Whoa, whoa, whoa, Saks found the gel. Oh my God. This guy, he's running for office. If he shows up with a red tie next week, we're fucked. That's the end of the show. He shows up with a red tie and a blue shirt. Are you coming out of your law retirement?

Are you going to be an active lawyer defending Trump? Saks, you look really good, I got to say, with the gel. That looks, that's a really good look. That's kind of the shower, used a comb. Oh, the weekly shower in Italy? Good look, right? It's not a bad look.

Did you use soap? Did you, uh, did you... Oh no. Oh no. I didn't have time. Didn't have 90 seconds? Yeah, I didn't want to keep you guys waiting another two minutes. All right, everybody, welcome to another episode of the All In podcast. It is August, and we just might have had the most consequential week in terms of politics and science in a long time.

Could be, could be the week of the year. Freeberg's been going nuts inside the group chat because everyone is trying to replicate this LK99 room temperature semiconductor experiment. Superconductor. Superconductor, yes. So, God, I mean, this has been, what has it been, like 10 days, and now everybody is on Twitter trying to recreate this.

Maybe I should just let you cue this up, Freeberg, since this is the first time, perhaps the last, that we're going to start the show at Science Corner. So, Science Corner takeover week. Tell us, is this legit? Because you flip from this is a fraud to this is changing the world, like, every day you seem to have a new piece of evidence.

Where are you today with this? Is this the real deal? I mean, it's probably somewhere in the middle, but it leads to a path that could get us to the holy grail, which is room temperature superconducting material, which we've talked about twice on the show before, and I encourage folks to go look at the episode we did a couple ago after the original claim was made a few months ago that turned out to not be true.

But the description in the paper that came out on how to make this material was chased by hundreds of labs around the world over the last few days. Folks have been live streaming it on these Chinese websites, Billy Billy and Twitter and Twitch. Everyone from Russian scientists to Chinese to Korean to American to European.

I will say one thing that I think is really profound, which it is, this is the first time in a very long time that I've seen so many people share a unified voice about optimism, about an abundant future, optimism about a big breakthrough, rather than get on social media to share a voice about fear and anger at someone or something and to hear everyone around the world get together and be excited about the potential of this discovery and its applications.

It's really profound to see and it's really amazing and wonderful to see. Now, where we are, a bunch of labs took the described chemical structure of this material, LK99, which has lead and phosphorus, oxygen and some copper in it, and put it into these modeling systems, these computer modeling systems to try and understand where do the electrons flow, where do the electrons sit in this material if this material is made the way it's described.

And five different labs have now published papers that show that the way that this material is supposedly produced, it should create these pathways or these energy states with the electrons that theoretically could enable superconductivity at a very high temperature. And so that's a very confirmatory signal that computer modeling of the electron clouds, because remember, electrons, even though they move around the nucleus of an atom, we only kind of have a probability statement of where they are.

So if you look at all the probability statements of all the atoms stuck together, and you try and figure out what's the aggregate probability of where electrons are, it indicates that there are these pathways that theoretically could allow for electrons to move freely through the material and be completely void of any sort of resistance, which is superconductivity.

And so that's what's really profound about the modeling outputs from five very separate independent labs. Just so we're clear, when electricity normally moves down an electric wire or in computers and CPUs, GPUs, whatever, there's resistance, that resistance results in loss, it results in heat. And the only way we've been able to reduce that loss is by making it freezing cold, like significantly cold.

Totally right. Yeah. So now if we were to do this, when we didn't have to make a cold, that means that these superconducting experiments move from the laboratory where it's forced to be cold to the real world, our desktop, you used an analogy in chat that was really interesting of like, a superconducting road, where and then you don't lose energy right now, how much energy do we lose transporting it to our houses?

Right. So, you know, I would say on the order of 70% of energy we produce is lost to heat and friction. Think about moving a car down the road, when you move a car down the road, you're having to put energy and to overcome the friction of the car hitting the road.

So if the car could hover above the road, the friction goes away and the energy needed to move the car goes way, way down. When you build a data center, the electrons that are moving through the copper and the semiconductors bump into other atoms, when they bump into the atoms in the material, they shake those atoms.

When atoms shake, that is heat. So that's why copper wire heats up when you put electricity through it, you're moving electrons through it. Some of those electrons bump into the copper atoms, shakes the copper atoms, they get hot, and then some of the electrons make their way through. The rate at which electrons are bumping into other atoms is the resistance of the material.

So, said plainly... And so all this energy is going into cooling down data centers and all this energy is lost in computing to heat. And same in electric motors could be reinvented, semiconductors, integrated circuits would be reinvented. And like I said, if you had enough of this material, you could put it in roads.

And because superconductors also reflect magnetic fields, you could put magnets on the bottom of cars and float them above the ground and cruise around without any friction. And if any of this is true, this 70% loss of... and then all this energy put into cooling data centers, we could be looking at doubling or tripling the amount of energy available because we built a certain amount of energy infrastructure.

So this would be all gains if we could figure out how to leverage this technology. Massive gains and massive abundance, it would lower the cost of electricity by 10%, 100%. I mean, look, assuming huge infrastructure investments, which would take probably decades to do, you would get there. But in the near term, there are these incredible applications.

Quantum computers are built using little superconductors as the qubit. And so the superconductor holds the qubit state. So this idea that we could now have room temperature quantum computing is also a very profound one, game changer, low cost. And the first thing that would be changed is likely electronic components.

So we would take electronic components and redesign them using superconducting material that would allow you to reduce heat loss and energy loss. And that would have a big transformative effect on, for example, the big effort right now to make more AI chips, GPU chips to do matrix transformations. There is some precedent for this.

People are now creating optical bridges between GPUs and CPUs in order to reduce the heat. So they're using optics, basically light to transfer data. Interconnects. Yeah, yeah. That's been the big lift right now, from what I understand, in GPUs and data centers is you still have to convert data.

Yeah, it's, I mean, we could go on for hours on that. But like, yes, I mean, this would just be a game changer, electronic component, right? Photonic chips, right? Photonic chips. But look, this is obviously a little bit separate. But here's where we are. So LK99, there's all these simulation models that show this thing could work.

But there's two things I will say came out of this from some of the simulations. The first is, remember, this is a crystal with mostly lead atoms. And these lead atoms, some of them get replaced by copper. And when they get replaced by copper, it causes the crystal structure to change by 0.46 degrees, is what the Koreans say.

The angle changes by 0.46 degrees. And when that happens, that bending causes the electrons in all the atoms in the crystal to overlap slightly. And that overlapping effect causes this free-flowing electron tunnel. That is the theory for why the superconducts. Now, what the simulation showed is that you have to replace only one of the lead atoms, not any of the other ones, in order for this to work.

And that could explain why everyone's having different results in the lab trying to reproduce this. Because when you bake this stuff in an oven, if the copper gets into the wrong atom space in the crystal, it doesn't work. And so that's why some of these things might end up looking good, and some of them don't look good.

And some of them, there was a lab yesterday in China that published no resistance, but they had to cool it down to 100 degrees below freezing. And so it wasn't at room temperature, but it did superconduct, it did have no resistance. >> 170 Kelvin, I think is where they got it.

>> Yeah, so 100 below zero Celsius. >> So in other words, there is a key here in the molecular structure that you have to just thread perfectly. >> You have to replace the right lead atom with the copper in order for this to work. And so that's a technically very, and what happens by the way, >> So that's a fidelity issue, that's a tool issue, like you have to have the right tool to do it, or is it luck, or right now?

>> So here's the crazy story, and I'll tell you guys this, I don't know how real this is, but the guys claim, so remember, these two scientists, Lee and Kim, supposedly saw this material in a lab in 1999. That's why it's called LK, Lee and Kim, '99. And so in '99, they came across this, and they could not replicate it, and they had no idea how to make it again.

And it disappeared, and they didn't have the sample again. They then spent the next 20 years of their life, one was a college professor, and the other one worked for LG as a battery engineer, and they just had these random, normal, everyday lives. It reminds me of Dennis Quaid in the movie The Rookie, where he had this amazing arm, and he was going to go to the MLB, and then something happened, and he spent the rest of his life as a high school PE teacher.

And then 20 years later, he gets his arm back, and he goes to the MLB, and he plays in a major league baseball game. Because all of a sudden, during COVID, these guys got some funding, they set up a company, they went into a lab, and they rediscovered this material.

And apparently, this is the rumor, I don't know if this is real, the rumor is, they had it, they were baking it in an oven, in a vacuum-sealed tube, and when the guy took it out of the oven, he accidentally bumped into a table, and the tube cracked. And when the tube cracked, it did something to the material, and then they measured it, and oh my god, it's room temperature superconductor.

That's the current theory of what, the rumor of what happened in the video. That's like Peter Parker being bitten by a radioactive spider. I mean, it doesn't make any sense. What? Yeah. So here's the drama. This guy, Kwon, got inserted to oversee them as like their CTO. The guy that gave the money to Q-Center said, "He's got to oversee you." Kwon apparently got fired from his job in March, and he was kicked out of his company, was no longer affiliated.

And the rumor is that Kwon took all the lab data, and these guys, in 2020, during COVID, they discovered this. They started filing patents and working on the manufacturing process, trying to figure out how to replicate it and do it again. They had all this data, but they weren't going to publish it.

They didn't want the world to know about it yet. And then all of a sudden, Kwon gathers all this data, probably disgruntled after getting fired, puts it into a paper and puts it on the internet. So that's the first paper that came out. This is important because there's a website called R-A-R-X-I-V.

