E140: LK-99, Sclerotic establishments, Fitch downgrades US debt, Trump indicted... again

00:00:00.000 | Whoa, whoa, whoa, Saks found the gel.

00:00:02.400 | Oh my God.

00:00:04.560 | This guy, he's running for office.

00:00:06.400 | If he shows up with a red tie next week, we're fucked.

00:00:09.200 | That's the end of the show.

00:00:10.160 | He shows up with a red tie and a blue shirt.

00:00:12.240 | Are you coming out of your law retirement?

00:00:14.320 | Are you going to be an active lawyer defending Trump?

00:00:16.400 | Saks, you look really good, I got to say, with the gel.

00:00:18.880 | That looks, that's a really good look.

00:00:20.560 | That's kind of the shower, used a comb.

00:00:22.400 | Oh, the weekly shower in Italy?

00:00:24.320 | Good look, right?

00:00:25.120 | It's not a bad look.

00:00:26.160 | Did you use soap?

00:00:26.960 | Did you, uh, did you...

00:00:28.240 | Oh no.

00:00:29.760 | Oh no.

00:00:31.440 | I didn't have time.

00:00:32.240 | Didn't have 90 seconds?

00:00:33.280 | Yeah, I didn't want to keep you guys waiting another two minutes.

00:00:34.960 | All right, everybody, welcome to another episode of the All In podcast.

00:00:58.000 | It is August, and we just might have had the most consequential week in terms of politics

00:01:05.200 | and science in a long time.

00:01:07.760 | Could be, could be the week of the year.

00:01:09.520 | Freeberg's been going nuts inside the group chat because everyone is trying to replicate

00:01:15.360 | this LK99 room temperature semiconductor experiment.

00:01:19.840 | Superconductor.

00:01:20.640 | Superconductor, yes.

00:01:22.400 | So, God, I mean, this has been, what has it been, like 10 days, and now everybody is on

00:01:30.400 | Twitter trying to recreate this.

00:01:32.000 | Maybe I should just let you cue this up, Freeberg, since this is the first time, perhaps the

00:01:37.120 | last, that we're going to start the show at Science Corner.

00:01:39.040 | So, Science Corner takeover week.

00:01:40.720 | Tell us, is this legit?

00:01:43.600 | Because you flip from this is a fraud to this is changing the world, like, every day you

00:01:49.280 | seem to have a new piece of evidence.

00:01:50.960 | Where are you today with this?

00:01:52.560 | Is this the real deal?

00:01:53.360 | I mean, it's probably somewhere in the middle, but it leads to a path that could get us to

00:01:58.720 | the holy grail, which is room temperature superconducting material, which we've talked

00:02:03.920 | about twice on the show before, and I encourage folks to go look at the episode we did a couple

00:02:08.880 | ago after the original claim was made a few months ago that turned out to not be true.

00:02:13.440 | But the description in the paper that came out on how to make this material was chased

00:02:20.320 | by hundreds of labs around the world over the last few days.

00:02:23.040 | Folks have been live streaming it on these Chinese websites, Billy Billy and Twitter

00:02:27.680 | and Twitch.

00:02:28.640 | Everyone from Russian scientists to Chinese to Korean to American to European.

00:02:36.560 | I will say one thing that I think is really profound, which it is, this is the first time

00:02:42.000 | in a very long time that I've seen so many people share a unified voice about optimism,

00:02:50.800 | about an abundant future, optimism about a big breakthrough, rather than get on social

00:02:55.680 | media to share a voice about fear and anger at someone or something and to hear everyone

00:03:02.080 | around the world get together and be excited about the potential of this discovery and

00:03:06.400 | its applications.

00:03:07.200 | It's really profound to see and it's really amazing and wonderful to see.

00:03:11.440 | Now, where we are, a bunch of labs took the described chemical structure of this material,

00:03:19.200 | LK99, which has lead and phosphorus, oxygen and some copper in it, and put it into these

00:03:25.840 | modeling systems, these computer modeling systems to try and understand where do the

00:03:30.240 | electrons flow, where do the electrons sit in this material if this material is made

00:03:34.880 | the way it's described.

00:03:36.640 | And five different labs have now published papers that show that the way that this material

00:03:42.320 | is supposedly produced, it should create these pathways or these energy states with the electrons

00:03:48.800 | that theoretically could enable superconductivity at a very high temperature.

00:03:52.560 | And so that's a very confirmatory signal that computer modeling of the electron clouds,

00:03:59.280 | because remember, electrons, even though they move around the nucleus of an atom, we only

00:04:03.680 | kind of have a probability statement of where they are.

00:04:06.400 | So if you look at all the probability statements of all the atoms stuck together, and you try

00:04:10.320 | and figure out what's the aggregate probability of where electrons are, it indicates that

00:04:15.600 | there are these pathways that theoretically could allow for electrons to move freely through

00:04:20.400 | the material and be completely void of any sort of resistance, which is superconductivity.

00:04:26.000 | And so that's what's really profound about the modeling outputs from five very separate

00:04:31.440 | independent labs.

00:04:32.320 | Just so we're clear, when electricity normally moves down an electric wire or in computers

00:04:38.880 | and CPUs, GPUs, whatever, there's resistance, that resistance results in loss, it results

00:04:44.720 | in heat.

00:04:45.200 | And the only way we've been able to reduce that loss is by making it freezing cold, like

00:04:50.640 | significantly cold.

00:04:51.760 | Totally right.

00:04:52.400 | Yeah.

00:04:52.960 | So now if we were to do this, when we didn't have to make a cold, that means that these

00:04:58.320 | superconducting experiments move from the laboratory where it's forced to be cold to

00:05:02.560 | the real world, our desktop, you used an analogy in chat that was really interesting of like,

00:05:07.440 | a superconducting road, where and then you don't lose energy right now, how much energy

00:05:12.000 | do we lose transporting it to our houses?

00:05:14.480 | Right.

00:05:14.800 | So, you know, I would say on the order of 70% of energy we produce is lost to heat and

00:05:20.560 | friction.

00:05:21.280 | Think about moving a car down the road, when you move a car down the road, you're having

00:05:24.720 | to put energy and to overcome the friction of the car hitting the road.

00:05:27.600 | So if the car could hover above the road, the friction goes away and the energy needed

00:05:31.360 | to move the car goes way, way down.

00:05:33.120 | When you build a data center, the electrons that are moving through the copper and the

00:05:37.120 | semiconductors bump into other atoms, when they bump into the atoms in the material,

00:05:41.120 | they shake those atoms.

00:05:42.480 | When atoms shake, that is heat.

00:05:44.400 | So that's why copper wire heats up when you put electricity through it, you're moving

00:05:48.000 | electrons through it.

00:05:48.960 | Some of those electrons bump into the copper atoms, shakes the copper atoms, they get hot,

00:05:53.120 | and then some of the electrons make their way through.

00:05:55.200 | The rate at which electrons are bumping into other atoms is the resistance of the material.

00:06:00.320 | So, said plainly...

00:06:01.200 | And so all this energy is going into cooling down data centers and all this energy is lost

00:06:05.360 | in computing to heat.

00:06:07.760 | And same in electric motors could be reinvented, semiconductors, integrated circuits would

00:06:13.360 | be reinvented.

00:06:14.240 | And like I said, if you had enough of this material, you could put it in roads.

00:06:17.840 | And because superconductors also reflect magnetic fields, you could put magnets on the bottom

00:06:22.320 | of cars and float them above the ground and cruise around without any friction.

00:06:26.160 | And if any of this is true, this 70% loss of...

00:06:30.800 | and then all this energy put into cooling data centers, we could be looking at doubling

00:06:36.720 | or tripling the amount of energy available because we built a certain amount of energy

00:06:41.840 | infrastructure.

00:06:42.560 | So this would be all gains if we could figure out how to leverage this technology.

00:06:46.720 | Massive gains and massive abundance, it would lower the cost of electricity by 10%,

00:06:52.080 | 100%.

00:06:52.480 | I mean, look, assuming huge infrastructure investments, which would take probably decades

00:06:56.960 | to do, you would get there.

00:06:58.880 | But in the near term, there are these incredible applications.

00:07:01.280 | Quantum computers are built using little superconductors as the qubit.

00:07:06.560 | And so the superconductor holds the qubit state.

00:07:09.120 | So this idea that we could now have room temperature quantum computing is also a very

00:07:13.520 | profound one, game changer, low cost.

00:07:16.000 | And the first thing that would be changed is likely electronic components.

00:07:19.200 | So we would take electronic components and redesign them using superconducting material

00:07:23.680 | that would allow you to reduce heat loss and energy loss.

00:07:25.920 | And that would have a big transformative effect on, for example, the big effort right now

00:07:30.400 | to make more AI chips, GPU chips to do matrix transformations.

00:07:33.760 | There is some precedent for this.

00:07:35.280 | People are now creating optical bridges between GPUs and CPUs in order to reduce the heat.

00:07:41.680 | So they're using optics, basically light to transfer data.

00:07:45.840 | Interconnects.

00:07:46.400 | Yeah, yeah.

00:07:47.040 | That's been the big lift right now, from what I understand, in GPUs and data centers is

00:07:52.000 | you still have to convert data.

00:07:53.760 | Yeah, it's, I mean, we could go on for hours on that.

00:07:56.320 | But like, yes, I mean, this would just be a game changer, electronic component, right?

00:07:59.600 | Photonic chips, right?

00:08:00.480 | Photonic chips.

00:08:02.160 | But look, this is obviously a little bit separate.

00:08:04.080 | But here's where we are.

00:08:06.000 | So LK99, there's all these simulation models that show this thing could work.

00:08:09.360 | But there's two things I will say came out of this from some of the simulations.

00:08:13.120 | The first is, remember, this is a crystal with mostly lead atoms.

00:08:18.160 | And these lead atoms, some of them get replaced by copper.

00:08:21.760 | And when they get replaced by copper, it causes the crystal structure to change by 0.46 degrees,

00:08:28.080 | is what the Koreans say.

00:08:28.960 | The angle changes by 0.46 degrees.

00:08:30.880 | And when that happens, that bending causes the electrons in all the atoms in the crystal

00:08:35.520 | to overlap slightly.

00:08:36.960 | And that overlapping effect causes this free-flowing electron tunnel.

00:08:42.800 | That is the theory for why the superconducts.

00:08:45.040 | Now, what the simulation showed is that you have to replace only one of the lead atoms,

00:08:51.280 | not any of the other ones, in order for this to work.

00:08:53.520 | And that could explain why everyone's having different results in the lab trying to reproduce

00:08:57.360 | this.

00:08:58.000 | Because when you bake this stuff in an oven, if the copper gets into the wrong atom space

00:09:02.880 | in the crystal, it doesn't work.

00:09:04.560 | And so that's why some of these things might end up looking good, and some of them don't

00:09:08.400 | look good.

00:09:08.720 | And some of them, there was a lab yesterday in China that published no resistance, but

00:09:13.600 | they had to cool it down to 100 degrees below freezing.

00:09:17.120 | And so it wasn't at room temperature, but it did superconduct, it did have no resistance.

00:09:20.800 | >> 170 Kelvin, I think is where they got it.

00:09:22.880 | >> Yeah, so 100 below zero Celsius.

00:09:25.280 | >> So in other words, there is a key here in the molecular structure that you have to

00:09:30.240 | just thread perfectly.

00:09:31.520 | >> You have to replace the right lead atom with the copper in order for this to work.

00:09:36.000 | And so that's a technically very, and what happens by the way,

00:09:38.640 | >> So that's a fidelity issue, that's a tool issue, like you have to have the right tool

00:09:42.000 | to do it, or is it luck, or right now?

00:09:44.320 | >> So here's the crazy story, and I'll tell you guys this, I don't know how real this

00:09:47.840 | is, but the guys claim, so remember, these two scientists, Lee and Kim, supposedly saw

00:09:54.320 | this material in a lab in 1999.

00:09:57.280 | That's why it's called LK, Lee and Kim, '99.

00:09:59.840 | And so in '99, they came across this, and they could not replicate it, and they had

00:10:03.600 | no idea how to make it again.

00:10:05.120 | And it disappeared, and they didn't have the sample again.

00:10:07.680 | They then spent the next 20 years of their life, one was a college professor, and the

00:10:11.760 | other one worked for LG as a battery engineer, and they just had these random, normal, everyday

00:10:16.160 | lives.

00:10:16.720 | It reminds me of Dennis Quaid in the movie The Rookie, where he had this amazing arm,

00:10:20.720 | and he was going to go to the MLB, and then something happened, and he spent the rest

00:10:24.080 | of his life as a high school PE teacher.

00:10:26.320 | And then 20 years later, he gets his arm back, and he goes to the MLB, and he plays in a

00:10:30.000 | major league baseball game.

00:10:31.200 | Because all of a sudden, during COVID, these guys got some funding, they set up a company,

00:10:35.200 | they went into a lab, and they rediscovered this material.

00:10:38.240 | And apparently, this is the rumor, I don't know if this is real, the rumor is, they had

00:10:41.680 | it, they were baking it in an oven, in a vacuum-sealed tube, and when the guy took it out of the oven,

00:10:47.360 | he accidentally bumped into a table, and the tube cracked.

00:10:50.240 | And when the tube cracked, it did something to the material, and then they measured it,

00:10:53.760 | and oh my god, it's room temperature superconductor.

00:10:56.000 | That's the current theory of what, the rumor of what happened in the video.

00:10:58.640 | That's like Peter Parker being bitten by a radioactive spider.

00:11:01.920 | I mean, it doesn't make any sense.

00:11:04.080 | What?

00:11:05.200 | Yeah.

00:11:05.920 | So here's the drama.

00:11:06.800 | This guy, Kwon, got inserted to oversee them as like their CTO.

00:11:10.320 | The guy that gave the money to Q-Center said, "He's got to oversee you."

00:11:12.880 | Kwon apparently got fired from his job in March, and he was kicked out of his company,

00:11:17.920 | was no longer affiliated.

00:11:19.520 | And the rumor is that Kwon took all the lab data, and these guys, in 2020, during COVID,

00:11:24.000 | they discovered this.

00:11:24.880 | They started filing patents and working on the manufacturing process, trying to figure

00:11:28.240 | out how to replicate it and do it again.

00:11:29.680 | They had all this data, but they weren't going to publish it.

00:11:31.280 | They didn't want the world to know about it yet.

00:11:33.040 | And then all of a sudden, Kwon gathers all this data, probably disgruntled after getting

00:11:36.880 | fired, puts it into a paper and puts it on the internet.

00:11:39.920 | So that's the first paper that came out.

00:11:41.600 | This is important because there's a website called R-A-R-X-I-V.

00:11:46.240 | Is there a pronunciation for this website?

00:11:48.080 | So this is where you can open source file scientific papers, right?

00:11:51.840 | Okay, so this is a place for dropping papers outside of the academia?

00:11:59.040 | Yeah.

00:11:59.760 | The traditional journal process requires peer review, and there's editors at the journal

00:12:04.000 | that decide whether or not to publish your paper.

