Just a couple of questions

before we kick off.

OK, look, it’s what I told you before.

It’s bad bitch o’clock.

OK, it’s thick 30.

I’ve been through a lot

sacks right now, but I’m still 30.

OK, is everybody back up

in the building sacks?

It’s been a minute.

Tell me how you’re healing

because I’m about

to get into my feelings.

How you feel on sacks?

How you feel right now?

What language are you speaking right now?

Is that what you’re talking about?

It’s called hip hop sacks.

You right.

Remember when you had

at your 50th?

Oh yeah, when you had

and she sang

and she sang.

And your.

Was dancing to.

Delete that.

Delete that.

Let’s start executing

the insta strike with Jake.

Why insta strike?

Well, when he says something

that we just insta strikes,

we don’t have to edit it later.

Just insta strike.

It’s because I am

taking back my power.

I was in therapy the other day

and they told me

I need to take back my power.

Insta strike.

But he apparently reads

the comments section

because he knew Friedberg

that you won the episode last week.

Oh, big time.

Which I agree with.

I thought you did a great job.

It was big Friedberg energy.

Finally, I honestly do not

like the competitive

nature of the show.

I think it makes us all hate each other

and it’s not a good dynamic.

We should just fucking do

the show with each other.

I know, but the point is

your performance

after I threatened to fire

if the show has gone up.

You know who also doesn’t

like the competitive nature?

Jake out because he’s losing.

Yeah, totally.

The fact that I’m even still here

is winning.

I love how Jake out

thinks he can threaten to fire Friedberg.

It’s like the janitor at Staples Center

think he’s going to fire LeBron

because he played poorly in a game.

This is a motivational technique.

I got the best out of him.

I’m like Michael Jordan.

He’s my Dennis Rodman.

You’re like the hot dog dealer.

OK, pal.

He’s like LeBron James.

You’re the hot dog dealer.

I do not insta strike these comments.

Let your winners ride.

Rain man, David.

I’m going.

And instead, we open source it to the fans

and they’ve just gone crazy.

Love you guys.

I squeeze.

All right, everybody.

Welcome to the all in pod with us again.

David Friedberg took a break

from playing his stray video cat game.

Saks is here in his deposition.

Apparently, Chamath.

By the way, do you guys want to see this?

Look at the size of this.

Jekyll’s apparently playing no comment today

on the comments.

So I will open the show.

I will open the show by asking David Saks,

would you like to tell us

about what you’re holding in your hand?

Yeah, OK.

So I got this subpoena from Twitter.

This is a non party subpoena for didn’t Twitter subpoena your tweets?

Yes.

Let me get to that.

Wait, is this a peanut?

I thought they’re public.

They are.

These nitwits have walked

to lift and billing them a probably two thousand dollars an hour

to subpoena tweets that are public.

Brilliant strategy.

But this is called a subpoena for production of business records

in an action pending outside California.

So I’m not a party to the laws.

At least they’re not suing me

because I have no involvement in this thing.

But they sent me the broadest ever subpoena.

It’s like 30 pages of requests.

And now I got to hire a lawyer to go quash this thing

because they basically want any of my communications

with any of my friends over the last six months.

It’s insane.

Saks, can you just explain to the audience

and to us like this is a court sanctioned subpoena.

The court is basically allowing the lawyers to demand

that you hand over these communications.

Is that right?

Yeah, but I haven’t had a chance to fight it yet.

So now at my own expense, I got to hire a lawyer

and go send them to fight it

because this is a ridiculous, overbroad subpoena.

And by the way, I’m not even involved in this thing.

I’m just a commenter on Twitter.

I don’t have any.

Let me just save

Wachtell Lipton a lot of time right now.

I’m not in possession of nonpublic information about this.

And the craziest thing is, yeah, like you mentioned,

they cite my tweets as an exhibit here

and they say they want all documents

and communications concerning your statement

in a tweet dated April 16th

that the quote new Twitter CEO checklist

includes eliminate all bots and fire useless employees.

50% question mark.

So obviously they didn’t like that.

Your statement in a tweet dated April 25th.

Crazy thought, what if Jack masterminded this whole thing?

Your statement in a tweet dated July 18th

that quote randomly sampling 100 accounts a day

is not a serious effort.

And or your statements in any other tweet

concerning the merger, blah, blah, blah.

Let me just save them time right now.

I don’t have documents and communications

concerning my tweets.

Now I know to a lawyer at Wachtell Lipton

that looking at my tweets and how brilliant they are,

you may think that I have extensive documentation

and source material for them.

But let me tell you what happened.

I went to go take a shit

and I basically tweeted off the cuff

and that’s how that tweet ended up in the public record.

There are no documents and communications

concerning my tweets.

And this idea that somehow,

I guess what they’re trying to get at

is that somehow I was tweeting on behalf of someone

or at someone’s behest, not true.

Go look well before this year at my public tweets and blogs

about the topic of free speech.

I’ve been a critic of Twitter’s for a long time

on the issue of free speech.

I’ve written a content moderation policy.

I’ve written about what I think a content moderation policy

for a social network that cares about free speech should be.

I’ve written all these posts on Medium going back years now.

I was a critic of Twitter

throwing Donald Trump off the platform.

So these views that I’ve publicly stated are,

the reason I’ve stated them is they’re just my views

and there’s just nothing more nefarious

or something behind them other than that.

And they’re just, I think they’re just trying to

chase a there that’s, there is no there there.

Right.

So let me just say that in a lot of time.

You and I can talk

because our friends have no comment on this matter.

