Biden chaos, Soft landing secured? AI sentiment turns bearish, French elections

00:00:00.000 | - He's ready to go.

00:00:02.680 | Is that official merch?

00:00:03.720 | - I got it online, so I hope she's getting royalties.

00:00:06.820 | I hope it's not a fugazi.

00:00:09.980 | - A fugazi, fugazi?

00:00:11.640 | - What's up with your outfit, J. Cal?

00:00:13.720 | You going on Fox News again?

00:00:15.360 | - Dude, he just signed on to pick up a contributor.

00:00:19.180 | - Wait, what?

00:00:20.780 | - He's a contributor.

00:00:22.300 | - You're a contributor to Fox News?

00:00:23.140 | - He pays a week.

00:00:24.340 | They're paying me.

00:00:25.180 | - That's hysterical.

00:00:26.360 | Wait, what?

00:00:27.200 | For real, for real.

00:00:29.000 | - Yeah, he's the newest contributor.

00:00:30.600 | - Oh my God, that's incredible.

00:00:32.440 | Do they know you have TDS?

00:00:33.840 | Do they know about that?

00:00:34.680 | - No, they're looking for a moderate.

00:00:36.920 | They want a moderate, independent thinker,

00:00:38.840 | and they love Nostracanus.

00:00:40.880 | They're branding Nostracanus.

00:00:42.560 | - He has to finish this in two hours

00:00:44.040 | because he's taping with Jesse Waters after that.

00:00:45.680 | - Oh my God.

00:00:46.880 | Honestly, I will say that I saw both of your appearances

00:00:49.720 | on Jesse Waters, and I thought you crushed both of them.

00:00:51.840 | - Totally, you were excellent.

00:00:53.680 | - I think it's actually a good move for them.

00:00:55.000 | I like the idea.

00:00:55.880 | Sax, you would love for me to be a contributor on Fox.

00:00:59.720 | - I would.

00:01:00.680 | - You would.

00:01:01.640 | I'm pulling your leg.

00:01:02.480 | I'm pulling your leg.

00:01:03.300 | I'm pulling your leg.

00:01:04.140 | They haven't made the effort.

00:01:04.980 | They haven't made the effort.

00:01:05.800 | - I want your training to continue, young padawan.

00:01:08.520 | - Oh, really?

00:01:09.360 | This is like, I will bring balance to the force?

00:01:12.000 | - Yes, yes.

00:01:12.840 | - I'm the chosen one?

00:01:13.660 | - You're the chosen one.

00:01:14.640 | - You were my brother, Anakin.

00:01:16.520 | You were supposed to bring balance to the force, Anakin.

00:01:19.520 | (upbeat music)

00:01:23.120 | - Rain Man, David Saxon.

00:01:25.120 | - And it said, we open sourced it to the fans,

00:01:29.840 | and they've just gone crazy with it.

00:01:31.520 | - Love you, guys.

00:01:32.360 | - I'm the queen of Kinwam.

00:01:34.020 | ♪ I'm going all in ♪

00:01:36.220 | - All right, everybody,

00:01:37.060 | welcome back to the number one podcast in the world.

00:01:39.660 | It's been confirmed by the CEO of Beep,

00:01:44.280 | who told us we are the Beep podcast on his platform.

00:01:48.440 | It's episode 186.

00:01:50.800 | From the home office in Italy,

00:01:54.720 | the chairman dictator, Chamath Palihapitiya.

00:01:57.480 | How you doing, brother?

00:01:58.560 | - Hello, Jason, how are you?

00:02:00.520 | - We're good, we're good.

00:02:01.480 | We can see that we are definitely in July now,

00:02:03.640 | because we have one button to go for August.

00:02:06.320 | And so, it's kind of like the sundial.

00:02:09.920 | You know, the Greeks, we created the sundial,

00:02:11.640 | math, plumbing, philosophy, democracy,

00:02:15.000 | all these great things.

00:02:15.840 | - Oh, my gosh.

00:02:17.120 | The Italians, you guys created bare chests.

00:02:20.960 | - Can I tell you how good Italian white wine is

00:02:24.520 | on a hot, humid day?

00:02:26.080 | It may be the closest thing to ambrosia in modern society.

00:02:31.080 | It's just so good.

00:02:33.480 | - Is that your sports drink?

00:02:34.360 | It's just like, you get off the,

00:02:35.520 | I picture you on like a treadmill.

00:02:37.520 | - I drink so much white wine during the summertime,

00:02:40.120 | and I eat gelato every day,

00:02:41.700 | and I tend to still lose a couple pounds

00:02:44.820 | by the time I get home.

00:02:45.660 | - A lot of walking, a lot of walking.

00:02:47.840 | Let me ask you this.

00:02:48.680 | Have you ever had a glass of wine while working out?

00:02:52.440 | Has that happened?

00:02:53.280 | Have you ever been tempted?

00:02:55.040 | Be honest.

00:02:55.880 | - I have tried to go for it.

00:02:57.480 | - You brought wine to the gym?

00:02:59.360 | I knew it!

00:03:01.080 | I knew it, that's the level of...

00:03:02.600 | (both laughing)

00:03:04.940 | Did you open the wine bottle in the gym,

00:03:06.960 | or did you just like half and half the glass?

00:03:09.360 | - No, I opened it, it had to breathe.

00:03:12.200 | I went, and then I had somebody

00:03:14.120 | just bring me a little sippy poops

00:03:15.700 | just so I could see if it was opening up properly.

00:03:17.860 | - Okay, were you on the treadmill,

00:03:19.540 | or were you doing weights?

00:03:20.380 | Were you on the weight bench when you sipped?

00:03:21.660 | - Yeah, I was pushing weight.

00:03:23.320 | - Okay, pushing weight, okay.

00:03:24.860 | Back in '88, okay.

00:03:26.140 | And getting ready, according to reports,

00:03:29.340 | I don't know if we can talk about this,

00:03:30.620 | but David Sachs is in the think tank,

00:03:34.460 | getting ready for his RNC debut.

00:03:37.180 | How are you, Rain Man?

00:03:38.820 | Yeah, definitely, definitely giving a keynote.

00:03:41.700 | - Well, I wasn't supposed to talk about that,

00:03:43.860 | but I saw that someone leaked it

00:03:45.460 | to the New York Times this morning, so it's out there.

00:03:48.200 | - Okay.

00:03:49.040 | - And yeah, I'm gonna be speaking there next week.

00:03:50.840 | - Great.

00:03:51.680 | Any theme that you're going for?

00:03:53.500 | You can give us a little idea of maybe a theme or two

00:03:55.960 | that you wanna--

00:03:56.800 | - There is a theme, but I don't wanna talk about it yet.

00:03:58.520 | I'm not supposed to talk about it.

00:04:00.360 | I'm not even supposed to say I'm doing it,

00:04:01.880 | but it got out there, so I guess there's no hiding it.

00:04:04.560 | - So we'll keep the cards close to the chest.

00:04:06.840 | And from the mountains,

00:04:11.760 | at the beep, beep,

00:04:14.660 | then he can talk about your sultan of science

00:04:17.920 | looking oddly not pale.

00:04:20.560 | You got a little sun there, brother.

00:04:21.680 | Looking good, day-free break.

00:04:23.040 | - Lot of outdoor sunning happening last couple of weeks.

00:04:26.640 | Yeah, enjoying the vitamin D.

00:04:29.800 | - All right, gentlemen, let's get to the docket.

00:04:31.200 | There's a lot to talk about.

00:04:32.440 | Let's start with macro.

00:04:33.900 | We haven't talked macro.

00:04:34.740 | Everybody wants us to talk a little macro.

00:04:36.360 | And I got a lot of news today.

00:04:38.020 | The big question is, has the soft landing been secured?

00:04:41.440 | Obviously, stocks are still surging.

00:04:43.200 | Records again this week, last week.

00:04:46.040 | All the jobs seem to have burned off,

00:04:48.620 | and unemployment is moving up.

00:04:51.040 | That was one of J-Pow's major efforts.

00:04:53.280 | And all the stimmy savings, as you pointed out,

00:04:55.240 | Sharmarath, are long gone.

00:04:57.220 | And today, the big news, CPI came in at 3%.

00:05:00.120 | Perhaps inflation has been cracked.

00:05:03.840 | Here's your chart, gentlemen.

00:05:06.120 | Economists were expecting 3.1,

00:05:07.720 | so the print was meaningfully cooler than expected.

00:05:11.120 | And CPI actually fell 10 bps on a month-on-month basis.

00:05:15.240 | Obviously, when you see that three handle,

00:05:17.500 | that is year over year.

00:05:20.120 | And this is the first time we had month-over-month CPI

00:05:24.600 | decreased since May of 2020.

00:05:27.240 | So lowest CPI in three years, J-Pow said.

00:05:30.920 | The Fed doesn't need, he said this earlier this week,

00:05:32.920 | he doesn't need to see the 2% inflation to start the cuts.

00:05:35.720 | Obviously, I guess he wants to steer

00:05:37.800 | or speed up going into the turn.

00:05:39.720 | So September cut looks highly likely.

00:05:44.160 | If you look at the prediction markets,

00:05:45.400 | Fed funds futures now see an 89% chance

00:05:48.520 | of at least one rate cut by September.

00:05:50.280 | That's up from 73% before the print,

00:05:55.240 | according to FedWatch.

00:05:56.360 | That's a tool that tracks interest rate traders.

00:05:59.760 | We discussed the Fed wanting to see employment

00:06:03.200 | and savings cool.

00:06:04.400 | Well, in June, unemployment was 4.1%,

00:06:06.760 | the highest since 2021, up from 4% in May.

00:06:10.280 | Here's the stunning chart of unemployment since 1948.

00:06:14.760 | In April 2023, unemployment bottomed out at 3.4%,

00:06:18.200 | the lowest since any of us were born, 1969.

00:06:22.440 | And you can see here, there's been an uptick

00:06:25.360 | from this incredible historic low.

00:06:27.440 | So soft landing appears to be working.

00:06:30.960 | The jobs market slowing down, inflation has dropped,

00:06:33.720 | tempered, and the market continues to hit

00:06:37.120 | all those all-time highs, S&P up 26% since last year,

00:06:42.120 | mostly, of course, thanks to NVIDIA's

00:06:44.840 | record-breaking performance,

00:06:46.560 | but also Meta, Amazon, Microsoft,

00:06:48.360 | a lot of the Fang, Magnificent 7.

00:06:53.160 | So I guess, Chamath, let's just start with you.

00:06:56.120 | Has the soft landing been secure?

00:06:57.840 | - I mean, it's pretty incredible, actually,

00:07:01.000 | but it looks like there's a really good chance that it has.

00:07:06.000 | I think the bigger question, though,

00:07:07.760 | is if we are on the verge of a real contraction

00:07:12.120 | in the economy.

00:07:13.040 | And I think there's been enough people that have warned,

00:07:16.040 | you have to remember, like, even though the stock market

00:07:19.160 | for seven companies is hitting all-time highs,

00:07:22.360 | the stock market for every other company

00:07:24.640 | that isn't those seven companies have not.

00:07:26.560 | And that really is about just the broad-based demand

00:07:30.240 | of the economy.

00:07:31.080 | So yeah, I think that inflation is contracting,

00:07:34.720 | but it could be contracting for a combination of reasons.

00:07:37.960 | One is because we have had high rates for a long time,

00:07:42.280 | but the other part is now people aren't employed,

00:07:44.760 | there is no money, and the question is whether you have

00:07:48.360 | some sort of contraction economically

00:07:50.440 | that is measured by a recession or not.

00:07:52.120 | I think that's a really big question.

00:07:53.400 | What happens in the next couple quarters?

00:07:55.320 | Do we have a little mini-recession or not?

00:07:57.520 | - Okay, Freeberg, your thoughts,

00:07:59.680 | and then we'll go to Sax.

00:08:01.200 | - I think the market's priced in a lot

00:08:03.800 | of the expectation already.

00:08:05.640 | If you look at the PE chart on the S&P 500,

00:08:08.960 | going back five years, let's pull this one up real quick.

00:08:12.600 | You can see that we peaked out, obviously, in 2020, 2021,

00:08:17.360 | where we had a big boom with all the stimulus money

00:08:20.920 | coming in and all the money found its way into the markets

00:08:24.040 | during the end of the ZURP era.

00:08:26.320 | And then there was the slow wind down

00:08:28.120 | as we started to hike rates.

00:08:30.360 | And then rate hikes peaked.

00:08:32.480 | And now, despite the fact that rate hikes have stopped

00:08:36.600 | and there have been conversations

00:08:38.240 | about when the reversal will happen,

00:08:39.680 | the market's already started to price in that reversal.

00:08:41.720 | So with respect to market valuations,

00:08:44.520 | we have still seen a rather significant increase

00:08:47.720 | in the PE ratio across the S&P 500.

00:08:49.720 | Now, to Chamath's point, a large percentage of that

00:08:52.200 | is contributed to by the top seven tech companies

00:08:55.040 | that are driving that ratio inflation.

00:08:57.840 | But a lot of the market makers

00:08:59.680 | have already started to take action,

00:09:01.520 | expecting the rate cuts to come in.

00:09:03.560 | As you point out, Jekyll, 90% plus likelihood

00:09:06.280 | of rate cuts happening this year.

00:09:08.240 | So I don't know how much market action we will see,

00:09:10.720 | but there has been a lot of conversation from D.C.

00:09:13.800 | about the Fed should reset expectations on inflation

00:09:17.520 | from two to 3%.

00:09:18.680 | And if they did that, that becomes the new normal.

00:09:22.640 | And we're never gonna get back to 2%,

00:09:24.200 | at least in this current kind of era.

00:09:27.680 | That might be the era that we start,

00:09:29.080 | the level that we start to cut.

00:09:29.920 | - Oh, really, people are talking about that?

00:09:31.480 | Talking about that, Freeberg, of that, like...

00:09:33.920 | - That's been a big push. - Interesting.

00:09:36.040 | - The Jerome Powell mandate of 2% inflation

00:09:39.600 | may be an expectation that cannot be met

00:09:42.880 | given the amount of stimulus that went into the economy

00:09:45.960 | during COVID, that it could take a decade

00:09:47.760 | to earn its way out.

00:09:49.040 | As a result, we will not see a normalized contraction

00:09:51.840 | of that capital coming out of the markets

00:09:53.400 | in a way that will get us back down to 2% inflation

00:09:56.280 | for the time being.

00:09:57.440 | And I just saw a presentation

00:09:58.920 | by a bunch of food company executives recently,

00:10:01.600 | and they took 13 to 15% price hikes last year.

00:10:04.880 | And you've heard Elizabeth Warren

00:10:06.000 | kind of chime on about this.

00:10:07.960 | But the reality is that inflation is not just in the U.S.,

00:10:11.160 | but around the world,

00:10:12.080 | and it affects the U.S. markets as well,

00:10:13.840 | because a lot of U.S. companies have had to raise prices

00:10:16.520 | because of their dependence on labor and materials

00:10:19.600 | and commodities from other countries that are inflating.

00:10:22.560 | - They call this the inputs, right?

00:10:24.200 | This is what they say, the inputs.

00:10:25.280 | - Exactly, and because of the way

00:10:26.680 | that the globalized economy works today,

00:10:28.720 | the inflation around the world

00:10:29.880 | is gonna continue to buoy inflation in the U.S.,

00:10:31.880 | even if we get our house in order.

00:10:33.720 | So it's very unlikely that we get back to a two-handle,

00:10:36.720 | at least in this kind of era.

