00:00:00
when I wasn't able to use the r word I would use Dey Chente for two people Jason and and friberg's dog Marshall
00:00:08
freedberg oh come on I can't stand Marshall freed that little bastardino jumps on the table eats the nuts the
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worst the worst I hate Marshall freedberg I hate him I can't stand this bastard guy look how he sits like a
00:00:25
[ __ ] sits like he sits like a Dey chanted look at this dweeb and this now Nick show them my dogs
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beautiful beautiful dogs Valentina zanini she's the breeder of breeders look at these two beautifully elegant oh
00:00:42
look at look how look how well behaved they are you don't see them jumping on the table to eat the main course freed
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no no Marshall almost ruined our Christmas dinner this is why I'm holding a real grudge against Marshall freedberg
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he at off nuts no and Alison [ __ ] Allison off guard she's like Marshall freedberg get off the table I just love
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that he's got a full name Marshall Eugene freedberg let your winners ride Rainman
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David and instead we open source it to the fans and they've just gone crazy with
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[Music] it all right everybody welcome back to the number one state SP I'm sorry Allin
00:01:25
podcast in the world the number one podcast oh sorry stray bullets here we go back on the program our guy Gavin
00:01:32
Baker is here you know him from a treaties management does private and public 4 billion under management and
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lot to talk about with you gb1 good to have you gb1 is Here solo Doo cor weave IPO happening soon uh by the time you
00:01:47
get this and Nvidia you were there at Nvidia you were the one analyst Gavin that Jenson pulled up you're loved by
00:01:57
Jensen what's it like to be loved by Jens tell us everything well so first he did um there
00:02:04
was uh Alfred F was from squa MH and then they had a a nice sside guy whose name is escaping me at the moment
00:02:13
but it is technically true I was the only public Equity investor on the buy side that Jin Jensen asked I've known
00:02:19
Jensen for 25 years he's he's kind of the same guy he ever was like just maybe slightly calmer Gavin can I ask you like
00:02:26
all this stuff where they talk about the balance sheet questions that some folks have
00:02:35
about Nvidia some of the accounts receivable issues and stuff is there any legitimacy to those issues the round
00:02:42
tripping like what's the what's the real story of someone that that peers into that p&l and understands it yeah so we I
00:02:49
guess maybe take them in reverse order I really don't think like if if Nvidia had
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not not put any money into cor weave not put any money into kind of other of these neoc clouds I don't think it would
00:03:02
have impacted their revenues at all at all they would have sold more to meta and more to more to meta more to
00:03:12
Amazon more to Microsoft so the reason they did it is even three years ago it was a very
00:03:21
stable three-player oligopoly from the cloud computing players in Amazon Google and Microsoft
00:03:28
and if you're Nvidia that's not great to have just three big customers those big clouds particularly
00:03:35
in 2023 when there was such a rush to get gpus they each kind of want to do their own kind of custom version of an
00:03:43
Nvidia server and Nvidia by giving kind of like a standard reference design which someone like cor weave bought to
00:03:51
cor weave you got gpus in the market a lot faster and when you use Nvidia reference design it's generally smoother
00:03:57
and easier to stand them up and so the big three kind of cloud computing you know
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hyperscalers their incremental share of Revenue went down and that was nothing but good for NVIDIA because they now
00:04:13
have kind of a more fragmented base of buyers who have less power over them but what does that mean Gavin when like the
00:04:20
accounts receivable jumps from a billion five or so to like 5 and a half billion
00:04:24
year-over-year is that concerning or that's just business so look it's never good good but if you think Nvidia has
00:04:32
gone through the biggest product transition in history in terms of Hopper you know this is a business doing tens
00:04:39
of billions of dollars at scale there's never been a product transition like this in the history of semiconductors
00:04:45
going from Hopper to Blackwell you know kind of the 2022 generation GPU to this one the only precedent for this on
00:04:53
planet Earth is the iPhone and there's something called the Osborne effect which is you know when Apple
00:05:01
comes out with new iPhone for the three months before nobody buys the new iPhone and I think the only reason
00:05:08
Nvidia was able to grow through this product transition is because of reasoning models like deep seek which
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are just so compute hungry and this product transition does come back to the days receivables the cume receivables
00:05:19
now is like23 billion yeah it's never good when accounts receivables go up but if this is the most understandable time
00:05:29
for it to happen in a product refresh cycle you're saying yeah and because a hopper server you know it's a rack it's
00:05:36
whatever it is 7 feet high it weighs 1,000 lbs it consumes 60 kilow which is 60 American OHS and it's air cooled so
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you cool those gpus and the big problem gpus one of the biggest is they melt you
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cool it with air Blackwell weighs 3,000 lb so three times as much the rack you know it's 8T tall
00:05:56
maybe 5T deep or 4 feet deep 300 ,000 lb and it consumes 120 KW so twice as much
00:06:04
power and roughly kind of the same footprint three times as much weight and it's liquid cooled so this is like an
00:06:11
iPhone upgrade cycle you know it was like it's still a pain that we went from you know lightning to USBC you know I'll
00:06:18
grab a cord and it'll be lightning instead of USBC this is like an iPhone upgrade cycle where to get the new
00:06:24
iPhone not only do you have to change your connectors you have to put in a new generator you have to put in a new
00:06:31
boiler and a whole house humidification system you know to kind of make it work so it's a Monumental product
00:06:39
transition and I think that is a lot of why the receivables went up you know they're
00:06:46
recognizing Blackwell Revenue you know while it was still kind of getting into customers hands
00:06:54
um if that Trend continues past the July quarter then I would say hey that's reason for concern but this is a very
00:07:04
understandable time for that to happen from my perspective so basically the summary is AR accounts
00:07:10
receivable builds as you go through this very complicated product transition but
00:07:16
then at some point it Peaks and then you start to work through all of it and it moves off balance sheet basically gets
00:07:22
recognized and you move forward and so then that AR should shrink and just to clarify that that's accounts receivable
00:07:28
that's the money owed to you by by customers for the audience who might have a question what they are exactly
00:07:33
and the reason they're not collecting it is because they haven't delivered it I mean the county gets very complicated
00:07:38
with these systems but yes I mean they have delivered it and they've recognized the revenue but maybe the customer is
00:07:47
saying hey we're not going to pay you until X you know until we get them plugged in
00:07:52
and working I mean who knows what it is got it because it's a new thing total accounts receivable it's just that here
00:08:02
the accounts receivable have gone up more than sales and that's just a function of the complexity of this
00:08:07
product transition the other part of what I would say is the first part of what you're saying is very similar to
00:08:12
what Intel did to scale their chip dominance in the 80s and 90s with this Intel Inside program they didn't really
00:08:19
need to do it probably in hindsight but it helped them support an ecosystem and it helped diversify their buyer base so
00:08:27
that fewer people had power over them and so a lot this quote unquote round tripping from your perspective is
00:08:32
diversifying the ownership pool of Nvidia is what you're saying absolutely and sending Nvidia gpus to people who
00:08:39
are adopting invidious reference architecture which they believe is the best architecture for those gpus whereas
00:08:47
each hyperscaler has their own slight tweaks to that server um that hyperscaler does it so it looks more
00:08:54
like their other servers but maybe doesn't run quite as well as the standard in video reference architecture
00:09:00
with all of their chips not just the Nvidia gpus but the Intel Insight analogy is interesting I had not thought
00:09:06
of that thank you jth well it he is definitely doing Keynotes like Intel did and trying to Brand the actual names of
00:09:15
the units which is yeah it was interesting Pentium inside people would go and buy a computer does it have a
00:09:21
Pentium and which Pentium does it have and now Apple's doing that same thing with the M4 you know series and people
00:09:27
are actually asking questions like you know so there is something to it that maybe some portion of the consumer base
00:09:34
wants to know what's inside right and and doesn't cost much to brand since we're here let's talk a little bit about
00:09:40
the cor weave IPO cor weave is going to go public on Friday we tape on Thursday so when you listen to this episode you
00:09:48
will have the actual data on what happened with their IPO they're going to raise 1.5 billion they're a neocloud
00:09:54
neocloud means not just cloud computing but a new Cloud thus Neo and company has
00:10:01
really been growing quickly it was reported they wanted to raise 2 billion and I guess they stepped it down to 1.5
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billion at a 23 billion doll valuation they had two billion in Revenue last year so they're up 8X and they've got a
00:10:13
lot of debt that's the other issue with core weave that people note almost 8 billion in debt and one customer
00:10:19
Microsoft accounts for over 60% of their revenue always a bit of a a red flag there as Troth mentioned Nvidia accounts
00:10:26
for 15% of their revenue and they own 6% 6% seems small enough to not make a difference so Gavin I guess what do you
00:10:33
make of this company cor weave and their timing what it says about the markets because hey this is the biggest IPO
00:10:39
we've had in a bit I think maybe the last ones that were notable were Reddit last year and a couple of other
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companies got out obviously stripe hasn't gotten out so is this a major Milestone or are they going out because
00:10:53
they have to go out because of all this debt and then this is all against maybe a backdrop of did we
00:10:59
overb and are these language models going to require as much Hardware uh as we thought last year so we're definitely
00:11:08
