00:00:00
Nat and I have goals when I play poker she always leaves me with the following play well check have fun check
00:00:09
do not eat late at night never a check as soon as we finish dinner within 20 minutes back at the poker table
00:00:17
chat's like may I have my hog andaz now may I have my second hog andaz now Helm you
00:00:25
are fire up the cheeseburger melt did you see freeberg you should have last week hel at the dinner table Shawn made
00:00:32
some like incredible I thought like fresh sorbet of some fruit or whatever he at the dinner table ordered from door
00:00:41
Dash double stuff Oreos some Nutter Butters and some je they arrived when we left dinner and
00:00:49
got back to the poker room it was so disgusting and then the next day my whole household everybody Nat the kids
00:00:56
are like what are these things they were like holding up these Nutter Butters they looking at never seen another but
00:01:02
the best part about Phil Hut's door Dash addiction is that like at least once a month chamath would be like somebody
00:01:11
ordered like four Entre like pastas and two desserts to my house and I didn't order it and it FS like oh that's me on
00:01:21
the group jet that's me yeah cuz he doesn't take the time to change his address back to his house and then you
00:01:27
see the naked truth of what he's ordering [Music] let your winners ride rman David and instead we open sourc it to
00:01:41
the fans and they've just gone crazy [Music] with one person who's not going to be
00:01:49
eating well is s SPF he was just sentenced breaking news Thursdays continues here at the all-in podcast
00:01:56
episode 172 but SPF was just sentenced with me again today on the Pod of course the
00:02:03
dictator chairman chamath ptia sultant of science David freeberg and the Rainman yeah David Sachs I'm Jason kis
00:02:13
welcome back to the number one podcast in the world episode 172 of the all podcast your
00:02:19
favorite SPF just senten 25 years they're always overhyping always hype man absolutely I'm I'm a hype man I'm
00:02:29
like flavor flave of this organization SPF Sam bankman freed of FTX was found guilty as you
00:02:39
know couple of months ago in November and he just got sentenced to 25 years in total FTX customers lost 8 billion
00:02:47
investors lost 1.7 billion and lenders lost 1.3 billion is that without parole um when is he eligible for that
00:02:57
that is a good question it doesn't say what the parole could be the prosecutors had there's no possibility of parole in
00:03:04
federal criminal cases yeah so Federal prosecutors saw 40 to 50 years so the judge went a little bit light I guess
00:03:12
and gave half in a sentencing judge Lewis Kaplan said s SPF had lied throughout the trial and showed no
00:03:18
remorse quote he knew it was wrong he knew it was criminal he regrets that he made a very bad bet about the likelihood
00:03:26
of getting caught but he is not going to admit a thing as is his right in related
00:03:31
news FTX is also selling the majority of its stake in anthropic for 884 million to mubadala The Sovereign one of the
00:03:39
Sovereign wealth funds from the UAE and other investors including Jane Street where SPF worked for a hot minute the
00:03:45
Ford Foundation Fidelity and some other investors from CNBC lawyers representing
00:03:51
the bankruptcy estate told the judge in Delaware last month that they expect to fully repay customers and creditors with
00:03:57
legitimate claims in the FTX case that doesn't take into account Equity holders so looks like that one investment could
00:04:06
save a lot of people their deposits I saw an analysis recently that showed that they were going to be in a surplus
00:04:13
so investors were going to get money back and all the depositors were going to get their full 100% back yeah I don't
00:04:18
know how much Bitcoin or other coins they owned but if they didn't sell Bitcoin at 30 or 40 and it's at 60 or 70
00:04:26
now yeah that would be material right the crazy thing is that SPF was not it turns out a terrible investor he made a
00:04:32
seed investment in a thropic that's worth billions now he made a seed investment in salana that I think is
00:04:39
worth billions now especially now that salana has recovered I think that salana was tarred with the brush of being a Sam
00:04:46
coin because SPF invested in it but as it turns out as far as we know it's a completely legitimate developer project
00:04:51
Sam was an investor but not a participant and you look at the price of it it's now rallied to something like an
00:04:57
80 billion market cap yeah the point being that a lot of the Investments he made ended up being pretty good
00:05:04
Investments and FTX itself the trading platform as far as we know was a functional workable business I mean it
00:05:15
was a offshore crypto Marketplace so I don't want to necessarily use the word legitimate but I think that it was I
00:05:22
think as good as any of these trading platform so the the crazy part of this is I'd say unlike the madeof case where
00:05:28
from the beginning with off it was entirely a Ponzi scheme there was nothing of value there in this case you
00:05:34
had a call it legitimate or semi legitimate crypto platform combined with some legitimate Angel Investments and so
00:05:45
what I think went wrong here was Alam that Sam decided to siphon off customer deposits to gamble with his hedge fund
00:05:53
which was completely optional he didn't need to do that I mean he already had a winning business and winning bets in his
00:06:00
portfolio so this whole Alam thing he didn't need to get into and then of course siphoning off customer deposits
00:06:05
to spray around for political donations to feel like you're a big shot was also really stupid so this is the crazy thing
00:06:12
I think about s SPF is it was sort of like this this manic there was like a a manic element to it there was a
00:06:20
Messianic element to it he wanted to take shortcuts he wanted to believe he was going to save the world and then did
00:06:26
all these criminal things in pursuit of that that he didn't really need to in order to be
00:06:32
successful and that's why I think it's such a curious case is it's not it wasn't full made off in a way because
00:06:38
there were some legitimate elements to to his portfolio you're right about the Messianic thing these guys were all
00:06:45
drunk on this effective altruism concept that I think whatever crimes they committed by stealing the deposits and
00:06:52
then going and investing them they saw themselves as Robin Hood we're going to take these deposits we're going to make
00:06:57
a ton of money and then we're going to give it all away of course they didn't have a CFO nobody
00:07:02
did diligence on these Investments there were no controllers in place and he was
00:07:06
literally stealing his customers money to gamble as and and I think I think actually one one quote that I saw
00:07:12
reported uh from the judge was that if you steal customers money go to Vegas gamble it yes you're still guilty even
00:07:22
if you can pay them back with the winnings yeah but that suggests to me that actually the the FTX trustee is is
00:07:29
on a path to repaying the 11 billion of customer deposits that were absconded with I just found it I don't know if
00:07:37
that's true or not it is true in early February the trustee said they now expect
00:07:41
100% payment back to the depositors in all the accounts and all the excess will go to the shareholders and FTX all the
00:07:48
preferred holders that invested in the stock I don't know um what the total prep stack was in FTX but it sounds like
00:07:54
there's going to be recovery there as well after all of the customer deposits are made whole wow so this my point is
00:08:00
he didn't need to do this I mean it was so insane I mean FTX like I said was a workable business he made
00:08:09
workable seed bets but then he went crazy with Alam and the the robin stuff and so it's just such a interesting Al
00:08:17
by the way sax Alam is what he started with so he he started a firm that was meant to Arbitrage crypto markets
00:08:23
because there's all these different markets that didn't connect around the world so the original concept was that
00:08:27
he would set up a hedge fund like at Jane Street to Arbitrage and so he would Arbitrage crypto pairs using different
00:08:34
exchanges around the world he set up all these different accounts and he would trade long one way short the other way
00:08:40
and make a spread and then he made so much money on the hedge fund and he said why don't we just do this all centrally
00:08:47
and that's how he started setting up FTX was it his own cryptocurrency exchange so like the Legacy was that Alam was
00:08:54
there from the beginning and the Arbitrage across these illiquid no transparency type markets
00:09:00
was really the core driving principle when he started all this work the crypto exchange came later and so it was like
00:09:05
he always had this orientation that he was trying to AR everything and I think I told you guys this when I saw that
00:09:10
video on YouTube right after he got arrested and then they took it down off of YouTube it was like an hourong video
00:09:15
showing him trading and doing his day job in the office it reminded me of like a mouse in a maze like trying to like
00:09:23
everything was like AR like he was Finding little arbs he could make everywhere nonstop they weren good at
00:09:29
lost ton of money and then money yeah and then he puts this dingbat in charge of alam who proceeds to lose billions of
00:09:37
dollars I mean the whole thing was so stupid I mean it's gonna be such a great movie I can't wait for the movie I think
00:09:44
one of the craziest parts of this is he had co-founders in FTX who weren't part of alam and they
00:09:52
just let him do this why would they do that I mean their own stakes in FTX minus Alam
00:10:00
could have been worth many millions of dollars hundreds of millions of dollars many billions of dollars I mean the
00:10:05
truth is in business you can do all kinds of criminal and crazy things until you get caught and these folks were
00:10:11
doing insane crazy things that the system is based on trust and people can break that trust we saw it remember with
00:10:17
um what was uh full T poker they were also taking the customer accounts and gambling oh those dollars they literally
00:10:25
mixed the operations budget and the customer deposits at full tale poker part of the part of the rationale
00:10:33
if I remember right I read the the Michael Lewis book on this and part of the rationale SPF gave
00:10:40
to Michael Lewis was that Alam was supposed to be a market maker liquidity provider to The Exchange so they were
00:10:46
playing an active role on the exchange of making trades available to create the market and that was a key aspect of
00:10:54
getting the market moving was that they had this well capitalized Market maker and they knew how to actively trade on a
00:11:00