00:12:05.920 | So sometimes...

00:12:06.560 | Gatekeepers.

00:12:07.120 | Yeah, gatekeepers.

00:12:07.920 | And so if you don't want to do that, you just want to get a story out to the world right

00:12:10.320 | away.

00:12:10.800 | So during COVID, everyone was publishing on the site, all their updates on research they

00:12:14.560 | were doing to help the world figure out what's going on with COVID.

00:12:17.040 | So it's a great place to just hit the world with your data, hit the world with your findings.

00:12:20.960 | This is like acoustic raw papers, and it's called Archive.

00:12:24.960 | A-R-X-I-V.org if you want to go see it.

00:12:28.560 | Archive.

00:12:29.040 | So anyone can publish a PDF.

00:12:30.880 | No one knows if it's real or not.

00:12:32.080 | It hasn't been peer reviewed, etc.

00:12:33.760 | So this guy, Kwon, so Kwon drops the paper with his name, Lee, Kim, and Kwon on the paper.

00:12:39.440 | Only three people can win a Nobel Prize.

00:12:41.120 | So the theory is he did this to get his name out there to make sure he could lock in his

00:12:44.480 | name for the Nobel Prize.

00:12:45.680 | Wow.

00:12:46.640 | And then within a day, Lee and Kim and four people they've been working with, including

00:12:52.080 | some folks in the US, published another paper with better data, but it was also rushed out.

00:12:56.880 | And so both papers are pretty ugly, I gotta be honest.

00:12:59.280 | They're like pretty messy.

00:13:00.800 | They don't have a great deal of clarity.

00:13:02.320 | There's errors in them.

00:13:03.200 | There's mistakes.

00:13:03.840 | There's redundancy.

00:13:04.640 | There's little basic chart editing errors, stupid stuff.

00:13:07.920 | Clearly, this was a rushed job.

00:13:09.600 | But these guys rushed out and said, "You know what, if this is going to be public, we now

00:13:12.320 | have to correct the story and see what happens."

00:13:15.040 | So they put this thing out there.

00:13:15.920 | They wanted to get their claim in to get their Nobel Peace Prize, which would indicate that

00:13:20.560 | would lean towards a piece of evidence, as would people funding them 25 years later.

00:13:24.960 | That would indicate maybe there's something there.

00:13:27.680 | Two things worth noting on the simulation stuff.

00:13:29.200 | Number one, obviously, you got to get the copper in the right place.

00:13:32.400 | And the production way to do that, how do we actually engineer that to happen?

00:13:36.400 | It's not really clear.

00:13:38.160 | Baking it in an oven clearly is creating what's called heterogeneous results, meaning everyone's

00:13:42.160 | getting different results around the world that have been doing this for the last couple

00:13:45.280 | days.

00:13:45.760 | And everyone's really confused.

00:13:46.880 | Is this real?

00:13:47.440 | Is it fake?

00:13:47.920 | I don't know.

00:13:48.560 | But that simulation explains why there's maybe lots of different results.

00:13:52.240 | Another comment.

00:13:53.440 | It turns out that one of the simulation teams said, "Hey, if you put gold instead of copper

00:13:57.920 | in the spot, it's a better superconductor.

00:13:59.840 | It could actually be a better material."

00:14:01.600 | So it's opening up all these paths for exploration that we had never considered before, that

00:14:06.640 | there's this whole new approach to creating superconducting materials that was not on

00:14:10.240 | anyone's radar before.

00:14:11.360 | So this is opening up a whole new realm.

00:14:12.800 | And I think this is going to unfold over the next couple of years with more material discovery,

00:14:17.360 | more invention coming off of this initial discovery and simulation model that then offers

00:14:22.640 | all these other opportunities for creating potentially new materials that maybe are easier

00:14:26.560 | to manufacture and better to produce.

00:14:28.080 | And the final thing I'll say is that there are some teams that are commenting, that are

00:14:33.120 | saying that this thing may be superconducting, but only on one dimension, which means along

00:14:38.080 | a line of atoms or line of molecules in the material.

00:14:41.760 | So normal superconductors, think about them as like a 3D matrix, and the electrons can

00:14:46.880 | flow freely through any direction through the matrix, through the crystal.

00:14:51.120 | And in this case, they're saying the electrons can only flow freely across a line in this

00:14:56.960 | material.

00:14:57.760 | And so now there's another question of, "Wait, how do you manufacture lots of lines to run

00:15:01.360 | in parallel to make this thing truly superconducting at scale?"

00:15:04.400 | So that's all the hard technical stuff that's emerging right now.

00:15:07.680 | Whether or not this actually does turn into a room temperature superconducting material

00:15:11.600 | that can be industrialized and used in all these applications everyone's really excited

00:15:15.920 | about, I think it's probably months to years away from knowing.

00:15:19.360 | But at this point, there's a great set of indications that, "Oh my God, we might be

00:15:23.200 | onto something new."

00:15:24.160 | There's a whole new path of discovery, a whole new path of engineering and invention.

00:15:27.680 | And it's amazing to just see everyone gather around this and get so excited about it, because

00:15:31.440 | it really will change so much about the world and create extraordinary abundance and prosperity

00:15:36.240 | for humanity.

00:15:37.600 | If this proves to be real and industrializable and scalable.

00:15:40.480 | >> Can I just ask a simple question here?

00:15:43.040 | >> Oh, you're good.

00:15:43.280 | >> When you say, "If this proves to be real," if nobody has reproduced the result, why is

00:15:48.720 | there any belief that this is real?

00:15:50.080 | >> There are properties of this that, look, I think we have to take a step back.

00:15:53.760 | We have found superconductive materials in the past.

00:15:58.720 | There are many ceramics that are superconductive.

00:16:01.120 | Mercury is superconductive.

00:16:02.720 | There's all kinds of elements and materials and compounds in the physical world that we've

00:16:07.520 | already figured out have these properties.

00:16:09.920 | So this is not like a new thing that's never been found before.

00:16:13.440 | It's just this idea of trying to find it at a certain temperature where it could exist

00:16:18.160 | naturally in the normal world without all this expensive cooling.

00:16:21.840 | Okay.

00:16:22.560 | But there is a separate thing, which is that we also have found a whole bunch of materials

00:16:29.440 | that look and behave like superconductors, but are really not.

00:16:35.200 | They're what's called just diamagnetic.

00:16:37.040 | I think right now what people are trying to sort out is, "Is this a clever diamagnet?

00:16:44.640 | Is this diamagnetism?

00:16:46.240 | Or is it superconductive?"

00:16:48.800 | These are huge differences that swing this from, "Yeah, it's kind of a cool thing," and,

00:16:53.840 | "Yeah, whatever.

00:16:54.400 | There's a bunch of other materials we found that are like this," to, "Wow, this is

00:16:57.920 | transformational."

00:16:58.880 | Right now, we don't know any of that.

00:17:00.960 | I think that all of the mystery around this is mostly because people can be on one side

00:17:07.200 | of the debate or the other literally by the second based on what new simulation or what

00:17:12.480 | new piece of research people are putting out there.

00:17:15.120 | But you have to remember, diamagnetism is like a property of matter.

00:17:20.160 | Superconductivity is a state of matter.

00:17:22.800 | It is totally different.

00:17:24.720 | All superconductors are diamagnetic, but all diamagnets are not superconductive.

00:17:29.280 | So we could just be extremely excited about not much of anything, or this could really

00:17:38.400 | be a breakthrough.

00:17:39.120 | If what the Chinese guy said is that they were able to cool this thing down and get

00:17:42.720 | it to be superconductive, then that does...

00:17:45.280 | At 170K, it doesn't mean much, in my opinion.

00:17:48.160 | Right.

00:17:48.400 | It's not room temperature, but it does indicate that this material can be superconductive.

00:17:53.040 | Look, there are many materials like this.

00:17:54.560 | There's a lot of forms of red matter that we've already found that at that temperature

00:17:58.480 | gradient, at that range of temperatures, can be superconductive.

00:18:02.480 | It's not practically useful at that point.

00:18:05.120 | Yeah, that's right.

00:18:06.320 | And I don't think you're going to see some massive revolution.

00:18:08.560 | So I'm a betting man.

00:18:09.600 | I make bets.

00:18:10.240 | I think I've talked about when there was this guy, Ranga Diaz, that had to try this stuff,

00:18:14.640 | and he was sort of refuted in what he was working on.

00:18:17.200 | But 18 months before that happened, I was trying to get a deal done with the University

00:18:20.880 | of Rochester to buy all that IP.

00:18:22.800 | So I've been grinding in and around this space for a couple of years.

00:18:25.920 | My intuition on this is that this is diamagnetic.

00:18:30.000 | And I think we're going to find that it's like yet another material added to the list

00:18:37.840 | of materials, and it's okay.

00:18:39.760 | But hopefully what it really does is it sparks an interest in a lot of other people putting

00:18:46.960 | more money behind this.

00:18:48.080 | Nick, if you could pull up this manifold markets, there's a prediction market called manifold

00:18:53.840 | dot markets that people have been sharing a link from betting markets where people bet

00:18:58.640 | either side of this will LK 99 room temp ambient pressure serving conductivity, preprint replicate

00:19:05.840 | before 2025.

00:19:06.880 | And you can see it's about 30% chance you what do you think of the prediction markets

00:19:11.040 | assessing this?

00:19:12.160 | Freeberg?

00:19:12.640 | Yeah, I think that's probably that's probably a good handicap for where we are.

00:19:18.240 | I'll say when you look at a diamagnetic material, and so what that means a diamagnet will expel

00:19:24.960 | magnetic fields of both polarities, a paramagnet will reflect the north or the south pole,

00:19:31.520 | its north pole will reflect the north pole of another magnetic material, right?

00:19:35.040 | diamagnets, you can put north or south pole and they reflect both.

00:19:37.840 | And there's plenty of videos you can watch of putting a frog in like a 10 Tesla machine

00:19:43.680 | and the frog floats technically a frog is diamagnetic.

00:19:47.520 | But what happens typically with diamagnetic materials is they orient themselves while

00:19:52.160 | they're freely floating into a particular direction.

00:19:55.040 | So there's going to be three things people are going to be looking for in terms of confirmatory

00:19:58.560 | proof on LK 99.

00:20:00.080 | The first is does this material float like a superconductor over a magnetic field?

00:20:04.000 | Because remember, superconductors perfectly expel magnetic fields, they are diamagnets

00:20:08.640 | to the absolute degree, they perfectly reflect all magnetic fields.

00:20:13.120 | So if you put a superconducting material above a magnetic field, it should kind of

00:20:16.800 | float freely and spin around and stuff.

00:20:18.960 | If it orients back to one position, it probably means that there's something going on, where

00:20:23.680 | it's maybe not a perfect superconductor.

00:20:25.920 | Now all these videos, the second thing you're going to look for zero resistance.

00:20:28.800 | So can you actually pass an electric charge through it and have no resistance in the material?

00:20:33.200 | So you're seeing data coming out now that's indicating we're seeing that we're seeing

00:20:37.040 | it at a low temperature, no one's yet replicated this at room temperature.

00:20:40.640 | And the third thing is a transition, which means that there's a point where it shifts,

00:20:45.040 | because that's a classic characteristic of superconducting materials that there's a

00:20:49.120 | transition temperature transition phase, where the material becomes superconducting, or it's

00:20:53.040 | not superconducting.

00:20:53.920 | So those kind of generally those three experimental proof points are what everyone's looking for.

00:20:59.440 | Thus far, the videos we've seen look like UFO or Bigfoot videos.

00:21:03.760 | They're friggin grainy.

00:21:05.120 | They're like, you know, you guys have seen some of these videos that have come out.

00:21:07.840 | They're like at a distance.

00:21:09.440 | It's like, wait, why didn't you do the whole angle?

00:21:10.960 | Why did you only take a picture?

00:21:12.160 | Why didn't you do the video?

00:21:13.120 | There's this woman in Russia, who's now in UFO territory, people are looking at me super

00:21:19.760 | like there's a raw, there's a little flake of here's a video of a little flake of a material

00:21:24.720 | that someone supposedly made in the lab, or it could be right, they put it over the super

00:21:30.000 | over a very strong magnet.

00:21:31.360 | And this is the video they got.

00:21:32.320 | It's super blurry.

00:21:33.680 | There's a woman in Russia, and she totally reinvented the manufacturing process.

00:21:38.000 | She's actually well known scientists.

00:21:39.280 | So she's not BS.

00:21:40.480 | And she said, I made this thing in my house using a furnace and I use the whole new process.

00:21:44.720 | So she does this whole new process.

00:21:46.000 | She live streams the whole thing.

00:21:47.200 | And then she puts out a video of the thing floating in a straw.

00:21:51.280 | It's a sorry, a video photo.

00:21:52.800 | And it's a blurry photo.

00:21:54.000 | And people are like, show us the video show us that it's real.

00:21:56.640 | And she's refusing to.

00:21:57.920 | So this whole thing is feeling a little like there's UFO Bigfoot type people out there

00:22:01.920 | that we're not really seeing clarity on is this real.

00:22:04.320 | And then obviously the resistance data, there's very credible academic universities coming out.

00:22:08.800 | And I will also say there are a number of labs, there's one in China, and the one in

00:22:12.240 | China that measured the zero resistance at negative 100 degrees, they created 8000 samples.

00:22:19.840 | So they found one that worked.

00:22:21.200 | There's another lab that did eight different pathways of manufacturing it in China.

00:22:25.120 | And they said, we can't find any that work yet.

00:22:27.120 | So you know, there's a lot of negative indications as well, which is why the prediction markets

00:22:32.560 | are probably right.

00:22:33.440 | But I do think that this theoretical explanation that you have to get the copper atom to replace

00:22:39.280 | the correct lead atom in the crystal structure explains a lot of the heterogeneity and results

00:22:44.720 | and the reason why people may not be able to replicate this.

00:22:46.800 | And if someone could crack the code on how do we actually engineer this thing and produce

00:22:50.560 | it correctly, based on the theory, maybe we'll see different better results.

00:22:54.720 | But again, that's also theoretical, because no one seems to have nailed the manufacturing

00:22:58.160 | process here.

00:22:59.280 | So lots of data coming in every day, by next week, we could be clapping and, you know,

00:23:03.600 | cheering.

00:23:04.100 | Or, you know, we could sort of be on this very long grind, sort of like Russia, Ukraine,

00:23:09.520 | just a long grind.

00:23:11.120 | And it's a it'll last years.

00:23:12.960 | And maybe someone will win, maybe someone won't, or maybe it just opens up a whole new

00:23:16.640 | set of explorations for new superconducting materials at room temperature that could change

00:23:20.480 | the world.

00:23:21.200 | I gotta say the thing I love most about this is like, we have this Oppenheimer film comes

00:23:25.600 | out.

00:23:26.240 | And at the same time, this happens, we got UFO testimonials, you know, in congressional

00:23:33.040 | hearings, all of this energy at the same time, of people who are just really stoked to do

00:23:38.160 | material science to do basic science to figure out big problems.