00:10:39.480 | And as a result, you'll probably see

00:10:41.280 | the market kind of assume

00:10:43.720 | that we're gonna be at a 3% kind of inflation level

00:10:46.120 | for quite some time.

00:10:47.720 | - It's very interesting, the obsession with the two.

00:10:50.400 | I brought this up on the show.

00:10:52.080 | The 2% handle and this target

00:10:55.280 | came from the Reserve Bank of New Zealand's guy,

00:10:57.240 | Roger Douglas, Minister of Finance,

00:11:00.360 | and he came up with it because they just asked him,

00:11:02.200 | like, "Well, what's a healthy one?"

00:11:03.360 | And he came up with that, and then everybody adopted it.

00:11:05.840 | - The Dunder Mifflin Inflation Index.

00:11:07.880 | - Basically, it's just sitting out there.

00:11:10.000 | Okay, so for a completely objective, nonpartisan view

00:11:13.600 | of all this incredible economic data,

00:11:15.720 | we go to our RNC correspondent, David Sachs.

00:11:19.320 | Throw a wet blanket on this incredible news.

00:11:21.600 | - I'm as nonpartisan as you are, Jay Cow.

00:11:23.640 | - Exactly.

00:11:24.480 | - Don't pretend like you're not a candidate in this race.

00:11:26.600 | - I am a moderate independent, as we all know,

00:11:29.000 | from my Fox News hits.

00:11:30.800 | - Yes, exactly.

00:11:31.640 | Fox News has hired you to provide

00:11:33.120 | the opposite point of view.

00:11:34.680 | In any event, sorry, what's your question?

00:11:37.360 | - Just going down the middle here.

00:11:39.600 | Joking, obviously, but a little bit.

00:11:42.840 | But this is just, rate the Fed's reaction to this.

00:11:47.480 | It seems like the Fed's supposed to be independent.

00:11:49.680 | Obviously, this Fed chair has worked

00:11:51.720 | across an administration.

00:11:52.800 | So, we've said here very critically,

00:11:55.640 | they got started too late.

00:11:56.840 | They should have got ahead of this.

00:11:57.880 | But, I mean, rate their performance since then.

00:12:00.680 | Do you think they're nailing this

00:12:01.720 | and there's gonna be a soft landing?

00:12:02.840 | What, you have concerns?

00:12:03.840 | You're optimistic about the economy

00:12:05.760 | and how they've handled it?

00:12:07.040 | - Well, the Fed's mistake was just waiting way too long

00:12:09.960 | to react to the inflation.

00:12:11.480 | And they didn't just wait nine months

00:12:14.200 | after the first inflation print came in

00:12:16.880 | that was too high before they started raising rates.

00:12:19.120 | They continued QE for six more months.

00:12:21.280 | So, when you talk about all this stimulus

00:12:23.120 | that's still in the economy

00:12:24.240 | that they can't seem to get rid of,

00:12:26.240 | a lot of that was created by the Fed's QE

00:12:28.720 | in the second half of 2021.

00:12:30.640 | That should never have happened.

00:12:31.960 | Since then, they did what they had to do,

00:12:33.520 | which is they increased rates to solve inflation.

00:12:36.120 | That's what you do.

00:12:37.360 | And yes, it does seem to be working,

00:12:40.360 | but we still have inflation

00:12:42.160 | being persistently high at 3%.

00:12:45.240 | And so now, like Friedberg's saying,

00:12:46.600 | they're trying to change the goalpost

00:12:47.920 | to somehow normalize 3%.

00:12:49.880 | We should just understand that what that means

00:12:52.480 | is permanently higher interest rates

00:12:54.320 | because the Fed has to offer,

00:12:56.960 | or under normal circumstances,

00:12:59.000 | has to offer a return above the rate of inflation.

00:13:02.680 | So, whatever that return is, 1%, 2%,

00:13:05.960 | you stack that on top of the inflation rate.

00:13:08.280 | So, in other words,

00:13:09.480 | let's say the Fed wanted to target a 2% real return.

00:13:13.440 | That means that the interest rate would be 5%

00:13:17.080 | with a 3% rate of inflation.

00:13:18.920 | Whereas if inflation can be managed down to 2%,

00:13:22.000 | you would have a 4% interest rate.

00:13:24.640 | And that persistently,

00:13:27.200 | if we're talking permanently higher interest rate,

00:13:29.720 | will create a drag on the economy

00:13:31.560 | because lower interest rates create more investment.

00:13:35.240 | They reduce the hurdle rates to take risk,

00:13:38.760 | whereas higher interest rates, as we've seen,

00:13:40.960 | create drag on equities and drag on investment.

00:13:44.680 | So, if they redefine the inflation rate to 3 instead of 2,

00:13:48.880 | there will be long-term consequences from that.

00:13:50.880 | That is not a free thing to do.

00:13:53.800 | - Yeah.

00:13:54.640 | - So, that would be one part of the answer.

00:13:56.480 | The other thing is just, yeah, look,

00:13:58.200 | inflation going from 3.1 to 3.0 is positive.

00:14:02.000 | It's good news.

00:14:03.280 | Better than it going from 3.1 to 3.2.

00:14:06.000 | But we're talking about 0.1%.

00:14:08.720 | And I just think people get a little too excited

00:14:10.600 | reading into these prints

00:14:13.160 | when these are not huge changes in numbers.

00:14:16.400 | I do think that once the inflation rate

00:14:18.200 | starts with a two-handle,

00:14:20.080 | that psychologically, I think,

00:14:21.600 | will be a big change for people.

00:14:23.240 | - Psychology has so much to do with this.

00:14:24.720 | I thought, I was doing a little research on it,

00:14:26.520 | why it's so contentious

00:14:27.520 | and there's so much of a lack of consensus about it.

00:14:31.080 | Nick, pull up this chart.

00:14:31.920 | I wanted to share it with you guys.

00:14:33.600 | This is basically a psychological phenomenon

00:14:36.720 | called partisan economic perception.

00:14:39.080 | And this has been studied for some time.

00:14:41.360 | And what's really interesting about it is

00:14:43.800 | it shows what percentage of people

00:14:46.640 | who are Democrats and Republicans

00:14:47.880 | here in the United States of America

00:14:49.400 | say the economy's good.

00:14:51.880 | And if you look at Clinton,

00:14:54.200 | and he got to be president at the helm

00:14:57.800 | during the internet revolution

00:14:59.640 | and this incredible economic boom,

00:15:01.320 | he was obviously so centrist, right?

00:15:02.960 | He appealed to both sides of the aisle.

00:15:05.480 | And you had this very tight consensus

00:15:09.560 | that the economy was good.

00:15:11.440 | Democrats were maybe three or four percentage points

00:15:13.840 | above Republicans in that perception.

00:15:16.160 | And then Bush came in and all of a sudden,

00:15:18.160 | Democrats hated Bush so much

00:15:20.400 | that they perceived the same economy,

00:15:23.080 | 2000, and you obviously have the dot-com bust there.

00:15:26.080 | So they both went down in unison,

00:15:28.360 | especially after the great recession.

00:15:29.840 | But you have this disparity that comes up, Chamath,

00:15:34.120 | where you have 25 points between how they perceive it.

00:15:37.480 | Obama, obviously, Democrats were incredibly enthusiastic

00:15:41.760 | about Obama, effusive even,

00:15:44.440 | but Republicans hated him with a passion, right?

00:15:47.480 | And that was really when Fox News started to get cooking.

00:15:49.840 | And then you look at Trump, same exact phenomenon.

00:15:52.680 | It flips.

00:15:54.160 | Under Trump, 80% of Republicans think,

00:15:58.640 | "Oh, the economy is good."

00:15:59.960 | And then Democrats say, "It's not good."

00:16:03.440 | And that plummets and you get this big dispersion.

00:16:05.440 | There are two moments in time, Freiburg, where,

00:16:08.240 | or three, when you start to see the consensus get tighter,

00:16:11.400 | and that's during a crash.

00:16:12.360 | So there's your dot-com crash, great financial crisis,

00:16:16.120 | and an election, yeah, and a great,

00:16:17.560 | that's a very good point, actually, I didn't notice that,

00:16:19.080 | and then also during the pandemic.

00:16:20.680 | So you have three crises.

00:16:21.520 | - Yeah, this is a great chart, yeah.

00:16:23.040 | - So, Freiburg, looking at this,

00:16:25.120 | I think it explains so much of the tension in the country

00:16:29.960 | that we can't even agree on,

00:16:32.560 | hey, is the economy good?

00:16:33.640 | It's just everything is perceived

00:16:35.440 | through your partisan lens.

00:16:37.240 | What's your takeaway from this?

00:16:39.200 | Is it that we just don't run moderates anymore like Clinton?

00:16:42.160 | - Well, look, I mean, at the end of the day,

00:16:45.040 | if people feel like they're progressing, they feel happier.

00:16:49.040 | They feel like they're not progressing, they're unhappy,

00:16:50.960 | regardless of their absolute state.

00:16:52.880 | You know, we talked about this with Jonathan Haidt

00:16:55.080 | on our interview show.

00:16:55.920 | We talked about this on the show in the past.

00:16:58.520 | I think that there's some studies that show

00:17:01.040 | that if income growth is not roughly 10% a year,

00:17:05.040 | you get an unhappiness indicator,

00:17:07.240 | and then there are other associations with that,

00:17:09.240 | like am I improving the size of my house?

00:17:11.040 | Am I able to buy a new car?

00:17:12.160 | Am I able to progress in my career and make more money?

00:17:15.440 | All these factors kind of play in,

00:17:17.000 | and much of this ends up being buoyed

00:17:18.840 | by the political ideology of the candidate

00:17:22.880 | that's in the office and how they are popularizing

00:17:26.200 | what they are doing to help you progress,

00:17:28.200 | even if you are or are not actually progressing.

00:17:30.880 | So then people hear the political leadership say,

00:17:34.160 | "This is what we're doing."

00:17:36.040 | You associate that as being positive or negative.

00:17:38.480 | If you're a Republican or you're a Democrat,

00:17:40.000 | you associate it as one or the other.

00:17:41.920 | And so you have this perception of progression

00:17:44.400 | without actually having economic progression be tied to it.

00:17:47.840 | So the reality gets decoupled.

00:17:49.720 | So I think it's an excellent chart

00:17:51.920 | to kind of highlight that fact.

00:17:54.240 | I'm not sure how much it ties to this inflationary issue

00:17:56.640 | that we're dealing with right now,

00:17:58.120 | but I will tell you that, and I'll restate this again,

00:18:02.360 | much of the inflation,

00:18:03.320 | like I think grocery prices are up 30 plus percent.

00:18:05.520 | Nick, you could probably pull this up since COVID.

00:18:07.120 | - That is, you're correct, one of the sticky points.

00:18:10.960 | You know, 'cause this CPI,

00:18:13.120 | you have to parse it like you're saying in grocery.

00:18:15.360 | - Yeah, the more globalized the businesses are

00:18:19.760 | that are providing the goods or services to us,

00:18:22.160 | the more likely they are to need to hike prices

00:18:24.640 | to make up for the inflationary cost structure

00:18:27.240 | in their business because of their global presence.

00:18:29.720 | - You wanna hear an interesting factoid?

00:18:32.040 | - Yes, please.

00:18:33.360 | - There was an article in Bloomberg, I sent it to Nick,

00:18:36.080 | but people have been tracking the S&P 500 index

00:18:40.160 | versus the equal weighted index.

00:18:42.000 | So when you calculate the S&P 500 index,

00:18:44.360 | you weight it for the market cap.

00:18:46.520 | So the top seven or eight companies

00:18:48.360 | obviously get a lot more weight in it.

00:18:50.640 | And so they look at the spread between that index

00:18:55.000 | and an equal weighted index where every 500 companies are,

00:18:57.840 | you know, the 500 companies are each equal.

00:19:00.800 | And what's interesting is the spread right now

00:19:04.560 | is the most extreme since March of 2000

00:19:09.520 | right before the dot-com crash.

00:19:10.960 | - Oh, Jesus Christ, thanks, Chamath.

00:19:13.920 | - Well, this is Bloomberg's data, so I'm just repeating it.

00:19:16.640 | I read that article, but--

00:19:18.400 | - That's incredible.

00:19:19.280 | - It's a tie-in to the AI thing, I guess,

00:19:21.520 | that we're gonna talk about soon, but--

00:19:23.160 | - Next, yeah.

00:19:24.480 | - We could be at the end of just an enormous hype cycle here

00:19:28.200 | where we have to contract the equity market.

00:19:30.800 | That's probably not a bad thing, by the way,

00:19:32.640 | because as Zak said,

00:19:34.160 | one of the things that you have to do

00:19:35.360 | is I think you have to underwrite to a rate of return.

00:19:37.920 | And right now, nobody knows really what to do

00:19:40.400 | because valuations would tell you

00:19:44.000 | that you should price to the low end,

00:19:46.160 | but then it's not really clear

00:19:48.280 | what the risk-free rate of return should be.

00:19:51.520 | So everybody's just sort of like they're shrugging

00:19:55.400 | and their arms are in the air, and nobody knows what to do.

00:19:57.960 | So if you really wanna get the economy moving at some point,

00:20:02.080 | you're gonna have to reset something.

00:20:03.640 | You're gonna have to reset rates,

00:20:05.840 | or you're gonna have to set the equity risk premium

00:20:07.960 | in the stock market.

00:20:09.080 | You're gonna have to reset people's expectations

00:20:12.240 | around what is actually happening in the economy.

00:20:15.640 | And right now, we're in this limbo

00:20:17.080 | where none of those things have been decided.

00:20:19.160 | But there are all of these weird moments,

00:20:23.320 | like data points that you could use

00:20:25.480 | to kind of just justify your bias, quite honestly.

00:20:28.720 | But the point is that I think

00:20:29.800 | there's a lot of question marks right now,

00:20:31.480 | not a lot of answers.

00:20:33.040 | - Yeah, that phenomenon you were talking about previously

00:20:37.640 | is relative deprivation, Freeberg.

00:20:41.680 | It's the phenomenon where you compare yourself

00:20:43.760 | to other people and you feel like I'm getting screwed here.

00:20:48.160 | Sax, what's your take on this AI bubble?

00:20:52.040 | 'Cause I got some data I'm about to pull up on it,

00:20:54.560 | but let's just get there right now.

00:20:56.160 | How much of this boom that we're seeing in the stock market

00:21:01.160 | is this AI bubble?

00:21:04.600 | - Well, a lot of the boom is driven by these AI stocks,

00:21:08.440 | notably NVIDIA.

00:21:09.520 | I mean, if you take out the AI stocks,

00:21:11.560 | I'm not sure the market is up,

00:21:13.560 | or maybe it's up a little bit.

00:21:14.760 | I mean, a huge part of the gain is from these,

00:21:17.160 | I don't know, top five, top seven tech stocks.

00:21:20.280 | Is it a bubble?

00:21:21.480 | I think that's going a little too far.

00:21:23.200 | I mean, I personally think the AI wave is real.

00:21:26.700 | I think the question is whether the level of investment

00:21:29.240 | that we're seeing going into cloud service infrastructure

00:21:32.640 | is sustainable.

00:21:33.960 | There's a huge build out happening right now,

00:21:36.680 | many, many billions of dollars building out

00:21:39.240 | these new cloud service centers or cloud infrastructure.

00:21:44.240 | - Data centers.

00:21:45.160 | - Data centers based on GPUs instead of CPUs.

00:21:48.240 | And I think it's a good question

00:21:49.600 | about whether that's sustainable.

