the weird thing about this recession

is because we haven’t let a lot of people

immigrate into the country,

but we have 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 stopped hiring for two years in advance, right?

Facebook said they were hiring for like 2024.

Their hiring plans were looking out two years.

So now if they go on a hiring freeze,

maybe there’s, you know, and that’s their number one cost.

I’m just putting out a theory.

I’ll give you the counterfactual.

I think Wall Street’s wrong.


And I think that earnings are gonna go down this year

and will 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 gonna put enormous pressure

on these cash burning, non-profitable tech companies.

Well, that’s for sure.

But in the ones that are profitable, Chamath,

they’re aware of this.

Facebook just canceled 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 smaller.

Sax, 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 number’s coming down really fast

as companies close open recs

and they basically freeze hiring.

So that number’s gonna come down very, very fast.

But one of the major contributors to inflation

is that the labor force participation has been very low.

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, rent’s people’s number one expense.

If 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 reenter 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 gonna get us out of this mess.

We also need to improve productive capacity.

Just to put a number on that,

we peaked in the 1999 era at 67%

of participational labor force.

And then it’s been down in this low 60, 61, 62,

and it continues to be low.

But that is the solution here.

We get that 7%, that gap could change everything.

You can’t just fix the demand side

because 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 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,

it’s 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’ve had several months in a row

of pretty significant increase in consumer credit.

And I think the reason is things are getting more expensive.

People generally do not like to reduce their spend on stuff

or their living, their lifestyle.

Once you get used to a lifestyle,

like going out to dinner once a week

or going to the movies every week and you create a budget,

you create a life experience around that,

a model around that.

It’s very hard to say, okay, 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

is 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 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 first to go,

these extra services markets where people,

have found other ways to make money,

side hustles and whatnot that 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 these jobs get filled.

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 can’t be done with this,

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 new industry here.

Yeah, job openings 11.4, it’s come down about six or 7%.

So it’s gonna be trailing, but it’s for sure,

we’re seeing it in our industry with the hiring freezes

that we’re gonna 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 50 to 75.

Remember a lot of the elements that we were kind of saying,

oh my gosh, I can’t believe the climate prices.

So wheat is down, I think 30%, lumber is down 50%,

gas prices are coming down.

So there are some of these commodity spikes

that we’ve experienced over the past couple of quarters,

particularly recently, 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.

There’s a real question of how quickly that flows

through the economy and flows through to the price of goods

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 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 gonna change

how Americans look at what car they buy?

Because this is what happened last time we had that.

They’re gonna get worse.

People started looking at not buying SUVs.

We could have $7 gas.

There was a picture actually, I tweeted in California,

there was a $7 and 11 cents gas.

Broadly, broadly, we could have $7 gas

all throughout the country.

But J. Cal, remember the average automobile

in the US lasts for 12 years.

That’s how often people change out their cars.

So that’s 8% of the fleet being changed per year.

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 years from now.

Wait till all these Peloton bikes need to get repossessed.

Well, all these, actually the wait for cars

and the overpricing of cars has ended in the last two months.

And there are multiple cars now on the market,

25, 30K for a 50 plus mile per gallon car.

I think this actually,

one of the silver linings coming out of this

is people might actually stop buying as many SUVs

or, you know, I think our average

is in the low 20s right now

and Europe’s 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’ve, you know,

you’ve been frustrated by some of the rules

that haven’t changed.

And when they change, they change 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 gonna 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, I don’t think that’s gonna 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 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 0.92.

So for every dollar that the Fed printed,

the stock market went up by 92 cents.

So, you know, it stands to reason

that if the Fed is gonna take three

to $5 trillion of value out,

then we have to re-rate the equity markets

by three to $5 trillion at a minimum.

And then you have to re-rate and re-baseline for earnings.

And so that’s probably another 20 or 30%.

It’s gonna-


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 assuming-

You’re taking out 400,000 a month is what, you know,

from the peaks.

You’re assuming that all of a sudden,

like, demand is stable, but it’s not necessarily stable.

And in a demand contraction, yes, people get fired,

but then also new job openings change, right?


There’s fewer of them.

They’re more specific in the way

that people will recruit for people.

Salaries go down, right?

That’s the next piece. Salaries go down.

That’s the piece I’m waiting for.

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 never going to.

That’s a lagging indicator, right?

Well, that would be, to me, capitulation.