Is there a pronunciation for this website? So this is where you can open source file scientific papers, right? Okay, so this is a place for dropping papers outside of the academia? Yeah. The traditional journal process requires peer review, and there's editors at the journal that decide whether or not to publish your paper.

So sometimes... Gatekeepers. Yeah, gatekeepers. And so if you don't want to do that, you just want to get a story out to the world right away. So during COVID, everyone was publishing on the site, all their updates on research they were doing to help the world figure out what's going on with COVID.

So it's a great place to just hit the world with your data, hit the world with your findings. This is like acoustic raw papers, and it's called Archive. A-R-X-I-V.org if you want to go see it. Archive. So anyone can publish a PDF. No one knows if it's real or not.

It hasn't been peer reviewed, etc. So this guy, Kwon, so Kwon drops the paper with his name, Lee, Kim, and Kwon on the paper. Only three people can win a Nobel Prize. So the theory is he did this to get his name out there to make sure he could lock in his name for the Nobel Prize.

Wow. And then within a day, Lee and Kim and four people they've been working with, including some folks in the US, published another paper with better data, but it was also rushed out. And so both papers are pretty ugly, I gotta be honest. They're like pretty messy. They don't have a great deal of clarity.

There's errors in them. There's mistakes. There's redundancy. There's little basic chart editing errors, stupid stuff. Clearly, this was a rushed job. But these guys rushed out and said, "You know what, if this is going to be public, we now have to correct the story and see what happens." So they put this thing out there.

They wanted to get their claim in to get their Nobel Peace Prize, which would indicate that would lean towards a piece of evidence, as would people funding them 25 years later. That would indicate maybe there's something there. Two things worth noting on the simulation stuff. Number one, obviously, you got to get the copper in the right place.

And the production way to do that, how do we actually engineer that to happen? It's not really clear. Baking it in an oven clearly is creating what's called heterogeneous results, meaning everyone's getting different results around the world that have been doing this for the last couple days. And everyone's really confused.

Is this real? Is it fake? I don't know. But that simulation explains why there's maybe lots of different results. Another comment. It turns out that one of the simulation teams said, "Hey, if you put gold instead of copper in the spot, it's a better superconductor. It could actually be a better material." So it's opening up all these paths for exploration that we had never considered before, that there's this whole new approach to creating superconducting materials that was not on anyone's radar before.

So this is opening up a whole new realm. And I think this is going to unfold over the next couple of years with more material discovery, more invention coming off of this initial discovery and simulation model that then offers all these other opportunities for creating potentially new materials that maybe are easier to manufacture and better to produce.

And the final thing I'll say is that there are some teams that are commenting, that are saying that this thing may be superconducting, but only on one dimension, which means along a line of atoms or line of molecules in the material. So normal superconductors, think about them as like a 3D matrix, and the electrons can flow freely through any direction through the matrix, through the crystal.

And in this case, they're saying the electrons can only flow freely across a line in this material. And so now there's another question of, "Wait, how do you manufacture lots of lines to run in parallel to make this thing truly superconducting at scale?" So that's all the hard technical stuff that's emerging right now.

Whether or not this actually does turn into a room temperature superconducting material that can be industrialized and used in all these applications everyone's really excited about, I think it's probably months to years away from knowing. But at this point, there's a great set of indications that, "Oh my God, we might be onto something new." There's a whole new path of discovery, a whole new path of engineering and invention.

And it's amazing to just see everyone gather around this and get so excited about it, because it really will change so much about the world and create extraordinary abundance and prosperity for humanity. If this proves to be real and industrializable and scalable. >> Can I just ask a simple question here?

>> Oh, you're good. >> When you say, "If this proves to be real," if nobody has reproduced the result, why is there any belief that this is real? >> There are properties of this that, look, I think we have to take a step back. We have found superconductive materials in the past.

There are many ceramics that are superconductive. Mercury is superconductive. There's all kinds of elements and materials and compounds in the physical world that we've already figured out have these properties. So this is not like a new thing that's never been found before. It's just this idea of trying to find it at a certain temperature where it could exist naturally in the normal world without all this expensive cooling.

Okay. But there is a separate thing, which is that we also have found a whole bunch of materials that look and behave like superconductors, but are really not. They're what's called just diamagnetic. I think right now what people are trying to sort out is, "Is this a clever diamagnet?

Is this diamagnetism? Or is it superconductive?" These are huge differences that swing this from, "Yeah, it's kind of a cool thing," and, "Yeah, whatever. There's a bunch of other materials we found that are like this," to, "Wow, this is transformational." Right now, we don't know any of that. I think that all of the mystery around this is mostly because people can be on one side of the debate or the other literally by the second based on what new simulation or what new piece of research people are putting out there.

But you have to remember, diamagnetism is like a property of matter. Superconductivity is a state of matter. It is totally different. All superconductors are diamagnetic, but all diamagnets are not superconductive. So we could just be extremely excited about not much of anything, or this could really be a breakthrough.

If what the Chinese guy said is that they were able to cool this thing down and get it to be superconductive, then that does... At 170K, it doesn't mean much, in my opinion. Right. It's not room temperature, but it does indicate that this material can be superconductive. Look, there are many materials like this.

There's a lot of forms of red matter that we've already found that at that temperature gradient, at that range of temperatures, can be superconductive. It's not practically useful at that point. Yeah, that's right. And I don't think you're going to see some massive revolution. So I'm a betting man.

I make bets. I think I've talked about when there was this guy, Ranga Diaz, that had to try this stuff, and he was sort of refuted in what he was working on. But 18 months before that happened, I was trying to get a deal done with the University of Rochester to buy all that IP.

So I've been grinding in and around this space for a couple of years. My intuition on this is that this is diamagnetic. And I think we're going to find that it's like yet another material added to the list of materials, and it's okay. But hopefully what it really does is it sparks an interest in a lot of other people putting more money behind this.

Nick, if you could pull up this manifold markets, there's a prediction market called manifold dot markets that people have been sharing a link from betting markets where people bet either side of this will LK 99 room temp ambient pressure serving conductivity, preprint replicate before 2025. And you can see it's about 30% chance you what do you think of the prediction markets assessing this?

Freeberg? Yeah, I think that's probably that's probably a good handicap for where we are. I'll say when you look at a diamagnetic material, and so what that means a diamagnet will expel magnetic fields of both polarities, a paramagnet will reflect the north or the south pole, its north pole will reflect the north pole of another magnetic material, right?

diamagnets, you can put north or south pole and they reflect both. And there's plenty of videos you can watch of putting a frog in like a 10 Tesla machine and the frog floats technically a frog is diamagnetic. But what happens typically with diamagnetic materials is they orient themselves while they're freely floating into a particular direction.

So there's going to be three things people are going to be looking for in terms of confirmatory proof on LK 99. The first is does this material float like a superconductor over a magnetic field? Because remember, superconductors perfectly expel magnetic fields, they are diamagnets to the absolute degree, they perfectly reflect all magnetic fields.

So if you put a superconducting material above a magnetic field, it should kind of float freely and spin around and stuff. If it orients back to one position, it probably means that there's something going on, where it's maybe not a perfect superconductor. Now all these videos, the second thing you're going to look for zero resistance.

So can you actually pass an electric charge through it and have no resistance in the material? So you're seeing data coming out now that's indicating we're seeing that we're seeing it at a low temperature, no one's yet replicated this at room temperature. And the third thing is a transition, which means that there's a point where it shifts, because that's a classic characteristic of superconducting materials that there's a transition temperature transition phase, where the material becomes superconducting, or it's not superconducting.

So those kind of generally those three experimental proof points are what everyone's looking for. Thus far, the videos we've seen look like UFO or Bigfoot videos. They're friggin grainy. They're like, you know, you guys have seen some of these videos that have come out. They're like at a distance.

It's like, wait, why didn't you do the whole angle? Why did you only take a picture? Why didn't you do the video? There's this woman in Russia, who's now in UFO territory, people are looking at me super like there's a raw, there's a little flake of here's a video of a little flake of a material that someone supposedly made in the lab, or it could be right, they put it over the super over a very strong magnet.

And this is the video they got. It's super blurry. There's a woman in Russia, and she totally reinvented the manufacturing process. She's actually well known scientists. So she's not BS. And she said, I made this thing in my house using a furnace and I use the whole new process.

So she does this whole new process. She live streams the whole thing. And then she puts out a video of the thing floating in a straw. It's a sorry, a video photo. And it's a blurry photo. And people are like, show us the video show us that it's real.

And she's refusing to. So this whole thing is feeling a little like there's UFO Bigfoot type people out there that we're not really seeing clarity on is this real. And then obviously the resistance data, there's very credible academic universities coming out. And I will also say there are a number of labs, there's one in China, and the one in China that measured the zero resistance at negative 100 degrees, they created 8000 samples.

So they found one that worked. There's another lab that did eight different pathways of manufacturing it in China. And they said, we can't find any that work yet. So you know, there's a lot of negative indications as well, which is why the prediction markets are probably right. But I do think that this theoretical explanation that you have to get the copper atom to replace the correct lead atom in the crystal structure explains a lot of the heterogeneity and results and the reason why people may not be able to replicate this.

And if someone could crack the code on how do we actually engineer this thing and produce it correctly, based on the theory, maybe we'll see different better results. But again, that's also theoretical, because no one seems to have nailed the manufacturing process here. So lots of data coming in every day, by next week, we could be clapping and, you know, cheering.