00:21:51.240 | I do think that one of the things that's going on

00:21:54.680 | is that the chips are really expensive.

00:21:57.160 | I mean, these GPUs from NVIDIA,

00:21:58.640 | what, they're like $30,000?

00:22:00.360 | - Yeah.

00:22:01.200 | - Per GPU? - For an H100, yeah.

00:22:02.520 | - Right, and part of the reason for that is the scarcity.

00:22:04.960 | They haven't been able to produce

00:22:06.280 | as much as there's demand for,

00:22:08.040 | and so they're commanding a premium right now.

00:22:10.120 | - And just to be clear, they're not just a chip.

00:22:11.880 | I mean, people think they're like a chip.

00:22:12.960 | They think something you hold in the palm of your hand.

00:22:14.280 | They're like a racked server that's like 50 pounds.

00:22:18.080 | - Yeah, it's got like thousands of components,

00:22:19.680 | and it's a very complicated product to make.

00:22:22.160 | In any event, they're very expensive,

00:22:24.640 | and so it's very expensive

00:22:26.280 | to build out this new infrastructure.

00:22:28.720 | I do think that over time,

00:22:30.280 | the price of these chips just has to come down.

00:22:32.000 | It just doesn't make sense that they'd be so expensive.

00:22:34.240 | Just as production increases

00:22:36.680 | and they don't have this rate limit on the supply,

00:22:40.640 | then I think the price should come down

00:22:42.240 | and the cost of this infrastructure should normalize a bit.

00:22:44.920 | - Well, and you heard it here first on the "All In" pod.

00:22:47.000 | Here's episode 181, six weeks ago.

00:22:50.400 | Noshvrakhanis wasn't involved in this one,

00:22:52.440 | but here's Chamath and Freeberg.

00:22:54.800 | - You cannot spend this kind of money

00:22:56.520 | and show no incremental revenue potential.

00:22:59.000 | So while this is incredible for NVIDIA,

00:23:02.760 | the chicken is coming home to roost

00:23:04.560 | because if you do not start seeing revenue flow

00:23:07.280 | to the bottom line of these companies

00:23:08.760 | that are spending $26 billion a quarter,

00:23:11.640 | the market cap of NVIDIA

00:23:12.960 | is not what the market cap of NVIDIA should be.

00:23:15.120 | And all of these other companies are going to get punished

00:23:17.880 | for spending this kind of money.

00:23:19.160 | Where are all these newfangled things

00:23:21.360 | that we're supposed to see

00:23:22.280 | that justifies $100 billion of chip spend a year,

00:23:26.200 | $200 billion of energy spend,

00:23:28.760 | $100 billion of all this other stuff?

00:23:31.000 | We're now spending $750 billion.

00:23:33.720 | This is on the order of a national transfer payment.

00:23:38.720 | And we've seen nothing to show for it

00:23:40.960 | except that you can mimic somebody's voice.

00:23:43.560 | It doesn't all hang together yet.

00:23:45.840 | - You know, the general statement might be made

00:23:47.840 | that perhaps the first AI mini bubble is bursting a bit,

00:23:52.480 | and particularly with respect

00:23:54.400 | to the accelerated expectations

00:23:56.680 | that public market investors had

00:23:58.280 | for public market technology stocks,

00:24:00.480 | that perhaps now is the time for a bit of a reckoning,

00:24:03.200 | that perhaps this isn't going to happen

00:24:04.480 | at the same margin level

00:24:05.920 | or the pace that folks had modeled.

00:24:07.600 | - Correct.

00:24:08.440 | - And this is going to cause a bit of a setback.

00:24:09.840 | And so I think inspired in part by that,

00:24:12.280 | David Kahn from Sequoia Capital,

00:24:15.000 | legendary venture firm here in Silicon Valley,

00:24:17.520 | published a blog titled "AI $600 Billion Question."

00:24:21.240 | Kahn said there was a $500 billion revenue hole

00:24:26.160 | when considering AI CapEx levels.

00:24:28.840 | He got this number by calculating

00:24:30.240 | that companies need to show around $600 billion

00:24:32.600 | in AI revenue to justify projected CapEx levels in Q4.

00:24:36.840 | And he generally assumes

00:24:38.440 | Google, Microsoft, Apple, MetaTesla, and others

00:24:40.480 | will generate $100 billion annually combined.

00:24:44.240 | That's pretty generous,

00:24:45.440 | and that still leaves a $500 billion hole.

00:24:48.640 | Here's the NVIDIA data center run rate revenue,

00:24:51.680 | as you can see, Q4 of 2023, $50 billion,

00:24:56.200 | and now $150 billion.

00:24:58.760 | And then you have the data center facilities being built

00:25:02.120 | and the cost to operate those,

00:25:03.320 | implied data center AI spend,

00:25:04.640 | and then of course your software margin.

00:25:06.400 | Kahn said he also thinks that the GPU shortage

00:25:09.400 | already peaked last year.

00:25:11.360 | We'll get to that later.

00:25:13.120 | On June 25th, a couple of weeks ago,

00:25:15.200 | Goldman published a 31-page report

00:25:17.640 | called "Gen AI, Too Much Spend, Too Little Benefit."

00:25:20.760 | So you heard it here first on the All-In Pod,

00:25:23.200 | and I think everybody's kind of catching up with this theme.

00:25:25.800 | Companies are gonna spend $1 trillion,

00:25:28.360 | according to the report, on AI CapEx

00:25:30.680 | over the next several years.

00:25:32.640 | Usually that's three to five,

00:25:34.120 | and we use the word several.

00:25:35.200 | AI productivity gains are limited

00:25:36.760 | in the near to midterm, the next 10 years,

00:25:38.800 | and AI's ROI is likely significantly limited due to costs.

00:25:43.160 | The costs of AI are so high,

00:25:44.640 | and the revenue is so unclear,

00:25:45.960 | there's a chance the economics never make sense.

00:25:49.480 | Here's a choice quote,

00:25:50.320 | and then I'll get the reaction from the team.

00:25:52.400 | "Replacing low-wage jobs

00:25:53.680 | "with tremendously costly technology

00:25:55.240 | "is basically the polar opposite

00:25:56.840 | "of the prior technology transitions

00:25:59.160 | "I've witnessed in my 30 years

00:26:00.560 | "of closely following the tech industry."

00:26:03.120 | And that's Goldman's head of global equity research.

00:26:05.560 | It's an interesting concept here, Chamath,

00:26:07.240 | that you're saying, like,

00:26:08.080 | hey, you're making fun images

00:26:10.520 | or maybe rewriting your blog post,

00:26:14.160 | but that's low-wage work.

00:26:16.960 | So what are your thoughts on this report,

00:26:20.000 | these two reports here?

00:26:21.080 | - Well, I think we're all converging

00:26:23.120 | on the same realization,

00:26:24.440 | which is you can't spend a trillion dollars

00:26:27.120 | and only have toy apps to show for it.

00:26:29.640 | So I think we've all been amazed

00:26:32.160 | by these AI demos.

00:26:33.920 | I think the four of us have talked

00:26:35.960 | pretty incessantly about it now

00:26:37.520 | for 18-plus months,

00:26:39.520 | ever since we saw the first open AI demos.

00:26:41.600 | So that's great.

00:26:43.640 | And the underlying technology, I think,

00:26:45.400 | is really important.

00:26:46.960 | But it's also important to acknowledge

00:26:49.960 | that the underlying technology has enormous gaps.

00:26:52.400 | There's gaps in the quality

00:26:57.040 | of the products that can be created

00:26:59.640 | to not have hallucinations.

00:27:02.000 | Those gaps are too large right now

00:27:04.440 | for them to be used reliably

00:27:06.160 | in production settings,

00:27:07.440 | unless you have a very defined scope.

00:27:10.520 | If you have a defined scope, though,

00:27:13.040 | the implementation costs are not nearly

00:27:15.440 | what needs the level of spend to support.

00:27:18.680 | So there's just a big mismatch.

00:27:20.200 | Second is that we have a huge problem

00:27:22.720 | with NVIDIA,

00:27:23.560 | and I'll just kind of say the quiet part out loud,

00:27:26.280 | which is you can't spend this kind of money

00:27:28.920 | to have technology lock-in to one hardware vendor.

00:27:32.680 | And that makes no sense.

00:27:34.120 | And what you're seeing now is that Amazon,

00:27:36.280 | Google, Microsoft, AMD, Intel,

00:27:39.440 | a plethora of startups, Grok,

00:27:41.440 | everybody trying to make now

00:27:43.160 | different hardware solutions.

00:27:45.400 | The problem, though, that that creates

00:27:46.640 | is that we have this massive lock-in right now

00:27:48.720 | because the code is littered

00:27:50.640 | with all these NVIDIA-specific ways

00:27:53.080 | of implementing access to GPUs.

00:27:54.960 | That's not sustainable.

00:27:56.960 | So we're in a bit of an existential thrash,

00:28:00.280 | and I think the only way

00:28:01.560 | that we're gonna get around this

00:28:02.880 | is to do a little bit of a reset.

00:28:05.400 | And I think that's gonna touch a lot of startups

00:28:07.560 | that have already taken down way too much money

00:28:09.960 | at really insane valuations.

00:28:12.960 | Part of that was just because we needed,

00:28:15.320 | I guess the market wanted a place to believe in again

00:28:19.200 | after the crypto meltdown

00:28:20.480 | and after all of the other SaaS meltdown

00:28:22.760 | and all of the other stuff that we've gone through.

00:28:25.280 | So yeah, I think that we are

00:28:27.520 | in a bit of a reckoning right now.

00:28:28.720 | It's going to be a complicated couple of quarters

00:28:33.600 | at a minimum and probably a complicated year

00:28:35.400 | to sort out who's actually real.

00:28:37.600 | - It's an interesting psychological phenomenon

00:28:39.400 | there, Friedberg, of the capital alligators,

00:28:42.480 | the tech industry, the entrepreneurs,

00:28:43.720 | they want to believe in something,

00:28:45.360 | and the previous paradigm shifts were ending,

00:28:48.600 | and here we go, a new paradigm shift.

00:28:50.680 | Perhaps we're such a efficient capitalistic machine now

00:28:55.640 | that we almost like process stuff super quickly

00:28:58.920 | in some ways, Friedberg.

00:29:00.400 | You know, we deploy massive capital,

00:29:02.800 | we try to solve huge problems, I mean,

00:29:05.160 | and then maybe we hit the reckoning

00:29:07.120 | and the trowel of despair that we talked about,

00:29:09.080 | you know, many times, innovators' dilemma,

00:29:12.120 | you know, crossing the chasm kind of style.

00:29:15.360 | So what are your thoughts on Shamat's point there

00:29:17.880 | or any other points you might have?

00:29:19.160 | - There's a cold hard truth here,

00:29:21.080 | which is there is a ton of capital

00:29:24.760 | that was raised during the COVID bubble era

00:29:28.680 | and the Zerp era that needed a place to go,

00:29:31.560 | and a lot of the traditional businesses,

00:29:35.480 | traditional business models,

00:29:36.480 | traditional in the technology sense,

00:29:38.280 | SAS and a lot of the biotech stuff,

00:29:40.720 | it all became-- - Apps.

00:29:42.520 | - It became uninvestable.

00:29:43.920 | Then there's a lot of money in the public markets

00:29:45.720 | that was sitting on the sidelines,

00:29:47.080 | that was sitting in treasuries and so on.

00:29:48.920 | So every dollar is looking for growth

00:29:50.880 | and there's a lot of dollars still sitting around out there

00:29:53.800 | from the Zerp era

00:29:55.240 | and coming into this kind of post-Zerp era,

00:29:57.800 | looking for a place for growth.

00:29:59.240 | And there is very little growth,

00:30:00.520 | as we talked about with the S&P 493,

00:30:03.640 | not being very performative

00:30:05.040 | with respect to growth and revenue

00:30:07.040 | and having great outlook for the next five years.

00:30:09.800 | So then when there is a glimmer of upside,

00:30:11.880 | there's a glimmer of opportunity,

00:30:13.640 | even if it's just painting a picture of a growth story,

00:30:17.320 | all the capital drives into it.

00:30:18.800 | And we've all heard stories

00:30:20.480 | about these Series A startups in AI

00:30:23.200 | getting bid up to $100 million valuation.

00:30:26.040 | And I've seen a couple of these

00:30:27.480 | where people have pitched me things

00:30:28.560 | on like protein modeling AI startups.

00:30:30.360 | And it's literally like two guys from Meta and OpenAI

00:30:34.240 | that left and started this company

00:30:35.360 | and they raised 30 on a 120 pre or something.

00:30:37.960 | And it's just two guys building a model.

00:30:40.360 | And that's because that capital needs to find a place

00:30:42.400 | where it can tell itself a growth story.

00:30:44.640 | And so I think that we're still dealing

00:30:46.360 | with the capital hangover from ZURP

00:30:48.760 | and the fact that there's a dearth of areas

00:30:50.520 | to invest for real growth

00:30:52.200 | that has allowed the AI bubble

00:30:53.640 | to kind of grow as quickly as it has.

00:30:56.080 | And now, as Chamath points out,

00:30:57.680 | we are kind of rationalizing that back.

00:30:59.880 | And I do think that there's gonna be a reset.

00:31:01.440 | Now, I'll also say that the Goldman report,

00:31:03.760 | which I read and some of the other analyses

00:31:05.720 | that have been done,

00:31:07.240 | I think there was some commentary or some analysis that,

00:31:09.720 | hey, it costs me six times as much

00:31:11.400 | as having an analyst do this work.

00:31:13.320 | Like the energy cost of the AI is still so high,

00:31:16.600 | the actual performance of the model is not good.

00:31:18.400 | But what that fails to, it's right and wrong.

00:31:20.840 | It's right in the sense that, yes,

00:31:22.160 | it is more expensive today

00:31:23.680 | and the return on investment is not there today.

00:31:26.000 | It's wrong in that it ignores

00:31:28.440 | the performative model improvements that we're seeing

00:31:31.120 | in nearly any metric over the past couple of months.

00:31:33.880 | Every few months, as we know,

00:31:35.440 | we see new models, new improvements, new architectures,

00:31:38.240 | new ways of leveraging the chips

00:31:40.120 | to actually drive a lower token cost,

00:31:43.280 | to drive lower energy cost per answer,

00:31:46.000 | lower energy cost per run.

00:31:47.600 | And so every metric that matters is improving.

00:31:50.240 | So if you fast forward another 24, 36 months,

00:31:53.200 | I do think that there's a great reason to be optimistic

00:31:55.920 | that there's gonna be extraordinary ROI

00:31:58.080 | based on the infrastructure that's being built.

00:32:00.000 | It's a question of, are you gonna get payback

00:32:01.560 | before the next cycle of infrastructure needs to be made

00:32:04.040 | and everything comes back in?

00:32:05.000 | We saw this during the dot-com boom

00:32:06.680 | where a lot of people built out data centers

00:32:08.240 | and by the time they were actually able

00:32:09.600 | to make money on those data centers,

00:32:11.160 | it was like, hey, all the new telco equipment,

00:32:12.680 | all the new servers need to be put in

00:32:14.240 | and everything got written off.

00:32:15.640 | So there is a big CapEx kind of question mark here,

00:32:17.920 | but I do think that the fundamental economics of AI

00:32:19.880 | will be proven over the next couple of quarters.

00:32:22.600 | - Yeah, I mean, I don't think it's going to be

00:32:24.760 | the next couple of quarters, quite honestly.