not overbuilt yet like since deep seek came out like what has happened since deep SE car1 came out is China is buying
00:11:17
every GPU they can one of the largest Chinese server manufacturers warned last night that there's about to be a
00:11:24
shortage of gpus in China the price of memory DM goes up every day so we're not overbuilt
00:11:33
today Point number one and you know open AI yesterday said that they are gating their new image generation service
00:11:40
because they don't have enough gpus so we're not overbuilt yet Blackwell is going to be a very successful product
00:11:46
cycle there is a little bit of a prisoners dilemma where you're going to spend on Blackwell
00:11:52
almost no matter what because if you don't you're afraid that you seed a big advantage to a competitor you know if
00:11:57
you're meta and you don't spend Google spins and their AI is a lot better than yours you're worried you may not catch
00:12:03
up I would say that that's already the case yeah that's already the case but here this is a brand new architecture
00:12:09
which is a lot I mean not only is it really different as we went through it is a lot better but now I would say all
00:12:16
these gpus they're hard to get them working at the beginning like right now Hoppers are you know finally tuned
00:12:22
everybody knows how to work with them Blackwell you know it's almost like you're you're skipping ahead you know
00:12:29
it's like imagine each one of these gpus is a Formula 1 car you know now you skipped ahead 10 years in the future and
00:12:34
you have to kind of learn how to drive that new Formula 1 car and it takes a while till you drive it as well as the
00:12:40
old one so any other thoughts Gavin on the core weave IPO which will have happened by the time people listen to
00:12:46
this episode yeah I would say you know the sentiment on X investors on X are pretty negative on core weave I think
00:12:53
there's maybe a little bit of you know negativity in the market they had to you know reduce the range lower the price
00:13:00
and everyone is very convinced this is a commodity business loads of debt loads of capex you know one really
00:13:06
concentrated customer and that they're completely undifferentiated and I guess I would
00:13:11
just make a point which is in America if you can pick any category any retail category and if you can run a thousand
00:13:20
stores in 50 different states with different preferences and have those stores well lit clean stocked by
00:13:28
friendly employees es with the right stuff in stock you will create a business that is worth you know well
00:13:35
over 10 billion and that's sounds easy but very few companies have been able to do it I think what may be
00:13:42
underappreciated about cor weave is it's actually really hard to run these big training clusters everybody thinks it's
00:13:50
easy but to synchronize ttin of thousands of gpus where they're melting or cables are being
00:13:57
unplugged and you know you lose a bunch of training data when it happens I just think it's
00:14:03
not it may not be the commodity that everyone thinks it is and it may turn out that it's much harder to do than
00:14:10
people think would there be analogy for that wouldn't there like people thought AWS would never work at the beginning
00:14:16
they were like who's going to trust Amazon with their compute and it was difficult and it you know developers
00:14:22
didn't understand exactly how to abstract their services into the cloud yeah the world was convinced AWS well
00:14:29
lot of the world was convinced AWS was a terrible business for the first few years you know when Microsoft announced
00:14:33
they're going to transition to the cloud it was very controversial because you go
00:14:37
from a capex light model to a capex heavy model so you know Wall Street consensus has been wrong before and I do
00:14:43
think core weave runs these big GPU clusters as well as anyone and there aren't that many people
00:14:51
on planet Earth who can run them well and you know it's kind of easy you can just look at the npv of their contracts
00:14:58
and the asset value and so everyone you know who's kind of you know confidently putting out all the negatives here like
00:15:05
I just think there are some offsetting positives that it's good for you know I think people to be aware of and consider
00:15:13
that's all I think it's a good company I I would I would second I mean I think it's a and it's a great business and I
00:15:18
think they deserve to be successful totally true and it's great to see a competitor to the existing
00:15:25
three or four clouds that are out there and uh it's great to see a company go public I mean m&a with whiz and now core
00:15:31
weave going public rol lenina KH is over you got to give the administration a lot
00:15:36
of credit for maybe removing the roadblocks to m&a and IPOs or at least people perceive that so I don't know if
00:15:43
perception becomes reality here but does seem like m&a is a bit on Far yeah Gavin
00:15:48
and and people are talking above and beyond Wiz I mean cor we bought weights and biases which I think is a really
00:15:53
interesting acquisition for them that kind of kind of further differentiates them and maybe decommodify them a little
00:15:58
bit uh but there have been quite a few acquisitions by big companies of smaller companies in the last month and I think
00:16:05
as none of the companies that have been bought have been public maybe it's flying a little under the radar but it's
00:16:10
happening in in I think a you know an accelerating way and I think this would be you know very good for the market and
00:16:17
animal spirits and everything that we care about do you think that there's any issues there was
00:16:23
a a bunch of companies added to the export control list two days ago some were in quantum Computing generally a
00:16:30
lot of it though was in the Nvidia ecosystem so I think that the the US government is really trying to make sure
00:16:36
that these next gen gpus don't go directly to China but also don't go to countries that could then redirect them
00:16:41
into China did you get a chance to look at that or did your team look at that yet oh yeah and I think this will be
00:16:47
part of you know the upcoming negotiation between America and China but it is hard you know it's like if we
00:16:54
can't you know if America cannot keep illegal drugs out of you know out of our own country these gpus are arguably
00:17:04
dramatically more valuable per unit you know like a Blackwell is like you know the size of this and it's just hard
00:17:14
particularly like you know America we're trying to keep drugs out here China is trying to bring the
00:17:20
gpus in and it's kind of significantly you know I think harder to prevent than than you know smuggling
00:17:28
of drugs now everybody does their best but um yeah the United States I think it's always going to be kind of a game
00:17:35
of cat and mouse until you get some sort of grand bargain and right now they they're allowed to sell certain kinds of
00:17:41
gpus into China and I'm sure they'll be should we be doing that Gavin is is this
00:17:46
going to be an effective strategy you know if you were advising the president we just say ah just let Nvidia sell them
00:17:53
it's a Fool's eron to try to stop them because they're all going to Singapore or wherever Vietnam and and routing
00:17:59
their way around I think we're putting enough friction into the system that it does theoretically give
00:18:07
America an advantage at the cost of creating tremendous incentives for China to develop their own semiconductor
00:18:18
ecosystem and you know pressure to kind of you know Necessities a mother of innovation and these export controls are
00:18:27
creating an immense incentive for China to be really algorithmically Innovative and you saw that with deep SE where
00:18:32
there were some real algorithmic Innovations yeah so said another way if we squeeze too tightly on letting them
00:18:40
buy the Nvidia chips they might make a better Nvidia I mean become resilient I think they're doing it now they're
00:18:47
trying now so that's well they're trying but I guess what are the chances they succeed in your mind Gavin in creating
00:18:52
something competitive with or better and then what would that say about the AI race in the next five years I think zero
00:18:59
I think it's really really hard but over the 10 years who knows and if you're the
00:19:05
CCP 10 years isn't that long if you're America 10 years is an eternity yeah they're thinking in centuries and we're
00:19:12
thinking in decades yeah that's probably correct hey um let's pivot over to AI agent since we're in the AI and
00:19:19
obviously there's other big topics this week we'll get to you doing politics and
00:19:23
uh signal and all that kind of good stuff but we have a company that seems to be you know having a
00:19:32
moment it's called Manis uh m n it's currently in private beta but they're creating agents and we've been talking
00:19:40
about this agentic revolution basically little you know jobs going out we used to call them Crown jobs back in the day
00:19:47
but going out and doing things for you and it seems to be working and it's pretty impressive what do you think
00:19:53
about this company specifically if anything and are we getting to a point where we're going to have the same chat
00:20:01
GPT 2.5 moment but with agents and then if we do have that Gavin what will that look like in terms of employment and how
00:20:09
companies are run look I do think uh if agents materialize as a reality and you know Manis is maybe a little bit of
00:20:18
a chat GPT moment for that I would say open Ai and anthropic anthropic developed something called the model
00:20:24
context protocol that openai just adopted I think it will become a standard and it makes it really easy for
00:20:31
an llm like stripe can just integrate with mCP and then any llm that uses mCP can you know interact with
00:20:41
stripe and this is solving a big big problem for agents um in terms of just making them you know much easier to use
00:20:49
much more standardized but if agents become a reality one the ROI on AI and Blackwell
00:20:58
is going to be very high and two what will it's not good for human employment but what will be kind of I
00:21:07
would say the rate limiting factor is just compute in a world where we all have agents doing things for us all day
00:21:15
long it's going to be a long time before we have enough compute in the ground for
00:21:21
that to be a really really widespread reality and I think that's why you know open AI was talking about pricing their
00:21:27
first agents at ,000 $20,000 a month like this Roi on AI question I think to me really does come down to agents in
00:21:35
the short term freeberg your thoughts on these agents and the impact they could have on running businesses employment
00:21:43
and just generally efficiency we now starting to have some standards mCP stands for model context protocol your
00:21:51
thoughts freeberg on how this might impact you know architecting a business which you're doing right now with ohal
00:21:56
how how might this change how people work on a day-to-day basis let's maybe give some examples for the audience look
00:22:03
I'll take a slightly different view than Gavin I've said this in the past but maybe I'll try and contextualize it a
00:22:11
little bit I think that the big unlock with these kind of agentic systems is not necessarily about replacing the easy
00:22:20
human tasks which everyone kind of thinks are kind of the obvious application of them I think what we're
00:22:27