I just have one question.

I have a follow up question.

During this movement that you had

and you composed the tweet,

is there any documentation of the movement?

No, but you know, next time that I compose a tweet

on the can, I will document it thoroughly

and I will send it to the lawyers at Wachtell Lipton.

Zach, what happens if you don’t respond in 20 days?

I don’t know.

I mean, I gotta, I mean, now I’ve hired a lawyer,

but by the way, just so people understand,

you may think that because of my position in business

or something that these things happen all the time.

They don’t.

I’ve been maybe subpoenaed like three times

in my entire career and I’ve never been subpoenaed

in my capacity as an individual.

It’s always been in connection with a company

and I don’t think I’ve gotten one of these

in over five years.

So this just does not happen that often.

These guys are totally chasing at straws

and it leads me to believe they’re wasting my time

and Twitter’s money.

And they’re trying-

So somebody at Twitter should just rein in their lawyers

because they’re, I’m sure,

racking up a fortune in legal fees.

It sounds like, Zach, the case is that they’re trying

to make that Elon used his network of friends

to help wash away the deal

because he didn’t like the price anymore

and had his friends kind of tweet about bots

and other stuff to support his case for killing the deal

because he didn’t like the price.

And they’re trying to see if there’s any communications

that he specifically said he didn’t like the price.

Yeah, I mean, look, in addition to my tweets,

they want all my documents and correspondence

related to my appearance on Megyn Kelly,

my appearance on the Will Kane podcast

and other media appearances that I’ve done.

Look, I had no coordination with Elon

before appearing on any of those shows.

I just went on those shows and said what I think.

I mean, look, it’s not like I’m a guy

who doesn’t have hot takes every single week

on various issues.

We’ve been doing this podcast for years.

I’ve been tweeting for years.

I’m just a commentator on this.

I’ve never been in possession of non-public information

and I’ve tweeted my takes based on the public information

that’s been available about this dispute.

Now, after I appeared, for example, on Will Kane,

I remember Elon tweeted in support of my appearance,

but there was no coordination before I appeared

or after for that matter.

He just liked the appearance.

So it’s just me spouting off doing what I’ve been doing

on this pod and tweeting for years.

Now I can understand if maybe they’re trying

to read something into it,

they’re on a fishing expedition,

but I’ve just told you what the truth is.

I think the whole thing is just such

an enormous waste of time.

Just get into court, adjudicate the thing and move on.

I was reading yesterday,

this guy who follows the Delaware courts pretty closely,

he had a bunch of commentary

and he mimicked some of the stuff

or the judge apparently on the case said some stuff

about preserving the integrity of the court,

meaning that the interpretation people are making

is that ultimately they don’t wanna,

the court is unlikely to try and force the merger

because if the merger then doesn’t get consummated,

it damages the reputation of the court’s ability

to make enforcement action.

And therefore it’s more likely

that they just impose a fine.

But what is the enforcement action if,

I don’t know, we should ask somebody who’s a-

Force the merger.

No, but-

Force Elon to buy Twitter.

But what does that mean, force?

I don’t know about that.

Okay, all I know is that this discovery request

is overly broad, it’s a fishing expedition,

it’s harassment of me,

it’s gonna cost me time and money to get rid of this thing.

I didn’t do anything to deserve it or prompt this.

I wasn’t part of the transaction, I just wasn’t.

And I’ve never said anything in regards to the transaction

that should lead anyone to believe

that I’m in possession of non-public information.

Yeah.

So this is harassment as punitive

and the fact that they’re citing my tweets

in which I criticize Twitter’s management,

it’s just petty and vindictive.

Yeah, I agree.

I mean, look-

Can you get your legal fees reimbursed?

I’d probably not.

Good luck, no.

Five or six years ago, I approached Twitter

about what I would have called a friendly activist,

myself and another large fund.

And the reality is there’s a lot of data

that sits in the public domain

that you can use to get a very clear view

of Twitter’s advantages and disadvantages.

And so all of these issues that Twitter is dealing with

has been known for a long time

to people that spend any time analyzing the stock,

comparing it to other social media stocks.

So I just don’t understand what all of this is about.

At the end of the day, a person that had a point of view

has changed their mind,

get to the bottom of what that person thinks,

but going on these broad fishing expedition,

I think is just really stupid.

And then what was Joe Lonsdale subpoenaed for?

I mean, he just appeared-

For being at the All in Summit.

For being a guest at the All in Summit.

So that just shows you how silly this is too,

because Elon, we did an interview,

the four of us interviewed Elon at the All in Summit

in Miami back in, was it May?

When did we do that?

Yeah, May.

So Elon appeared, but he dialed in by Zoom.

It’s not like he was walking around the hallways,

bumping into people and talking.

He did not communicate with anybody else at the summit.

He was a guest by Zoom.

So if you want to know the communications that we had,

just go watch that public recording of us interviewing Elon.

There’s just, again,

there’s no need for this fishing expedition.

Guys, this is the record

for the longest amount of time in his life.

J. Cal has not spoken.

So I want to acknowledge this moment

and we can move forward.

Sax, did you do any prep work

for the interview with Elon while you were?

Wow, good question.

In the commode?

In the commode?

No, there’s no prep work.

I showed up.

Barely.

I barely showed up.

Barely.

I barely showed up.

You guys remember.

Barely.

Oh my gosh.

See, and you guys don’t want to do All in Summit 2022.

Come on, 23.

Come on.

We’re good.

We’re good.

Yeah, exactly.

Why do I need another one of these?