platform and they just built their own platform and then they were able to attract with more liquidity more
00:11:05
participants onto their exchange and that might have kick started it yeah but that could have kickstarted it but like
00:11:11
you know five minutes into it you could probably turn that off I mean right you know what I'm saying like yeah they
00:11:16
didn't need to do that once you get to a certain point also these people were all
00:11:20
on speed so there's that it contributed to the Mania yeah I think like they were
00:11:28
they were hopped up on speed and they felt that they were gods and that you know stocks go up coins go up they can
00:11:35
do anything they want they can hang out with celebrities it just got diluted and
00:11:39
they were super entitled I mean this is a level of entitlement and criminal behavior that we rarely
00:11:45
see doesn't matter if their tokens went up when I had my one and only interaction with SPF which was over a
00:11:55
zoom I asked for a model and this arrogant dingdong that worked for him sent me like a feline Excel
00:12:08
spreadsheet and I thought and I thought this is the worst example of arrogance in Hubers I've ever
00:12:16
seen I I had one interaction with SPF uh oh do you want to hear it yeah I got a little bit of a of a tiff with him so it
00:12:25
was at a at a Tech conference uh this a few years ago this is when he was absolutely at his like Peak like
00:12:32
everybody wanted to talk to him he was sort of holding Court he had a bunch of lackes around him and this is like a
00:12:38
pretty exclusive Tech conference I'm not going to Tar their name by mentioning them in
00:12:43
this context but so a friend of mine said you want to go over and meet with SPF and so I said sure whatever so we go
00:12:49
sit down and I start asking him about this ballot initiative that he was funding in California to raise our taxes
00:12:57
to fund a pandemic prevention Center and as it later turned out that his brother
00:13:02
was going to run this thing and so I I said to him you don't even live in California what are you
00:13:09
doing funding a ballot initiative here in my state where I live you live in the Bahamas or whatever in order to fund
00:13:16
this boond doggle which by the way is looking in the rearview mirror we don't need it like CO's over and even if we
00:13:22
did need a pandemic prevention center the federal government should do it not California taxpayers and he starts
00:13:27
getting very animated and defend this thing end up we sort of getting into an argument and uh so I kind of you know
00:13:33
ended it by saying well listen I'm going to um just let you know like I'm going to publicly oppose this you know
00:13:39
vigorously and uh because I you know I just wanted to let him know like I'm going to call you out for this standing
00:13:45
up for the little guy David David sax coming in here standing up for his state so when I got back from that conference
00:13:51
I actually talked about it on this pod I talked about that ballot initiative in California and that was the the or story
00:13:58
that yeah capitulated right oh that's right yeah like a month later they dropped that thing because it was too
00:14:03
much heat but little did we know that they were in mesh in all this criminality and they were absconding
00:14:08
with all this money what is Sam bankman Freed's brother's name bam bankman freed
00:14:15
was it like Gabe or something ah Gabe nice I had one interaction with him at some uh at a annual general meeting I
00:14:24
got asked to interview him and it was like a private Affair a couple of months before this all blew up
00:14:29
and he's dressed like a slob you know like literally doesn't look like he showered clothes don't fit he's wearing
00:14:37
flipflops and shorts is kind of like the shtick and he's a billionaire blah blah
00:14:42
blah and I start talking to him and his leg is shaking like restless leg syndrome I
00:14:49
mean it but no it's he's got his hand on and he's trying control did he have restless leg syndrome it's bouncing I
00:14:55
kid you not like a 100 times a minute it was disturbing disturbing and so I'm wondering if this guy's got a panic
00:15:01
attack or what's going on and I kind of like toned down my crypto skepticism questions because I felt so bad for him
00:15:10
that I thought I was having a panic attack and then I realized this guy's hopped up on speed and he's got so much
00:15:16
uh of Aderall or whatever these these kids were taking some patches that you wear to release this stuff I am
00:15:22
convinced that these guys were taking a level of speed unbelievable that would kill an elephant
00:15:29
like Vietnam War level yeah like these guys were out there I mean he w i mean patches these guys were wearing patches
00:15:36
and he was shaking was it like this no oh did Hitler have he was apparently tot was also on speed that looks like he's
00:15:49
on amphetamines there yeah it did look like that H it was kind of almost exactly like
00:15:56
that oh my God where's that for people who don't know the Third Reich was on speed there's like many many stories
00:16:06
about this yes a that they were hopped up on spe I believe so I'm not sure but I believe so big I think entire books
00:16:12
have been written about yeah drug use by the the third re but yeah I haven't delved into it yeah no no i' I listened
00:16:19
to a couple podcasts about it in fact and uh so it must be true um I've listened to some podcasts All
00:16:27
Right Moving On in the uh if it was on MSNBC it must be true or fox or fox or if it was uh beep the great your
00:16:37
Anonymous friend on Twitter must be true all right Trump just made5 billion dollar on paper with his memes back
00:16:44
Trump's social network has finally DPed it's now publicly traded you can go by Donald Trump spack at
00:16:51
djt is the ticker symbol they are on Pace for a whopping $4.5 million in Revenue you on a $60
00:16:59
million loss they're growing like 3x year-over-year and the company is not disclosing any
00:17:06
user metrics this quote from one of their recent filings is next at this juncture in its development
00:17:14
tmtg the Trump media and Technology Group believes that adhering to traditional kpis such as signups average
00:17:22
revenue per user add Impressions and pricing or active user accounts including monthly and daily active users
00:17:28
could potentially divert its focus from strategic evaluation with respect to the
00:17:33
progress and growth of its business so they're not tracking isn't that the business
00:17:40
I it's so laughable like I can barely get through it that's crazy they said that literally they said it it's a quote
00:17:47
from their SEC filing according to similar web estimat truth social had about five 5 million visits last month
00:17:54
as of Thursday morning it's worth about 8.5 billion same as Reddit or close to 2,000 times Topline Revenue company had
00:18:03
about $300 million in cash after the merger by comparison Reddit uh has 800 million in Revenue their Market Cap's
00:18:11
8.4 billion or about 10 times Revenue so uh it should be about five six seven times Revenue would be more realistic
00:18:18
according to basic media comps Reddit had two billion visits last month with 73 million daily active users that's
00:18:26
pretty significant uh this spack took a long time to close there was an SEC investigation into three men allegedly
00:18:34
making 23 million buying then dumping shares of dwac after the merger was announced they
00:18:40
all faced at least five fraud and conspiracy charges of course this is what happened before it was despa and
00:18:48
so what do you think trath thoughts on this so just to be clear I just think we should be really clear
00:18:57
because you're just Flo putting this insider trading thing out there as part of the introduction which is a huge
00:19:03
allegation and we have to be really clear that is related to a few investors and not to the company itself and their
00:19:12
the company spack was approved by the SEC so I just think to be clear here Char yeah just to be super clear SEC
00:19:17
charges former dwac board member and others for insider trading dwac I just don't think this is
00:19:25
the story this is just not this is the reason it was delayed so just to be clear it was the whole this whole
00:19:30
thing's been delayed for a couple years because of this okay fine so it was delayed the SEC approved it the company
00:19:36
is now trading yeah what do you think of the valuation and that's the real topic
00:19:40
isn't it here's what I'll say I think that this is a really important watershed moment and it reminds me of
00:19:50
1997 Nick throw this little image up in 1997 David Bowie issued what was then famously called the Bowie Bond it was
00:19:59
$55 million that yielded 7.5% which is about 80 bips above the 10year at the time these were 10e bonds that's awesome
00:20:08
I didn't know that the bond payments were linked to 20 albums that Bowie had released before
00:20:15
1990 and so these are like 280 songs and what he basically said was like listen folks you're essentially buying a piece
00:20:23
of me and in this case my past work and I'm going to take this $55 million upfront and you're going to get paid
00:20:31
this interest based on the royalties that I generate off that historic library for a 10-year period we think
00:20:38
you're going to get paid the 55 million plus the 7 and a half% a year and then I'm going to take back the rights and if
00:20:44
I default if these bonds default you will own the songs and it turned out that it was an
00:20:49
incredible bet the people that bought it I think it was credential which was an insurance I think it's an insurance
00:20:54
company they got paid the bonds did not default in 2007 and Bowie took back the ownership of that catalog of
00:21:03
that back catalog but instead what he had was 55 million up front which allowed him to go and buy all kinds of
00:21:09
other parts of his catalog that he didn't otherwise own so why is this interesting this was the first example I
00:21:15
think of people monetizing themselves their name and their likeness in this case it was done via
00:21:21
debt I actually think when you look today what's happening is a a more sophisticated version of that move
00:21:28
movement but at much larger scale I mean we were all joking that there was a bunch of meme coins that launched not
00:21:36
with any of our support by the way but you know with our names with all these other quasi famous people's names those
00:21:42
things went up and were worth millions of dollars of value and I think what this Donald J
00:21:50
Trump the djt company what it represents is effectively a trading coin a baseball
00:21:57
card if you will a trading card via a stock on the value of Donald Trump's Enterprise Value his name his
00:22:05
recognition and his likeness so this I think is the modern instantiation of the Bowie Bond and what's incredible is you