missing is is the ability to unlock really complex tasks that are not really manageable today I
00:22:38
can't come up with a very Grand project planning exercise with the team I have today I have to go hire 30 people let
00:22:47
let me give you an example I want to go build a plant breeding facility under the ocean okay so how do I do that so to
00:22:56
do that today I'm like well I got to go hire people that under understand oceans
00:22:59
I that understand engineering that understand how to do underwater engineering I have to hire material
00:23:04
scientists I have to hire physicists I have to hire construction project planners there's a whole group of
00:23:10
complicated people I would need to kind of put together to be able to kind of execute on that opportunity but now a
00:23:16
smaller group maybe three or four people or two people can say okay let's use these agents to help us build that
00:23:22
project plan and spec out every step of the process Define how much everything will cost what workloads are needed
00:23:28
who's going to do what so suddenly that difficult project becomes a reality here's another good example the
00:23:34
California highspeed rail program that's ballooned to this hundred billion doll what if we had a agents organizing and
00:23:39
running that program well maybe the cost of that program and the reality of that
00:23:43
program makes it a reality now so it suddenly becomes a program that we launch we get it done we build this
00:23:49
railroad whereas all the people all the complication all the confusion has and whatever grift has been going on has led
00:23:56
to a hundred billion dollar balloon budget with no outcome so I think complex projects can actually be tackled
00:24:01
in an easier way that actually unlocks a tremendous amount of building a tremendous amount of opportunity for new
00:24:08
employment for people to come in and small teams of three or four to get hired that can now do the work of three
00:24:14
or 400 really deeply sophisticated highly technical people with a very small less technical group so I think
00:24:20
there's going to be a tremendous amount of opportunity in biotech in Engineering
00:24:27
in Manufacturing in Urban Design in transportation and on and on and on where small groups are going to get spun
00:24:35
up that can use these systems uh to do really complex projects it's less about like oh you're going to replace call
00:24:40
centers like sure maybe but like what are we going to be able to do with these things that I can't even think about
00:24:45
doing today chamath let's level this up and just talk about the bigger picture which is our giant rival in
00:24:53
China they're actually catching up in some cases exceeding us if they get to AI first and then are able to execute on
00:25:01
this given their top- down controls uh given the size of their population given their advantages in manufacturing that
00:25:08
we're seeing now with xiaomi making cars you know what uh byd is doing in self-driving and cars what we're seeing
00:25:17
now with chips versus Nvidia it's kind of getting set up that almost everything we're building here in the US China's
00:25:24
copying at a very fast pace and then exceeding so what's at stake here big picture and then I guess we'll then look
00:25:31
at why what should our what should our philosophy be you know on in a geopolitical way yeah let's just do an
00:25:38
economics lesson why does anybody invest they invest because you let's just say a
00:25:44
dollar you want to generate a rate of return that's better than all your Alternatives and the riskier it gets the
00:25:52
more of a return you want right that's the basic idea so if you invest a dollar in bonds you can get five or six% if you
00:25:57
invest a dollar in an early stage startup you want to get 50 or 60% returns okay that's that's obvious but
00:26:05
the return that you generate is in part driven by how profitable is this company
00:26:11
obviously and if you have a 300 person group of people that has to do something it's a lot harder for them to generate
00:26:18
profit and then to generate a rate of return than it is if you have two or three people so the
00:26:26
Chinese strategic comperative is no different than small startups versus an incumbent which is to be as hyper
00:26:34
disruptive economically as you can so I think the big risk is not necessarily Chinese but many of these Alternatives
00:26:44
will come from China which is to say that where are the incumbents most of the incumbents are
00:26:51
American companies if you look at SAS software that's a perfect example of where there is trillions of of dollars
00:26:58
the the software industrial complex as I call it right that's like a three and a
00:27:03
half four trillion dollar industry it grows by 10% a year so every year it's adding 300 billion of quote unquote
00:27:12
Enterprise Value is that value that is being created I think a lot of the customers would say no so if you're a
00:27:20
startup or if you're China what is the most disruptive thing you could do well you could take a three-person team to
00:27:28
disrupt a 30,000 person team and blow a hole right in the side of that trillion economy that's the big risk so whether
00:27:35
the risk comes from here whether it comes from the Chinese I think what you're seeing is that if these agents
00:27:41
can scale the Opex the actual load of making something will go down by an order of magnitude and that is and maybe
00:27:50
even two orders of magnitude that is incredibly disruptive because the existing incumbents cannot compete with
00:27:57
that cost scale and Gavin to just bring this around the horn Here China is playing a different game and obviously
00:28:05
there's other competitors on a global basis but they are subsidizing for example their cars and their entire car
00:28:11
industry so the margin of cars here in the United States and Germany and Japan that's their opportunity they don't
00:28:17
actually need to make a profit on it they could just break even there are cars now 10 20 30 $40,000 cars now being
00:28:23
made there so this then leads us to oh my goodness will Americans buy these we're pretty great customer Will trump
00:28:32
block them with tariffs so let's make the jump what would the Tariff policy be if as chamat points out here we've got
00:28:41
this big broadside of our Battleship that they can put a giant hole through which is our software industry our car
00:28:48
industry pick and Industry that they might be able to just blow a hole in because they don't need to make a profit
00:28:54
they just need to have jobs and break even what should our tariff policy be or what
00:29:00
is it I mean we know what it is for Autos it's 25 do we know what it is I mean it seems like it's inlux so maybe
00:29:05
we start there what should the policy be what do you perceive the policy is because it does seem to be a moving
00:29:13
Target we'll see what happens on April 2nd because Trump keeps tweaking let's say adjusting in
00:29:20
public yeah I mean this is so traditional economics would say hey tariffs are not a good idea we should
00:29:29
have free trade you know everybody understands the principle of comparative advantage I do think the Trump
00:29:34
Administration is pretty convicted that that approach has not worked well for America over the last 20
00:29:43
years and maybe it's worked well for knowledge workers but it hasn't worked well for kind of ordinary Americans and
00:29:49
I think they are very convicted in changing that and trying to bring back kind of good highquality manufacturing
00:29:55
jobs to America I think they see tariffs as an eff way to do that are they right
00:30:00
is is it going to be because a lot of what we're seeing in factories is automation so what they may have been
00:30:06
right about tariffs bringing back high-paying middle class jobs for the past 20 years we cannot go in a time
00:30:12
machine and change that policy and isn't where the Puck's going that we're going
00:30:16
to have Optimus robots figure robots pick a robot company doing all this work here's what tariffs do tariffs are a
00:30:23
level setting mechanism that fixes a historical imbalance look the reality is that we have had
00:30:32
meaningfully lower tariffs for products coming in then those reciprocal tariffs exist for our products going into these
00:30:41
other countries that's true and the one thing I'll say about Donald Trump is you
00:30:46
may not agree with the tariffs but he's been incredibly consistent I was on YouTube
00:30:53
yesterday and I stumbled into an interview he did Nick maybe you can find this with Larry King in
00:31:00
1987 and he ran a full page ad in the New York Times talking about this exact issue and then went on Larry King and he
00:31:08
walked through the entire trade imbalance 40 years ago yeah he's been on this so this is not a fly by night thing
00:31:16
so what do they want what they want is to create the economic incentives to reshore as much industry as possible
00:31:25
into the United States the delicate Balancing Act though is that after 20 years of
00:31:32
globalism and a perverted version of free trade because it's not what it is today it's been
00:31:38
perverted it is incredibly difficult to do that without these whack-a-mole problems emerging in other areas right
00:31:46
whether it's inflation or whether it's retaliatory tariffs or consumption taxes all of these complexities I think are
00:31:52
what has to get figured out but the structural reason of why tariffs make sense is not necessarily to overly
00:31:59
penalize one country over another but it's simply to say if you charge 5% we charge 5% if you charge 10% we charge
00:32:06
10% Nick has the clip you just just listen to this from 40 years ago we don't have free trade right now because
00:32:11
if you want to go to Japan or if you want to go to Saudi Arabia or various other countries it's virtually
00:32:15
impossible for an American to do business in those countries virtually impossible so the fact is that you don't
00:32:21
have free trade we think of it as free trade but you right now don't have free trade so Gavin let's get back to this
00:32:27
original question with chat's important context Trump has been on this for a while but is this where the Puck's going
00:32:34
we have the lowest unemployment of our lifetime wages are obviously not where we want them to be so is the right
00:32:41
solution to in put in a bunch of tariffs create trade Wars and then hope that people are going to build factories that
00:32:48
employ humans when in fact it probably will be robots so is there another solution like maybe raising the minimum
00:32:56
wage I don't know what are you your thoughts well one I think it's jamat and that clip Illustrated he is convicted in
00:33:02
this it's 40 years old it's happening yeah it's happening and so I would say two things like one I think it's all
00:33:10
something I'm always conscious of at um my wife Becky one of her college or High School reunions there's
00:33:19
a guy there who' been in her class and had been in the Navy Seals and he deployed to 80 countries he'd been the
00:33:23
Navy Seals for like a decade and I said what's the one thing that you learned and he said the one thing I learned is
00:33:30
everybody in America is always trying is always focused on making America better
00:33:35
have youve been to 80 different places all around the world our only goal should be to not screw it up in America
00:33:42
just don't make it worse because America is so much better than everywhere else so the first thing is like you know chth