I actually want to have

Friedberg stands create an event honoring him

and I’m going to appear there as the keynote speaker.

Absolutely.

Sultan of science con.

Actually, I should really thank you, J. Cal.

Yeah, totally.

For throwing this summit.

Thanks, J. Cal.

First, I blame Twitter’s executives.

Then I blame you.

I think you could put, listen,

if we do another All in Summit,

maybe it’s profitable and we can pay our legal bills.

Can I just say like as a user,

just as a user, okay?

Commentary.

The bot issue is really real.

Like how many accounts are there

which have like 20 or 30 followers

that just spew vitriol,

either positive or negative constantly.

Every time you tweet anything,

it makes tweeting impossible.

I used to be an ardent user of Twitter.

And I think in the last year

it has become exceptionally unusable.

Wow.

And so they should just fix it.

They should fix that product quality problem.

In fairness to Saks,

he did pay $10 per account to have those created

and to troll your replies.

But it is true.

If you, I always screenshot it.

I look at who’s like trolling me in replies.

And inevitably it is a six month old account

that’s following a hundred people

and has no followers or five followers.

And it has like some, you know,

large string of numbers at the end of the name.

Every time you say something,

every time I say something,

it’s like every other comment is about a stock.

It’s about a crypto thing that they want you to click on.

And so, you know, this last month

I’ve started to experiment with turning comments off

and it’s been the best because I can still communicate out.

It gets the same reach.

Millions of people will see what I have to say,

but I don’t have to deal.

And all of the other people that follow me

theoretically for useful information

don’t have to deal with all of the bullshit

that comes with it.

Yeah.

But you can also pick, you should try.

There’s a real problem on that platform

that needs to get fixed.

Here’s the thing.

It’s easily fixable because if you go to LinkedIn

or Facebook or Instagram, you don’t see this.

So if the other platforms can figure it out

across many different companies,

it’s not like there’s some secret sauce here.

You just have to put up, you know,

a couple of reasonable gates

and have some reasonable reporting

and you take a little friction out

and people will not be able to create bots on mass.

Yeah, I noticed that problem, you know,

in the early days of the Ukrainian war

when I would tweet out my opinion,

my contrarian opinions,

my non-consensus opinions on the Ukrainian war.

You get attacked.

I saw, I remember you were getting attacked.

Oh my God, it was ruthless.

Those are not real people.

Those are not real people.

Well, here’s the point.

Those are algorithms.

Yeah, when you would go click on those accounts,

you would see that they were accounts created that month.

Yep.

Zero followers, zero following,

and they were brand new accounts without any history.

And they were all tweeting the same thing,

accusing me of being devil Chamberlain.

It was all just, you know,

Putin talking points or whatever.

So there were, you know,

I think particularly when you speak out

against the current thing,

there’s, you know, an organized effort

to try and drown you out.

And, but look,

the Washington Post had a story about this,

that Ukraine was really good

at what they called strategic communications.

Yeah, misinformation.

We used to call that propaganda,

but in any event, yeah, I mean, look,

there is absolutely a problem there.

It’s now a playbook.

If you, I don’t know if you guys saw the Zack Snyder

recut of Justice League,

supposedly there were bot armies

that put the pressure on Warner Brothers

to release his cut of that movie

and that he might have in some way been involved

was the insinuation.

And it actually drove commerce.

They gave him the whatever,

30, $40 million to recut the film.

All right, let’s talk about markets

since that’s what everybody really comes here for.

Looks like inflation is finally

maybe getting a little pushback gas

and oil is way down.

Big win for Americans

and obviously the administration.

There clearly is an upper bound

to how much people will pay for a gallon of gasoline.

Consumption is actually going down, which is interesting.

Human’s pretty adaptable there.

Jobs, and we’ve talked about this every month

as we watch it, finally dipped under 11 million

as Sachs predicted.

You know, we’re gonna shed three or 400,000 jobs

it seems every month,

which should take this, you know,

10, 11 million number over the next year

down to maybe five or six,

which would still be an unbelievable number.

So put us at very robust, full employment,

which has been a big question.

So there’s a number of open job,

the number of job wrecks,

it went down by something like half a million in one month.

Yeah, and it’s been going down three or 400.

So it’s kind of been pretty consistent,

but there’s clearly something going on here.

And the stock market, interestingly,

we’ve started to see a little bump here,

even crypto, which the most speculative of all assets,

I guess, Bitcoin bounced as well,

you know, hitting 22, 23 now.

So what do you think Chamath about markets?

You may have called the bottom here on the program

a couple of months ago,

and I started J trading three weeks ago

based on our discussions here,

thinking we’re bouncing along the bottom.

Is it a head fake right now?

I think at the time, initially,

I think I said, you know, it rallies to around 4,000.

I was a little off rally.

What rallies to 4,000?

The S&P.

Yeah.

Probably gets to 4,200, 4,300.

Look, it’s always important from my perspective.

Trading at 4,150 today, just so people know.

Yeah, it’s always important from my perspective

to just take the other side

and just intellectually debate with oneself

why the other side could be right.

So at this point right now,

what people would say is,

okay, the Fed’s gonna capitulate

at the beginning part of 2023.

We have a pretty clear forecast

for all the rate increases that have to happen.

Everybody’s doing the work that’s necessary,

either raising prices, cutting costs,

or doing both, letting people go, et cetera, et cetera.

So maybe we’re there.

Okay, so what’s the other side of that?

Well, I think, again, as I’ve stated before,

the other side starts with energy.

And the reason why I think it’s important

is that it really is the conflation of an economic system

and a political system using an instrument.

