00:00:00
i now have a chief of staff he's pretty great he's worked for me for a while and
00:00:03
he's he's doing a great job but it's actually really helped i will say that and then i uh started a family office
00:00:08
wow congrats what does that mean you have a place in your home that you call an office
00:00:14
yeah you don't like to break by your refrigerator there's an office is that the family office yes the family goes in
00:00:19
there to talk about all this stuff where does jade put the stickies that say we're out of granola bars
00:00:26
[Music] [Music] hey everybody welcome to another episode of the all-in podcast episode 72 part du
00:00:49
with us today again the prince of panic attacks the sultan of science david friedberg
00:00:59
ah yes and also the zephyr of zoloft and also as you're hearing cackling the duke of degeneracy
00:01:07
uh the dictator himself holly hoppity and of course everybody's uh favorite the rain man himself the
00:01:14
drunk history channel uncle david sachs i mean david i i follow you on twitter you're tweeting 50 times a day oh i was
00:01:24
thinking the same thing when do you work what has happened to you you you won't meet with startups anymore i i bring you
00:01:30
startups she said you know what i'm no longer you're like stuck in your room tweeting
00:01:34
i just i don't do first meetings that is the end of your career huge mistake no it preserves it preserves my energy
00:01:42
there's nothing more draining than endlessly spending your day in first meetings no why don't you just have a
00:01:47
short first meeting like a 15-minute first meeting well that's what you know we have a team for
00:01:52
is there they don't because we know exactly what we're looking for sas investing is
00:01:57
very metrics driven and so the first meeting yeah exactly so it's like the first meeting we just find out do
00:02:03
they meet our basic threshold for love it for growth yeah exactly fantastic yeah so we run the numbers and i i will
00:02:10
meet with them if they look good i love this i would like all vcs to take the same approach and i will let
00:02:17
everybody know my dm's are open jason at cal academy i will take the first meeting saks i need to call you after
00:02:23
this one of our businesses which is not in sas has started to sell sas software and
00:02:28
we've already booked 40 million dollars of [ __ ] acv by complete accident from zero wow you stepped in it
00:02:36
uh and i need some advice okay yeah let's talk all right everybody uh it's been a bit uh of a crazy couple of weeks
00:02:44
here and i we have to start with the war in ukraine and and do a bit of an update it's been over 20 days the
00:02:52
death toll continues to climb we don't know exact numbers here it's very hard to get information we're not experts we
00:02:57
don't have boots on the ground uh but according to uh the new york times seven thousand russian troops have
00:03:04
been killed and zolensky said on march 12 1300 ukrainian troops have been killed i
00:03:11
think we've got three or four angles we need to talk about here one i want to talk about food supply
00:03:16
with freedberg since you ran climate.com and have a lot of expertise in that and
00:03:20
of course ukraine and russia are the breadbasket of the world trabot i want to talk about markets of
00:03:26
course but let's go to our history channel uncle first uh sacks you have been going down the rabbit hole looking at
00:03:34
the history of this let me just ask you just a pointed question is russia losing
00:03:42
the war and if they are losing the war if that is a pos is that even a possibility that
00:03:47
they're losing the war are they losing the war and then what is the exit ramp here and what does it mean on a go
00:03:52
forward basis right i think great question so here's where i think we stand three weeks into the war is that
00:03:59
putin clearly miscalculated he thought this would be a cakewalk obviously has turned out not to be the ukrainians have
00:04:04
put up very fierce resistance the russians have taken very serious casualties and losses
00:04:10
um and so the war is very much you know up in the air the the outcome is very much in doubt so i think you know putin
00:04:17
was overconfident uh made a political economic and you know obviously humanitarian mistake but i think three
00:04:24
weeks in here is where i would characterize things is it feels to me like the west might be making a similar
00:04:31
mistake of sort of excessive overconfidence and triumphalism meaning that we think the rest of this war is
00:04:38
going to be a cakewalk and the reason i say that let me just give you some examples and then tell you why it may
00:04:43
not be a cakewalk so you've got francis fukuyama had a piece this week basically
00:04:47
he's back with the end of history he predicts that you know imminent russian defeat and that there's gonna be a new
00:04:52
birth of freedom uh for the west it's going to be like the bush doctrine and 20 years of failed
00:04:57
policy in the middle east never happened you got david from you know all but predicting mission uh accomplished just
00:05:03
like the iraq war he said the springtime's gonna be bad for anyone who bet on putin his words which in his view
00:05:09
is anyone who isn't a basically a neocon who favors regime change you had a piece
00:05:14
get a lot of circulation over the last week in the u.s china perception monitor by um
00:05:20
by i think a former chinese observer named hugh way and he basically predicted that china would be under so
00:05:27
much pressure by what the the russians have done you know in terms of humanitarian
00:05:33
uh losses that they would come out basically denouncing russia and support the west and then of course i think the
00:05:40
final example of what you might call western triumphalism right now is that absolutely no one in washington seems to
00:05:46
be pushing for a ceasefire they're all you know they're all paying lip service at least to snow flows fl no-fly zone
00:05:52
idea biden and the squad seem to be the last holdouts uh for the idea of not imposing no fly
00:05:59
zone so i would say right now the west seems to be very confident about the way this war is going and not inclined to
00:06:05
make any compromises or concessions i just want to flag quickly why that you know why there might be some clouds on
00:06:12
this silver lining so you had a washington post article first of all warning it was very interesting that
00:06:17
ukrainian military progress may not be as great as there's quote stratcom the strategic communications
00:06:24
you know aka propaganda so in other words the ukrainians are very effective at fighting the information war but the
00:06:31
the russians are still making progress on the ground you also had this um washington post story about neo-nazis
00:06:37
flocking from all over europe to ukraine to fight for the cause again that story
00:06:42
got it's it's very troubling and it got no likes or retweets because it just doesn't fit the great narrative here
00:06:48
you've got the slow motion humanitarian is that true like this yeah but let's come back to let me lay out all the
00:06:52
issues that we can come back to you've got the slow motion humanitarian disaster of you know a billion people
00:06:57
across the world potentially starving if the spring planting doesn't happen which
00:07:01
we should let freeburg speak to more you've got the fact that russia can still escalate this war i mean they
00:07:06
could still rubble cities uh by elorus could enter the war and you know god forbid they could even use wmd
00:07:13
and then we you have this idea this dream of toppling putin probably look it could happen but probably a fantasy you
00:07:19
had 200 000 protesters pro-war protesters turn out in moscow today nationalism is still strong in russia
00:07:26
yes there's anti-war protesters there but the russian people at the moment seem to be still behind putin and then i
00:07:33
think you had today um the foreign minister of china came out with a statement really throwing cold
00:07:40
water on the idea that they support the west they basically denounced the west for nato expansion so this whole idea of
00:07:46
of the chinese bowing to western media pressure which they in other contexts called the baizou influence i think
00:07:53
that's a fantasy that is not going to happen so look i think that you know you know we all support the ukrainian cause
00:08:01
uh we all support their desire for freedom to their freedom from domination from this um this russian war of
00:08:08
aggression but what i wonder about is whether this would be the opportune time to for washington to try and push for a
00:08:15
ceasefire instead of a no-fly zone and we should talk more about what that might look like
00:08:21
can i give you a psychological assessment of i think what's happening right now yes great just as somebody who
00:08:27
as as you know you guys and i were just joking but six days just being mostly off the grid
00:08:32
with my notifications off i was really like honestly like you you kind of like go through this dopamine
00:08:40
fast and what it actually helps you do is pick out better signal and you know with all respect sex i
00:08:47
think like a lot of what you said is not really a as meaningful signal as the following
00:08:53
which is the most important thing that happened was both sides basically said the surface area of a
00:08:58
deal was very much in sight and that they were down to three or four points and i think that that didn't get
00:09:03
reported nearly as much as it probably should have and what i thought was psychologically
00:09:08
interesting was that as soon as that was said the next few days was when the rhetoric
00:09:13
got ratcheted up extremely aggressively on both sides and the way that i interpret that
00:09:19
typically is having done deals that's typically when you're closest to a deal and you're trying to get the last few
00:09:24
t's in c's and in that same construct as applied to ukraine and russia i suspect what's
00:09:29
happening is they both put out the trial balloon it was well received on both sides the surface area is now down to a
00:09:35