Salaries go down, or people,

instead of laying people off sacks,

they do salary cuts at a company.

That is really hard to do, right?

That’s gnarly.

Yeah, I don’t think they do salaries.

More liquidation preferences and deals.

Right, I think the way the salaries come down

is that startups freeze their hiring plans

or they lay people off,

and now all of a sudden the war for talent subsides,

easier to hire people,

so there’s no need to keep raising up salaries.

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 realized what’s happening.

I just got back from the Cotu Summit

over the past couple of days.

This was an event that was hosted by Cotu,

you know, whose founders are Philippe and Thomas Lafont.

Very smart guys, very smart investors

who’ve been public market sort of hedge fund investors

for a long time,

so have a large venture fund to do growth stage investing.

Some of the takeaways from that conference,

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 gonna need to raise in a year,

and in a year from now,

we’re gonna be in the middle of a recession.

They’re predicting, they’re forecasting

that capital availability is gonna decline about 75%.

That’s venture money that’s available to the ecosystem

down by three quarters.

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.

That’s just not even possible.

The other thing that, the other really vivid takeaway

is that they did some polling of the startup founders

who are in attendance, okay?

And what the numbers basically showed is a contradiction.

On the one hand, the founders 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 gonna react to it,

what are you gonna do about it?

Are you gonna cut headcount?

Are you gonna accelerate your business to beat competitors?

Everybody said, oh, we’re gonna out-accelerate

our competitors.

So everybody thought that they’re the exception.

In other words, everyone understood

we’re headed for this massive recession

and it’s gonna be really bad,

but we’re gonna be the one company

that doesn’t need to cut.

We’re actually gonna grow.

We’re gonna accelerate during the downturn.

So there was a real contradiction

in 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 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, okay, we’re gonna go look at our plan

and we’re gonna reevaluate

and we’re gonna make major cuts.

We’re gonna bring our burn multiple

down to where it should be.

But then when you’re checking with them

a couple of months later and you’re like,

where are you on the plan?

Haven’t taken the medicine.

Or the medicine is like a 10% cut.

And I’m like, guys, like 10% is a performance review.


That’s what you should be doing every year anyway.

Yeah, you get rid of the bottom,

like the C performers, you promote the A’s and B’s

and you get rid of the C.

So no one really wants to take the medicine yet.

And 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 two 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 what companies need to think about

is this 75% reduction.

Imagine if you did $100 million round last year, right?

If you go try to raise next year in the middle of this

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 the next round you’re burning.

And if you reorient 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 200, 300 times revenue kind of world.

It was just insane.

And they’re now coming back with $10 million caps,

$15 million caps on their notes.

I was offered $100 million of 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 probably most private companies.

It’s them.

You don’t like that valuation Chamath?

What is that valuation?

40 at 50% off?

I, it’s less of a judgment on,

but it’s just more an observation

that we’re at the beginning of the beginning.

And again, we’re at the beginning of the beginning, okay?

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,

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 give up $100 million of cash

in my bank account?

I would not do that right now.

Because 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.

There’s a quarter.

I mean, like we talked about,

there’s a quarter trillion dollars

of quote unquote dry powder.

I mean, I know Chamath thinks

that people are going to give that money back,

but there’s never been as much.

There’s not that much, a lot of that’s deployed.

They’re not going to give it back.

Giving a lot of that’s deployed?


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.

TechCrunch had an article saying

it was already deployed in six months.


I wasn’t on that show.

Oh, that was the one where Jekyll

tried to replace you with Brad Gerstner.

We should do the show weekly going forward

instead of monthly.

It might be better to keep up with these trends.

Okay, speaking of trends.

Jekyll, you made a good point there.

Can we just go back to this for a second?

You said the founders were,

they’re still anchored on this world

of two to 300 times ARR valuations.

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 ARR.

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 there.

So that’s 10X next year is ARR basically.

Yes, exactly.

And the way that you get there

is that if you look at like the multiples

for like the best public SaaS companies

that are like say a 40% grower,

like a Snowflake, they’re at 8X.


So, you know, so basically it’s like.

You’re 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 ARR.

Now think about you’re spending not last round’s money.

You’re spending the next round’s money.

If you could just reorient your thinking that way,

you’d burn a lot less money.


I literally had a deal, you know,

in the 30 and 40 range and angel investors who 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

that 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 going to invest less in 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 market fit.

Think about all those folks,

like what’s happened in the last six months.

