All-In with Chamath, Jason, Sacks & Friedberg - E86: Macro outlook: jobs, housing, inflation + Dutch farmers protests & EU climate missteps

you’re seeing now the fresh summer collection of Laura Piana. This, Jason, is the thin summer

gilet. Okay, really beautiful cashmere. It’s called like the King’s cashmere or something.

And then this is called a lovely yellow boating sweater. Anyways, I took sacks to my tailor and I

took them to Laura Piana. And then at some point, I just fucking lost them. And then I haven’t seen

them since. You took them to your tailor and to Laura Piana. And to Laura Piana, yeah.

Wow, great that the show remains accessible to the every man and woman.

They’re sacks. Fuck yeah.

Look at you two, it’s like twins. Oh my God, it’s so perfect.

The Sri Lankans do. Oh my God. Did you guys have an announcement today?

Third announcement. Good to see everybody’s focused on what matters. Okay, everybody,

welcome to All In episode 86, end of the world, except for these two douchebags.

We thought it’d be really funny to find the exact same outfit at Laura Piana.

I feel fully styled. What a great look.

You guys look so good. It’s like dumb and dumber in Italy.

Hey everybody, welcome to episode 86 of the All In podcast. We’re not dead yet,

still publishing with us from Italy, the rain man and the dictator in matching outfits. Gentlemen,

how is Italy? It’s fantastic. And also with us, the sultan of science himself,

David Friedberg from an undisclosed conference somewhere, which we can’t talk about. How you

doing buddy? I’m off the record this week. Off the record this week and a little hung over,

it seems. Yeah. You need a cup of coffee? Are you drinking a little scotch last night? Late night.

I went scotch and beer and it was a late night. All right, everybody, we got a lot of news to

get through. Let’s just parse through some of the data because data has been coming in and the

minutes from the June Fed are out. The key quote, significant risk that elevated inflation could

become entrenched if the public began to question the resolve of the Fed. So they went from transient

to now fearing entrenched. Jobs have slipped a little bit. This is something we’ve been talking

about. But just to give some context here, we’re still a historic number of job openings. We

peaked in March 11.9 million. In May, we we dropped down to 11.3. And 11 million for six straight

months. It’s just extraordinary. If you look at this Fred chart, it’s just astounding to think

that this many jobs are available to for one in the United States, there are two jobs available

for every one person who needs a job. And this, they’re just absolutely stunning. If you look at

the what do you think this is a precursor to dropping down dramatically in the white collar

sector is what the data is showing. What are major wage or major wage inflation? I mean,

yeah, that work clearly has to be done. And if you lay people off,

the number of unemployment, unemployed will go up. But at the end of the day, the thing that we

know here is we have a structural unemployment problem, as you said, two openings for every

person, which means those openings aren’t paying enough for people to leave the sidelines and get

on the field. Yeah, or, or they’ve been incentivized to, to be on the sidelines. Exactly. So these job

openings might actually be indicative of the opposite of what the Fed is telling us, right?

The Fed wants us to believe that they can just keep jacking up rates, and then we’re not going

to go into recession, because we have all these open job wrecks. But what if we should see the

labor market is really two separate markets, they’re sort of white collar professionals.

And you’re seeing all of these tech companies that were involved in slam on the brakes

really quickly right now. So we’re going to see greater unemployment there.

And then on the blue collar side, you have this issue of record low labor participation.

And so you still have inflation there, because they can’t fill all the jobs,

because there’s all these like warped incentives around that.

There are to just put a number on it sacks, we’re 10% off the peak in terms of participation.

And if those folks would participate, it would really fill a lot of these jobs

that would increase the production of goods and services that might take some of the pressure

off inflation, and it would also increase monetary velocity, right sacks, people would

spend the money they make, which then get us out of this mess, possibly,

I think part of the problem with the Fed’s approach here is that it’s assuming that if

they just keep jacking up rates that will that will reduce demand, and that will stop or slow

down inflation. And there’s some truth to that. However, I don’t think this inflation is purely a

problem of excess demand. I think there’s also a supply problem, meaning that not enough goods

and services are being produced. And the commodities, the inputs that we need to the

production of goods and services, those prices are increased there, they’ve been inflated.

And that started well before the Ukraine war. But I think the Ukraine war has now exacerbated

this problem with respect to energy and food. If you had seven minutes for your over under

for sacks to mention Ukraine, you took the under you I’m just mentioning as as a

exacerbator. I think that’s actually really good framing that it’s an exacerbator.

Yeah, I didn’t start with this.

Yeah. So if you look at the quits, let me just give you the quits number,

because this is really interesting. These are people who are actually quitting jobs.

It’s still at a record high. So this concept of the Great Resignation,

we’re still having over 4 million people quit their jobs every month.

Free pandemic quits averaged under 3 million a month. And if you look at that chart,

it’s just staggering to think that in an economy that’s going down, people are still quitting.

Now, what is that indicative of? It’s indicative of people believing that they can get another job,

you don’t quit your job, if you don’t think you can get another one,

or you have some savings available, you want to YOLO, maybe, you know,

you know, spend a little free time going on vacation,

or there’s a new economy emerging, right? I mean, one of the cases to be made is that

the pandemic and the stimulus that followed created a staggering short shift in the types

of jobs and the types of businesses that people, you know, use to make money. And,

you know, a lot of people were able to shift to work from home. And when you shift to work

from home, you have more flexibility and freedom to choose other jobs that you can now do from home.

And people don’t want to work in restaurants, they don’t want to work in fast food.

And if they can find another job, a gig like or services like or on demand type job,

where they can have more freedom and flexibility and more earnings in their life,

they’ll make that choice. And this happened so quickly, because of the shutdown, the lockdowns,

and then the stimulus, the trillion dollars or $2 trillion that poured in,

it created all these new opportunities and all these new incentives for new types of work. And

the fact is, the old economy, the old businesses, all the fast food restaurants, and the coffee

shops, they’re sitting with half employment, and they can’t fill the jobs because that’s,

you know, that that used to be a job that there was demand for, it’s not the case,

you know, and I think that by the way, I don’t I don’t know if that necessarily reverts in the

near term, because I do think that there’s been a substantial, almost permanent change in some

of these sectors of the economy, not necessarily all some will revert, but it leaves big gaps in

parts of the economy. And maybe fast food restaurants are not going to be as cheap as

they used to be. Because in order to get people to work there, you got to charge more. And there’s

other parts of the economy like services and selling stuff on Etsy and whatnot that are

working for people. Let me just put a number on that and then hand it off to you, sex to just put

a number on that. The jobs that fell the most white collar off 325,000 and manufacturing 208,000

the jobs that are increasing the most hospitality and retail. So exactly to your point, people feel

more options. This whole thing was accelerated during the pandemic sex. Well, the question I

want to ask free burgers, do you actually think that these new options of work from home and

remote work have actually made the economy more productive? It seems to me that obviously

employees if you give them the no freedom over the decision of their trade off between work and

leisure and let’s make the economy more expensive. How so? If you take a big step back to the day

before the lockdowns started, we had a normal functioning an economy that was growing by call

it 2% a year. And the minute that we enforce these lockdowns, I actually think what we did was

we started a supply side recession. It’s what sack said earlier. So what does that mean? Let’s

just say you’re a factory and you make wheels, okay, just make something really simple. You

were growing at 2% a year, everything seemed hunky dory, you had employees, it was fine,

you used to sell your products, make 10 15% profits, everything was fine. And then the day

after the government said you need to shut your factory down, because we can’t have people

spending too much time close together, because we need to get a handle on this pandemic.

Okay, so you shut it down. And then for the next 12 or 18 months, what happens that stuff sits idle,

these people that used to work for you get two and a half trillion dollars put into their bank

accounts, they spend their time doing other things. And then all of a sudden, people say,

okay, it’s time to start the factory up again, people want to buy wheels. And now all of a

sudden, you find that because everything all around the world was shut down, there’s no rubber

to make the wheels, there’s no steel to make the axle, there’s no people to put them all together.

And so what happens? Well, prices go up, because again, you gave everybody else two and a half

trillion dollars. So they’re like, Well, I used to pay $1 for your wheel, I’m willing to pay you $2.

Now, just make the wheel, give it to me before you give it to somebody else. So that is like

the classic definition of a supply side recession. There’s another piece to that, too. And sorry,

just to finish the point. And the Fed basically confirmed this in the minutes that they just

released today, Jason, can you just read the quote that you had in the in the notes?

Well, the one up top a significant risk that elevated inflation should become entrenched if

the public begins to question the resolve their resolve. I think the point is that, you know,

we were kind of in a supply side recession. And now, by raising rates to some crazy amount,

the end of which we’re still not sure about, may actually then trigger the demand destruction to

have a demand side recession. And so I don’t I don’t know that we’ve lived in a modern

point in time, where both things have been true. Right? There’s been a principle of macro economics

that you’re everybody’s always kind of debating, is this a supply side issue? Is it a demand side

issue? We know that in COVID, it was a supply side issue, we took all the supply out of the market.