And if you look inside of what’s happening in Europe,

there’s a lot of complexities here

that I think need to get unpacked.

So for example, a couple of days ago,

the French government basically said

that they’re going to start producing less nuclear energy.

And you’d say, well, why would they do that?

Well, it turns out because the temperatures are so high,

you cannot use the water to cool these nuclear reactors

because the exiting water is then so hot

that it would actually destroy the ecosystem

of the lakes and rivers that they use

to feed natural fresh water in to cool the nuclear reactor.

Second, because it’s so hot,

all the rivers are below their natural level,

barges that carry coal and that gas

are getting stuck on the Danube.

The Po, which is the longest river in Italy

that feeds all the fields,

actually is below the level where it can actually

offload the water.

So farmers can’t basically do what they need to do

to produce a food supply.

So if you play all of that out,

you start to see an issue where by October,

November of this year,

we’re back into the same complexity

where energy is the tip of the spear

around which everybody starts to debate

all of the national security issues

that we have to deal with,

the Ukraine war, et cetera, et cetera.

So I don’t know.

I mean, you’ve made a lot of money this year

by basically doing the following,

which is the exact opposite of everybody else.

When everybody else was freaking out,

had you bought, you would have made a ton of money.

Now everybody’s like, it’s over.

And you can tell that by looking at the VIX,

which is the volatility index.

We’re about to get into the high teens.

You have systematically, it has been true

that when the VIX is in the teens,

you tend to basically buy volatility,

which is essentially you get short stocks.

And when the VIX is in the thirties,

you tend to basically sell volatility

and you buy equities because we’ve hit the bottom.

If you’ve been doing that for the last year,

you’ve made a ton of money.

So there you have it.

I really don’t know what’s going to happen from here,

but I tend to think things still have to get a lot worse

to flush everything through the system.

And for people who don’t know,

the VIX is the ticker symbol that you can look up yourself

for the CBOE’s volatility index,

which measures the stock market’s expectation of volatility

based on the S&P index’s options trading.

If you look at oil, SACS,

we are now down to 87 bucks for a barrel.

Haven’t been here since, gosh, looks like,

yeah, February maybe.

And so, and gas prices plummeting,

something going well in this regard?

What are your thoughts?

Yeah, I mean, that particular commodity is coming down.

I still think we have a big inflation problem.

Why do you think it’s going down?

I guess production’s stepping up.

I mean, in response to higher prices,

people increase production and the price comes down.

No, no, no, no, no, there’s less demand.

The crazy sad thing about this whole thing with Biden

was that OPEC came back and they basically said,

we can increase like 600,000 barrels a day.

But the only two countries that are able to do it

were I think Kuwait and Saudi.

And the total number of barrels is about 100,000.

So with all the bluster and all of this stuff.

You’re right, actually.

There’s no surprise.

It’s because the interest rate increases

are actually having an effect.

Correct.

You know, these rate increases are like chemotherapy.

You know, it’s on the economy.

The gas demand is lower than the summer of 2020

in the middle of the pandemic in the United States.

Yeah, you’re right.

The commodity prices are reflecting expectations

that the economy is slowing down and, you know,

maybe in a recession.

So supply modestly up, demand massively down equals,

hey, we want to get people to buy this commodity

that will lower the prices.

Well, lo and behold, the same thing is happening

a little bit with groceries.

And we’ll see what happens with travel.

Homes also spectacularly falling down in price

and the inventory spiking as well.

So what’s your take here?

Unpack the 75 basis point increase in the chemotherapy

that you were going down that road.

Well, let me just speak to this rally

in the market for a second,

because I think there was a really interesting chart

that Philippe Lafon showed at that CO2 summit

that we talked about on the spot a few months ago.

And I’ll just put it on the screen.

I put it in the chat.

What it basically shows is that during, you know,

protracted bear markets,

you can still get substantial bear market rallies.

And so during the 2000, 2001 dot-com crash,

you had these plus 32%, plus 41%, plus 45% rallies,

but even while the market as a whole was going down.

And so they ended up being sort of sucker rallies.

Now, I don’t know if that is what’s happening here,

but it is a possibility.

One interpretation, Sax, of this could be

people are picking the winning stocks

while the losers continue to lose.

And that’s what’s causing this, you know,

jagged edge or the dead cat bouncing, as they say,

which is what we’re seeing

in a lot of these public companies, right?

I don’t know if you’re watching, but Uber, you know,

obviously I’m still a big shareholder,

had a massive print and other companies

have been doing equally as well, Apple included.

I think two things happened last week.

One is there were a number of companies

that reported good earnings.

And I think even more importantly, has strong forecasts.

So that helped.

And I think it was just,

there was so much pessimism and negativity

that just companies reporting decreases

that weren’t as bad as people were expecting

created some room to move up.

But the other thing that drove the rally

is that the Fed made these comments

on the heels of that 75 basis point rate increase

that we were close to neutral.

And so the market seemed to get really optimistic

that we wouldn’t get much more

in the way of rate increases.

Maybe there’d be a 50 basis point rate increase

towards the end of the year,

which would bring the Fed funds rate

up to about the two-year bond rate.

So the idea was we’re close to neutral

and markets really reacted to that.

The thing about that is though,

that I think what Powell and what the Fed says today

about rates is way less important

than what the inflation data will actually show

in a few months.

If we still have 9% inflation three months from now,

then I don’t think the rate increases are done.

So at the end of the day,

I think that the data here is gonna be a lot more important

than what the Fed says,

because certainly the Fed has said a lot of things

over the past couple of years

that turned out not to be true.