00:22:12
can see Bowie 30 or 40 years ago he could have generated $55 million in inflation adjusted dollars that's about
00:22:20
a 100 million in today's dollars Trump three a half 4 billion I think it sits on top of this idea that the
00:22:57
[Music] that will be buyers that essentially will buy this as a Donald Trump a directional bent on the value of his
00:23:34
brand and I'm also predicting that many other individuals will go public and have
00:23:41
Enterprise values that are levered in the same way as djt and that is a modern version of the boy bond from
00:23:50
97 freeberg your thoughts on the chat's argument that this is a proxy for the value of Donald J Trump's brand
00:23:59
I think that's certainly one reason why people are buying the stock and driving the price up and another one is probably
00:24:05
a vote against traditional media that there's a contingent of folks who are basically voting with their dollars and
00:24:14
saying we want an alternative to traditional media and traditional publishing platforms that
00:24:20
have censorship that we don't agree with or have editorialization that we don't agree with and that this investment I
00:24:27
think represents a way for them to vote and say I don't want the old way I want a new way and while this may or may not
00:24:35
be the new way that succeeds it may or may not be a great business and it may or may not even have much viewership or
00:24:40
or usefulness it's a mechanism by which people can put some money down and say I'm voting on an alternative I want to
00:24:47
see an alternative so I do think that there's a flasho indication that arises from this that's more than just the
00:24:53
meming aspect of it which is certainly fun everyone crowds into a stock stock price goes up it's it's kind of like to
00:24:59
the moon and so on I think there's also this element of demand for alternative media there's demand for a different
00:25:06
type of publishing platform and so I think that that's what this most represents to me from a um
00:25:13
what the market is telling us perspective I think there's one other thing going on here which is that this
00:25:22
represents a populist reaction to the law fair against Donald Trump that I think Trump's supporters want to support
00:25:31
him against all of these lawsuits and this persecution that he's been facing and I think one proof of this is if you
00:25:40
turn the dial over to MSNBC they've been losing their minds all week over this because they thought they had finally
00:25:45
gotten the man there was this $450 million judgment in New York that he was fined for supposedly inflating the value
00:25:54
of of assets against which he got loans even though the bank did its own independent appraisal of the properties
00:26:01
and even though the banks fully got paid back and said they wanted to keep doing
00:26:04
business with him so they thought they had finally gotten djt and he was going to have to pay hundreds of millions of
00:26:11
dollars in fines and then lo and behold the spat comes along and he makes millions and millions of dollars now
00:26:16
that's not locked in yet we're still in this lockup period where for six months there's a very small float and it's
00:26:23
probably the case that once there's more shares on a liquid Market we'll find out
00:26:28
what the real valuation is so let's call the valuation we're seeing today based on a very small float let's call this
00:26:34
more of a preliminary number and Trump can't sell yet but presumably after six months when the Locka comes off he'll be
00:26:41
able to sell so look I think fundamentally what's going on here is this is political Trump's enemies are
00:26:47
angry about this spack because they see that it gives him a lifeline and I think
00:26:51
Trump's supporters are deliberately buying this stock to support their guy and to say that this laware against
00:26:58
Trump that basically seeks to imprison the man or bankrupt the man instead of Simply run against him is a new low in
00:27:05
American political discourse and I think there's millions of people who agree with that and some of them are willing
00:27:10
to buy this stock as a as a protest vote I agree 100% with the protest vote it's
00:27:16
uh you know he had what 60 70 million people vote for him he got 74% 74 million rather
00:27:24
46.8% to Biden's 81 million if but 2% of those people want to buy the stock it's
00:27:30
a million and a half people and that's exactly what's happening here they don't care if they lose the money actual value
00:27:36
of this company with five million in Revenue four million in yearly Revenue I mean if you really want it to be
00:27:43
absolutely insane and give it 100 x valuation it's worth 400 million and so then if whatever Goodwill
00:27:50
Donald Trump's likeness is maybe that's another 500 million but you'll lose a large
00:27:57
amount of money I predict if if you buy this and if you're buying it as a protest vote sure go for it why don't
00:28:02
you uh jcal why don't you short it as a j TR never shorted a stock and I I I I think remember Gabe
00:28:09
plin no who's this oh remember from uh Melvin Capital he thought he could he blew up his fun shorting GameStop he
00:28:16
thought he could out all the Apes yeah I mean that's exactly why I wouldn't do it
00:28:20
I've never short it I think that you know you get these Trump voters and it starts going up because of the small
00:28:25
float which is what's happening now they might send this thing to 880 billion you
00:28:30
know who knows what is possible with the short float and a mo motivated you know
00:28:36
million two million people you guys are bringing up something else as well which
00:28:39
is we've shifted from fundamental-based stock trading being the overwhelming driver to
00:28:47
there's a lot of like very speculative day overday activity that you can't control anymore and I think it's part
00:28:52
and parcel of what's happening in other markets in America as well so when you look at sort of like what happened in
00:28:58
2016 where the Supreme Court said each state can regulate Sports gambling all forms of like online
00:29:07
gamesmanship and betting just started to Skyrocket it could be casinos Lottery sports betting it didn't matter but
00:29:13
everything just caught a massive ginormous bid and when you look at the products that service the retail Market
00:29:21
they've also become increasingly gamified Robin Hood is probably the best example of of having built an incredibly
00:29:27
good business by making things more like a game and then recently adding fuel to the fire
00:29:34
are things like zero day options which are just like and there was a big article in the Wall Street Journal where
00:29:39
like one of the reporters she became addicted to it and like the Wall Street Journal gave her I want to say like like
00:29:46
a few thousand bucks but she had to discor the profits and she like 2,000 ex she had she got like a 2,000% return or
00:29:54
something specking zero day options via Robin so the point is that on top of the
00:30:03
whole movement to sort of allow individuals to monetize their own name and likeness via the stock market which
00:30:09
we just talked about the second movement is that a lot of these things are becoming less financialized and more
00:30:15
gamified and so you just have many more participants and so to your point you can have a GameStop moment in any of
00:30:20
these things you can have these zero day options run the stock to the Moon I would be I would tread very
00:30:27
lightly here yeah and just another warning you know the the stock market bases things
00:30:35
ultimately on like earnings and profits and so when we look at this as a proxy and Mr Beast would have the same issue
00:30:43
or Marther Stewart you have a key man key individual riskier I.E this person goes to jail they die whatever which
00:30:52
Martha Stewart always had on her businesses and then what is included in this is key so when if he does another
00:30:59
TV show and it becomes a hit again is that included in this no if he has another building or his buildings
00:31:05
included in this no if the golf course is included no what's included in this included in this deal when you buy djt
00:31:12
is apparently just a reallya crazy you know social network that nobody uses so just be clear what you're
00:31:21
buying no you're right the the more sophisticated version of this Trading Card analogy
00:31:28
would be if Donald Trump contributed his brand licensing Revenue in perpetuity to the asset and then it
00:31:36
really is a longitudinal forward bet on the Trump name yeah and that that's sort
00:31:42
of more like if vergin like if Richard Branson took the Virgin hold co- public yes that's effectively what that is as
00:31:50
well like you know Branson over 40 or 50 years has built an incredible business I
00:31:54
think the stat that I heard when I got to know him was he's created 20 businesses worth at least a
00:32:02
billion dollars or more over his with the Virgin brand with the Virgin brand and the Virgin brand is a licensing
00:32:09
model where he holds that right and he will license it to you for a share of the revenue that's independent of
00:32:15
anything else that he may do with these businesses and so if he took that virgin
00:32:19
hold co- public then what you're buying is a longitudinal discount a cash flow on the value of Virgin and to your point
00:32:26
if Trump contributed that name and likeness licensing capability into this by the
00:32:32
way he could also still do that so to the extent that this business saw a contraction and maybe the truth social
00:32:39
thing didn't end up being that valuable but the other aspects of the media business he could create by basically
00:32:44
saying okay look this will get a share of my licensing revenue for my name would effectively be a proxy to do that
00:32:49
so he's got a lot of outs here to maintain this market value and then on top of that to your point there's 70
00:32:55
million odd people who would want to support him in one way shape or form I would not go anywhere near shorting it
00:33:02
given his uh his fan base is incredibly likely to keep buying these shares and if you want to know the actual value of
00:33:10
this business today I'm an expert at this it's $0000 million it's $200 million it's not anywhere close to this
00:33:18
put your money where your mouth is we just no no we just explained when you have a small float like this and a rabid
00:33:23
group of people who are gambling you will get your face ripped off stupidness what's that you'll get
00:33:31
Plotkin yeah I mean it's it's disastrous I mean they what did they say we can be
00:33:36
stupid longer we can be longer than you can be solvent the redor is such a great
00:33:44
line I mean but you can gamble like this on stocks yet you cannot invest in private companies I don't get the legal
00:33:52
system in America be careful out there folks you will lose a large portion of money is my prediction if you buy the
