Peter was the person who told me this really pithy quote. In a world that's changing so quickly, the biggest risk you can take is not taking any risk. This guy is a tough nut to try to sort of explain. Changed money with PayPal. Was the first outside investor in Facebook.

Backed Palantir, which is, I believe they helped find Osama Bin Laden. Almost certainly the most successful technology investor in the world. I don't think the future is fixed. I think what matters is a question of agency. What I think works really well are sort of one of a kind companies.

How do you get from zero to one? What great business is nobody building? Tell me something that's true that nobody agrees with you on. All right, Peter, welcome back. Good to see you. (audience applauds) You don't do this too often, so we do appreciate it. But when you do do it, you're always super candid, and we appreciate that as well.

You fit right in here. You're sitting this year's political cycle out. - Right into politics. - Well, no, I mean, I think this is a question we all have, which is, you were very active. You bet on J.A.D. in a major way. He delivered today. It was a very impressive discussion.

Why aren't you involved this cycle? It's very confounding to us because these are your guys. - Man, how much time do we have? I mean, this was, let's talk about this for two hours or something. I don't know. Look, I have a lot of conflicted thoughts on it. I am still very strongly pro-Trump, pro-J.A.D.

I've decided not to donate any money politically, but I'm supporting them in every other way possible. Obviously, I think there's, my pessimistic thought is that Trump is going to win and probably will win by a big margin. He'll do better than the last time, and it'll still be really disappointing because the elections are always a relative choice, and then once someone's president, it's an absolute, and you get evaluated.

Do you like Trump or Harris better? And there seem to be a lot of reasons that one would be more anti-Harris than anti-Trump. Again, no one's pro any of these people. It's all negative, right? But then after they win, there will be a lot of buyer's remorse and disappointment.

That's sort of the arc that I see of what's gonna happen, and it's somewhat under-motivating. I don't know, just to describe it, I think the odds are slightly in favor of Trump, but it's basically 50/50. My one contrarian view on the election is that it's not gonna be close.

Most presidential elections aren't, and one side just breaks. 2016, 2020, we're super close, but 2/3 of the elections aren't, and you can't always line things up and figure it out. I think either the Kamala bubble will burst, or maybe the Trump voters get really demotivated and don't show up, but I think one side is simply gonna collapse in the next two months, and then if you wanna get involved with all the headaches that come with being involved, if it makes a difference counterfactually, and if it's a really close election, everything makes a difference.

If it's not even close, I don't think it makes much of a difference. If it is gonna be close, by the way, if it's gonna be a razor-thin close election, then I'm pretty sure Kamala will win, because they will cheat, they will fortify it, they will steal the ballots, and so if we can answer that question, if we can answer them in the event that it's close, I don't wanna be involved.

In the event that it's not close, I don't need to be involved, and so that's sort of a straightforward analysis right there. - My jumping off point, how much cheating on a percentage basis do you think happens every year? How much, and do you think Trump actually won the last time?

- You need to be careful with the verbs, so you know, cheating, stealing, that implies something happened, the dark of night. - Massaging. - I think the verb you're allowed to use is fortify. - Okay, yeah, we don't wanna get canceled on YouTube. - Ballot harvesting, I mean, it's all sort of, there were all these rule changes, it was sort of done in plain daylight, but yeah, I think our elections are not, they're not perfectly clean, otherwise we could examine it, we could have a vigorous debate about it.

- Well, what would you change then? What should change? 'Cause we all want everybody's votes to count, we want it to be clean. I'm talking about the audience here. - I don't know, at a minimum you'd run them, you'd try to run elections the same way you do it in every other Western democracy, you have one day voting, you have practically no absentee ballots.

You have, and, (audience applauding) and it's one day where everything happens, it's not this two-month elongated process. That's the way you do it in every other country. You'd have some somewhat stronger voter ID and make sure that the people who are voting have a right to vote. - Make it a national holiday.

- That's basically what you do in every other Western democracy, and it used to be much more like that in the US. I mean, it's meaningfully decayed over the last 20, 30 years. You know, 20, 30 years ago, 30, 40 years ago, you got the results on the day of the vote, and that sort of stopped happening a while ago.