You would agree they seem to be doing something correct

here with the 75 BPS,

you know, and taking it a little more seriously.

It’s having an impact.

I’ll say it again.

I’ve said it now five pods in a row.

We’ve never seen a moment in history, in American history,

where when CPI has printed successively above 5%,

that it got under 5% without Fed funds

getting to that same number.

So we should all hope that this is the exception

that proves the rule,

but there’s an enormous amount of data

that would tell you that we have to take rates

to double what the equilibrium rate

is thought to be right now.

There was no print in August.

They take the month of August off.

They could do an emergency print,

and then they’re expecting 50 or 75 BPS in September

if they do that.

Sachs, Chamath, Freeberg.

I think 50 is the expectation for September.

But look, I think it’s appropriate now

after all the rate increase they’ve done to take a pause.

They’re gonna get two full months now of inflation data

before the September Fed meeting.

I think it’s appropriate to let the economy digest

these rate increases and see where we’re at.

And let’s see where the next two months inflation print

is, and then that’ll determine what happens next.

Freeberg, based on all this,

what’s your outlook for the economy?

I think there’s more…

We all try and be predictive

based on the current set of conditions in the world.

And there are a number of conditions in the world

that the switch could flip very quickly.

And there’s enough of those triggering events right now

that the probability of any one or any set of them happening

in the next couple of months is probably pretty high.

You know, I kind of talked about it on the show

a few weeks ago that it’s like a bunch of tortoises

sticking their head out of the shell.

And, you know, there’s a few that might pop out here.

There’s obviously a massive problem

with getting gas to Western Europe for this winter.

There’s an emerging problem with food insecurity

in Africa, South Asia, around the world.

There is obviously continuing escalating conflict

in Eastern Europe.

This NATO situation may or may not help.

The Taiwan visit may or may not help.

Is it escalating?

Yeah.

I mean, I think, you know, Sweden and whatnot joining NATO

is going to be viewed as provocatory.

And, you know, it could not make things cooler

and calmer over there, but make them more tense.

I mean, we view it as a security issue,

but it really is a conflict escalation issue.

And then I think that there are emerging markets problems.

You know, Argentina is facing 60% inflation.

Brazil has a criminal as their president right now.

And he has said publicly in the last couple of days

that he will not leave office if he loses the election

because the election is fraudulent.

And if that happens,

then you could see massive civil unrest.

He’s been encouraging the population in Brazil

to go to the streets and fight back.

And there are a number of these flashpoints.

And by the way, that’s a massive,

you know, food supplier,

as well as a massive holding in EM credit portfolios

around the world.

US consumer credit is a problem.

You know, we just had the largest number

of new credit card accounts open since 2008 in Q2

from the New York Fed report yesterday.

All of these things I’m painting as pictures

of potential flashpoints

for what could quickly become wildfires or brush fires

that spread very quickly in markets

and could escalate some of the consideration.

So I don’t feel like I look around and say,

everything is good, we’re in a good place.

There are some indications

that some of the stagflationary considerations

and concerns we may have had

in the way that markets are behaving right now

gives us a pause, gives us a respite, makes us feel okay.

But there are also a lot of things

that could go wrong.

And any one of those things could be a triggering point.

So I always think in terms of probabilities,

there’s a whole bunch of low probability things.

But when you have enough low probability things,

the probability that something

in the set is triggered becomes high.

That’s where I kind of say, look,

the probability of something being a flashpoint

for us this year is high.

I also still think that globally,

we are very primed for conflict right now.

And we feel like,

and are hoping that the Russia Ukraine thing resolves,

but there are other points of escalation.

Look at what’s happening with Pelosi visiting Taiwan.

Everyone that’s, you know,

even well-informed is scratching their head saying,

what the heck is going on here?

There is currently an indulgence in conflict.

And I think that that indulgence will, you know,

cause more harm than good,

particularly for these financial markets

that we’re commenting on right now in the months ahead.

So look, you know, like I’ve always said,

I’m not going to be one to time markets.

It’s like trying to time social behavior.

Like who’s going to say some word first.

I don’t know the answer in a population of people,

you know, you can kind of guess how people are gonna behave,

but markets are the output,

the manifestation of social behavior.

And so timing markets is very difficult.

I think you can do a good job analyzing businesses

and the quality of businesses

and how they will perform over time.

I don’t think that anyone over time

can do a good job timing markets.

And I think that there’s a lot of these things

that could really shift anyone’s perspective

on what you believe right now,

very rapidly in another direction,

based on any one of these things happening.

Chamath, do you feel the world is,

as Dr. Doom here is, you know, setting it up?

By the way, I’m not being negative.

I’m just pointing out that there are a set of things

that could flip things the other way, right?

Absolutely, I’m being slightly facetious here,

but you paint a pretty stark picture of,

hey, there’s all these tipping points around the world.

Chamath, do you feel like this is how the world works?

There’s always a bunch of potential tipping points.

There’s always going to be wars, sadly,

and there’s always going to be countries

that are dealing with dictators or insolvency,

especially in frontier markets and emerging markets,

or is this chaos really acute

and people should be anxious and in a panic?

I think both of you guys are right.

There’s always stuff going on in markets

and markets represent the collective sum

of our wishes and expectations and also the realities.

This is why I think, for me at least,

the way that I process this information

is not trying to have an opinion on any one of those things,

because I just, I find it too hard

and I don’t have enough depth of understanding

of any of those things.