It’s like, they’ve been long, unprofitable tech.

It’s got smoked by 75 to 85%.

They’ve been long crypto.

That’s gotten spoked 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 it out.

People are, 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 know the growth market.

If you’re under 40 years old,

you don’t understand what you’re about to experience.

And here we are.

That’s a perfect time to segue into crypto.

Bitcoin’s price is down 71% from the all time high

69K in November of 2021, bottomed out at 17,000 or so

on June 18th, Ethereum’s price down 78%.

And if you look at the craziness

since the last all in episode,

you know, this 3AC, three arrow capital,

they’re a 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.

It 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, Solend,

which is not Solana.

It’s an application built on top of it.

I talked to Vinny Lingam, 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 was not many buyers in crypto right now,

could collapse Solana.

So thoughts on crypto writ large.

What is this going to look like, Sax,

over the next year for crypto?

I mean, it’s like the dot com crash all over again.

I mean, basically you had an extremely promising technology.

I mean, it is a promising technology.

Of course.

It’s a future 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 became very speculative.

And again, all of this was fueled

by the excess liquidity that was pumped into the system.

So we’ve said it before

that crypto is like a liquidity sponge.

It sucks up, when there’s a lot of excess liquidity,

it sucks up that liquidity,

but now that sponge is getting wrung out.

And part of the problem is with interest rates going up,

it’s one thing when you have negative real interest rates

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 let’s say there’s like a real risk-free rate,

now there’s alternatives for all that cash.

And then you’ve 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 margin called and wiped out.

That’s the contagion that’s occurred.

And people were levered up five, 10 times

their Bitcoin on these roads.

Wait till these token sale things get litigated.

I mean, 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 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 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 is Andreessen Horowitz.

Chris Dixon, I think was considered

like the best investor last year or the year before

because of all these token returns.

I gotta wonder when they go,

now that this people are losing money,

that’s when people start suing.

I mean, what is it gonna look like if they were,

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.

To your point, Chamath, what is the litigation path

and the shadow economy that was created?

What is that gonna look like?

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 what owns the other

and who the ultimate look through ownership structure is.

And it doesn’t mean that Binance is guilty of anything,

but the article was just 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 actually file this lawsuit against.

So if that’s what’s happening in a trillion dollar market,

there’s, I mean, it’s gonna be a lot of pain.

It’s a lot of oversight that we’ve missed.

Freeberg, what is this gonna do to regulation in crypto

at this point?

Because crypto regulators are gonna just be looking

at this going, wow, look at all the pain and suffering.

And when a local DA gets five or six of their people

complaining they lost money in Terraluna or whatever it is,

this is like the perfect opportunity for them

to collect a pelt and get some crypto kid

and hold them responsible and get some great headlines.

I mean, what do you think happens from this point forward

in the crypto land?

What you just said.

Okay, 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.

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 obvious that-

If it’s a security, it has to be governed by the SEC.

If it’s a future or a 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 arena,

a rink or the other.


And otherwise-

Otherwise all this gray is going to exist for a long time

and people, 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 Department of Financial Services.

They are a pretty litigious prosecutorial group.

I mean, they go after scams and people preying 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 evaluating enforcement decisions,

but they will prosecute.

And I think that there’s a, as you said,

a lot of opportunity when people have been grifted

out of their money for politically motivated

and 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 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 CFMA 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

that 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…



By the way, are you…

J-Cal’s always going to want a J-Cal.

Is that what you’re saying?

Oh, you get out of here with your calling.

Everybody download Call-In.

You can get the after gym podcast.

J-Cal’s going to J-Cal.

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, NFTs, you know,

they’re just trading cards, yada, yada.

And it’s not a big deal that somebody at OpenSea

decided to front run the market.

Oh, 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 cares

and they are a pretty serious group of people.

Former employee of NFT Marketplace,

OpenSea was charged in the first ever

Digital Asset Insider Trading Scheme.

So just because insider trading

didn’t exist as a concept for NFTs before, congratulations.

It 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 manage liquidity.

I mean, 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 ape

or whatever, like there might’ve been

some shenanigans going on here.


I mean, no, but Jason, it’s not illegal.

This is my understanding though.

It’s not illegal to front run crypto trade.

So most of these organizations 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 tens of billions of dollars.

All these exchanges were.