00:32:26.360 | I do think in the next couple of decades

00:32:28.840 | and in the next couple of years,

00:32:30.320 | what I would hope ambitiously

00:32:31.840 | is that there are a few really useful proof points

00:32:36.960 | where companies are making revenue,

00:32:38.880 | solving very specific defined problems,

00:32:41.920 | where quite honestly, you're taking workloads of X

00:32:45.000 | and making it X over 10, right?

00:32:47.400 | And I think that that's possible,

00:32:49.800 | but I think this generalized idea

00:32:51.360 | that all of this spend is gonna have a good ROI,

00:32:53.560 | I think is pretty wishful thinking.

00:32:56.240 | - Sach, you wanna maybe give us your thoughts here?

00:32:59.600 | Bubble, do we work our way out of it?

00:33:02.120 | Are we overspending or is this all manifest destiny?

00:33:04.800 | You know, if you build it, they will come kind of situation.

00:33:07.680 | We throw all this capital there.

00:33:09.320 | We make a lot of progress on these projects

00:33:12.680 | and something comes out the other end as messy as it is.

00:33:15.760 | - I think that's what's likely to happen.

00:33:17.200 | I'm much more bullish than you guys

00:33:18.680 | about this investment that's being made.

00:33:20.960 | Remember that when the internet got started in the '90s,

00:33:24.000 | it was via dial-up.

00:33:25.920 | I mean, you literally had to have a modem

00:33:27.640 | and you would dial up the internet

00:33:29.400 | and it was incredibly slow.

00:33:30.960 | Photo sharing didn't even work,

00:33:32.400 | so social networking wasn't possible.

00:33:35.040 | And basically what happened next

00:33:37.480 | was that the telecom companies spent a ton of money

00:33:40.320 | building out broadband

00:33:42.720 | and people started upgrading to broadband.

00:33:44.920 | Then we had the dot-com crash.

00:33:46.000 | Everyone thought that the telecom companies

00:33:48.320 | had wasted billions of dollars

00:33:50.360 | investing in all this broadband infrastructure

00:33:53.280 | and it turned out that no, they were right to do that.

00:33:55.720 | It just took a while for that to get used.

00:33:58.920 | And this is a pretty common pattern

00:34:01.560 | with technological revolutions

00:34:03.200 | is that you can have a bubble in the short term

00:34:05.640 | but then it gets justified in the mid to long term.

00:34:10.280 | The build out of the railroads in the United States,

00:34:11.960 | another example of this.

00:34:12.800 | We had huge railroad bubbles

00:34:14.840 | but it turned out that that investment was all worthwhile.

00:34:18.600 | So I tend to think that's what's gonna happen with AI.

00:34:20.680 | I mean, I do think that there's already enough,

00:34:23.720 | let's call it realness, to the applications.

00:34:26.520 | I mean, I'll give you three examples.

00:34:27.760 | Number one, open AI.

00:34:29.560 | I mean, open AI is effectively semantic search, right?

00:34:33.800 | It's a different kind of search engine

00:34:36.200 | where it understands the question you're asking

00:34:38.120 | and gives you an answer instead of blue links.

00:34:40.600 | And they're already at, what was it?

00:34:42.280 | We talked about this previously.

00:34:43.440 | 3.4 billion in revenue.

00:34:45.040 | - Now that's consumer at 20 bucks

00:34:47.760 | and enterprise at like 30 bucks a month.

00:34:50.160 | And then there's also the API.

00:34:52.080 | - Yeah, they're just starting already.

00:34:53.480 | I mean, this company has only been around for two years

00:34:55.560 | with a product on the market

00:34:57.080 | and it's doubling year over year.

00:34:59.480 | So that's just example number one, right?

00:35:01.880 | I mean, what's the most valuable application

00:35:03.560 | on the internet until now?

00:35:04.920 | It's been Google, right?

00:35:05.880 | And so-- - Search.

00:35:06.920 | - Search.

00:35:07.760 | And so you have a different kind of search now

00:35:10.560 | that I'm not saying it's a one-for-one replacement.

00:35:12.400 | It's also a new market.

00:35:13.520 | But my point is just you already have

00:35:15.600 | a very powerful application

00:35:17.600 | in the form of this semantic search,

00:35:19.080 | which open AI is currently dominating.

00:35:21.040 | The second one, I think, will be when Apple comes out

00:35:23.480 | with the iPhone 16 with LLM-powered Siri,

00:35:28.480 | assuming they do a decent job with that,

00:35:30.480 | it's gonna lead to a huge upgrade cycle.

00:35:33.560 | I mean, I'm still on an iPhone 13

00:35:34.960 | because I haven't seen a reason to upgrade.

00:35:36.520 | I will definitely upgrade to the iPhone 16.

00:35:38.640 | - Yeah, snap upgrade.

00:35:39.560 | Snap upgrade.

00:35:40.400 | - Snap upgrade for that,

00:35:41.440 | assuming that they roll their own LLM

00:35:44.160 | and use that to power Siri

00:35:45.320 | and don't give my data to a third-party LLM.

00:35:48.240 | And there's been mixed reports about that.

00:35:51.120 | - You don't trust Sam Altman with your iPhone backup?

00:35:54.480 | - I don't want Apple sharing any of my data,

00:35:57.800 | which they obtained by being the operating system

00:36:00.000 | with a third-party LLM.

00:36:01.760 | But a bunch of viewers of the show

00:36:05.320 | posted in the comments that I had made a mistake on this

00:36:07.560 | and that Apple was rolling its own LLM to power Siri

00:36:11.760 | and they would only go to open AI

00:36:13.960 | if their own LLM can't do it for some reason.

00:36:18.960 | I'm just gonna turn that feature off.

00:36:21.200 | But in any event, so assuming Apple gets that right,

00:36:25.000 | everyone's gonna upgrade their iPhones.

00:36:26.760 | The third app is, look,

00:36:28.360 | we're using LLMs to power Glue

00:36:31.520 | and the results aren't always consistently awesome.

00:36:36.200 | I would say the results are kind of like a B+ right now,

00:36:40.000 | but you do get some really great results.

00:36:43.560 | - B+ is a strong start for YouTube.

00:36:45.320 | - It's a strong start.

00:36:46.160 | - Yeah.

00:36:47.000 | - And in a year or so,

00:36:47.920 | we're gonna be at the next-gen version of all the models.

00:36:51.920 | You're gonna be at, I'm sure,

00:36:54.080 | Chat GPT 5 will be out

00:36:55.680 | and then the next version of Clawed and so forth.

00:36:58.520 | At that point, it's gonna be an A+.

00:37:00.800 | - I gotta tell you, I've been using Clawed and Chat GPT 4.0

00:37:05.160 | and it is extraordinary how fast they've fixed

00:37:09.120 | going to the web to get information.

00:37:10.800 | It used to be arduous and painful

00:37:12.800 | to get updated information.

00:37:14.800 | And so I was like, "Hey, get me all of these."

00:37:17.160 | I think I may have told this story previously here

00:37:20.640 | on This Week in Startups,

00:37:21.480 | but I was talking about like I was doing research

00:37:23.280 | on salaries.

00:37:24.400 | And I said, "Just grant me all the information

00:37:25.680 | "from Glassdoor, Indeed, high salary, low salary,

00:37:28.320 | "average salary, these two different cities,

00:37:30.400 | "put it in a table and give me the links."

00:37:32.680 | And it did it.

00:37:33.720 | And I was like, "That's like a college-educated person's job

00:37:38.720 | "for 40 bucks an hour, call it, whatever it is,

00:37:41.080 | "a 60, 70, $80,000 a year person."

00:37:43.000 | So I'm in the bullish gap with you, Sax.

00:37:45.760 | I think it's being overbuilt, sure,

00:37:48.960 | but I think we're gonna see a tipping point next year

00:37:51.320 | where a lot of labor arbitrage occurs.

00:37:54.960 | And what I mean by that is like,

00:37:57.840 | people are figuring out ways to cut jobs

00:38:01.400 | or have one person do three jobs.

00:38:03.040 | And I'm seeing it across all the startups we invest in.

00:38:05.720 | I'm seeing it with Athena,

00:38:06.560 | the company we invested in, I mentioned earlier.

00:38:08.920 | And I'm really interested in robotics now too.

00:38:13.200 | I think there's gonna be some incredible gains

00:38:15.840 | with Optimus and some of the other robots that are occurring

00:38:18.360 | and those things are only gonna cost 20 grand.

00:38:20.000 | So this is gonna be pretty amazing.

00:38:22.480 | - Yeah, look, I think the low-hanging fruit application-wise

00:38:25.600 | in the enterprise is chat with a knowledge base,

00:38:29.240 | chat with your knowledge bases.

00:38:30.600 | That's what people want, right?

00:38:32.320 | And we're still in the early stages

00:38:33.600 | of being able to connect your enterprise data

00:38:35.840 | to an LLM in a safe, compliant way.

00:38:40.040 | That's where a lot of activity is happening right now.

00:38:42.680 | - And the compliant part means

00:38:45.240 | you're working in the tech group or the marketing group

00:38:48.240 | and you don't search the HR department's data.

00:38:52.640 | - Guys, let me ask you just a general question though.

00:38:55.320 | Like we've spent a trillion dollars.

00:38:58.320 | Let's say that there's four purchasing commits for,

00:39:00.960 | let's be generous and say only half that number.

00:39:02.800 | So now there's 1.5 trillion.

00:39:04.520 | So we're $1.5 trillion in the J-curve.

00:39:07.840 | How much total revenue does the entire AI economy

00:39:12.720 | that's established today need to generate

00:39:15.080 | to pay that back plus some reasonable rate of return?

00:39:17.600 | Revenue at a fair multiple.

00:39:19.760 | And I think what I'm getting to is

00:39:21.920 | open AI is a good example of a company that's winning,

00:39:26.400 | but unless they somehow figure out a way

00:39:27.840 | to start making $50 billion,

00:39:29.800 | there's another $47 billion of revenue that's missing.

00:39:33.000 | That's my point.

00:39:34.160 | - Yeah, I think they get there.

00:39:35.240 | I'm totally honest.

00:39:36.080 | And watching-- - No, no, no, I'm saying,

00:39:37.840 | I'm just saying that's like

00:39:39.160 | just for the last couple of years I spent.

00:39:41.000 | - Yeah.

00:39:41.840 | I mean, there's so much dry powder sitting around

00:39:45.520 | at these large companies.

00:39:46.800 | I think capital is a weapon kind of situation,

00:39:49.160 | but it could be a big--

00:39:50.800 | - That's a different explanation,

00:39:51.960 | which is we can just take the rate of return to zero

00:39:54.360 | 'cause we have nothing better to do with the money.

00:39:56.800 | That's a fair answer as well, Jason.

00:39:59.160 | - Yeah, I mean, what are they gonna do?

00:40:00.000 | Give a dividend?

00:40:01.040 | I mean, God forbid, right?

00:40:02.600 | Like, I mean, Facebook started giving one,

00:40:04.520 | Apple's given one, so maybe, you know,

00:40:06.400 | I think that's how, and they can't do M&A

00:40:07.880 | because of Alina Khan.

00:40:09.200 | - Yeah, look, where I think Shamath has a point

00:40:11.760 | is that these big tech companies

00:40:13.680 | are not building out all this infrastructure

00:40:16.200 | because they've modeled out the ROI

00:40:18.080 | and it's extremely positive.

00:40:19.320 | They're doing it because it's an arms race.

00:40:21.560 | It's so strategic right now to have these AI capabilities

00:40:24.880 | and to power the expected next generation of AI apps,

00:40:28.160 | they can't afford to let one of their competitors have that.

00:40:30.760 | They have to compete.

00:40:32.120 | So they're all in an arms race with each other,

00:40:34.120 | bidding up the cost of these GPUs

00:40:35.960 | because they have to have that supply.

00:40:37.960 | - It's like nukes.

00:40:38.800 | It's like nukes.

00:40:39.640 | You never use them.

00:40:40.480 | You built them out.

00:40:41.300 | It might be the good comparison.

00:40:42.140 | - Well, I mean, I think they're gonna use them,

00:40:43.320 | but yeah, I mean, the point is that

00:40:45.480 | it's a zero-sum game.

00:40:46.840 | And if I let you have this GPU,

00:40:49.480 | I have one less GPU to use.

00:40:51.280 | - What do you think of Andreessen,

00:40:52.760 | this article that Andreessen just turned on 20,000 GPUs?

00:40:56.240 | - Shamath, to your point,

00:40:57.120 | it was reported earlier this week

00:40:58.280 | that Andreessen Horowitz,

00:40:59.440 | that's a very large venture capital firm

00:41:01.040 | here in the Bay Area,

00:41:02.320 | is building a 20,000 GPU cluster.

00:41:05.160 | We mentioned earlier, $20,000, $30,000 a GPU

00:41:07.800 | is what you can estimate there.

00:41:08.880 | So this is hundreds of millions of dollars

00:41:11.640 | to try to cut deals and win deals with AI startups.

00:41:15.360 | And so they stole this idea from Daniel Gross,

00:41:18.360 | which you probably don't know who that is,

00:41:19.960 | but it's a company called Pioneer Labs

00:41:22.720 | and Nat Friedman from GitHub,

00:41:24.280 | they did this last year.

00:41:26.520 | Same exact idea.

00:41:27.360 | They acquired 2,500 H100s

00:41:29.840 | and they gave their portfolio companies access to it

00:41:32.040 | in something called the Andromeda cluster.

00:41:35.280 | Really brilliant idea.

00:41:36.920 | There's a tweet from Nat.

00:41:38.960 | It's not clear whether A16 is purchasing these

00:41:41.960 | or they're just gonna pay for them on AWS

00:41:45.600 | or Google Cloud or some other provider.

00:41:49.280 | But if these were purchased,

00:41:50.280 | obviously hundreds of millions of dollars.

00:41:52.240 | What's your thought here?

00:41:53.520 | I won't go through all the details.

00:41:54.560 | I'll just go right to your opinion, Shamath.

00:41:55.960 | What's your thought on this?

00:41:57.480 | - A friend of mine,

00:41:58.320 | who's a very successful debt fund manager,

00:42:02.400 | and I talked about it this week,

00:42:04.880 | friend of the pod,

00:42:05.840 | I won't name check him,

00:42:07.880 | but he knows who he is,

00:42:09.720 | and we're talking about this.

00:42:10.960 | And basically, I think if you look at the most typical deal,

00:42:15.080 | so like, for example, the CoreWeave deal,

00:42:17.320 | which was floating around,

00:42:19.080 | was something along the lines of 40% of the cost

00:42:23.200 | of all the GPUs was put up in cash

00:42:25.040 | and 60% was lent to CoreWeave by a whole group of bankers.

00:42:29.080 | So assuming Andreessen was able to do roughly the same thing,

00:42:33.240 | the 20,000 GPU cluster, I'd call it,

00:42:35.440 | say 20 to 30,000 is between four and 600 million of cost.

00:42:40.680 | And if they get 60% of it financed, I hope they did,

00:42:44.160 | that still leaves 40% that they would have had to pay for,

00:42:47.000 | which you're still talking about $100 million plus.

00:42:51.280 | And so then the real question is,

00:42:53.360 | can they get enough equity back

00:42:54.920 | to make that $100 million investment worthwhile?

00:42:59.760 | And just to put a fine point on this,

00:43:02.080 | if that's 100 million of management fees,

00:43:04.360 | the reality is that that's actually $2 billion of value,

00:43:07.680 | right, because these management companies trade at,

00:43:09.960 | call it, say 20 odd times.