And now we’re trying to figure out when we exhaust, you know, all of the money we’ve given

people, and we destroy demand and take the incentives for demand to go away, right, consumer

confidence is now starting to turn. What happens then? Well, we’re going to figure that out in the

next six or nine months. But the thing is, you have both that are true. It’s not as if the supply

side of the economy has been fixed. It’s not as if everybody is running at 100% capacity. It’s not as

if all the supply chain issues have been worked out. Yep. So I don’t know, I just think it’s a

very complicated situation. Yeah, it’s a perfect pivot, pivot. And just to build on that, Chamath,

the downstream effects, we always talk about the second order impact, because people are not going

to work anymore. downtown areas are dying. So office space, commercial real estate sacks,

you’re in that so you can comment on what’s happening. And then restaurants and commuting

and all the stuff that was happening downtown, San Francisco’s downtown, let Maryland and breed

had a press conference. And she’s been tweeting, hey, we have to revitalize. You know, Soma in

San Francisco, that’s never going to happen. That’s off the table. It’s like Biden tweeting,

we got to drop gas prices. Yeah, I mean, we have complete incompetence, but we’ll get to politics.

sacks, don’t worry, we got plenty of politics.

So there’s your flop, gentlemen.

But on San Francisco real estate, I read an amazing statistic today from like one of the

major brokers. They they said that by the end of the year, they’re expecting 30 million square

feet of office vacancy 30 million in San Francisco by the end of the year.

San Francisco is tiny, by the way,

because of sub leases and, and then tenants rolling off. So the first thing I did is I tried

to Google what’s the total square footage in San Francisco. And I think it’s about 75 million

of office space. Oh, my 40% vacancy by the end of the year. I’ve never heard of such a thing.


Let’s be clear, San Francisco is fairly unique and a bit of an outlier in the circumstance,

because so much of it was, you know, tech heavy, and so much of it went remote. Yeah.

And the city, and it all got crime. But like, generally, that’s not the case. I mean, you know,

New York is apparently still pretty stable, right? And Miami’s obviously doing well, LA Austin,

here’s the piece of it that people aren’t really thinking about, which is,

the only reason it’s stable is because tenants sign up for long term leases.

And this is why it turns out that we work with a pretty bad business model is because

if you’re if all your leases are month to month, and you hit a recession,

your revenue gets whammied. This is why landlords like long term leases with creditworthy tenants,

they signed seven years, 10 years and so on letters of credit, right?

Putting your dad means though, is that as these tenants start to roll their leases roll over the

next few years, they don’t need as much space because they’ve either gotten remote, or they’re

like hybrid now. And so they’re thinking of their office less as a headquarters, which everyone

needs to go to, and more as like a co working space, their employees occasionally go to,

so they’re all reducing their footprints. This is why San Francisco keeps increasing its vacancy

is that as more and more of these leases roll, there’s just no need, they don’t need as much

space. So they’re also downsizing. Now, here’s the problem. Here’s the problem is that these

buildings have debt on them, right? And that debt has was called a debt service coverage ratio,

DSCR. And basically, you become a you as a building owner, become in default on your

debt covenants. If your revenue from the building drops below a certain number,

and here’s the problem, all these new leases that get signed to the extent there are any,

they’re going to be at a fraction of what the old leases were, because this vacancy

is going to create a massively low market clearing price.

Am I right to understand that they’re not allowed to sign those leases because they’re under it?

So can the landlord take it as better than nothing? Or do they are not allowed to take it?

It’s not that it’s just that the market clearing prices can be so much lower than their old leases

that when they then look at the revenue from the building, and by the way, that building is gonna

have a lot of vacancy on it. Now, they’re just not gonna be able to hit their their debt service

coverage ratio. So they will be in default. What that means is, I don’t understand how in a place

like downtown San Francisco, half the buildings don’t end up getting owned by the banks. Well,

the banks don’t want to own all these buildings. So there’s gonna be a fire sale. But I don’t know

who the buyers are going to be. I mean, they just have to convert it, right? I mean, that’s the only

thing that they got to convert these to residential because we have a housing crisis still.

That takes years and years. That takes years and years. And that’s, that’s a repositioning play.

First, you need the cooperation of the city government, which isn’t gonna happen. Then you

need developers to come in and have the capital to basically make all those changes. Again,

it takes a long time. But think about the systemic risk from that, right? If you know

that a huge chunk of the real estate in the commercial real estate in downtown San Francisco,

which used to be blue chip, I mean, the most blue chip, right? Who are those financial institutions

who own those assets? Because they are now toxic assets. And they will be revealed to be toxic

assets as soon as the leases roll. Well, and then there are debt funds and banks as well, right?

And so what are the cascading effects when those shoes start to drop?

Yeah, okay. And so just to put a finer point also on the jobs, and that was our flop.

Net international migration has just plummeted. We’re well under a million folks coming into

the country. So the obvious solution to our employment issues is to recruit people from

other countries. But let’s go to the turn card. Yeah, there it is. We have just stopped letting

people Trump just absolutely closed the borders, as you can see, 2016. Biden also is in favor of

closing the borders. It’s also sentiment. It’s like, you know, America is not the shining

people still light on the hill. It used to be not in the same way.

And there are easily have three or 4 million people coming into the country if we wanted to.

Yeah, we have 3 million people have come in just under Biden and illegal migration.

Does that chart count illegal migration? No, this is legal. This is legal. Okay,

well, so just make sure you count that. Because we’ve basically had a border policy.

Yeah. If we didn’t allow those workers in what would happen? Okay, let’s go to the turn card

consumer confidence conference boards consumer confidence index in June fell to 98.7 from

103.2 in May. expectation was 100. So it’s under the expectation, the expectation index. So when

you look at consumer confidence, there’s to your confidence in the present situation, that’s the

blue on the chart. And then there’s your expectations of the future. And what you see is

a huge divergence, they’re starting to happen, people are starting to look towards the future

as negative, but they feel pretty good about today. And so, gentlemen, what do you think of

this chart? It seems to me like this is sort of akin to what sacks was relaying about that founder

at the CO2 conference, which is like, you know, he thinks everybody else is gonna, you know,

roll up their sleeves and buckle down, but he has no intention of doing it. I think people

are roughly the same way. And I think their behavior is, well, you know, if things are

going to get hard, I’ll deal with it in the future. But right now, I have money in my pocket.

And, you know, if you look at airlines, and how many people are trying to travel, if you just look

at like the cost of a hotel room, if you look at what’s happening this summer, it does not seem

like people are slowing down or tapping the brakes in any way. Yeah, I get concerned about

credit, because it’s not coming from wage gains, you know, the increased cost is there,

the increased income, it’s not. And, you know, we’re seeing continued month after month increases

in consumer credit balances. And that I think, you know, this was the point I made a few episodes

ago was I don’t think people are going to slow down how they’re living and how they’re spending.

It’s exactly what there’s an inertia.

I don’t know. I just think after two years of a lockdown, I do think that people are

anxious to reestablish some amount of normalcy. And this is really the first summer where

everybody writ large, can be out and do the things that they were planning.

Last year was a little bit of a head fake. And look, you have two years of pent up plans of,

you know, wedding anniversaries, and weddings and all of this stuff that’s happening.

And so I think people are really spending money.

And if you look at it, you know, the consumer is holding up amazingly,

it’s got to be some combination of jobs, home prices, and this inflation.

But this is why I there has not been a downtick in demand. I don’t know why everybody thinks

that there’s been a downtick in demand. There was an article today numbers yet,

it’s not showing up in the numbers yet.

No, I think it is anecdotal and guess very subtle. Okay, sure. It is there is a subtle

I actually disagree with you guys. I actually think that the economy is pivoting on a dime here.

And it’s it’s starting to show up subtly in the numbers. Here’s some other data points,

consumer sentiment, biggest drop in consumer sentiment in 40 years, that was in the last

month, right track, wrong track polling, only 10% of the country thinks we’re on the right track.

If you pull people and ask, are we in a recession, something like close to 60% of the country

already thinks we’re in a recession. There’s a slight political tint to that more Republicans

than Democrats think we’re in a recession. However, even roughly half of Democrats

think we’re in a recession. So I think those are all feelings, not behavior,

though, sex, we’re looking at the data, not the sentiment.

I think the behavior will catch up with the sentiment. I think the behavior,

I think the behavior is pivoting. It’s just that I think you have to dig beneath the

surface. And you have to look at things like retail, sales, things like that.

I’m not sure, David, if you look back on all the number of times consumer sentiment is dipped,

that the correlation to spending patterns is so uniformly predictive, as we think,

I mean, I think that there are, there’s a slight positive correlation, I remember,

but I don’t think it’s like, you know, 0.75, 0.81. It’s not that. So there’s this weird

preference falsification that happens when you get asked, what do you think is going to happen

versus what do you do? And I think a lot of consumers, that’s why they have, you know,

we know the data in America, like less than a month of savings, or whatever those numbers are,

despite all of the sentiment analysis and all of this stuff, you would think that there’d be

behavior change. But mostly people kind of just live in the moment. And you know, that that’s

partly because they don’t have the structural support to save or other things. But the reality

is that most folks, from what they say to what they behave, there is a gap.