Yeah, and then I guess the question becomes Saks,

you know, in terms of, since you’re an attorney,

like how you interpret this stuff,

there may not be a law on the books

about front running NFTs,

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 gonna come crashing down

and the discovery is going to be next level.

If the Southern District of New York

actually subpoenaed any of these exchanges,

all hell would break loose.

Oh, no, they are.

You can be sure that’s in process.

If they go after one NFT flipper.

No, forget NFTs.

I’m saying coins, crypto, like that’s the huge market.

And they’re turning over these cards

because you know how they like to work.

They like to flip their way up to the top person.

But we’re not talking about January 6th here.

We’re talking about gas in the Ukraine next.



That’s a little reference for you.

Listen, now that we’re an hour and 10 in

and we’ve kind of like broken the ice

and we’re friends again.

Yes, I feel good.

We’re playing as a team again.

You want to redo our intros

so you’re not being such a bitch?

Oh, I don’t care.

I don’t care.

Can we just move forward?

I think we all understand.

I’d like to be recognized.

You said that you were workshopping an 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 on strike on intros.

No, I didn’t.

Here’s the thing.

It’s what it was.

I wanted to, the intros.

He needs an extra point.

He needs an extra point to do the intros.

No, it’s not about the point.

That was a joke.

I wanted to do intros.

I didn’t know coming into this

how sensitive people would be.

And then Saks is like,

I need to have in the contract a non disparaging NDA.

And I’m scared about the things I said.

So spike content needs to be-

No, I actually took that out.

You were the spike content guy.

You’re the most concerned about spike content.

No, we have an agreement around that.

Spike content is a good rule.

Non disparagement, he didn’t want to have in there.

I under-

Oh, he didn’t want non disparagement.

He wants to have free reign to disparage you day and night.

I mean, he’s ready to go.

To be honest, I took it out

because I thought you would be more sensitive

about accusing others of disparaging you.

This whole show is you disparaging me, Saks.

Do you have an intro or not for the viewers?

I don’t have intros prepared.

No, I’ll do intros 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 Gershner?

Look, we got real shit to talk about.

Can we talk about Ukraine and World War III?

It’s not all about our narcissistic nonsense

as four teenage boys running amok.

Go ahead, Saks.

Something happened in the last week

that I think is 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, it’s 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 Kaliningrad, 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 act of escalation against Russia.

We always thought it would be Poland, but it’s Lithuania.

Right, exactly.

And remember, Lithuania is a member of NATO,

so they have an Article V 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 gonna help anyone in Ukraine

to blockade Kaliningrad and prevent coal

and building materials and steel from reaching Kaliningrad.

That’s not gonna 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 V.

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 the reaction to acts like this?

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 if the Russians are the bad guys,

Lithuanians are the good guys, so therefore this is okay.

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 I really got to wonder about

who’s mining the store on this.

Day 120, and it feels like this is just,

doesn’t have an end in sight.

Is there an end in sight here?

What’s the end?

I mean, the end is a negotiation.

I mean, what do the two parties want?

Yeah, what do 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 this point?

The problem is that Biden engaged the United States

in a proxy war without our real explicit discussion,

number one.

And then number two 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,

all right, listen, we need to find an organized detente here

because there is, according to Europe,

a Lehman-like situation in terms of economic contagion

that could manifest over the next months.

I think that the end game is probably some organized,

negotiated detente and ceasefire.

I don’t think anybody will be happy with it,

but I think by and large, Russia is and has won,

meaning they’ve won economically.

They’re selling oil like it’s going out of style.

It’s just not selling it to Europe and to America.

They’re selling it to China, they’re selling it to Africa,

they’re selling it to India.

If they have time with it, they’ll take some cheap oil.

Well, 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 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 conversely, they’re saying Russia’s 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, it does seem like both-

I don’t think the Russians are running out of anything.

The Russians, so listen, I said on this pod,

three weeks ago- Well, they said

they’re out of tanks, right?

Well, they’ve adjusted their strategy,

and 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?

But look, 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 gonna 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 comes true. He’s always wrong.

He’s always wrong. He’s always wrong.

It’s like negative one correlation.

And remember, I said three weeks in

that we were potentially, I think Putin made the mistake

in the first three weeks of thinking this would 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 country.

Just to build on what you said,

we engage in economic sanctions,

and I was the first one to say,

hey, this could really work,

and this could be a roadmap for how to do it.

And it turned out this is the roadmap 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 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

make the mandate that we believe to be just to come to life.