00:33:49
said the word delicate and I think that's right and if I had one thought for the administration it would be every
00:33:55
time they say the word tariff whatever they think Wall Street in the markets and I would
00:34:00
say you know I think a lot of Business Leaders are convinced that tariffs are bed now maybe Wall Street is wrong and
00:34:06
the administration is right one thing everyone agrees on is deregulation is good so every time they say the word
00:34:13
tariff they need to say the word deregulation two or three times because the best way to I think maximize the
00:34:20
odds of this policy succeeding despite the headwinds from automation I think it's going to be a
00:34:26
long time before we have hundreds and millions of robots you know even between China and Tesla I think it's going to
00:34:31
take a long time to make vast numbers of humanoid robots the best way to encourage this reshoring is just making
00:34:39
it easier to do business in America okay 100% can I just add one thing that's really really important what Gavin said
00:34:46
there's a third thing I would add Gavin to your list which is we need to figure out the difference between manufacturing
00:34:53
and IP and I think what we want to do is make sure that we trap the real value back back in America as well look I've
00:34:59
told you guys a story before but when I was helping to run Facebook I was a signatory when we were setting up
00:35:05
Facebook abroad we exported all of our IP to Ireland and lo and behold who do they
00:35:12
sue Zach meta and me pink and we've been in this 10year lawsuit 15year lawsuit with the IRS because they're trying to
00:35:22
come back and say hey Facebook you owe all of this money why because we exported all of our critical IP to
00:35:29
Ireland and we trapped it there that should not have been able to happen we can fix it separately there's many
00:35:36
companies who are abroad who live inside the American Market who have given a mechanism would import their IP into the
00:35:42
United States if there was a mechanism to do so so not only can you have manufacturing you can also have the
00:35:48
critical knowledge not just of that manufacturing but of that product of that supply chain those are the
00:35:53
incentives that these nuances if we get right it's really a Renaissance for the United States let's talk a little bit
00:35:59
about maybe other Solutions freedberg obviously perhaps raising the minimum wage or increasing corporate taxes in
00:36:08
order to do that would that not also help us maybe build back the middle class that is the criticism I think some
00:36:16
other people have we you know Trump when he did his tcj ja if people remember the
00:36:21
tax cut and jobs act corporate tax rate was 35% we put it down to 21 and now rep
00:36:27
ation of cash from overseas as chat's pointing out I think it's only 15% it's like everybody can kind of afford that
00:36:33
so would that not be another way to solve this problem of the bottom half the bottom third not making enough or
00:36:41
maybe even lowering their tax rate which is already pretty low well I think the proposal that I've
00:36:49
heard from this Administration that we heard from Howard lutnick when we met with him was they're
00:36:54
going to cut all taxes for people making less than $150,000 a year so get the tax
00:37:00
rate to zero do you believe that do you think it's realistic now that it's after you
00:37:05
do that you actually think that could happen I 100% do and in what timeline and why well that's the key question
00:37:12
this is where this becomes like a first and second derivative problem let's just
00:37:16
talk about it this way when you take money out of the economy you want to make sure you're also putting money back
00:37:22
into the economy in another way to keep the economy stable or growing so if you're taking money out of the economy
00:37:29
in the case of tariffs you're putting money into the government's coffers you're reducing people's
00:37:36
spending because everything costs more now so consumers will spend less so what you want to do is you want to make sure
00:37:41
that the money that you're repatriating is going back to the consumers so they can now have more
00:37:46
money to spend so that's why you want to cut taxes at the same time that you're increasing the Tariff rates so if you
00:37:52
increase the Tariff rates things cost more the government is now making things more expensive that's not good but at
00:37:59
the same time if I cut your taxes and you got more money now than you did before so you can now buy the things
00:38:04
that you were buying even though they're a little more expensive the economy should be able to remain stable or grow
00:38:10
at the same time if you're cutting government spending that means that the government can afford to take less taxes
00:38:17
in and so they can make that assessment so these are all we've said it many times these are all very related and to
00:38:24
Gavin's point you've got to cut regulation at the same time so that the incremental dollars flow into things
00:38:30
like automation onshore production so the cost of things come down and so again not a simple equation I would call
00:38:37
it a grand economic experiment the analogy for me feels a little bit like there's four freight trains kind of
00:38:43
passing by each other at very high speed and you're trying to pass all the ingredients to make a sandwich between
00:38:48
the windows of the freight Trends you're trying to get them all over so you can make this delicious sandwich and get to
00:38:52
this golden age that's the configuration that it feels like they need to kind of
00:38:57
assess as and they're iteratively they have to thread the needle is I think your point and it's really hard to do
00:39:03
and you use the phrase experiment Gavin you said before hey don't screw up this amazing country and what we've got here
00:39:12
this sounds like a very high-risk you know High dexterity maneuver it feels like a a fighter plane like trying to
00:39:20
land on you know a very small you know aircraft carrier can they pull this off can they get to the tariffs working at
00:39:28
the same time inflation not spiking not impacting employment getting rid of people's taxes does this sound too
00:39:35
complex to you and too much too fast what what is your honest thought Gavin as you watch this as a capital allocator
00:39:41
are they going too hard too fast or is it worth pursuing this experiment as as freedberg framed it look Scott bent is
00:39:49
probably the single most respected or was the single most respected macro investor in the world like he really
00:39:55
understands the markets how they through to policy policy flows back he's an extremely smart talented guy they have a
00:40:04
coherent Theory you know I thought Howard and Scott did a great job in the last two episodes Absolutely yeah kind
00:40:11
of explaining the theory and the one thing I would just say having you know we all watched the first Trump
00:40:17
Administration he is adaptable he adapts to circumstances and the midterms now are
00:40:24
whatever whatever they are you know and and pol iCal terms they're they're 15 months away from you know around the
00:40:30
corner yeah around the corner so I think they're trying to do a lot as quickly as they
00:40:37
can but I also think that if after a few months it's you know 6 months nine months it's not working they will adapt
00:40:47
and I think that's one reason there's such an emphasis on reciprocity you know and Vietnam came out and they lowered
00:40:53
their tariffs on American goods and that's that's good and so I think the out is oh you know maybe it's not going
00:41:02
quite the way we hoped we're going to declare kind of hey we have a series of grand Bargains with these countries
00:41:08
declare Victory maybe tariffs on American goods are slightly lower tariffs here are slightly higher feels
00:41:14
more fair and you know move on to kind of firmer ground of kind of deregulation balancing the budget
00:41:23
cutting government spending and cutting Government taxes commensurate with the spinning Cuts so I think they're trying
00:41:29
the risky stuff first and if it doesn't work they will attack quickly yeah that was my perception especially after
00:41:36
hearing bent on the all-in pod great job uh guys on getting those long form and I
00:41:41
think this is where the administration is strong it's when they do a long form discussion and you hear their thoughts
00:41:45
about it it doesn't sound as crazy as when you know all due respect to the president when the president is like I'm
00:41:51
going to go easy on them I'm going to go hard on them you know and it's like a reality TV show and who's going to get
00:41:55
fired this week you actually have two incredibly thoughtful I will point out Democrats lifelong Democrats around
00:42:02
Trump and I I think that's like a really I had this crazy observation gabin I don't know if you notic it as well you
00:42:08
know Trump lost his reelection campaign and he filled his whole cabinet with a bunch of Republicans this time he's
00:42:14
filled his whole cabinet and everybody around him's a Democrat and he's gone to a really unique concept here of how to
00:42:21
solve the US's problems which is get the working man and woman a higher salary and lower their taxes this this could be
00:42:30
like an incredible Grand bargain that bent I think is the architect of and letnik is you know the communicator and
00:42:38
and uh executor of you think they have a chance of pulling this off what do you if you had to handicap it I hope they do
00:42:44
as an American I hope they do I think they for sure have a chance of doing it they have a solid theory of the case
00:42:50
they need to execute well um I would say Doge's efforts are important you know if
00:42:55
you can really cut a trillion dollars of of waste Fraud and Abuse out of the government government spending that's
00:43:01
good you know we should all agree As Americans you know maybe Democrats they want more government spending maybe
00:43:07
Republicans want less but for whatever given level of government spending we want it to be as efficient as possible
00:43:12
because if you're a Democrat that means more services if you're a republican maybe that means a smaller government so
00:43:17
I think they have a solid theory of the case I think there's a reasonable chance
00:43:21
it will succeed but if it doesn't I think they will tack quickly and the one thing they can't afford is a recession
00:43:27
if they're focused on the def deficit a recession blows out the deficit so they will be ultimately sensitive to these
00:43:35
market-based forces you know rates stock markets the foreign Cur foreign currency
00:43:42
markets trath you want to uh maybe wrap this up for us here move on to some of the other topics of the Week John Arnold
00:43:49
had a post this morning on X he was saying the deficit this year is going to be 1.9 trillion his best guess for 20 26
00:43:57
was 1.9 trillion and he was just kind of asking his followers what they thought if you listen to Howard last week what
00:44:04
he said is I'm going to raise a trillion dollars and elon's going to cut a trillion now if that comes to pass then
00:44:13
we have a balanced budget if you ask the sharp money on Wall Street their numbers range from 170
00:44:21
billion to 300 billion on the revenue side so let's take the midpoint of around 200 to 250 billion okay 250 if
00:44:30
the sharp money is right that means that tariffs and all of that stuff will only