00:33:57
stock but but feel free if you want to gamble look I think I think this is all part of the ongoing backlash to law fair
00:34:05
yeah Joe Biden instructed his justice department to prosecute Trump it's in my view it's utterly impressed in American
00:34:13
history for one president to try and prosecute imprison and bankrupt his main opponent in the political election and
00:34:19
there are millions of Americans who are absolutely disgusted by this I think it's a new low in American politics and
00:34:25
God bless all the people buying these shares to support Trump just as a protest vote I don't know whether
00:34:30
they're going to make money or lose money like I said I don't think you can justify the valuation based on
00:34:35
fundamentals but you can sure as hell justify based on Payback yeah I mean if you want to give
00:34:40
your money to a billionaire buy the stock absolutely feel free I think prob I agree with you like maybe two of the six
00:34:48
lawsuits are a bit weak I think the three or four other ones you know he committed the crimes and he's just
00:34:55
paying the price but you know we can agree to disagree on this pod intelligent people do speaking of
00:34:59
intelligent people RFK Jr just picked up his running mate this is a little bit crazy and I'm really interested in
00:35:07
hearing your thoughts on it he chose a 38-year-old bay area lawyer Nicole Shanahan as his VP RFK explained why he
00:35:15
chose her she knows big Tech very well how they use AI to exploit the public how they censor and suril Americans to
00:35:22
push certain agenders she understands the health consequences of toxins in our air soil and food
00:35:28
and he wanted a younger person to represent Millennials and gen Z he says younger Generations feel like nobody
00:35:35
represents him in Washington he also wanted an athlete in good shape to inspire Americans to live healthier
00:35:41
lives and Shanahan donated 4 million in support of RFK Junior's Super Bowl ad that ran earlier this year sax what do
00:35:51
you think of this pick well um this does not excite me I'll I'll be frank uh but since I'm
00:36:02
going to say something critical I want to me start by saying something positive because I I really you know I love Bobby
00:36:08
Kennedy I mean I think that he represents a number of really great issues that I agree with I mean first of
00:36:15
all he's been the most articulate critic of the Ukraine war understands it deeply
00:36:18
and has explained it extremely well he stood up for sealing the Border he went down there showed that it's out of
00:36:24
control completely agree he was a vocal of fouchy and lockdowns was completely right about covid he he supports civil
00:36:34
liberties and free speech so you know I want to say like Bobby Kennedy is great the issue I have with this pick is that
00:36:42
she doesn't represent any of those issues she has a completely different issue Matrix and uh I I watched her
00:36:47
speech and just to say something positive about her I mean I like her enthusiasm I think she's 38 and it's
00:36:55
nice to have someone running for political office who's not in their 70s or 80s and I think she's genuine I
00:37:01
actually think she's saying what she really believes and that's really nice and refreshing but again if you go back
00:37:07
to the issues themselves she brought up three issues number one is she says she wants to make Americans healthy again
00:37:12
it's the focus on chronic disease I'm not saying she's wrong about that that's just not my issue number two she brought
00:37:19
up Criminal Justice Reform this one concerns me apparently she donated to gasone who's a Soros da who helped
00:37:27
destroy San Francisco and then failed upward to La so apparently she's a gasone supporter that does not fill me
00:37:33
with confidence that is a quite frankly luxury liberal belief and this uh decarceration idea so I'm not excited
00:37:43
about that her third issue was climate and environment related but but in a very specific way she went after big
00:37:50
agriculture she said we can no longer support extractive corporate agriculture I'm going to let freeberg speak to that
00:37:57
one uh I can't really say whether she's right or wrong but that's not one of my issues so listen at the end of the day I
00:38:04
feel like this pick accentuates and underlines the issues in Bobby's platform that appeal to the to the left
00:38:15
frankly to to liberals and I look I think Bobby's candidacy is a complex candidacy that brings together people
00:38:21
from both left and right but again this pick does not speak to me it speaks to the more liberal parts of his Coalition
00:38:30
does it increase his chances and who would have been the person who would have increased his chances most tuls
00:38:36
well the person who would have been amazing would have been Tulsi gabard okay if he had chosen tulsy that would
00:38:44
have blown the doors off slam done yeah I mean and tulsi's been saying chth publicly that she would be proud to
00:38:51
serve with Trump and it's seeming likely that she's got a a shot at that yeah being the VP for Trump I'm not going to
00:39:00
comment on that okay let me just say something else I think Tulsi gabard is really impressive I think she's
00:39:08
independent and I think she really stands firmly on her own two feet in a way that I find
00:39:16
inspiring I like saaks have many many positive thoughts about Bobby Kennedy I think he
00:39:24
is he was really a breath of fresh air Jason this in this election cycle because he was able to say the unsayable
00:39:33
things and made those things more easy to be said by others and I think that there's a really important role in that
00:39:38
and I think he deserves a lot of credit for that and then the fact that he said things that were so unconventional and
00:39:46
not mainstream that are now mainstream views I think says a lot to the fact that he was pretty grounded in
00:39:54
first principal thinking on those topics and I think that having those kinds of people in
00:40:00
office are really good for America all of that said I do agree with David that I think
00:40:07
the pick was meant to be more about covering his Left Flank and I found that an odd
00:40:19
calculation and I wonder whether it wouldn't have been easier to cover the right flank and there are different
00:40:26
folks that are that could have been in the mix to do that and so I think that it was a calculation though and I think
00:40:32
it's about he has a core set of issues it's about whether he appeals more to this side or to this side in order to
00:40:37
get the totality of the votes that he think is possible second he was under a little bit of a time constraint because
00:40:44
some of these states need the VP candidate named and he's under a shock clock that the other two are
00:40:51
not so I mean I I wish Bobby the best because I think some combination of Bobby doing
00:41:01
well and some upheaval between the Democrats and the Republicans is really the only chance we have of having a
00:41:07
credible third party well let's see now what happens by the way we should just say
00:41:12
like you know Joe Liber been passed away which is really unfortunate you know he was a
00:41:18
really independent thinker as well let's see what no labels really does here there's a little bit of chaos
00:41:25
over at No Labels I think but so there's a lot of moving parts so it was clearly
00:41:30
calculous I don't totally understand what that formula was though just to build something jamas said there's a
00:41:37
report by Colin rug that the DNC realizes what jamas said about this covering Bobby's Left Flank rather than
00:41:44
his right flank and apparently they're in somewhat of a panic about this and I think what you're going to see is that
00:41:52
lawyers from the DNC and the Biden campaign are going to fight tooth and nail to keep this ticket off the ballot
00:41:59
at least in the major contested States like the five or six states where the presidency will be decided in
00:42:05
2024 and of course they'll be saying they're doing this to save democracy but you're going to see I think a full court
00:42:11
press by DNC lawyers to keep the Kennedy Shanahan ticket off the ballot yeah this
00:42:18
seems really like it's going to damage Biden which was my original prediction and that a reason why a lot of the
00:42:24
right-wing were supporting RFK was because they wanted they saw this as a clear path to take away a couple points
00:42:30
from Biden I think first part first part of what you said is 100% right I'm not sure that a bunch of Republicans are
00:42:39
going to get organized jcal to vote for RFK in that way oh no I don't think they're going to do that I think they
00:42:46
supported him publicly in order to build him up as a Centrist candidate knowing that it would take away from Biden so I
00:42:53
just think on a strategic political basis all these Republicans do that for for Maryann Williamson why
00:42:59
notable yeah no no it's because she's not electable I mean she's Crystal and not like a viable candidate it's it's
00:43:06
pretty clear she's not viable why can't you just accept that people on the right
00:43:10
like the issues that Bobby spoke to isn't that because I think that they're partisans and they just want to win so I
00:43:16
don't think it has anything to do with what you're saying which would be like authentically liking and connecting with
00:43:20
what he's saying I don't think it was that I think it's a strategic plan to try to pull Biden votes and I think
00:43:26
Republicans are a plant you think he's a plant I think their support for him is for nefarious reasons they're supporting
00:43:33
him to take votes away from Biden and here it is we're all agreeing that this is going to take votes away from Biden
00:43:38
so I think it's a very clever strategy on the GOP hold on I just just to add one point to that remember that when
00:43:44
Bobby entered the race he did so as a Democrat he did so challenging Joe Biden for the nomination of the democratic
00:43:50
party how did the Democratic party react they kept him off the ballot they wouldn't give him a fair shot that's why
00:43:55
he went independent so he did not have to be this you know sort of like what you're kind of implying like a fly in
00:44:02
the ointment type Third Party candidate he tried to be the Democratic candidate they wouldn't let him compete if they
00:44:07
had let him compete in a fair way maybe he would have stayed a Democrat I would have loved to have a massive competitive
00:44:14
field of Democrats I think the Democrats are screwing this up big time I think this could be the mo this could I think
00:44:20
they could peel off a couple of percentage points yeah in those more you're right I think it's more than that
00:44:26
so I mean I think it's more than that so we all agree that's what's happening here then we're just disagreeing
00:44:31