- What would make you not disappointed? So Trump gets elected, how do you, what's your counter-narrative on, you know, we're a year or two years past the election, Trump is president, what makes you say I'm surprisingly not disappointed? What takes place? - Man, it's, you know, it's, I think there are some extremely difficult problems that it's really hard to know how to solve them.

I wouldn't know what to do, but we have an incredibly big deficit, and yeah, if you can find some way to meaningfully reduce the deficit with no tax hikes. - And without GDP contraction. - Well, you would do it if you got a lot of GDP growth, maybe, but if you could meaningfully reduce the deficit with no tax hikes, that would be very impressive.

You know, I think we're sort of sleepwalking into Armageddon with, you know, Ukraine and the conflict in Gaza, just sort of the warmups to the China-Taiwan war. And so if Trump can find a way to head that off, that would be incredible. If they don't go to war in four years, that will be better than I would expect, possibly.

- In relation to Taiwan, if Trump called you and asked, should we defend it or not in this acute case, would you advise to let Taiwan be taken by China in order to avoid a nuclear holocaust and World War III? Or would you believe that we should defend it and defend free countries like that?

- Well, I think you're probably not supposed to say. - Wait, but you're Peter Thiel. - No, no, no, if you, look, I think there's so many ways our policies are messed up, but probably, you know, the one thing that's roughly correct on the Taiwan policy is that we don't tell China what we're gonna do.

And what we tell them is we don't know what we'll do and we'll figure it out when you do it, which probably has the virtue of being correct. And then I think if you had a red line at Kumhoi Matsu, the island, you know, five miles off the coast of China, that's unbelievable.

If you say we want some guardrails and we won't defend Taiwan, then they'd get invaded right away. So I think the policy of not saying what our policy is and maybe not even having a policy, you know, in some ways is relatively the best. I think anything precise you say, that's gonna just lead to war right away.

- But what do you believe? Worth defending or not worth stirring the conflict, democracy in this tiny island, worth going to war over or not, according to Peter Thiel? - It's not worth World War III. And I still think it's quite catastrophic if it gets taken over by the communists.

- How does the world-- - Those can both be true. - How does the world divide if we end up in a heightened escalation? Is China, Russia, Iran friends? Is that an axis that forms? Think out the next decade in kind of your base case and estimate how the world divides.

- I don't know what happens militarily if there's a China-Taiwan invasion. I mean, maybe we roll over, maybe it escalates all the way to nuclear war. Probably it's some very messy in-between thing, sort of like what you have in the Ukraine. What I think happens economically is very straightforward.

I think basically with Russia and Germany, you had one Nord Stream pipeline, and we have the equivalent of 100 pipelines between the US and China, and they all blow up. I met the TikTok CEO about a year ago, and maybe I wouldn't have said this now, but what I told him and what I felt was very honest advice was you don't need to worry about the US.

We're never gonna do anything about TikTok. We're too incompetent. (audience laughing) But if I were in your place, I would still get the business out of China. I would get the computers out, the people out. I'd completely decouple it from ByteDance because TikTok will be banned 24 hours after the Taiwan invasion.

And if you think there's a 50/50 chance this happens and that will destroy 100% of the value of the TikTok franchise-- - What was his reaction? - He said that they had done a lot of simulations and there were a bunch of companies in World War I and World War II that managed to sell things to both sides.

- He doesn't seem so bright to me. Do you think he's-- (audience laughing) No, he gotta see. What was your taste on him? - He didn't disagree with my frame, and so I always find that flattering if someone basically agrees with my framing. So he seemed perfectly bright to me, even though-- - Game theory?

- Maybe not, not correct. - But game theory. - A lot of bright people are wrong about this. - I saw you give a talk last summer with Barry Weiss and you talked about this decoupling should be happening. You weren't saying should. You were recommending that every industry leader consider decoupling from China.

I think your comment was it's like picking up nickels in front of a freight train. Do you remember saying that? - Well, I think there are a lot of different ways in which businesses are coupled to China. There were investors that tried investing. There are people who try to compete within China.

There are people who built factories in China for export. And there are different parts of that that worked to varying degrees. But yeah, I certainly would not try to invest in a company that competed domestically inside China. I think that's virtually impossible. I think it's probably quite tricky even to invest in Chinese businesses.