00:44:35
really raise a quarter of a trillion which means that there's going to be even more pressure on Elon he's going to
00:44:41
have to find not one trillion but 1.75 trillion again assuming that that $1.9 trillion deficit exists next year so
00:44:50
that's the math it is A2 trillion doll Bogey and they have to fill it somehow my intuition is that the waste Fraud and
00:44:58
Abuse is probably meaningfully more significant than we think when we were there we heard about one consulting firm
00:45:08
95 plus of all of their revenue multi-billion dollar Revenue comes from time and materials contracts with the
00:45:13
United States government we heard throughout the week I've reposted it on X $65 billion is paid out to Consulting
00:45:22
organizations Beyond just that one in these time materials costplay contracts if you start to add all of these up
00:45:30
today we just heard that the2 billion grift to Stacy abrs was canceled and they're now starting a doj
00:45:38
investigation into how those dollars got given to her all of these things start to add up it may be the case that if
00:45:45
there's an upper bound on tariffs that there will be more than a trillion and Elon kind of fills in the
00:45:53
Gap but I think it's possible they are looking Gavin also at military spending and maybe cutting that 8% a year every
00:46:01
year for a couple years that's where big dollars are are sitting and obviously nobody wants to touch Social Security
00:46:06
despite I do have to point this out for my besties you guys did a great job with
00:46:10
that interview and uh you know I just want to say fmz for like trying to spin it as you know letnik was trying to take
00:46:18
away people's Social Security they literally took an hour plus interview they clipped it to try to make it seem
00:46:28
like he was saying the opposite of what he said he was saying the frauders will be the first to respond not my mom my
00:46:37
mom would just you know call eventually and say hey can I she would assume that there was good intentions yes whereas
00:46:43
the fraud would be like oh man I got to get here I think it's you know what swier did the same thing no let me
00:46:48
finish my little thing here TR because I don't want you guys have to defend yourself listen I couldn't make it you
00:46:53
guys did these last minute interviews mazeltov we missed you I thank you for saying that I would have loved to be
00:46:59
there I will be at the next ones for people who are saying like oh there's some conspiracy there's no conspiracy I
00:47:03
had ski week these guys went to do business or whatever they were doing and to see their friends in DC and uh you
00:47:09
know these things happened very rapidly uh and I wasn't able to get there bottom
00:47:13
line these were great substantive long interviews from Democrats one of them a gay Democrat by the way the highest
00:47:21
ranking gay Democrat who's ever been in uh an Administration the left and the media should be giving praise to these
00:47:27
interviews they should be studying them and they're doing the exact opposite they're trying to spin them into
00:47:32
something they weren't it's a gift what the all-in podcast did to the American people by showing them a long form
00:47:39
interview with the administration explaining these details don't spin it I think great I think it's great sorry I'm
00:47:46
pissed off about it piss me off I don't think you should be pissed off I think it's wonderful that these people lie I
00:47:51
think it's incredible that they just put it out there and it just further erodes
00:47:56
what's happening I think if once Bobby puts a nail in the coffin of Pharma ads on TV byebye Anderson Cooper byebye all
00:48:04
these guys I think it's great I'm so pissed off I'm sorry like when I see people lie like that they should be
00:48:10
lying they should be lying they should it's great they're because they will not exist okay gav you're a neutral third
00:48:16
party go ahead no I just say three really quick points like first what Howard lutnick literally said was if we
00:48:22
can find a lot of waste Fraud and Abuse we don't have to raise the retirement age everybody talking about raising the
00:48:27
retirement age to 70 if we administer these programs more efficiently we can keep it at 65 and you know that's good
00:48:34
for everyone the second thing is it's just interesting to me there's so much doubt about this when the inspector
00:48:40
generals of you know both Biden and Obama you know said there were hundreds of billions of dollars of waste Fraud
00:48:46
and Abuse and I would just say someone in my immediate family has had their social security
00:48:52
their identity stolen and someone is using their social security number to collect unemployment benefits in Alabama
00:49:00
and this has been going on for two years and they've been unable to stop it and so you know you don't want to rely too
00:49:06
much on anecdote but I think this is really happening and then just the third thing I would just say is I do think you
00:49:13
know no one has ever raised no president has ever raised my taxes more than Trump
00:49:17
did and I think they are pretty convicted in their focus on normal workingclass Americans and making their
00:49:25
lives better is actually genuinely their North Star You can disagree with the theory of the case you can disagree with
00:49:34
you know the the way they're communicating it but I think their intentions are good absolutely and you
00:49:40
know what he even said in the interview if you if you really listen to it he said he was disgusted by the idea that
00:49:46
you would even raise the Social Security age I think we should by the way any rational person I think the majority of
00:49:53
people say hey maybe it should go up a year or two maybe we should have a little auster here on the margins but no
00:49:59
of course not we can't talk about that and um you know the the thing this Administration could do better is
00:50:05
communication those two long form interviews was a great step in the right direction they should do more of those
00:50:10
and do should do a better job of explaining this waste and fraud they're doing a good job I give them like you
00:50:16
know a B+ but there's more work to be done here and there's waste there's overspending there's fraud and there's
00:50:24
abuse right these are like different categories to get to the fraud that takes building legal cases all that
00:50:30
stuff's going to have to be referred to people we have a justice system here it's going to take years to figure out
00:50:36
if somebody actually stole but waste and overspending we're going to find that pretty quickly so it's a process people
00:50:42
and I I I for one trust the process because we're overspending massively let's get to some other conversations
00:50:49
here I think maybe we start with J I just think it is it is whether it's a semiannual or quarterly something that
00:50:57
is like the Doge report and everything's been audited and triple checked these are the three categories this is what we
00:51:05
found I think something like that would be very helpful I think they need investigative journalists I'm I'm happy
00:51:10
to help with this I'll do a doge pod you know listen I'm not part of the administration everybody knows I was
00:51:15
never Trumper I'm independent blah blah blah disclaimer disclaimer disclaimer I would totally go in there and I would do
00:51:20
a do J why do you keep saying independent and then you throw yourself a label that says you're not independent
00:51:27
I'm telling people I I was a never Trumper but if Trump is going to surround himself with the moderate
00:51:32
Democrat are you truly independent I like to think so I I try to be independent call balls and Strikes
00:51:38
here on the program I'm not going to bend the knee to the administration I'm going to I'm going to be critical of
00:51:42
trump coin I'm going to be critical of these deportations which we're going to get to and I will say critical things
00:51:48
but I would go in there and I would do the Doge pod with Elon or whoever in the group is and go Point by Point through
00:51:53
these things to explain it to the American public let's keep moving here we got such a full docket I want to talk
00:51:58
about signal text our bestie and talk to him about it I think that's yeah I mean
00:52:02
maybe I should go in there because listen I don't even consider this like a trump Administration now I consider this
00:52:06
a democratic moderate Administration everybody around Trump now is a Democrat I think I might be in I might be in you
00:52:13
guys look like you had a good time you guys look like you had a good time last week I kind of want to included it look
00:52:19
like fun did you vote for Trump I don't want to bring in my vote I did not vote for comma let's keep moving here I'm
00:52:26
going to keep dropping wow my go I did not vote for KLA I couldn't vote for her she said I don't want to say it
00:52:34
but anyway let's keep going I I don't want to vote for somebody who was selected I wanted to vote for somebody
00:52:39
who had a primary and the Democrats disr OD for not having a speedrun primary signal gate it's the biggest story in
00:52:46
America right now on Monday turning this is incredible what a day no I me list I'm going to call balls and shrikes
00:52:51
right now 70% of what they're doing I agree with 30% I don't I'm going to get to the 30% and human rights basis I
00:52:57
think you just admitted you voted for Trump it's really incredible actually anyway let's keep moving here I'm from
00:53:02
the great state of Texas I'll leave that signal gate signal gate signal gate on Monday the Atlantic published a story
00:53:09
titled the Trump Administration accidentally texed me their War plan somehow Atlantic editorinchief Jeffrey
00:53:15
Goldberg was added to a super high profile signal group with our secretary of state our vice president tulsy
00:53:25
bessent the CIA director the Secretary of Defense how is this possible folks they added a journalist the edin chief
00:53:33
of the Atlantic to their War planning signal group they shouldn't be using signal obviously to do this stuff and
00:53:40
inside this group they discussed the plans to strike houy targets across Yemen nobody noticed nobody checked that
00:53:48
the editor-in-chief of the Atlantic was in the group chat they included the exact t targets
00:53:57
the actions the timing of all of this it was apparently cut and pasted from some
00:54:02
other system by heg our secretary of defense and former Fox commentator that's not a dig it's just a fact and
00:54:10
I'm not saying it as a dig chth people are losing their mind over this I could get into all the details I
00:54:15
think most people know it because it's taking up the whole all the oxygen in the room in the
00:54:20
media in the group chats number one what's your general take on what happened to how stupid is this how
00:54:27
ridiculous is it does it matter go ahead Jam start us off here I think that what
00:54:33
folks have stopped talking about entirely which I think is just worth touching upon okay is what is actually
00:54:40
going on that necessitated this group chat to be created in the first place in such haste
00:54:48
so I have a couple of images that I pulled just to explain what this issue is so the problem that we have is that
00:54:56
somewhere after the war with Gaza Iran continues to fund these houti rebels in Yemen and what do they start
00:55:07
to do they start to invade and flood into the Red Sea and they start to block up the suas canal in different points