00:43:12.040 | So what's so interesting about this is like,

00:43:13.920 | you take 100 million of management fee,

00:43:16.720 | that's worth 2 billion of enterprise value,

00:43:18.520 | you dump it into these chips and cash.

00:43:21.280 | So whatever equity you get from these startups

00:43:23.680 | will need to make about $2 billion plus a little bit

00:43:27.120 | to account for the time value of money.

00:43:29.800 | Otherwise, you were probably better off not doing this.

00:43:32.840 | That's just the math of it.

00:43:33.960 | - I wonder if this is defensive--

00:43:34.800 | - Well, hold on, the 20 times math only makes sense

00:43:38.160 | if it's 100 million a year in perpetuity, right?

00:43:40.760 | If it's a one-time spend on the 100 million,

00:43:43.280 | then it's just 100 million.

00:43:44.280 | - Well, you also have to power these,

00:43:45.680 | you have to put them in a data center.

00:43:46.960 | There's a lot of cost to these things.

00:43:47.800 | - There's a lot of ongoing costs.

00:43:49.240 | - Yeah, a lot of ongoing costs.

00:43:50.880 | - Let's just say they'll spend then another 20 or 30 million

00:43:53.640 | over the next 10 years.

00:43:54.480 | My point is, it's a drag on your enterprise value

00:43:57.160 | that's probably in the billion plus dollar range.

00:43:59.680 | And so whatever equity you get

00:44:01.840 | needs to make up for that plus some.

00:44:03.680 | And my only comment is that if you then factor in SAX,

00:44:07.800 | as you said before,

00:44:09.160 | the desire to get these Nvidia chips down in price,

00:44:13.160 | but also to have hardware diversity,

00:44:15.400 | it's a really speculative bet.

00:44:18.160 | And you have to be really right.

00:44:20.000 | - It's also a crazy conflicted bet too,

00:44:22.840 | because Nvidia was using these chips in the same fashion.

00:44:25.920 | They were using allocations

00:44:27.800 | to get investment allocations in companies

00:44:31.040 | and then paying them off.

00:44:31.880 | So now you have Andreessen buying them from Nvidia.

00:44:34.320 | It's also convoluted.

00:44:36.160 | Amazon was doing this as well with AWS,

00:44:38.120 | giving credits, et cetera.

00:44:39.240 | So tried and true strategy, but very strange.

00:44:42.320 | - I don't think it's that weird a strategy.

00:44:44.480 | Because, I mean, look, it's definitely different.

00:44:47.440 | - I'm just saying it's weird

00:44:48.280 | because they're giving money to Nvidia.

00:44:50.800 | - I don't think you need to do this

00:44:51.920 | to build a successful venture firm.

00:44:53.480 | I mean, if you wanted to maximize the value of the entity,

00:44:57.040 | you would keep the 100 million for yourself

00:44:58.760 | because then some investor

00:44:59.720 | will pay you a huge multiple for that.

00:45:02.160 | - I know what I'm saying is that they're buying these chips

00:45:05.200 | and then they're effectively timesharing them out

00:45:07.160 | to portfolio companies.

00:45:09.400 | And so they're gonna charge for their use.

00:45:12.160 | They're gonna amortize this cost.

00:45:14.200 | - They're gonna charge back,

00:45:15.200 | you think they're gonna charge back the startups?

00:45:16.640 | - Yeah, yeah, no, I don't get it.

00:45:18.040 | - I'm just saying, you have to see a path

00:45:19.440 | to make back what you're losing in enterprise value.

00:45:21.720 | - I think this is brilliant for year zero, one, two,

00:45:25.560 | like Pioneer Labs was doing,

00:45:27.240 | because those people really don't have the money.

00:45:29.120 | If you're a viable concern,

00:45:30.720 | you can easily get the money to buy your own

00:45:32.800 | or rent your own.

00:45:34.320 | And we just said in the previous story

00:45:35.760 | that the glut and the weight is over for these.

00:45:38.280 | So interesting.

00:45:39.600 | - It depends on the rate of depreciation.

00:45:41.480 | If you buy these chips at a premium

00:45:43.440 | because they're scarce right now,

00:45:44.760 | and then all of a sudden they rapidly depreciate in value,

00:45:47.600 | then you might lose money.

00:45:48.680 | On the other hand,

00:45:49.560 | if the current value of the investment remains stable

00:45:51.880 | because they don't depreciate that rapidly,

00:45:53.480 | and then you can charge the cost back to the startups

00:45:56.360 | who are using the chips,

00:45:57.680 | then you break even.

00:45:59.600 | - I think that's an excellent point.

00:46:01.600 | - And it's basically a business development expense.

00:46:03.400 | - I think that's an excellent point.

00:46:04.880 | - This is a PR marketing exercise, and it worked.

00:46:08.800 | Well done, Mark, 'cause we're talking about it.

00:46:10.480 | - Yeah, I don't think this is a bad idea at all.

00:46:12.760 | I mean, I think it's kind of interesting.

00:46:14.360 | - I think they've gotten a hundred million

00:46:15.560 | in marketing of it just by--

00:46:17.160 | - Yeah, I mean, look,

00:46:18.000 | it appeals to a certain category of startup

00:46:19.720 | who needs the GPUs.

00:46:20.960 | I mean, just to be clear,

00:46:21.960 | like there's lots of AI applications

00:46:23.960 | that don't need direct access to GPUs,

00:46:26.840 | because, you know, for example,

00:46:28.640 | we're using the cloud models

00:46:30.280 | and we're using the open AI models.

00:46:31.480 | - And we're using the language model APIs,

00:46:33.960 | so it's abstract, we don't need them.

00:46:35.400 | - Yeah, we don't deal with GPU.

00:46:36.360 | I mean, you have to be in the model business effectively

00:46:39.080 | to need direct access to the GPUs.

00:46:41.200 | - As we wrap up here today, Freeberg, your thoughts,

00:46:44.280 | and you had mentioned in the group chat

00:46:45.800 | last minute addition to the docket,

00:46:47.640 | you wanted to talk about the French collections,

00:46:50.360 | and I know Sax was tweeting about it,

00:46:53.280 | because all the people who hate him were sending it to me.

00:46:57.000 | So I always know when he tweets about something spicy.

00:46:59.920 | Go ahead, Freeberg, what do you got?

00:47:00.920 | - There was effectively a center and left alignment

00:47:05.760 | that created kind of a surprise upset to the right

00:47:10.760 | that was surging in the polls

00:47:12.400 | leading into this election in France.

00:47:14.560 | And as we all saw, there was a lot of celebration

00:47:17.160 | in the streets and some rioting and so on,

00:47:20.000 | but it was a real kind of surprise ship left

00:47:22.480 | in this kind of important vote that happened in France.

00:47:24.600 | And then the party stepped up

00:47:27.200 | and put forward these economic proposals.

00:47:29.080 | They said a 90% tax on income over 400,000 euro a year,

00:47:32.840 | a 14% mandatory wage increase,

00:47:35.040 | retirement age needs to be reduced

00:47:36.960 | to the age of 60 from 64,

00:47:38.640 | which obviously massively increases social spending,

00:47:41.440 | and that they want to put forward proposals

00:47:43.600 | to put in place price controls on things like food,

00:47:46.560 | electricity, gas, and petrol,

00:47:47.920 | so effectively intervening

00:47:49.240 | in kind of the free market pricing system.

00:47:52.120 | Last month in India,

00:47:54.720 | we also saw elections where the BJP

00:47:56.640 | did not get a majority.

00:47:57.880 | In Mexico, we saw Scheinbaum get elected

00:48:00.200 | with 60% of the vote,

00:48:01.760 | retaining the leftist government.

00:48:03.800 | Scheinbaum's platform is that the government's role

00:48:08.520 | is to really solve the economic inequality

00:48:10.760 | kind of throughout the country.

00:48:12.800 | She is a Jewish scientist

00:48:14.160 | who believes in technological progress,

00:48:15.920 | but her orientation is really around

00:48:17.360 | having institutions manage progress,

00:48:19.680 | not individuals in free markets.

00:48:21.640 | We've seen this broad across other places.

00:48:25.040 | In the UK, there was a big election in this past week,

00:48:27.520 | but I wanted to take a step back

00:48:28.920 | and just highlight

00:48:30.320 | that there is this kind of emerging tactical alliance

00:48:33.040 | that we've seen repeat a few times

00:48:34.360 | between the left and the center

00:48:35.520 | that pushes back against the right globally,

00:48:37.800 | but really what I think we're seeing

00:48:39.440 | is a much bigger shift

00:48:40.680 | where there's this bigger battle

00:48:43.240 | between socialism and free market democracy.

00:48:46.480 | And I think that we're seeing it all happen at once

00:48:50.720 | because of globalism

00:48:52.160 | and because of the fact that globalism

00:48:56.400 | has enabled, just like we've seen manifest

00:48:58.720 | in the United States,

00:49:00.400 | massive and significant economic progress,

00:49:03.800 | but at the cost of a small number of people

00:49:07.120 | becoming very wealthy

00:49:08.280 | and a large number of people feeling left behind

00:49:10.720 | as a result of the wealth accumulating

00:49:13.960 | in a major way to a small number of people.

00:49:16.440 | And the reaction that we're seeing in France,

00:49:20.640 | in India, in Mexico, in the US, in the UK

00:49:25.400 | is all very much kind of aligned.

00:49:27.800 | That there is this big push that socialist practices

00:49:31.480 | can perhaps resolve the inequality

00:49:33.920 | and the inefficiencies that are seen in the markets today.

00:49:36.520 | And this is being manifested

00:49:38.200 | in a lot of really nasty ways.

00:49:39.600 | First of all, I think it's rationalized as being,

00:49:42.080 | hey, there's economic excess for a few

00:49:43.800 | while the majority are left behind.

00:49:45.600 | It's activated by big bureaucracy,

00:49:48.400 | by anti-free market principles

00:49:50.480 | and by tax policies and spending policies

00:49:52.640 | that will ultimately cripple economic growth.

00:49:55.880 | And I don't wanna say I'm against taxes

00:49:58.280 | 'cause I'm all for taxes to make up for budget deficits.

00:50:02.400 | But I think the results are ultimately across all of this

00:50:05.400 | gonna be what we saw happen in Argentina,

00:50:07.640 | which I think is on the other side of this problem,

00:50:10.640 | which is unsustainable debt accumulation,

00:50:12.600 | massive inflation and crippling unemployment.

00:50:16.240 | And I think that we should really take a hard look

00:50:18.080 | at what's happening around the world right now

00:50:19.840 | as being all related.

00:50:21.120 | All of the industrialized world

00:50:23.320 | is voting in a similar way

00:50:24.760 | and starting to shift in a similar way

00:50:27.000 | that we should be fairly concerned about

00:50:28.760 | and pay a lot of attention to.

00:50:30.840 | In the US, there's this expectation

00:50:33.520 | that Trump is gonna totally trounce Biden

00:50:35.680 | if Biden stays in the race.

00:50:37.120 | I think that if we see the same sort of thing happen

00:50:42.320 | in the US in that the psyche of people

00:50:45.280 | are that we feel left behind,

00:50:46.880 | that there's a hierarchical system

00:50:48.720 | that disadvantages the majority of people

00:50:51.240 | because economic progress is not proportional to everyone.

00:50:56.080 | You could end up seeing a surprise sort of voting system

00:50:59.120 | emerge in the US where the left may win

00:51:02.760 | because socialist principles are on the rise

00:51:04.880 | in the psyche of the youth in the industrialized world.

00:51:07.960 | And I'm not saying I'm making a prediction

00:51:09.480 | about how the election is gonna go in the US,

00:51:11.600 | but I do think that there's a big kind of

00:51:13.120 | fundamental change underway here.

00:51:14.440 | - Sax, you didn't mention immigration,

00:51:17.320 | specifically Muslim, Islamic immigration in France.

00:51:20.480 | That seems to be a big part of this issue

00:51:22.160 | that people aren't talking about

00:51:24.400 | and the lack of integration of that population into society.

00:51:29.240 | In fact, I've been told by folks in France

00:51:32.920 | that it's kind of the opposite,

00:51:34.360 | like Islamic Muslim immigrants are kind of shunned

00:51:39.360 | and aren't integrated by the French people themselves.

00:51:41.960 | I'm not sure how true that is.

00:51:43.040 | I don't have a lot of firsthand experience in it,

00:51:45.880 | but how much of that is part of what's happening

00:51:49.360 | in this right-left Donnybrook occurring in France?

00:51:54.360 | 'Cause they're literally on the streets

00:51:56.080 | fighting and yeah, rioting.

00:51:57.640 | - Yeah, look, I don't think that the youth's demand

00:52:01.040 | for socialism is what's driving

00:52:02.880 | the results in France at all.

00:52:05.200 | Let me explain what happened.

00:52:06.360 | So the way that the voting works in France,

00:52:08.920 | it's an unusual system to our eyes

00:52:11.600 | where they have a first round of voting.

00:52:14.720 | And in that first round of voting,

00:52:17.600 | Marine Le Pen's party national rally

00:52:19.680 | won a strong plurality of the vote.

00:52:22.200 | And the map looked like this,

00:52:24.040 | where literally they won every district in the country,

00:52:28.120 | except for Paris.

00:52:29.120 | I mean, it was a really dominant performance.

00:52:32.240 | And so people were expecting major reform.

00:52:34.360 | And Jake, you're right that Marine Le Pen's major issue,

00:52:37.480 | her party, is the unlimited immigration

00:52:41.240 | that's taken place into France.

00:52:44.400 | The French people or a substantial portion of them

00:52:46.840 | are up in arms about this.

00:52:47.960 | And actually, this is something

00:52:49.960 | that's very common across all of Europe.

00:52:51.800 | They're tired-

00:52:52.640 | - They're very nationalistic.

00:52:53.480 | Let's call it what it is.

00:52:54.320 | - Well, it's-

00:52:55.440 | - They care about their culture.

00:52:56.720 | - The indigenous people of France

00:52:58.880 | are opposed to the settler colonial invasion

00:53:01.960 | that's happening from the global South.

00:53:03.800 | And they wanna preserve their French culture

00:53:06.440 | and society and nation as it has always been.

00:53:10.880 | And they do not see how this unlimited immigration

00:53:14.040 | from the global South is good for them.

00:53:15.400 | It's not good for them economically.

00:53:16.800 | It's not good for societal cohesiveness.

00:53:18.600 | It's not good for crime and so on.

00:53:20.880 | So this is undoubtedly a huge driver

00:53:24.440 | of national rally success.

00:53:26.280 | But then what happened is that in the French system,

00:53:29.520 | there's a second round of voting a week later.

00:53:32.800 | And we got these results

00:53:34.640 | where national rallies still got the plurality of the vote.

00:53:37.280 | They got 37% of the vote, but they only won 142 seats.

00:53:42.560 | Whereas Macron's party got 22% of the vote, won 148.

00:53:46.800 | And then a collection of parties

00:53:48.360 | called the New Popular Front,

00:53:49.960 | which is basically a collection of far-left parties

00:53:53.460 | under the radical socialists, Jean-Luc Mélenchon,

00:53:56.720 | won only 27% of the vote, but won the most seats.

00:54:00.040 | And this is what I think Freeberg's reacting to

00:54:01.760 | is that the socialists ended up with the most seats.

00:54:04.560 | Well, how did this happen if National Rally,

00:54:07.680 | Marine Le Pen's party got a lot more votes

00:54:09.840 | than New Popular Front?