notics we agree it's taking points away yeah I think we agree about that but what I'm saying is that this is where
00:44:37
We've Ended up I don't think it was constructed to be this way ah interesting freeberg your thoughts on
00:44:45
this candidate specifically around her love of organic food and wanting to take on the pesticides toxic
00:44:54
food you know and the and the industrial food cont I remain steadfast in my commitment to there being only one major
00:45:02
issue facing this country and that is the federal debt and the deficit we are increasing the federal debt by a
00:45:08
trillion dollar every hundred days that number is not slowing down the current budget proposal from the Biden
00:45:15
Administration calls for over $7.2 trillion to be spent next year that makes the US federal government roughly
00:45:23
onethird of our country's GDP the outrageousness of the condition that the US is in right now makes it so insane to
00:45:33
me that we are talking about any other topic like big agriculture or whatever other nonsense was being spattered about
00:45:42
as important topics to this particular person if every voting citizen of the United States does not recognize the
00:45:48
severity of the deficit and debt problem that the federal government faces you are wasting your vote and no candidate
00:45:55
is speaking to what is clearly the biggest issue of our time and we need to address this issue head long so I don't
00:46:00
care about this person or anyone else who's running for office that is talking about stuff that we cannot actually
00:46:07
address and problems we cannot actually solve if we don't get our fiscal Affairs
00:46:10
in order that's my point of view got it and uh respect for that can anybody win the presidency on a hey we're going to
00:46:20
balance the budget we're going to cut spending platform nope so they can't win and it's an existential is
00:46:27
that's why I look I mean I I'll keep shouting into the abyss hope that a few people hear it and that at some point it
00:46:34
becomes a topic that folks do begin to focus on I I think that the ne necessity of raising tax rates the necessity
00:46:45
ultimately of cutting entitlement programs the necessary inflation that will arise because of the condition of
00:46:53
the federal government's debt level because we're going to have to keep printing money
00:46:57
these are the sorts of things that are like a Boiling Pot that one day folks will wake up and say well what the heck
00:47:03
happened everything got mismanaged and it's not a Democrat problem it's not a republican problem it's a it's a
00:47:10
fundamental problem of people voting themselves all the money and people getting voted into office by saying I'm
00:47:15
going to do more than it's being done today and that costs money and no one actually addresses the rampant misuse of
00:47:23
funds the lack of accountability in spending and the fact that we have an incredible amount of negative Roi
00:47:28
spending and the fact that we've effectively created an economy that's fundamentally dependent on federal
00:47:33
spending and I'll go through some statistics when we talk about Biden's budget later in the show but I think
00:47:38
that the significance is just overlooked by all of these candidates and we're not really
00:47:44
talking about the thing that matters so all right so let's break down Biden's proposed budget of
00:47:49
2025 proposed budget was 7.3 trillion for fiscal 2025 that starts in October of 2024 it's up 18% from 2023 projected
00:48:00
deficit 1.78 trillion which is similar to the deficits we ran in 23 and 24 the budget projects an average deficit of
00:48:09
1.6 trillion per year over the next decade national debt as uh freeberg was alluding to is insane it's at 34.5
00:48:17
trillion but we made some charts here to go through all of this let's pull up the
00:48:21
first chart and this is comparing Biden's proposed budget in 2025 with budgets from 2005 and 2015 defense
00:48:30
spending has actually grown pretty modestly during that time but entitlements interest payments and
00:48:35
non-defense spending have jumped significantly us will owe 965 billion in interest on its debt next year that's 65
00:48:44
billion more than the pros defense budget and in 2026 the US will surpass 1 trillion on interest owed on its debt
00:48:52
and we'll talk about that more in a minute but let's start here with this first chart anything jump out to you
00:48:57
Cham here that's notable and worth discussing all the areas that we need to cut we can't even have a conversation
00:49:06
about so they'll never get cut and they'll keep growing so I think that we probably need
00:49:13
to figure out what the alternatives are so if you can't have a conversation about expenses the only logical place is
00:49:23
to have a conversation about revenues and what that means for the government is in
00:49:30
taxation and so I don't know Jason what we do here there could be a couple of saving
00:49:38
Graces so there are some things happening for example on the Medicare side that could be profoundly disruptive
00:49:46
they are now I'm not again I'm just going to put this out there as it's happening I don't know if it's good or
00:49:50
bad but they are looking at reimbursing things like wovi and OIC and not if you look at the underlying cost of those
00:49:59
kinds of chronic diseases diabetes heart disease Etc and you put a large swath of the
00:50:06
American population on those drugs the reimbursement value of those drugs versus the cost of actually The Chronic
00:50:11
Care Management would save you many hundreds of billions of dollars a year so that's something second is on the
00:50:19
defense side there's a large portion of that budget that's migrating away from traditional tactical Warfare to things
00:50:25
that are unman vehicles and cyber and whatnot that could save or300 billion do there so there are places where you
00:50:33
could save 500 billion to a trillion dollars but I think it's going to be a almost impossible conversation and it'll
00:50:41
happen by accident so then the only forced conversation that I think we are going to have as a society is around
00:50:47
Taxation and that's really bad for you know a lot of people that don't believe that's the path to generating
00:50:55
growth one of the challenges is that there are and and we should reference these in the show notes Nick but there
00:51:01
are well researched economic studies that show that when a government tries to increase the taxation level north of
00:51:10
20% of GDP of that economy that you actually see GDP growth go negative that EV there's a certain natural equilibrium
00:51:19
on which you can tax the system beyond that level investment dollars go down and growth begins to shrink and that's
00:51:26
what triggers the spiraling problem because then the government spending needs to go up to continue to grow and
00:51:31
support growth in the economy and it creates this inevitable totally spiraling would you call this the Atlas
00:51:36
Shrug the Atlas Shrug effect is investment goes down there's a Fred chart yeah showing percent of GDP that's
00:51:44
federal tax receipts and then percent of GDP that's spending exactly and and then
00:51:50
the Gap is your deficit okay and freeberg is right that I think in the absolute best economy best years of the
00:51:57
best economy so it's like you know the best year of the Reagan boom and the best year of the Clinton boom when we
00:52:02
had the government surplus I think the government was extracting just shy of 20% of
00:52:09
GDP and in the 70s when marginal tax rates were at 70% so before the ran tax cuts we were actually extra extracting a
00:52:18
lower percentage of GDP so there's only so much blood you can get from a stone if you raise tax rates on a marginal
00:52:25
basis high enough the econom performs worse and you actually end up collecting less or people spend a lot more money on
00:52:33
lawyers and accountants to basically figure out more structuring schemes to avoid paying taxes so the years in which
00:52:40
we've got the highest percentage of Revenue out of the economy are in good economic years where we've had
00:52:48
reasonable levels of Taxation as opposed to the highest levels of Taxation and so
00:52:53
the problem is with the spending I mean we used to be able to keep spending to somewhere
00:53:00
between I'd say in the best years of of the years of the Clinton Surplus I think
00:53:05
spending as a percent of GDP was like 18.8% it's around 20% of GDP goes to federal spending
00:53:13
that's that was normal but then the spending got out of control during covid and it went up to like 25 30% of GDP
00:53:20
went to federal spending it's starting to come down but it's still way too big a number anyway my my point is that a
00:53:27
starting point for dealing with next year's budget is free spending just free spending you know the 18% increase is
00:53:35
not a good idea if we want to get this problem under control freeze the spending we can talk about taxation but
00:53:40
you're only going to get so much blood from a stone an increased spending is stimulatory and so it works well in an
00:53:46
election year I would say we took two major crises and we had crisis level spending and then we normalized that
00:53:54
spending and allowed it to carry forward starting with the 08 financial crisis with our monetary policy and then being
00:54:01
accelerated with covid and and our fiscal policy I'll give you guys I I did some back of the envelope math I'm sure
00:54:08
there are economists who have done a better job of this than I there are directly three million Americans that
00:54:13
are directly employed by the federal government there's 167 million workers in the US so 3 million are directly
00:54:19
employed by the federal government if you take the rest of the federal spending that flows into the economy
00:54:24
it's about 3 and a half trillion a year and assume 30% of that Capital goes to equity holders and businesses that own
00:54:30
businesses that benefit from that spending and the rest flows through to labor that's about 133% of GDP flowing
00:54:35
through to labor and assuming average annual income that's another roughly 45 50 million people that are directly
00:54:43
benefiting that are directly earning income because of federal spending there's another 50 million people in the
00:54:48
US that rely on Social Security and here's another important statistic there's somewhere between 12 and 20
00:54:53
million people in the US that pay more than 50% tax rate today so those people are
00:55:01
effectively working for the federal government because half of their their income goes back to the government so
00:55:06
when you add this all up there's there's over 100 120 million people in the US that are directly working for or getting
00:55:13
paid by the federal government in the US that is such a significant percentage of
00:55:19
our economy that is such a significant dependency on individual income on a federal