00:55:14
making it very perilous for Freight traffic to get there so what do folks do they're either forced to go all the way
00:55:21
around the Cape of Good Hope or risk attack through the Suz Canal so what do you think happens
00:55:27
well the traffic through the Red Sea in the sus Canal falls off a cliff and then
00:55:33
you would ask well why is that important well the problem is that because of that
00:55:36
other chart and this chart prices start to Skyrocket so if you're trying to ship
00:55:41
things even going into the United States prices start to rise 30 40% going to Europe prices are rising 300 and 400% if
00:55:50
you add that all together as Gavin said earlier we're in this very delicate moment where we're fixing all these
00:55:57
parts of the economy the thing we can't have is productivity go down you can't have a recession and so if you have a
00:56:04
bunch of input prices that go up or trade slow down now you're bringing the likelihood of a recession to the
00:56:12
Forefront so that's one thing the second thing which was included in the group chat is it turns out that nobody was in
00:56:19
a position to fight off these houthis except the United States the British the French all of their Naval capacity
00:56:28
wasn't strong enough or adaptable enough to fight these folks off so the United States had no choice but to attack these
00:56:35
guys and reset and so what happened now all of a sudden traffic is reset right volumes are back up by the third week of
00:56:44
March which is where we are now we're back to where they were even a year ago the price of shipping is now
00:56:51
contained the inflation risk is contained the productivity hit is contained it's just
00:56:58
important that's the context why they did the attack great I find it crazy that we still actually for 95 articles
00:57:06
though Jason on Signal we have only less than one article on this so I just wanted the smart people listen to our po
00:57:13
to actually understand it the second thing the second we're to send the bill to Europe because this is really a
00:57:19
European problem because okay so we have the whole Pacific Ocean we can accept things through and you can go ports in
00:57:24
Texas or you go so the point is we're on a shock so the point is we're on a shock
00:57:29
clock people had to act quickly here's my big problem with signal I think it was a [ __ ] up okay and I think I think I
00:57:37
think it was an important set of decisions that had to be made but I think the using signal was a mistake but
00:57:42
there's very one narrow reason why and we've said this in our group chat the signal desktop app is total and complete
00:57:50
garbage okay and when you build apps somewhere along the way we were all told all of us as app developers oh you need
00:57:58
to have an app on every endpoint it needs to be available for Android it needs to be available for the iPad it
00:58:05
needs to be available for your phone it needs to be available for the desktop and the problem is now you'll have a
00:58:11
computer at home you'll have a computer In Your Den you'll have a computer at the office some it person comes and
00:58:17
helps you install this stuff and now all of a sudden instead having one attack Vector you you have seven right so this
00:58:24
is insanity so it's a mistake it's a stupid mistake but I think it's a mistake and so I think
00:58:30
like you know let's give it two scaramucci I think we'll forget about it give it a scarci or to should somebody
00:58:37
resign should somebody be fired no no no I think these are mistakes and I think I
00:58:41
think by the way sorry the other thing is John rackliff was very clear there are very clear procedures that they
00:58:45
inherited which is no administration's fault but there's some security it person that writes these things it's
00:58:52
approved and so rewrite those things to be more normal your thoughts here do you
00:58:57
have a take so I think this issue will become one of whether or not government officials can use signal and apps like
00:59:11
it for communication this is a controversy that's been around for some time but it's actually being tried in the courts
00:59:18
right now there's I think four Active cases so the federal records Act was originally passed in 1950
00:59:26
and then there was this amendment related to electronic communications that was passed in
00:59:31
2014 and the federal records act says all government officials and employees have to create maintain and preserve
00:59:38
adequate and proper documentation of activities transactions decisions policies and other business that's the
00:59:44
law that's the law and it says adequate and proper documentation is defined as records that clearly document the
00:59:49
government's decisions and actions and that can be preserved and retrieved for accountability transparency and
00:59:56
hisorical purposes and then we have the foil laws which allow you as a citizen or as a journalist to go make a request
01:00:01
Freedom of Information Act this is to have a functioning democracy what you're talking about here freeberg is people
01:00:07
who work for us should not be able to endr run their communication and that's the law yeah the Foya provides access to
01:00:14
government records because our taxpayer dollars pay for the government to do its
01:00:17
work and therefore access so the question is is the particulars of the communication that's taking place
01:00:24
amongst these individuals in this case and in the daily work done by government officials that's like this where people
01:00:32
are updating one another or talking with one another about things does that have
01:00:36
restrictions around preservation of Records under the federal records Act and the amendment that came out in 2014
01:00:43
and so there were a bunch of lawsuits one is the competitive Enterprise Institute against the OSP the office of
01:00:48
Science and Technology policy in 2016 where using email accounts and Communications that weren't properly
01:00:54
archived or preserved was challenged by this institute and the DC Circuit Court of Appeals ruled that the officials who
01:01:01
use private email for official business must copy or forward email Communications government accounts to
01:01:05
comply the citizens for responsibility and ethics in Washington act sued the Trump Administration in 2017 and this is
01:01:12
ongoing in multiple forms right now in the courts where there's a lot of procedural
01:01:18
complexity but the courts have generally said that they emphasize that these officials are obligated to preserve
01:01:24
official Communications and that failure is violating the laws then there's Judicial Watch versus Department of
01:01:30
Homeland Security and then there's National Security archiv versus Mike Pompeo the state department 2019 which
01:01:36
is also still in the courts and I think from these cases and this particular incident there's going to become much
01:01:43
greater kind of call it Clarity and also a better understanding of the consequences of what communication do
01:01:50
you need to preserve records of and what communication are you allowed to have off the Record that you what do you
01:01:56
think freeberg I mean we get it there's a what do you personally think like what
01:02:00
do you David freeberg the sulan of science think I think it is counterproductive to have every piece of
01:02:06
communication foilable and kept in the public record I think that's a mistake and I'll tell you why when you're making
01:02:12
a business decision let's say you're making an HR decision the management team sitting around they're talking
01:02:16
about a particular candidate or person at the company should we give this person a raise should we terminate
01:02:21
someone you don't want to have a record of that that employees can then go pull up and see and understand because it
01:02:26
will have a really muing effect and a dampening effect on the types of conversation on the authenticity of the
01:02:33
conversation on the productivity of the conversation that you will be able to have if you're forced to say this is
01:02:39
always going to be in the public domain true and so I do think that this idea on
01:02:43
like how did you make a decision and what was the action that you took those to me feel like they should be recorded
01:02:50
and they should be foilable but all of the background material all of the noise all of the dialogue that leads to
01:02:58
that I do not think that should be foilable and I think that you need to justify the actions and the decisions
01:03:03
that you're making as a government official but I don't think that you need to have a record personally of
01:03:08
everything that led up to that action or that decision because I think that that
01:03:11
will be really deeply unproductive let me give a take here this is a serious issue they
01:03:17
shouldn't be doing it for obvious reasons it's very easy to hack personal phones and they do have a way to do this
01:03:24
which is called the skiff and there's other places for them to have secure communication and as you point out they
01:03:29
work for the American people they should be a record of this they're breaking the
01:03:33
law by doing this so the the the administration should not be breaking the law obviously we don't want them to
01:03:39
do that also hexa clearly took a report of the attack plan cut and pasted it from a some server somewhere
01:03:48
and then pasted it over this is a known Vector your your clipboard is what it's called and this is an attack Vector that
01:03:54
you know anybody who's in or has basic security training knows that you can get your clipboard hacked
01:04:01
very easily they need to take ownership of it and this is one of the things that
01:04:05
this Administration and this group does very poorly instead of taking ownership like chamad said here just take just own
01:04:11
it no big deal this is a you know a chance for us to learn and iterate on the security protocols yada yada we
01:04:17
apologize let's move on they attack and this is Trump's like Playbook we have to
01:04:23
attack the journalist so what did they do they attack the journalist they take no ownership and the second thing which
01:04:28
this Administration really has an Achilles heal for is on top of just taking not taking ownership and
01:04:34
attacking um the hypocrisy because this was the entirety of the anti-hillary movement was oh my God she did this
01:04:42
exact same thing with her email and Republicans had a long list of oh my God here's hold on I'll finish you'll get
01:04:48
your chance sham to defend your boys the point is it's complete utter hypocrisy and it's distasteful to attack the
01:04:56
journalist which you added this is incompetence it's a mistake own it well hold on and then every single person's
01:05:02
phone has to get dumped now and so they're not doing a good job communicating what they're going to do
01:05:07
to make sure that somebody hasn't gotten onto everybody's personal phone why are
01:05:12
they doing this on their personal phones as chth you very much pointed out these
01:05:17
are attack vectors they should be using the phones issued to them for these communications not their personal
01:05:23
devices goad the first thing is I think you're wrong about the fact that they don't have an adequate claim with this
01:05:32
journalist I think it's fair to ask what is the ethical standard that that journalist should have had if you're
01:05:39
added to something you know it's inappropriate the guy just sat there lurking you don't know how it was added