Yeah. And to your point, sax, this is starting to catch up, we’re seeing a slight downtick,

and we’ll go to real estate next. But if you look, I found I was doing some research on gasoline,

because that’s obviously where people are getting hit the most. The average household is now

spending 5000 a year on gasoline. That’s almost double last year. So this is going to have an

impact is going to catch up. But there’s so many jobs available. And there’s so many people

unemployed, I think it’s manageable. So to your point, your mouth, it feels like consumers can

manage even this great headwind. Let me just put a point to it. I think the average

per capita income in the US about $38,000 a year that works out to about 17 bucks and 50 cents an

hour, roughly. Think about a person with that level of earnings. The average household in the

US has historically, you know, spent about a third on housing, about 13% on food, and about

16% on you know, their car and their gas, and they only have about 12% leftover for savings.

So you know, if that 13% on food has jumped by 30%, the 16% that they’re spending on gas has

jumped by 40%, or 50%. And even if housing prices take up a little bit, all of a sudden,

your savings are gone. And you’re actually not saying it’s actually doubled freeberg. It’s

doubled, I guess. So yeah, by the way, it’s worse than you say, no, it’s worse than you say,

because you’re using a per capita number. Yeah, yeah. And so what, but I think what I’m trying

to highlight is that there is a distribution, there is a group of the United States, a small

percentage of minority that have earned good income and are having their 50th anniversary,

like to mop is talking about taking their travel, and that shows up in the numbers,

there’s outside spending happening with a segment of the economy. And what Saks is saying, I think

is right as well, which is that the majority of Americans are facing this really critical budget

crisis, where their personal spending levels are now exceeding their income levels. And there’s a

critical need for credit, and for personal debt and spending to go down. And that’s what’s going

to drive significant risk in the next couple of months and quarters and years is that the majority

it looks some of the numbers will look good, because there’s a segment of the economy that

is overspending. But the majority of the economy is as Saks is saying, probably turning on a dime.

And I think both things can be true. Yeah, let me let me maybe tie a couple of these things

together. Because I tend to agree with you. Like I think that we have been in a supply side recession,

that is what has caused inflation, we have to go through a process of taking all the excess money

that’s been put in out. And when you do that, we will destroy demand. And then that’ll trigger

demand side recession, because people will asset values, and we will destroy asset values. So

that process asset values went real quick. Yeah, that will happen second.

So the balance sheets of that segment of the population that is overspending right now,

once their balance sheets really take the hit may take a hard look at what their savings are,

they’re going to cut spending. Right? Yeah. So the point is, I think we’re still firmly in

that first phase. And I and I hate to be the bearer of bad news. But the reason why I think

that we’re still in the first part of this process is because people, broadly speaking,

still have a lot of savings because of all the stimulus checks, there is still a lot of money.

So what, how will we know maybe is the better point, when all of that excess savings has been,

you know, torn away from these people because of high prices, I suspect it’s when Jason’s first

chart starts to close, right? So when people are, you know, go, they’re more motivated to reenter

the workforce, I think that’s a signal. Freeberg, your signal is another one, which is when credit

delinquencies really start to spike. It’s because people then, you know, tapped out their savings,

then they tap their credit cards, and then all of a sudden, they become delinquent.

When all of those things happen, you’re probably now at a point where that first phase of the

supply side issues are largely done. And now you get to the demand destruction. But all of those

roads, unfortunately, lead to the same conclusion, which is like, you know, equities get really

under pressure, there is no scenario where there’s a bid to equities, why would you buy something

that has lower earnings in the future? Or why would you buy something that has a lower discount

rate for profits in the future? In this case, both are true. All right, let’s get to that.

Because the piece we haven’t got to, so here’s the river card is housing, because people’s homes are

the majority of their wealth here in the United States. And that I think will be the true indicator

trim off to your point, labor participation, certainly one, but when this hits housing,

that’s when we’re going to know we’re in the end game. The mortgage rate just hit 5.3%.

Why do you say housing is the end game?

Well, I think we haven’t seen the collapse of housing prices yet. We’re in a housing shortage.

And historically, mortgages are still at, you know, the 30 year average. So let me just give

you the statistics here. The mortgage rate is 5.3%. If you look at this chart from our childhood on

our parents in the 80s, we’re paying 15 1670 17 17% for their mortgages were well below the 50

year average even with the rate hikes. And so the 50 year average for mortgages, the 30 year mortgage

is 7.77. So we’re at 5.3 well below that. But well, this has been a very quick turnaround from

two and a half percent mortgages all the way up to 5.3%. Home sales have started to show weakness.

So to Sax’s point, this is starting to show up in the numbers. But ever so much, we’re down 6%,

almost 7% year over year and 3.5% month over month, but we’re holding up historically. So

for the last 10 years, we’ve been selling over 5 million homes a month with the exception of the

pandemic shutdown. And that’s this next chart you’re going to see here. And this is a really

amazing chart I found, which is existing home sales versus a 30 year fixed rate mortgage in

our childhoods in the 80s. We’re selling two or 3 million homes a year. As you see the rates,

that’s the orange line come down massively from 17%. And then under 10% housing starts to flip

people start flipping houses more and more often. But we’re still at that 5 million that numbers got

to drop down to probably four, and then we would actually have some capitulation feedback from the

panel. I mean, look, there’s an old saying that a recession is when your neighbor loses his job

and a depression is when you lose your job. And the reality is we haven’t had the big job losses

yet. It’s starting, we can start to see it in the number of open recs are getting closed. And then

there were those job loss numbers that just came out, which were a little higher than expected.

So the job losses are starting. But so far, it’s really been the step prior to that, which is

people are seeing their 401ks get destroyed, stock markets down. They’re seeing their wages

get destroyed by inflation, food and gas prices being much higher. So there’s a really good reason

why people are so, sentiment is so negative out there. People feel poorer than they were before.

And this could get worse, like you’re saying, Jason, with their nest egg in their homes getting

hit. I agree. That’s the next shoe to drop, just like the commercial real estate is the next shoe

to drop. But I think the really big question over the next six months is what sort of job losses do

we see? Because that really is going to be the big determinant of of how hard this recession hits.

Yeah, I agree with you. And it’s it doesn’t look like if we if we’re losing 300,000 jobs a month,

it’s gonna take a long time for us to even get to one for one jobs. And so this is very weird.

Honestly, I think I think you’re right. But I think we’re not even close to that. I just don’t

see where all of a sudden there are these writ large mass layoffs. For example, I would believe

what you’re saying if if the headline in the Wall Street Journal said Walmart lays off 10,000 people,

right? That’s not what’s happening. In fact, it’s the exact opposite. Walmart’s like, well,

you know, we seem to have record demand, we’re raising prices, and every supplier will have to

pay a gas tax and a supplier tax and deal with it. So I just think that you’re you’re going to

be right in the end. I just think we’re way too early in this process to get to that place where

we did. We’re debating this. I don’t see search about Are you on board with the the Ackman trade?

Basically, you know, Ackman basically came out that tweets from a couple of days ago,

basically saying that, listen, inflation is still the big problem, not recession,

the economy is humming along. There’s plenty of jobs. And we’re gonna have a persistent problem

with inflation. I think he’s kind of right and kind of wrong. I think that you can have inflation

and a recession at the same time. This is what my point is, I think we have been in

a supply side recession, meaning the day of the pandemic, it’s not as if demand stopped,

it’s not as if you and I, David didn’t want to go out or use DoorDash or take an Uber,

or watch a movie in a movie theater, we were not allowed, right. And so we found other ways in in

order to fulfill our demand. That’s why Shopify, you know, did so well on behalf of the merchants

that they served. That’s why Robin Hood did so well. That’s why fortnight did so well, right,

we found other places to spend money. But what went away was a supply. And those incentives

didn’t come back. And they’re still not back. That’s why prices keep going up.

This is the problem is the definition of a recession, right? Chamath?

It’s not the problem is that most people don’t understand that you can have a supply side

recession and a demand side recession. They just manifest in different ways. So well, I think I

think like, I guess Ackman is roughly right, in some ways, he’s roughly not so right. And some

others, I think that we have an issue where we are going to transfer the supply side issues that

are driving inflation to average everyday consumers and their ability to buy things.

I still think that the average everyday consumers desire to buy things is what it was from before.

And on the margin is probably higher. I do think at some point, it will start to change

when prices get high enough. But I don’t think we’ve reached that point of equilibrium yet.

And the reason is because companies like the Walmarts of the world who see this demand

on literally a real time basis, knows better than anybody else when and how much they can

raise prices downstream into their supply chain. So when you see something like this in the Wall

Street Journal, I would just encourage us all to say, they must see that demand is the same or

better. And so they’re going to now push those price increases down to everybody else, because

now Walmart says, here’s an opportunity for me to defend my earnings power. And this is why I think

we’re in this first inning of this. So I don’t know whether Ackman is right or wrong. But I think

we’re in the early phases of a two phase recession. And I don’t know what that looks like, because

I’ve never lived through one of those. And I think in many ways, it’s the combination of the two.