00:55:24
government it I I don't want to use the term socialism but the the ability for us labor to earn is so largely dependent
00:55:34
and largely driven by federal spending at this point it becomes this critical Lynch pin to enabling
00:55:41
progression economically to enabling the labor force to continue to participate that the federal government
00:55:48
is now the primary customer or employer of most of the labor force in the United
00:55:54
States today that is a deeply and profoundly different circumstance than what I think the founding fathers
00:56:01
envisioned when the federal government was supposed to be this lightweight overseeing organization of a
00:56:07
Federated Republic of states and unfortunately I think we find ourselves in a condition as Jamal points out
00:56:12
that's very hard to get out of this is going to require a dedicated multi-decade effort to create a slow
00:56:18
unwinding from this deep dependency that our labor force has on federal spending
00:56:22
and I I'm just like so shocked that this isn't the the critical problem of our day that we're not all spending time on
00:56:28
folks have pointed out that this only goes one way at this point hey Nick can you bring up that first Fred chart this
00:56:34
is federal receipts as percent of GDP and it goes all the way back to World War II to free Berg's Point we've never
00:56:43
gone above 20% look at that and we've had tax rates as high as 90% I'm saying top marginal tax rates as high as 90% I
00:56:52
think after World War II because we're trying to get out of the deficit that was created by the war spent
00:56:56
you can't get above 20 yeah exactly the economy shrinks no but hold on the the I
00:57:02
I gave you this oecd report it says that since 2000 we've been in the mid 20s and the oecd average
00:57:11
is 34 in terms of tax to GDP tax to GDP is this this includes state and local then
00:57:19
right probably yeah yeah I just showed Federal I think this probably includes state and local by the way is a whole
00:57:26
another BWI because I didn't include those numbers in my employment statistics the US Bureau of Labor
00:57:31
Statistics estimates that about 20.2 million Americans are employed by local and state governments directly employed
00:57:39
by local and state governments so again when you add this all up the majority of
00:57:42
the US Labor Force is employed by the government or is a beneficiary of the government as the primary customer or is
00:57:51
supported by government entitlement programs if you go back to that Fred chart for a second I mean if you if you
00:57:55
basically ack knowledge the point that 20% is the ceiling on how much we can extract from an Economy based on 80
00:58:04
years of data okay with all sorts of differing tax schemes then I think what we should say is that federal spending
00:58:12
will be capped at 20% of GDP we should you see what I'm saying like if we can't go above 20% on receipts cap cap federal
00:58:19
spending should be a constitutional amendment right that's it and then and then on the revenue side we should say
00:58:27
what is the best tax code to achieve that 18 19 20% because what we do right now is we just say well just tax the
00:58:35
rich but what we've seen is we've been taxing the rich as high as 90% in the past and you didn't get more Revenue so
00:58:43
we should be much more scientific about saying well given that our Target is let's say 20% what's the best way to do
00:58:49
that and no one really has that conversation no none of the conversations have to do with data or
00:58:55
building a a bulletproof system the same thing we could say about immigration where we try to talk about the numbers
00:59:02
here of what's a reasonable number of people and tying that to an actual number um and it's pretty obvious we
00:59:10
should have one immigration policy when we have 5% unemployment and a different one if we had God forbid 15 or 20%
00:59:17
unemployment can we just say TI to the unemployment rate the fundamental structural problem I'm highlighting is
00:59:25
that we've created an economy that is so deeply dependent on federal spending that the federal spending
00:59:31
levels are what support so many employed and so many companies in the US you're answering your own question that's why I
00:59:38
can't stop right I don't think the real economy that creates all the Innovation and all the value and all the the the
00:59:45
good paying jobs I think that is separate from what theary economy that's the that's the true market-based
00:59:51
deflationary economy the problem is once we've layered in all of these layers of
00:59:55
dependency from federal dollars flowing into businesses or into people's pockets
01:00:00
it's very difficult to back out of that I don't call that dependency I call that
01:00:04
special interests I think there's a lot of special interests who are basically looting the federal government and
01:00:09
taking all this money and then they turn around and use some of it to to donate back to the politicians and Lobby for
01:00:15
more spending so what you're calling dependency is really more special interest meaning that I don't think we
01:00:21
need to have this level of spending in order to have a successful economy I think it makes our economy less
01:00:26
successful yeah it's still stimulatory because saaks remember Mitch McConnell when they were talking about supporting
01:00:32
Ukraine his primary argument as you remember was that all of these dollars are going to go into defense
01:00:38
contractor's Pockets which is going to go to employees Pockets which is going to stimulate our economy that's the
01:00:43
fundamental thinking value that know but that's the thinking behind it right I mean that's the political system that
01:00:49
okay let me just walk through this real quick if the government prints a bunch of money and it to people as steich X we
01:00:55
all understand that creates no economic value it just creates inflation okay now
01:01:00
if the government does the same thing but instead of a stimy check pays people to dig holes and fill them back up
01:01:05
that's the exact same thing no economic value just inflation now let's say the government pays people to create bombs
01:01:13
that create holes in other countries exact same thing no economic value for the country it just creates inflation
01:01:20
here why is that because the only thing that creates economic value in the United States is the production of goods
01:01:26
and services that people can actually consume and use and that they want and so federal spending on basically make
01:01:35
work projects or things that people don't really want or they don't use or even worse bombs that get dropped on
01:01:42
poor people in other countries none of that creates any value but I don't think it's a real economic dependency I think
01:01:48
it is just a special interest that keeps lobbying for all this stuff what about housing and Healthcare and education
01:01:53
because those are the three biggest line items and it's been inflationary across
01:01:57
all three of those line items in the US economy the federal government has stepped in to provide broader access to
01:02:02
housing broader access to healthcare and broader access to education and in the process that's why the price goes up
01:02:08
yeah you know there's that famous chart showing inflation by category and all the categories where the federal
01:02:14
government provides subsidies the prices have gone up and all the healthare and housing and the more the government
01:02:20
tries to subsidize it the more the providers realize a second we can charge whatever we want because the government
01:02:25
pay One customer and they'll always pay one customer that's got to be completely
01:02:30
reformed yeah here's a chart of all employees in government and I think this Fred chart includes all employees in
01:02:38
government which would include state and local and as you can see where yeah that's right it's 20 million local in
01:02:44
state three million Federal and then the math I was highlighting was just my back
01:02:49
of the envelope math where there's 50 million people that are on Social Security in the US plus if you do the
01:02:55
math on how government spending flows into employers into employees pockets it's about another 45 50 million people
01:03:04
that benefit from federal spending in the US we're already kind of at a point of maximal dependency if you will yeah I
01:03:11
mean if you look at this chart we have had 20,000 people working in government since the late 90s 20 million since the
01:03:20
late 90s it's it's now hitting a peak and the question is you know how far up does it from here it's 23 obviously the
01:03:27
country is growing as well each year so as a percentage we don't have the percentage but as a percentage of
01:03:35
Americans it hasn't grown that dramatically but it certainly feels like this could keep going in the wrong
01:03:41
direction the one thing to keep in mind from all the Dooms daying I would just offer you two data
01:03:49
points the first is that our debt to GDP either historically but also in relation to other countries R is still
01:03:56
relatively reasonable and what that basically shows is we have a lot more debt that we can issue which means that
01:04:01
there's a lot more deficits to run not saying that it's right yeah before the great financial crisis it was running at
01:04:07
50 60% our debt as a percentage of GDP and to your point jamath it's now at 1.2 it's
01:04:16
120% other countries have much higher so we have a lot more to run yeah so Nick if you want to just throw that up and so
01:04:22
it means that the countries on the right haven't failed they haven't done great necessarily but they haven't failed in
01:04:28
the way that we would Define failure and it's not as if the countries on the left
01:04:32
are crushing it the way that we would Define crushing it and so it's not clear that there's a real correlation between
01:04:39
debt to GDP and the performance over large longitudinal periods of times as a country that's the first thing I'll say
01:04:45
the second thing is if you actually look at all of these countries the thing to keep in mind is where are populations
01:04:50
growing and shrinking because at a very basic level jcal you you mentioned this earlier but when countries are shrinking
01:04:57
there's no fundamental ability to grow GDP and you're just debating how much it shrinks and the interesting thing about
01:05:03
the United States is we are the only Western country that is forecasted to grow at reasonable rates above our
01:05:14
replacement population and so you know by the end of this Century we'll be around 400 400 odd million individuals
01:05:21
and other countries will have been cut in half and so again there's some positive news as well now to your
01:05:29
earlier point the problem is politicians will use this as a reason to continue spending because they won't be forced to