And then there is sort of this model of building factories in China for export to the West. And it was a very big arbitrage. These things do work. I mean, I visited the Foxconn factory nine years ago and it's, you have people get paid a dollar and a half, $2 an hour, and they work 12 hours a day.

And they live in a dorm room with two bunk beds where you get eight people in the dorm room. Someone's sleeping in your bed while you're working and vice versa. And you sort of realize they're really far behind us or they're really far ahead of us. And either way, it's not that straightforward to just shift the iPhone factories to the United States.

So I sort of understand why a lot of businesses ended up there and why this is the arrangement that we have. But yeah, my intuition for what is going to happen without making any normative judgments at all is it is going to decouple. - How inflationary will that be?

- It presumably is, it's presumably pretty inflationary. Yeah, that's probably the, you know, I don't know. It's, you'd have to sort of look at, you know, what the inelasticities of all these goods are. - So if that's true, what's the policy reaction? - It's probably not that, it may not be as inflationary as people think because people always model trade in terms of pairwise, in terms of two countries.

So if you literally have to move the people back to the US, that's insanely expensive. I don't, you know, I don't know how much it would cost people to build an iPhone. - Does India become China? - Well, I think India is sort of too messed up, but you shift it to like Vietnam, Mexico, there are, you know, there are 5 billion people living in countries where the incomes are lower than China.

And so, you know, probably the negative sum trade policy we should have with China is, you know, we should just shift it to other countries, which is a little bit bad for the US, extremely bad for China, and let's say really good for Vietnam. That's kind of, and that's kind of the negative sum policy that's going to manifest as this sort of decoupling happens.

- Let's talk about avoiding it for a second here. Trump seems to be extremely good with dictators and authoritarians. Kim Jong-un seems like a big fan. I mean that in like as a compliment as a superpower, right? Like he doesn't have a problem talking to them. He connects with them and they seem to like them.

So what would be the path to him working with Xi to avoid this? Is there a path to avoid this? Because we were sitting here last year talking about this and it just seems mind boggling that if everybody agrees that this is going to happen, that we can't figure out a way to make it not happen.

- Well, it's not just up to us. So yeah, there is, and so I don't know, it's obviously somewhat of a black box. We don't exactly, I feel we just have no clue what people in China think. But I think it's sort of the sense of history is strongly the sort of Thucydides trap idea that you have a rising power against an existing power and it tends to, it's Wilhelmine, Germany versus Britain before World War I.

And it's Athens against Sparta, the rising power against the existing power, you tend to get conflict. That's probably what deep down I think is really, really far in the China DNA. So I'd say maybe the first, I don't know, the meta version would be the first step to avoiding the conflict would be we have to start by admitting that China believes the conflict's happening.

- Right. - And then if people like you are constantly saying, well we just need to have some happy talk. - Right. - That is a recipe, that's a recipe for World War III. - I'm not advocating happy talk necessarily. (audience applauding) I get accused of being a bit more hawkish.

- Obviously, in general, I don't know. I'm not sure Trump should have talked to the North Korean dictator, but yeah, in general, it's probably a good idea to try to talk to people even if they're really bad people most of the time. And it's certainly a very odd dynamic with the U.S.

and Russia at this point where I think it is impossible for anybody in the Biden administration even to have a back channel communication with people. I don't think Tucker Carlson counts as an emissary from the Biden administration. And if anybody gets tuckered or I don't know what the verb is who talks, that seems worse than the alternative.

- Can we talk about technology? You have a speech where you talk about some of the misguided things we've done in the past in the name of technology and use like big data as an example of that. What is AI? - Oh man, that's sort of a big question.

Yeah, I always had this riff where I don't like the buzzwords and machine learning, big data, cloud computing. I'm gonna build a mobile app, bring the cloud to, if you have sort of a concatenation of buzzwords, my first instinct is just to run away as fast as possible. It's some really bad group think.

And for many years, my bias is probably that AI was one of the worst of all these buzzwords. It meant the next generation of computers, the last generation of computers, anything in between. So it's meant all these very different things. If we roll the clock back to the 2010s, probably the AI, to the extent you concretize it, I would say the AI debate was maybe framed by the two books, the two canonical books that framed it.