00:54:11.280 | The answer is that Macron, President of France,

00:54:15.880 | conspired with the far-left

00:54:19.520 | to have 200 candidates quit

00:54:23.160 | to basically drive those voters,

00:54:25.680 | the voters in let's call it the center-left,

00:54:27.960 | over to the far-left

00:54:29.400 | in order to block Marine Le Pen's party

00:54:32.000 | from winning the number of seats

00:54:34.160 | that they otherwise would have.

00:54:35.160 | - So just to recap what you're talking about,

00:54:37.040 | they have two rounds of elections here.

00:54:39.860 | They have a first round, a second round.

00:54:41.160 | If you don't win the majority in the first round,

00:54:43.880 | then it goes to the second round runoff.

00:54:45.880 | And then strategically,

00:54:47.920 | what Macron and his party did was

00:54:49.720 | they took the multiple parties and said,

00:54:51.280 | "Hey, we'll just have y'all drop out

00:54:53.560 | "and consolidate our votes."

00:54:55.120 | Almost like in a microcosm in the United States,

00:54:58.000 | it would be like RFK dropping out at the last minute

00:55:02.080 | and saying, "I endorse this person on left or right."

00:55:04.460 | So they did a very strategic thing to--

00:55:06.840 | - Right, but they went district by district

00:55:08.640 | and they basically said, "Okay."

00:55:09.480 | - Oh, great strategy, yeah.

00:55:11.040 | - "Hold on, in this district we're gonna let the,

00:55:13.600 | "we're gonna have Macron's candidate drop out

00:55:16.440 | "and endorse New Popular Front."

00:55:17.640 | - They cut deals.

00:55:18.800 | - Exactly, so that's what they did.

00:55:20.260 | - So brilliant.

00:55:21.280 | - Well, it's a manipulated result

00:55:23.840 | and what it ends up with,

00:55:25.640 | look, a lot of people said,

00:55:26.480 | "So actually you're saying that they rigged the election."

00:55:28.120 | Look, they didn't rig the votes, okay?

00:55:29.880 | I have no reason to believe that the votes aren't real.

00:55:31.800 | But they did rig the candidates

00:55:33.580 | in order to frustrate the desire

00:55:35.360 | of the French people for reform,

00:55:37.680 | the reform that Marine Le Pen was offering.

00:55:40.560 | And, Freeberg, you're interpreting this

00:55:42.040 | as basically a big endorsement for socialism.

00:55:43.920 | I don't think that's what this is.

00:55:45.680 | I think that what happened here

00:55:47.080 | is that the center-left under Macron

00:55:49.320 | was willing to throw the election through legal,

00:55:52.720 | I'm not saying they did anything illegal,

00:55:54.240 | through legal manipulation.

00:55:56.000 | - They consolidated the candidates.

00:55:57.680 | - Yeah, exactly.

00:55:58.520 | And so, to me, it's sad that,

00:56:02.400 | one person tweeted that,

00:56:04.480 | "We voted for reform.

00:56:06.620 | "We voted for national sovereignty.

00:56:08.780 | "We voted to restrict unlimited immigration.

00:56:12.000 | "And what we got was communism.

00:56:13.840 | "This isn't what we voted for."

00:56:15.680 | And so it's just kind of sad that what's happening

00:56:18.280 | is that the system, the system politicians,

00:56:21.360 | are essentially getting together to frustrate

00:56:23.880 | the popular will of the people.

00:56:26.040 | - Le Pen's party still got outvoted

00:56:28.820 | in each of those districts, right?

00:56:30.040 | Is that correct?

00:56:31.120 | - Only because--

00:56:32.380 | - They dropped a candidate.

00:56:33.680 | - 200 candidates basically were strategically dropped out

00:56:36.880 | in order to throw the vote in those districts.

00:56:39.140 | - So all these systems ultimately resolved

00:56:41.300 | to a two-party system where some minority

00:56:44.340 | can hijack one of the parties

00:56:46.460 | to enforce their will ideologically.

00:56:49.620 | I think that's kind of my point.

00:56:51.180 | In fact, I mean, the day after the election,

00:56:54.460 | there was this statement

00:56:56.160 | on some of their economic priorities.

00:56:58.340 | "Increase the tax rate to 90% on income over 400K.

00:57:02.060 | "Drop the retirement age from 64 to 60."

00:57:05.020 | I mean, you go down the list,

00:57:06.660 | putting in price controls on free market services

00:57:11.660 | and products and goods,

00:57:13.340 | this is a lot of what we're seeing kind of repeated

00:57:15.780 | in a bunch of different ways.

00:57:17.300 | It's all the same story with different characters

00:57:19.700 | all over the industrialized world.

00:57:20.980 | - You're right about that part.

00:57:21.820 | So basically, on the heels of this vote

00:57:24.760 | with New Popular Front winning all these seats,

00:57:27.400 | Jean-Luc Mélenchon gives this speech

00:57:29.600 | in which he rails basically

00:57:32.240 | against Macron's neoliberal policies.

00:57:34.980 | He wants to go back to the restricted number of hours

00:57:37.580 | in the work week.

00:57:38.420 | He wants a 90% wealth tax and so on across the board.

00:57:42.020 | He does want radical socialism.

00:57:43.460 | And he says that he will not cooperate with Macron's party.

00:57:48.180 | So, I mean, this is like just,

00:57:49.900 | it's almost cartoonish and clownish

00:57:53.020 | how much this has backfired on Macron.

00:57:54.900 | He was so hellbent on trying to frustrate Marine Le Pen

00:57:59.140 | that he threw the election to New Popular Front

00:58:01.220 | who has now announced that they will not work with him.

00:58:04.140 | Okay?

00:58:04.980 | Now, Jake, you may want to say,

00:58:06.340 | well, this is the will of the majority.

00:58:07.760 | But the majority of the country

00:58:09.100 | did not want to vote for chaos.

00:58:11.620 | But chaos is what they've got

00:58:13.020 | because now there is no dominant faction

00:58:15.900 | in their parliament, right?

00:58:17.500 | And New Popular Front--

00:58:18.580 | - By the way, same in India.

00:58:19.660 | They just lost majority in India, right?

00:58:21.540 | Which is the first time in 12 years.

00:58:23.460 | And the UK's also up in disarray.

00:58:25.380 | - No, there's a, it's a majority, but not a super majority.

00:58:28.420 | - Not a super majority, sorry.

00:58:29.520 | Yeah, sorry.

00:58:30.360 | - The good news, Freeberg, is that Mélenchon

00:58:31.820 | will not have a majority in the assembly

00:58:34.180 | to push through those radical policies that he wants.

00:58:36.820 | No faction will have a majority

00:58:38.580 | because they're not gonna work with each other.

00:58:40.060 | You've got three big parties here, or three big groups,

00:58:44.220 | and you need two of them working together

00:58:46.220 | to get anything done.

00:58:47.460 | So what's gonna happen is you're just gonna have,

00:58:49.260 | basically, a logjam.

00:58:51.580 | And like Marine Le Pen said,

00:58:53.340 | reform in France is just gonna have to wait,

00:58:56.020 | and we're gonna lose another year.

00:58:57.500 | - Do you think socialist ideologies are on the rise

00:59:00.100 | in the youth, in the industrialized world?

00:59:01.820 | And is that showing up in elections around the world?

00:59:04.780 | - I think what's happening is that

00:59:06.940 | there is a pent-up demand for reform.

00:59:09.620 | People are craving reform.

00:59:11.060 | They understand that the system does not work.

00:59:13.500 | It is corrupt. - It feels rigged for everyone.

00:59:15.060 | - It feels rigged, it feels corrupt,

00:59:17.060 | and it's resistant to reform.

00:59:20.700 | And so they are basically clamoring for that.

00:59:23.180 | And they will get it wherever they can take it.

00:59:25.300 | - In the past, socialism has won, when this has happened.

00:59:27.860 | This happened after World War I.

00:59:30.260 | It's happened multiple times in history

00:59:32.780 | where we've seen the socialists rise in these moments.

00:59:35.820 | - Well, I don't think it's because

00:59:37.300 | socialism is that desirable.

00:59:39.180 | I actually think that the desire for reform,

00:59:42.420 | I think it is first and foremost looking for

00:59:44.740 | what I would call a nationalist populist solution.

00:59:48.660 | - Right. - And you can see here

00:59:49.940 | that National Rally did do better

00:59:51.580 | than New Popular Front, considerably better,

00:59:54.180 | but it was the system's desire to hand a victory

00:59:58.500 | to New Popular Front that gave them the win.

01:00:01.460 | And I think you see a similar thing in the United States.

01:00:03.420 | Look, if Joe Biden had just shut down the border

01:00:06.780 | for the last four years-- - Oh, yeah, huge win.

01:00:09.300 | - He would be in a materially different position.

01:00:11.420 | - Absolutely. - But the radicals

01:00:12.860 | in his party didn't wanna do that.

01:00:14.060 | So in a way, you could say that you have a similar type

01:00:17.020 | of conspiracy taking place where the center-left

01:00:20.620 | would rather enable and support the radical progressives

01:00:25.580 | as opposed to making sensible moderations

01:00:28.900 | or sensible adjustments-- - Which, by the way--

01:00:29.740 | - That would actually make them much more popular.

01:00:31.940 | - It would, and what has Trump done in Trump 2.0

01:00:34.620 | that I think, I don't know who could have possibly coached

01:00:38.700 | or given any feedback to Trump of how to win this election,

01:00:41.980 | but he seems much more presidential, he seems normal,

01:00:45.100 | he basically went right to the middle on abortion,

01:00:48.020 | he went right to the middle on immigration,

01:00:49.980 | and he's not acting like a lunatic in name-calling

01:00:52.460 | and his debate performance was fantastic.

01:00:55.380 | He just sat back-- - By the way, look,

01:00:56.780 | look who's been the most ardent supporter of Joe Biden.

01:01:00.780 | It's been the progressive left, right?

01:01:03.620 | Those are the folks that have actually said,

01:01:05.460 | hey, and I think probably it's because there's

01:01:08.860 | a underlying quid pro quo at play, AOC, Bernie Sanders,

01:01:13.860 | all of these folks-- - Elizabeth Warren.

01:01:16.740 | - If they support Biden and he wins a second term,

01:01:20.500 | I suspect that there's going to be a lot

01:01:22.580 | of their legislative agenda

01:01:24.220 | that basically gets put up for vote.

01:01:25.820 | - 100%, 100%, yes.

01:01:28.300 | - I think there's a common denominator here

01:01:29.780 | that both Macron and Biden would rather throw

01:01:34.420 | the government of the country to radicals and communists

01:01:38.940 | than implement sensible restrictions on immigration.

01:01:42.740 | It's mind-blowing to me that neither Macron nor Biden

01:01:46.180 | can simply make a sensible adjustment on immigration.

01:01:49.700 | People do not want open borders.

01:01:52.220 | They especially don't want them in Europe,

01:01:54.380 | and they don't want them here either.

01:01:55.740 | - That's fair. - They want reasonable borders,

01:01:57.340 | reasonable immigration.

01:01:58.380 | - If I had to kind of give you my opinion on all of this,

01:02:00.700 | I do think that when you look across all of these countries,

01:02:03.900 | I do think Freeberg is touching on something,

01:02:06.740 | but I think the explanation doesn't have to be

01:02:10.620 | this idea that people are embracing socialism.

01:02:13.260 | I think there's a much simpler explanation as well,

01:02:15.460 | which is that we've gone through a very difficult period

01:02:18.300 | of joblessness, of inflation, of high costs,

01:02:21.860 | and I think typically what happens

01:02:23.300 | is you have governmental turnover in these moments,

01:02:26.980 | and so the incumbent gets tossed out

01:02:29.580 | and somebody else comes in,

01:02:31.500 | and whatever they're saying seems like the new thing.

01:02:34.660 | So for example, in Canada right now,

01:02:36.700 | the opposite is trending,

01:02:37.900 | which is the liberal socialist government

01:02:40.940 | just looks totally incompetent,

01:02:42.700 | and it looks like the progressives,

01:02:44.740 | when this election happens,

01:02:45.980 | is just gonna completely run over them,

01:02:47.540 | and so that's more of a swing to the right.

01:02:49.620 | So I think it's less left or right.

01:02:52.340 | I think it's incumbent people

01:02:54.940 | who have not done necessarily a great job

01:02:56.780 | in these last four years getting tossed out

01:02:58.300 | for folks that are new,

01:02:59.580 | and I think that explains a lot of these elections

01:03:01.300 | more than socialism or anything else.

01:03:03.060 | - I really hope you're right.

01:03:03.980 | I just worry about the trend of economic globalization

01:03:08.980 | has kind of moved every,

01:03:11.140 | 'cause it used to be that every country

01:03:12.620 | kind of looked like its own country politically,

01:03:14.660 | and there's just a lot of alignment happening.

01:03:17.140 | - Where Saxe is right, it's like,

01:03:18.660 | look, in every other country of the world,

01:03:21.060 | other than the West,

01:03:23.660 | you embrace the national traditions

01:03:26.980 | that make a culture its own.

01:03:29.140 | But if you came to Sri Lanka,

01:03:30.660 | you'd see people in saris,

01:03:32.100 | you'd see people dressed in traditional garb,

01:03:35.940 | you speak this one language that's somewhat complicated,

01:03:39.340 | not spoken anywhere else,

01:03:40.900 | although we teach English as well.

01:03:42.580 | But the point is that there are these cultural traditions,

01:03:44.660 | and that's just an example of a country that I know well,

01:03:46.900 | but many countries, if you look across Africa,

01:03:49.060 | it's the same, if you look across Asia,

01:03:50.860 | Central and South America.

01:03:52.860 | In the West, it's more of that you come

01:03:55.220 | and there's this kind of like odd monoculture,

01:03:59.620 | and I think at some point,

01:04:00.780 | people are pushing back against that.

01:04:02.180 | I do agree with David that there is that pushback,

01:04:04.740 | and I think that that's a reasonable pushback.

01:04:08.340 | - America's very unique in that.

01:04:09.340 | We had a concept called the melting pot,

01:04:11.380 | where you would culturally assimilate.

01:04:13.260 | And if you say that today,

01:04:14.660 | and you were to teach that in schools,

01:04:16.020 | I think people would get very upset.

01:04:17.820 | - Very upset. - Thinking like,

01:04:18.660 | you are giving up your culture.

01:04:20.620 | No, you've chosen to leave your land

01:04:23.500 | and make a new world here in this new experiment

01:04:26.460 | called America.

01:04:27.860 | And if you assimilate, you're welcome here.

01:04:29.900 | If you don't want to assimilate,

01:04:31.620 | you're not welcome in America.

01:04:32.660 | That's what they taught when we went to school

01:04:35.060 | as Gen Xers in the '70s and '80s.

01:04:37.940 | - No, no, no, so my only point sits,

01:04:40.140 | and I agree with you, Jekyll,

01:04:41.500 | is as a country, you're allowed to have those beliefs.

01:04:45.060 | It's not that just because you're in the West,

01:04:46.740 | you have to throw that out,

01:04:48.100 | and all of a sudden, you have to succumb to this belief

01:04:50.460 | that everybody else's culture is better

01:04:52.800 | than the one that you've had

01:04:54.100 | for the last 400 or 500 years.

01:04:55.540 | I don't think that that's necessarily true.

01:04:57.580 | And I think you miss out on a lot by saying that.

01:05:00.020 | So to your point, I just think that when you look globally,

01:05:03.520 | there's a really interesting quote from Peter Thiel

01:05:06.020 | that actually is, he made this comment,

01:05:08.500 | which is, if you look at the 10 commandments,

01:05:11.260 | he's like, the first and the 10th are the most powerful,

01:05:13.780 | because the first one is about looking up,

01:05:16.020 | and the 10th is not about looking down,

01:05:18.340 | and everything else is about looking left and right of you.