few points i'm not saying that those are justifiable in the end but i think that
00:09:39
if both of these two folk parties want to come to a ceasefire which i think it does
00:09:44
we're probably much much closer than anybody thinks and right now all of this rhetoric is meant to basically try to
00:09:48
get the other side to budge a little bit more and so i suspect and you know i could be completely wrong
00:09:54
um is that we're much closer to a ceasefire than anybody thinks and i suspect that you could see something in
00:09:59
the next two to three weeks and i think that that's really hopeful because you want this thing to come to
00:10:05
an end the thing i'm trying to parse here uh and i don't know if anybody here can even answer this
00:10:11
is how did how did we either underestimate or over estimate depending on the time
00:10:18
russia's ability to invade another country i think i think the thing is we we have we can't
00:10:25
even estimate correctly so for example there was something that said there was a hundred out of a hundred russia has
00:10:30
170 battalions apparently i don't know if that's true or not right of which 100 were sent in we don't know if that's
00:10:37
true or not of which you crane apparently destroyed 50 of which we don't know if that's true or not so
00:10:43
we're left to guess and unfortunately what that does is that people psychologically then fit as david is
00:10:48
used in the past your priors what are your biases right what narrative fallacy do you want
00:10:53
to believe and then you're going to fit so the pro-russian factions will say that's entirely not true the
00:10:58
pro-ukrainian factions will say actually it's even greater than that huge sustained military losses
00:11:04
the truth is somewhere in the middle that will only get accounted for after a ceasefire is in place so i think we
00:11:09
almost need to again we can get caught in this fog of war and and talk about this stuff in ways which
00:11:16
we don't accurately know or we can level up and say the thing that we both know is there was on the record statements by
00:11:22
the foreign minister of russia and the president of ukraine that a cease-fire and the surface area of that ceasefire
00:11:28
is within sight and unless something is materially changed and then in the last three days
00:11:34
which it hasn't it means we are really really close to this being done so i agree with a lot of
00:11:40
what jamal said i don't think it contracts anything i said before i agree that there was a big piece of news this
00:11:44
week that caused markets to rally for three days which is the announcement of a proposed 15-point peace deal
00:11:50
and the we do know sort of the key features of that deal it means that the three big features are you uh ukrainian
00:11:58
neutrality so they don't become members of nato you had zilinski saying that nader membership was off the table
00:12:03
ukraine can't host foreign troop spaces or weaponry there'd be limits on ukraine's military but they would get
00:12:08
security guarantees from the allies uh so it wouldn't be a complete demilitarization
00:12:13
and then the the other pieces of it were ukraine recognizing russia's control of
00:12:18
crimea recognizing that's not coming back and then some sort of independence recognized for the disputed territories
00:12:24
in the dawn bass so i think you're right chamath that everybody now knows the broad contours
00:12:31
of what a peace deal would look like and the markets are starting to price in them getting to that peace deal but i'm
00:12:39
worried that if you look at it from the point of view of what people in washington say
00:12:45
that there's no pressure here coming from washington for zielinski are who's basically our
00:12:52
client he's an american client to make a deal you know if you compare this to say the
00:12:57
1973 yom kippur war where the us was on the side of israel but still acted as a peacemaker and got a ceasefire done you
00:13:05
know kissinger got that deal done even though we were on the israeli side you don't really hear anyone in washington
00:13:11
saying let's get a deal done so i hope you're right but it's because you're not we're not talking about the elephant in
00:13:17
the room which is that in the yom kippur war the unitary resolve and the military
00:13:22
dominance of america was undisputed and so as a result its ability to be the mediator was also undisputed we've
00:13:29
already talked about this when biden called the uae in saudi they wouldn't even pick up the phone the people that
00:13:35
are negotiating this priest peace treaty right now are naftali bennett and emmanuel macron so we're not
00:13:41
at the table so i think a lot of what we're hearing as well is just a lot of the rejection and the psychological you
00:13:47
know kind of anger that we have to not being even part of the process maybe the world doesn't want us to have
00:13:53
such an outsider the point is it's we've moved past that whether you wanted us to
00:13:57
be involved in it or not we're not involved and we are not the principal mediators in this and we i hope to god
00:14:04
that israel and france and whoever else is at the table gets this done yeah i agree with that but here's my
00:14:10
concern is i think everyone knows the broad contours of the deal but if you're russia or you're ukraine you're getting
00:14:16
daily reports of what's happening on the battlefield and if you think you're winning you have an incentive to stall
00:14:21
the peace process to cement greater gains and get more leverage for those remaining details and negotiating points
00:14:28
and so if zolinski thinks that the ukrainians are making progress on the battlefield he's going to wait and so
00:14:33
neither one of them i think left to their own devices can be fully trusted to make it deal i think you need the us
00:14:41
applying some pressure or acting in a pot in a constructive way towards the process and
00:14:48
i think it's a huge problem that the us is not viewed as a peacemaker uh we're basically viewed as so partisan and on
00:14:55
the side of ukraine that no one wants us involved david we've talked on this pod
00:14:58
about us not being the global police officer of the world and that other people need to stand up so maybe the
00:15:04
lesson here is you know maybe strategically jason it's not like we were called on and we didn't
00:15:09
stand up we weren't called on well okay that's we assume that i mean we don't have perfect information either but
00:15:14
let's let's get to friedrich here i think the other wrinkle in all of this and i think it's quite positive is
00:15:21
sanctions uh are seeming to have a profound impact here and people are looking at them as potentially
00:15:28
maybe cyber warfare and just you know actual tactical warfare on battlefields is less important than
00:15:36
economic warfare and russia has been essentially cancelled from the global economy from visa to mcdonald's
00:15:43
uh to exports and these sanctions are not just uh government sanctions these are people
00:15:49
opting into them whether it's corporations uh and other entities saying we're just not going to do
00:15:54
commerce with russia unfortunately and this is something you have great expertise on and so we're lucky to have
00:16:01
you here to talk about it people may or may not know this i'm happy to be here this is the bread basket of the world
00:16:08
they export more wheat than anybody and they also export fertilizer soybeans and
00:16:12
some other inputs uh which we've talked about previously that uh provide meat uh for the world uh
00:16:20
so what can you tell us about the downstream effects of there not being potentially uh
00:16:28
or half as much crops coming out next year and what would happen in places that are the beneficiaries or dependent
00:16:35
on wheat and fertilizer from russia so there's a number of um first order and then second order
00:16:43
effects that are not just about sanctions but also about export controls by russia
00:16:49
that are creating swings in food markets like we've never seen and will almost certainly lead to
00:16:57
widespread famine by the end of this year at this point so the first important point to note is about 15 of
00:17:05
the world's calories come from wheat about a third of that wheat comes from russia ukraine russia has banned export
00:17:11
of wheat and um the the wheat spring planting season is like now this week and there's
00:17:18
not a lot of planting going on you know a lot of commodity folks are in the field trying to figure out who's
00:17:22
actually going to go to field and plant but um no one's making you know the concerted effort that they
00:17:29
normally would under normal circumstances so not only is the current wheat supply in russia ukraine blocked
00:17:35
up and cannot make its way to countries like africa or countries in africa and elsewhere but the future planting season
00:17:42
um is now significantly at risk and again that's 15 of global calories and i just to take a step back the whole
00:17:49
planet earth operates on a 90-day food supply so once we stop making food humans run out
00:17:55
of food in 90 days so another way to think about that is our food supply excess our capacity
00:18:02
in excess is about 25 of our global production so if our global production goes down by
00:18:07
12 we've lost half of our global food supply and that's not just linearly across all nations what happens is the
00:18:13
most vulnerable nations lose their food supply first and the richer nations buy that food supply to secure their
00:18:19
population calories and so you very quickly see a bifurcation happen when you have a shortage in a food supply
00:18:25
like this of just a few points where suddenly famine is a real risk and we already have
00:18:31
about 800 million people on earth that are subsisting on below 1200 calories a day so this very quickly tips the bucket
00:18:39
in a significant way in a number of countries that's going to be really awful and that's just on the wheat
00:18:45
supply and wheat planting problem the bigger problem is the energy price problem and the phosphorus and potassium
00:18:52