00:23:42.160 | And I agree with you, the optimism around all this is, is, I mean, how fantastic else,

00:23:49.040 | tell me something else in our lifetime in our in the last decade or two, where we've

00:23:53.360 | seen the whole world, say, in a positive way, something great could happen, instead of something

00:23:59.200 | bad could happen, and someone's to blame for something.

00:24:01.280 | I mean, it really is, in my mind, the first time I've really seen this happen in a very

00:24:05.120 | long time.

00:24:05.680 | Maybe the internet was a was a great moment came to me.

00:24:09.840 | Yeah, everybody being connected, everybody being able to share information, free access

00:24:14.640 | to information on Twitter and Billy Billy and YouTube and like all sharing this stuff.

00:24:18.960 | And saying, my gosh, we could have this breakthrough together as a, as a civil as a species, not

00:24:24.240 | like a country, not a individual, not a who messed up who did something wrong, who's to

00:24:29.760 | blame who's on the other side.

00:24:30.880 | It's like, dude, if we all do if this happens, we're all going to be like, chilling on the

00:24:35.440 | beach, it's gonna be amazing.

00:24:36.400 | Like, this is awesome.

00:24:37.120 | So we're gonna have, we're gonna have a rash of VCs running into this next.

00:24:42.400 | And start funding material science.

00:24:46.640 | Yeah, I mean, my attitude is kind of like, wake me up when you know, it's real.

00:24:50.160 | Because it's nice that if this is real, then it's great that there's all this positive

00:24:59.200 | energy around it.

00:24:59.840 | But that's like a big caveat.

00:25:01.760 | Until we know that there's something real here.

00:25:04.960 | I think it's premature for everybody to say that this is like some wonderful thing.

00:25:09.600 | Now, if we find out that the science is real, and then it's just a debate over commercialization

00:25:14.080 | of it, then yeah, I agree.

00:25:15.360 | That would be like a really positive moment.

00:25:17.200 | I just love the fact that when something positive in the world happens, or when something negative

00:25:20.560 | happens, we have this amazing platform for everybody, social media, x.com, formerly Twitter,

00:25:25.200 | where everybody can get together around this campfire and just start discussing it and

00:25:29.520 | speculating.

00:25:30.160 | Now, some people don't like speculation.

00:25:31.840 | Obviously, if there's a school shooting or a tragedy, a building burns down, the fog

00:25:36.880 | of war, as we've seen, in the constant Ukraine coverage, you know, you can have, it's very

00:25:43.440 | easy to make mistakes.

00:25:44.560 | You're hashing this stuff in real time, but I love the real time nature of the world and

00:25:49.440 | the pace we're moving at.

00:25:50.480 | It's kind of delightful to me.

00:25:51.600 | I don't have a problem with the speculation and there is a fun element to it.

00:25:55.280 | But when you start talking about investing in it, like I said, wake me up when you know

00:26:00.400 | it's real.

00:26:00.800 | There's a really funny meme that VC Braggs posted.

00:26:04.240 | Oh, VC Braggs, shout out VC Braggs.

00:26:06.880 | This is good.

00:26:08.720 | This is a famous meme of a kid drowning.

00:26:12.160 | That's so good.

00:26:13.040 | While the mom is playing with another kid and not paying attention to the drowning kid,

00:26:18.000 | it's sort of like the guy who's holding hands with his girlfriend, but looking over

00:26:22.480 | his shoulder and whistling at the other woman.

00:26:24.880 | And Superconductors is the happy little kid.

00:26:28.560 | VCs is the mom and Generative AI is drowning.

00:26:31.760 | But then they show in the underwater, yeah, somebody who's tied to a chair with chains

00:26:36.480 | of skeletons.

00:26:36.960 | The last hype cycle.

00:26:38.000 | The last hype cycle, creator of Codemy Crypto M3.

00:26:40.880 | Yeah, it's pretty funny.

00:26:41.920 | It's pretty, I will say, I told you about this when we were in Italy last week.

00:26:46.800 | But when I was 13 years old, J. Cal can make fun of me now.

00:26:50.080 | I did a science fair project on Superconductors.

00:26:52.320 | Actually, I was doing it when I was 13.

00:26:54.720 | And I bought this superconductor from the back of Popular Science magazine.

00:26:58.320 | You know, this old yttrium barium copper oxide.

00:27:00.480 | That was the one that won the Nobel Prize.

00:27:01.840 | You could buy it for nothing.

00:27:03.280 | And I got liquid nitrogen at UCLA and I did a demo at the science fair and I did a poster

00:27:07.040 | board and I had hyper card on a Macintosh LC.

00:27:10.240 | And I showed everyone, this is the future.

00:27:12.800 | We're about to have room temperature superconductors.

00:27:14.720 | It's about to happen.

00:27:16.080 | And we're going to have flying cars and we're going to have limitless energy and limitless

00:27:20.160 | battery storage for energy, by the way, which is one of the big applications.

00:27:23.040 | And it's just on the brink.

00:27:26.160 | And this was when I was 13 years old, 1993.

00:27:28.640 | You know, here we are 30 years old, 30 years later.

00:27:31.520 | And everyone feels like this moment might be upon us.

00:27:35.680 | But it has been this thing that's always been elusive, that everyone's always thought is

00:27:38.960 | around the corner.

00:27:39.760 | Well, it sounds like cold fusion.

00:27:41.280 | You know, we've always been 10 years away for some breakthrough in cold fusion, self-driving

00:27:45.440 | cars, artificial general intelligence.

00:27:48.800 | Well, I think there's a difference between this physical world, material sciences type

00:27:53.600 | innovation and then software innovation.

00:27:55.600 | And one of Peter Thiel's critiques is that we've had tremendous innovation in software,

00:28:01.520 | but in every other aspect of the economy, there's been little to no innovation.

00:28:06.320 | Planes, for example, are getting slower, not faster.

00:28:08.720 | Would you believe that position from from him?

00:28:11.200 | I don't buy that.

00:28:12.320 | Well, I mean, with the exception of like what Elon has been doing with the genomic revolution,

00:28:19.040 | he misses life sciences entirely in that point.

00:28:21.600 | I don't know.

00:28:22.080 | I mean, genomics is largely software based at this point.

00:28:25.120 | If you look at the whole revolution driven by gene editing, oncology, the breakthroughs,

00:28:30.160 | I mean, look, it's all slowing down.

00:28:31.520 | I do agree with him.

00:28:32.640 | If you look at the number of approved drugs every year and the cost per drug cost per

00:28:37.520 | drug is going in the wrong direction and the number of drugs per year is going in the wrong

00:28:41.840 | direction.

00:28:42.320 | So there is an argument to be made there.

00:28:45.440 | But there are arguably some quantum leaps in the types of medicine that we're applying.

00:28:49.920 | We didn't have biologics, you know, 40 years ago.

00:28:52.720 | We didn't have gene therapy 10 years ago.

00:28:55.200 | These are new modalities for therapies that didn't exist as we've engineered the molecular

00:28:59.760 | world to do amazing things in the biochemical application space.

00:29:03.040 | So I think there's elements of this that I disagree with.

00:29:06.000 | But I think the general trend lines, as he points out, is totally true.

00:29:09.040 | Yeah, but with planes, I think we've made a conscious decision.

00:29:11.920 | He always cites the plane issue.

00:29:13.200 | Hey, we don't have the Concorde, we're going backwards in terms of speed.

00:29:15.920 | I think that was a deliberate

00:29:17.280 | cost cutting measure because people aren't willing to pay to go faster and burn more

00:29:23.760 | fuel.

00:29:24.000 | So they're making an economic decision on that.

00:29:26.080 | The price gets cheaper.

00:29:27.440 | That's right.

00:29:28.240 | That's right.

00:29:28.880 | Same with electricity.

00:29:29.600 | Same with energy.

00:29:30.160 | Electricity is getting more expensive, not cheaper.

00:29:33.600 | But if you look at the massive, if we wouldn't have the massive gains in artificial intelligence

00:29:38.800 | and machine learning, if it hadn't been for the revolution in GPU storage, and data centers and

00:29:44.160 | microprocessors and the iPhone.

00:29:47.680 | But that's kind of the point is that we were promised flying cars and instead we got 280

00:29:51.760 | characters.

00:29:52.480 | Not that Twitter slash X is bad, but that's just where all the innovation has been is in IT.

00:29:57.360 | That I agree with.

00:29:58.160 | So they figure it out.

00:29:58.880 | They keep figuring out how to put more circuits on a transistor or whatever and, you know,

00:30:03.120 | keep Moore's law going or I could show you over the years, but I could make a different

00:30:07.600 | argument by showing you human lifespan and agricultural yields.

00:30:11.280 | I mean, agricultural yields continue to climb because of our ability to engineer in a smarter

00:30:16.080 | and better way.

00:30:16.720 | Every generation there, there's a lot of counter arguments to that.

00:30:20.720 | I would say what's valid about it is we go ahead, Shama.

00:30:23.680 | I was going to say the reason we don't see these kinds of innovations is because the

00:30:28.560 | ruling class has clogged up and sclerotically dominated all the places where you'd have

00:30:33.360 | this massive forms of innovation, like regular regularity.

00:30:37.360 | No, no, no, no, no, no.

00:30:39.680 | That's like I'm talking about.

00:30:40.640 | That's like a boogeyman.

00:30:42.880 | So get the boogeyman out.

00:30:44.320 | The regulatory captures there forever.

00:30:46.160 | Like, why was this paper published on artisan?

00:30:49.120 | Because every other form of publishing mechanism is sclerotic.

00:30:53.760 | It's establishment.

00:30:54.960 | It's hierarchical.

00:30:56.240 | It's about people basically dominating their own little forms of payola.

00:31:00.320 | Right.

00:31:00.640 | And so nature, JAMA, all of this stuff works this way.

00:31:04.160 | And so what happens?

00:31:05.120 | You don't get fundamental innovations that happen in labs.

00:31:07.520 | You have things that feed research proposals that feed people who need to basically establish

00:31:14.800 | their supremacy.

00:31:15.520 | You saw the Stanford professor get booted up because of stuff that, you know, he the president

00:31:20.080 | of Stanford, the president said, so why is all this happening?

00:31:23.360 | Well, Peter is right.

00:31:24.400 | The reason why this stuff is happening is that instead of places where true fundamental

00:31:27.680 | innovation can happen, if you look at the Nobel Prize winners and you do distribution

00:31:31.520 | by age, what do you find?

00:31:32.800 | People win Nobels in their 60s for work that they did in their 20s and 30s.

00:31:37.680 | Right.

00:31:38.640 | And so you have a system now that rewards people staying in their positions.

00:31:43.360 | I wrote this in one of my annual letters.

00:31:46.160 | If you look at the average age of like leading people in schools, they're like 70 years old.

00:31:51.600 | If you look inside of Congress, so there's all of this stuff that just kind of sclerotically

00:31:56.720 | prevents young, naive people from basically going out and really pushing the boundaries

00:32:02.000 | in specifically this case of science, of fundamental science.

00:32:05.120 | And so for every innovation, I think the question to ask is what other innovations are we missing?

00:32:10.080 | And if innovations are on a fundamentally well-established pathway that defends a bunch

00:32:16.880 | of work of senior people before it, it'll get supported.

00:32:19.840 | And I would say that genetics is a perfect example of that.

00:32:22.720 | The other thing,

00:32:23.920 | If you look at the, if you look at the number of rare diseases that have still that are

00:32:27.440 | still like unsolved or the lack of understanding of immuno disease, it's just crazy.

00:32:31.760 | Like it's, I just think that that's really what's happening.

00:32:34.480 | I think Peter's more right than he's wrong.

00:32:36.080 | The other issue here, Saxe is, and I'd like to get your feedback on this is if you look

00:32:40.320 | at how venture capital works, you got a 10 year window, you want to get returns for your

00:32:44.880 | LPs, you look at how this fundamental research, we just said this started in 1999, that's

00:32:50.000 | why it's called dash 99.

00:32:51.840 | This thing took 25 years to get to this point is part of this issue that you have this big

00:32:58.560 | opportunity zone between say ventures window 10 years, and then academia, which you put

00:33:05.440 | at like four decades there, Chumaf, 20 year olds getting their rewards in their 60s.

00:33:10.400 | How much of this has to do with, we don't have a platform in between venture

00:33:14.880 | and academia.

00:33:15.760 | That's not the problem.

00:33:16.480 | So it's true that VC funding, typically you want to go to the commercialization of an

00:33:24.080 | idea and that the underlying platform shift already exists.

00:33:28.320 | And usually that comes from some sort of breakthrough that happened in academia.

00:33:32.160 | I mean, that's basically what happened with the internet.

00:33:33.920 | So yeah, you do not want VC funding typically going to basic R and D, fundamental science

00:33:41.920 | R and D.

00:33:42.560 | It's just really expensive, takes too long and too unknown.

00:33:46.240 | So you want that stuff kind of done more at the academic level.

00:33:49.520 | The question I have is how much of what's happening in academia is basically either

00:33:55.200 | irrelevant or fraudulent.

00:33:56.640 | So Chumaf, you brought up the Stanford president.

00:33:59.120 | I think the story there is he had five papers about Alzheimer's research and related topics

00:34:06.000 | like that, where they found out that the papers are basically bogus and quasi fraudulent.

00:34:12.560 | So how much of the work that's being done in academia, how many of these papers are

00:34:17.280 | basically bogus?

00:34:19.040 | Well, the thing with peer review is like, it's presented like it's a great, incredible

00:34:23.040 | solution to the world's problems, but I think what it has inherently wrong with it.

00:34:27.600 | So the positive part of it is theoretically you have error correction, right?

00:34:32.320 | But here, what you don't find is that that error correction actually even happened.

00:34:36.160 | And so it takes like some young 20 year old kid at Stanford who's a journalist, whose

00:34:40.560 | family were journalists to basically figure that out.

00:34:42.960 | So instead, what were those journals?

00:34:44.800 | What were those papers doing?

00:34:46.240 | They were supporting a rising up and coming person because they thought that, you know,

00:34:50.400 | he would support them at some point.

00:34:51.840 | This is like the whole corrupt Fauci system at the NIH.

00:34:54.800 | Friedberg, Chumaf and Sachs are presenting academia as corrupt.

00:34:58.720 | Do you agree with that?

00:35:00.160 | I don't know if corrupt is the right term, because I think that implies malintent.

00:35:04.240 | I think that the incentives are wrong.

00:35:06.240 | So in order to get funded, you have to show results.

00:35:09.520 | No one gets a grant to disprove someone else's work.

00:35:13.680 | No one gets a grant to do confirmatory work on someone else's work.

00:35:17.680 | You get a grant.

00:35:19.520 | You get it.

00:35:20.000 | Yeah.

00:35:20.240 | I mean, that's that's the argument that some folks make.

00:35:22.880 | You get a grant to do breakthrough research and have breakthroughs.

00:35:26.560 | And if you have breakthroughs, you get more money.

00:35:28.880 | That's the way the system is set up.

00:35:30.480 | But this is why this guy this is why.