And so Russia’s completely worked around it.

Their economy effectively is thriving.

So what have we gained?

How is it thriving?

I mean, I don’t know that thriving

is how they would describe their economy right now, yeah.

I mentioned this- Jason, they’re printing

record surpluses. The rubles

that are 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.

It was the exact opposite of what we tried to do.

And by the way, 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 are all these securities.

We’re no longer allowed to trade in them.

So guess what?

You guys can trade in them.

You can have them.

They got all of their gas and energy

and nickel and mining companies for free.

I think it’s such a good point.

For zero, they paid $0 for these companies.

It’s unbelievable.

We gave 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.

Enjoy, oh, and by the way,

because of our idiotic sanctions

and the way we’re employing them,

the commodity prices are gonna double and triple

and all these companies are gonna have

record profits this year.

Happy fucking birthday.

The ruble’s up five X.

It’s not up five X, but yeah, okay.

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 even have to do that

because we just gave him the 400 billion.


I mean, how did this policy make sense?

It’s this policy of conducting, again,

of conducting foreign-

You cannot trade in Russian securities.

I’m frigging 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.



I think, listen, I think we’ve got like a two-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.

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 tried to use it 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 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 predicted this years ago, years ago.

He predicted the US was leading Ukraine

down the primrose path,

and the result was that Ukraine was gonna 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 its oil and gas imports

and imports plunged under the weight of sanctions.

Well, if you’re Putin and you’re looking at this,

you’re like, wow,

maybe I should be under sanctions more often.


What country should I invade next?

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 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’s 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 only did our sanctions package not work,

and not only is the treasury flailing around now

trying to find even more back doors,

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 oil delivered

by pipeline.

Janet Yellen has been negotiating this carve out.

We have been enabling Russia to sell.


No, the EU passed this legislation.

Jason, look in the Wall Street Journal today,

the article is there.

I’m reading the CNBC right now about it.

Like the EU passed this 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 beginning and end of this.

It is not popular.

And this is the problem with populism.

What’s not popular?

It’s not popular to continue 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.


Huge mistake on German’s part.

They closed three nuclear reactors.

Popular sentiment in Europe got highly affected

by these environmental groups.


That’s my point.

But in the US,

I think the people of the country

want us to be energy independent.

For sure.

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 one.

We should cancel new drilling.

America should be a net energy exporter.

Job number one is to be energy independent.

And job number two is to move to renewables.

But look at Biden now.

There’s another piece to this, right?

You gotta do this in sequence.

So when he came in,

he said that he was gonna make the Saudis a pariah

on the world stage.

Remember this?

Now he’s going hat in hand to them

to try and get them to produce more oil and lower the price.

So what was the point of this foreign policy?

It was contradictory.

He cancels their energy independence.

He basically insults the Saudis

on which we’re even more dependent for oil.

And then he basically refuses

to engage in diplomacy on Ukraine.

These policies are contradictory.

Even if your goal was to basically isolate the Russians,

you would then want to improve our relationship with Saudi.

And you’d want to produce more of our own oil.


Yeah, he overplayed his hand for sure.

I mean, you can’t not have heat in the winter in Germany

and the Germans are completely-

That’s coming by the way.

That’s coming.

You think things are bad right now, wait until winter.

And then 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.


I mean, Germany’s gotta put those nukes back online.

The slow march of nationalism will continue

and this will be another catalyzing event for it.

Turn your nukes back on, Germany.

And I also think that,

in thinking about the Western alliance,

I think that countries like Germany and France

are really gonna question U.S. leadership

when they have basically a huge economic recession

and they’re wondering how they’re gonna

heat their homes in the winter.

But I think in the U.S. 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 U.S. standing behind them

as a bodyguard?

No way, they would be much more circumspect and prudential.

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.

Yeah, and by the way, to your point, Sax,

also, there continues to be escalating issues

with debt and concerns about debt repayment across the EU.

And while Germany is looking to the U.S. for support

and worried about energy prices,

they’re gonna end up having to foot the bill

to support a bunch of these EU member nations

that are facing debt crises

and will continue to face significant debt crises

over the years ahead.

I mean, Greece made a payment recently,

but Greece’s debt to GDP is still over 200%.

Italy’s at 155%.

Portugal’s at 134%.

I mean, the numbers are pretty significant

and as rates climb.

I mean, you saw it today.

You know, it was.