Or, you know, we could sort of be on this very long grind, sort of like Russia, Ukraine, just a long grind. And it's a it'll last years. And maybe someone will win, maybe someone won't, or maybe it just opens up a whole new set of explorations for new superconducting materials at room temperature that could change the world.

I gotta say the thing I love most about this is like, we have this Oppenheimer film comes out. And at the same time, this happens, we got UFO testimonials, you know, in congressional hearings, all of this energy at the same time, of people who are just really stoked to do material science to do basic science to figure out big problems.

And I agree with you, the optimism around all this is, is, I mean, how fantastic else, tell me something else in our lifetime in our in the last decade or two, where we've seen the whole world, say, in a positive way, something great could happen, instead of something bad could happen, and someone's to blame for something.

I mean, it really is, in my mind, the first time I've really seen this happen in a very long time. Maybe the internet was a was a great moment came to me. Yeah, everybody being connected, everybody being able to share information, free access to information on Twitter and Billy Billy and YouTube and like all sharing this stuff.

And saying, my gosh, we could have this breakthrough together as a, as a civil as a species, not like a country, not a individual, not a who messed up who did something wrong, who's to blame who's on the other side. It's like, dude, if we all do if this happens, we're all going to be like, chilling on the beach, it's gonna be amazing.

Like, this is awesome. So we're gonna have, we're gonna have a rash of VCs running into this next. And start funding material science. Yeah, I mean, my attitude is kind of like, wake me up when you know, it's real. Because it's nice that if this is real, then it's great that there's all this positive energy around it.

But that's like a big caveat. Until we know that there's something real here. I think it's premature for everybody to say that this is like some wonderful thing. Now, if we find out that the science is real, and then it's just a debate over commercialization of it, then yeah, I agree.

That would be like a really positive moment. I just love the fact that when something positive in the world happens, or when something negative happens, we have this amazing platform for everybody, social media, x.com, formerly Twitter, where everybody can get together around this campfire and just start discussing it and speculating.

Now, some people don't like speculation. Obviously, if there's a school shooting or a tragedy, a building burns down, the fog of war, as we've seen, in the constant Ukraine coverage, you know, you can have, it's very easy to make mistakes. You're hashing this stuff in real time, but I love the real time nature of the world and the pace we're moving at.

It's kind of delightful to me. I don't have a problem with the speculation and there is a fun element to it. But when you start talking about investing in it, like I said, wake me up when you know it's real. There's a really funny meme that VC Braggs posted.

Oh, VC Braggs, shout out VC Braggs. This is good. This is a famous meme of a kid drowning. That's so good. While the mom is playing with another kid and not paying attention to the drowning kid, it's sort of like the guy who's holding hands with his girlfriend, but looking over his shoulder and whistling at the other woman.

And Superconductors is the happy little kid. VCs is the mom and Generative AI is drowning. But then they show in the underwater, yeah, somebody who's tied to a chair with chains of skeletons. The last hype cycle. The last hype cycle, creator of Codemy Crypto M3. Yeah, it's pretty funny.

It's pretty, I will say, I told you about this when we were in Italy last week. But when I was 13 years old, J. Cal can make fun of me now. I did a science fair project on Superconductors. Actually, I was doing it when I was 13. And I bought this superconductor from the back of Popular Science magazine.

You know, this old yttrium barium copper oxide. That was the one that won the Nobel Prize. You could buy it for nothing. And I got liquid nitrogen at UCLA and I did a demo at the science fair and I did a poster board and I had hyper card on a Macintosh LC.

And I showed everyone, this is the future. We're about to have room temperature superconductors. It's about to happen. And we're going to have flying cars and we're going to have limitless energy and limitless battery storage for energy, by the way, which is one of the big applications. And it's just on the brink.

And this was when I was 13 years old, 1993. You know, here we are 30 years old, 30 years later. And everyone feels like this moment might be upon us. But it has been this thing that's always been elusive, that everyone's always thought is around the corner. Well, it sounds like cold fusion.

You know, we've always been 10 years away for some breakthrough in cold fusion, self-driving cars, artificial general intelligence. Well, I think there's a difference between this physical world, material sciences type innovation and then software innovation. And one of Peter Thiel's critiques is that we've had tremendous innovation in software, but in every other aspect of the economy, there's been little to no innovation.

Planes, for example, are getting slower, not faster. Would you believe that position from from him? I don't buy that. Well, I mean, with the exception of like what Elon has been doing with the genomic revolution, he misses life sciences entirely in that point. I don't know. I mean, genomics is largely software based at this point.

If you look at the whole revolution driven by gene editing, oncology, the breakthroughs, I mean, look, it's all slowing down. I do agree with him. If you look at the number of approved drugs every year and the cost per drug cost per drug is going in the wrong direction and the number of drugs per year is going in the wrong direction.

So there is an argument to be made there. But there are arguably some quantum leaps in the types of medicine that we're applying. We didn't have biologics, you know, 40 years ago. We didn't have gene therapy 10 years ago. These are new modalities for therapies that didn't exist as we've engineered the molecular world to do amazing things in the biochemical application space.

So I think there's elements of this that I disagree with. But I think the general trend lines, as he points out, is totally true. Yeah, but with planes, I think we've made a conscious decision. He always cites the plane issue. Hey, we don't have the Concorde, we're going backwards in terms of speed.

I think that was a deliberate cost cutting measure because people aren't willing to pay to go faster and burn more fuel. So they're making an economic decision on that. The price gets cheaper. That's right. That's right. Same with electricity. Same with energy. Electricity is getting more expensive, not cheaper.

But if you look at the massive, if we wouldn't have the massive gains in artificial intelligence and machine learning, if it hadn't been for the revolution in GPU storage, and data centers and microprocessors and the iPhone. But that's kind of the point is that we were promised flying cars and instead we got 280 characters.

Not that Twitter slash X is bad, but that's just where all the innovation has been is in IT. That I agree with. So they figure it out. They keep figuring out how to put more circuits on a transistor or whatever and, you know, keep Moore's law going or I could show you over the years, but I could make a different argument by showing you human lifespan and agricultural yields.

I mean, agricultural yields continue to climb because of our ability to engineer in a smarter and better way. Every generation there, there's a lot of counter arguments to that. I would say what's valid about it is we go ahead, Shama. I was going to say the reason we don't see these kinds of innovations is because the ruling class has clogged up and sclerotically dominated all the places where you'd have this massive forms of innovation, like regular regularity.

No, no, no, no, no, no. That's like I'm talking about. That's like a boogeyman. So get the boogeyman out. The regulatory captures there forever. Like, why was this paper published on artisan? Because every other form of publishing mechanism is sclerotic. It's establishment. It's hierarchical. It's about people basically dominating their own little forms of payola.

Right. And so nature, JAMA, all of this stuff works this way. And so what happens? You don't get fundamental innovations that happen in labs. You have things that feed research proposals that feed people who need to basically establish their supremacy. You saw the Stanford professor get booted up because of stuff that, you know, he the president of Stanford, the president said, so why is all this happening?

Well, Peter is right. The reason why this stuff is happening is that instead of places where true fundamental innovation can happen, if you look at the Nobel Prize winners and you do distribution by age, what do you find? People win Nobels in their 60s for work that they did in their 20s and 30s.

Right. And so you have a system now that rewards people staying in their positions. I wrote this in one of my annual letters. If you look at the average age of like leading people in schools, they're like 70 years old. If you look inside of Congress, so there's all of this stuff that just kind of sclerotically prevents young, naive people from basically going out and really pushing the boundaries in specifically this case of science, of fundamental science.

And so for every innovation, I think the question to ask is what other innovations are we missing? And if innovations are on a fundamentally well-established pathway that defends a bunch of work of senior people before it, it'll get supported. And I would say that genetics is a perfect example of that.

The other thing, If you look at the, if you look at the number of rare diseases that have still that are still like unsolved or the lack of understanding of immuno disease, it's just crazy. Like it's, I just think that that's really what's happening. I think Peter's more right than he's wrong.

The other issue here, Saxe is, and I'd like to get your feedback on this is if you look at how venture capital works, you got a 10 year window, you want to get returns for your LPs, you look at how this fundamental research, we just said this started in 1999, that's why it's called dash 99.

This thing took 25 years to get to this point is part of this issue that you have this big opportunity zone between say ventures window 10 years, and then academia, which you put at like four decades there, Chumaf, 20 year olds getting their rewards in their 60s. How much of this has to do with, we don't have a platform in between venture and academia.

That's not the problem. So it's true that VC funding, typically you want to go to the commercialization of an idea and that the underlying platform shift already exists. And usually that comes from some sort of breakthrough that happened in academia. I mean, that's basically what happened with the internet.

So yeah, you do not want VC funding typically going to basic R and D, fundamental science R and D. It's just really expensive, takes too long and too unknown. So you want that stuff kind of done more at the academic level. The question I have is how much of what's happening in academia is basically either irrelevant or fraudulent.

So Chumaf, you brought up the Stanford president. I think the story there is he had five papers about Alzheimer's research and related topics like that, where they found out that the papers are basically bogus and quasi fraudulent. So how much of the work that's being done in academia, how many of these papers are basically bogus?

Well, the thing with peer review is like, it's presented like it's a great, incredible solution to the world's problems, but I think what it has inherently wrong with it. So the positive part of it is theoretically you have error correction, right? But here, what you don't find is that that error correction actually even happened.

And so it takes like some young 20 year old kid at Stanford who's a journalist, whose family were journalists to basically figure that out. So instead, what were those journals? What were those papers doing? They were supporting a rising up and coming person because they thought that, you know, he would support them at some point.