00:35:32.480 | Well, let me just say it's corrupt.

00:35:34.160 | I think it's corrupt.

00:35:35.280 | There's no funding for breakthroughs.

00:35:36.960 | Come on.

00:35:37.840 | OK, whatever you want to define it as the guy at Stanford, if you read some of the testimony

00:35:42.560 | from people in his labs, they said that he encouraged people to have big findings.

00:35:47.360 | And if you get big findings, you get to progress in the organization.

00:35:50.560 | You get more funding, et cetera.

00:35:52.560 | So the the incentive structure that he set up for people was not necessarily to go in

00:35:57.040 | and disprove stuff or try something and show that it didn't work.

00:36:00.640 | If you try something and show that it didn't work and publish a paper on that, it's going

00:36:04.880 | to be very hard for you to turn around and get a trophy or get some money or get a grant.

00:36:08.960 | He did.

00:36:09.920 | There was like a bunch of error in the data that they went back and were like, hey, this

00:36:13.120 | is this is incorrect.

00:36:14.160 | And he's like, oh, yeah, it was sloppy.

00:36:16.160 | I just didn't do a good job of reviewing it.

00:36:17.840 | So yeah.

00:36:18.880 | So what happened was, if you read some of the testimony, the people that worked in his

00:36:22.400 | labs, the students and the graduate students and so on, they said that he basically encouraged

00:36:26.960 | people to get good results.

00:36:28.400 | And in that process and in that way, there was some fuzziness in the data or some tweaking

00:36:33.280 | of the data that he didn't double check for sure.

00:36:36.160 | But he was encouraging this sort of system of performance and the system of performance

00:36:41.440 | says you've got to show results.

00:36:43.040 | You can't show non results.

00:36:44.640 | And if you show non results, there's no money.

00:36:46.240 | And the reason they're doing that is marketing.

00:36:48.880 | They want to market and get more attention so they get more donations.

00:36:53.600 | Yeah, exactly.

00:36:54.320 | The problem with with pure research is that you have to get funding to do your research.

00:36:59.040 | Where do you get your funding from?

00:37:00.160 | You get your funding from federal agencies, from nonprofits, from your, you know, your

00:37:05.040 | donors.

00:37:05.920 | And so in order to get that money, you have to say, here's what I'm going to do.

00:37:09.280 | Here's not what here's, you don't say I'm going to go not prove something.

00:37:12.480 | You say I'm going to go prove something.

00:37:13.760 | You're hiding the cheese.

00:37:15.840 | Can you stop hiding the cheese?

00:37:16.960 | That's not what these people are saying.

00:37:18.240 | These people aren't saying I'm not going to not prove this.

00:37:20.160 | These like most of these people are working on very thin incremental extensions of work

00:37:26.720 | that's already been done, because it allows them a more defined path to get tenureship

00:37:33.120 | to be a well respected professor to work through the hierarchy of a university.

00:37:36.720 | That's what's happening today.

00:37:37.920 | And the reason why that stuff gets funded is that those are the same people that are

00:37:42.160 | in charge of the funding infrastructure at NIH and all these other places.

00:37:45.520 | What we don't have is something that says, go and write the most ambitious proposals,

00:37:51.520 | and I'm going to go fund it.

00:37:52.560 | I think both things are true.

00:37:53.760 | I'm sorry.

00:37:54.320 | There's no market mechanism.

00:37:55.840 | I'll just say both things are true, because what you're saying, Chamath, is a point of

00:38:00.080 | failure.

00:38:00.880 | If you say I'm going to go try something crazy, like do a search for a room temperature

00:38:04.960 | superconductor using lead crystals, you're not going to get funding for that.

00:38:08.720 | It's too out there.

00:38:10.000 | I mean, you guys today are talking about how low probability stuff isn't that interesting.

00:38:13.760 | I'm not going to fund it until it's real.

00:38:15.520 | And so when things are real, you have some molecule that has some effect on cancer cells,

00:38:20.240 | then you get funding to make that molecule go to the next phase or go to the next stage.

00:38:24.960 | That is more fundable than the outlandish crazy thing where the probability of it going

00:38:28.880 | to zero is 99%.

00:38:30.000 | You could throw Elizabeth Holmes into that, right?

00:38:32.560 | I mean, she came up with this absurd idea that she could do 200 tests on one drop of

00:38:36.800 | blood, and they left her out of campus.

00:38:39.360 | That was just a statement about engineering that wasn't ready.

00:38:41.840 | And what another company just got funded to do the same thing that Theranos promises going

00:38:45.680 | to do.

00:38:46.320 | Yeah, you see this, but I did not say that.

00:38:48.880 | Yeah, I mean, some pretty good VCs invested in actually, and they especially said, we

00:38:54.320 | know this is the same idea as Theranos.

00:38:55.920 | But for that very reason, we think it's very unlikely to be fraud because it's being held

00:38:59.760 | to such a high standard of scrutiny.

00:39:01.600 | I want you guys to think about this.

00:39:03.200 | I want you guys to think about this as VCs.

00:39:05.120 | An entrepreneur comes to you.

00:39:07.440 | And the entrepreneur, she says, I've done this thing.

00:39:09.840 | I did this thing.

00:39:10.480 | I did this thing.

00:39:11.040 | I did this thing.

00:39:11.440 | I did this thing, five different things, none of them work.

00:39:13.360 | I want to have money to do this next thing.

00:39:15.760 | You're less likely to fund that person than the entrepreneur that shows up and says, this

00:39:20.160 | first thing I did work.

00:39:21.120 | The second thing I did work, the third startup I did work.

00:39:23.520 | They weren't home runs, but they were amazing.

00:39:26.480 | And I had good results.

00:39:27.440 | That's basically what happens in, you know, the scientific research is you've got to get

00:39:32.400 | something that's fundable.

00:39:33.760 | And often that means not doing something that's likely to go to zero.

00:39:37.120 | And that's where the incrementalism comes in, Chamath, is that orientation, I think.

00:39:40.400 | I hate to give my playbook, but one of the great successes I've had is finding people

00:39:44.720 | who got their asses kicked on the last two companies, talking to them about why they

00:39:48.720 | got their asses kicked, and then how they're going to avoid getting their asses handed

00:39:52.560 | to them with this third company.

00:39:53.840 | Then if you look at Travis with Uber, he did Scour, got, you know, sued for a quarter trillion

00:39:59.680 | dollars.

00:40:00.320 | He did Red Swoosh.

00:40:01.760 | He got like a $30 million exit.

00:40:04.000 | And then he did Uber, right?

00:40:04.960 | He, his first two companies were very hard.

00:40:07.200 | Steve Jervison and Future Ventures, he took his venture fund and he told the LPs, it's

00:40:11.760 | a 15 year term, not 10.

00:40:13.520 | So he specifically is trying to do a little bit of a longer window.

00:40:17.840 | I think that is actually a possible solution here.

00:40:20.080 | I think smart, independent thinkers find ways to make money.

00:40:22.800 | I've been looking at this superconductor space for the last two years.

00:40:28.080 | And so it's not like people are shy and have money and aren't willing to write the checks.

00:40:32.960 | I just don't think that's what it is.

00:40:34.560 | The body of work that's coming out of academic institutions today for the amount of money

00:40:38.480 | that's put in is modest.

00:40:40.240 | And I think that's the best way to describe it.

00:40:41.920 | It's the fairest way.

00:40:43.040 | And the reason it's modest is not because of the intellectual capacity of the people.

00:40:47.120 | It's because of the incentives and the hierarchy and the establishment elitist politics that

00:40:54.240 | infuses how these organizations are run.

00:40:56.800 | And I think the only way to break that apart is to basically disrupt who is in charge of

00:41:03.200 | these institutions.

00:41:04.000 | Nick, just throw up this chart.

00:41:05.120 | These are people that for decades and decades and decades are in a grind and who are now

00:41:13.600 | in control.

00:41:14.640 | And so what is the incentive of these folks to change?

00:41:18.480 | Explain the chart.

00:41:19.520 | Yeah, what is this?

00:41:20.400 | This is a chart that I put together, which is just the generational distribution of academic

00:41:24.320 | leadership across all the leading research institutions in America.

00:41:27.280 | Okay?

00:41:28.800 | Well, isn't Fauci a prime example of this?

00:41:31.360 | This is the birth year?

00:41:32.560 | No, listen, you had the most important person, hold on a second, the most important person

00:41:37.360 | probably in the federal distribution of grants in the medical field was Fauci, right?

00:41:42.800 | He literally was running the NIH since the 1980s.

00:41:45.760 | He's been there for 40-something years.

00:41:48.560 | And the mask was peeled away during COVID.

00:41:50.960 | And we saw how much power he wielded, really, I think, in a corrupt way.

00:41:55.120 | Jason used the word corrupt.

00:41:56.640 | You had that letter to the Lancet that he got a whole bunch of scientists to sign that

00:42:02.720 | claimed that COVID was not made in a lab, that was a conspiracy theory, that the only

00:42:08.480 | place it could have come from was the sort of the zoonotic leap naturally occurring from

00:42:14.160 | animals.

00:42:14.960 | We know that he used his power over grants to basically pressure those people into signing

00:42:20.320 | the letter, or they thought it would be in their interest to do so.

00:42:24.240 | Even though Fauci had already been updated by a bunch of scientists that it likely had

00:42:28.800 | come from a lab, they could just look under a microscope and see it appearing in Cleveland

00:42:32.720 | sites, which are the telltale sign.

00:42:35.200 | So, they knew that this thing likely came from a lab.

00:42:38.000 | There was no basis for calling it a conspiracy theory, certainly.

00:42:42.000 | And yet, the whole field got behind that.

00:42:44.480 | But Sax, did you see the Slack messages where they were trying to manipulate the New York

00:42:48.800 | Times science writer?

00:42:50.240 | I mean, they basically...

00:42:51.440 | But the question you have to ask is why were all these scientists willing to go along with

00:42:54.480 | this and sign that letter to the Lancet?

00:42:56.480 | Because these guys have been grinding for 40 or 50 years in a hierarchy.

00:43:00.320 | And so, to all of a sudden, put a pin in it and just say, you know what, I'm going to

00:43:03.840 | dispense with all of it.

00:43:05.360 | And now I'm going to basically like be completely open minded.

00:43:08.240 | How likely was that?

00:43:09.120 | The odds of that were very low.

00:43:10.640 | Look, look at the number of people who have basically grown up in one segment of society

00:43:17.360 | that are sclerotically in charge of every single leading research university in the

00:43:21.600 | United States.

00:43:22.640 | That is why we don't have flying cars.

00:43:24.960 | This is why.

00:43:26.640 | Because after 40 years of working in a specific hierarchy, being rewarded in a very specific

00:43:31.520 | way with a very specific set of incentives, when some young, brash, 22-year-old naive

00:43:36.400 | person writes an extremely ambitious research proposal, you're like, no, you will not be

00:43:41.280 | a part of my lab to do that.

00:43:42.480 | But you can do this incremental thing that that further reinforces my leadership in society.

00:43:47.840 | That is what this chart shows.

00:43:50.000 | Yeah, it's also perverse inside of government.

00:43:52.000 | We didn't talk about it, I don't think, last week.

00:43:53.840 | But Mitch McConnell, I don't know how to say it, but I guess he froze while he was

00:43:57.520 | speaking.

00:43:58.000 | And, you know, we got to have an upper age.

00:44:00.400 | Oh, and then the Dianne Feinstein thing.

00:44:02.080 | Remember when she started giving a speech and their staff are whispering, saying, just

00:44:07.280 | say I, you know, and she starts going on this like filibuster.

00:44:12.080 | No, Jason, you're right.

00:44:12.880 | We have a sporadic political system run by octogenarians because the boomers are not

00:44:17.840 | relinquishing political power.

00:44:19.280 | They're fucking retired.

00:44:19.760 | And they're also not relinquishing bureaucratic power.

00:44:22.080 | Can we just pull up this Lancet letter for a second?

00:44:24.480 | They say here, zoom in on this, "The rapid, open, and transparent sharing of data on this

00:44:28.240 | outbreak is now being threatened by rumors and misinformation around its origins.

00:44:34.160 | We stand together to strongly condemn conspiracy theories suggesting that COVID-19 does not

00:44:39.280 | have a natural origin."

00:44:40.960 | How could they say that at that point in time?

00:44:43.280 | All the evidence suggested it was made in a lab.

00:44:46.320 | Now, certainly, I think you could take the other side of that, but to condemn the lab

00:44:50.800 | leak theory as a conspiracy theory, that was corrupt.

00:44:54.160 | I'm not sure that that's corrupt.

00:44:55.280 | You know, what's corrupt is not retracting that and apologizing.

00:44:57.840 | That's where the real corruption is.

00:45:00.480 | We have not gotten our post-mortem on this stuff.

00:45:01.680 | But this Lancet letter was organized.

00:45:03.600 | It was organized.

00:45:04.560 | This is just like the 51 spies who lied, claiming that the Hunter Biden laptop was

00:45:09.040 | disinformation.

00:45:10.320 | This is the establishment willing to use its credentials and respectability and expertise

00:45:18.560 | to sign a letter they know is false to perpetrate a fraud on the American people in order to

00:45:24.560 | protect the people in charge.

00:45:26.320 | That's the motivation here, because Fauci had funded gain-of-function research in the

00:45:31.040 | Wuhan lab.

00:45:31.760 | I think the same rot that is in some of these leading research institutions and leading

00:45:36.640 | academic institutions and politics, they all share the same commonality, which is we are

00:45:42.960 | sclerotic.

00:45:43.680 | We are in desperate need of a generational shift of power.

00:45:48.000 | And right now, there is no incentive, because at the same time, you know, the people that

00:45:53.280 | are 70 and 80 are thinking to themselves, "Well, I'm probably going to live to 100.

00:45:56.320 | What should I do for the next 20 years?"

00:45:58.240 | Being in power is pretty good.

00:45:59.600 | Right?

00:46:01.120 | So we're in this weird clash.

00:46:03.840 | I was thinking a lot about the fiscal spending problem in the US, and we should talk about

00:46:09.200 | the Fitch rating downgrade that happened this week.

00:46:11.040 | I've got some data I'd like to share.

00:46:13.280 | One thing I was thinking about was how tied the age of Congress is to our fiscal spending

00:46:20.240 | problem.

00:46:21.040 | If you think about someone who's young, they're going to want to invest for their future and

00:46:26.000 | think about the future.

00:46:26.960 | If you're someone who's old, you live for the day, and you don't think about the future.

00:46:32.080 | And I worry so much that the aging of the establishment that makes the decisions about

00:46:37.440 | how money is spent creates a psychological barrier or positioning that's all about giving

00:46:43.760 | away all the money today instead of making the right decision to make sure that we have

00:46:48.880 | a prosperous tomorrow.

00:46:50.160 | And that's why I think so many of these things kind of slip through.

00:46:55.360 | If you put a 20-year-old in charge that was well-informed in charge of some of the fiscal

00:47:00.960 | policy, environmental policy, energy policy decisions, defense policy, it would be a very

00:47:06.480 | different set of decision making than someone who's in their 80s.