And it was it was largely because of government failure, government failure, and how we reacted

to the pandemic. In hindsight, sacks was right all along. We overreacted by shutting everything

down, we probably could have kept some supply online, by understanding masking early on.

And then second, we exacerbated with failed government policy, because we gave everybody

trillions and trillions of dollars. And we entered the capital markets and perverted it with another

seven or 8 trillion more. And by the way, stay that has consequences. Well, the consequences are

still talking about giving stimulus. Yeah, now in order to help people deal with so we are not we

are not learning, I can you can’t pour fire. So if I eat on the fire, if I had to basically put what

we are all saying into a neat little bow, I would say there needs to be a multi phased economic

correction, one that corrects the supply that we took out of the market during the pandemic,

one that corrects for all the excess money, and then one that corrects for demand. That’s a lot

of stuff we have to do. So the more misguided government policy we have, the farther away from

finding that equilibrium point, we’re going to be the longer it’s going to take, the more damage

it’s going to be. So sacks, the Fed is obviously, it’s pretty much consensus, they’re going to do

another point 7575 basis points later this month, could be 50 basis points, who knows, there seems

to be a couple of people saying that that might happen. If that does happen, and it feels like

inflation is starting to top out, do you think inflation? You know, starts to turn? Or do you

think we’re still going to see prices go up? Because it does feel like it was starting to

bounce along the ceiling? Where do you what do you think is going to happen if the point 75

happens? You’re seeing the market rally today in the last few days, especially gross stocks,

because of this idea that the Fed is tackling inflation, they’re raising rates, and the market

is looking out six months and seeing the possibility of recession. And they believe

that is going to bring down demand and bring down prices. And it could be what I just described,

would be a soft landing, I just am skeptical, there’s gonna be a soft landing, because of what

saying, which is this is a multi part problem. And until we fix the supply side, I don’t think

that merely reducing demand is going to get us out of this. I really agree with you. It’s a

production problem. It’s a demand problem. And it’s also as we just talked about a few minutes ago,

an employment problem, because the businesses that need to grow that need to generate revenue

cannot get the businesses that are dependent on people to do service jobs cannot get those jobs

filled. And so they cannot grow their revenue cannot make their profits. And there’s a trickling

effect in the economy of that, you know, what we talked about that kind of job shift, that job

market shift that’s happened. So all three, and so all three are just this like dislocation that’s

happened. Totally right. And it’s unclear, you know, someone very smart, I was talking to yesterday,

who’s a former member of an administration said, we just there’s literally no way to predict,

but we just don’t because you think about the complexity of throwing three rocks in a pond,

how do those three rocks interact? And how do the ripples interact is really what we’re trying to

predict. And it’s very hard to do. I mean, if you translate this into the markets for one second,

I think what we’ve done since November of 21. And Nick, you should play this clip because,

you know, not to say, you know, we didn’t see this coming. But we really did, you know,

we pointed to, you know, one of our friends and a person, somebody else that we kind of know,

Bezos and Elon, and we said, when the two smartest capital allocators in the world,

start divesting, they clearly understand and see things that the rest of us should pay attention

to and to ignore it seems reckless or the clip. And we’ll be back in 30 seconds after the clip.

The two most important founders of our generation, the two smartest people who have really

consistently won Elon Musk and Jeff Bezos have collectively sold more than $11 billion of their

holdings this year alone. And if you can’t take all of that and decide for yourself what’s right

for you and your family, you’re doing yourself a disservice. I think it’s important for me to

never sort of like be forced to tell folks whether I’m buying or selling, although I’m

willing to do it in moments where I think it’s important. But I think it’s really important to

understand the context. And so I think like these folks that like think derisively about

individuals who are managing risk, I think it’s really naive. And I think it’s, it creates a lot

of missed opportunity for them as well. If the smartest people in the world are now selling

their core holdings that they told you they would never sell, and you are not reconsidering your

position on things, you’re either much smarter than them, or you’re being really, really reckless.

That was November, you know, and at that moment, I started a bunch of things in process,

which we can talk about at the end, but I also sold a bunch of stuff.

You sold the warrior’s position.

I started a process at that point, and I sold a piece in December, and then I just sold the

last piece this week. But then, you know, I sold a big piece of SoFi in that moment.

But the point was more the following, which is since that clip to today, what we’ve gone

through is a massive re rating of the discount factor of these companies, assuming nothing else

changes, right, that’s all we’ve done, we’ve, we’ve not questioned whether earnings can change,

you know, all we said is, Okay, well, now we’re going to take the discount rate up,

which means the value of this company is less than it used to be. That’s all we’ve done through

all of this wealth destruction that’s happened since November. But now the second shoe has to

drop, which is if you believe that after this supply side issues are resolved, when you go

through a demand destruction phase, the earnings of these companies are in real trouble. And Jason,

you posted something I think about the social media companies and

going to get hit, right. So one of the first things to go in a recession is advertising,

if you’re going to belt tighten at a company, where can you do it? Well, you lay off employees,

but you can’t get out of your leases, as we talked about in real estate, but you can cut your

spending on marketing. And so right now they it’s looking pretty bleak for Facebook because of the

headwinds they have. So the earnings could drop, which means and by the way, the earnings ratio

could be totally talked about. These are not real, right? Well, we talked about that. We talked about

that over the last few weeks, which is every time the market rallied, oddly, Facebook would be

stagnant or trade off. And we know when I called people on Wall Street, what they said was because,

you know, we think this is the company that has the most pressure on earnings. I don’t know if

that’s true or not. But they took every opportunity and rallies to trim their position in Facebook.

Now, if that’s true, you have to remind yourself that is one of the 10 best companies in the entire

world. And so if you’re going to go and question the earnings power of one of the 10 best companies

in the world, you may want to consider the earnings power of every other company that’s

not Facebook, there are some unique things to the Facebook story, they are facing a unique disruptive

moment with Apple ankling their ability to target users supposedly Google might follow suit with

that, which would be super anti competitive and also the surging tick tock, taking market share

for them. There’s some good news in energy, which will then dovetail into politics and into this

farming situation. Friedberg Turkish government claims it just discovered almost 700 million

metric tons of rare earth minerals. It’s 15 times China’s reserve if this is true. You guys probably

know we use about 150,000 metric tons a year right now that’s going to double by 2030. This

is something like 4000 years at the current demand. And this would put them far beyond anybody else’s

Chamath you’ve got investments in this space. I don’t know if you’ve been tracking this news

thoughts on another massive discovery of rare earths. What did you guys just have dinner,

dinner or surf? What do you guys know? Nat’s the best she brought she brought us to show me

there’s an incredible restaurant here in Milan called DeSantis, which makes the best paninis

you’ve ever tasted. Is this a harbinger of the future DeSantis? What can be more perfect than

that? Oh, the DeSantis panini. Here you go. This is the Oracle sacked with a subliminal influence.

Absolutely. Oh, good. This is what’s gonna get us out of this situation. DeSantis.

All right, come off just quickly on the rare earths. If this is actually true.

What would this do? And have you been tracking the situation? Because it does seem there’s

some truth to it. Yeah, I think it’s important to just take a step back and kind of look at this

thing with not like complete skepticism, but just a little skepticism. It’s not surprising that

there’s additional deposits all around the world. Meaning we’ve always said rare earths are not

particularly that rare. It’s just the question is, you know, which of the 17 rare earth elements

at what grade meaning at what percent concentration does it exist? And then really

importantly, at what cost to extract it economically? Yeah, right. So meaning there’s

a ton of underdeveloped rare earth assets in Canada, the US, Africa, Australia, Brazil,

Brazil, they’re just under under developed, because when you put all of these factors together,

it’s really tough. So the government release says they’re going to process like 570,000 tons of ore

that’ll produce around 10,000 kilotons per year of rare earths. That implies sort of a 1.75 to 2%

grade, it’s fine. So there’s just a lot more work, I would just sort of say it’s really

directionally great, a lot more work needs to be done. And more importantly, they need to release

enough of this detail. So folks like us and others can actually diligence it to tell you

more accurately, but the press release was exciting. Freeberg, this reminds me a little

bit of the peak oil head fake we had, you know, 15 years ago, everybody basically said,

we’re not going to find more oil. Here’s what’s left of oil. And then Norway is like, yeah,

we just found more oil than existed previously, and it’s been pulled out. And the whole concept

that the world’s going to run out of oil is now gone. So freeberg, what is happening in science,

that we just can’t predict what resources are available,

we know very little about what’s inside the below the certain depth of the crust of the earth. So

you know, there’s some estimates, but we’re always surprised. And we know very little about

the distribution of those elements in the crust of the earth and below the crust of the earth.