For me, I’d rather go back to the historical trends

because those, I find a little bit easier to parse

and whether any of those things are true

and baked into inflation right now or not.

Can they turn that radio down?

Jason, we’re just docking something.

Oh, okay, no problem.

It’s just a little, we can’t hear you, sorry.

No problem.

The second helicopter is replacing the first helicopter

because of a fuel leak issue on the first helicopter.

Oh, the helicopter pilots are swapping out.

Yeah, no, that’s important.

The helicopters are switching on the helicopters.

I mean, it takes a team to park this boat,

I’ll just be honest with you.

So they’re trying to get it done, it’s gonna be a little.

No, but listen, so the real problem is that like,

if I go back to the historical artifacts,

have there been issues in the past,

the way that, you know, Freeberg described?

Absolutely.

So this is why I think you can look at the fact

that whenever there’s inflation and whenever it’s spiked,

this is what has had to happen by the Fed

is you have to take rates above that key 5% threshold

when CPI is above 5% to break enough demand

so that the economy’s reset.

And I think that’s where we are.

So instead of trying to figure out whether, you know,

I mean, the Brazil thing as an example

that Freeberg said is crazy.

Like he’s basically, you know,

he said publicly in a press release,

the army’s on my side and it’s ready to help me,

you know, keep in staying, just the craziest thing.

So what are you supposed to do?

The fighters need to take to the streets.

So what are you supposed to do?

In my opinion, I’m like, you know what?

A version of Brazil has happened before.

I don’t know enough history, quite honest,

to know the specifics of what happened then

and how that could translate to now.

And I don’t wanna spend the time understanding

what’s gonna happen in Brazil right now.

I’d rather just say there are 20 or 30 things

that could very much complicate the world economy.

I think the reality is that governments need

to flush all this excess money out of the system

so that we can really find out what equilibrium demand is

and get back to normal.

There’s also, by the way, a really important trend, Chamath,

on like, that I think is playing out

and will play out for the next decade on deglobalization.

So as the US tries to build

its own semiconductor manufacturing capacity,

as China loses key trade partners,

as all of these markets stop trading with each other

and start to build redundancy,

there is a massive, longer-range economic effect

of deglobalization.

Globalization enables efficient pricing.

It enables labor and energy and everything to be done,

you know, to go to the cheapest source.

That’s the way globalization has benefited us.

We’ve been able to get cheap energy and cheap labor

in overseas markets to do work for us.

And as a result, we’ve gotten access to cheap products.

So when you deglobalize,

you end up having to pay more for labor, more for energy.

You have to build infrastructure,

and the price for everything goes up.

We’ve said this on the pod for two years now.

That era of cheaper, faster, better is over.

And what comes with that is better national security,

but the cost of that better national security

is higher prices.

Higher prices, less growth.

And there’s nothing that we can do to avoid that.

I’m not sure I agree with the less growth.

I actually think that there’s enough excess slack

to be absorbed by all of this free money

that I think you can still have sustained growth,

but it will come with higher interest rates

and higher inflation and higher input costs.

Everybody will have to do their part to absorb some of this,

but that’s what’s going to happen.

And I think we should just deal with the medicine

as quickly as possible.

This is why the people that actually think

that the Fed should just be very aggressive

and get this over with quickly,

I suspect on the margins are right.

The problem is they don’t want to look

at the historical artifact

because the historical artifact would say,

wait, I need to raise interest rates

by another 250 basis points.

That’s just way too disruptive

for what the world is ready to hear right now.

So we’re going to incrementally plot along.

And I think what Friedberg says is right,

which is that there’s going to be a whack-a-mole that emerges.

That’s going to tilt the markets.

Then the consumer credit thing will implode.

That’s going to tilt the markets.

Then Jair Bolsonaro will try to take over Brazil.

That’ll tilt the markets and we’ll go back

to this inflationary, fragmented,

de-globalized view of the world

that just frankly takes higher interest rates to normalize.

All right, and Sax, I’ll bring you on this.

I mean, counter to Friedberg’s point,

the counter obviously would be,

hey, we will have less dependency on dictators

like Putin, Xi Jinping, MBS, et cetera.

And that would be great for humanity

and we’d have resiliency in our supply chain.

And the West now becoming unified,

say what you will about the NATO membership

and the timing of it,

it’s probably a great thing that the West is saying,

hey, we’re going to get together as a group,

I think you would agree,

and stand against dictators invading other countries.

And if everybody pays their fair share to be part of NATO,

which is an important point-

Well, that’s not what they said.

That’s not what they said.

Well, it is a fair point.

Well, I mean-

No, that is not, but be intellectually honest.

We all said the first part.

Which is?

And nobody talked about that second part.

And the only person who,

which is Josh Hawley,

who is not exactly my favorite person in the world,

but maybe Sax wants to comment,

was the only one that actually said,

which is probably the fair thing,

which Jason, you are saying is part of the deal,

it is not part of the deal.

No, no, it should be part of the deal.

I’m saying it should be part of the deal.

And for people who missed what we said there,

United States spends three and a half percent

of our GDP on military.

Other places in NATO might be spending one or 2%,

and we’re trying to get them all to 2%

to be a little closer to us.

And then this obviously trip to Taiwan,

strengthening our relationship with that country,

but at what cost and why are we doing it now,

all come into play here, so.

Do you actually think that this trip to Taiwan

actually strengthened our relationship with Taiwan?

Did we come out with a deal for chips

that DSNC all of a sudden said?

In what way?

I’m curious.

Well, because they are, I mean,

did you not see their statements and giving Pelosi awards?