This is like the whole corrupt Fauci system at the NIH. Friedberg, Chumaf and Sachs are presenting academia as corrupt. Do you agree with that? I don't know if corrupt is the right term, because I think that implies malintent. I think that the incentives are wrong. So in order to get funded, you have to show results.

No one gets a grant to disprove someone else's work. No one gets a grant to do confirmatory work on someone else's work. You get a grant. You get it. Yeah. I mean, that's that's the argument that some folks make. You get a grant to do breakthrough research and have breakthroughs.

And if you have breakthroughs, you get more money. That's the way the system is set up. But this is why this guy this is why. Well, let me just say it's corrupt. I think it's corrupt. There's no funding for breakthroughs. Come on. OK, whatever you want to define it as the guy at Stanford, if you read some of the testimony from people in his labs, they said that he encouraged people to have big findings.

And if you get big findings, you get to progress in the organization. You get more funding, et cetera. So the the incentive structure that he set up for people was not necessarily to go in and disprove stuff or try something and show that it didn't work. If you try something and show that it didn't work and publish a paper on that, it's going to be very hard for you to turn around and get a trophy or get some money or get a grant.

He did. There was like a bunch of error in the data that they went back and were like, hey, this is this is incorrect. And he's like, oh, yeah, it was sloppy. I just didn't do a good job of reviewing it. So yeah. So what happened was, if you read some of the testimony, the people that worked in his labs, the students and the graduate students and so on, they said that he basically encouraged people to get good results.

And in that process and in that way, there was some fuzziness in the data or some tweaking of the data that he didn't double check for sure. But he was encouraging this sort of system of performance and the system of performance says you've got to show results. You can't show non results.

And if you show non results, there's no money. And the reason they're doing that is marketing. They want to market and get more attention so they get more donations. Yeah, exactly. The problem with with pure research is that you have to get funding to do your research. Where do you get your funding from?

You get your funding from federal agencies, from nonprofits, from your, you know, your donors. And so in order to get that money, you have to say, here's what I'm going to do. Here's not what here's, you don't say I'm going to go not prove something. You say I'm going to go prove something.

You're hiding the cheese. Can you stop hiding the cheese? That's not what these people are saying. These people aren't saying I'm not going to not prove this. These like most of these people are working on very thin incremental extensions of work that's already been done, because it allows them a more defined path to get tenureship to be a well respected professor to work through the hierarchy of a university.

That's what's happening today. And the reason why that stuff gets funded is that those are the same people that are in charge of the funding infrastructure at NIH and all these other places. What we don't have is something that says, go and write the most ambitious proposals, and I'm going to go fund it.

I think both things are true. I'm sorry. There's no market mechanism. I'll just say both things are true, because what you're saying, Chamath, is a point of failure. If you say I'm going to go try something crazy, like do a search for a room temperature superconductor using lead crystals, you're not going to get funding for that.

It's too out there. I mean, you guys today are talking about how low probability stuff isn't that interesting. I'm not going to fund it until it's real. And so when things are real, you have some molecule that has some effect on cancer cells, then you get funding to make that molecule go to the next phase or go to the next stage.

That is more fundable than the outlandish crazy thing where the probability of it going to zero is 99%. You could throw Elizabeth Holmes into that, right? I mean, she came up with this absurd idea that she could do 200 tests on one drop of blood, and they left her out of campus.

That was just a statement about engineering that wasn't ready. And what another company just got funded to do the same thing that Theranos promises going to do. Yeah, you see this, but I did not say that. Yeah, I mean, some pretty good VCs invested in actually, and they especially said, we know this is the same idea as Theranos.

But for that very reason, we think it's very unlikely to be fraud because it's being held to such a high standard of scrutiny. I want you guys to think about this. I want you guys to think about this as VCs. An entrepreneur comes to you. And the entrepreneur, she says, I've done this thing.

I did this thing. I did this thing. I did this thing. I did this thing, five different things, none of them work. I want to have money to do this next thing. You're less likely to fund that person than the entrepreneur that shows up and says, this first thing I did work.

The second thing I did work, the third startup I did work. They weren't home runs, but they were amazing. And I had good results. That's basically what happens in, you know, the scientific research is you've got to get something that's fundable. And often that means not doing something that's likely to go to zero.

And that's where the incrementalism comes in, Chamath, is that orientation, I think. I hate to give my playbook, but one of the great successes I've had is finding people who got their asses kicked on the last two companies, talking to them about why they got their asses kicked, and then how they're going to avoid getting their asses handed to them with this third company.

Then if you look at Travis with Uber, he did Scour, got, you know, sued for a quarter trillion dollars. He did Red Swoosh. He got like a $30 million exit. And then he did Uber, right? He, his first two companies were very hard. Steve Jervison and Future Ventures, he took his venture fund and he told the LPs, it's a 15 year term, not 10.

So he specifically is trying to do a little bit of a longer window. I think that is actually a possible solution here. I think smart, independent thinkers find ways to make money. I've been looking at this superconductor space for the last two years. And so it's not like people are shy and have money and aren't willing to write the checks.

I just don't think that's what it is. The body of work that's coming out of academic institutions today for the amount of money that's put in is modest. And I think that's the best way to describe it. It's the fairest way. And the reason it's modest is not because of the intellectual capacity of the people.

It's because of the incentives and the hierarchy and the establishment elitist politics that infuses how these organizations are run. And I think the only way to break that apart is to basically disrupt who is in charge of these institutions. Nick, just throw up this chart. These are people that for decades and decades and decades are in a grind and who are now in control.

And so what is the incentive of these folks to change? Explain the chart. Yeah, what is this? This is a chart that I put together, which is just the generational distribution of academic leadership across all the leading research institutions in America. Okay? Well, isn't Fauci a prime example of this?

This is the birth year? No, listen, you had the most important person, hold on a second, the most important person probably in the federal distribution of grants in the medical field was Fauci, right? He literally was running the NIH since the 1980s. He's been there for 40-something years. And the mask was peeled away during COVID.

And we saw how much power he wielded, really, I think, in a corrupt way. Jason used the word corrupt. You had that letter to the Lancet that he got a whole bunch of scientists to sign that claimed that COVID was not made in a lab, that was a conspiracy theory, that the only place it could have come from was the sort of the zoonotic leap naturally occurring from animals.

We know that he used his power over grants to basically pressure those people into signing the letter, or they thought it would be in their interest to do so. Even though Fauci had already been updated by a bunch of scientists that it likely had come from a lab, they could just look under a microscope and see it appearing in Cleveland sites, which are the telltale sign.

So, they knew that this thing likely came from a lab. There was no basis for calling it a conspiracy theory, certainly. And yet, the whole field got behind that. But Sax, did you see the Slack messages where they were trying to manipulate the New York Times science writer? I mean, they basically...

But the question you have to ask is why were all these scientists willing to go along with this and sign that letter to the Lancet? Because these guys have been grinding for 40 or 50 years in a hierarchy. And so, to all of a sudden, put a pin in it and just say, you know what, I'm going to dispense with all of it.

And now I'm going to basically like be completely open minded. How likely was that? The odds of that were very low. Look, look at the number of people who have basically grown up in one segment of society that are sclerotically in charge of every single leading research university in the United States.

That is why we don't have flying cars. This is why. Because after 40 years of working in a specific hierarchy, being rewarded in a very specific way with a very specific set of incentives, when some young, brash, 22-year-old naive person writes an extremely ambitious research proposal, you're like, no, you will not be a part of my lab to do that.

But you can do this incremental thing that that further reinforces my leadership in society. That is what this chart shows. Yeah, it's also perverse inside of government. We didn't talk about it, I don't think, last week. But Mitch McConnell, I don't know how to say it, but I guess he froze while he was speaking.

And, you know, we got to have an upper age. Oh, and then the Dianne Feinstein thing. Remember when she started giving a speech and their staff are whispering, saying, just say I, you know, and she starts going on this like filibuster. No, Jason, you're right. We have a sporadic political system run by octogenarians because the boomers are not relinquishing political power.

They're fucking retired. And they're also not relinquishing bureaucratic power. Can we just pull up this Lancet letter for a second? They say here, zoom in on this, "The rapid, open, and transparent sharing of data on this outbreak is now being threatened by rumors and misinformation around its origins. We stand together to strongly condemn conspiracy theories suggesting that COVID-19 does not have a natural origin." How could they say that at that point in time?

All the evidence suggested it was made in a lab. Now, certainly, I think you could take the other side of that, but to condemn the lab leak theory as a conspiracy theory, that was corrupt. I'm not sure that that's corrupt. You know, what's corrupt is not retracting that and apologizing.

That's where the real corruption is. We have not gotten our post-mortem on this stuff. But this Lancet letter was organized. It was organized. This is just like the 51 spies who lied, claiming that the Hunter Biden laptop was disinformation. This is the establishment willing to use its credentials and respectability and expertise to sign a letter they know is false to perpetrate a fraud on the American people in order to protect the people in charge.

That's the motivation here, because Fauci had funded gain-of-function research in the Wuhan lab. I think the same rot that is in some of these leading research institutions and leading academic institutions and politics, they all share the same commonality, which is we are sclerotic. We are in desperate need of a generational shift of power.

And right now, there is no incentive, because at the same time, you know, the people that are 70 and 80 are thinking to themselves, "Well, I'm probably going to live to 100. What should I do for the next 20 years?" Being in power is pretty good. Right? So we're in this weird clash.