You know, mining’s an incredible industry, I don’t know, the state of the art in engineering

and mining very well. But, you know, from a pure geophysics point of view, by some estimates,

we have 10 billion years of energy reserves below the crust of the earth that we can access in the

form of nuclear reserves, geothermal power. And that’s excluding, you know, some of the,

you know, the potential of some of these elements and what they can do

in building a more sustainable energy economy. Why is people so pessimistic when we keep

surprising ourselves with more resources? Anyone wants a great book? None of you guys were at the

dinner that I did a few weeks ago, where we had Steven Pinker come for dinner. Yeah, read his

book enlightenment now. I could watch one of his videos on YouTube where he’s got like all 60

slides. And he highlights like, you know, humans have a tendency to focus on the risks and the

concerns and the downsides. And we miss the incredible optimism that is apparent as we

actually look at the data of what’s happening with our species and what we’re doing on our planet.

We have every reason to be optimistic. You know, we have fewer wars than we’ve ever had.

Murder rate per capita is lowest than it ever been. longevity is increasing, health is increasing,

per capita, everything’s increasing. And I think that the same is true in terms of,

you know, scientific breakthroughs, discovery and engineering our way

to a more sustainable energy and food future. This is one of the great things about having you

as a friend, Friedberg is your relentless optimism and your actual cool, calm, collective lack of

anxiety. In other amazing news, the EU Parliament has flipped again, credit Thurmberg is completely

tilted. We talked about the virtue signaling EU Parliament, you know, and Germany turning off

their nuclear power plants and just securing the bag for Putin, the EU Parliament flipped,

and they are now saying these virtue signaling knuckleheads, they came to the census, and now

they believe nuclear is green. Also green, according to the EU Parliament, is natural gas.

So this to me feels like the beginning of the end for Putin and Saudi Arabia. If you look at

the US becoming a net exporter of energy, it’s quite possible the EU could become that as well,

if they actually, and this is a big F if they actually, you know, start building nuclear,

it could be the beginning of the end of what some people are calling the woke green movement.

And that’s certainly over this realization, that to transition to the next car to the beyond the

carbon economy is going to require continuing to invest in and support the carbon economy

until those alternative solutions emerge, and to have dual track investing. And I think that that’s

what we’re seeing around the world in the United States in Europe now. And Europe has always been

farther way farther left than the United States in taking this point of view. And I think now this

this has been a wake up call for everyone. And all it took was just a little bit of $6 gasoline

and for people to personally suffer for them to change their virtue signaling nonsense.

Yeah, this is this is markets at work. Yeah, this is educating the public,

would you rather be beholden to Putin, they pivoted because we’d rather have nukes,

they pivoted from banning energy production to banning food production.

She talked about the Netherlands, we’re about to get there. We’re about to get well.

So on the energy side, I did a in the group chat, just a little breakdown on the math,

I think it may be interesting for people to understand. But today, globally around the world,

every single country in the world that is involved in the oil business,

is able to produce exactly 1 million more barrels per day than we need. So let’s assume that we,

you know, need 100 million barrels of oil a day as a as a as a world to continue to do everything

we want to do. We produce 101 million. So we’re right on the knife’s edge. By August,

we’re going to go through a capacity increase in OPEC plus, which is, you know, OPEC plus Russia,

etc. Saudi Arabia is going to go from 10 million barrels a day to 11 million barrels,

so not a huge increase. Russia has is is thought to be able to cut production if they feel pressure

up to 5 million barrels a day without having any impact to their economy. So JP Morgan,

I think and Credit Suisse, they did this sensitivity analysis. And here’s what they

found. They found that if Russia were to cut 3 million barrels of oil, so we would go from being

oversupplied by 1 million to undersupplied by two, the price of oil would go to about $180 a barrel.

If they cut 5 million, so the threshold at which their economy doesn’t really get that impacted,

the price of oil could go as high as $380 a barrel. While you would say, okay, well,

we just need to pump more oil from other places. And this is the problem in all of these rules

that have existed for so long. The capacity doesn’t exist, right? We were destroying supply.

Governments all around the world were making it very difficult to generate the supply of nuclear

to generate the supply of oil and to generate the supply of nat gas. So Saudi Arabia says we

can get to 12 million. Well, guess what, they can only start the work in 2024. They’ll be done in

  1. Yeah. So to your point, all of a sudden, we realized, wait, we needed these bridge fuels

all along. Yeah, how do we allow all of this supply destruction to happen? And now we need

to unwind it, it’s going to be a very complicated process. And if any of these things happen,

if Russia decides to play hardball against Europe or America, we better hope that it’s a mild winter

because very quickly, you can go from plus 1 million barrels to minus two in a heartbeat.

Yeah. And America started and the last point on this Saudi Arabia, you’d say, okay, well,

Saudi Arabia is going to go from 10 to 11. So that’s good. They have been at 11 million for

some total of eight weeks in their entire lifetime. If we look at this, I mean, Americans

also buying 20 to 25 mile per gallon cars, that’s got to end to and so personal responsibility

is part of this. The really interesting thing is China already has this plan. Their nuclear

strategy with the belt and road initiative is to put 30 nuclear reactors in countries outside of

China that they’re trying to have influence in. And they’re building 30 nukes right now they got

150 planned. So China’s just ultimately savvy and thinking big here about energy independence,

and we need to follow them. Other big anybody have anything else on the energy situation?

Before we go to the farming situation? Let’s get to the farming situation.

Okay, so Dutch farmers are in revolt. After a new proposed law to cut emissions.

On Tuesday, Dutch lawmakers voted on proposals to slash emissions of pollutants

like nitrogen oxide and ammonia. They’re targeting a 50% cut nationwide by 2030.

Livestock produces these emissions. So the plan will likely force Dutch farmers to cut their

livestock herds or stop working altogether. Farmers protested. They put their tractors

outside buildings, they dump fertilizer. 40,000 farmers gathered last week in the

Central Netherlands agricultural heartland to protest these plans.

And it started shooting at them.

These tractors were doing some pretty gnarly things and stopping traffic and

and there were shots were fired.

Were they? No. Wait, the government there were shots. The protesters were unarmed.

As far as they were unarmed, but supposedly they were doing some

dangerous maneuvers.

Were they honking their horns? Is that why?

No, no, no, no. I think they were using it.

It’s OK for the police to shoot working class protesters if they’re honking their horns.

I think they were threatening the safety of… This is the other side of the story, Saks.

Listen, neither of us were there, but according to the sources,

they were using the tractors to threaten the police, like physical bodily harm.

And that’s why they unloaded. We don’t know all the details. It’ll come out, but…

That sounds proportionate.

I mean, if you had a tractor coming at you to kill you and you’re a police officer,

I think it is proportionate to unload.

OK, so let’s talk about the science of it. Science. Let’s go.

Wait, is it like the scene in Austin Powers where there’s a steamroller coming towards Austin?

I was just thinking about that.

Exactly. I was just thinking about that.

Jason’s like, oh, they’re using the tractor as a weapon. It’s like, really?

Just, I’m, I was, you were not there. I was not there. I’m just telling you what was reported.

I’m reporting what’s reported. And nobody knows if those reports are true.

So I think, look, I think it’s worth just highlighting because this is a really important,

this is the first time we’ve seen government action of this scale and the resulting kind of

rebound effect on something that’s really important.

Humans use roughly between two and 6% of our energy on Earth every year to make ammonia.

Ammonia is the primary fertilizer we use to fertilize our crops around the world.

And if not for the invention of the Haber-Bosch process,

which you can read about in the book, The Alchemy of Air,

and the creation of ammonia as a synthetic fertilizer,

humans would all have starved in the mid 20th century. It’s an incredible technology breakthrough.

What we’ve learned over the years, however, is that when ammonia sits on the ground

for too long, it volatilizes and it basically binds with oxygen and turns into nitrous oxide

and goes into the atmosphere. Nitrous oxide is 300 times more potent as a greenhouse gas

than CO2. It lasts longer, and it absorbs more heat. So there has long been concern about the

overuse of fertilizer and the overproduction of ammonia that just sits on the ground for too long

that ultimately creates this incredible greenhouse gas effect.

And so there has been talk in the United States under the Obama administration under multiple

EPAs. There was a Supreme Court ruling a few weeks ago that started to touch on whether or

not the EPA has regulatory authority here to actually regulate the use of ammonia.

Farmers generally put a lot of ammonia on the ground because they get higher yields out of

their crop. The problem is if that ammonia sits there for too long, it turns into a greenhouse gas.

And so regulating ammonia and regulating this nitrous oxide emission has been,

you know, at the forefront of green, the green movement at the forefront of climate change as

one of the ways to manage and reduce the effects of global warming from human industry. And now,

you know, the Dutch government has come out and started to do some of this regulation.

It’s a little bit off because it comes from cows. And we’re seeing what happens.

Chamath Freebrook, can we finally admit that it’s the vegans fault now?

Well, at this point, actually, you know,

is that a yes? No, no, the ammonia production in the Netherlands is from I mean, it’s from

the Netherlands. Just so you guys know, the Netherlands is the world is the world’s third

largest dairy exporter. They export $3 billion a year of dairy of milk to the rest of the world

to other countries. And so they have all these cows that are like densely packed and they’re

peeing everywhere. And that P is ammonia. And it’s causing all of this problems. The other

problem with ammonia. So if you guys look at the United States, corn farmers farm in the Midwest,

when it rains, the ammonia on their fields goes into the streams goes into the Mississippi River

and goes into the Gulf of Mexico. In the Gulf of Mexico, there is a massive hypoxic zone,

there are no fish, they’re all dead. Because when ammonia ends up in the water, it kills life.