There was the Bostrom book, "Superintelligence 2014" where AI was gonna be this superhuman, super duper intelligent thing. And then the anti-Bostrom book was the Kai-Fu Lee "2018 AI Superpowers". We can think of the CCP rebuttal to Bostrom where basically AI was going to be surveillance tech, face recognition, and China was going to win because they had no qualms about applying this technology.

And then if we now think about what actually happened, let's say with the LLMs and chat GPT, it was really neither of those two. And it was this in-between thing, which was actually what people would have defined AI as for the previous 60 or 70 years, which is passing the Turing test, which is the somewhat fuzzy line.

It's a computer that can pretend to be a human or that can fool you into thinking it's a human. Even with the fuzziness of that line, you could say that pre-chat GPT wasn't passed and then chat GPT passed it. And that seems very, very significant. And then obviously it leads to all these questions.

What does it mean? Is it gonna compliment people? Is it gonna substitute for people? What does it do to the labor market? Do you get paid more, do you get paid less? So there are all these questions, but it seems extremely important. And it's probably, certainly the big picture questions, which I think Silicon Valley's always very bad at talking about is like, what does it mean to be a human being?

Sort of the, I don't know, the stupid 2022 answer would be that humans differ from all the other animals because we're good at languages. If you're a three-year-old or an 80-year-old, you speak, you communicate, we tell each other stories. This is what makes us different. And so, yeah, I think there's something about it that's incredibly important and very disorienting.

You know, the question I always have as a, I don't know, the narrower question I have as an investor is sort of how do you make money with this stuff? And- - How do you make money? - It's pretty confusing. And I think, I don't know, this is always where I'm anchored on the late '90s is sort of the formative period for me.

But I keep thinking that AI in 2023, 2024 is like the internet in 1999. It's really big. It's going to be very important. It's going to transform the world, not in six months, but in 20 years. And then there are probably all kinds of incredibly catastrophic approximations where what businesses are gonna make money, who's gonna have monopoly, who's gonna have pricing power is super unclear.

Probably, you know, one layer deeper of analysis, you know, if attention is all you need, and if you're not post-economic, you need to pay attention to who's making money. And in AI, it's basically one company is making, NVIDIA is making over 100% of the profits. Everybody else is collectively losing money.

And so there's sort of a, you have to do some sort, you should try to do some sort of analysis. Do you go long, NVIDIA? Do you go short? You know, is it, you know, my monopoly question, is it a really durable monopoly? You know, and then I, it's hard for me to know because I'm in Silicon Valley and I haven't done anything, we haven't done anything in semiconductors for a long time.

So I have no clue. - Do you, if you, let's de-buzzword the word AI and say it's a bunch of process automation. Let's just say that's version 0.1, where brains that are roughly the equivalent of a teenager can do a lot of manual stuff. What do you, have you thought about what it means for, you know, 8 billion people in the world, if there's an extra billion that necessarily couldn't work or like whether that in political or economic terms?

- I don't know, the, I don't know if this is the same, but this is, you know, the history of 250 years, the industrial revolution, what was it, you know, it adds to GDP, it frees people up to do more, more productive things. You know, maybe there's, you know, there was, yeah, there was a, I don't know, there was a Luddite critique in the 19th century of the factories that people were going to be unemployed and wouldn't have anything to do because the machines would replace the people.

You know, maybe the Luddites are right this time around. I'm probably, I'm probably pretty, pretty skeptical of it, but, but yeah, it's, it's, it's extremely confusing, you know, where, where the gains and, and losses are. There probably are, you know, there, there's always sort of a hobby. You can always just use it on your hobby horses.

So I don't know the, you know, my anti-Hollywood or anti-university hobby horse is that it seems to me that, you know, the, the AI is quite good at the woke stuff. And it'll, and, and so, you know, if you want to, if you want to be a successful actor, you should be maybe a little bit racist or a little bit sexist, or just really funny.

And you won't have any risk of the AI replacing you. (audience laughing) Everybody else will get, everybody else will get replaced. And then probably, I don't know, I don't know, Claudine Gay, the plagiarizing Harvard University president, you know, the AI is going to, you know, the AI will produce endless amounts of, of these sort of, I don't even know what to call them, woke papers.