00:47:09.760 | Inheritance tax.

00:47:10.720 | Yeah, yeah.

00:47:12.560 | I mean, so anyway, we should talk about you want to talk about the Fitch downgrade because

00:47:15.520 | I think it's a really important story this week.

00:47:17.680 | Fitch, the rating agency downgraded the US's long term debt by one notch from AAA to AA+.

00:47:26.800 | Only nine countries have AAA ratings from the top three rating agencies, S&P, Global,

00:47:31.360 | Fitch, and Moody's.

00:47:32.480 | Those are Germany, Denmark, Netherlands, Sweden, Norway, Switzerland, Luxembourg,

00:47:37.120 | Singapore, and Australia.

00:47:38.000 | What you can take from that is you got to have a good balance sheet and you have to

00:47:41.520 | have high functioning governments.

00:47:43.920 | The highest functioning governments in the world are the Nordics.

00:47:47.600 | That's why you see Denmark, Netherlands, Sweden, Norway there.

00:47:50.240 | According to NPR, the negative reaction hasn't been as strong as 2011.

00:47:55.120 | That was the first time the US was downgraded from AAA to AA+ by the S&P.

00:48:00.000 | That also had to do with the debt ceiling.

00:48:01.840 | The markets kind of shrugged off, largely shrugged off the Fitch downgrade.

00:48:05.760 | Main reasons for the downgrade is obviously higher interest rates, aging population,

00:48:12.560 | the debt to GDP ratio, which we've talked about here.

00:48:15.280 | But government kept coming up over and over again and how dysfunctional our government

00:48:21.120 | is and the debt ceiling is one of the key manifestations of that.

00:48:25.360 | Your thoughts on this?

00:48:27.200 | For the first half of the show, Freeberg, you're an optimist, but are you now going

00:48:32.960 | to switch to declinist?

00:48:34.640 | I wouldn't say declinist.

00:48:35.840 | Are you going to switch to declinist mode now or are you still in optimist mode?

00:48:39.440 | I mean, in Jekyll's view, unless you're a cheerleader for every stupid government policy,

00:48:44.000 | you're a declinist.

00:48:45.280 | I know.

00:48:46.320 | Jekyll, listen, I want to be honest.

00:48:50.320 | I don't think so.

00:48:51.120 | I think he, like, and I concur, I think you can highlight that there are concerns with

00:48:57.280 | US fiscal policy that are putting us in decline in our spending spiral with the US currency

00:49:03.920 | reserves, which there are now diversification efforts underway, and I'll talk about this

00:49:07.120 | in one second.

00:49:07.760 | And that doesn't mean that the US isn't the most exceptional place to do engineering

00:49:12.720 | and entrepreneurism and have freedom of speech and thought and so on.

00:49:16.320 | But there are elements of the US that put things at risk.

00:49:18.560 | So let me just point out these two charts.

00:49:20.240 | If you guys pull the first one up, this is a pretty striking chart, and I think I showed

00:49:24.160 | this before.

00:49:24.880 | This is federal government interest payments that are being made.

00:49:27.920 | We're now up to, you know, a trillion dollars.

00:49:30.560 | The chart, as you can see, a year, has spiked.

00:49:33.760 | And by the way, that number is spiking further, and we'll talk about this in one second, as

00:49:37.280 | a result of rising interest rates and increased fiscal spending.

00:49:40.400 | So this is now becoming a pretty sizable part of our budget.

00:49:42.880 | And as of now, paying the interest on our debt is a larger capital outlay for the federal

00:49:48.560 | government than defense spending.

00:49:49.840 | The second chart shows what happened in the last week, which is that 30 year treasuries

00:49:54.160 | have been sold off.

00:49:55.440 | And as that's happened, treasury yields have climbed.

00:49:57.920 | So there's been about a 10% decline in pricing and, you know, concurrent, nearly 10% increase.

00:50:03.520 | And Bill Ackman, you know, basically said today that he's shorting 30 year treasuries,

00:50:07.520 | he thinks we're going to go to 5.5% long term rates.

00:50:10.640 | Currently, the 30 year treasury sitting at 4.3.

00:50:12.960 | And remember, I told you guys this after this thing I went to a few weeks ago, that there

00:50:18.560 | were two prominent economists who shared that they think we're going to be facing long term

00:50:23.440 | rates in the 5 to 7% range, very long term rates for a very long period of time, that

00:50:28.320 | it is a new fiscal regime.

00:50:30.400 | And then if you pull up the last link I sent Nick, this is a report made by the Treasury

00:50:35.840 | Borrowing Advisory Committee of the Treasury Department.

00:50:39.120 | And I just want to read a couple of quotes from this report.

00:50:41.360 | This just came out today, and it was published, it was sent over to the Secretary of the Treasury

00:50:45.440 | yesterday.

00:50:46.240 | And it said since the advisory committee convened in May, two year treasury yields are about

00:50:51.280 | 100 basis points higher, while 10 year treasuries have increased by about 40 basis points.

00:50:54.800 | The bank holdings of non mortgage backed government securities, mainly treasuries, have actually

00:51:00.480 | declined by 146 billion so far this year.

00:51:04.000 | That means banks are selling off their treasuries.

00:51:06.160 | The committee goes on to say at the same time, treasury investors have noted the treasury

00:51:10.480 | supply will need to increase to address the rise in public deficits, as tax revenues have

00:51:16.000 | come in weaker, and government spending has increased.

00:51:18.880 | Issuance needs will be additionally impacted by the timing of a recession, so on.

00:51:22.720 | Then they said, based on the marketable borrowing estimates published on July 31st, treasury,

00:51:27.680 | this is crazy, treasury currently expects privately held net borrowing of

00:51:33.680 | $1.007 trillion in this quarter, with an assumed end of September cash balance of 650.

00:51:41.120 | And then they said we expect another $852 billion of borrowing next quarter.

00:51:47.520 | That means treasury is going to try and issue and sell $2 trillion worth of treasury bonds

00:51:53.440 | in the next two quarters.

00:51:55.440 | That's $2 trillion of new borrowing by the federal government to pay our bills.

00:52:00.160 | At the start of the year, they were estimating $1.6 trillion for the year, which was an insane

00:52:04.240 | number.

00:52:04.800 | Now we're talking about $2 trillion in just two quarters.

00:52:06.880 | So rates are climbing.

00:52:09.120 | As a result, we need to borrow more.

00:52:11.040 | And this is a perfect manifestation of the debt spiral problem that we've talked about

00:52:15.200 | multiple times.

00:52:16.400 | Our fiscal spending outlay and the rising interest rates combine to create an insurmountable

00:52:22.320 | debt spiral that is now manifesting in the fact that we need to sell $2 trillion of treasuries.

00:52:28.800 | And here's the crazy statistic that they said.

00:52:30.880 | In reviewing recent demand for US treasuries in auctions, the committee noted that an increasing

00:52:36.880 | percentage of supply is being absorbed by investment funds, while foreign participation

00:52:41.120 | has remained range bound.

00:52:42.240 | That means as we're trying to sell more treasuries, foreign governments are buying fewer of them,

00:52:46.800 | which means that the US currency as a reserve is no longer the place that everyone wants

00:52:50.960 | to plow their money as much as it used to be.

00:52:52.960 | It is in decline.

00:52:54.960 | Now, the other thing I want to share, which I think is absolutely critical, is how do

00:53:00.080 | we address this gap?

00:53:01.440 | Well, the one way is these entitlement programs.

00:53:03.600 | And so several Republican presidential candidates, Nikki Haley, Ron DeSantis, and Mike Pence,

00:53:08.480 | have all publicly stated on the campaign trail that they're promoting programs to cut Social

00:53:14.320 | Security benefits for people that are 30 and 40 years old.

00:53:17.920 | And here's the response to that.

00:53:19.680 | So they've gone out and they've started saying that.

00:53:23.760 | A poll was done.

00:53:25.040 | And on that poll, 82% of voters opposed the push to cut Social Security for Americans

00:53:32.400 | under 50.

00:53:33.120 | 82%.

00:53:33.680 | So where is this going to take us?

00:53:36.640 | This is what is so scary to me, J. Cal.

00:53:38.800 | I'm not an American declinist.

00:53:40.480 | I believe in the American system.

00:53:42.320 | It benefited me and my family.

00:53:44.160 | But I do worry that we find ourselves in a whirlpool that is very hard to get out of

00:53:48.640 | because the populace says we don't want to make the cuts that are necessary in order

00:53:53.040 | for us to save ourselves.

00:53:54.400 | That's what's so scary to me.

00:53:56.000 | And I said it before, I think it's worth saying again, that's it.

00:53:58.240 | I'm done.

00:53:59.520 | It's not a problem with populism.

00:54:00.960 | I mean, the elites are saying it too.

00:54:02.720 | There's no appetite in the DNC to cut or reform Social Security.

00:54:06.640 | Are you kidding?

00:54:07.200 | It's very unpopular.

00:54:08.080 | How do you get elected saying?

00:54:09.440 | I don't know why those Republicans...

00:54:10.480 | How do you get elected saying?

00:54:11.760 | I hadn't seen that article.

00:54:13.280 | I would advise all those campaigns not to touch that rail.

00:54:15.920 | They're going to electrocute themselves.

00:54:17.200 | I think Trump has the right political instincts on this point, which is you cannot touch

00:54:22.720 | Social Security as a single party effort.

00:54:25.760 | It has to be bipartisan.

00:54:27.200 | And there is no bipartisan will to do anything.

00:54:29.200 | So I think you're right about the larger point.

00:54:31.200 | Chamath, your thoughts on Friedberg's manifesto that 80% of the public does not want to cut

00:54:38.560 | spending.

00:54:38.880 | They're in favor of Social Security for people under 50 years old.

00:54:42.560 | And we have a trillion dollars in debt payments.

00:54:44.320 | And we're in a death spiral because we don't have the will.

00:54:46.160 | And we're borrowing $2 trillion.

00:54:47.440 | In 180 days, we're borrowing an extra $2 trillion.

00:54:49.520 | That's the real point.

00:54:50.960 | The fiscal end of days.

00:54:54.080 | At the start of the year, the expectation was they were only going to borrow $1.6 trillion

00:54:59.440 | for the year.

00:55:00.480 | Now we're borrowing $2 trillion and just these two quarters.

00:55:02.640 | Let me just state what I think about the downgrade.

00:55:04.640 | It's irrelevant.

00:55:05.360 | The S&P did it 13 years ago.

00:55:09.120 | Fitch is a marginal credit rating agency.

00:55:12.000 | They're at a minimum 13 years late.

00:55:14.400 | At a maximum, they're just anxiety ridden, like other people are.

00:55:18.320 | We're always screaming that the sky is falling.

00:55:20.640 | So that's my first point.

00:55:21.760 | The second point and the more important one is that none of you who are always freaking

00:55:28.000 | out about this understand this conversation about relativism.

00:55:32.720 | All of these conversations are relative.

00:55:35.040 | They can deal with them in absolutes.

00:55:36.480 | On a relative basis, Japan's debt to GDP is 270% and growing.

00:55:42.080 | On a relative basis, our debt to GDP is half of that.

00:55:44.960 | We are the most important economic force in the world.

00:55:50.800 | It is going to continue to be the most economic force in the world.

00:55:54.080 | All I see actually on every single monetary basis is every other country struggling more

00:55:59.120 | than we are.

00:55:59.680 | So my question to all of the chicken littles is, what do you do if you're a central government

00:56:06.560 | where you have to have foreign reserves?

00:56:09.360 | Do you all of a sudden double down on the euro?

00:56:13.520 | Do you double down on the yuan, which is basically a proxy for doubling down on the US dollar?

00:56:19.280 | What are you supposed to do?

00:56:20.240 | And I never get a good answer because on a relative basis, the US will still continue

00:56:24.160 | to do well.

00:56:24.720 | I think that debt to GDP is a red herring for a lot of people.

00:56:28.880 | And I think that the way that people run their personal lives, which should take income to

00:56:34.400 | debt into consideration, I don't think applies as much to governments.

00:56:38.880 | And I think these things are going to march forward as a group.

00:56:42.000 | There's not going to be a single G8 country that all of a sudden moves away and starts

00:56:47.200 | printing surpluses.

00:56:48.720 | It happened almost as an accident and an aberration during the Clinton administration.

00:56:52.560 | It'll never happen again.

00:56:53.520 | And I think that we shouldn't worry so much, because I just don't see an alternative.

00:56:59.680 | So give me instead of telling me how bad this is, because you think about your own life

00:57:03.680 | and how it would be bad if you had debt to GDP of 100.

00:57:06.320 | I get it.

00:57:06.800 | As a country, give me the alternative country.

00:57:10.320 | But just start with that.

00:57:11.760 | Can you answer that question?

00:57:12.800 | What is the alternative country?

00:57:14.960 | Yeah, where would you put your, your wealth, if not the dollar?

00:57:18.560 | Well, let me paint a scenario that's not as dire as a collapse of the US dollars, the

00:57:25.600 | world's reserve currency.

00:57:26.960 | Okay, so on this Fitch, that's not what I think happens, right?

00:57:30.400 | I think this is just purchasing power goes down.

00:57:32.400 | That's it.

00:57:32.960 | But go ahead, sex relative to who?

00:57:34.640 | Be specific.

00:57:36.320 | Anyone.

00:57:36.720 | But what does that what does that mean relative to anyone?

00:57:39.600 | Let me paint like a non catastrophic scenario or non apocalyptic scenario, which is what

00:57:44.240 | you saw in this Fitch ratings downgrade is that the bond market didn't move at the margins,

00:57:49.760 | there was a sell off in the 10 year.

00:57:51.440 | And as a result, the 10 year bond yield moved up to 4.2%.

00:57:54.800 | So it wasn't a case of everybody shedding all of their US treasuries.

00:58:00.000 | It's just that there were market actors at the margins who adjusted their portfolios.

00:58:05.520 | Okay, now, Freeburg is saying that the Treasury is going to have to do another $2 trillion

00:58:10.080 | bond offering, and we have trillion dollar plus deficits as far as the eye can see.

00:58:14.160 | And we've got entitlement liabilities on the horizon and then a political unwillingness

00:58:19.680 | to do anything about it.

00:58:20.960 | So the deficits are only going to get bigger and bigger.

00:58:23.200 | Now, what does that do?

00:58:24.160 | It's supply and demand.

00:58:25.680 | When the US Treasury needs to keep issuing more and more bonds, at some point, the demand

00:58:30.400 | for those things gets incrementally saturated, and they have to offer a higher yield.

00:58:35.920 | So what happens?

00:58:37.440 | Well, the bond rates go up.

00:58:39.280 | And so the 10 year goes up, like Freeburg was saying, from 4.2% to somewhere in the

00:58:43.760 | 5% to 7% range.

00:58:45.520 | And that doesn't mean that US dollar is not the world's reserve currency.

00:58:48.880 | It just means that it gets incrementally harder and more expensive to keep financing our debt.