01:05:21.060 | And he brings it up in this context

01:05:23.020 | of all of these commandments, the middle eight,

01:05:26.100 | are all about how you should not be looking

01:05:28.160 | to the left and the right,

01:05:30.020 | figuring out and making yourself getting tilted

01:05:32.880 | about the fact that you have less than the other person.

01:05:34.860 | - No coveting.

01:05:36.460 | - And I just think that there may be something interesting

01:05:39.100 | in that idea, which is that what we've really done

01:05:41.580 | is we've created tools that have allowed you

01:05:44.400 | to just obsess and fantasize

01:05:46.220 | about all these random people's lives

01:05:48.580 | who you think are perfect,

01:05:50.540 | but they're just manufactured trying to get views anyways,

01:05:53.340 | and you just leave being angry and thinking your life sucks.

01:05:57.600 | And in fact, your life is actually not that bad.

01:06:00.020 | And I think if we had more truth

01:06:01.740 | and honesty and authenticity,

01:06:03.460 | maybe there would be less of this perception

01:06:05.580 | and you'd actually try to just enjoy what you have.

01:06:08.360 | And I don't think we figured that out.

01:06:10.900 | - Let's wrap up here on the hot swap summer update

01:06:14.860 | and the speed run primary.

01:06:16.580 | Biden still insists he's still running for president

01:06:20.580 | and he will not stand down.

01:06:22.860 | Since the last episode, so much has happened,

01:06:25.860 | including George Clooney writing an op-ed

01:06:28.980 | in the New York Times this week,

01:06:30.260 | "I love Joe Biden, but we need a new nominee."

01:06:33.700 | Two weeks ago, Clooney co-hosted a fundraiser,

01:06:37.180 | Katzenberg and some other Hollywood bigwigs

01:06:39.980 | that raised 30 million for President Biden,

01:06:42.700 | twice as much as you guys did for Trump.

01:06:44.260 | But I mean, this is Hollywood and Clooney we're talking about.

01:06:46.020 | - Well, they had 95,000 people.

01:06:48.220 | We had a hundred people.

01:06:49.400 | - I know, I'm just saying,

01:06:50.240 | it's really impressive what you guys did.

01:06:52.740 | Clooney is also besties with Obama.

01:06:57.740 | And Obama has put out a tweet in support of Biden,

01:07:01.460 | but according to a political report,

01:07:04.340 | Clooney gave Obama the heads up before he published this.

01:07:08.460 | NBC is reporting that Biden has lost his donor base.

01:07:11.420 | Anonymous quotes, "The money has absolutely shut off.

01:07:14.580 | It's already disastrous."

01:07:16.420 | Two of the sources said,

01:07:17.640 | "This month is on a path to be down by possibly half

01:07:20.540 | or much more from large donors."

01:07:22.500 | Adam Schiff, who is as partisan as they come,

01:07:26.280 | said Biden should slow down

01:07:28.620 | and make the right decision here.

01:07:30.580 | He also said he should get new counsel,

01:07:32.180 | independent counsel.

01:07:33.180 | So that was on "Meet the Press."

01:07:35.400 | And Nancy Pelosi gave a non-answer

01:07:37.700 | when asked if she supports Biden as the nominee.

01:07:39.820 | And again, as partisan as they come.

01:07:42.420 | Tim Kaine said, "Complete confidence,

01:07:44.580 | Joe Biden will do the patriotic thing

01:07:47.340 | in regards to his future as nominee."

01:07:49.300 | Yeah, that's pretty rough.

01:07:50.860 | And Axios reported that Chuck Schumer has-

01:07:54.100 | - Let me ask you, I'm putting you on the spot here.

01:07:55.980 | I'm putting you on the spot.

01:07:56.960 | - You've seen all these clips.

01:07:58.400 | - Yeah.

01:07:59.240 | - Do you think that there's an active coverup going on

01:08:01.920 | by the White House about his cognitive...

01:08:04.160 | - Hold on.

01:08:05.000 | No stracanis is gonna make a prediction.

01:08:07.700 | I've got it.

01:08:09.300 | A whistleblower will emerge in the next 10 days.

01:08:12.260 | If you are a doctor, a nurse, a secretary, an EA,

01:08:17.260 | or part of the inner circle here,

01:08:18.900 | and you know he's in cognitive decline,

01:08:21.140 | whistleblow it.

01:08:22.940 | Hock to on that whistle and get it out there, folks.

01:08:27.020 | Because we know there's a coverup.

01:08:30.480 | We know there's a coverup.

01:08:33.700 | So spit on that thang.

01:08:35.100 | - That's right.

01:08:35.940 | All right, hock to that whistle.

01:08:37.720 | - Hock to and let's get it out there

01:08:39.940 | because also coming out-

01:08:42.460 | - No, but sorry, kidding aside,

01:08:43.500 | you think there's a coverup?

01:08:45.020 | - Of course there's a coverup.

01:08:46.340 | I mean, come on.

01:08:47.940 | Did you see this report that a doctor,

01:08:49.940 | a neurologist went to the White House-

01:08:52.380 | - Visited the White House.

01:08:53.340 | - Visited, and the New York Times is putting this out there.

01:08:56.580 | And then watch this clip of KJP,

01:09:01.300 | who is absolutely covering everything up.

01:09:03.620 | We all play poker.

01:09:04.780 | This person is bluffing.

01:09:06.740 | They're lying.

01:09:07.620 | It's so obvious.

01:09:08.620 | Play the clip, Nick.

01:09:10.140 | - That's a very basic direct question.

01:09:12.020 | - Wait, hold on, hold on.

01:09:13.740 | Wait, wait, wait, wait a second.

01:09:16.460 | - Eight times or at least once

01:09:18.500 | in regards to the president specifically.

01:09:20.660 | - Hold on a second.

01:09:21.500 | - That's not what you should be able to answer

01:09:22.740 | by this point.

01:09:23.580 | - Wait, no, no, no, no, no, no.

01:09:24.900 | No, wait a minute.

01:09:26.660 | Ed, please, a little respect here, please.

01:09:30.420 | Every year around the president's physical examination,

01:09:35.140 | he sees a neurologist.

01:09:36.260 | That's three times, right?

01:09:38.260 | So I am telling you that he has seen a neurologist

01:09:41.620 | three times while he has been in this presidency.

01:09:44.260 | So that is answering that question.

01:09:46.780 | - No, it's not.

01:09:47.620 | - No, it is, it is.

01:09:48.460 | You're asking-

01:09:49.300 | - Dr. Kevin Kennard, come to the White House.

01:09:50.620 | - Can I just add, I also said to you, Ed,

01:09:53.660 | I also said to you, for security reasons,

01:09:55.940 | we cannot share names.

01:09:57.500 | - It is public information.

01:09:58.340 | - It's public.

01:09:59.180 | - I hear you.

01:10:00.020 | - The name's public.

01:10:00.860 | - Guys, guys, guys, guys, hold on a second.

01:10:05.860 | - The point of a press conference

01:10:08.220 | is that you ask questions and you ask hard questions.

01:10:11.580 | This person is covering it up.

01:10:12.940 | It is a huge coverup.

01:10:14.300 | I haven't seen somebody lie this bold face

01:10:16.860 | since Elizabeth Holmes.

01:10:19.020 | If you had the machine that did the blood test,

01:10:21.540 | you'd show the machine.

01:10:23.020 | If there's a cognitive test that shows he's not in decline,

01:10:26.180 | they would show the test.

01:10:27.500 | Show the test.

01:10:28.780 | If you're a whistleblower, release the test.

01:10:31.260 | Somebody out there has the results of these tests.

01:10:33.500 | And if you're a doctor and you're covering this up,

01:10:35.660 | if you work in that White House and you're covering this up,

01:10:38.180 | it's the most unethical, un-American,

01:10:40.260 | immoral thing you can do.

01:10:42.260 | And this is the reason we have whistleblower protections.

01:10:44.700 | There are 50 people who probably know what's going on here.

01:10:47.580 | And I know there's at least five.

01:10:49.060 | So somewhere in that number is somebody

01:10:50.900 | who has a profile and courage,

01:10:52.660 | who will come out and tell the American people

01:10:55.740 | what the hell is going on here.

01:10:58.180 | - Oh, I think we already know what's going on, J. Cal.

01:11:00.420 | - I know, but this not telling the truth

01:11:02.700 | in a press conference with the press,

01:11:04.820 | and then admonishing the press,

01:11:07.380 | admonishing the press like this,

01:11:08.900 | it's complete utter bullshit.

01:11:10.420 | - So in that press conference,

01:11:12.060 | it's nice to see the press actually doing their job

01:11:13.940 | because their job is to hold truth to account

01:11:17.820 | and to actually ask tough questions,

01:11:19.820 | and they're finally doing it.

01:11:21.580 | But I see in that press conference

01:11:23.460 | not just a liar at the podium,

01:11:25.180 | I think the entire audience are a bunch of liars too

01:11:28.060 | because they knew, they knew the truth about the situation

01:11:31.180 | and they refused to report it

01:11:32.700 | and they refused to investigate it until now.

01:11:35.380 | Now, what you've heard in the past week or so

01:11:38.740 | is a bunch of people who knew about the situation

01:11:41.700 | telling on themselves.

01:11:42.940 | So first you had George Clooney.

01:11:44.620 | In that New York Times op-ed,

01:11:45.860 | he says that after the fundraiser we did,

01:11:48.460 | yeah, I knew, and everyone there knew.

01:11:50.540 | That was a month ago.

01:11:51.700 | What took you so long to come out?

01:11:53.660 | Olivia Nuzzi says she had the story

01:11:56.820 | for New York Magazine six months ago, okay?

01:12:00.580 | She had anonymous sources,

01:12:01.540 | but she said she was afraid to publish it

01:12:03.860 | because the White House would basically push back

01:12:06.060 | and she didn't think the press would back her.

01:12:08.020 | Chuck Todd just said it on a podcast

01:12:10.460 | that a cabinet official, okay, in the Biden White House

01:12:14.340 | told him two years ago

01:12:16.900 | that he could not get a meeting with the president

01:12:18.940 | because the president was effectively incapacitated

01:12:21.340 | and his inner circle was keeping him shielded.

01:12:23.740 | Chuck Todd knew.

01:12:25.060 | Why didn't Chuck Todd report that?

01:12:26.820 | Why didn't Chuck Todd pass it on

01:12:28.740 | to an investigative reporter at NBC to investigate that?

01:12:31.900 | These people covered-- - Dereliction of duty

01:12:33.780 | is the answer. - Dereliction of duty.

01:12:34.620 | - It's a dereliction of duty.

01:12:36.220 | - Of course, but let me tell you

01:12:37.660 | what they were trying to do, okay?

01:12:40.300 | They were trying to weaken a Bernie's this thing.

01:12:42.860 | - Absolutely. - They thought

01:12:44.220 | they could get Biden through the election

01:12:46.380 | and so they were on narrative

01:12:49.020 | and they weren't gonna report the truth

01:12:50.740 | about his condition. - 100%.

01:12:51.580 | - They were just gonna try and get him

01:12:53.140 | across the finish line.

01:12:54.180 | They're all complicit in this coverup

01:12:57.060 | and they don't deserve any credibility

01:13:00.100 | because now they're finally reporting it

01:13:01.620 | because the only reason they're reporting it

01:13:04.260 | is because of concerns about Biden's electability.

01:13:06.880 | They're afraid that he's gonna lose

01:13:08.800 | and the turning point was that debate

01:13:10.740 | because the whole country could see it.

01:13:12.340 | So in the wake of that, they're starting to panic

01:13:14.540 | and they're realizing, oh wait, we need a new candidate.

01:13:17.020 | So finally, they're telling the truth about the situation

01:13:19.580 | but they had absolutely no intention

01:13:21.100 | telling the truth about it

01:13:22.500 | because they could have done it a long time ago.

01:13:24.900 | - And here is all you-- - They were just gonna try

01:13:27.100 | and drag Biden across the finish line.

01:13:28.940 | - And we need to give one person his flat horse here.

01:13:31.540 | Dean Phillips came on this program seven months ago

01:13:34.620 | and if you listen to All In,

01:13:35.620 | the number one podcast in the world,

01:13:37.040 | you're going to know what's gonna happen in the future.

01:13:40.500 | It's not just Nostracanus here,

01:13:42.060 | the guests come on and tell us the truth.

01:13:43.900 | Dean Phillips told us, I quote,

01:13:46.620 | when I asked him, I'm not sure who asked him,

01:13:48.940 | when we asked him, he said,

01:13:50.780 | "People are saying that I'm causing his problems,

01:13:54.300 | "that I could risk his re-election.

01:13:57.180 | "I'm certainly not the guy that has shown his decline."

01:14:00.740 | That's on video, that's on audio, you see it.

01:14:03.500 | He's a human being for goodness sake.

01:14:05.780 | Seven months ago, he said this.

01:14:07.860 | He's a human being, he's now in his 80s,

01:14:10.420 | he is clearly in decline,

01:14:11.860 | but do I think he will be in a position

01:14:13.220 | to continue leading this country in the future?

01:14:15.980 | I do not.

01:14:17.200 | I think I'm joined about 75% of the country in saying that.

01:14:20.100 | He was clear on this podcast.

01:14:21.700 | - He was clear on this podcast

01:14:22.980 | and kudos to Dean Phillips

01:14:23.940 | for having the courage to tell the truth.

01:14:25.780 | He was one of the only people in the Democratic Party

01:14:27.500 | to tell the truth.

01:14:28.340 | Remember, he also said in our podcast

01:14:30.660 | that he called up J.B. Pritzker,

01:14:32.140 | he called up Gretchen Whitmer.

01:14:33.380 | He said, "Where are you guys?

01:14:34.680 | "You're the leaders of the Democrat Party.

01:14:36.220 | "Why aren't you challenging President Biden?

01:14:37.940 | "He obviously isn't fit to serve."

01:14:40.100 | They told him, "Shut up."

01:14:41.140 | They wouldn't take his phone calls, okay?

01:14:43.620 | And look, Dean Phillips knew the truth

01:14:45.780 | without having special access to the president.

01:14:47.780 | Quite frankly, he's a backbencher, right?

01:14:50.380 | But it was obvious to him.

01:14:52.020 | They all knew, the whole party knew,

01:14:54.500 | but their strategy was to pretend and deny.

01:14:57.700 | And to portray anyone who told,

01:14:59.620 | to excommunicate anyone like Dean Phillips

01:15:01.900 | who told the truth and to try and discredit

01:15:04.540 | anyone who reported the truth

01:15:06.020 | as basically a partisan or a liar

01:15:08.640 | who was trafficking in the fakes.

01:15:10.680 | Remember that?

01:15:11.520 | - It's sick. - So all these people

01:15:12.800 | are complicit.

01:15:13.640 | They're all complicit.

01:15:14.640 | And the only reason they're telling the truth now

01:15:16.800 | is 'cause they're afraid of losing an election.

01:15:18.800 | - Well, and the receipts are coming.

01:15:20.600 | - Well, let's just play this out.

01:15:21.760 | So if there is a grand cover-up,

01:15:24.600 | I think, Jason, you are right,

01:15:26.200 | that there is too much time between now and the election.

01:15:29.160 | There will be a deep throat Watergate-style leak here.

01:15:34.200 | You know, there will be a Woodward and Bernstein

01:15:36.020 | that gets to the bottom of this.