And they, they were all already sort of plagiarizing one another. They were, they were always saying the same thing over and over again. - They were using their own version. - The AI is just going to flood the zone with even more of that. And that, you know, I don't know, obviously they've been able to do it for a long time and no one's noticed, but I think at this point, it doesn't seem promising from a competitive point of view.

- What are the areas? - But it's obviously my hobby horses. So I'm, I'm just, maybe just wishful thinking on my part. - What are the areas of technology that you're curious about that your mind is like, wow, this is really, I have to learn more, pay attention? - You know, I'm always, I always think you, you want to instantiate it more in companies than, than things, or, you know, if you ask sort of like, where is, where is innovation happening?

You know, in our society, and it doesn't have to be this way but it's, it's, it's mostly in, you know, in a certain subset of relatively small companies. We have these relatively small teams of people that are really pushing the envelope. And that's, that's sort of, you know, that's sort of what I find, you know, inspiring about, about venture capital.

And then, and then obviously you don't just want innovation. You also want it to, it to, it to translate into, into good businesses. But that's, that's where it happens. It's somehow, it doesn't happen in universities. It doesn't happen in government. You know, there was a time it did. I mean, you know, somehow in this very, very weird, different country that was the United States in the 1940s, you had, you know, somehow the army organized the scientists and got them to produce a nuclear bomb in Los Alamos in three and a half years.

And the way the New York Times editorialized after that was, you know, it's, it's, you know, it was sort of an anti-libertarian write-up. It was, you know, there were, you know, obviously maybe if you'd left the prima donna scientists to their own, it would have taken them 50 years to build a bomb.

And the army could just tell them what to do. And this will silence anybody who doesn't believe the government can do things. And they don't write editorials like that in the New York Times anymore. But I think, yeah, but I think that's sort of, that's sort of where one should look.

I think a crazy amount of it still happens in the United States. You know, and there's sort of, you know, we've episodically tried to do all this investing. We've probably tried to do too much investing in Europe over the years. It's always sort of a junket, sort of, it's a nice place to go on vacation as an investor.

And it is very, it's very, I don't have a great explanation, but it's a very strange thing that so much of it is still, the US is somehow still the country where people do new things. - Peter, is that a team organizational, social evolutionary problem in the United States?

What is the root cause of the failure to innovate in the United States relative to the expectation going back 70 years, 50 years, et cetera? From, you know, the rocket ships and we're all gonna live in. - Yeah, well, this is always, there's always one of the big picture claims I have that we've been in an era of relative tech stagnation the last 40 or 50 years, or the tagline that we hadn't.

- And techno negativism. - They promised us flying cars, all we got was 140 characters, which is not an anti-Twitter, anti-X commentary, even though the way I used to always qualify it was that at least, it was at least a good company. You had, you know, 10,000 people who didn't have to do very much work and could just smoke marijuana all day.

- Very similar to Europe. - And so I think that actually, that part actually did get corrected, but. - Very subtle. - But I think. - Like what went wrong? 'Cause you point out that it's not a technology trend tracker that you think about, it's about people and teams that innovate and drive to outcomes based on their view of the world.

And what's gone wrong with our view of the world and our ability to organize, to achieve the seemingly unachievable with very rare exceptions, obviously Elon's here later, but yeah. - You know, it's over-determined. The rough frame I always have, and again, it's not that there's been no innovation. There's been a decent amount of innovation in the world of bits, computers, internet, mobile internet, you know, crypto, AI.

So there are sort of all these world of bits places where there was a significant, but sort of somehow narrow cone of progress. But it was everything having to do with atoms that was slow. And this was already the case when I was an undergraduate at Stanford in the late '80s.

In retrospect, any applied engineering field was a bad idea. It was a bad idea to become a chemical engineer, you know, a mechanical engineer. AeroAstro was terrible. Nuclear engineering, everyone knew. I mean, no one did that, you know. And there's something about, you know, the world of atoms that, you know, from a libertarian point of view, you'd say it got regulated to death.