And so there’s this green algae and no fish and everything dies. And so that’s what the Dutch are

trying to regulate. And the EU generally has been trying to regulate is the removal of excess

ammonia in ag production and in right, but I again, I still hear though, that if if we ate

less vegetables, this wouldn’t be a problem. Not correct. Not correct. Most of the production of

ammonia is used to make animal feed, which is used to feed animals to make beef, which is a

terrible decision. You could feed it olives, as we know, olives taste delicious, but they’re

I’m sure the issue here that is the issue here that the regulators hit the brakes too hard on

these farmers, and they should have maybe had a more gradual landing for them is it’s been talked

about for a long time. And in the US, there’s just no way a law is going to pass because the US Senate

is controlled primarily by rural states, which are ag heavy. So you see a lot of you don’t see

a lot of bills that hurt farmers get passed in the United States. Because the Senate is controlled by

farmers that are elected, sorry, senators that are elected by farmer by big farming communities

and farming states. And so, you know, it’s been hard to get a regulation like this past,

where folks have tried to and talked about doing it around the world, however, in a place like the

Netherlands and the EU, or as I mentioned before, they’re far more progressive, and have this very

kind of green hat on, they’re starting to take this sort of climate change action, as they’re

calling it, and that climate change action, you know, does have the ramifications of destroying,

by the way, one of the things they said, is we expect, and this will destroy the livelihoods of

many dairy farmers in the Netherlands. That was horrible. By the way, look, all kidding aside,

they said that directly, by the way, and the dairy farmers are like, F you, you’re not destroying our

business for climate change. I have a specific question, though, which is has there not been

some efforts to engineer how these plants themselves absorb nitrogen? That’s great.

Come on, I have three businesses. That’s totally right. Technology is going to solve this problem.

I’m super optimistic on that. There are microbes that are being used to coat seed. Those microbes

can pull nitrogen out of the atmosphere directly. So you don’t need ammonia. You use far less

ammonia. There’s a couple companies that are doing this really effectively. They’re growing like

crazy. They’re doing really well. There are other projects. And there’s very simple solutions. My

last company, we had a product called nitrogen advisor, where we basically told farmers instead

of dumping all the fertilizer at the start of the season, you pace it out. So the fertilizer doesn’t

sit there and volatilize. There’s all these solutions that technology allows from software

to bioengineering to these microbial solutions. And so we’re definitely, I think going to resolve this.

But meanwhile, these governments are in a frenzy to solve the climate change problem. And you know,

they’re going to start to pass these laws that really hurt the livelihoods of, you know, ag

producers. How do you guys think something like this happens? Because typically, you would expect

when a government is about to pass something like this. There’s sort of like a pretty fulsome review

and all sides are brought together. And there’s working groups and all of this stuff. And at some

point, you would talk to some scientists at other points, you would talk to economists. At other

points, you talk to the people who’d be directly affected like the farmers. Is it that the virtue

signaling around sustainability and climate change is just so high, that people just turn off their

brains? Or like what is actually happening here? I think what’s going on is you got a bunch of

technocratic bureaucrats in Brussels, who don’t know anything about farming, or these people who

live in the Netherlands, who’ve been doing this for generations. And they sit there in Brussels,

and they make up these completely arbitrary guidelines and requirements. 50% by 2030,

those are suspiciously round numbers, okay. And then some other, you know, authoritarian technocrat

in the Netherlands then says, well, we got to implement this and they pass some crazy law.

And they don’t even think about the impact on these farmers. Why? Because they’re deplorables.

I mean, it’s complete class bias. It’s just like the Canadian truckers. They don’t think about

these people. They don’t factor into their equation. They don’t know how they live. And so that’s what’s

going on here. And so you’ve got this global elite of technocrats who are willing to use

authoritarian tactics. They’re appropriating their farms are taking them away. That’s why they’re up

in arms. See the rest of it, which you’re not saying it’s not just technocrats. It’s the actual

global elite writ large, have wrapped themselves around the sustainability blanket. And they

believe that that word justifies all kinds of bad, unscientific, innumerate policies.

Right. And by the way, they’re they’ve just woken up on energy, right? They had just banned energy

production in Europe, they realize, oh, wait a second, this is making us dependent on Russian

authoritarians. Well, what is the other big export of Ukraine? It’s food. So they got smart on energy.

And now they’re about to repeat their same dumb mistake of basically prohibiting this area where

they have an enormous natural advantage, which is food production. So, you know, it’s like,

they just keep making the same mistake over and over again. And by the way, let me ask you a

question, by the way, yeah, look, I’m not going to question you on the science free bird. But here’s

what I would say is, I think there’s a tendency on the part of these technocrats to think that

the science is a lot more bulletproof than it actually is. That is certainly what we saw with

COVID is we had these same sort of global elitists, these technocrats who claim to be

health experts, they made up all these lockdown rules that we talked about the beginning of the

show. No, this isn’t speculative, but I will agree with you. They’re willing to use heavy

handed authoritarian tactics. And I just don’t believe that the science of this, especially this

50% by 2030, why is that the guideline who can prove that those are the exact right numbers,

and they’re willing to use any tactics necessary to implement their crazy rules?

Let me ask you a question, sex, let’s assume that there’s a technology transition possible,

that there are solutions that could be used, I highlighted a few of them,

they just cost money, they require some investment. And, you know, creating this

distortion in the market by saying you can’t release 50% of the ammonia that you’ve been

releasing forces a technological shift that otherwise would have taken longer in the market.

Do you agree that there may be a scenario here whereby, you know, governments can and should

intervene? And I’m not making the case personally, I’m just trying to, you know, highlight for you

that I think this is where folks are coming from. There are alternative ways to make the dairy,

there are alternative ways to feed the cows. There are, you know, well, here’s where I think

you’re going with that, which could make sense, which is okay, you’re saying there is a pollution

externality here being created by the farmers. Well, exactly to basically internalize the

externality, we need to capture the cost of that. So what you could do is gradually introduce some

sort of permit system, you know, or tradable permit system, right, where that would incentivize the

creation of these technologies that you’re talking about, you want to do it gradually,

so you don’t destroy the livelihoods of these farmers who’ve been doing it for generations. So

that would probably be the approach you’d want to take.

I agree. By the way, I think that I think that is what is going to happen around the world

is that that sort of cap and trade or taxation system is going to get slowly rolled out.

For a lot of these externality costs in production and industry and agriculture,

particularly, because there are technological alternatives, and it will incentivize the

switch to those alternatives, because the alternatives will cost less than the taxes

sacks, based on what you’re saying is one of the problems here that these technocrats,

these professional politicians, they don’t actually have great strategic, thoughtful,

you know, real world experience to do planning, you know, looking at Germany, their inability to see

the writing on the wall of what building a gas pipeline from Russia to Germany and shutting

down nukes would do. It just seems like over and over, they’re just really bad strategic thinkers.

Combined with this, I think you’re wrong. No, Jason, they are influenced by these cultural

elites who they want to group think it’s a lot of groups. Yeah, behind the group think is a class

bias, right? They only associate with other members of the professional class who have,

you know, basically graduate degrees. They don’t even interact with these farmers, just like the

legislators making COVID rules, the health experts never interact with Canadian truckers. So,

there’s a huge amount of class prejudice, saying that these people just don’t matter,

we can force them to obey our rules. And if they don’t like it, we’ll confiscate

their farms. And by the way, the rest of you, you’re gonna have to learn to eat bugs,

or tofu, or tempeh, or recycled excrement, or whatever. How was the DeSantis? What was your

DeSantis? Was the DeSantis prosciutto? What did you have on there? Was it some mozzarella?

That’s a beautiful roast beef. Beautiful roast beef by DeSantis.

Brought to you by DeSantis. It’s gonna become a meme after this episode. I had prosciutto cotto.

Is the best market campaign ever. He’s a lock for president.

Jake, I had prosciutto cotto with brie, white truffle cream and lemon.

Did you have the white truffle on it? That’s like a plus, what’s that?

Bro, this is eight euros. No, it’s like eight euros.

Eight euros? Bring some back. Wait, I want to say something about this.

I hope the Democrats embrace this agenda wholeheartedly, because if we get all the

voters who want to eat roast beef, I’m pretty sure that’s a super majority in this country.

The way to solve this, Freeberg, is with the right economic incentives. There’s no reason

why the Dutch government had to go and basically put thousands of farmers out of business. Instead,

what they could have done is actually created the tax incentive that allowed farmers to adopt

some of these bleeding edge technologies when they were probably too expensive

to make it economically equivalent. I mean, by the way, that is not a newfangled idea.