And Taiwan very much wants to strengthen

their relationship with the West.

That is their goal.

They want to strengthen the West.

They want the protection of the West.

So yes, it’s trying to-

Do you think that this was a coordinated-

Hold on, let me finish.

It does strengthen our relationship with Taiwan.

The question is, does it provoke China?

And was it necessary at this point in time in history

when the world does feel like

it’s a little bit of a powder keg?

No, but so six months from now,

when all the fruits and vegetables

that have been embargoed and not sent to Taiwan,

and then the sand that allows them to make chips

continues to not flow,

do you think that they’ll still be positive

about the trip?

We’ll see.

Let’s go to Sax.

He likes to comment on these things, so.

All right, well-

I want to break Saxon.

I want to dismantle everything you just said.

I know, that’s why I set you up for it.

So on Pelosi, I mean, look,

once it came out that Pelosi was going to Taiwan

and China threatened her and the US saying you can’t go,

obviously we couldn’t back down from that

because we can’t let China dictate

which of our officials can go to Taiwan.

So at that point, we had to back her play.

And you saw that everybody from Fox News

to 25 Republican senators got on board, okay?

But here’s the issue.

The real issue is, should she even have been going?

I think this trip was self-indulgent.

It was reckless.

She was told by the Biden administration,

don’t go, this is not the right time.

This is a sensitive time.

The CCP’s got their party conference

in the next couple of months.

There was no reason to basically provoke

this showdown right now.

And she just dismissed what the administration,

Biden and what the Pentagon told her to do

because she wanted to make some sort

of valedictory tour to Taiwan.

So look, Nancy Pelosi does not deserve

any credit for this trip.

Did we have to defend her once China threatened her?

Yes, of course, we had to, like I said, back her play,

but this was reckless and it was self-indulgent

and it didn’t need to happen.

And it really makes you wonder

who is calling the shots in this administration

when Pelosi won’t even respect the wishes

of a president in her own party.

And what is she doing going over there?

She’s not the secretary of state.

She’s not the president.

Had the same questions, like why now?

Why now?

Thomas Friedman had, well, because it’s all about her

making this valedictory tour before.

She’s gonna hand over the gavel.

Look, the Democrats are gonna lose the House in November.

Once she passes the gavel to a new Republican speaker

of the House, I think she’ll be announcing

her retirement shortly after that.

So this is all part of her farewell tour.

But it didn’t need to happen.

And the fact that she did it in violation of the wishes

of a president of her own party makes you wonder

who’s calling the shots over there.

And it kind of reminded me, you know, a few weeks ago,

Gavin Newsom was over at the White House

when Biden was over in Europe and everyone was speculating,

what’s he doing over there?

Is he measuring the drapes?

Yeah, he’s measuring the drapes.

So, you know, it just goes to show

does this administration have control over anything,

over the members of their own party?

Over 60% of Democrats say they want someone different

to run in 24.

So yes, there was a surface level of consensus

and backing of Pelosi.

But if you scratch beneath the surface,

you see that the trip was unnecessary

and reveals a president who doesn’t seem completely

in control of our foreign policy.

So in a statement, almost universally,

the leadership of the Republican Party said,

for decades, members of the US, United States Congress,

including previous speakers of the house

have traveled to Taiwan.

This travel is consistent with the United States

one China policy to which we are committed.

We are also committed now more than ever

to all elements of the Taiwan Relations Act.

So one China, if you don’t know,

is that Taiwan and China are all part of one unified entity.

So the Republicans seem to be supporting this

in a cynical way, you’re saying,

or it is consistent that other members

of the United States Congress have gone

including other speakers of the house.

I think there is bipartisan support now to defend Taiwan.

I actually think that that is in the cards.

I think there’s a very high probability

that we actually end up in a war with China.

Really?

This century. Oh, yeah.

I don’t think so.

I think Taiwan is the biggest flashpoint in the world.

I would agree with that.

But explain why you think there’s going to be a war

because I think a lot of people think

there’s way too much at stake here

for there to be a war.

So there is going to be some sort of negotiated settlement

in the South China Sea.

So why would you think you think the majority case

is there’s going to be a war really?

You have to look at it first of all,

from the Chinese point of view,

they view Taiwan as sacred territory.

And for decades now, they have said in every single meeting,

diplomatic meeting with the US,

Taiwan is always their number one issue.

They are hell bent on

recent reunification of mainland China with Taiwan.

And they would like to do it peacefully

through coercion if they can,

but I think they will do it militarily if they must.

And the only question is when they feel

that they will be strong enough

to basically take the island by force.

So that’s, I think, the Chinese point of view.

And I think America is increasingly committed

to the defense of Taiwan.

So, you know, we have contradictory statements on this.

The one China policy says that we respect

that there’s one China,

but on the other hand,

the Taiwan Relations Act commits us

to help in the defense of Taiwan.

So we have a contradictory policy on this,

but if you really want to understand-

And by the way, as does Sachs, you would agree,

China has flip-flopped on this.

I mean, it’s only the last hundred years

that they’ve really considered Taiwan strategic.

They didn’t care about it two or 300 years ago.

They were kind of like, this is worthless.

You guys do what you want.

That’s because Taiwan was part of China until 1895,

when Japan took it from them.

Yeah.

They have been-

But they didn’t want it at that time.

That’s the other thing.

They were like, this is worthless real estate.

We don’t care.

And it’s only-

No, that’s not true.

Taiwan is extremely important strategically.

And if you want to understand why,

I think you need to look at this map of the island chains.