There were probably, you know, there's some set of arguments where the low-hanging fruit got picked and got harder to find new things to do. Although I always think that was just a sort of baby boomer excuse for covering up for the failures of that generation. And then I think, but I think maybe a very big picture part of it was that at some point in the 20th century, the idea took hold that not all forms of technological progress were simply good and simply for the better.

And there's, you know, there's something about the two world wars and the development of nuclear weapons that gradually pushed people into this more risk-averse society. And it didn't happen overnight, but, you know, maybe a quarter century, you know, after the nuclear bomb, it's like- - By Woodstock it happened.

- By Woodstock it happened. - Yeah, 'cause that was the same summer we landed on the moon. - Yeah, Woodstock was three weeks after that. - Yeah, that was the tipping point. - Progress stopped and the hippies took over. - Saxon. - Can we shift gears just to the domestic economy?

What do you think's happening in the domestic economy? And just as backdrop, we've had something like 14 straight months of downward revisions to jobs. The revisions are supposed to be completely random, but somehow they've all been down. Probably doesn't mean anything. There's also what's happening with the yield curve, but I'll stop there.

What's your take on what's happening in the economy? - You know, it's, man, it's always hard to know exactly. Yeah, I suspect we're close to a recession. I've probably thought this for a while. It's being stopped by really big government spending. So, you know, in May of 2023, the projection for the deficit in fiscal year '24, which is October of '23 to September '24, was something like 1.5, 1.6 trillion.

The deficit's gonna come in about 400 billion higher. And so, you know, it was sort of a crazy deficit was projected and it was way off. And then somehow, and so if we had not found another 400 billion to add to, you know, this crazy deficit at the top of the economic cycle, you know, you're supposed to increase deficits in a recession, not at the top of the cycle.

You know, things would be probably very shaky. There's some way where, yeah, we have too much debt, not enough sustainable growth. Again, I always think it comes back to, you know, tech innovation. There probably are other ways to grow an economy without tech or intensive progress. But I think those don't seem to be on offer.

And then that's where it's very deeply stuck. If you wind back over the last 50 years, there's always a question, why did people not realize that this tech stagnation had happened sooner? And I think there were two one-time things people could do economically that had nothing to do with science or tech.

There was a 1980s Reagan-Thatcher move, which was to massively cut taxes, deregulate, allow lots of companies to merge and combine. And it was sort of a one-time way to make the economy a lot bigger, even though it had, it was not something that really had the sort of compounding effect.

So it led to one great decade. And then there was, you know, and that was sort of the right-wing capitalist move. And then in the '90s, there was sort of a Clinton-Blair center-left thing, which was sort of leaning into globalization. And there was a giant global arbitrage you could do, which also had a lot of negative externalities that came with it, but it sort of was a one-time move.

I think both of those are not on offer. You know, I don't necessarily think you should undo globalization. I don't think you should raise taxes like crazy, but you can't do more globalization or more tax cuts here. That's not gonna be the win. And so I think you have to somehow get back to the future.

- We have time for a couple more questions. You, I think, saw that maybe those Ivy League institutions maybe weren't producing the best and brightest or weren't exactly hitting their mandate, and you created the Thiel Fellows. And you've been doing that for a while. And I meet them all because they all have crazy ideas and they pitch me for angel investment.

What have you learned getting people to quit school, giving them $100,000, and then how many parents call you and get really upset that their kids are quitting school? - Well, I've learned a lot. I mean, it's, I don't know. I think the universities are far worse than I even thought when I started this thing.

(audience laughing) I think, yeah, it's, I did this debate at Yale last week, resolved the higher education's a bubble. And you should go through all the different numbers. And then, and again, I was careful to word it in such a way that I didn't have to, and then people kept saying, well, what's your alternative?

What should people do instead? And I said, nope, that's not, was not the debate. I'm not, you know, I'm not your guidance counselor. I'm not your career counselor. I don't know how to solve your problems. But if something's a bubble, you know, the first thing you should do is probably not, you know, lean into it in too crazy a way.

And, you know, the student debt was 300 billion in 2000. It's basically close to 2 trillion at this point. So it's just been this sort of runaway, this runaway process. And then if you look at it by cohort, if you graduated from college in 1997, 12 years later, people still had student debt, but most of the people had sort of paid it down.