I was thinking a lot about the fiscal spending problem in the US, and we should talk about the Fitch rating downgrade that happened this week. I've got some data I'd like to share. One thing I was thinking about was how tied the age of Congress is to our fiscal spending problem.

If you think about someone who's young, they're going to want to invest for their future and think about the future. If you're someone who's old, you live for the day, and you don't think about the future. And I worry so much that the aging of the establishment that makes the decisions about how money is spent creates a psychological barrier or positioning that's all about giving away all the money today instead of making the right decision to make sure that we have a prosperous tomorrow.

And that's why I think so many of these things kind of slip through. If you put a 20-year-old in charge that was well-informed in charge of some of the fiscal policy, environmental policy, energy policy decisions, defense policy, it would be a very different set of decision making than someone who's in their 80s.

Inheritance tax. Yeah, yeah. I mean, so anyway, we should talk about you want to talk about the Fitch downgrade because I think it's a really important story this week. Fitch, the rating agency downgraded the US's long term debt by one notch from AAA to AA+. Only nine countries have AAA ratings from the top three rating agencies, S&P, Global, Fitch, and Moody's.

Those are Germany, Denmark, Netherlands, Sweden, Norway, Switzerland, Luxembourg, Singapore, and Australia. What you can take from that is you got to have a good balance sheet and you have to have high functioning governments. The highest functioning governments in the world are the Nordics. That's why you see Denmark, Netherlands, Sweden, Norway there.

According to NPR, the negative reaction hasn't been as strong as 2011. That was the first time the US was downgraded from AAA to AA+ by the S&P. That also had to do with the debt ceiling. The markets kind of shrugged off, largely shrugged off the Fitch downgrade. Main reasons for the downgrade is obviously higher interest rates, aging population, the debt to GDP ratio, which we've talked about here.

But government kept coming up over and over again and how dysfunctional our government is and the debt ceiling is one of the key manifestations of that. Your thoughts on this? For the first half of the show, Freeberg, you're an optimist, but are you now going to switch to declinist?

I wouldn't say declinist. Are you going to switch to declinist mode now or are you still in optimist mode? I mean, in Jekyll's view, unless you're a cheerleader for every stupid government policy, you're a declinist. I know. Jekyll, listen, I want to be honest. I don't think so. I think he, like, and I concur, I think you can highlight that there are concerns with US fiscal policy that are putting us in decline in our spending spiral with the US currency reserves, which there are now diversification efforts underway, and I'll talk about this in one second.

And that doesn't mean that the US isn't the most exceptional place to do engineering and entrepreneurism and have freedom of speech and thought and so on. But there are elements of the US that put things at risk. So let me just point out these two charts. If you guys pull the first one up, this is a pretty striking chart, and I think I showed this before.

This is federal government interest payments that are being made. We're now up to, you know, a trillion dollars. The chart, as you can see, a year, has spiked. And by the way, that number is spiking further, and we'll talk about this in one second, as a result of rising interest rates and increased fiscal spending.

So this is now becoming a pretty sizable part of our budget. And as of now, paying the interest on our debt is a larger capital outlay for the federal government than defense spending. The second chart shows what happened in the last week, which is that 30 year treasuries have been sold off.

And as that's happened, treasury yields have climbed. So there's been about a 10% decline in pricing and, you know, concurrent, nearly 10% increase. And Bill Ackman, you know, basically said today that he's shorting 30 year treasuries, he thinks we're going to go to 5.5% long term rates. Currently, the 30 year treasury sitting at 4.3.

And remember, I told you guys this after this thing I went to a few weeks ago, that there were two prominent economists who shared that they think we're going to be facing long term rates in the 5 to 7% range, very long term rates for a very long period of time, that it is a new fiscal regime.

And then if you pull up the last link I sent Nick, this is a report made by the Treasury Borrowing Advisory Committee of the Treasury Department. And I just want to read a couple of quotes from this report. This just came out today, and it was published, it was sent over to the Secretary of the Treasury yesterday.

And it said since the advisory committee convened in May, two year treasury yields are about 100 basis points higher, while 10 year treasuries have increased by about 40 basis points. The bank holdings of non mortgage backed government securities, mainly treasuries, have actually declined by 146 billion so far this year.

That means banks are selling off their treasuries. The committee goes on to say at the same time, treasury investors have noted the treasury supply will need to increase to address the rise in public deficits, as tax revenues have come in weaker, and government spending has increased. Issuance needs will be additionally impacted by the timing of a recession, so on.

Then they said, based on the marketable borrowing estimates published on July 31st, treasury, this is crazy, treasury currently expects privately held net borrowing of $1.007 trillion in this quarter, with an assumed end of September cash balance of 650. And then they said we expect another $852 billion of borrowing next quarter.

That means treasury is going to try and issue and sell $2 trillion worth of treasury bonds in the next two quarters. That's $2 trillion of new borrowing by the federal government to pay our bills. At the start of the year, they were estimating $1.6 trillion for the year, which was an insane number.

Now we're talking about $2 trillion in just two quarters. So rates are climbing. As a result, we need to borrow more. And this is a perfect manifestation of the debt spiral problem that we've talked about multiple times. Our fiscal spending outlay and the rising interest rates combine to create an insurmountable debt spiral that is now manifesting in the fact that we need to sell $2 trillion of treasuries.

And here's the crazy statistic that they said. In reviewing recent demand for US treasuries in auctions, the committee noted that an increasing percentage of supply is being absorbed by investment funds, while foreign participation has remained range bound. That means as we're trying to sell more treasuries, foreign governments are buying fewer of them, which means that the US currency as a reserve is no longer the place that everyone wants to plow their money as much as it used to be.

It is in decline. Now, the other thing I want to share, which I think is absolutely critical, is how do we address this gap? Well, the one way is these entitlement programs. And so several Republican presidential candidates, Nikki Haley, Ron DeSantis, and Mike Pence, have all publicly stated on the campaign trail that they're promoting programs to cut Social Security benefits for people that are 30 and 40 years old.

And here's the response to that. So they've gone out and they've started saying that. A poll was done. And on that poll, 82% of voters opposed the push to cut Social Security for Americans under 50. 82%. So where is this going to take us? This is what is so scary to me, J.

Cal. I'm not an American declinist. I believe in the American system. It benefited me and my family. But I do worry that we find ourselves in a whirlpool that is very hard to get out of because the populace says we don't want to make the cuts that are necessary in order for us to save ourselves.

That's what's so scary to me. And I said it before, I think it's worth saying again, that's it. I'm done. It's not a problem with populism. I mean, the elites are saying it too. There's no appetite in the DNC to cut or reform Social Security. Are you kidding? It's very unpopular.

How do you get elected saying? I don't know why those Republicans... How do you get elected saying? I hadn't seen that article. I would advise all those campaigns not to touch that rail. They're going to electrocute themselves. I think Trump has the right political instincts on this point, which is you cannot touch Social Security as a single party effort.

It has to be bipartisan. And there is no bipartisan will to do anything. So I think you're right about the larger point. Chamath, your thoughts on Friedberg's manifesto that 80% of the public does not want to cut spending. They're in favor of Social Security for people under 50 years old.

And we have a trillion dollars in debt payments. And we're in a death spiral because we don't have the will. And we're borrowing $2 trillion. In 180 days, we're borrowing an extra $2 trillion. That's the real point. The fiscal end of days. At the start of the year, the expectation was they were only going to borrow $1.6 trillion for the year.

Now we're borrowing $2 trillion and just these two quarters. Let me just state what I think about the downgrade. It's irrelevant. The S&P did it 13 years ago. Fitch is a marginal credit rating agency. They're at a minimum 13 years late. At a maximum, they're just anxiety ridden, like other people are.

We're always screaming that the sky is falling. So that's my first point. The second point and the more important one is that none of you who are always freaking out about this understand this conversation about relativism. All of these conversations are relative. They can deal with them in absolutes.

On a relative basis, Japan's debt to GDP is 270% and growing. On a relative basis, our debt to GDP is half of that. We are the most important economic force in the world. It is going to continue to be the most economic force in the world. All I see actually on every single monetary basis is every other country struggling more than we are.

So my question to all of the chicken littles is, what do you do if you're a central government where you have to have foreign reserves? Do you all of a sudden double down on the euro? Do you double down on the yuan, which is basically a proxy for doubling down on the US dollar?

What are you supposed to do? And I never get a good answer because on a relative basis, the US will still continue to do well. I think that debt to GDP is a red herring for a lot of people. And I think that the way that people run their personal lives, which should take income to debt into consideration, I don't think applies as much to governments.

And I think these things are going to march forward as a group. There's not going to be a single G8 country that all of a sudden moves away and starts printing surpluses. It happened almost as an accident and an aberration during the Clinton administration. It'll never happen again. And I think that we shouldn't worry so much, because I just don't see an alternative.

So give me instead of telling me how bad this is, because you think about your own life and how it would be bad if you had debt to GDP of 100. I get it. As a country, give me the alternative country. But just start with that. Can you answer that question?

What is the alternative country? Yeah, where would you put your, your wealth, if not the dollar? Well, let me paint a scenario that's not as dire as a collapse of the US dollars, the world's reserve currency. Okay, so on this Fitch, that's not what I think happens, right? I think this is just purchasing power goes down.

That's it. But go ahead, sex relative to who? Be specific. Anyone. But what does that what does that mean relative to anyone? Let me paint like a non catastrophic scenario or non apocalyptic scenario, which is what you saw in this Fitch ratings downgrade is that the bond market didn't move at the margins, there was a sell off in the 10 year.