Can we pull that up, actually?

Yeah, it’s a really interesting discussion

because 200 years ago, they didn’t care.

And then all of a sudden they were like, wait a second,

if we’re going to be in wars with the West

and Japan’s going to be a democracy,

we do actually have something at stake here.

We’d like that island back.

The island chain strategy was originally created

by John Foster Dulles.

This one of the, Secretary of State,

I think under Eisenhower,

who was one of the initial architects

of our containment policy against the Soviet Union,

but also came up with this idea

of how we would contain China in East Asia.

And the basic idea is that China is surrounded

by a series of island chains.

The first island chain goes down

from the Southern tip of Japan to Okinawa,

to Taiwan, to I think there’s some islands

in the South China Sea, the Spratly Islands.

It’s got the Northwest tip of the Philippines.

That’s the first island chain.

Second island chain goes out to the Eastern part

of the Philippines.

No, Vietnam’s all the way down in the South China Sea.

But I think the second island chain includes,

you know, it goes down to Indonesia.

And then I think there’s even a third island chain

that includes Guam.

Although Guam actually might be in the second,

somewhere around there,

it’s a heavily fortified American base.

So the idea is if you want to bottle up and contain China,

you do it by controlling these island chains.

And Taiwan is really the central one.

It sort of divides this East China Sea

where you’ve got South Korea and Japan

from the South China Sea,

where you’ve got Vietnam and Malaysia.

If we distance between Vietnam and Japan,

it’s literally, if you were to draw a center line

of China’s coastal access, that is it.

Yeah, so the bottom line is this.

If you want to pursue a policy of containment

against China, you really want to control

these island chains.

Another way to think about it is that these islands

are unsinkable aircraft carriers.

They allow America to project power 6,000 miles away

into the Pacific.

That’s how we saw it during World War II

is we had all these island hopping battles.

And as we took these islands,

they would then become a runway for the next stage of,

to project American power to get all the way to Japan.

So, you know, if you believe that we’re headed for,

or we already are in Cold War II with China,

and I think we are.

I think China is really the geopolitical threat,

not Russia.

The way that you would contain China

and keep them bottled up is to have these islands

in the American alliance.

It’s gonna be very hard for China,

which is now building a huge blue water Navy,

has actually more ships than the United States.

It’s gonna be very hard for them to project their power

all over the world if they are contained and bottled up

and have to watch their own backs.

One note on the number of ships though,

in East Asia is, you know, they have a lot of small ships.

The tonnage wise, we have much more tonnage.

And if you were to look, you know, even the perfect setup,

as you explained through these islands

is very similar to NATO and what’s happening with Russia.

You know, we have Korea, we have Japan,

we have Vietnam, the Philippines,

we have an incredible alliance in this area.

And that’s a great thing for America.

And Taiwan obviously is a jump ball here.

But this is a setup for China, you know, having…

Jason, what do you think about the repercussions

of her visit?

So CATL, which is Tesla’s biggest battery supplier,

basically, you know, delayed the announcement of a factory.

It’s not clear whether they’re gonna put it

into the United States.

They may actually pick a city in Mexico.

But the decision that was supposed to happen now

has now been delayed until September or October.

There’s a bunch of, you know,

there’s all of these crazy military drills that happened.

Was it all worth it?

I mean, that is the question.

And I’m asking why now?

Was it worth it?

We don’t have enough information, I think,

to know why this was done now.

Was it a freelance?

Hold on, he asked me a question.

Let me finish.

Is it a freelance and Nancy Pelosi’s completely freelance

or is there a bigger strategy here is the question.

Is China weak now?

Are we trying to send a message to them?

And one could equally take the side of the argument

that the United States supporting Finland,

supporting Sweden, supporting NATO,

you know, supporting the Ukraine

and supporting the Pacific is actually the right move here

to contain the dictators.

I agree, but we have a, I agree,

but we have two people to do that.

It’s the president and the secretary of state.

Well, that would be a much bigger provocation,

I think is the issue.

So if you sent the president,

that would be a very big provocation.

The Thomas Friedman article that Saks mentions

was pretty explicit that, you know,

Blinken and Biden both told her, please stand down.

Yeah, the NSC and the joint chief said, please stand down.

You are way over your ski tips here.

And she said,

I agree, I agree.

I’ve been very public.

What is the point of doing this now?

Is the question.

And we don’t have information.

Once China tried to dictate to Pelosi that she couldn’t go,

of course we had to back her play,

but you have to be kind of a fool

to fall for this in the first place.

This was self-indulgent by Pelosi.

She didn’t need to pick this battle.

The administration asked her not to.

And look, let me give Biden some credit here.

Biden has the right policy on Taiwan,

which was stated this way.

He says that we support the status quo

and we are against unilateral changes to the status quo.

We want the United States to be a status quo power

with respect to Taiwan

and force China to be the revisionist power.

And we need to be very careful

that we do not come across as the revisionist power

that would give China an excuse.

So we want to just maintain the status quo.

That should be our policy.

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

on the All In Pod.

Bye-bye.

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Rain Man, David Sachs.

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And instead, we open-sourced it to the fans

and they’ve just gone crazy with it.

Love you, Estes.

I’m the queen of Kinwan.

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Besties are gone.

I hope they’re not that bad.

That is my dog taking a notice in your driveway.

Sachs.

Oh, man.

We should all just get a room

and just have one big huge orgy

because they’re all just useless.

It’s like this like sexual tension

that they just need to release somehow.

Let your beat be.

Let your beat be.

Let your beat be.

Let your beat be.

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