But the first, by 2009, we started the Thiel Fellowship in 2010, and it felt, by 2009 was the first cohort where this really stopped. If you take the people graduated from college in 2009, and you fast forward 12 years to 2021, the median person had more student debt 12 years later than they graduated with.

Because it's actually just, it's just compounding faster. And it was, you know, partially, partially the global financial crisis, the people had less well-paying jobs, they stayed in college longer, and the colleges, it's just sort of been this background thing where it's decayed in these really significant ways. And, you know, again, I think it's on some level, there are sort of a lot of debates in our society that are probably dominated by sort of a boomer narrative.

And maybe the baby boomers were the last generation where college really worked. And, you know, they think, well, you know, I worked my way through college, and why can't an 18-year-old going to college do that today? And so I think the bubble will be done once the boomers have exited stage left.

- But does the government need to stop? It would be good if we figured something out before then. - Does the government need to stop underwriting the loans? 'Cause it's the lending. I think the 90 plus percent of the capital in the student loan programs is funded by the federal government.

And there's, if you're an accredited university, you can take out a loan and go to it. And accreditation, in a rigid kind of free market system, you would have an underwriter that says, are you gonna be able to graduate, make enough money to pay your loan off? Is this a good school?

Are you gonna get a good job? And then the market would figure out whether or not to give you a loan, would figure out what the rate should be, and so on. But in this case, the government simply provides capital to support all of this, and as a result, everything's gotten more expensive.

And the rigidity in the system that basically qualifies schools and the quality of those schools relative to the earning potential over time is gone. So we need the government to get out of student loan business. - Yeah, but look, the place where I'm, I know, I'm sort of, some ways I'm right wing, some ways I'm left wing on this.

So the place where I'm left wing is, I do think a lot of the students got ripped off. And so I think there should be some kind of broad-- - Relief. - Student debt forgiveness at this point. - Wow. Who should pick up the tab? - But it's not just the taxpayers.

It's the universities and it's the bondholders. - Got it. (audience applauding) - The bondholders-- - Take a little bit out of those endowments. - And the universities. And then obviously, if you just make it the taxpayers, then you'll just, then the universities can just charge more and more every year-- - There's no incentive to change it.

- There's no incentive to reform whatsoever. But-- - We've had-- - Well, also, I mean, if you-- - But it's in 2005, it was under Bush 43 that the bankruptcy laws got rewritten in the US where you cannot discharge student debt even if you go bankrupt. And if you haven't paid it off by the time you're 65, your social security wage checks will be garnished.

- It's crazy. - So I do think-- - But should we stop lending? Should the federal government get out of the student lending business? - Well, if we say that, if we start with my place where a lot of the student debt should be forgiven, and then-- - And then reform the whole program.

- And then we'll see how many people are willing to lend, how many of the colleges can pay for all the students-- - What's your sense? If it was a totally free market system, how many colleges would shut down? 'Cause they wouldn't be able to, there's no tuition support.

- It probably would be a lot smaller. It might, you might not have to shut them down because a lot of them have gotten extremely abloated. It's like Baumol's cost disease where, I don't know, I have no idea, but a place like UCLA, it probably has twice or three times as many bureaucrats as they had 30, 40 years ago.

So there's sort of all these sort of parasitic people that have sort of gradually accrued, and so there's probably a lot of, there would be a lot of rational ways to dial this back, but yeah, maybe-- - We're gonna need a new location for next year. - If the only way to lose weight is to cut off your thumb, that's kind of a difficult way to go on a diet.

- Peter, three of your collaborators, long-time collaborators, Elon Musk, Mark Zuckerberg, and Sam Altman are arguably the three leading AI language model leaders. Which one is gonna win? Rank them in order and tell us a little bit about each. (audience laughing) Peter said he would answer any question. - I said I would take any question.

I didn't say to answer any questions. - You said you would honestly, you said today you felt extremely honest and candid, so let's-- - I, yeah, but I've already been extremely honest and candid, so I think I'm gonna-- (audience laughing) - Quartermaster. - It's whoever I talked to last.