problem all fertilizer is made up of nitrogen phosphorus or potassium those are the
00:18:57
three major types of fertilizer that farmers around the world have to use every year in order to grow that crop
00:19:02
without fertilizer plants don't grow nitrogen is made from natural gas 98 of the world's ammonia is made from natural
00:19:08
gas natural gas prices as you guys know have doubled and the futures market looks
00:19:13
like in some places natural gas prices going up like 4x as a result the price of ammonia
00:19:18
fertilizer nitrogen-based fertilizer has gone from 200 a ton to a thousand dollars a ton so it's five times as
00:19:25
expensive to buy basic ammonia fertilizer today than it was a few weeks ago or a few months ago and so this is
00:19:32
now leading a lot of farmers around and then the other big problem is phosphorus
00:19:35
so phosphorus you know by some estimates i mean you know there's a little variation around
00:19:42
here but about 10 of the world's phosphate comes out of russia and um about you know call it
00:19:51
um 25 of the world's potassium comes out of russia but potash both of those markets are blocked up they they are
00:19:56
they are sanctioned and they have banned exports russia has through the rest of 2022. so around the world the cost to
00:20:02
make nitrogen fertilizer has skyrocketed because of natural gas prices because of
00:20:06
the russia problem and russia is not exporting potassium and phosphorus and as a result the price of nitrogen has
00:20:12
gone from 200 to a thousand the price of potassium has gone from 200 to 700 and the price of phosphorus has gone from
00:20:18
250 to 700. so now it's so expensive to grow a crop that a lot of farmers around
00:20:24
the world are pulling acres out of production and they're actually going to grow less this year than they would have
00:20:29
otherwise because it is so expensive and they cannot access fertilizer locally to
00:20:34
plant crops so not only do we have the wheat problem we now also have the fertilizer problem
00:20:40
and the acres coming out of production problem and so food supplies are going to go down even further and this is
00:20:45
going to become even more catastrophic and so there's a scrambling going on right now you know food prices around
00:20:50
the world as a result everyone starts buying up all the commodities they buy up all the corn they buy the soybeans
00:20:55
they buy up the wheat and the price for corn has nearly doubled whereas you know
00:20:59
from where it was in july of 2020 uh the price of soybeans the price of wheat are
00:21:03
all skyrocketing and in a lot of countries they cannot afford to um acquire and individuals cannot afford to
00:21:12
uh to buy food with the skyrocketing commodity prices can ask you a question uh i think it's estimated that the u.s food
00:21:19
supply if you could x out the waste would actually feed most of the developing world because i think 30 to 40 of all of
00:21:26
our food is wasted can you do something with that yeah that that is actually true um a lot of that happens at the
00:21:32
point of consumption so it's in people's homes so it's a reverse supply chain problem um where you know we throw away
00:21:39
a lot of like stale bread and cereal that goes bad or whatever there's some in the fresh vegetables
00:21:45
market but generally the core calorie producing commodities are rice wheat potatoes
00:21:53
and corn those commodities don't go bad in the supply chain they end up getting tossed
00:21:58
out at the end of the supply chain which is at the point of consumption at home so you know i'm not sure there's a real
00:22:03
solution there right now the the bigger issue is like how do you get bulk commodities to the places that are going
00:22:08
to need them over the next 12 months so look right now we're reducing food supplies stocks around the world there
00:22:13
are strategic reserves that are getting opened up and being released as that starts to get the plenish um
00:22:19
diminished and as the production kind of numbers start to come out it looks like
00:22:23
less acres are in production you know and god willing we have a good weather year everywhere this
00:22:28
year because you know a bad weather year in some markets could completely decimate the remaining supply that's
00:22:33
coming out this year regardless it is going to be a humanitarian disaster within a year and we will see hundreds
00:22:40
of millions of people go starving and there will be potentially i think you said hundreds of millions of people
00:22:45
hundreds of millions of people never happened in the history of 100 million people already live on below 1200
00:22:52
calories a year right now so you're predicting that 100 over 100 million people will die because of this i don't
00:22:57
know about death salmon like famine is this like you know short of calories you know within within a market it's not
00:23:02
like hey there's no food like you know there will be strategic reserves released there will be stuff but it
00:23:06
won't be enough we just don't have enough in the way supply chains are set up there just isn't enough and so so
00:23:12
once again we found another supply chain weakness uh like we did in covet over and over
00:23:17
again and so the free surprise will be released but then hoarding is starting so david
00:23:23
you take it after this but the one question i had was maybe talk to me about this concept of hoarding because
00:23:29
there seems to be a cascading effect and you you kind of well yeah it's not just
00:23:33
a little bit as with any market guys as you know when there's scarcity people come in and
00:23:38
buy at a faster pace you know everyone and so this is a market dynamic it's not like people are physically hoarding
00:23:44
loaves of bread but commodity traders countries strategic reserves they start buying up what they can get to prepare
00:23:51
for the famine that's coming then prices go even higher and then it kicks other people out of the market that couldn't
00:23:56
afford to buy it and the whole thing gets really ugly really and there's no off ramp here there's no way to solve
00:24:01
this well what freeberg yeah the thing i want to ask you is if we had a peace deal right now a ceasefire would we
00:24:06
avoid this outcome i mean like how long how long do we have to avoid we need russia to reopen fertilizer export
00:24:12
markets now we need natural gas prices to come down now and we need them to plant the spring
00:24:18
wheat those are three things that need to happen to solve this problem if those three things don't happen we're going
00:24:24
into spring right now so around the world in the northern hemisphere farmers are making plans they're
00:24:29
planting they're deciding how much fertilizer to use and so as this market starts to kind of work itself out over
00:24:35
the next few months a lot of the commodity traders and the the ag departments they publish these
00:24:40
planting reports and they talk about how many acres of what were planted and then
00:24:43
everyone forecast how much the supply will be and we're going to start to see these uglier numbers come out over the
00:24:48
next few weeks and months meanwhile we're seeing supplies dwindle and russia is holding all this stuff so you know
00:24:53
they're holding hostage uh phosphorus potassium and the natural gas pricing is just what it is remember there are
00:25:01
ammonia plants everywhere the ammonia plants and i and all ammonia plants use natural gas to create
00:25:07
you know to create this nitrogen-based ammonia let me make a statement and i'd love your reaction
00:25:14
we're finding out all of these externalities that was made with underlying poor scientific ra reasoning that has
00:25:22
caused these issues to be exacerbated so we know for example that our over-reliance on russian hydrocarbons
00:25:28
could have been mitigated with nuclear but we fell for shoddy science and we fell
00:25:33
for uh a bunch of uninformed people who ran this banner of like environmental protection right
00:25:40
so they screwed us okay and those people now have meaningfully less credibility let me give you another cohort
00:25:46
freebergen you tell me all the people that pushed back on gmo and said gmo was unacceptable it could never happen it
00:25:55
has to be x y and z way and there are ways where we could have been working on plants that had different mechanisms of
00:26:04
action in order to actually absorb and retain nutrients from the soil in different ways that would have made us
00:26:10
less reliant in exactly the way in which fertilizer works true or false yeah gmo
00:26:15
technology as a former monsanto executive so you can call me a monsanto chill here
00:26:21
but yeah gmo technology has been hindered globally by a challenge to adopt it and there are techniques and
00:26:30
technologies that have not been aggressively developed because of the concern on approvals just to get a
00:26:37
single gmo trait approved in the united states today and get it to market can take seven to 13 years
00:26:42
and um even then you have to still go get china to approve it because they're the biggest importer and you have to you
00:26:47
know get all these other market participants to approve it and there are multiple agencies to get to approve it
00:26:53
europe is finally the eu is finally coming back to the gmo problem and saying you know what precision gene
00:26:58
editing can actually be beneficial to growing better more stuff now would it have solved this particular
00:27:04
crisis can i just say what's so ridiculous about this the fact that we have a modern agrarian economy is because we
00:27:11
actually did figure out a way to do gmo except we use the punnett square and we use successive iterations but the minute
00:27:18
that you try to scientifically scale it in a lab all of a sudden that same process
00:27:22
is not uh does not make any sense to me that's it's just intellectually so inconsistent
00:27:28
yeah the thing that really scares people about gmo look i mean i've spent a lot of time on gmos and and the reason
00:27:33
people are upset i have a broader philosophical do you believe in that do you believe in that in consisting that