And as a result, the 10 year bond yield moved up to 4.2%. So it wasn't a case of everybody shedding all of their US treasuries. It's just that there were market actors at the margins who adjusted their portfolios. Okay, now, Freeburg is saying that the Treasury is going to have to do another $2 trillion bond offering, and we have trillion dollar plus deficits as far as the eye can see.

And we've got entitlement liabilities on the horizon and then a political unwillingness to do anything about it. So the deficits are only going to get bigger and bigger. Now, what does that do? It's supply and demand. When the US Treasury needs to keep issuing more and more bonds, at some point, the demand for those things gets incrementally saturated, and they have to offer a higher yield.

So what happens? Well, the bond rates go up. And so the 10 year goes up, like Freeburg was saying, from 4.2% to somewhere in the 5% to 7% range. And that doesn't mean that US dollar is not the world's reserve currency. It just means that it gets incrementally harder and more expensive to keep financing our debt.

Now, what is the result of that? Well, if I, as an investor, could theoretically get 7% from the US Treasury as the risk free rate, why would I want to take equity risk and put it in the stock market, which historically has yielded somewhere in the 5% to 7% range?

So if I can get my 5% to 7% from a risk-free US government bond, of course, I'm going to do that. So the discount rate on equities will go up. That means that the stock market, on a relative basis, will go down. Risk capital will go down. There will be less risk capital.

And there'll be way less risk capital available for things like venture capital and private equity, just risk taking of all kinds. And so the economy will just grow slower. It's not like there'll be a collapse. It'll just be this huge albatross around the neck of the private sector. And this is called crowding out.

Here's the thing. May I give a counter here? I think if you look at the amount of sovereign wealth funds and the investment coming from around the world into US venture capital, that will keep the venture machine cranking here in America. But three charts to just look at here.

Nick, pull up the first one, the 30-year Fed. So to counter this argument, really, the aberration has been 2010 to 2020 when we had low single digit mortgages, 3%, 4%. The majority of our lifetime, it was between 5 and 10. And if it's 6 up in the 5 to 10 basis, that's what we experienced for most of our life.

And then the second chart, this is the lowest unemployment we've had in our lifetimes. If you look at the unemployment rate in the United States, 3.6 is unbelievable. And then combined with it, something we've talked about here for two years that we can't understand is when do all these jobs burn off?

We peaked during the post-COVID era at about 11 million job openings. And then we're still over nine. So there's two or three job openings for every American who wants to work. And we've shut down the borders largely, even though we have some illegal immigration coming in. It has basically shut down the United States to immigration.

It's about a third of what it was before Trump and Biden decided to shut things down. I don't think we're looking at the same video that I'm seeing. Yeah, if you're looking at videos, those are very distracting. I would encourage you to look at the numbers of the actual migration into the country.

It's a third of what it was. Just seeing what's happening in New York City. They got lines around the blocks. You're caught up in clips from the border. I would just look at the raw numbers, Sax, and the raw numbers show you're already- How do they know the raw numbers?

Yeah, because we count them. And we count the immigration. Well, you have to estimate them because they're illegal. But they got 7 million in the last two and a half years. Again, I would much rather look at the numbers and the actual statistics than anecdotal videos because both sides will manipulate the heck out of them for their own purposes.

But the fact is, America is just crushing it in terms of employment. And that's why we didn't have this crash landing. And I think the soft landing is because of employment. And I'll just end there. And if we can keep ourselves employed, and everybody from the Middle East to Japan, to high net worth individuals in Europe are pouring their money into the US venture ecosystem, I think the setup here is we got to control spending.

As you've said correctly, Friedberg, we get a little bit of control on spending, hopefully. And then we are going to have to slowly burn off some of this debt. We can't live with this kind of debt payments. Here's a little data for you, Chamath. This is from Congressional Research Service off of Fed data.

So foreign holdings of US treasuries have declined from 40% to 30% of total treasuries. 70% of treasuries today are held by domestic investors. This is the data that was being described in the Treasury Advisory Committee. The Borrowing Advisory Committee letter that I just said is that they're seeing less demand from foreign buyers of treasuries.

Now, I can argue, we can argue theoretically about what else are they going to buy? What else are they doing with their money? I don't know. But the data is showing a decline in purchasing intention by foreign buyers of US treasuries. And we're having to pick up the slack through investment funds held by the US, mostly pension, mostly retirement funds, I would guess that are buying these treasuries.

That is not what this chart shows. The chart shows the effect of quantitative easing. That's what this chart shows. Because when you're buying treasuries from the market and retiring them, of course, the percentage of foreign and domestic holdings of publicly held debt is going to go down. So this last period, explain this x of QE, explain it.

Sorry, I don't understand what you're saying. This is a measurement of the amount of people that own treasuries. Is that right? Domestic versus foreign? Yeah, so who owns so as of December 22, there was 20. Domestic holdings. I'm going to assume because this chart is fucking worthless. If this if it doesn't assume that the domestic holding the gray bar that adds up to 100 doesn't include the Fed, which it must.

And that is because the Fed has been buying treasuries from the market. Okay, so just let me just give you the numbers for a second. And then we can take out. I'm just looking at the chart. The chart is a gray bar that says domestic holdings. I'm gonna give you there's an orange bar that says foreign holdings.

You've had 10 years of the Fed buying treasuries. I'm going to give you the numbers. There are $24 trillion of treasuries publicly held treasuries outstanding 7.4 trillion held in foreign hands, the foreign holding of publicly held debt between December of 18 and December 22 increased from 6.3 trillion to 7.4 trillion.

While other investors increased from 16 trillion to probably 23 trillion. So you know, it's we're having to pick up the slack investment funds, private investors are having to pick up the slack because of foreign demand for treasuries lagging at this point. That's the point of the chart. I don't know what I don't know what to tell you.

I think what this chart shows me is that the balance sheet of domestic holdings grows grows because the Fed has been buying treasuries and in a in a world of Qt. I suspect that this bar chart will change in the next 10 years. If you look at the histogram 10 years from now, if you assume the Qt sticks around, so I don't know you can interpret whatever you want to feed your anxiety, it doesn't change that there's a relative problem at hand, which is you cannot sell one thing without buying another.

That's just the way it works in financial markets. The Federal Reserve during that same time period increase their treasury holdings. Here's the exact numbers from nine 3.7 trillion to 9.7 trillion. So they bought 6 trillion of that debt. I think the fact that we're going to go from quantitative easing to quantitative tightening over the next decade is another overhang.

But because not the whole thing, because not only does the US government need to sell another 2 trillion of bonds every year to finance its deficit, which is basically the addition to the debt. You've got the Fed now shedding what like 8 trillion. They're just letting them roll off.

They're letting them roll off and they're not reissuing them. But you actually said the right thing earlier, which is that the risk premium has been shrunk so massively between equities and bonds. These 2 trillion of bonds that these guys will issue bet between the strip trade from 5% all the way down to there'll be a line out the door, I guarantee you.

And the reason why is exactly what you said before, David, which is like, why not own 5% paper from the US government versus having to like all of a sudden speculate on the S&P 500 or something else? It's a no brainer. And I totally agree with you. But that this last 2 trillion, that'll be the easiest 2 trillion to sell.

There will be a line out the door, guaranteed. Well, there's a line out the door at some price. So my point is that the yield will have to go up to attract those incremental buyers. And as the supply of T-bills becomes a glut, obviously, they're gonna have to make the yield more attractive in order to keep attracting that marginal buyer.

It's just that simple. So yeah, at some price, they'll be able to find a buyer. But that yield will have to get higher and higher over time. And then that crowds our private investment. Because why in the world would you invest in a risky stock when you get 7% risk free?

What's your alternative? Because again, like, what do you think the spread to JGBs is going to be if that's true? If US treasuries, okay, if 30 year treasuries are all of a sudden, five and a half of Bill Ackman's, right, which you could very well be the other part of what he's not saying is what a JGBs look like, what do European bonds look like?

You know what they're going to be? They're going to be trading at 300 to 500 basis points above that. It is cataclysmic for the entire world economy. And so we all move in unison. When we suffer, we will suffer less than other countries. And when we win, we will generally win more than other countries that has typically been true.

I suspect it will typically be true. And I don't see anything changing that. Well, hold on, let's assume that you're right. And what happens is that the let's call it the Western world and all these governments are basically mired in debts with a few exceptions. I guess Australia is good, Switzerland is good, but the rest have massive debt to GDP as well.

So their bonds have to move up with ours. And so their risk premium has to go up as well. So you're right in lockstep with the US. But now why wouldn't global growth just slow down across let's call it this whole Western dollar complex, coupled with inflation, coupled with inflation, right?

Which is inevitable. That's basically what's happened in Japan, right, is that they have like a 200% debt to GDP, and they've been very active in yield curve control. And so they've controlled the interest rates, but the price of that's been total economic stagflation for two decades. They have demographic problems as well, but...

That's the main issue there is young people there. There's just not a lot of young people there. I mean, housing is crazy if you just look at it. And I think the United States has a lot of innovation. So we will innovate our way out of it is my belief, which is kind of what we've always done.

It's so exciting, guys, we can have this conversation with Larry Summers himself at the All In Summit in September. Wait, do we have Ray Dalio too? We have Ray Dalio, yeah. Are they going to be on a panel together? Or it'd be really interesting to discuss this topic with the two of them.

Maybe overlap? I'll look at the schedule. Everyone, unfortunately, all our speakers are on tight schedules on when they're in and out, which is why I need Jekyll to respond to my IM to him about finalizing some of our other speakers. But... Hey, Jimmy texted me because apparently he's in London or he has to go to London right after.