- Okay, well, okay, why don't you-- - They're all very, very convincing people, so, you know, I-- - Great answer. Well, maybe talk a little bit about each individual. - I talked to Elon a while ago, and it was just how ridiculous it was that Sam Altman was getting away with turning open AI from a nonprofit into a for-profit.

That was such a scam. If everybody was allowed to do this, everybody would do this. It has to be totally illegal, what Sam's doing, and it shouldn't be allowed at all, and that seemed really, really convincing in the moment, and then sort of half an hour later, I thought to myself that, you know, actually, man, it's been such a horrifically mismanaged place at open AI with this preposterous nonprofit board they had, nobody would do this again, and so there actually isn't much of a moral hazard from it, so, but yeah, whoever I talked to, I find very convincing in the moment.

- Will that space just get commoditized? I mean, do you see a path to a monopoly there? - Well, again, this is, again, where, you know, you should, you know, attention is all you need. You need to pay attention to who's making money. It's NVIDIA, it's the hardware, the chip slayer, and then that's just, it's just what we, you know, it's not what we've done in tech for 30 years.

- Are they making 120% of the profits? - They're making, I think everybody else is losing money collectively. Yeah, everyone else is just spending money on the computer, so it's one company that's making, I mean, maybe there's a few other people that are making some money. I mean, I assume TSMC and ASML, but yeah, I think everyone else is collectively losing money.

- What do you think of Zuckerberg's approach to say, I'm so far behind, this isn't core to my business, I'm going to open source it. Is that going to be the winning strategy? Candy cap that for us. - Again, I would say my, again, my big qualification is, you know, my model is AI feels like, it does feel uncomfortably close to the bubble of 1999.

So I'm, we haven't invested that much in it. And I want to have more clarity in investing, but the simplistic question is, you know, who's going to make money? You know, I think a year ago, two years ago, in retrospect, Nvidia would have been a good buy. You know, I think at this point, everybody, it's sort of too obvious that they're making too much money.

Everyone's going to try to copy them on the chip side. Maybe that's straightforward to do, maybe it's not, but that's, no, I'd say probably you should, if you want to figure out the AI thing, you should not be asking this question about, you know, meta or open air or any of these things.

You should really be focusing on the Nvidia question, the chips question. And the fact that we're not able to focus on that, that tells us something about how we've all been trained. You know, I think Nvidia got started in 1993. I believe that was the last year where anybody in their right mind would have studied electrical engineering over computer science, right?

'94, Netscape takes off. And then, yeah, it's probably a really bad idea to start a semiconductor company even in '93, but the benefit is there was going to be, no one would come after you. No talented people started semiconductor companies after 1993 because they all went into software. - Score their monopoly power.

- It's, I think it's quite strong because this history that I just gave you where none of us know anything about chips. And then I think the, you know, I think the risk, it's always, you know, attention is all that you need. The qualifier to that is, you know, when you get started as an actress, as a startup, as a company, you need attention.

Then it's desirable to get more. And at some point, attention becomes the worst thing in the world. And there was the one day where Nvidia had the largest market cap in the world earlier this year. And I do think that represented a phase transition. Once that happened, they probably had more attention than was good.

- Hey, Peter, as we wrap here, your brain works in a unique way. You're an incredible strategist. You think, you know, very differently than a lot of the folks that we get to talk to. With all of this, are you optimistic for the future? - I always, man, I always push back on that question.

I think extreme optimism and extreme pessimism are both really bad attitudes. And they're somehow the same thing. You know, extreme pessimism, nothing you can do. Extreme optimism, the future will take care of itself. So if you have to have one, it's probably you wanna be somewhere in between, maybe mildly optimistic, mildly pessimistic.

But, you know, I believe in human agency and that it's up to us. And it's not, you know, it's not some sort of winning a lottery ticket or some astrological chart that's gonna decide things. And I believe in human agency. And that's sort of an axis that's very different from optimism or pessimism.

- What a great place. - Extreme optimism, extreme pessimism, they're both excuses for laziness. - What an amazing place to end. Ladies and gentlemen, give it up for Peter Thiel. - Thank you, thank you, Peter. - Come on now. - Thanks, man. - Wow. - All right. - Peter Thiel.