This is not genius talk here. So the reason why they don’t do the obvious simple thing

is class bias. It is exactly what David said. It is the influence of people who look down on

these people. Yeah. Okay. And who believe that they are more virtuous because of their desire

to defend climate change. There’s also a pragmatic piece of this. This reminds me of the coal debates

we had. There are 62,000 coal miners in this country. Like, this is a small number of people

who were impacted, we could just, you know, basically give them severance or a soft landing

instead of the, you know, this crazy or, or let them continue to do their job and egress off

naturally, the economic free market will manage it will manage it on its own. And instead, what

you could do is actually green light nuclear subsidize some of these more adventurous ways

in which you can extract and refine LNG. But my point is, this is where it’s it’s a real head

scratcher why politicians don’t do this. And I think the only thing that I can come up with is

that they are overly influenced by these cultural elites with their perspectives, I agree that do

judge very harshly what they believe to be right and what they believe to be wrong.

Can we take a victory lap here in the United States that were energy independent, and that

were food independent? Can we take that victory? How much longer Jason? No, well, I think we now

need to think instead of just being independent, I think our mission should be surplus Jason,

our president, you know, cancel the Keystone Pipeline. He canceled a bunch of exploration

permits in the Gulf. You know, again, it’s we are one bad winter away from all of a sudden being in

the same situation as everybody else. So it’s not as one bad. We’re not one freeberg. Where are we

in terms of our independence? Jake, we are the number one ag exporter in the world. And by the

way, under a different under a different president, just a couple of years ago, we were the number

one energy exporter in the world. The fact that we take a food and energy, we have the greatest

natural resources. And we should be developing that we should be moving. But no sex. My point

is, what if the United States took a philosophy of not just being an independent, but being even

like a stronger surplus to the point of like, you know, the market? We are, we’re working it out,

the market’s working it out. And we’re taking, you know, we’re, we just need to feel like we

could do better. It feels like we do. I mean, the issue with nuclear power, as you know,

is the regulatory cost. So you know, it’s $10 billion in 30 years to get it. Let’s move to

the lightning round. No, I just want to show you guys the Monmouth poll, which I think is worth

highlighting. Okay, we didn’t talk about it. But the Monmouth poll that was published a few days

ago, which is the June 2022 poll, the number one concern that America, the number one thing

Americans are concerned about, Nick, you could put the chart, the table in the in the show notes,

33% care about inflation 2015% care about gas prices, 9% care about the economy 6% care about

everyday bills and groceries. You know, you add that up. That’s the vast majority of what people

are concerned about. And all the way down at the bottom of the table is climate change at 1%.

Absolutely. So I think it just speaks to the point about, you know, there there is,

and by the way, I’m not advocating that this is the right position. But I will say that there

is a huge distinction or discrepancy between what the average American is worried about.

And you know, where political leaders are trying to carry us forward. I’m not sure what the right

answer is. But there’s definitely a disconnect. And I think it’s being played out in this

Netherlands situation right now. One point for you on that as well. Nick, I put this article in the

in the chat, but the top ESG fund manager in Europe of the of 2022, they released their

results, and the guy was up like almost 16%. And he disclosed what he owns. And it turns out that

he owns Conoco, Valero, and Exxon. And according to the ESG rules that these folks have passed,

this qualifies as an ESG fund because he doesn’t own weapons, porn and oil sands.

But it allows all these people to walk around thinking that their investments are tied up in

things that are actually clean. So it’s not true. So the point is that there are there are

these structural lies that have been baked into the system, that they are supported by very shoddy

accounting or rules or science. And if we’re really going to fix this problem, I think you

have to go and inspect these things and call them out. But like all of this ESG investing,

which perpetuates, by the way, perhaps, you know why these governments just have no clue what’s

going on, sit on top of all of these lies. There’s nothing ESG about Conoco and Exxon per se.

It’s ridiculous. Let’s just call it for what it is. This guy’s a good fund manager. It’s a he’s

a good fund manager. He did well in a period where everybody else was down. Let’s just celebrate that

and not tell all these had a good marketing spin for a while. So you know, but it’s not just

marketing. It allows people to believe that there’s a solution that is being affected. That

is not true. That’s the part about it. That is super nefarious. Yeah. Okay. Listen, we move

science up because science got a short shrift last week. What is a lightning round? What is that?

I just wanted to things that were small that weren’t like full segments. I my concept here

was to just put things at the end of the show that we missed. But what I did this time was

give you a shout out. You’re doing a great job moderating today, by the way. Thank you put a

couple extra hours. And by the way, I think Freeberg made a really interesting point a

minute ago about me being a great moderator. No, not that. Okay. About the about the polling,

the mammoth polling, where if you look at what voters care about, and what the elites,

and the elected politicians care about, there’s a huge divergence. That’s clearly what happened

in Holland, right? You got these Dutch farmers, their livelihoods are being taken away by people

in Brussels who don’t even understand what they do. I mean, people want to make a living.

Yeah. But but this is why you’re seeing populist nationalist uprisings in all these countries is

you’ve got a crowd of people who go to Davos and make policy and they’re completely disconnected.

They’re completely disconnected from the real concern. Look at Bojo electorate.

Bojo just got booted today. Why? Ultimately, at the root causes he was throwing COVID parties

when he was telling the same thing that everybody nailed Gavin Newsom for this guy just got booted

out as Prime Minister better than everybody. They’re hypocrites, and they’re incompetent

at their jobs. Let’s call it what it is. The association is you try and do what you

believe to be best for everyone. But it’s not it’s not what’s best for you. You know,

and I think that that’s the point like climate, fixing climate change, stopping COVID. I got to

do X, Y and Z for everyone, but I still want to fly in a private jet and I still want to go to a

COVID party, you know, to a dinner party. Exactly. A super spreader. This is why I think Biden is

very unpopular. I mean, look, he’s hold on, hold on, let me see. Okay, so we’re gonna tee up.

Okay, well, let me just explain it. It’s a lot easier if I do that. Hold on.

Hold on. Here comes the alley oop. I don’t need the alley oop. Let me do two sentences.

It’s two sentences. I have a good joke. Just let me do it. All right. So all of the Friedberg

stands were breaking my chops that Chamath was cackling and laughing during a science

segment and we rushed him. So I moved science up. So to the Friedberg stands, please stand down.

Now we go to Biden derangement syndrome segment. At the end of the show,

Joe Biden’s cognitive decline is becoming the topic. Sachs, have at it.

Well, listen, if if you call this Biden derangement syndrome, 62% of the country has

Biden derangement syndrome because we all did for Trump. Biden’s poll numbers are down to something

like 38%. It’s historic low for this point in time of a presidency. But look, what the point

I was trying to make was I think that Biden’s problems flow from this dynamic we’re talking

about, which is he campaigned as Scranton Joe. He was a working class hero who is going to give

us a return to normalcy. And what has he done? He’s basically implemented every wacky idea of

the progressive left. He basically is representing that part of the party that is completely

disconnected from the ordinary desires of the working class. And what are people concerned

about right now? Food and energy prices. What is Biden concerned? Well, first of all, he’s blaming

it on mom and pop gas stations. Even even Jeff Bezos had to that tweet was insane.

Yeah. So just to keep the tweet, my message is Biden’s tweet, my message to the companies running

gas stations and selling and setting prices at the pump is simple. This is a time of war and

global peril. Bring down the price price you are charging at the pump to reflect the cost you’re

paying for the product and do it now. And then almost all small business franchises, which is

absurd. And that’s just not how the economy works. Do you think that they look at a Chevron

and think it’s owned by Chevron? Are they cannot be who’s tweeting for some some millennial,

some millennial with a couple of master’s degrees? Oh, and 400,000 of debt is rage tweeting from

the White House to make him look incompetent. I mean, I am forever thankful for Joe Biden to

getting Trump out before he took a third or fourth. It would take an eight second Google

search to know that less than 10% of the gas stations in America are owned by these corporates.

Well, here’s base us as quick. These are mom and pop businesses. This is insanity.

A lot of immigrants, a lot of South Asians. This is why it’s very sensitive to me.

These gas stations, they are mom and pop owned. A lot of them are owned by immigrants. And this

is their small, very expensive, the American dream. And Biden comes along and he’s saying

you’re doing too well. I mean, these people, their profit margins, like 2%, 2%, 2%, nothing.

My buddy’s family, by the way, owns a bunch of gas stations in the Bay Area.

And he told me they make no money on gas. They make all their money selling cigarettes and soda.

That’s it. That’s the whole business. It’s a way to get people into a convenience store.

Here’s my thought. I think I’m going to state it right here. Bezos is going to run for president

in 2024. This is why he retired. What? This is why he’s giving money away. I will bet anything

against them. Okay. He doesn’t need the headache. 15 to one. Okay. Well, he’s playing legacy games.

No. Why else would he become a shit poster on Twitter? Ouch. Inflation is far too. That wasn’t

even a shit post. Well, anyway, he’s he’s he doesn’t have to run a company anymore.

He’s Bezos after dark. That wasn’t even a shit post. That was kind of like he was outraged by

the financial illiteracy, the sheer stupidity. And, you know, what is what is the lack of

economic understanding to take on the president? There’s no upside there. He’s not starting a

fight. Check out. It’s just calling out something that on its face, that tweet.