We gotta figure out how to get him back. Yeah, yeah. He said he'd fly out, but we gotta figure out how to do that. But yeah, we can have this conversation in LA, September 10 through 12. Oh, well, it's sold out. So way to frustrate everybody. I'm getting like all kinds of like LPs and giant folks who are like, can I buy a VIP ticket?

And I'm like, listen, it's sold out. You had two months to do that. So in other news, the GOP's lead candidate for the 2024 race, Donald Trump has been indicted for trying to overturn the 2020 election and stop the peaceful transfer of power. The indictment has four counts and is the third criminal case for those of you playing along at home.

Four counts include conspiracy to defraud the US, conspiracy to obstruct an official proceeding, obstruction of an attempt to obstruct an official proceeding, conspiracy against rights. Trump campaign not shockingly called it fake news. The indictment feels like it's got them dead to rights. And this is on top of the oath keepers, founders, Stuart Rhodes getting 18 years and a bunch of other cases.

In addition to that, the DOJ prosecutors also accused Trump of ordering employees to delete security videos and the classified documents case, the coverup, of course, being worse than the crime. Looks like they got them dead to rights on that one as well. All of this against the backdrop of DeSantis spending tens of millions of dollars and falling in his percentage.

Sachs, explain to the audience why this is Hunter Biden's fault and that's a deep state conspiracy. I kid. What are your thoughts on this? When you say they have them dead to rights, like, what do you mean by that? What's your basis for saying that? Exactly. What do you mean?

Dead to rights on what charge? Yeah. So in this indictment, the 45 pages, if you read it, you will see that they put up fake electorates and they knew that it wasn't going to work and they did it anyway after losing 60 cases. So that's the belief of why this is such a serious case.

And then also the coverup obstructing justice. And it looks like some of these maintenance workers are potentially flipping and Mark Meadows, they claim has flipped as well. So, but, you know, hey, listen, everybody gets their day in court. The documents case is sort of separate. I mean, I think we should just stick to this.

The big news here is... Well, what do you think of the fact that he tried this allegation that he tried to delete the videos? Do you think it's real or do you think it's made up? I don't know. That's a detail about a piece of evidence in that case.

I do think the documents case is on a sounder legal footing than the January 6th case. More dangerous to him, you're saying. More dangerous to him. It doesn't involve as many novel legal theories. Now, is it really dangerous? I think the American people think that at the end of the day, that documents case is sort of a paperwork case.

And there are many other people who violated the classified requirements rules like Sandy Berger, like David Petraeus, like Hillary Clinton, never prosecuted. So I think if they have him dead to rights on any of the cases, it's the documents case. But I also think that in the minds of the American people, that in the minds of the American people, it feels like DC inside baseball.

Now, I think on this January 6th case... What do you think about the documents case? What do you personally think? I think if you're going to prosecute Trump for that, you need to prosecute all these other people who violated classified documents rules. What do you think about him? Sandy Berger, who worked for Clinton, who was a national security advisor, stuffed his pants with classified documents from one of those lean rooms and got away with a slap on the wrist.

What do you think about Trump trying to overturn the election? Well, look... Do you think he tried to overturn the election? I mean, just a basic fact. Let me state right away that I think that what Trump did in the wake of the 2020 election was indefensible. I said so at the time.

I said that... You did. I give the credit. I did say it. What I said is that once the Supreme Court, once the courts in general threw out his case, and once the Supreme Court denied certiorari, it was time for him to stop. And he kept going. He should have stayed on down.

Yeah. It was time for him to stop, and he did it. And so I think that his actions were indefensible. However, when you're talking about criminal prosecutions, they can't just be an expression of condemnation. You actually have to prove that somebody engaged in criminal behavior. And the issue here with this January 6th case is that it relies on novel legal theories.

There's actually a really good article in the New York Times of all places explaining this. Do you think there was a possibility that if he could have, he would have turned over the election if Pence had gone along with it? I don't know. You're getting into a bunch of hypotheticals here.

The question is whether these charges will actually stand up to scrutiny. Let me read you what David Leonhardt from the New York Times reported, because I actually think when you have the New York Times saying that the case is weak, I think it's really indicative. So what the New York Times says, or Leonhardt says, "As shocking as it was, Trump's behavior on January 6th did not violate any laws in obvious ways.

He never directly told those at the January 6th rally to attack Congress. During his speech that day, he even said he knew that protesters would behave peacefully and patriotically. It was part of a longstanding Trump pattern in which, as my colleague Maggie Haberman puts it, 'He is often both all over the place and yet somewhat careful not to cross certain lines.'" As for Trump's broader effort to overturn the election result, no federal law specifically bars politicians from attempting to do so.

Without such a law, Smith has relied on a novel approach. He has charged Trump with committing criminal fraud and violating conspiracy laws that were not written to prevent the overturning of election result. And then he says that a key part of these laws, they revolve around a person's intent, intent is core to the notion of fraud.

Only if someone is knowingly trying to deceive others can he be committing a fraud. And he says that's why the case seems like they revolve around Trump's state of mind. So the problem with this is they have to not only prove that what Trump did in the wake of the election was indefensible and outrageous and all the things that you believe, they have to prove that Trump knew that he lost the election and knowingly perpetrated the fraud.

And I don't think you'll be able to ever prove that beyond a reasonable doubt. But even though, yes, there are statements that they point to. - Yeah, they got all those statements and then Bill Barr, Mark Meadows, everybody's flipped on him. Pence has flipped on him. They're all flipped on him now.

- They have statements by those people, yes, but Trump also had this whack pack of lawyers. So you had Giuliani and you had Sidney Powell and John Eastman. And Mike Lindell, the pillow guy, they were all in the White House telling Trump that, "Listen, you won the election, you've been robbed, and there are valid legal grounds for you to contest this." And Trump for years has been maintaining the stolen election narrative.

Even when his advisors have told him, "This is not good for you." The guy has stolen election on the brain, okay? Every interview, he's brought this up even when it's manifestly harmful to himself and the Republican Party. So this idea that you can prove that he doesn't really believe the election was stolen, the one thing I believe about Trump is that he really does believe the election was stolen.

And I think you will never be able to prove beyond a reasonable doubt that he is knowingly lying about that. And as a result of this, you can never prove this case. Now, it also relies on this novel theory. They are turning the civil rights law into a pretzel to try and figure out a way to indict Trump or prosecute him under this novel legal theory of committing, quote, "fraud against the American people." Okay?

This is a novel legal theory that's never been tried before. And by the way, if you're gonna create that as a precedent, I hope we're gonna go after those signers of the Lancet letter we talked about because they committed a fraud against American people. I hope that we will prosecute the 51 spies who lied because they perpetrated a fraud against American people.

I hope...hold on a second. I hope we will go after the authors of that Steele dossier because they perpetrated a fraud of the American people. There's a lot of people in Washington who've perpetrated a fraud on the American people. I hope we're gonna go after all of them. But my point is this, it's not the job of a prosecutor to be creative with the law ever.

I mean, they are supposed to apply the law strictly as written. They're supposed to bring cases that are open and shut. And what Jack Smith is doing here is going for this bank shot where he wants to charge Trump with incitement, but he knows he can't win that case.

So he's going for this backdoor civil rights law to sidestep the First Amendment problem. And in my view, this is an abuse of prosecutorial power. And once you let prosecutors get creative like this, you're on a slippery slope to show me the man, I'll show you the crime as in Stalin's Russia.

So listen, I believe that, again, Trump's actions were illegitimate and outrageous. But again, the purpose of criminal law is not to express disapproval. You have to be able to prove these cases in an open and shut way without novel legal theories. I just want to say I need to give I need to give sacks of 10 out of 10 for this last piece.

That was excellent. Absolutely. Excellent. Jason, here's the question I ask you. Do you believe that Trump was guilty of inciting an insurrection? Absolutely. Yeah. When he told those people to, yeah, when he told those people to go down. Why hasn't Jack Smith? Why hasn't Jack Smith indicted Trump? They've indicted Trump on all these different charges with over 500 years of jail time.

And they have not indicted him for incitement. Why not? They could always add to the charges. And so I suspect when they start flipping people, they will. But, you know, it's kind of meaningless to have this discussion. We should move on to the next. No, it's not. No, hold on.

Hold on. Hold on. Let me finish. You asked me a question. Here's the thing. You know what? 30% of people in the Republican Party, about 30% of this country have Trump Stockholm syndrome. They cannot let go of Trump. And so there's no reason to debate it with the GOP.

They have TSS. And you're going to defend him to the dying day. You're going to do what about isms. The Republican Party will never accept the fact that this person's a criminal. He's corrupt. And he's a horrible human being. And he is not fit to serve. And you're going to serve him up as your candidate.

It's disgraceful. The GOP is a disaster for actually supporting him. Guy has no morality. And he would have overturned the government if he had the chance. And he will do it again. Can I respond to this? I have a couple of points here. All right. So let me get as many points as you want.

There are people who are absolutely fixated on January 6th. And it's the people who've been trying to whip this up and make it into a crime and invent all these novel legal charges and haven't stopped talking about for the last two and a half years. I'm so sick of talking about this whole January 6th thing.

I don't want this to be our politics. OK? The people who've made it our politics include the mainstream media. It's all the people on CNN and MSNBC who won't stop talking about it. And part of the reason why I think Trump likely will be the nominee is because they are creating a backlash in the GOP where people basically think that he's being unfairly prosecuted and persecuted.