01:05:47
Jason you're speculating it could have been Sure hold on it could have been injected okay it could have been
01:05:52
injected into a laptop nobody knows yet this is why I think just admit what happened was a mistake I think they did
01:06:00
that they're looking into it let them look into it I don't think you need to have scalples and heads and all this
01:06:05
other stuff but I do think it's important to say why was this guy lurking about okay what ethical standard
01:06:12
should he have at C he had none and by the way this guy oh no that's ridiculous you're so wrong with this he he tried to
01:06:18
figure out okay your opinion is wrong in this case respect he tried to figure out
01:06:22
what was going on here and then when he did figure out it he contacted them and removed himself he didn't stay on there
01:06:29
indefinitely if he did that that would be wrong but for him to be added to something he may have he may have been
01:06:35
being attacked himself and the other reason you're wrong is they went on the attack immediately and they denied that
01:06:42
there was anything wrong they did not take ownership of it and that's why we're having this debate right now is
01:06:47
they don't take ownership of these things Marco Rubio did say someone made a big mistake there were no
01:06:54
consequences we learned we're going to do better and he is a secretary of state so someone in the
01:07:00
administration did say that this was a mistake yeah and the other guys attacked a journalist so that's what I find
01:07:04
distaste no no but hold on a second Trump said it was a mistake too I don't think these guys it it is it's a mistake
01:07:09
so fix it and move on but the point should be what is the mistake the mistake is the security protocols that
01:07:18
these guys rely on I don't I'm going to just go out on a limb as expert as they are in policy I think they're in experts
01:07:25
in technology so there is probably somebody that is responsible for how all of these folks communicate how all of
01:07:34
these folks get software installed on their multiple devices okay how they get new devices it I'm guessing that it's
01:07:40
not them so I think that they're using their personal devices I think that's the problem why why is anybody in
01:07:48
government using a personal device to Share Plans how do you know that for because they said it was their personal
01:07:55
device they've said it this has been established that they did this on their personal devices that that that's
01:07:59
totally established now okay um so and they have skips for this so I I just don't understand why they don't just
01:08:07
their but again I'm saying the bigger issue is that they had to operationalized quickly they weren't in
01:08:12
a position to be together the importance of the issue is getting lost it was an important issue that has consequences
01:08:19
they're all within 10 ft of a skiff at all times their their SUVs are Skiffs their offices are Skiffs scav you have
01:08:25
any final that's why before we move on to the yeah I would just say I thought the contents were interesting and that
01:08:30
there are a couple of things you know there's all this you know oh the Trump Administration is you know coing up to
01:08:36
Russia and you know trying to blow up these you know this post World War II alliance with Europe there are two
01:08:42
things one they said we are the only people on our side of The Ledger who can deal with the houthis and our side of
01:08:51
Ledger meaning like recognizing kind of Europe you know tradition alliances the good team the good team so I thought
01:08:58
that was interesting that just for all the rhetoric they're conscious of who's the home team and second they made it
01:09:05
was very clear to everyone in that chat and JD van raised it 3% of America's trade goes through the sus Canal 40% of
01:09:13
Europe's trade so we are really doing this it will help us a little bit but it will help Europe a vast amount and we're
01:09:21
doing something that helps them that they cannot do now hey they're asking that they want to be paid but I just
01:09:28
think it made me think that behind the scenes a lot of this rhetoric about you know the US and the European Schism is
01:09:35
overblown and we're still helping them I thought that was interesting yeah I think it's important note okay let's
01:09:42
move on to our final two stories the Trump Administration has deported 238 alleged gang members to a pretty severe
01:09:50
prison called Cott CE coot prison in El Salvador here's a clip of them being dragged out of the United States and put
01:09:57
into this extremely notorious prison this was all done under the alien enemies Act of 1798 this
01:10:08
allows the president to detain and support individuals without due process from quote an enemy Nation during an
01:10:14
invasion or quote predatory incursion it's been used before but only during actual Wars FDR used it to deport
01:10:21
thousands of Germans Italians Japanese during World War II the Trump Administration is claiming that the gang
01:10:27
members were sent to the US intentionally calling them a hybrid criminal State not surprisingly most of
01:10:33
them were not all of them had criminal records in the US uh this was confirmed by ice and obviously some number of
01:10:40
them appear to have been misidentified as gang members or terrorists I can tell you you know coming from a law
01:10:47
enforcement family and just looking at the statistics out of 238 you're not going to bat a thousand so maybe you get
01:10:53
a couple of these wrong former pro soccer player jersey Rees baros he fled Venezuela after being tortured by the
01:11:01
government for protesting he's a refugee he has been mistaken for a gang member according to his people because
01:11:09
he's got an arm tattoo supporting his favorite Club Real Madrid and there is a social media post
01:11:17
that ice officials believe featured him making gang signs but it was actually the language for I love you
01:11:24
according to to his attorney second example a shoe salesman and social media influencer noberto Rodriguez he fled
01:11:32
Venezuela for Columbia out of desperation because he and his family were starving he's a father of three he
01:11:37
was also suspected because of a tattoo which features playing cards and dice his family says he got to he got it to
01:11:43
cover a scar on his forearm and third and final example stylus and makeup artist Andre Hernandez he is being
01:11:52
represented by the immigration Defenders Law Center he claims he has no criminal history he
01:11:58
sought Asylum after fleeing Venezuela where he was persecuted for being gay again his arrest was based on
01:12:06
tattoos that is attorneys claim are not gang affiliated this has caused the US District Judge to pause these
01:12:14
deportations the Administration has apparently continued these deportations and they're even gloating by doing
01:12:21
videos highly produced videos threatening people with the prison in El Salvador again the seot your thoughts
01:12:32
chth on this extradition process if any I mean as long as there's a mechanism for these mistakes to get
01:12:43
rectified seems like the overwhelming majority of these folks should not have been in the United States and
01:12:50
we part of illegal criminal organizations okay so there should be a mechanism Gavin your thoughts if
01:12:56
innocent people were sent to a prison like that's a terrible mistake and you know that that
01:13:03
happens and it shouldn't happen and hopefully it gets rectified but I guess my bigger thought is a little bit you
01:13:10
know the this Administration and as we discussed they have a really ambitious agenda they want to fundamentally change
01:13:16
America in the ways that they think will be better for kind of blue Coller normal
01:13:19
working Americans and things like this you know signal gate if you if they made a mistake and sent innocent people to
01:13:28
this prison there's only so many of those mistakes they can afford before they lose kind of the Mandate necessary
01:13:36
to accomplish their goals and you know hopefully it's you know we're we're whatever we're not even
01:13:44
into the you know third full month 66 days 66 days we're into the third month but um we're 4.5% of the way through the
01:13:53
second term and it feels like yeah six gamucci in yeah it's brutal It Ain't Easy here this is such a good
01:14:01
point though Gavin continue they just execution matters like if they they to accomplish their goals they need to
01:14:09
execute at a high level and communicate clearly and effectively and just if innocent people were sent to you
01:14:19
know this prison mistake signal gate look you know hey maybe it's a big mistake it's a small mistake depending
01:14:26
on where you sit I thought Marco Rubio's response was good but just like I think
01:14:30
execution is important for them to accomplish their goals great freeberg any thoughts here I do not agree with
01:14:38
sending people to prison or Detention Center that due process I felt similarly that Guantanamo
01:14:45
Bay because I don't think it matches the rights and the values that the United States should stand for
01:14:52
I think it's different if you believe that they're here illegally part of a criminal Enterprise and we don't want to
01:14:56
try them in courts here then we should ship them back to a port of departure somewhere else in another country maybe
01:15:01
it's back to Venezuela and let their courts try them but I will talk a little bit about this El Salvador motivation as
01:15:08
you guys know the El Salvador prison that they set up for putting the um the gang members in had a radical impact on
01:15:15
living standards in the country in 20 15 the homicide rate per capita in El Salvador was 103 people per 100,000 so
01:15:25
out of every thousand people were murdered every year they introduced this aggressive policy of rounding people up
01:15:30
without you process and putting them in this prison and through that action they
01:15:34
were able to reduce the homicide rate per capita below two per 100,000 which is what it was last year
01:15:41
1.9 so it had a radically positive effect on society but obviously at the cost of a value that we in the United
01:15:48
States hold dear which is the the value of due process and and the importance of
01:15:53
due process because all it takes is one innocent life being locked up but so you're saying El Salvador there was no
01:15:58
due process there was no due process and so there are plenty of stories if you watch the documentaries on this prison
01:16:04
there are plenty of stories of people that later were released when they were found to be completely innocent and
01:16:08
randomly rounded up or caught up in a sweep or something that they shouldn't have been at um and there was actually
01:16:14
one fascinating interview I saw of one of the guys who spent over a year in the prison was completely Innocent but he
01:16:20
said you know what it was worth it because the government's been able to clean up the streets I got to find this
01:16:25
clip but I was really like shocked I couldn't believe that a guy that spent a year in this prison actually had
01:16:29
something positive to say because it was such a say that to get out who knows you
01:16:33
know well it was such a profoundly difficult place to live in El Salvador and we've all heard these stories but I
01:16:38
do think that there's an a cue being taken by this Administration that there's a way to
01:16:45