00:27:37
intellectual inconsistencies like how do you think somebody from you know pre-bc
00:27:41
to today i think that agriculture iterated on our roots no i think agriculture itself is technology think
00:27:47
about it humans humans used to go out and just eat whatever was lying around what nature gave us then we started
00:27:52
making rose in the ground and putting seeds in the ground and putting water on the ground we engineered the earth to
00:27:58
make sure we started to breathe and then we used plant breeding and traditional plant breeding through enormous normal
00:28:03
energy save the world modifying things it is and then what we did with gmos which is the distinction
00:28:09
just to be really clear about the definitional distinction between gmo and traditional plant breeding gmo is when
00:28:14
you take dna from another organism and you put it in the plant's dna to get that plant to do something very specific
00:28:20
and jason you came with me to monsanto i mean you're sure cautious we should be cautious about any
00:28:26
time we're doing stuff like that right but and then there's generally like a very
00:28:30
visceral reaction when i make that statement and people are like wait you're taking the dna from bacteria and
00:28:34
putting it in plants and how do i know that's going to work and so there's these layers of concern which you know
00:28:39
are deeply psychological layers but we can you know scientifically resolve this over time but look at the end of the day
00:28:46
humans today you guys remember last year how much i was talking about that stark
00:28:50
synthesis paper and how important it was we don't need to grow plants to make the
00:28:54
stuff we need to consume if every city around the world had a starch synthesizer and it took co2 from the
00:29:00
atmosphere and water from the ocean and had this technique developed out it could synthesize its own calories in a
00:29:06
physical device without needing to rely on the ammonia supply chain and the phosphate supply chain and all of the
00:29:13
systems that we rely on that are super outdated that are all a scaled up industrialized version of old-school
00:29:19
agrarian techniques humans today i think have the ability to synthesize and print
00:29:24
food and over the next couple of decades particularly catalyzed by what's going on in russia ukraine today we're going
00:29:29
to see these technologies accelerate it's obviously where i spend a lot of my time but i'm super excited about it yeah
00:29:34
i think we suffer from a very insidious kind of plague in the world which is the
00:29:40
plague of over-educated dumb people and it's it's almost as if you know because of their degree in the school
00:29:47
you give them inordinate power to make value judgments that really put the world in a very
00:29:52
difficult position and so when you have something like a war in ukraine it just lays everything bare
00:29:59
you find all these things like you know another another version of this example how did an entire continent and
00:30:05
specifically i mean europe abdicate their entire energy security to the group of it to a group of
00:30:11
environmentalists and to you know to a 16 year old girl without even thinking about what the
00:30:17
right answer was for themselves from first principles that's really crazy that that happened and you need a war
00:30:24
you know where tens of thousands of people have to die to realize that that was a really bad set of decisions that
00:30:28
have been compounding for decades here's another example where food security is yet another one where you know we
00:30:34
weren't able to think cleanly from first principles and so depending on who had more money or who was able to create
00:30:40
more psychological guilt or fear was able to get an outcome that fundamentally puts the world
00:30:46
at a hundred million person plus famine so somehow we need to rethink how our institutions work because we are giving
00:30:53
folks who haven't proved that they can handle power the ability to influence outcomes
00:31:02
for the wrong sets of reasons what's even worse tomorrow these people you talk about who are smart dumb people
00:31:07
they're so privileged that they're living in some bubble making decisions for people who have food insecurity or
00:31:13
energy and security and it's only when kovid showed hey oh semiconductors i can't get my car that i want because it
00:31:20
doesn't have the chip in it or i can't get drugs or i can't get ppe then all of a sudden they see the value in
00:31:26
redundancy and supply chain but when they were living high on the hog and had nothing to worry about in 20
00:31:32
different flavors of captain crunch that you know they can't even think about people in africa jacob i think it's
00:31:37
really important to speak to the capitalist incentive and how you get there so okay we've globalized supply
00:31:43
chains because as a business it doesn't make sense for me to do every step of the thing that i want to do because you
00:31:49
can get better utilization out of capex if a system is running all the time to make stuff so if one step of the system
00:31:56
doesn't need the other system running 24 7 it's going to outsource that and that's kind of think about like
00:32:01
semiconductors think about food manufacturing right doesn't make sense for a farmer today to make his own
00:32:06
ammonia so there's a pneumonia plant that centrally makes that stuff 24 7 distributes it out to a bunch of farmers
00:32:12
that brings the cost down per unit of production and so these systems have existed because we've had less capital
00:32:18
with a higher roi on capital invested at every point in the system by you know distributing and having a kind of you
00:32:25
know centralized supply chain system like this now what we're looking at today is what
00:32:31
happens when one part of that system fails and now i think the big trend for the next decade or two everyone's going
00:32:38
to have like an institutional memory of this and you're going to see companies that are going to start to vertically
00:32:42
integrate supply chains they're going to vertically integrate their their manufacturing we're going to see a lot
00:32:48
of businesses make what traditionally would have been really quote unquote bad capex decisions and bad investment
00:32:53
decisions and they're going to say you know what we need to have redundancy because we cannot face the cataclysmic
00:32:58
kind of circumstance that we faced in the past i also think those are by the way the easy decisions i also think that
00:33:03
there are some more complicated ones of morality that we may have also misappropriated i'll give
00:33:10
you one example so if you think about energy independence of america i think there's there's not
00:33:14
going to be there's not going to be many who think that it's not critically important well
00:33:20
then you go and say we have a short-term bridge with hydrocarbons and the long-term solution is renewables but
00:33:27
underneath renewables is the idea that you have to store these things right you have to store the energy you make
00:33:31
whether it's from wind or solar even if it's from nuclear okay and all of that results in us needing
00:33:37
batteries while batteries need lithium there's enormous lithium deposits in the united states that today
00:33:43
can never get accessed because we've decided that the you know the upper land grouse of the state
00:33:50
is more important than america's energy independence right so when push comes to
00:33:54
shove a small rat like creature is prioritized more importantly than america's energy independence the
00:34:00
downstream implications of that are now obvious rising costs inflation unemployment potential recession war
00:34:06
death famine is the upper land growth that fundamentally more important than all of these systemic risks to humankind
00:34:15
and the thing is for a long time we would never even think about the trade-offs to actually think about why
00:34:20
that decision should be made that way and now we actually have the ability to remake these decisions so it's going to
00:34:26
be really interesting to see whether we upend all of these existing frameworks you
00:34:31
know and there's enormous environmental lobbies that have been created that have
00:34:35
raised hundreds of millions billions of dollars to fight these battles systematically wherever they come up
00:34:42
and in some ways now what people will say well you've really prevented progress and you've actually done more
00:34:47
damage that's going to be a really interesting point good intent save the environment and
00:34:54
then downstream impacts let's go to sax about the sanctions we saw a level of sanctions we
00:35:01
didn't expect they were ferocious they were unilateral they they're you know undeniably having an impact do you think
00:35:11
putin would be at the table do you think these sanctions are having a dramatic impact and do you
00:35:17
think that there will be a tool that we should use in the future or do you think
00:35:20
maybe we need to be more thoughtful about them in other words cancer culture comes up as a an analogy
00:35:27
here people are saying oh it's like cancer culture for a country i think it's pretty great that a country that is
00:35:33
murdering their neighbors doesn't get to participate but obviously you could have some serious concerns if
00:35:39
fertilizer and supply chain issues as we just discussed are going to cause famine so
00:35:45
what's the balance here yeah i think i think it's a great another great example of um
00:35:50
you know we're not thinking through the second and third order consequences of what
00:35:55
we're doing we're just reacting and so to to freeberg's point um so you know first of all we have to
00:36:01
realize this was more than just sanctions this was a complete severing of economic ties i mean basically every
00:36:07
western country pulled up stakes out of they russia mean they did it on their own too i mean
00:36:13
they did it because for the reasons you said because they wanted to make a statement that what putin did was wrong
00:36:18