Now, to my question, why aren't they charging him with incitement? That is the crime that the media says he has committed for the last two and a half years. So why aren't they charging him? Because the DOJ looked at that at the beginning of 2021. Merrick Garland's DOJ looked at that.

And they did a report and found that they could not win that case. And when that came out, the media and even Biden himself said that Merrick Garland was basically being a wimp and should be tougher. And so that's when they appointed Jack Smith to be the special counsel to go find some other way of prosecuting him.

And so that's why they've invented this novel legal theory. Now, I think the reason why we should care about this that has nothing to do with wanting to defend Trump or make him the nominee is that I don't think our political system should be weaponized this way, because when they can start inventing novel legal theories to get somebody, that's what they've done here, Jason.

It's show me the man and I'll show you the crime. - Now, Trump tried to overthrow and reverse the election. And he tried to do that by putting up a fake slate. And he tried to convince Pence to go along with it. Pence is an honorable person who wouldn't go along with it.

And everybody in his cabinet said, this is a bridge too far. His supporters from Barr to Pence to Meadows all told him, please stop. What you're doing is illegal. You cannot overturn the government, the election results. - But are you saying this as an expression of condemnation against Trump?

Or are you saying that Jack Smith actually has? - I think it will be proven that he broke the law. I think it will be proven in the documents case that he also tried to cover it up. But that's just my opinion. I believe that he's a criminal. I believe he will be held accountable.

I think he should be held accountable for trying to overthrow the election. He tried to overturn the election. That is the most treasonous thing you can do. You can come up with all of your defense of it. - They're charging with treason, charging with incitement. They have not done that.

They've invented this non-illegal theory that never existed before. - He's a very smart guy when it comes to avoiding accountability. And I think that the clock is running out for him. - You know what, J. Cal, do you not think that it's a little surprising that all of these charges are hitting years after this event took place in the months leading up to the Republican primary?

- No, I think it's... - That's the weirdest thing to me is like, why would it take so many years to prosecute someone? All those guys that went into the Capitol building, they all got charged with crimes years ago, two years ago. Why is all this stuff falling on Trump today?

It's like they paced the grand jury investigation. - Because Trump wouldn't get in the case. - And they paced the whole thing out today. - It takes time to build these. - Because I will say it does feel like it is interrupting a political process that if there were criminal charges to be filed, I would have liked to have seen them filed two years ago.

So this could all get adjudicated ahead of a political cycle. Now that it's in the middle of a political cycle, it makes me as a US citizen nervous about the fact that there are agencies interfering in the political cycle. - You're so right. - He could have given the documents back when they asked for them.

And he could have said, don't delete the tapes. - We're talking about January 6th. - I'm talking about both. - Yeah, and it takes... - You changed the subject to the case that is... - No, I'm talking about both cases. I'm talking about both cases concurrently. We're talking about...

- The documents case, I will say the documents case is more solid, but less important, okay? - Sure. - Actually, Leonhard says this in the New York Times. - But you asked me a question. I think it takes time to build a case properly. And it took them a long time to get through the 400 people who attacked the Capitol and brought tens of thousands of rounds of ammunition to the Capitol and put it in three hotels, which is why the Oath Keepers got 18 years.

400 people have gotten sentenced in that for good reason. They beat cops. They broke down their way into the Capitol, and they brought dozens of AR-15s, and they bought tens of thousands of rounds of ammunition and placed them in hotels around the Capitol. These are dangerous, domestic terrorists. They would have shot the place up and killed hundreds of people.

- Then try him for that. That's not what he's being indicted for. - No, I'm talking about who they... They already got those Oath Keepers on 18 years. - I just want to read this one sentence from Leonhardt just to wrap this up. Because this is the New York Times.

This is the New York Times. He says, "You can think of the new charges as being both more important and less solid than Trump's previous federal indictment." - Yeah, no, I mean, listen, everybody's gonna have different opinions on this. I get that. I just hope he has his day in court, and I think he's guilty, and I think it'll be proven that he's guilty, and that it's time to start moving this towards a pardon and figuring out how to get him out of political life and give him a pardon for all these crimes he's committed and let him off the hook, but get him out.

And so that your party can field a good candidate. That's what I hope happens. - I think one of the really tragic side effects of these prosecutions, where they're inventing novel legal theories, clearly, to get this man for what he did, even though it was outrageous, but I don't think criminal in the way you want it to be, Jason.

But the really tragic thing about this... - It's not the way I want it to be. I would rather he didn't do this criminal activity. - Yeah, I get it. I get it. I've already denounced it. I've already denounced it. I'm not defending his actions. I'm defending the integrity of our legal system.

- Sure. - And really the tragic thing about this... - I appreciate that. - The tragic thing about this is that I want the 2024 election to be about issues. It's not. It's gonna be a referendum on what happened in 2020. And there is no way to convince either side of the American people that they're wrong about that.

The MSNBC, CNN crowd are gonna believe that Trump is guilty of a crime, no matter where this case comes out. And by the way, I think Trump's actually gonna win this case. Maybe not in the DC jury pool, but I think he'll win it on appeal. - The Supreme Court.

- I think if he has to take it to the Supreme Court, he's gonna win it. 'Cause this is a novel legal theory. By the way, Jack Smith took a case against the Virginia governor to the Supreme Court, got overturned on appeal 9-0 because of an outrageous legal theory there.

So that same thing could happen here. I think it probably will. - It's possible. - But those people who believe in this will never be convinced. And by the same token, Trump supporters, the other half of the country will never be convinced that this was not a political persecution.

- It's TDS versus TSS. - So this will tear the country apart. And to Freeberg's point, it's two and a half years later. We could have just moved on. There's plenty of other things. They already have the Dockman's case. So this is a political prosecution by Biden's own DOJ.

- Do you have any way to get out of this? What's your solution to get out of this? - We should have just moved on. - Oh, not charge him. - Yeah. Listen, the proper forum to deal with this was the impeachment hearing. The second impeachment was expressly on the correct charge, which was whether Trump incited an insurrection.

They already had this trial. The proper forum was that impeachment trial. He made it through. And it's up to voters to take this- - Mitch McConnell actually said the proper one was to go criminal. So it was interesting. Yeah. He said the impeachment was the wrong way to do it.

They should just do the criminal. So here we are doing the criminal thing. - The country should have moved forward. And instead we're getting torn apart. - You got any tailing data on it? - And this is what 2024 is now gonna be about. - What do you think, Freeberg?

What do you think is a good path forward? - I kind of align with the fact that this is a little bit too late. It's in the middle of an election cycle and the damage that it will cause in terms of how our country views the intersection between the justice system and the electoral process can be more damaging than the benefit we would gain from bringing an individual to justice for breaking the law in this case.

Unfortunately, the timing is just off. And I think it's really scary. - All right, Jason, you have to ask, what is actually gonna strengthen our democracy? And what is the wisdom of bringing these charges? I think this case shows a lack of wisdom. I don't think it's gonna strengthen our democracy.

I think it's gonna undermine it. It's gonna make this country more polarized and hyper-partisan. And it's not gonna help us move past this era of our politics. And I believe that- - Was that a question towards me? - I think Trump is responsible for part of that polarization. But I think Biden now is playing into it from the other side.

I don't think we've had a president seek to indict his leading political opponent, who's likely to be his- - Oh, I thought he was not involved in this. This is the Justice Department. He's not driving it. - Wait a second, that is not true. - Okay. Yeah, he's not involved in it.

- No, there's an article in which Biden said that when Merrick Garland refused the incitement charges, that he thought that it was weak in that. Biden thought that Trump deserved to be prosecuted. And that was a public article. It's in the New York Times. And I'll provide the note.

- Sure. - I'll provide the citation. - What's your question for me? Did you have a question? You said you wanted to ask me a question. - Well, no, I didn't say a question. I just said you can respond. - Oh, okay. - But my point is, I now think that Biden has crossed the line here.

And just remember, this is not an independent prosecutor. Jack Smith works for Merrick Garland, who works for Joe Biden. This is banana republic type stuff. This is one president's DOJ seeking to prosecute his main political opponent. - Who put Merrick Garland in? - Biden appointed him. - Yeah. So this has been the All In Podcast.

Chamath had to bounce. Freyberg, congratulations on OK99. I hope it happens. Sachs, sorry about- - Congratulations to you too. Congratulations to you too, Sachs. If it's proven to be real, we will all benefit. So it's great. - Yeah. - Right? - And we'll see you all next time on the All In Podcast.

Bye-bye. - Bye-bye. (upbeat music) ♪ We'll let your winners ride ♪ ♪ Rain Man David Sachs ♪ ♪ I'm going all in ♪ ♪ And instead we open source it to the fans ♪ ♪ And they've just gone crazy with it ♪ ♪ Love you West Coast ♪ ♪ Queen of Quinoa ♪ ♪ I'm going all in ♪ ♪ Let your winners ride ♪ ♪ Let your winners ride ♪ ♪ All right ♪ ♪ Besties are gone ♪ (laughing) - That's my dog taking a notice in your driveway, Sachs.

(laughing) - Oh, man. - My avatar will meet me at Plymouth. - We should all just get a room and just have one big huge orgy 'cause they're all just useless. It's like this like sexual tension that they just need to release somehow. (upbeat music) ♪ What the beep ♪ ♪ What the beep ♪ ♪ What the beep ♪ ♪ We need to get merch ♪ ♪ Besties are gone ♪ ♪ I'm going all in ♪ (upbeat music) ♪ I'm going all in ♪