00:58:54.320 | Now, what is the result of that?

00:58:55.760 | Well, if I, as an investor, could theoretically get 7% from the US Treasury as the risk free

00:59:02.560 | rate, why would I want to take equity risk and put it in the stock market, which historically

00:59:07.280 | has yielded somewhere in the 5% to 7% range?

00:59:09.440 | So if I can get my 5% to 7% from a risk-free US government bond, of course, I'm going to

00:59:15.280 | do that.

00:59:16.080 | So the discount rate on equities will go up.

00:59:19.120 | That means that the stock market, on a relative basis, will go down.

00:59:23.600 | Risk capital will go down.

00:59:24.640 | There will be less risk capital.

00:59:26.000 | And there'll be way less risk capital available for things like venture capital and private

00:59:30.480 | equity, just risk taking of all kinds.

00:59:32.480 | And so the economy will just grow slower.

00:59:34.960 | It's not like there'll be a collapse.

00:59:36.320 | It'll just be this huge albatross around the neck of the private sector.

00:59:41.280 | And this is called crowding out.

00:59:42.560 | Here's the thing.

00:59:43.920 | May I give a counter here?

00:59:44.880 | I think if you look at the amount of sovereign wealth funds and the investment coming from

00:59:50.000 | around the world into US venture capital, that will keep the venture machine cranking

00:59:55.360 | here in America.

00:59:56.160 | But three charts to just look at here.

00:59:57.840 | Nick, pull up the first one, the 30-year Fed.

01:00:00.080 | So to counter this argument, really, the aberration has been 2010 to 2020 when we had low single

01:00:08.480 | digit mortgages, 3%, 4%.

01:00:10.560 | The majority of our lifetime, it was between 5 and 10.

01:00:13.840 | And if it's 6 up in the 5 to 10 basis, that's what we experienced for most of our life.

01:00:18.640 | And then the second chart, this is the lowest unemployment we've had in our lifetimes.

01:00:23.040 | If you look at the unemployment rate in the United States, 3.6 is unbelievable.

01:00:28.000 | And then combined with it, something we've talked about here for two years that we can't

01:00:30.880 | understand is when do all these jobs burn off?

01:00:33.520 | We peaked during the post-COVID era at about 11 million job openings.

01:00:38.960 | And then we're still over nine.

01:00:41.280 | So there's two or three job openings for every American who wants to work.

01:00:45.760 | And we've shut down the borders largely, even though we have some illegal immigration coming

01:00:49.440 | in.

01:00:50.000 | It has basically shut down the United States to immigration.

01:00:52.640 | It's about a third of what it was before Trump and Biden decided to shut things down.

01:00:57.200 | I don't think we're looking at the same video that I'm seeing.

01:01:00.240 | Yeah, if you're looking at videos, those are very distracting.

01:01:02.320 | I would encourage you to look at the numbers of the actual migration into the country.

01:01:05.840 | It's a third of what it was.

01:01:07.120 | Just seeing what's happening in New York City.

01:01:08.800 | They got lines around the blocks.

01:01:10.400 | You're caught up in clips from the border.

01:01:13.440 | I would just look at the raw numbers, Sax, and the raw numbers show you're already-

01:01:16.000 | How do they know the raw numbers?

01:01:17.120 | Yeah, because we count them.

01:01:19.040 | And we count the immigration.

01:01:19.920 | Well, you have to estimate them because they're illegal.

01:01:22.000 | But they got 7 million in the last two and a half years.

01:01:23.120 | Again, I would much rather look at the numbers and the actual statistics than anecdotal videos

01:01:27.760 | because both sides will manipulate the heck out of them for their own purposes.

01:01:31.360 | But the fact is, America is just crushing it in terms of employment.

01:01:34.800 | And that's why we didn't have this crash landing.

01:01:37.680 | And I think the soft landing is because of employment.

01:01:40.800 | And I'll just end there.

01:01:42.160 | And if we can keep ourselves employed, and everybody from the Middle East to Japan,

01:01:47.280 | to high net worth individuals in Europe are pouring their money into the US venture ecosystem,

01:01:52.400 | I think the setup here is we got to control spending.

01:01:55.200 | As you've said correctly, Friedberg, we get a little bit of control on spending,

01:01:58.560 | hopefully.

01:01:59.120 | And then we are going to have to slowly burn off some of this debt.

01:02:04.240 | We can't live with this kind of debt payments.

01:02:06.640 | Here's a little data for you, Chamath.

01:02:08.400 | This is from Congressional Research Service off of Fed data.

01:02:11.440 | So foreign holdings of US treasuries have declined from 40% to 30% of total treasuries.

01:02:18.000 | 70% of treasuries today are held by domestic investors.

01:02:21.600 | This is the data that was being described in the Treasury Advisory Committee.

01:02:26.800 | The Borrowing Advisory Committee letter that I just said is that they're seeing less demand

01:02:31.120 | from foreign buyers of treasuries.

01:02:32.560 | Now, I can argue, we can argue theoretically about what else are they going to buy?

01:02:35.840 | What else are they doing with their money?

01:02:36.880 | I don't know.

01:02:37.840 | But the data is showing a decline in purchasing intention by foreign buyers of US treasuries.

01:02:44.560 | And we're having to pick up the slack through investment funds held by the US,

01:02:48.080 | mostly pension, mostly retirement funds, I would guess that are buying these treasuries.

01:02:52.400 | That is not what this chart shows.

01:02:54.080 | The chart shows the effect of quantitative easing.

01:02:56.640 | That's what this chart shows.

01:02:57.840 | Because when you're buying treasuries from the market and retiring them,

01:03:01.360 | of course, the percentage of foreign and domestic holdings of publicly held debt is going to go down.

01:03:05.280 | So this last period, explain this x of QE, explain it.

01:03:09.600 | Sorry, I don't understand what you're saying.

01:03:11.120 | This is a measurement of the amount of people that own treasuries.

01:03:15.040 | Is that right?

01:03:15.840 | Domestic versus foreign?

01:03:17.520 | Yeah, so who owns so as of December 22, there was 20.

01:03:21.920 | Domestic holdings.

01:03:23.040 | I'm going to assume because this chart is fucking worthless.

01:03:25.520 | If this if it doesn't assume that the domestic holding the gray bar that adds up to 100

01:03:30.240 | doesn't include the Fed, which it must.

01:03:32.800 | And that is because the Fed has been buying treasuries from the market.

01:03:37.200 | Okay, so just let me just give you the numbers for a second.

01:03:39.280 | And then we can take out.

01:03:41.440 | I'm just looking at the chart.

01:03:42.560 | The chart is a gray bar that says domestic holdings.

01:03:45.360 | I'm gonna give you there's an orange bar that says foreign holdings.

01:03:48.080 | You've had 10 years of the Fed buying treasuries.

01:03:53.280 | I'm going to give you the numbers.

01:03:54.720 | There are $24 trillion of treasuries publicly held treasuries outstanding 7.4 trillion held

01:04:03.200 | in foreign hands, the foreign holding of publicly held debt between December of 18 and December 22

01:04:10.480 | increased from 6.3 trillion to 7.4 trillion.

01:04:13.680 | While other investors increased from 16 trillion to probably 23 trillion.

01:04:18.400 | So you know, it's we're having to pick up the slack investment funds, private investors

01:04:22.480 | are having to pick up the slack because of foreign demand for treasuries lagging at this

01:04:26.720 | point.

01:04:27.280 | That's the point of the chart.

01:04:28.480 | I don't know what I don't know what to tell you.

01:04:29.840 | I think what this chart shows me is that the balance sheet of domestic holdings grows grows

01:04:34.160 | because the Fed has been buying treasuries and in a in a world of Qt.

01:04:37.360 | I suspect that this bar chart will change in the next 10 years.

01:04:41.440 | If you look at the histogram 10 years from now, if you assume the Qt sticks around, so

01:04:45.360 | I don't know you can interpret whatever you want to feed your anxiety, it doesn't change

01:04:49.440 | that there's a relative problem at hand, which is you cannot sell one thing without buying

01:04:54.400 | another.

01:04:54.720 | That's just the way it works in financial markets.

01:04:57.440 | The Federal Reserve during that same time period increase their treasury holdings.

01:05:02.400 | Here's the exact numbers from nine 3.7 trillion to 9.7 trillion.

01:05:06.800 | So they bought 6 trillion of that debt.

01:05:08.400 | I think the fact that we're going to go from quantitative easing to quantitative tightening

01:05:12.080 | over the next decade is another overhang.

01:05:13.840 | But because not the whole thing, because not only does the US government need to sell another

01:05:18.240 | 2 trillion of bonds every year to finance its deficit, which is basically the addition

01:05:24.480 | to the debt.

01:05:25.440 | You've got the Fed now shedding what like 8 trillion.

01:05:28.880 | They're just letting them roll off.

01:05:32.800 | They're letting them roll off and they're not reissuing them.

01:05:34.720 | But you actually said the right thing earlier, which is that the risk premium has been shrunk

01:05:39.840 | so massively between equities and bonds.

01:05:41.600 | These 2 trillion of bonds that these guys will issue bet between the strip trade from

01:05:48.800 | 5% all the way down to there'll be a line out the door, I guarantee you.

01:05:54.160 | And the reason why is exactly what you said before, David, which is like, why not own

01:05:57.920 | 5% paper from the US government versus having to like all of a sudden speculate on the S&P

01:06:02.640 | 500 or something else?

01:06:03.600 | It's a no brainer.

01:06:04.320 | And I totally agree with you.

01:06:05.600 | But that this last 2 trillion, that'll be the easiest 2 trillion to sell.

01:06:09.120 | There will be a line out the door, guaranteed.

01:06:11.840 | Well, there's a line out the door at some price.

01:06:14.480 | So my point is that the yield will have to go up to attract those incremental buyers.

01:06:19.600 | And as the supply of T-bills becomes a glut, obviously, they're gonna have to make the

01:06:25.360 | yield more attractive in order to keep attracting that marginal buyer.

01:06:30.160 | It's just that simple.

01:06:31.920 | So yeah, at some price, they'll be able to find a buyer.

01:06:34.640 | But that yield will have to get higher and higher over time.

01:06:38.160 | And then that crowds our private investment.

01:06:40.320 | Because why in the world would you invest in a risky stock when you get 7% risk free?

01:06:44.400 | What's your alternative?

01:06:45.360 | Because again, like, what do you think the spread to JGBs is going to be if that's true?

01:06:49.600 | If US treasuries, okay, if 30 year treasuries are all of a sudden, five and a half of Bill

01:06:53.680 | Ackman's, right, which you could very well be the other part of what he's not saying

01:06:56.560 | is what a JGBs look like, what do European bonds look like?

01:06:58.960 | You know what they're going to be?

01:07:00.080 | They're going to be trading at 300 to 500 basis points above that.

01:07:04.800 | It is cataclysmic for the entire world economy.

01:07:07.920 | And so we all move in unison.

01:07:10.000 | When we suffer, we will suffer less than other countries.

01:07:12.720 | And when we win, we will generally win more than other countries that has typically been

01:07:16.320 | true.

01:07:17.040 | I suspect it will typically be true.

01:07:18.880 | And I don't see anything changing that.

01:07:20.800 | Well, hold on, let's assume that you're right.

01:07:22.080 | And what happens is that the let's call it the Western world and all these governments

01:07:25.840 | are basically mired in debts with a few exceptions.

01:07:28.560 | I guess Australia is good, Switzerland is good, but the rest have massive debt to GDP

01:07:33.280 | as well.

01:07:34.080 | So their bonds have to move up with ours.

01:07:36.320 | And so their risk premium has to go up as well.

01:07:39.840 | So you're right in lockstep with the US.

01:07:41.760 | But now why wouldn't global growth just slow down across let's call it this whole Western

01:07:47.600 | dollar complex, coupled with inflation, coupled with inflation, right?

01:07:51.840 | Which is inevitable.

01:07:52.800 | That's basically what's happened in Japan, right, is that they have like a 200% debt

01:07:56.400 | to GDP, and they've been very active in yield curve control.

01:07:59.840 | And so they've controlled the interest rates, but the price of that's been total

01:08:03.840 | economic stagflation for two decades.

01:08:06.880 | They have demographic problems as well, but...

01:08:08.560 | That's the main issue there is young people there.

01:08:10.720 | There's just not a lot of young people there.

01:08:12.320 | I mean, housing is crazy if you just look at it.

01:08:16.240 | And I think the United States has a lot of innovation.

01:08:18.960 | So we will innovate our way out of it is my belief, which is kind of what we've always

01:08:23.840 | done.

01:08:23.840 | It's so exciting, guys, we can have this conversation with Larry Summers himself at

01:08:27.680 | the All In Summit in September.

01:08:29.680 | Wait, do we have Ray Dalio too?

01:08:31.760 | We have Ray Dalio, yeah.

01:08:32.960 | Are they going to be on a panel together?

01:08:34.160 | Or it'd be really interesting to discuss this topic with the two of them.

01:08:36.560 | Maybe overlap?

01:08:37.200 | I'll look at the schedule.

01:08:38.240 | Everyone, unfortunately, all our speakers are on tight schedules on when they're in

01:08:42.160 | and out, which is why I need Jekyll to respond to my IM to him about finalizing some of our

01:08:47.840 | other speakers.

01:08:48.560 | But...

01:08:49.280 | Hey, Jimmy texted me because apparently he's in London or he has to go to London right

01:08:53.040 | after.

01:08:53.200 | We gotta figure out how to get him back.

01:08:54.080 | Yeah, yeah.

01:08:55.280 | He said he'd fly out, but we gotta figure out how to do that.

01:08:57.280 | But yeah, we can have this conversation in LA, September 10 through 12.

01:09:00.240 | Oh, well, it's sold out.

01:09:01.840 | So way to frustrate everybody.

01:09:03.680 | I'm getting like all kinds of like LPs and giant folks who are like, can I buy a VIP

01:09:09.200 | ticket?

01:09:09.520 | And I'm like, listen, it's sold out.

01:09:10.640 | You had two months to do that.

01:09:12.000 | So in other news, the GOP's lead candidate for the 2024 race, Donald Trump has been

01:09:21.600 | indicted for trying to overturn the 2020 election and stop the peaceful transfer of

01:09:27.280 | power.

01:09:27.680 | The indictment has four counts and is the third criminal case for those of you playing

01:09:33.040 | along at home.

01:09:33.760 | Four counts include conspiracy to defraud the US, conspiracy to obstruct an official

01:09:38.640 | proceeding, obstruction of an attempt to obstruct an official proceeding, conspiracy against

01:09:43.760 | rights.

01:09:46.160 | Trump campaign not shockingly called it fake news.

01:09:50.000 | The indictment feels like it's got them dead to rights.

01:09:52.800 | And this is on top of the oath keepers, founders, Stuart Rhodes getting 18 years and a

01:09:59.360 | bunch of other cases.

01:10:00.800 | In addition to that, the DOJ prosecutors also accused Trump of ordering employees to delete

01:10:06.560 | security videos and the classified documents case, the coverup, of course, being worse

01:10:11.680 | than the crime.