so every russian who was working for one of these companies basically got fired and all the stores closed and and so on
00:36:24
so i think i think it is the repercussions of it are going to be severe however these things the
00:36:30
economics of it take time to play out and so do i think it creates pressure on putin to make a deal yes
00:36:37
but you know if the if this is going to be determined on the battlefield one way or
00:36:42
another in the next month do i think it has time to operate in that time frame probably not and
00:36:49
i think what's likely to happen here is that in the same way that the real repercussions
00:36:57
of this war are going to be felt in grain production in six months you know there is an economic tsunami
00:37:04
headed for our own economy as a result of the blowback from basically severing you know 144 million russians
00:37:12
from the global economy um there's also going to be geopolitical uh blowback i mean
00:37:18
you know i think it's very likely that the way this is going to play out geopolitically is that russia will
00:37:24
become a chinese client and you know all of those natural resources that china produces
00:37:30
the the gas you know all the the mineral wealth that those resources are going to flow on a
00:37:37
conveyor belt on a belt and road conveyor belt from moscow to beijing and they're going to
00:37:42
fuel the chinese economy yeah yes and no because the reality is the the the thing
00:37:48
we have to remember is china is still a fundamentally export-driven economy of which 35
00:37:53
percent just alone goes to the united states when you add in europe and other oecd
00:37:58
countries it's almost 60 so i think the idea that all of a sudden you russia will be able to back door all of
00:38:05
these things through china into the rest of the world i think is not really realistic and this is actually why i
00:38:10
think the rhetoric is so high because those two countries specifically are put in a very difficult situation
00:38:16
like what do you think the china calculus on taiwan is looking what's happening to russia
00:38:20
hasn't completely exported because it's completely off the table completely off the table they would never consider
00:38:26
invading taiwan knowing that it would put apple in a position or other companies that are entwined in the
00:38:32
chinese economy i think they would have to again i've said this before everybody
00:38:36
has was always you know sort of like land-basing economic sanctions you know even on this pod people it's never going
00:38:42
to work it doesn't do anything and it turns out it's just not true to be clear i think sanctions are an
00:38:48
appropriate way to create economic pressure so that we can get a ceasefire and a peace deal made okay so i do
00:38:55
believe in the same way that i believe we should arm the ukrainians so they can defend themselves while i'm against the
00:39:00
no-fly zone the the issue is just are we actually using the leverage that we're creating
00:39:07
to drive this process to a success i'm trying the ceasefire process to a successful resolution because if we just
00:39:15
make this the new normal which is you know a basically an insurrection in ukraine
00:39:21
that drags on forever and uh the china and russia cut off from the global economy and becomes a client of china i
00:39:28
think there's a parade of horribles that flow from that and freeburg just outlined one of them which is hundreds
00:39:34
of millions of people across the world potentially starving so my point about sanctions is not that
00:39:40
we shouldn't have done them but there are going to be big repercussions for our economy if
00:39:46
we don't resolve the situation in ukraine let's do best case worst case with these new this new economic order
00:39:52
here in economic sanction ability that the west has now demonstrated um you know quite effectively
00:40:00
for me the best case scenario here is if you want to participate in the global economy and globalism globally
00:40:06
globalization 2.0 means you're going to have to be hit some base uh behavior level of being a good actor in the world
00:40:14
if you want to participate in the wider economy therefore as chamath just pointed out i
00:40:20
think quite correctly taiwan's off the table i mean china does already is having massive
00:40:26
economic downturn and headwinds the the idea that they would face what russia is
00:40:31
facing right now in terms of sanctions globally would be cataclysmic for them so
00:40:36
do we think what's that what's the best case in your mind friedberg the worst case of this new economic sanctions that
00:40:42
we've just outlined best case worst case much of this is driven by um russian decision making not just our
00:40:50
decision making and so you know there's a lot of question marks around what they're gonna they've said
00:40:57
definitively we are banning all fertilizer exports through 2022 okay so like does changing a sanctioned model at this
00:41:06
point get enough resolve for them to kind of come back to the table do we need to kind of weave that into some
00:41:14
discussion peace discussion that they're having with ukraine i think there's going to need to be this multilateral
00:41:19
like global either support or partnership model that's going to have to kind of emerge
00:41:25
for this to all get resolved positively i don't think that it's just about russia and ukraine agreeing to a bunch
00:41:29
of terms we're all going to be affected by what's going on and what russia has chosen to do back to us and we all think
00:41:36
we're in the power and we've blocked them and destroyed the ruble and you know knocked them back to the stone age
00:41:42
yada yada but like we're hurting ourselves far more than we realize and we have to go get something back from
00:41:48
russia in order to resolve this so nuanced i'm not sure i totally agree with that i actually think that you know
00:41:53
necessity what is it necessity is the mother of invention um i think that this has the ability
00:42:00
just circling back to what we said before for us to rewrite all of these other decisions that were
00:42:06
frankly not necessarily rooted in either first principles or long strategic thought in a way that can actually
00:42:12
improve the state of play for everybody not just including us for the next 50 or
00:42:17
100 years so i'm not completely convinced that it's as catastrophically bad as you think
00:42:22
well what about this uh friedberg if if we were thinking about food stability you mentioned your slurry and you know
00:42:28
being able to make these calories without actually planting any food if we it's not going anywhere if you
00:42:35
call it a slurry but yeah okay let's call it a protein bar you know like ultimately jason we can actually
00:42:42
create pasta bread rice i mean that's where this all goes perfect by the way just so you guys know i want to frame
00:42:48
this up it's super important 60 of the world's calories come from carbohydrates which are basically two molecules
00:42:55
amylose and amylopectin okay that's what makes up starch so if we can synthesize
00:42:59
amylose and amylopectin we can make it how long would it take how long would it take what would it cost to build your
00:43:06
pasta making machine and rice making machine you know uh to have more decades-long scale-up problems
00:43:13
right this is not like this is like hey we got a solar it's similar to nuclear or solar exactly yeah yeah okay but
00:43:20
there are solutions to this i look i mean this is why i keep coming back to saying like we're evolving the global
00:43:26
economy and planet earth away from this model of centralized industrial manufacturing into a production system
00:43:34
that looks more distributed more decentralized with better technology and that that's really a big trend for this
00:43:40
century for for our global economy and that's why right now i think the near-term trend is in de-globalization
00:43:45
people making less capital-efficient decisions that create redundancy in supply chains and there's a lot of ways
00:43:50
as investors to play that by the way sax were your thoughts on maybe the the high order bit for the west being a race
00:43:58
to resiliency or a race to redundancy in energy in semiconductors this race to resiliency in food supply yeah i mean
00:44:06
look trade creates economic wealth but it also creates dependency and we're realizing the downsides of having that
00:44:12
dependency if we're dependent and or europe is dependent on russian gas or you know you saw during covid we've
00:44:18
become dependent on chinese pharmaceuticals all the pharma companies have moved their manufacturing
00:44:23
over there and then you know that got when china was rattling the saber uh because we were blaming them for covet
00:44:30
this is back in in 2020 they all of a sudden started implying we might not get access to pharmaceuticals so look we are
00:44:35
going to have to rethink all those trade relationships you can't have trade without trust because
00:44:41
again if you if you you are empowering the producer to cut you off when you make yourself dependent on that yeah so
00:44:48
so look i think we're going to rethink all of that but can i go back to your best case worst case question yes i was
00:44:53
trying to get somebody in there on this i think that's a good question and you know i hear here let me lay out the best
00:44:57
case and then the worst so the best case look the best case is this sort of the fukiyama argument
00:45:04
the sort of the from argument is this western triumphalism which is luck sanctions are going to drive the
00:45:10
russians into submission they're going to topple putin the people are going to rise up they're going to lose this war
00:45:16
we are going to strike a great blow against autocracy and liberal democracy is going to win okay i understand that
00:45:22
argument okay now what's the the worst case scenario worst case scenario is freeberg's right we end up with hundreds
00:45:30
of millions of people starving the war drags on because the russians aren't gonna give up so the sanctions
00:45:37
you know while be while hurting the russians don't end the war and in fact drive them into the arms of the chinese