01:05:36
and that's not a great thing but this is probably why the status quo would go on
01:05:41
for a very long time so grab the bag get your bag figure figure out what you're figure out what
01:05:50
your thing is I don't know man I just want people like voters to they're not going to get your bag like
01:05:59
everybody else problem we have is if okay Nick can you pull the the Fred spending chart we've talked about this a
01:06:04
few times well okay so if you look there there's a huge Spike because of covid because of all that covid stimulus that
01:06:11
was air drop in the economy I think we're now down to about 22% for 2023 MH but that that's a big number you know we
01:06:19
talked about how the absolute Max you can extract is 20% so what they should do is just freeze spending
01:06:26
until the federal net outlays as a percent of GDP is down to 20% that would be the the simplest thing such an easy
01:06:34
solution what's great about it is it takes out the politicians making this partisan hey there is a logical amount
01:06:41
of you know taxation we can do before we freeze up the productivity of the country which if you talk to anybody
01:06:50
when taxes get high people just start getting protecting their wealth I think you alluded to to that with strategies
01:06:57
as opposed to investing the hard part of it is that I mean look I think we should
01:07:01
do it you know 20% cap and and free spending till we get there the the hard part is that our interest expense keeps
01:07:06
growing because as our debt rolls onto more expensive higher interest bonds then our
01:07:14
interest expense is increasing just a few years ago our interest expense was only 300 billion a year now it's over a
01:07:19
trillion a year and that's just going to keep growing and growing and then the other thing that's going to grow is all
01:07:25
the entitlements related to to demographics so the country's demographics are getting worse and so
01:07:32
the entitlement expenses are going to go up so even holding it to 20% if we could
01:07:38
get there is going to take some work L I don't know if you read Larry Fink's letter from Black Rock it was really
01:07:44
good and you talked about you mean his 2030 business plan JL basically yeah it's his way of extracting value from it
01:07:51
but he did make some sing points in it as opposed to just him talking his book of why should do is retire your
01:07:56
retirement savings with black rock is a fair point but just getting the what age
01:08:00
do people retire at that discussion we need to have and we we're not having that as a country and then what
01:08:06
percentage of benefits do people get at different how do we incentivize people to stay in the workforce well at a
01:08:12
minimum don't you agree we should just allow people to opt out of Social Security and in a simple way of saying I
01:08:18
don't need it and I'll take care of myself use these proceeds for somebody else that could use it that who has
01:08:25
better need for absolutely yeah I mean and then getting people to participate in their 401ks you know at an earlier
01:08:33
age and defaulting those to on as of defaulting them to off there's a lot of small behavioral things we could do in
01:08:38
this country to get people saving earlier wow I uh I saw that Robin Hood was running a scheme where if you moved
01:08:45
your raw thyra they gave you 3% cash back and I thought is there an upper bound limit on what on how much you
01:08:53
could move over CU I wonder if I could you have to keep your money in there for five years yeah but that's okay I'm just
01:08:59
wondering like will they really write like a100 million check if you move Robin Hood just sent me something
01:09:06
so we had a portfolio company called X1 which was making a new like credit card and credit card app it was like awesome
01:09:13
I don't know if you guys used it anyway they got acquired by Robin Hood and so the guys here just sent me their new
01:09:19
Robin Hood gold card card yeah this thing is the heaviest card here just listen to drop hold on let me tell my
01:09:27
mic don't cut yourself don't cut your toe off apparently it's got $1,100 worth the
01:09:33
gold in it I have one coming myself and i' I'm proud to say I've sold no shares of my Robin Hood I keep all my Robin
01:09:40
Hood shares if my if I move my Roth iral they'll have to give me the whole building you give you a goal plated
01:09:46
building actually they they sent it to me in a uh Louis Vuitton with a Louis Vuitton wallet this is like unbelievable
01:09:53
yes it's got and look they got A50 got a $50,000 ad on the you got like a little LV wallet there oh I like it
01:10:02
there you have it folks send a Louis Vuitton wall get a free $50,000 ad on the Pod sign up now for your Robin Hood
01:10:09
gold yeah but what is it a credit card yeah it's a credit card it's a credit card yeah their their their whole plan
01:10:14
was always to provide the full Suite of services do you guys carry credit cards and
01:10:20
money do you have any money forting my wallet but I always carry money you have money I
01:10:26
yeah like to tip tip people or something always have some cashish never you always got to have a
01:10:31
cup of hyy just in case it's a really bad habit you got to keep a couple of hyy in the bag you put the 100 on the
01:10:38
outside J count there's a bunch of ones no we don't do that you get caught doing that in Brooklyn you get your ass
01:10:45
got the Bol on the outside no no no no you could what we do is we get rid of the ones the fives and the tens you just
01:10:50
get rid of those you don't even keep them in circulation that's that's the best line um I get cash when I go to
01:10:57
Vegas but that's the best line ever was this woman comes up to Sammy Davis Jr and she says hey uh C can you um can you
01:11:07
can you break uh you know this whatever amount of money and he just pulls out aund and gives her a 100 and she says no
01:11:15
no can can you make change he says that is change baby that is change that's what he considered change was the Hy
01:11:21
there was a story out of juu so you know Triton poker yes okay I'm not going to say who it is but there was a guy that
01:11:28
was playing the high stakes cash game and apparently so he lost like 8 million bucks okay he tipped out 450k in 25K
01:11:39
chips to like the staff and like the person giving him a massage and stuff so it apparently became a free-for-all
01:11:45
trying to get into this game where everybody was like are we pulling tips are we pulling tips and they were like
01:11:49
no we're not the leag tips just Flags he was tipping off Flags wow that is incredibly incredibly
01:11:58
generous all right science Corner rapid fire you wanted to get to Coco here we are we're at CoCo
01:12:08
freeberg you have the you guys you guys asked about Coco you want to pull up the
01:12:12
commodity price chart on Coco look at that okay this is not cocaine this is cocoa this is chocolate precursor to
01:12:19
Chocolate not COC this is chocolate as you guys can see from this chart Coco's moved in price from about 2,000 a ton
01:12:26
which is where it normally trades at to $10,000 a ton 70% of Coco is grown in West Africa in Ghana and Ivory Coast and
01:12:37
in that area they've been severely hit by this ELO weather year that we're just kind of coming out of so here's all the
01:12:45
cocoa production 73% of it's in Africa mostly in Ghana and Ivory Coast that's where most of the world's cocoa beans
01:12:51
are produced cocoa is grown from the cacao tree which is about 10 ft tall these bean
01:12:57
pods you take them down you roast the beans crush it you make cocoa when you eat a Hershey's bar for example 11% of
01:13:04
that bar is ground up cocoa powder so cocoa is like the critical ingredient all the chocolate products we consume so
01:13:10
we had this massive El Nino event last year so here you can see sea surface temperatures so in Q4 of last year El
01:13:17
Nino spiked like crazy and that caused a lot of rainfall to hit the west coast of
01:13:23
Africa and as a result this fungus was spread in cocoa trees there's a fungus called blackp disease and this fungus
01:13:30
spreads when rainfall hits the ground and it splashes up gets in the tree and then the tree has really bad yield and
01:13:36
the Coco production goes down so now if you look at the Coco production out of Ghana you can see that we've seen a like
01:13:42
50% rough decline in Coco production on the final bar chart so that's the effect so when that happened
01:13:50
basically everyone started to Corner the market so all the buyers of Coco went in
01:13:53
and started buying Coco like crazy and then all the short sellers got squeezed because there's typically a
01:13:58
pretty good balance on the short and long side in the market so the short sellers got squeezed and it caused this
01:14:03
big parabolic jump in price and that's where we're at today the chocolate companies again 11% of chocolate that
01:14:09
you're buying at the store is made from this cocoa powder uh they're talking about cutting the size of their
01:14:14
chocolate bars raising prices and starting to use other ingredients so you'll start to see that happen in the
01:14:18
shelves in the next couple of months but this is the big news in the commodity markets right now is this this parabolic
01:14:24
spike in Coco prices and you know consumers will get hit with high prices and smaller
01:14:29
chocolate bars isn't there a scene in trading places the OJ Futures orange yeah orange Futures that's right they
01:14:36
squeeze the orange market that's right that's basically what's happening Coco so there was a bad weather event yields
01:14:41
dropped by 50% so we got half the production and then all the Traders came in and they squeezed the short side of
01:14:47
the market and price spiked so that's kind of what's gone on if I had a dollar for the the number of times a fungus has
01:14:54
ruined a good time man well you know it's interesting I was looking at this and I was worried about
01:15:02
chocolate prices here it comes I was I was really worried about chocolate prices specifically I'm I'm on Amazon
01:15:09
right now and these edible anuses Uranus prices have gone up somehow so these chocolate Uranus pric are sky
01:15:21
find how did you find that I just typed in Uranus I Ted you freeberg Uranus and chocolate and this came up it was the
01:15:29
number one result there it is Uranus chocolate prices are going up I know what I'm
01:15:37
getting you guys for Christmas this year well it's you notice it was priced in euros not dollars yeah it's not
01:15:42
available in America it's it was coming from Belgium I guess they got some serious Kink going on over there yes if
01:15:48
you want a chocolate Uranus it's it's there for you I mean I just was like Google SE search chocolate
01:15:56
Uranus and yeah I don't recommend you make that search if you're listening to the Pod well when I when I heard there
01:16:03