kind of very quickly resolve to a positive outcome with respect to immigration and crime but I do think
01:16:50
Gavin's point is right that we do have to have some boundary conditions particularly as it relates to human
01:16:56
rights that we do value here in this country and as long as there's a court trial as long as there's a judge as long
01:17:01
as there's some sort of it doesn't need to be a jury of peers but as long as there's some evidentiary hearing to make
01:17:07
the determination that someone is you know likely this criminal makes sense but again I'm much more in favor if
01:17:14
there's going to be forced movement of people I don't think that they should necessarily be moved into a prison as
01:17:20
much as moved to a port of departure and have them tried in another country if is
01:17:25
a crime or we try them here and put them in prison I agree so much with what you
01:17:29
just said due process is important like America like human rights are a core American value that was great you
01:17:36
acknowledged that like the outcome in El Salvador was good homicides down 99.9% lots of lives saved and just you know
01:17:46
there needs to be a balance between these yes then let me ask you guys a question very pointed question if you
01:17:51
guys could Implement an El Salvadorian Style incarceration system tomorrow and it would have the exact
01:17:59
same effect on American Crime so yeah C by with and and and I'll give you there's a four or five% error rate would
01:18:09
you do it would the benefit of the safer Society be outweighed in your minds by the error rate or not absolutely not
01:18:20
most people would say yes because they would view it wouldn't affect them and then the two 5% of people who have
01:18:26
family members who are innocent get locked up I get that I'm saying what do you think yeah I I I wouldn't compromise
01:18:32
that value yeah yeah we don't want to compromise that value it's incredibly dangerous yeah incredibly dangerous
01:18:37
we've been riding on a bit of a high and I think there's a couple of things here
01:18:42
this Administration could do better and communicating when they make a mistake and then human rights is such a core
01:18:48
part I believe me Jason calanis believes that there is a sadistic nature to this
01:18:53
Administration is an Achilles heal for them and when you see them doing videos from these prisons and saying this is
01:19:01
going to happen to you and this prison is known for torture and this prison is known for just absolutely the most
01:19:07
abhorent issues in the world this is the sadistic nature of this Administration that I think they need to drop because
01:19:14
it is going to derail them and people care in this country deeply about human rights and process and there is a
01:19:20
constitutional issue right now because Trump and this Administration is disobeying the court when they say hey
01:19:27
let's slow down here there is no cost zero cost to Americans sending these people to a was station and
01:19:34
investigating each of these cases to make sure we don't send a gay hairdresser to El Salvador another
01:19:40
country to be tortured in prison if that is in fact the case and it is Against All American principles to not have due
01:19:48
process and to have innocent people potentially go to jail and what all Republicans should do is here is say
01:19:54
this is going to derail the administration these are the things that will build up over time and people just
01:20:01
pragmatically speaking people in America who are rooting for this Administration
01:20:06
to do some good things like I am when they do stuff like this and I represent a large swath of people it loses them
01:20:12
votes and this is why they I predict this is why they will lose the mid turns if they continue to do this type of
01:20:18
stuff that's my position it's not virtual signaling I've cared about human rights long before the all-in podcast
01:20:23
existed I my first job was working at Amnesty International and this is a giant Mistake by this Administration
01:20:30
Gavin you had some thoughts this whole debate is a question of ins versus means and it's like we all agree that the
01:20:37
homicide rate down 99.9% and Al Salvador is a good outcome it's a good end and this is one of the
01:20:44
great philosophical questions and it's you know we can debate it endlessly and there has to be a balance
01:20:53
between the two human rights are a core American value and I agree I think with a lot of what David said but I also
01:21:00
think if you are you know going back to that homicide rate the Trump campaign you know they spoke to the mothers and
01:21:08
the families of people who were brutally murdered or raped and murdered by um people who were illegal
01:21:17
immigrants and were convicted criminals in their home country and were known convicted criminals and some how still
01:21:25
were not apprehended and then committed terrible crimes that were very similar to the crimes they committed there you
01:21:30
have a lot of compassion for the victims too but all they have to do like one of
01:21:35
I thought elon's best moments and I think you know it's what doge is doing is great these are brilliant people
01:21:41
working hard for free to do things that have never been done before in the government in terms
01:21:47
of efficiency and kind of modernizing it but you know Elon said at one of the at
01:21:51
the first press conferences listen we're going to make mistakes and then we're going to quickly correct them so to me I
01:21:58
think all the administration needs to say and I do think more due process to David's point is good is like listen if
01:22:04
we made a mistake it's terrible and we're going to fix it immediately and it just it bring gives
01:22:11
you so much credibility when you say that agreed but isn't due process happening
01:22:17
how else would you guys know that three out of the 238 were miscast the fact that you know that means the process is
01:22:25
working I I think the question is what about the other 235 people their families talked to the press this wasn't
01:22:31
from the administration from but the point is it's it's there so whether it's the freedom project or whether it's the
01:22:36
Southern Property Law Center my point is there are resources is it bad when this
01:22:40
happens absolutely my question is do you just blow the whole process up and then
01:22:44
what do you do with the other 235 people You' hold all 238 at GMO if you wanted to in Humane prisons and process them
01:22:53
and then have their attorneys get to look at their case you could give their cases to you could be public with their
01:22:58
cases and say here are the cases these are the people we deporting and why right so your specific issue is where
01:23:04
they're being sent yes you Cham they're being sent to the most sadistic prison in the world Cham do you want to answer
01:23:10
your question about like the 5% trade-off like if you sweep up 5% of the people being innocent whether it's worth
01:23:18
that trade off for Crime did I get an answer you well you asked the question but I wanted to hear
01:23:25
your answer like what's your point of view on that I think that that's probably what happens today in America's
01:23:31
prisons in fact it's probably more than 5% but I guess the question is Jam what is an acceptable you know it's a little
01:23:37
bit like the trolley problem you know there are many variations of this I think the important thing is I think
01:23:42
that that a bit above our pay grade but I don't think it's above the presidents and I think that that was part of what
01:23:49
he was elected to do is make that call because I don't think he hid behind any rhetoric he was very clear about what
01:23:54
his intentions were and to your point he did bring the you know Lake and Riley act I mean they were very explicit about
01:24:02
what their intentions were yes but man it just feels like a little more due process being a little more
01:24:10
careful with the signal but also just going back to what were 4 and a half% into the administration I'm not saying
01:24:16
hey mistakes were made and it's okay inent people were sent to this prison that's terrible and I hope it gets
01:24:21
rectified quickly if there was some concession here hey if we made a mistake we're going to fix it that would be a
01:24:27
lot better than putting out promotional videos Ling how brutal this prison is that would go a long way with me but
01:24:36
we're seeing the opposite they're releasing videos that they're producing we we'll play one here for you to see by
01:24:43
the way I I think an important point about this and perhaps like the key part of
01:24:51
the strategy of the administration is that this isn't the beginning of a continuous
01:24:56
process but they're sending a signal which they expect will cause people to naturally
01:25:04
immigrate out of the country that are committing crime or at risk of being caught for being associated with gangs
01:25:10
and while beinga uh in the United States as a way to kind of Chase folks out so I
01:25:15
think that there's some calculus and what's going on here with respect to the risk and the actions being hey look if
01:25:21
we do this to the first 240 people and even if or four innocent people get caught up there's a net benefit
01:25:28
ultimately because it will reduce the immigra immigrants kind of coming to this country that are parts of gangs and
01:25:34
perhaps some of them will choose to go home you know they clearly believe that this is that this is going to save
01:25:42
innocent lives in America that is their clear belief system well yeah and everybody wants
01:25:49
that here's secretary chrisy Noam from the prison itself at Cott today and uh visiting this facility and first of all
01:25:57
I want to thank El Salvador and their president for their partnership with the United States of America to bring our
01:26:02
terrorists here and to incarcerate them and have consequences for the violence that they have perpetuated in our
01:26:08
communities I also want everybody to know if you come to our country illegally this is one of the
01:26:13
consequences you could face uh first of all do not come to our country illegally
01:26:18
uh you will be removed and you will be prosecuted but know that this facility is one of the tools in our toolkit that
01:26:23
we will use if you commit crimes against the American people harsh words she's trying to make it a deterrent clearly
01:26:30
all right another amazing episode of Allin is in the can for Gavin Baker David freeberg and jth
01:26:39
POA I'm Jay Cal Jason Cal canis and we will see you all greatest next time virtue signal [ __ ] [ __ ]
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did you see I love I mean I can't even take it there I'm sorry I'm passionate about some things I'm passionate about
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some things look at this I can't tell how much of the tension is real vers like I love I
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love let your winers ride Rainman David and instead we open source it to the fans and they've just gone crazy
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with it love queen [Music] of Besties that's my dog taking [Music] driveways oh man myit will meet me at
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should all just get a room and just have one big huge orgy cuz they're all this useless it's like this like sexual
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tension that they just need to release [Music] Som we need to get mer [Music] I'm going all in