00:45:43
you know the russia has been called a big gas station with nukes that gas station will now fill up the chinese
00:45:48
economy henceforth worsening the balance of power in cold war ii and then there's a big you know tsunami
00:45:55
or boomerang headed for the u.s economy we we have a recession later this year as gas prices go to seven dollars and
00:46:02
ten dollars a gallon and so it ends up hurting us and so i don't i i certainly see the case for sanctions
00:46:11
um but um but i wonder if people are really thinking through the downside scenarios
00:46:17
and what i what i do think is that if that that the removal of sanctions should be certainly something we're
00:46:24
affirmatively putting on the table in these ceasefire negotiations and and that sounds obvious but i saw a tweet
00:46:30
from ian bremmer who's sort of part of the foreign policy establishment think tank guy who has been pretty good
00:46:36
on like smart he's smart and he's been good on no-fly zone he's been saying the same things i've been saying like guys
00:46:42
this is tantamount to a declaration of war we're not going there uh also basically saying that listen no matter
00:46:46
what the russians do we are not gonna get into war three here he's been cool-headed about that but he also
00:46:52
tweeted that listen as long as putin's in control of russia we can't ever do business with them again sanctions are
00:46:59
sticking around basically forever and i just wonder if that is an overreaction if if we're gonna make
00:47:06
that policy i'd rather see us as america be willing to put economic relations back on the table
00:47:14
as you know in this peace process as opposed to saying that the russians are cut off forever because otherwise
00:47:21
they're just going to become a chinese client state i don't see how that benefits us long term well again i did
00:47:26
but again david what do you think they do with china china what are they going to do take 60 percent of their goods and
00:47:32
still export them to us even though it just contains russian materials that are now considered contraband
00:47:38
so they can't absorb it economically is my point there's not enough demand outside these oecd countries to absorb
00:47:44
all of that well here's what i think it's just mathematically not possible i think so look i think you make a point
00:47:53
but i think if you're going to look at this from like a 50 000 foot level i think there's like two grand narratives
00:47:57
about what is happening in the world one narrative sort of the neocon sort of liberal hegemony narrative is
00:48:04
that we're in a great battle between democracy and autocracy the other narrative is that we're in cold war ii
00:48:10
is that it's more of a great power rivalry between the us and china i tend to think that the latter is where we're
00:48:16
really at in the world and the reason why i say that is you look at there's a lot of autocracies who frankly we
00:48:23
support because we want them on our side for example you know turkey is run by an autocrat um
00:48:30
you know erdogan is becoming more autocratic in egypt we had sort of democracy there for a
00:48:37
brief moment when mubarak got overthrown guess what they elected the um the muslim brotherhood and we didn't
00:48:44
like that too much and now we got general al-sisi in charge we like that a lot better
00:48:49
you know we are still allies with the the saudis and they're they're a more autocratic government so i tend to think
00:48:56
that you know the better way to describe what's happening in the world is a balance of power rivalry between the us
00:49:03
and china which is only going to pick up momentum in the current in the coming decades and we have to think about who's
00:49:10
on our side of the ledger and who's on their side of the ledger and you know i think
00:49:15
at this point it's we've pretty much driven russia completely onto the chinese side of the
00:49:21
ledger and um i think it's gonna have like very bad consequences for us all right let's
00:49:26
segue from here into uh the economy inflation and markets in a previous episode chamath you talked
00:49:34
about the the psychological cycle of you know ignoring good news then accepting it being outraged by it and
00:49:42
then maybe not taking the good news in the bad news column obviously inflation continues uh last six months of cpi
00:49:51
numbers year over year obviously uh september 5.4 i'll fast forward to november 6.8 january 7.5 february 7.9
00:50:00
excluding food and energy core inflation still rose 6.4 that being said um we have
00:50:07
11.x million jobs uh available for americans five or six million people unemployed who are looking for work
00:50:14
obviously there will be some uh mismatch in terms of geography and skills there uh and then corporate earnings great but
00:50:21
a recession possibly looming where are you on this uh and obviously the market's bottomed out so where are you
00:50:28
at with the economy hope fear and otherwise um well i think that we're in the midst of
00:50:36
what i would call a melt up so you know probably the next month month and a half
00:50:43
there really isn't much quote-unquote bad news that hasn't been priced in the the thing that i've learned over the
00:50:50
last few years is that markets don't actually care what the news is they they can process good news and bad news
00:50:59
equally well what they despise is the uncertainty of what the news could be and so
00:51:07
this week was really important because we had two um huge buckets of uncertainty
00:51:13
taken out of the market so the one we've already talked about which is when when
00:51:17
the market saw that there was a surface area of a deal between ukraine and russia
00:51:22
that was really constructive because neither side would have signaled something if both parties were very far
00:51:29
apart so that that meant to the markets were a few weeks out from something getting done
00:51:34
and then the second thing was jerome powell and the federal reserve they finally had their meeting they
00:51:39
raised rates 25 basis points but even more importantly they gave you a very prescriptive forecast
00:51:46
of what the next year will look like at a minimum and possibly even two years and once you could have that
00:51:54
you were able to then go and redo all of your expectations and what people realized was okay you know inflation may
00:52:02
actually start to get tamed in the back half of the year the economy is still quite strong uh and
00:52:08
we could actually support two two and a half percent interest rates and still actually grow really well and
00:52:14
so what you've seen in the last three or four days is a reaction to the loss of uncertainty
00:52:21
and so there really isn't you know uh the only thing defying the ointment could be if
00:52:28
the war all of a sudden escalates not that it gets dragged on because at that point that's also i think been priced in
00:52:34
but if something very meaningfully different and some and and russia in this case ratchets up the intensity
00:52:42
by going you know nuclear something else although i think that's a very long tail
00:52:45
chemical weapon seems a possibility or carpet bombing i think these are all very very low probability events um but
00:52:52
in the absence of these things you basically have really constructive dynamics right now for at least the next
00:52:58
month and a half maybe even two months how much of this has to do with retail investors who were yolo huddlers
00:53:06
speculators stemi chats super active for two years and then maybe getting super spooked right now
00:53:12
and maybe needing the money to deploy in their lives look the the thing to remember and and and i hate to be this
00:53:18
blunt but it's true retail is not a very good signal of anything in fact um if you actually look at retail flows
00:53:30
typically you will make money by doing the exact opposite of what retail does and i posted this in the group chat to
00:53:36
you guys you know every single day of since the beginning of this year retail was a net buyer in all of those
00:53:44
days the market got punched in the face finally at the beginning of march retail
00:53:49
capitulated right and i posted that same day and i said guys this is the moment to buy
00:53:55
and it lo and behold what happened the markets rallied meaningfully from that point
00:54:00
and the reason is because they were going into the end of q1 you have a huge tax bill due in april 15th people were
00:54:07
starting to just finally give up they were buying every single day and they finally gave up but that capitulation
00:54:12
was the moment that you buy so if anything retail is is is the you know you know i've said before you fade your
00:54:18
faith list you know retail flows are something you typically will make money by fading by
00:54:24
doing the exact opposite of whatever retail is doing um and you just need to have access to
00:54:28
that information if you have access to it you can kind of um you know profit from it so
00:54:35
where are we going from here probably up david you've been pessimistic uh we're seeing a lot of changes in the private
00:54:40
market funding rounds taking longer a lot of funds getting closed uh you know venture funds that is
00:54:47
but seems like a lot more diligence is being done the time mean time to closing a deal has definitely extended massively
00:54:55
what's your batting strategy now as a venture capitalist i think that there's going to be a trickle-down effect of
00:55:00
what's happened in the market to privates and the valuations are going to go back to their pre-coveted levels i
00:55:06
mean ar multiples pre-covered we're like 20 not 100. so we're seeing a massive repricing
00:55:13
of deals and that's going to continue and i don't think it's just going to be this like transient effect everything's
00:55:18
going to bounce back in a few weeks on the public markets the defining characteristic of these markets is
00:55:24
volatility i mean the vix which is the measure of volatility is at one of its all-time highs and so it's
00:55:30