Yeah, the spread on Italian debt

has spiked over the last couple of weeks.

Spiked, Bridgewater basically is big as short.

Germany’s got another frigging crisis to fight now.

And I think you’re right.

The Western alliance is more than just military

at this point.

There’s this, you know,

do I really wanna be the economic savior

over and over again of my smaller member states?

And guess who’s gonna benefit in all of this?


Like, they’re gonna look at this fracturing

and they’re gonna be like, great.

By the way, just speaking of China for a second,

you know, we talk on,

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, CATL,

which is one of the largest battery manufacturers,

announced a pretty meaningful improvement

in their, you know, 3.0 battery design.

These guys are now building batteries

that can go a thousand kilometers

in both of the major, you know,

compositions that really matter, NMC and LFP.

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.

It’s a really bad state of affairs.

We are in a very odd period

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?

How have they lost out?

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 okay.

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 unquote, 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.

When China goes abroad,

they go abroad in search of economic resources

and economic development.

That’s the point of Belt and Road.

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 are gonna 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 sent ourselves abroad

to be the world’s policemen.

We can no longer afford to do that.

Can I make a generalization, Sachs?

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 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 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 backhanded way, support everybody.

So we end up in this odd situation

where we are picking fights we cannot win.


And the consequences for us

are economically really damaging.

Right, absolutely.

And then the consequences for everybody else

to stay on the sidelines is like economic prosperity.

That doesn’t make any sense.


Unless you’re in Europe and 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.

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 of this.

Well, I mean, if it’s poorly executed,

it’s not working at this point in time.

Yeah, I mean, it’s a valid criticism.

If you look at the EU, okay, as an entity,

they have almost the same GDP and output as the US.

And if you compare them to Russia,

their economy, 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 should be able 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 do that?


And then obviously the wars in the Middle East were

just disastrous. Let me pick up

on this world’s policemen 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 area.

Yeah, boots on the ground.


The U.S. has made itself the world’s policemen.

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 first.

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, 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 had energy independence.

We’re getting circles run around us by China, Jason,

on the innovations front.

Circles run around us by China on the innovation front.


I just told you, the CATL battery

that they just announced today.

It’s incredible.

Yeah, I mean, battery technologies,

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 gonna 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

in 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 30, 40, 50,

or 30 and 40.

It’s because we like our seven seat suburbans.

Which is ridiculous

because 99 out of a hundred missions in that suburban

are done with one or two people in it.

The fact that our Ubers and our Lyfts or whatever

are coming with giant suburbans with one person in it

is just ridiculous.

I have a Fiat E500 here, like a little mini.

Oh, it’s incredible.


It’s incredible.

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 50, 55

miles per gallon.

We really have to be more punitive

in terms of taxation on the SUVs.

Give me the forecast, J. Cal,

what’s going to happen with Biden?

Oh, okay.

So I guess.

Give me your scorecard.

Give me your grade.

How’s he doing?

For Biden?

Oh, 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.


So play it out, play it out.

Well, I don’t think he’s going to run again.

I think they’re going to have to put another candidate.

You don’t think Biden’s going to run again?

I think there, 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 going to 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?

J. Cal, J. Cal, as a Democrat,

who would you want to have put up?

I think it’s going to be DeSantis versus Newsom in 24.

I, yeah, I.

But sorry, explain that.

Okay, so, but which part of it, Newsom or DeSantis?

How does Newsom get the nod?

Okay, so Newsom has a very weak challenger in California.

It’s a plus 30 Dem state.

But can he win?

Hold on, so he’s going to handily win

re-election in California.

He’s already, he’s not even campaigning

for re-election in California.

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 just as someone who’s analyzing the politics of it,

is that he went on true social

and to basically counter 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 going to have, there’s going to be a reckoning.

And they’re going to 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,

progressives were talking about him

as a presidential candidate for a brief minute.

They swooned over him.


Didn’t he go to jail?

Yes, he’s in jail right now.

Yeah, no, it’s a total grifter scumbag.

A total grifter scumbag.

But you got to remember CNN had him on there every day

because he was a fighter.

J. Cal says his name in the funniest way possible.

I remember in our poker game

when like Helmuth said he had no numbers on it.

J. Cal, what’s this guy’s name?

Say his name.

Michael Avenatti.

I don’t know how to pronounce it.

I never met the guy.

Michael Avenatti.