01:10:12.400 | Looks like they got them dead to rights on that one as well.

01:10:16.320 | All of this against the backdrop of DeSantis spending tens of millions of dollars and falling

01:10:22.080 | in his percentage.

01:10:24.320 | Sachs, explain to the audience why this is Hunter Biden's fault and that's a deep state

01:10:30.320 | conspiracy.

01:10:30.880 | I kid.

01:10:31.940 | What are your thoughts on this?

01:10:33.600 | When you say they have them dead to rights, like, what do you mean by that?

01:10:36.720 | What's your basis for saying that?

01:10:38.960 | Exactly.

01:10:39.280 | What do you mean?

01:10:40.240 | Dead to rights on what charge?

01:10:42.080 | Yeah.

01:10:42.400 | So in this indictment, the 45 pages, if you read it, you will see that they put up fake

01:10:49.200 | electorates and they knew that it wasn't going to work and they did it anyway after losing

01:10:56.160 | 60 cases.

01:10:56.960 | So that's the belief of why this is such a serious case.

01:11:01.840 | And then also the coverup obstructing justice.

01:11:05.520 | And it looks like some of these maintenance workers are potentially flipping and Mark

01:11:10.080 | Meadows, they claim has flipped as well.

01:11:12.480 | So, but, you know, hey, listen, everybody gets their day in court.

01:11:14.480 | The documents case is sort of separate.

01:11:16.320 | I mean, I think we should just stick to this.

01:11:18.080 | The big news here is...

01:11:19.280 | Well, what do you think of the fact that he tried this allegation that he tried to delete

01:11:22.640 | the videos?

01:11:23.120 | Do you think it's real or do you think it's made up?

01:11:24.640 | I don't know.

01:11:25.280 | That's a detail about a piece of evidence in that case.

01:11:28.560 | I do think the documents case is on a sounder legal footing than the January 6th case.

01:11:36.640 | More dangerous to him, you're saying.

01:11:37.120 | More dangerous to him.

01:11:38.080 | It doesn't involve as many novel legal theories.

01:11:40.800 | Now, is it really dangerous?

01:11:42.560 | I think the American people think that at the end of the day, that documents case is

01:11:46.320 | sort of a paperwork case.

01:11:47.520 | And there are many other people who violated the classified requirements rules like Sandy

01:11:53.760 | Berger, like David Petraeus, like Hillary Clinton, never prosecuted.

01:11:57.120 | So I think if they have him dead to rights on any of the cases, it's the documents case.

01:12:01.840 | But I also think that in the minds of the American people, that in the minds of the

01:12:05.680 | American people, it feels like DC inside baseball.

01:12:08.800 | Now, I think on this January 6th case...

01:12:10.560 | What do you think about the documents case?

01:12:12.480 | What do you personally think?

01:12:13.440 | I think if you're going to prosecute Trump for that, you need to prosecute all these

01:12:15.920 | other people who violated classified documents rules.

01:12:18.160 | What do you think about him?

01:12:19.920 | Sandy Berger, who worked for Clinton, who was a national security advisor, stuffed his

01:12:25.200 | pants with classified documents from one of those lean rooms and got away with a slap

01:12:31.600 | on the wrist.

01:12:32.320 | What do you think about Trump trying to overturn the election?

01:12:35.040 | Well, look...

01:12:35.600 | Do you think he tried to overturn the election?

01:12:37.360 | I mean, just a basic fact.

01:12:38.880 | Let me state right away that I think that what Trump did in the wake of the 2020 election

01:12:44.960 | was indefensible.

01:12:46.320 | I said so at the time.

01:12:47.440 | I said that...

01:12:48.080 | You did.

01:12:48.640 | I give the credit.

01:12:48.880 | I did say it.

01:12:49.440 | What I said is that once the Supreme Court, once the courts in general threw out his case,

01:12:54.400 | and once the Supreme Court denied certiorari, it was time for him to stop.

01:12:57.840 | And he kept going.

01:12:58.400 | He should have stayed on down.

01:12:58.960 | Yeah.

01:12:59.520 | It was time for him to stop, and he did it.

01:13:01.280 | And so I think that his actions were indefensible.

01:13:03.280 | However, when you're talking about criminal prosecutions, they can't just be an expression

01:13:08.400 | of condemnation.

01:13:09.360 | You actually have to prove that somebody engaged in criminal behavior.

01:13:13.680 | And the issue here with this January 6th case is that it relies on novel legal theories.

01:13:20.560 | There's actually a really good article in the New York Times of all places explaining this.

01:13:24.480 | Do you think there was a possibility that if he could have, he would have turned over

01:13:29.280 | the election if Pence had gone along with it?

01:13:32.560 | I don't know.

01:13:33.280 | You're getting into a bunch of hypotheticals here.

01:13:35.280 | The question is whether these charges will actually stand up to scrutiny.

01:13:40.160 | Let me read you what David Leonhardt from the New York Times reported, because I actually

01:13:45.520 | think when you have the New York Times saying that the case is weak, I think it's really

01:13:48.640 | indicative.

01:13:49.200 | So what the New York Times says, or Leonhardt says, "As shocking as it was, Trump's behavior

01:13:54.720 | on January 6th did not violate any laws in obvious ways.

01:13:58.880 | He never directly told those at the January 6th rally to attack Congress.

01:14:02.240 | During his speech that day, he even said he knew that protesters would behave peacefully

01:14:06.160 | and patriotically.

01:14:07.440 | It was part of a longstanding Trump pattern in which, as my colleague Maggie Haberman

01:14:11.440 | puts it, 'He is often both all over the place and yet somewhat careful not to cross

01:14:15.440 | certain lines.'"

01:14:16.000 | As for Trump's broader effort to overturn the election result, no federal law specifically

01:14:21.440 | bars politicians from attempting to do so.

01:14:23.920 | Without such a law, Smith has relied on a novel approach.

01:14:28.080 | He has charged Trump with committing criminal fraud and violating conspiracy laws that were

01:14:32.720 | not written to prevent the overturning of election result.

01:14:35.920 | And then he says that a key part of these laws, they revolve around a person's intent,

01:14:39.280 | intent is core to the notion of fraud.

01:14:41.440 | Only if someone is knowingly trying to deceive others can he be committing a fraud.

01:14:45.280 | And he says that's why the case seems like they revolve around Trump's state of mind.

01:14:48.560 | So the problem with this is they have to not only prove that what Trump did in the wake

01:14:53.360 | of the election was indefensible and outrageous and all the things that you believe, they

01:14:57.760 | have to prove that Trump knew that he lost the election and knowingly perpetrated the

01:15:03.520 | fraud.

01:15:03.840 | And I don't think you'll be able to ever prove that beyond a reasonable doubt.

01:15:06.400 | But even though, yes, there are statements that they point to.

01:15:08.880 | - Yeah, they got all those statements and then Bill Barr, Mark Meadows, everybody's

01:15:13.840 | flipped on him.

01:15:14.400 | Pence has flipped on him.

01:15:15.280 | They're all flipped on him now.

01:15:16.160 | - They have statements by those people, yes, but Trump also had this whack pack of lawyers.

01:15:20.960 | So you had Giuliani and you had Sidney Powell and John Eastman.

01:15:26.560 | And Mike Lindell, the pillow guy, they were all in the White House telling Trump that,

01:15:30.480 | "Listen, you won the election, you've been robbed, and there are valid legal grounds

01:15:33.920 | for you to contest this."

01:15:34.960 | And Trump for years has been maintaining the stolen election narrative.

01:15:38.720 | Even when his advisors have told him, "This is not good for you."

01:15:42.400 | The guy has stolen election on the brain, okay?

01:15:44.400 | Every interview, he's brought this up even when it's manifestly harmful to himself and

01:15:50.080 | the Republican Party.

01:15:51.280 | So this idea that you can prove that he doesn't really believe the election was stolen, the

01:15:56.880 | one thing I believe about Trump is that he really does believe the election was stolen.

01:16:01.040 | And I think you will never be able to prove beyond a reasonable doubt that he is knowingly

01:16:05.920 | lying about that.

01:16:06.800 | And as a result of this, you can never prove this case.

01:16:09.360 | Now, it also relies on this novel theory.

01:16:12.480 | They are turning the civil rights law into a pretzel to try and figure out a way to indict

01:16:19.360 | Trump or prosecute him under this novel legal theory of committing, quote, "fraud against

01:16:24.320 | the American people."

01:16:25.440 | Okay?

01:16:25.680 | This is a novel legal theory that's never been tried before.

01:16:30.080 | And by the way, if you're gonna create that as a precedent, I hope we're gonna go after

01:16:33.920 | those signers of the Lancet letter we talked about because they committed a fraud against

01:16:38.720 | American people.

01:16:39.680 | I hope that we will prosecute the 51 spies who lied because they perpetrated a fraud

01:16:44.160 | against American people.

01:16:45.280 | I hope...hold on a second.

01:16:46.160 | I hope we will go after the authors of that Steele dossier because they perpetrated a

01:16:51.280 | fraud of the American people.

01:16:52.000 | There's a lot of people in Washington who've perpetrated a fraud on the American people.

01:16:55.280 | I hope we're gonna go after all of them.

01:16:56.560 | But my point is this, it's not the job of a prosecutor to be creative with the law ever.

01:17:01.520 | I mean, they are supposed to apply the law strictly as written.

01:17:05.440 | They're supposed to bring cases that are open and shut.

01:17:07.600 | And what Jack Smith is doing here is going for this bank shot where he wants to charge

01:17:14.960 | Trump with incitement, but he knows he can't win that case.

01:17:17.840 | So he's going for this backdoor civil rights law to sidestep the First Amendment problem.

01:17:22.800 | And in my view, this is an abuse of prosecutorial power.

01:17:26.000 | And once you let prosecutors get creative like this, you're on a slippery slope to show me

01:17:30.400 | the man, I'll show you the crime as in Stalin's Russia.

01:17:32.880 | So listen, I believe that, again, Trump's actions were illegitimate and outrageous.

01:17:38.240 | But again, the purpose of criminal law is not to express disapproval.

01:17:41.680 | You have to be able to prove these cases in an open and shut way without novel legal theories.

01:17:46.560 | I just want to say I need to give I need to give sacks of 10 out of 10 for this last piece.

01:17:50.640 | That was excellent.

01:17:52.160 | Absolutely.

01:17:52.720 | Excellent.

01:17:53.120 | Jason, here's the question I ask you.

01:17:54.880 | Do you believe that Trump was guilty of inciting an insurrection?

01:17:58.160 | Absolutely.

01:17:58.720 | Yeah.

01:17:58.960 | When he told those people to, yeah, when he told those people to go down.

01:18:02.400 | Why hasn't Jack Smith?

01:18:03.440 | Why hasn't Jack Smith indicted Trump?

01:18:06.880 | They've indicted Trump on all these different charges with over 500 years of jail time.

01:18:11.280 | And they have not indicted him for incitement.

01:18:13.040 | Why not?

01:18:13.360 | They could always add to the charges.

01:18:15.600 | And so I suspect when they start flipping people, they will.

01:18:18.080 | But, you know, it's kind of meaningless to have this discussion.

01:18:20.640 | We should move on to the next.

01:18:21.600 | No, it's not.

01:18:22.000 | No, hold on.

01:18:22.480 | Hold on.

01:18:22.800 | Hold on.

01:18:23.040 | Let me finish.

01:18:23.440 | You asked me a question.

01:18:24.240 | Here's the thing.

01:18:24.720 | You know what?

01:18:25.120 | 30% of people in the Republican Party, about 30% of this country have Trump Stockholm syndrome.

01:18:30.960 | They cannot let go of Trump.

01:18:32.640 | And so there's no reason to debate it with the GOP.

01:18:35.040 | They have TSS.

01:18:36.000 | And you're going to defend him to the dying day.

01:18:39.680 | You're going to do what about isms.

01:18:41.520 | The Republican Party will never accept the fact that this person's a criminal.

01:18:45.760 | He's corrupt.

01:18:46.800 | And he's a horrible human being.

01:18:47.920 | And he is not fit to serve.

01:18:49.600 | And you're going to serve him up as your candidate.

01:18:51.600 | It's disgraceful.

01:18:52.800 | The GOP is a disaster for actually supporting him.

01:18:56.400 | Guy has no morality.

01:18:58.560 | And he would have overturned the government if he had the chance.

01:19:01.040 | And he will do it again.

01:19:02.000 | Can I respond to this?

01:19:02.720 | I have a couple of points here.

01:19:04.000 | All right.

01:19:04.240 | So let me get as many points as you want.

01:19:06.160 | There are people who are absolutely fixated on January 6th.

01:19:10.160 | And it's the people who've been trying to whip this up and make it into a crime and

01:19:14.320 | invent all these novel legal charges and haven't stopped talking about for the last two and a half

01:19:17.680 | years.

01:19:18.160 | I'm so sick of talking about this whole January 6th thing.

01:19:21.120 | I don't want this to be our politics.

01:19:23.120 | OK?

01:19:23.840 | The people who've made it our politics include the mainstream media.

01:19:28.080 | It's all the people on CNN and MSNBC who won't stop talking about it.

01:19:31.200 | And part of the reason why I think Trump likely will be the nominee is because they are creating

01:19:37.760 | a backlash in the GOP where people basically think that he's being unfairly prosecuted

01:19:42.640 | and persecuted.

01:19:43.680 | Now, to my question, why aren't they charging him with incitement?

01:19:47.280 | That is the crime that the media says he has committed for the last two and a half years.

01:19:51.920 | So why aren't they charging him?

01:19:53.360 | Because the DOJ looked at that at the beginning of 2021.

01:19:57.680 | Merrick Garland's DOJ looked at that.

01:20:00.400 | And they did a report and found that they could not win that case.

01:20:03.040 | And when that came out, the media and even Biden himself said that Merrick Garland was

01:20:08.560 | basically being a wimp and should be tougher.

01:20:10.880 | And so that's when they appointed Jack Smith to be the special counsel to go find some

01:20:14.880 | other way of prosecuting him.

01:20:16.080 | And so that's why they've invented this novel legal theory.

01:20:19.360 | Now, I think the reason why we should care about this that has nothing to do with wanting

01:20:24.160 | to defend Trump or make him the nominee is that I don't think our political system should

01:20:29.040 | be weaponized this way, because when they can start inventing novel legal theories to

01:20:34.000 | get somebody, that's what they've done here, Jason.

01:20:36.400 | It's show me the man and I'll show you the crime.

01:20:38.080 | - Now, Trump tried to overthrow and reverse the election.

01:20:43.920 | And he tried to do that by putting up a fake slate.

01:20:46.720 | And he tried to convince Pence to go along with it.

01:20:49.760 | Pence is an honorable person who wouldn't go along with it.

01:20:52.400 | And everybody in his cabinet said, this is a bridge too far.

01:20:56.240 | His supporters from Barr to Pence to Meadows all told him, please stop.

01:21:02.160 | What you're doing is illegal.