true that over the past week we saw a nice sort of melt-up or a rally because there was speculation about this peace
00:55:39
deal the financial times had that article on the 15-point plan chamath is right that if that peace deal
00:55:46
gets signed i think the market rallies strongly because you know it went up considerably just on
00:55:53
hopes that it might be signed but on the other hand if this peace process falls apart
00:55:58
i think the market will give back all those gains and then some i think we are nowhere near out of the woods on all the
00:56:05
risky scenarios that could develop from this war i think that if there is no peace deal i
00:56:11
think you can almost expect russia to escalate in the war they have said this is an existential
00:56:17
issue for them i think that would mean at a minimum you know heavy bombing of ukrainian
00:56:23
cities and then that will step up the pressure even more on biden and washington to get militarily involved
00:56:29
this situation could still spend out of control so you know i think in the absence of peace
00:56:34
deal and then finally we have all the risks of recession we we definitely are seeing a slowdown in the economy right
00:56:39
now and i think if this war continues and we don't get the spring planning and things keep you know deteriorating i
00:56:47
think we're headed for a very serious um recession in this country i think we'll
00:56:50
go from slow down to recession so if i were advising biden of course no one's listening to me but if i were advising
00:56:57
biden i would be telling biden listen mr president we are going to have a horrible midterms in november and you
00:57:03
know we are going to have a really hard time in 2024 if this war continues and you know we head down into a recession
00:57:10
or any of the other catastrophes that could happen we need to push for a peace deal right now
00:57:16
and the u.s should be playing a constructive role and we should be applying pressure wherever we can to
00:57:22
make a deal because the broad contours of this deal to jamaa's point have been set
00:57:28
i don't think any of the details now that we know look it's about crimea it's about dawn bass about neutrality
00:57:34
none of the details that we're still fighting over are more important than getting a piece right now and if i were
00:57:40
in the white house i'd be singly pushing for that yeah it's uh it's complicated there the
00:57:47
the counter to that obviously is this could be you know the beginning of the end for putin and you know even if
00:57:53
that's a 10 chance or 20 chance the possibility that in our lifetime you know russia could have a leadership
00:58:00
change could be tremendous obviously it's a coin toss which way it goes uh but change could be i think
00:58:06
so look that's certainly in the cards and um and look if somehow magically putin got toppled and replaced with a
00:58:12
democrat that would be a wonderful thing um however before it's rare but it happens yeah
00:58:18
well tell me when does it happen uh east germany right on the wall yeah i mean that was a reunification
00:58:27
here's the basic problem we understand the russians in the russian system you've got all these
00:58:31
oligarchs are basically like bosses or mob bosses and then putin's like the boss of bosses right so what are the
00:58:37
odds if you take out the boss of bosses that he's replaced with someone who's a democrat versus the next biggest baddest
00:58:44
boss um i think you know look that that's certainly a possibility but my concern
00:58:50
is that when you play for maximalist upside like that you're also taking maximalist downside and a lot of people
00:58:55
have made this point that look if putin's life is on the line he's going to be more willing to do anything
00:59:01
and i think that the better approach and you've heard people mention this idea of
00:59:05
the golden bridge from sun tzu which is give your enemy a golden bridge to retrieve i mentioned it so that he's not
00:59:12
fighting for his life that was a really clever um framework jacob i think yeah i think i
00:59:18
mean if you guys went and created a tally and i'm not trying to be debbie down here
00:59:24
but you know since the advent of the cia the number of times that we have tried to
00:59:28
incite regime change and then the number of times it's been successful what is that percentage i
00:59:34
mean we don't know because we don't know how many times we've tried well we know
00:59:37
we know of many attempts yeah i mean we've chased a lot of two outers which every time we try it we either get the
00:59:43
same or worse so for example syria we tried to get rid of assad he's still there and now it's worse uh afghanistan
00:59:49
we tried it the taliban are back in power well no but hold on we finished to take it to the calculation is what if it
00:59:54
does change hold on iraq we got rid of saddam and now we've handed that country to uh iran on a silver platter the
01:00:01
ayatollahs control it gaddafi in libya we got rid of him because he was so horrible and now that
01:00:08
country is in chaos you've got to try open air markets we tried in um in ukraine we tried in ukraine in 2014.
01:00:17
so our track record is not super good yeah no i mean i i think regime change is like chasing someone out or something
01:00:26
you know if we're a company at some point we would have been pipped for our ability to do regime change
01:00:31
i don't i don't think it's a great strategy i'm not necessarily advocating for it but
01:00:36
i'm not saying that i'm saying whether or not it's a good strategy i think that we are particularly not good at it yeah
01:00:41
we need a performance improvement plan on that front well we should just i think we should just stop trying that we
01:00:45
shouldn't be going for a regime change we should be this is a good question you and i had this thing where i said you
01:00:50
and i are in sync that we both want to contain dictators and maybe isolation and you're like i'm not into isolation
01:00:56
so i think a definition of like what is the strategy for containment going forward post a peace deal with
01:01:02
russia and isolationism you know i guess is a bit of a trigger word and it's loaded
01:01:07
but well yeah i'm not an isolationist next person i would describe my strategy as selective engagement meaning that we
01:01:14
still engage internationally on behalf of vital american interests in our core interests but we don't stick our fingers
01:01:20
in the pie of the internal affairs of all these countries all over the world to try and foment regime change so for
01:01:26
example like what's an example of a vital american interest i would say standing up to to china in the sense
01:01:33
that we do not want them dominating asia and becoming a pure competitor to the united states that can then challenge us
01:01:38
all over the world so some more pragmatists on it and that would be more productive we can be isolationist with
01:01:43
north korea because there's literally nothing they can do for us and and look i would not be throwing
01:01:48
countries like turkey and egypt and saudi arabia out of our coalition in cold war ii because we don't like the
01:01:56
the nature of their governments and i'm not saying i support autocracy i don't know but the reality is dialogue is
01:02:03
reasonable because if you don't then the other side will the foreign policy playbook
01:02:08
is going to get fundamentally rewritten after this russia ukraine war in large part because of the
01:02:16
effectiveness of government sanctions plus corporate social responsibility whatever
01:02:23
you want to call that csr public sentiment or whatever you want to call it yes i
01:02:28
agree but the combination of these two things has proved to be incredibly effective
01:02:33
at setting the stage for some sort of compromise or regime change the spectrum of outcomes is there but
01:02:40
the point is that's an incredibly unique set of circumstances where before we never would have thought an economy that
01:02:46
large or a country that important on the world stage would ever have compromised in the absence of military
01:02:53
intervention and i think that that's important to think about as we think about what our forward going china
01:02:58
policy looks like i think really like the the importance of like the oecd right the importance of all these
01:03:05
organized nations that consume from china uh becoming more organized now probably
01:03:11
makes more sense i said this before in a tweet but the importance of the us dollar has become completely primary
01:03:17
which has been an incredible benefit you know benefit of what has happened because of this war
01:03:22
you know very small silver linings in the grand scheme of all this humanitarian crisis but
01:03:27
those are going to be really important things that the united states can seize on so you know we may in some ways have
01:03:32
have had some diminished power in order to facilitate peace in this truck in this conflict
01:03:38
but the downstream capital that we could accumulate by organizing these countries
01:03:42
more effectively i think could be really important and then separately we have to
01:03:46
have a moral conversation in the united states about all these things like environmental laws like our
01:03:52
approach to agriculture that may have been underrated absolutely yes with faulty logic a little more pragmatism
01:03:58
would go a long way yes it would i'm a little more pessimistic about our foreign policy establishment and part of
01:04:04
the reason i say this is because i'm very disappointed in the republicans the republicans used to be the party a vital
01:04:10
national interest meaning america did not get involved all over the world unless we had a vital national interest
01:04:16
you just never hear them making that case anymore it's all the way back to sort of bush doctrine and you know as an
01:04:22
example they're all pushing for the no-fly zone they're all pushing for the delivery of the migs despite they want
01:04:28
war just say the words they're weird i mean those right wingers are crazy why are
01:04:34
they so not war i've been very critical i mean i've been the war on this i don't