Bada bing, bada boom, I’m Michael Avenatti, right?

He’s a disaster.

It’s an interesting concept.


Zach, giving the Dems will give Newsom the nod.

Can he actually win in some of these middle states?

Well, you got to remember,

and 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.

And they want to have a winner.

They want someone that can win Pennsylvania.

They want someone that can win Florida.

Yeah, but yes and no.

So if you remember when Bill Clinton

pulled the Democratic Party back to the center in 1992

and 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

three disastrous presidential elections.

So Reagan in 80 and 84,

and then Herbert Walker Bush in 88.

So it took three big losses for them to rethink.

I don’t think progressives are gonna rethink their agenda

based on one midterm loss,

even though I think it’s gonna 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 gonna give it up.

They’re gonna blame it on a communication problem.

They’re gonna say, let’s find a new messenger.

And Newsom will seem like a younger, fresh face.

So I think that’s how it could happen.

And if you look at the Democratic bench,

who else they got?

Well, he can also say, can he also,

who else they got as the issue?

Who else they got?

I mean, Buttigieg.

You mean Elizabeth Warren?

I don’t think it’s gonna be.

Buttigieg and AOC, if they wanna go full,

like crazy left, would be,

and then if they wanna go more moderate, Gavin.

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 about turnout.

They’re gonna say that Newsom is the governor

of a big state, which is, as of now,

$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.

The big question is,

will the Republicans field Trump after January 6th?

And I.

I think the answer is no, and.

It’s too shameful, right, to do that?

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 are gonna nominate

a candidate who represents the future.

No Republicans want him as going out there

trying to steal an election again.

No Republicans want that on their hands.

If you look at straw polls, okay,

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 sometimes has very smart observations.

Remember the whole zero 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 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 the field-

Also, I mean, if DeSantis runs,

he’s gonna win a landslide.

This is why I say it’s DeSantis 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 if it’s something like a Newsom versus Trump,

I think Republicans could lose that

just because the people-

People think about the future.

They don’t wanna be reminded of the past.

And so I think there’s risks there.

No more octogenarians.

Also, the past is insane and deranged.

You can’t have two 80-year-olds running for president.

No more octogenarians.

That would be great, yeah.

All right.

Nothing against octogenarians.

Hard cap at 75 years old would be good for me.

All right, this has been a very long episode.

Well, yeah, well,

considering how much Sachs is gonna spike,

we’ll get it back down to 45 minutes.

All right, everybody.

It was an amazing episode.

We’re back. I love you guys.

It’s really nice to be back. We’re not going anywhere.

Everybody relax. We’re back.

We’re back.

Jake Allen’s back. I’m not going anywhere.

You’re gonna need a wrecking ball to take me out of here.

You’re gonna just send

him to the National Guard. We never wanted

to get rid of you, J-Cal.

J-Cal, we don’t wanna get rid of you,

but now all we need is three out of four votes, so.

All right, good luck.

Vote me off.

We never wanted to get rid of you, J-Cal,

but we knew we had to do certain things

to get you to act right.

Oh my gosh.

Oh boy, here it comes.

Here it comes.

J-Cal brought a knife to a gunfight.

He came to negotiate.

You guys don’t want any intros.

You’re too cheap to give me two points.

That’s fine.

J-Cal 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 intros for you.

That’s actually a lot of scraps.

No more Holland Summit.

No more intros.

We’re gonna 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 Summit.

Yum, yum, yum.

Yum, yum, yum, yum, yum.

Good luck with that money.

That’s long gone.

I put that on the Warriors.

I tripled it.

We’re good.

All right, everybody, we’ll see you next time

on the All in One podcast.

Love you, boys.


Love you, besties.



We’ll let your winners ride.

Rain Man, David Sassman.

I’m going all in.

And it said, we open sourced it to the fans

and they’ve just gone crazy with it.

Love you, besties.

I’m the queen of quinoa.

I’m going all in.

Let your winners ride.

Let your winners ride.

Let your winners ride.

Besties are gone.

That’s my dog taking a notice in your driveway.


No, no, no.

Oh, man.

Oh, man.

My avatar will meet me at…

We should all just get a room

and just have this one big huge orgy

because they’re all just useless.

It’s like this sexual tension

that they just need to release somehow.

Let your, that’ll be, let your be.

Let your be.


Let your be.

We need to get merch.

Besties are gone.

I’m going all in.

I’m going all in.

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