01:21:03.600 | You cannot overturn the government, the election results.

01:21:06.800 | - But are you saying this as an expression of condemnation against Trump?

01:21:12.320 | Or are you saying that Jack Smith actually has?

01:21:15.200 | - I think it will be proven that he broke the law.

01:21:16.800 | I think it will be proven in the documents case that he also tried to cover it up.

01:21:19.600 | But that's just my opinion.

01:21:20.800 | I believe that he's a criminal.

01:21:22.240 | I believe he will be held accountable.

01:21:23.600 | I think he should be held accountable for trying to overthrow the election.

01:21:27.600 | He tried to overturn the election.

01:21:29.120 | That is the most treasonous thing you can do.

01:21:32.000 | You can come up with all of your defense of it.

01:21:34.200 | - They're charging with treason, charging with incitement.

01:21:35.680 | They have not done that.

01:21:36.480 | They've invented this non-illegal theory that never existed before.

01:21:39.120 | - He's a very smart guy when it comes to avoiding accountability.

01:21:43.280 | And I think that the clock is running out for him.

01:21:46.320 | - You know what, J. Cal, do you not think that it's a little surprising

01:21:52.400 | that all of these charges are hitting years after this event took place

01:21:58.240 | in the months leading up to the Republican primary?

01:22:00.560 | - No, I think it's...

01:22:01.680 | - That's the weirdest thing to me is like,

01:22:03.440 | why would it take so many years to prosecute someone?

01:22:06.160 | All those guys that went into the Capitol building,

01:22:09.040 | they all got charged with crimes years ago, two years ago.

01:22:12.240 | Why is all this stuff falling on Trump today?

01:22:14.640 | It's like they paced the grand jury investigation.

01:22:17.120 | - Because Trump wouldn't get in the case.

01:22:17.680 | - And they paced the whole thing out today.

01:22:19.360 | - It takes time to build these.

01:22:19.600 | - Because I will say it does feel like it is interrupting a political process

01:22:24.000 | that if there were criminal charges to be filed,

01:22:26.560 | I would have liked to have seen them filed two years ago.

01:22:28.640 | So this could all get adjudicated ahead of a political cycle.

01:22:31.920 | Now that it's in the middle of a political cycle,

01:22:33.520 | it makes me as a US citizen nervous about the fact

01:22:37.040 | that there are agencies interfering in the political cycle.

01:22:39.360 | - You're so right.

01:22:40.320 | - He could have given the documents back when they asked for them.

01:22:42.640 | And he could have said, don't delete the tapes.

01:22:44.480 | - We're talking about January 6th.

01:22:45.760 | - I'm talking about both.

01:22:46.800 | - Yeah, and it takes...

01:22:47.440 | - You changed the subject to the case that is...

01:22:49.680 | - No, I'm talking about both cases.

01:22:50.960 | I'm talking about both cases concurrently.

01:22:52.240 | We're talking about...

01:22:52.640 | - The documents case, I will say the documents case is more solid,

01:22:55.920 | but less important, okay?

01:22:57.440 | - Sure.

01:22:57.680 | - Actually, Leonhard says this in the New York Times.

01:23:00.240 | - But you asked me a question.

01:23:01.520 | I think it takes time to build a case properly.

01:23:03.600 | And it took them a long time to get through the 400 people

01:23:06.960 | who attacked the Capitol and brought tens of thousands of rounds of ammunition

01:23:11.280 | to the Capitol and put it in three hotels,

01:23:14.320 | which is why the Oath Keepers got 18 years.

01:23:17.600 | 400 people have gotten sentenced in that for good reason.

01:23:21.120 | They beat cops.

01:23:22.560 | They broke down their way into the Capitol,

01:23:25.600 | and they brought dozens of AR-15s,

01:23:28.160 | and they bought tens of thousands of rounds of ammunition

01:23:30.400 | and placed them in hotels around the Capitol.

01:23:32.640 | These are dangerous, domestic terrorists.

01:23:35.360 | They would have shot the place up and killed hundreds of people.

01:23:36.800 | - Then try him for that. That's not what he's being indicted for.

01:23:38.720 | - No, I'm talking about who they...

01:23:40.560 | They already got those Oath Keepers on 18 years.

01:23:43.120 | - I just want to read this one sentence from Leonhardt just to wrap this up.

01:23:47.200 | Because this is the New York Times.

01:23:48.720 | This is the New York Times.

01:23:49.680 | He says, "You can think of the new charges as being both more important

01:23:53.440 | and less solid than Trump's previous federal indictment."

01:23:56.720 | - Yeah, no, I mean, listen, everybody's gonna have different opinions on this.

01:23:59.360 | I get that.

01:24:00.320 | I just hope he has his day in court, and I think he's guilty,

01:24:03.280 | and I think it'll be proven that he's guilty,

01:24:05.600 | and that it's time to start moving this towards a pardon

01:24:09.040 | and figuring out how to get him out of political life

01:24:12.240 | and give him a pardon for all these crimes he's committed

01:24:14.960 | and let him off the hook, but get him out.

01:24:17.440 | And so that your party can field a good candidate.

01:24:20.080 | That's what I hope happens.

01:24:21.120 | - I think one of the really tragic side effects of these prosecutions,

01:24:25.200 | where they're inventing novel legal theories, clearly,

01:24:27.440 | to get this man for what he did,

01:24:29.840 | even though it was outrageous, but I don't think criminal

01:24:32.800 | in the way you want it to be, Jason.

01:24:34.560 | But the really tragic thing about this...

01:24:35.440 | - It's not the way I want it to be.

01:24:36.480 | I would rather he didn't do this criminal activity.

01:24:38.080 | - Yeah, I get it. I get it.

01:24:39.280 | I've already denounced it.

01:24:40.640 | I've already denounced it.

01:24:41.680 | I'm not defending his actions.

01:24:43.360 | I'm defending the integrity of our legal system.

01:24:45.680 | - Sure.

01:24:46.160 | - And really the tragic thing about this...

01:24:47.680 | - I appreciate that.

01:24:47.920 | - The tragic thing about this is that I want the 2024 election

01:24:51.680 | to be about issues.

01:24:52.800 | It's not.

01:24:53.760 | It's gonna be a referendum on what happened in 2020.

01:24:57.360 | And there is no way to convince either side

01:24:59.600 | of the American people that they're wrong about that.

01:25:02.640 | The MSNBC, CNN crowd are gonna believe

01:25:04.720 | that Trump is guilty of a crime,

01:25:06.640 | no matter where this case comes out.

01:25:08.800 | And by the way, I think Trump's actually gonna win this case.

01:25:11.280 | Maybe not in the DC jury pool,

01:25:12.960 | but I think he'll win it on appeal.

01:25:15.200 | - The Supreme Court.

01:25:16.560 | - I think if he has to take it to the Supreme Court,

01:25:18.160 | he's gonna win it.

01:25:18.640 | 'Cause this is a novel legal theory.

01:25:19.840 | By the way, Jack Smith took a case

01:25:22.080 | against the Virginia governor to the Supreme Court,

01:25:24.560 | got overturned on appeal 9-0

01:25:26.480 | because of an outrageous legal theory there.

01:25:28.560 | So that same thing could happen here.

01:25:30.160 | I think it probably will.

01:25:30.960 | - It's possible.

01:25:31.360 | - But those people who believe in this

01:25:33.360 | will never be convinced.

01:25:34.320 | And by the same token, Trump supporters,

01:25:36.320 | the other half of the country will never be convinced

01:25:38.320 | that this was not a political persecution.

01:25:41.440 | - It's TDS versus TSS.

01:25:42.240 | - So this will tear the country apart.

01:25:45.440 | And to Freeberg's point, it's two and a half years later.

01:25:48.560 | We could have just moved on.

01:25:49.920 | There's plenty of other things.

01:25:51.280 | They already have the Dockman's case.

01:25:52.640 | So this is a political prosecution by Biden's own DOJ.

01:25:57.040 | - Do you have any way to get out of this?

01:25:58.960 | What's your solution to get out of this?

01:26:00.400 | - We should have just moved on.

01:26:01.520 | - Oh, not charge him.

01:26:03.360 | - Yeah.

01:26:04.320 | Listen, the proper forum to deal with this

01:26:07.520 | was the impeachment hearing.

01:26:09.200 | The second impeachment was expressly on the correct charge,

01:26:12.640 | which was whether Trump incited an insurrection.

01:26:15.360 | They already had this trial.

01:26:17.200 | The proper forum was that impeachment trial.

01:26:20.080 | He made it through.

01:26:21.920 | And it's up to voters to take this-

01:26:23.200 | - Mitch McConnell actually said the proper one

01:26:24.880 | was to go criminal.

01:26:25.680 | So it was interesting.

01:26:26.800 | Yeah.

01:26:27.200 | He said the impeachment was the wrong way to do it.

01:26:29.040 | They should just do the criminal.

01:26:29.840 | So here we are doing the criminal thing.

01:26:31.040 | - The country should have moved forward.

01:26:32.720 | And instead we're getting torn apart.

01:26:34.320 | - You got any tailing data on it?

01:26:34.560 | - And this is what 2024 is now gonna be about.

01:26:36.640 | - What do you think, Freeberg?

01:26:38.880 | What do you think is a good path forward?

01:26:40.400 | - I kind of align with the fact that

01:26:42.400 | this is a little bit too late.

01:26:43.760 | It's in the middle of an election cycle

01:26:45.760 | and the damage that it will cause

01:26:47.440 | in terms of how our country views

01:26:51.280 | the intersection between the justice system

01:26:53.760 | and the electoral process can be more damaging

01:26:56.400 | than the benefit we would gain

01:26:58.720 | from bringing an individual to justice

01:27:00.400 | for breaking the law in this case.

01:27:01.920 | Unfortunately, the timing is just off.

01:27:04.640 | And I think it's really scary.

01:27:05.840 | - All right, Jason, you have to ask,

01:27:08.080 | what is actually gonna strengthen our democracy?

01:27:10.160 | And what is the wisdom of bringing these charges?

01:27:12.240 | I think this case shows a lack of wisdom.

01:27:14.320 | I don't think it's gonna strengthen our democracy.

01:27:15.840 | I think it's gonna undermine it.

01:27:17.040 | It's gonna make this country more polarized

01:27:19.200 | and hyper-partisan.

01:27:20.720 | And it's not gonna help us move past

01:27:22.320 | this era of our politics.

01:27:23.760 | And I believe that-

01:27:24.320 | - Was that a question towards me?

01:27:25.280 | - I think Trump is responsible

01:27:27.760 | for part of that polarization.

01:27:29.440 | But I think Biden now is playing into it

01:27:31.120 | from the other side.

01:27:31.920 | I don't think we've had a president seek to

01:27:35.440 | indict his leading political opponent,

01:27:38.240 | who's likely to be his-

01:27:38.960 | - Oh, I thought he was not involved in this.

01:27:40.080 | This is the Justice Department.

01:27:41.920 | He's not driving it.

01:27:43.120 | - Wait a second, that is not true.

01:27:45.040 | - Okay.

01:27:45.920 | Yeah, he's not involved in it.

01:27:48.320 | - No, there's an article in which Biden said

01:27:51.760 | that when Merrick Garland refused

01:27:54.080 | the incitement charges,

01:27:55.280 | that he thought that it was weak in that.

01:27:57.520 | Biden thought that Trump deserved to be prosecuted.

01:27:59.920 | And that was a public article.

01:28:01.120 | It's in the New York Times.

01:28:02.080 | And I'll provide the note.

01:28:03.200 | - Sure.

01:28:03.840 | - I'll provide the citation.

01:28:04.160 | - What's your question for me?

01:28:04.880 | Did you have a question?

01:28:05.600 | You said you wanted to ask me a question.

01:28:07.120 | - Well, no, I didn't say a question.

01:28:08.560 | I just said you can respond.

01:28:09.680 | - Oh, okay.

01:28:10.720 | - But my point is,

01:28:11.840 | I now think that Biden has crossed the line here.

01:28:14.080 | And just remember,

01:28:15.360 | this is not an independent prosecutor.

01:28:17.360 | Jack Smith works for Merrick Garland,

01:28:19.760 | who works for Joe Biden.

01:28:21.280 | This is banana republic type stuff.

01:28:22.880 | This is one president's DOJ

01:28:24.880 | seeking to prosecute his main political opponent.

01:28:28.080 | - Who put Merrick Garland in?

01:28:29.840 | - Biden appointed him.

01:28:31.120 | - Yeah.

01:28:33.520 | So this has been the All In Podcast.

01:28:35.840 | Chamath had to bounce.

01:28:36.880 | Freyberg, congratulations on OK99.

01:28:39.600 | I hope it happens.

01:28:40.400 | Sachs, sorry about-

01:28:42.160 | - Congratulations to you too.

01:28:44.080 | Congratulations to you too, Sachs.

01:28:45.600 | If it's proven to be real,

01:28:47.840 | we will all benefit.

01:28:49.840 | So it's great.

01:28:50.560 | - Yeah.

01:28:51.280 | - Right?

01:28:51.680 | - And we'll see you all next time on the All In Podcast.

01:28:54.960 | Bye-bye.

01:28:55.360 | - Bye-bye.

01:28:56.560 | (upbeat music)

01:28:57.440 | ♪ We'll let your winners ride ♪

01:28:58.720 | ♪ Rain Man David Sachs ♪

01:29:01.920 | ♪ I'm going all in ♪

01:29:04.640 | ♪ And instead we open source it to the fans ♪

01:29:06.880 | ♪ And they've just gone crazy with it ♪

01:29:08.640 | ♪ Love you West Coast ♪

01:29:09.440 | ♪ Queen of Quinoa ♪

01:29:10.640 | ♪ I'm going all in ♪

01:29:12.320 | ♪ Let your winners ride ♪

01:29:13.520 | ♪ Let your winners ride ♪

01:29:15.520 | ♪ All right ♪

01:29:17.520 | ♪ Besties are gone ♪

01:29:19.520 | (laughing)

01:29:20.160 | - That's my dog taking a notice in your driveway, Sachs.

01:29:22.720 | (laughing)

01:29:25.280 | - Oh, man.

01:29:26.000 | - My avatar will meet me at Plymouth.

01:29:27.920 | - We should all just get a room

01:29:29.120 | and just have one big huge orgy

01:29:30.640 | 'cause they're all just useless.

01:29:31.840 | It's like this like sexual tension

01:29:33.360 | that they just need to release somehow.

01:29:34.800 | (upbeat music)

01:29:36.000 | ♪ What the beep ♪

01:29:37.840 | ♪ What the beep ♪

01:29:38.880 | ♪ What the beep ♪

01:29:41.360 | ♪ We need to get merch ♪

01:29:42.160 | ♪ Besties are gone ♪

01:29:42.800 | ♪ I'm going all in ♪

01:29:44.800 | (upbeat music)

01:29:50.720 | ♪ I'm going all in ♪

01:29:53.920 | [BLANK_AUDIO]

E140: LK-99, Sclerotic establishments, Fitch downgrades US debt, Trump indicted... again

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