was a spike and Coke prices it made me think of [Laughter] this say hello to my little friend I
01:16:14
went the last time when's the last time you watched Scarface beginning to end not like just caught aou I watched it
01:16:21
yeah it holds up yeah yeah I mean man is by the way I saw Dune 2 jamat have you seen it no no don't say anything because
01:16:29
I need to wait till it comes to streaming okay I loved it I'm going back to see it I'm going back to see it again
01:16:35
I'm going to see it at IMX so you're with me I didn't hate it I just think it's overrated like Spielberg said it
01:16:41
was like one of the greatest moments of his life one of the greatest movies I've
01:16:43
ever seen I thought no it's completely overrated I'm not saying it's bad it's just not that scale of one to 10 give it
01:16:50
a number I will do anything to have this guy do D3 he's talking about whether or
01:16:54
not he should do it he like I'm only going to do it if it's going to be better than Dune 2 you know
01:16:58
he's Canadian guy yeah he did sakario sakario and the arrival like he's honestly one of the top three directors
01:17:06
of our no den v v i don't know that the hero in that movie is like this soy boy type I mean I
01:17:19
don't really believe that he's leading an army it's not credible you know the story I I read a lot about you know
01:17:25
these were all like short stories published in magazines by Frank Herbert calized they were calized and he was
01:17:32
really into drugs he was really into mushrooms and so the spice came around from the mushrooms makes sense it was
01:17:39
written in the 1965 when there was this idea that we needed to move toward zero population growth because the population
01:17:46
Spike on Earth was going to cause resource uh constraints and we were all going to die if you guys remember this
01:17:52
and so there was this big movement uh it's what launched the hippie movement did they not have math back in 1965 yeah
01:17:58
they they really did think this and that there wasn't going to be improvements in
01:18:01
productivity so there were limited resources the world was going to run out of land and the ecology or the
01:18:07
environmentalist movement kind of sprung out of this effort so a lot of what he wrote about was the ecology and the
01:18:13
connection between the fungus and taking mushrooms and better understanding the world around you so so much of this was
01:18:19
rooted in a hippie movement sack to your point when he wrote These original they
01:18:24
expl what spice is in Dune no and it was tied explain why when he was intervie when Frank Herbert was interviewed later
01:18:32
he talked about how it was meant to be about a fungus is this the greater of life and this greater of life and he
01:18:38
wanted spice to be representative of mushrooms of fungus zocon got it and it was like it opens your mind and you get
01:18:44
more connected with nature and all this stuff so it was rooted in that but they never really get into details on it in
01:18:49
the book so this film to you freedberg is a 10 out of 10 out of 10 okay I was about to I was gonna give it an eight
01:18:56
and a half out of 10 I I think the first half was slower I'd say like the second
01:19:01
I mean there like jam I'm not ruining anything I really like Zena I think she's super
01:19:06
cool I agree with you socks I'm not a huge Timo shalam fan I think he's too skinny is it his name is it the name or
01:19:13
is it the no I grew up in Canada with a lot of French people so I'm cool with that I don't
01:19:18
like he's just too skinny like do a couple push-ups or something it's the Vibes general what do you give it sax
01:19:26
and um yeah i' give it an eight and a half I won't give it a nine I'll give it eight and half what do you give it saak
01:19:31
give it a number I'll give it a six and a half six and a half now if it had a proper lead who is more than 120 pounds
01:19:38
who a good yeah who's a good lead for you SX where you would have given it a nine exactly the same everything is the
01:19:44
same without a soy boy oh Jake Gyllenhaal is it is that is that more of a SX night like Ultimate Fighting body
01:19:51
Jake Gyllenhaal he's guys I mean who Tom Cruz Ryan goling ran what movie is a 10 out of 10 for you
01:20:02
I don't know you like a young Russell Crow or something right don't you but have you seen the original Dune that guy
01:20:09
if you think that this guy oh my God a David Lynch movie yeah David Lynch movie good actually yeah it was a little I
01:20:17
mean it was similarly it was like a soft protagonist what is is movie yeah what's a 10 out of 10 for
01:20:24
you s Gladiator Good Fellas Casino sakario Casino is incredible sario is incredible
01:20:33
all those are good all those are good tast I might give this a seven I may I got to see it again May I'll revise it
01:20:39
up to a seven but it's not more than a seven in my book isn't there like a sakario 3 coming out I hope so sakario
01:20:45
one and two are so rewatchable ultimately rewatchable sario 1 was unbelievable unbelievable sario 2
01:20:53
does it for me at the where you hear theise of like what are those Locs oh my god when they're in traffic
01:21:02
and the cars are parked yeah yeah that scene is like to me as like the Bane scene in Dark Knight yeah and and also
01:21:13
when he's at the dinner table of the drug lord yeah oh God that is intense I think that film has probably the best
01:21:22
Cadence of any modern film like the the way he kept pacing that film did not turn off for one second you were hooked
01:21:29
from beginning to end and you could watch million like Godfather was also like that the pacing in Dune 2 is
01:21:34
terrible I mean he spends all this time in the wilderness and then the oh you haven't seen it yet then why
01:21:40
are we talking about for to come to stre we had this whole conversation last time does anyone
01:21:46
else think that the arrival is like one of the best films of Our Generation no I
01:21:52
mean it's good but it's not I think it's good like such a a mind-blowing film oh SX you know maybe maybe like a a
01:21:59
young buff Matt Damon no uh M Dam I don't really see him in the RO uh okay how about um what's that
01:22:11
guy's name Adam Driver yeah Young Adam Driver oh yeah Adam Driver would work he could do it he
01:22:17
could do it he that's kind of like a Kyle mclin type pick you know he's a little exact
01:22:22
little yeah yeah but not so skinny yeah I mean the idea that he's going to win all these fights and he
01:22:29
weighs 120 lbs wet out of the showers makes no sense like kick his ass Zena does doesn't she kick his ass basically
01:22:39
yeah I mean let's not give it up here no that scene with best opening scene of a
01:22:45
film what do you got sax what's your best most intense scene of of any film any opening scene
01:22:53
most intense I mean the Joker bank heist scene is incredible that's good Danel Le
01:23:00
in the shaft of There Will Be Blood absolutely climbing out of there with the broken leg oh my God that sets the
01:23:07
tone that's who he is as a person that's everything that's that's your spirit animal that's it it you're bitter and
01:23:13
angry and you have a you have a competition have a competition in me I don't like to see others succeed I'm
01:23:21
David fredberg I'd like to see the world burn strike strike actually it's true it's
01:23:28
accurate really accurate it's your favorite movie reason yeah you admitted Own It
01:23:35
own it just own it I drink your milkshake keep the lie alive I do have a competition in me yeah it's funny the
01:23:41
only like opening scene of a movie that I really remember is like Reservoir Dogs
01:23:46
you know when you talk about like an opening scene that's memorable Pulp Fiction well no what what
01:23:53
was the opening oh the open scene pul fiction is pretty good too where the robbing the diner yeah the diner it's
01:23:57
like you're you're hooked on the dialogue right at the beginning yeah yeah probably some Tarantino movie
01:24:04
there was nothing like that right when that came out you're like what is this and then you're just like actually the
01:24:07
opening scene of Good Fellas is really good where the guy's kicking the trunk from the inside they think he's dead
01:24:16
yeah yeah Saving Private Ryan also I'd say he pretty great Jam if you want to go see
01:24:23
it at IMAX you got put heat in that on that list jaob heat amazing yeah I mean heat is definitely top 10 they're coming
01:24:30
out with heat too by the way they wrote a book and then it's coming out I can't wait for heat too and Gladiator to where
01:24:36
where do you go to see the IMAX oh they have a good one in the stud in San Francisco the Metreon is a 70
01:24:44
M ginormous it's and they're doing the full print at that theater of Dune 2 so it's like the ACT he shot the thing in
01:24:51
70 mm IMAX I expensive like absurdly expensive absurdly he spent like $190 million on this film it's fantastic
01:25:01
everybody go see dude to Zach what what films do you have coming out anything interesting you producing anything
01:25:06
what's in the production line you bought the rights right to something we released Dolly land earlier this year
01:25:10
with Ben Kingsley playing Dolly yeah and actually Elon just posted a long reminiscence about how we made Thank You
01:25:19
for Smoking which was kind of cool did you guys see that nice no I didn't see it he tweeted it or someone TW TW did
01:25:24
like hey did you know that like Elon mus and Peter teal and Max Lin and David sax
01:25:29
produced this movie Thank You for Smoking because it's been like almost 20 years and so I remember people don't
01:25:36
know about it so anyway that someone tweeted it and Elon responded there's like a really crazy story behind it and
01:25:40
they were like oh tell us and he wrote up a long tweet explaining how he got the rights and his memory was actually
01:25:46
really good I was like impressed that he remembered all these details from 20 years
01:25:50
ago yeah I tweeted back like look if if Jason wrightman's up for the sequel let's do
01:25:55
it Ryan's doing pretty good he's doing okay all right everybody for the Rainman David Sachs chth poly ho the chairman
01:26:02
dictator the Sultan of science I'm the world's greatest moderator blah blah blah and we'll see
01:26:10
you oh and by the way if you're listening to this go ahead and check out Allin podcast on YouTube and subscribe
01:26:18
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01:26:22
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01:26:28
and we're going to try to have as many people at the million subscriber party as possible when we hit I think 600,000
01:26:35
we're going to do a live Q&A on the channel so really cool Milestones coming up for the Pod and we'll see you all
01:26:42
next time bye-bye bye-bye love you boys let your winners ride Rainman David and instead we open source it to
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