01:15:37.100 | I just think the odds of that--

01:15:38.620 | - Are 100%.

01:15:39.460 | - Of it not happening are too low.

01:15:41.900 | So I guess then the real question is,

01:15:44.200 | is it that the only way to keep the charade going

01:15:48.900 | is the quote-unquote threat of the Donald Trump boogeyman?

01:15:53.020 | Is that what they use, basically,

01:15:54.520 | to hang over these people to--

01:15:56.700 | - Of course, yes.

01:15:57.840 | I mean, listen, that worked last time.

01:16:00.820 | Trump, the overwhelming majority of Americans

01:16:04.740 | felt Trump's first presidency was too divisive

01:16:08.100 | and it was too chaotic.

01:16:09.460 | They used that to win.

01:16:11.440 | Okay, fair enough.

01:16:12.900 | Now they're trying to use that again.

01:16:14.640 | It's not working.

01:16:15.480 | Why?

01:16:16.320 | Trump 2.0.

01:16:17.140 | He's coming across as reasonable.

01:16:18.060 | A lot of the things he got right,

01:16:20.020 | when you re-underrided him about the border,

01:16:21.900 | he got that right.

01:16:22.720 | The economy was pretty good under him.

01:16:24.140 | He did some things correct.

01:16:25.540 | He's not like all demagogue and all evil.

01:16:27.580 | I have my problems with his behavior.

01:16:29.540 | I've made it documented here,

01:16:31.260 | but you cannot use that excuse anymore

01:16:33.820 | because Americans are gonna say cognitive decline,

01:16:36.340 | somebody with Alzheimer's, like my aunt, my uncle,

01:16:38.740 | my parent, whatever, they've experienced it firsthand.

01:16:41.520 | For Trump, it's an easy choice for most Americans

01:16:44.100 | and that's why Trump will beat Biden

01:16:46.380 | and that's why they're gonna do the speed run

01:16:47.980 | and that's catching steam next.

01:16:49.780 | And let's just, we can wrap on that, I think.

01:16:53.660 | I mentioned here the speed run primary

01:16:56.580 | a couple of weeks ago.

01:16:57.660 | Nick, roll the clip.

01:16:59.900 | Must credit Nostradamus.

01:17:02.020 | They're gonna do a democratic primary speed run.

01:17:05.060 | Here's what's gonna happen.

01:17:06.020 | They're gonna do five debates in 10 weeks

01:17:08.860 | and then whoever wins, wins.

01:17:10.540 | Kamala, he's gonna resign.

01:17:12.240 | Kamala becomes president.

01:17:13.860 | Kamala gets to run in the speed run.

01:17:17.420 | She gets to speed run like everybody else.

01:17:19.280 | Dean Phillips gets to come in.

01:17:20.540 | Everybody speed runs it.

01:17:22.340 | They take over the media.

01:17:24.820 | The media will go crazy over the summer,

01:17:27.240 | massive ratings, boom.

01:17:29.300 | Pull up the Semaphore article.

01:17:31.020 | After I made my prediction,

01:17:33.100 | two Democratic Party insiders

01:17:34.660 | have floated this very unique idea in Semaphore.

01:17:37.180 | It's a pretty obvious idea, I guess.

01:17:38.580 | Biden steps down as the nominee in July.

01:17:39.940 | - Wait, where did you get it from, J. Cal?

01:17:41.620 | - It was my idea.

01:17:42.460 | - 'Cause I mean-- - I did not hear it anywhere.

01:17:45.020 | - Okay, I personally don't think it's gonna happen

01:17:46.860 | but I still think you deserve credit for being the first.

01:17:49.140 | - I agree. - So you came up with this

01:17:50.660 | and now it's a spread or what?

01:17:52.700 | - Oh, well, here we go.

01:17:53.580 | Semaphore-- - This is amazing.

01:17:54.940 | - I mean, you're name checking yourself here.

01:17:56.660 | So this is pretty-- - I don't know what's happening

01:17:58.980 | in this bizarro universe.

01:18:00.300 | I put on a red tie and all of a sudden

01:18:01.780 | I'm getting everything right.

01:18:03.940 | Who knows?

01:18:04.780 | Biden steps down-- - I mean, you're--

01:18:06.300 | Listen, so many times in the past

01:18:07.900 | your head has been so far up your ass

01:18:09.260 | but this time it's really real.

01:18:10.700 | You open it and you see your face

01:18:12.100 | but it's you just name checking yourself.

01:18:14.100 | - I guess I gotta name check me.

01:18:16.140 | But here's what Semaphore says.

01:18:17.740 | This is their version.

01:18:18.580 | Biden steps down as the nominee mid-July.

01:18:20.980 | Okay, that's now.

01:18:22.100 | Biden announces the new system with support

01:18:24.340 | from Kamala Harris.

01:18:25.280 | Candidates would have a few days

01:18:26.500 | to throw their hats in the ring.

01:18:27.500 | Democrats would start a primary sprint.

01:18:30.160 | Oh, not a speed run, a primary sprint.

01:18:32.320 | Where six candidates, not 10,

01:18:34.500 | who've received the most votes from delegates

01:18:36.060 | pledge to run positive only campaigns

01:18:38.600 | in the month leading up to the DNC.

01:18:40.020 | Weekly forums for each candidate

01:18:41.980 | would be moderated by cultural icons.

01:18:43.700 | Oh, interesting punch up.

01:18:45.340 | Michelle Obama, Oprah, Taylor Swift

01:18:46.780 | in order to engage voters.

01:18:48.220 | As I talked about taking over the media,

01:18:49.900 | nominee will be chosen by delegates

01:18:51.580 | using rank choice voting, your favorite sacks,

01:18:54.340 | before the start of the DNC on August 9th.

01:18:57.300 | So anyway, there you have it folks.

01:18:59.080 | Speed run coming, whistleblower, August 19th.

01:19:02.020 | Speed run and the whistleblower.

01:19:04.420 | Look for it this month.

01:19:05.540 | - Okay, look, I think you deserve credit

01:19:07.380 | for being the first to talk about this.

01:19:08.660 | And that idea is clearly gaining some currency on the left.

01:19:12.140 | However, at the end of the day,

01:19:13.500 | I don't think the Democrats can afford to do that

01:19:15.820 | because they're already in a state of chaos right now.

01:19:18.020 | And if they finally succeed in pushing Biden overboard,

01:19:20.720 | the last thing they're gonna wanna do

01:19:21.780 | is have the chaos of an open primary,

01:19:24.120 | even if it is a speed run primary.

01:19:26.380 | I think they're just gonna have to go to Kamala Harris.

01:19:28.700 | I think that's what they've decided.

01:19:29.960 | I think that if they succeed at pushing Biden out,

01:19:33.080 | which does seem probably more likely than not at this point,

01:19:36.100 | I think it's gotta be Harris.

01:19:37.820 | And I think she's gonna be the nominee.

01:19:39.860 | So I just don't think-- - You think Harris

01:19:40.700 | can beat Trump?

01:19:41.520 | You worried about him?

01:19:44.100 | - Well, no, look, I think that Trump should win regardless,

01:19:47.860 | but it's an opportunity for them to reset the race.

01:19:50.380 | And that's what's driving all of this

01:19:52.660 | is that they're concerned about losing.

01:19:54.400 | But look, let me say this,

01:19:55.680 | that everything that's happened here

01:19:57.880 | with Biden's cognitive state,

01:20:01.200 | it's just one in a series of hoaxes and cover-ups

01:20:05.920 | that the Democrat party has transpired

01:20:08.400 | over the last several years.

01:20:10.120 | It's gotten to the point where you have to wonder,

01:20:11.800 | can these guys even run a presidential campaign

01:20:14.680 | without hoaxes?

01:20:16.000 | You had the Steele dossier, okay?

01:20:17.560 | You have the whole suckers and losers hoax.

01:20:19.200 | You have the very fine people hoax.

01:20:21.040 | You have the, this is the best version of Biden hoax.

01:20:24.180 | You had the whole cheap fake hoax.

01:20:26.380 | And you've just got to wonder,

01:20:29.380 | is this a party who deserves

01:20:31.100 | the trust of the American people?

01:20:32.820 | I think that Trump deserves another term

01:20:34.900 | just as a rebuke to all of the misinformation and lies

01:20:38.220 | that the Democratic party has told about him.

01:20:41.000 | And I think that he should win.

01:20:42.420 | - Shout out to Scott Adams and his hoax list.

01:20:44.700 | Here we go.

01:20:45.540 | The Scott Adams, he's a, Scott Adams is obsessed with his--

01:20:48.180 | - That's like 20% of the hoax list.

01:20:50.200 | There's like 10 more, okay.

01:20:52.020 | - No, he's been keeping a list, yeah.

01:20:54.140 | - Trump deserves to win just based on all the hoaxes

01:20:56.860 | that have been thrown at him.

01:20:58.020 | - All right.

01:20:58.860 | - And you know what, you got to give him credit

01:20:59.700 | because it was his decision to go on CNN in that debate

01:21:04.300 | that really called their birth on this whole thing.

01:21:06.860 | - God, when they started,

01:21:08.060 | this is when you knew something was in the air.

01:21:10.100 | When he got like, started getting ovations and clapping

01:21:14.340 | from the rigged CNN audience for the town hall.

01:21:18.180 | I mean, or maybe CNN did that and set up themselves

01:21:21.960 | and set up the Democrats, I don't know.

01:21:24.240 | - I don't think it was a setup.

01:21:25.280 | - You don't think it was a setup?

01:21:26.280 | - No, I think, look, there are a lot of people

01:21:28.100 | who do think that it was a controlled demolition

01:21:30.200 | and they want Biden out.

01:21:31.480 | I don't think so.

01:21:32.320 | I think this situation is so--

01:21:33.140 | - Wow, that's a conspiracy theory.

01:21:34.380 | - It is a conspiracy theory and I understand

01:21:36.700 | why people might think that

01:21:38.160 | because so many conspiracy theories

01:21:39.280 | have turned out to be true.

01:21:40.340 | However, I don't believe that's what happened.

01:21:41.960 | I believe-- - Fascinating.

01:21:43.240 | - That Biden's staff created conditions for the debate

01:21:46.920 | that they thought would be untenable to Trump, right?

01:21:49.580 | They said that we're gonna choose the host,

01:21:51.840 | they're gonna be hosts who basically already

01:21:53.320 | called Trump Hitler, right?

01:21:55.000 | So it's like the most favorable setting.

01:21:57.040 | They said there's not gonna be an audience,

01:21:58.400 | we're gonna turn off your microphone

01:22:00.000 | and they thought that Trump would just say no to all of this

01:22:02.700 | and they'd be able to get Biden through without debate.

01:22:04.640 | But Trump called their bluff.

01:22:06.340 | He said, okay, I'll do it.

01:22:07.360 | - Sure.

01:22:08.200 | - And he walked into the lion's den,

01:22:09.520 | just like, remember, a year ago,

01:22:11.200 | he walked into the lion's den at CNN

01:22:13.740 | to do that town hall. - Yeah, he's fearless.

01:22:15.000 | - Remember, he is fearless. - He can beat anybody

01:22:17.200 | comedically.

01:22:18.340 | - You gotta admit that Trump has the huevos.

01:22:20.080 | - He can comedically beat anybody in mainstream media.

01:22:22.960 | - You gotta admit that Trump has the huevos.

01:22:25.040 | Like Tony Montana said,

01:22:26.640 | the only thing in this world that gives orders is balls.

01:22:30.400 | - Absolutely. - You gotta admit.

01:22:31.720 | - Hot to a.

01:22:32.560 | - You gotta hot to those. - Don't forget the balls.

01:22:36.460 | (laughing)

01:22:37.720 | This episode's off the rails.

01:22:39.560 | For the chairman dictator calling in from Italy,

01:22:42.760 | my bestie, David Sachs,

01:22:44.600 | I'll see you on Jussie Waters,

01:22:46.700 | and at the RNC.

01:22:48.240 | For Freeberg, who's genuflecting somewhere

01:22:50.580 | in a retreat center, I am.

01:22:53.880 | No stracanis, and I have a prediction.

01:22:56.440 | (laughing)

01:22:57.440 | I have a prediction.

01:22:58.920 | We're gonna see you at the next episode, everybody.

01:23:01.160 | Bye-bye.

01:23:02.360 | - Love you, boys.

01:23:03.200 | - Bye-bye.

01:23:04.040 | (upbeat music)

01:23:06.620 | (upbeat music)

01:23:09.280 | - David Sachs.

01:23:10.280 | ♪ I'm going all in ♪

01:23:12.740 | - And instead, we open sourced it to the fans,

01:23:14.880 | and they've just gone crazy with it.

01:23:16.720 | - Love you, Wesley.

01:23:17.560 | - I'm the queen of quinoa.

01:23:18.900 | ♪ I'm going all in ♪

01:23:21.740 | ♪ What your winners like ♪

01:23:23.960 | ♪ I'm going all in ♪

01:23:25.680 | - Besties are gone.

01:23:26.800 | (laughing)

01:23:28.400 | - That is my dog taking a notice in your driveway.

01:23:30.320 | - David Sachs.

01:23:31.160 | (laughing)

01:23:33.280 | - Oh, man.

01:23:34.120 | - My avatar will meet me at Woodson.

01:23:36.000 | - We should all just get a room

01:23:37.080 | and just have one big huge orgy,

01:23:38.640 | 'cause they're all just useless.

01:23:39.840 | It's like this sexual tension

01:23:41.320 | that they just need to release somehow.

01:23:43.920 | ♪ What your about to be ♪

01:23:45.760 | ♪ What your about to be ♪

01:23:49.300 | - We need to get merch.

01:23:50.140 | - Besties are back.

01:23:50.980 | ♪ I'm going all in ♪

01:23:55.980 | ♪ I'm going all in ♪

01:24:01.480 | - And now, the plugs.

01:24:03.880 | The All In Summit is taking place in Los Angeles,

01:24:06.880 | September 8th, 9th, and 10th.

01:24:08.920 | You can apply for tickets.

01:24:10.240 | Summit.allinpodcast.co.

01:24:13.880 | And you can subscribe to this show on YouTube.

01:24:16.280 | Yes, watch all the videos.

01:24:17.400 | Our YouTube channel has passed 500,000 subscribers.

01:24:20.760 | Shout out to Donnie from Queens.

01:24:22.480 | Follow the show, x.com/theallinpod.

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01:24:35.240 | Sign up for his weekly email.

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01:24:40.480 | And sign up for a developer account at console.grok.com

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01:24:54.040 | And Ohalo is hiring.

01:24:55.520 | Click on the careers page at ohalogenetics.com.

01:24:59.040 | I am the world's greatest moderator, Jason Calacanis.

01:25:01.520 | If you are a founder and you want to come

01:25:04.080 | to my accelerators and my programs,

01:25:06.200 | founder.university, lunch.close/apply

01:25:08.600 | to apply for funding from your boy J Cal for your startup.

01:25:11.320 | And check out athenawow.com.

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01:25:16.480 | Athenawow.com to get a virtual assistant

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01:25:22.160 | Thanks for tuning in to the world's number one podcast.

01:25:24.360 | You can help by telling just two friends.

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01:25:27.840 | Forward this podcast to two friends and say,

01:25:30.880 | this is the world's greatest podcast.

01:25:32.440 | You got to check it out.

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01:25:34.560 | Laugh while learning.

01:25:35.760 | We'll see you all next time.

Biden chaos, Soft landing secured? AI sentiment turns bearish, French elections

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