It was not written by Joe Biden. So let’s not pin the blame on him.

But that office and that strategy is clearly broken because it is run by someone at a minimum

who’s enumerate, and who’s clearly financially illiterate, who doesn’t know how to Google

anything. Because that’s the only way you could write something that insipid Biden should fire

whoever it is that wrote that 100% Biden is looking for scapegoats. Okay, his popularity

is at historic lows that the right track wrong track numbers are at historic lows. He’s looking

for anyone to blame. And he’s been going through a whole sequence. And the Putin price hike wasn’t

working. He couldn’t even say it right. So now they’re looking for anyone else. Remember,

Elizabeth Warren did something similar when they had food inflation, they started blaming the meat,

the meatpacking industry or whatever. Look, this is not how these industries work. But they are

looking for someone to blame for their own mismanagement of the economy. And Biden baked

this cake last year. We’ve discussed this before. He canceled energy independence, his first day in

office. And then moreover, look on this Ukraine situation, if you knew you were going to take

this tough with Putin approach, Jason, I know you support Okay, but if you knew a proxy war was

coming, or you’re willing to let one happen, you would want to basically create an energy glut,

not an energy shortage, you’d want to basically maximize the amount of American production,

and you would not want to alienate the Saudis. So what is Biden doing now? He’s going over Saudi

Arabia had in hand totally humiliating to beg for forgiveness for last year ostracizing them

and calling them pariahs. So no, hold on a second, they had no grand strategy.

If they wanted to pursue a tough on Russia strategy, they should have maximized energy

production. Instead, they didn’t even think about it. They didn’t even think about it.

Strategically, we’ve got energy inflation.

I agree with you there. It also I will say is notable. I think the democrats are actually now

I think they’re quietly pushing the Joe Biden cognitive decline so that they can put it they

can feel that what do you mean quietly? How do you allow a governor, a sitting governor to run

ads in a different state against the presumed Republican nominee unless it’s ordained?

Well, I’m saying the cognitive decline thing. I think they’re not going to come out and say,

I don’t think this is happening surreptitiously.

Okay, here’s the tweet from Bezos, just so people hear it. Ouch, inflation is far too

important a problem for the White House to keep making statements like this. It’s either

straight ahead misdirection, or a deep misunderstanding of basic market dynamics.

This is a very strong statement. And the point I was trying to make before

is, why would Bezos? Why would Bezos at this time? Why would he take on the administration?

I would think it’s important for Biden to take control of his communication strategy and to

reclaim more of the center going into the midterms. I think a lot of this content, the naming the

shaming the blaming tends to be more of the playbook from the far progressive left. And I

think that there’s probably too many people that have infiltrated the White House from those ranks.

And I think he needs to close ranks a little bit more. And so I don’t think he wrote this,

okay. And I don’t think he would have wrote it if he was given a chance. So it’s clearly something

is breaking between what is being discussed as a team and then what is being executed on the ground.


Look, Biden’s staff, the wrong claims been with him for years, they reflect his desires. I think

this is classic Biden. If you look at his career in the Senate, he is a grandstander. He always

liked to basically scapegoat and demonize. This is a playbook. He may not have written the tweet,

but he certainly endorsed it. And he’s given speeches now where he’s calling out this scapegoat

and that scapegoat for basically the energy prices, which are totally his fault. He could

have had a better strategy around this.

DeSantis versus Bezos, you heard it first.

On the Bezos thing, hold on a second. Jason, you’re not taking into account,

this is actually the second time that Bezos has tweeted about inflation.

I haven’t taken that into account, yeah.

Okay. That was back in May. He called out the administration. So it’s on this particular issue,

I think he feels strongly about this issue. And I think he’s looking at what the administration

is doing and just saying, this is a level of political stupidity and financial illiteracy

that I just cannot stand. And by the way, who is Jeff Bezos? Bezos is a very liberal guy.

He’s an outspoken critic of Trump and he owns a very liberal media house at the Washington Post.

So I think this is a reflection that Biden has even lost the Jeff Bezos of the world.

And he’s trying to spend it as a good thing as if we don’t need these billionaires. But

if you’re losing Jeff Bezos, you’re losing a lot of people in the center, probably the entire

I would follow the breadcrumbs. He bought the Washington Post, he bought the largest house in

DC. And now he’s taking on the administration. I think it’s a clear path that he wants to run.

You can, you can, you can mention me on Twitter if you disagree.

I’ll tell you a funny story to end. After after the sale of the Warriors completed,

and I tweeted this thing out. It was really beautiful. Dray sent a beautiful text to me.

So did David Lee. And then I got one text message from Phil Hellmuth saying,

I dispute how much credit you’ve given me. I expected more.

Wow. So seven seconds to fill again, it only took seven seconds. And then he called

and then he called I showed I showed sacks the text, right? It’s an unbelievable text, right?

sacks can sacks can testify to it. And then he lost his mind again. He lost his mind. He said,

basically, like, you know, he took the credit that I gave him want to throw it at the window. He

thought I really tried to fuck him over. And then he said, I’m going to block you for a week,

but then change his mind. Just tell him you’ll buy him into the to the big game

or something. And he’ll be fine. No, he didn’t. He just wanted more credit,

more credit. Tell him you’ll stake him. Because he did. He did introduce you to the

Is it true that he introduced that Phil Hellmuth introduced you to the deal? Yes or no?

He introduced me to Joe Lakem. Got it. So if not for Phil, you probably would not have made that

trade. I don’t know. It’s unclear. Maybe they know they had bankers and I was you know, I was

using Allen and company. So I mean, do you? And there’s not a lot of people running around in

that moment trying to write a 10% you because he deserve any credit for you buying your stake in

the Warriors. In fact, and I thought I gave him an appropriate amount of credit. Yeah,

Chamath tweet stormed it was like, it was Phil Peter Thiel and like one other Oh, and then

makeup makeup. Yeah. And it’s like better company he couldn’t find himself in. It’s the best he’s

ever been. Except when he was with Michael Jordan and Jay Z. But other than that, this was the best

Phil’s ever done. I mean, you know, when I get Did you see he made it to the second? When I get

my fourth ring, I’m going to take a picture like Michael with the four rings. But but Chamath,

in the interest of peace, maybe you should just think Phil right now. Oh, I have a great idea

to tell Phil Friedberg. Look at Friedberg’s laughing. He’s the only one that got that

joke. Did you get that job? I was wondering if I should tell you to cut it or not. I don’t know.

I think it’s good. Here’s a great one. You know how I think it’s a funny joke. You know how Phil

gives his bracelets away? As like a recognition. You don’t have to do this. But pretend that

you’re giving since you have four rings that you wanted to thank the other three besties on the

show and that you’re keeping one ring for yourself. Oh my god. Giving us the other three rings. Oh my

god. Thank you for all the support. We’ve given you all the support for the Warriors. Yeah. For

the Warriors that we gave you and all the counsel we gave you over the years. This will put him on

he should have gotten one of the four rings. It’s the greatest April Fool’s joke. Actually,

that reminds me. Phil’s next ring is going to me. So I can’t say anything critical. Yeah,

bracelets. The next bracelet’s going to me. So I can’t say anything critical. You know what you’re

going to do? You’re going to take that bracelet? Whatever I said that would be critical. I

guarantee you Saks takes the bracelet and loses it in the first three days and never wears it

and doesn’t care. Right in the garbage. Doesn’t care. Never talks about it again. All right,

everybody. We’re back. The team is playing professional crisp ball again. Point God is back.

We’ll see you on episode 87. We’re going to make it to 100. I feel like we can make it to 100. Yes,

we’re going to make it. The vibe is back. The vibe. I love you guys. It’s a show in the text,

but it’s great here. I gotta say, I love I love hanging. I love hanging out with Saksiput

like live in physical. He’s a fucking little he’s very you just want to take him. I love him. He’s

good live. He’s good. He’s great. He’s really he’s so good live. He’s really good. He’s really,

really good contract. He’s an asshole. Last time I hung out live with him, he had an IV hooked up

and he was recovering from the night before. Saks on an IV. He’s basically on an IV now.

That’s how bad it’s gotten for him. Saks, you look terrible. Can you please get some sun and

just maybe eat one less sandwich? He’s losing weight. He looks good. I had two. No, but you

could afford to. You’re in great shape. I mean, Saks, maybe half a DeSantis. Maybe you should have

a half a DeSantis. I think I’m going to put you on a half DeSantis. We’ll see you all next time

on the All-In-One. Love you guys. Bye-bye. Bye-bye. Bye-bye.

Besties are gone.

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

Oh man.

The Dasher will meet me at Glens.

We should all just get a room and just have one big huge orgy because they’re all just useless.

It’s like this sexual tension that they just need to release somehow.

Wet or the beat. Wet or the beat.

Wet or the beat.

We need to get merch.

Besties are gone.

I’m going all in.

We need to get merch.

Besties are gone.

I’m going all in.

I’m going all in.

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