01:04:38
understand well anxiety i think i think there's two possibilities i think is it free what is
01:04:46
it anxiety yeah and this is why i predicted war at the end of last year but you know i think
01:04:52
that trying to be a great prediction right look i've been i've been very disappointed in the republicans and i
01:04:56
think i think here's what i think is going on i think if any of those republicans like say uh mitt romney or
01:05:02
something and look i think lindsey graham is just a crazy sort of warmonger but but you take someone like mitt
01:05:07
romney who's basically saying all these um sort of more uh bellicose and escalatory things if he was actually in
01:05:15
biden's shoes i bet he'd be making the same decisions as biden because he would not want to risk war
01:05:23
three but it's such a cheap easy partisan political attack to say that biden is being weak and he's not doing
01:05:30
everything at all i think history will look back and think two things about about this whole thing with it with the
01:05:36
american lens the first thing was for whatever set of reasons we lost it and we diminished some stature in the
01:05:42
world as a perceived arbitrator and mediator in these kinds of conflicts but separately i do think biden has done a
01:05:49
very good job in seeing the forest from the trees he held the line on military intervention and he has really ratcheted
01:05:56
up the ability for others to impose economic sanctions beside and behind the united states and i think that will turn
01:06:02
out to be a master stroke i give him credit and i think that that he deserves to be acknowledged for that i'm going to
01:06:07
agree with you because i i think the uh biden has done an amazing job of just saying outright we're not going to
01:06:14
war we are not starting to i mean and sacks you've lauded them i think that shows some intellectual
01:06:22
honesty on your part and to your point there's a reason why we lost our credibility these misadventures of
01:06:28
saxophonism in the middle east have been disastrous we made huge mistakes and we
01:06:34
need to take a different approach i'll give a trump a compliment he didn't start any wars and if you look at every
01:06:40
president who came before him in our lifetime every time they start two or three
01:06:44
conflicts and he was like we're going to have a no war policy and now he got by and say we're not going to go to war
01:06:48
either this could be a tipping point and our focus i think the ultimate checkmate
01:06:53
should be biden coming out and the eu coming on saying we are going to start a race to resiliency and here's how it's
01:07:00
going to look jason it's an incredible point that you just made i just want to reiterate it since reagan i can i can
01:07:06
explicitly point out incremental conflicts that the president of the united states
01:07:13
has approved and greenlit to get us into since reagan so we've been we've been in
01:07:18
seven wars we've been in seven wars since the end of the cold war it's amazing the
01:07:22
american people trump was the only one that did not start a new war right before biden you want to know why
01:07:27
because he was a populist and the people of the united states of america don't want these crazy wars they are sick of
01:07:33
all these wars it is the foreign policy establishment that is pushing for all of
01:07:38
these wars and listen why and obama the same way obama let's just go back obama beat hillary clinton for the
01:07:45
democratic nomination because he was against the iraq war and she was for it yeah obama had the right instincts on
01:07:51
ukraine he did not want to escalate the situation remember in 2014 when they took crimea he said america does not
01:07:58
have a vital national interest that justifies us going to war he was right the president that tried to incite
01:08:04
regime change it's it's right you know why you want to know why because because the state department lifers you
01:08:11
know who institut who incited that are under secretary of state for russian affairs was victoria newland
01:08:19
who was a foreign policy advisor for dick cheney and these people bull weevil their way into the foreign policy
01:08:24
establishment they're in the think tanks they're in the state department what did
01:08:28
you just use bull evil they they like it's like they are the permanent hold on a second
01:08:34
they are the permanent establishment of washington the president's come and go they stay forever yeah she was there
01:08:41
she was caught on a phone call basically picking the new leader of ukraine after
01:08:47
a coup in 2014. she is she the one that had that famous quote that said uh putin
01:08:52
[ __ ] putin was that he said no he said he said yeah she said yas is our guide basically picking yatsenyuk to be the
01:08:58
new leader and she said [ __ ] the eu when the eu wanted to take a more temperate
01:09:03
approach okay okay look at william f buckley here you going saks i think the mistake biden made listen i think biden
01:09:09
has good instincts on this i think he had good instincts last year in june when he called for basically an
01:09:15
emergency summit with putin to dial down the tensions and i think that summit was
01:09:20
successful so what happened okay the intercept just had a great article talking about how tensions ratcheted
01:09:26
down after that june summit but they picked back up in october november what happened between june and october i'll
01:09:32
tell you what on september 1st zielinski met with biden in the white house and the state department issued a joint
01:09:39
statement basically reaffirming that ukraine would be part of nato they would reaffirm military ties economic ties and
01:09:46
then on november 10th they published a giant charter agreement between the united states and ukraine that was
01:09:52
signed by blinken now look did i know about this yes but this is the state department agenda and it was on the
01:09:59
heels of this charter agreement that the russians basically said they had reached
01:10:03
the boiling point they basically delivered the ultimatum to the us in december and precipitated
01:10:10
the crisis that preceded this war so my point is just listen we have a state department with its own agenda it loves
01:10:17
regime change it loves having clients all over the world and inserting its fingers in the pie and unless biden hold
01:10:25
on if unless biden stands up to his own state department we will not get a ceasefire and we will not get a peace
01:10:31
deal and that will be disastrous for his presidency what i will say is um i think
01:10:35
biden has done a very good job and uh i i know tony really well and i think tony's trying to do the best job
01:10:41
he can i think he's done a pretty good job all things considered as well that's awesome
01:10:45
final thoughts here on uh you know a very difficult time period we're living through the global order
01:10:53
is being restructured it's predictable i think again if you read ray dalio's book which i recommended
01:11:00
heavily last year um it's surprising how much of that simple um rubric uh is playing out uh today
01:11:10
exactly as that rubric kind of estimated it would um and you know the look i mean by the
01:11:15
way one way to think about the china russia us dynamic you know you got a one two and three player game theory number
01:11:21
one wants two and three to be at it because then they'll you know end up diminishing value number two wants one
01:11:27
and three to be at it number three wants one and two to be at it and so we're seeing that um
01:11:32
that multi-party game theory play out right now um and you know again based on that
01:11:37
rubric you could probably predict where this is all gonna end up brilliant point
01:11:40
listen if you were to look at this from the chinese standpoint they must be loving what's going on loving it
01:11:47
old saying i think napoleon said it never interrupt your enemy when he's making a mistake why is china
01:11:52
so quiet right now well yeah because they love their dreams their dream is the us and russia
01:12:00
attacking each other yeah we have to implement energy independence writ large and we have to make sure
01:12:09
that it is very clear we have influence amongst all these oecd countries because
01:12:14
if china takes one foot over the line we have to have the ability to do to them what we've done to russia economically
01:12:21
it's the only way in which we can ratchet down all this tension and find peace yes the new war is the war on our
01:12:28
dependency on dictators we must must must have a race to resiliency we're going to talk about this and more at the
01:12:35
all-in summit no more may 15 16 and 17 all in summit miami uh 500 of the 700 tickets are gone if
01:12:46
you want to apply for a scholarship you can apply tell us how much you love the show at the website just do a google
01:12:50
search for all in summit really excited to announce keith reboy will be joining us uh one of sax's besties a very
01:12:56
iconoclastic person we're going for iconoclasts next up brian peterson friend of the pod from flexport
01:13:02
talking about all these supply chain issues the number of speakers we're going to
01:13:05
have is going to be extraordinary brad gerstner friend of the pod is going to come talking about markets education joe
01:13:11
lonsdale is uh halfway in again another iconoclastic controversial person and then
01:13:21
we'll keep announcing more every week uh apply for a scholarship if you like and
01:13:26
uh we'll see you all there for love you guys sultan of science the rain man and the dictator i'm jake al
01:13:32
love you besties bye bye bye best love you sacks love your socks love you free bird back at you those are good feelings
01:13:39
for you to have let your winners ride rain man david sacks and it said we open source it to the
01:13:50
fans and they've just gone crazy with it [Music] we should all just get a room and just
01:14:13
have one big huge orgy because they're all just useless it's like this like sexual tension that they just need to
01:14:17
release [Music] your feet we need to get back [Music]