00:00:00
is this a real picture is this help you come on stop last year the gut I recognize the gut very
00:00:10
it's like a fingerprint youut printed him you gut printed him oh my God look at this
00:00:20
picture pull it up oh no this ister is unbelievable I I don't think you guys know there's a treasure Trove you go to
00:00:33
Google Images you type in Phil's name and WSOP which is the last thing I would ever do dozens of these dozens every
00:00:39
year he dresses up in some outfit oh my God let me see which ones I like yeah the plunging V Line's a little much I
00:00:46
can do without the pl he does have a perky C cup so I mean sometimes you got to use your asset
00:00:54
sex oh my Lord Nick pull this one up oh oh my God oh my God it's h it's just incredible it's posidon it's just
00:01:09
incredible it's incredible oh no wait it's Poseidon's well it's no no it's posidon my gosh oh oh Phil we love you
00:01:16
we love you we love you pH you Phil and Phil loves attention let your winners ride Rainman
00:01:25
[Music] David open sources to the fans and they've just gone crazy [Music] with all right everybody Welcome to
00:01:38
episode 163 of the Allin podcast with me of course the sultant of beep science we'll find out his crop soon David
00:01:46
freeberg and David Sachs the Rain Man himself and of course chairman dictator Jamal ptia let's get to work boys tons
00:01:53
and tons of interesting topics on the docket markets are ripping jobs and inflation looking good as the Dow hits
00:02:00
an all-time high uh forget about soft Landings boys sentiment is now flipping to a market melt up in 2024 the GDP
00:02:08
numbers that just came out smashed at 3.3% year-over year in the fourth quarter expectations were just 2% Dow
00:02:14
and S&P 500 both hit all-time highs in the past week Dows above 388,000 for the first time in history CPI number
00:02:22
reasonable up 30 basis points month over month 3.4% from last year getting close
00:02:27
to that 2% Target and uh the jobs data beat expectations 2023 jobs not so bad at 2.7 million it's the fifth strongest
00:02:37
year for job increases since 2020 real test will be of course this year we've seen a bunch of layoffs we'll get to
00:02:42
that later gas prices plummeted 40% from $5 a gallon in the summer of 2022 now just $3 a gallon and consumers are
00:02:51
apparently feeling great about the economy University of Michigan which is the most
00:02:56
respected report on consumer sentiment said it increased in the past two months the most since
00:03:04
1991 and the Federal Reserve Bank of New York survey found that Americans inflation expectations have reached
00:03:11
their lowest point in three years Ki uh is a prediction Market I like to use and
00:03:15
it says 37% chance of a cut by March that's dropped so people are thinking the rate cuts are going to get pushed
00:03:21
back and prediction markets also think four to five R cut still in 2024 but again people seem to think they're going
00:03:27
to get pushed towards the spring or second half chth you alluded to this melt up I don't know was it like three
00:03:34
or four episodes ago that we might have a chance of a market melt up everything seems to be aligning here
00:03:40
what do you think I think the important thing to note is that Tesla put out a pretty
00:03:47
important missive at the end of market Clos yesterday which essentially said that expect a very different demand
00:03:55
curve in q1 and you have to understand that Tesla has done the best job of understanding
00:04:06
Supply demand and their pricing power and the pricing elasticity of their cars and so the fact that they put this
00:04:15
out to me says that we are now really in the belt tightening phase of this kind of like economic
00:04:26
process so I think that the next probably six to 9 months are more of these kinds of things where folks
00:04:34
realize that the amount of discretionary income that people had is less they will either lower prices or lower
00:04:45
expectations and so the the thing is and what happens to the market this is sort
00:04:50
of why about a month ago when we on on the pot I was kind of like we're going to be in a melt up and it's because the
00:04:57
economy will cool demand will cool inflation cools rate Cuts come in again it's not really worth debating whether
00:05:04
it happens in 6 months or 9 months but when we look back 18 to 24 months from now the market will probably be
00:05:11
materially higher because there's just so much money on the sidelines and that just continues to grow and grow and grow
00:05:18
so trillions of dollars on the sidelines cooling economic consumption actually on
00:05:23
the ground meets reasonable to resetting to lower expectations for some of these
00:05:28
companies I think that all roads lead to a continued melt up saak you were just on the prediction show saying hey maybe
00:05:37
it's going to be a little bumpy so and again this isn't none of this is investment advice we're for D it's
00:05:43
talking but what are your thoughts on the the economic data and the Melt up scenario versus the soft Landing versus
00:05:49
the rocky Landing well Jason we're only three weeks into the new year so there's
00:05:53
plenty of time for bumps here but this report was good I mean the GDP growth was good inflation continues to come
00:05:59
down down so you know we are on track here for a soft Landing it seems like um but yeah there's definitely potential
00:06:06
storm clouds on the horizon like jamath mentioned there's some data points out there suggesting that the consumer may
00:06:13
not stay as strong as the consumer has over the past year there's a few other things though that are kind of going on
00:06:19
the FED has announced that they're going to end btfp the bank term funding program on March 11th that could reveal
00:06:26
weakness in the regional banking system remember we had a in crisis in March of last year that btfp sort of papered over
00:06:35
you also have what looks like a crash happening in China the Chinese government took some actions to prop up
00:06:42
the stock market there which is a pretty negative signal that mainly impacts the
00:06:47
Chinese economy not us but it will have an impact on the global economy if China
00:06:51
has you know a big crash and then we still have a lot of geopolitical risks I mean I still think we get an oil shock
00:06:57
in the Middle East if this sit situation broadens into a larger Regional War maybe with Iran you could get you know a
00:07:05
shock in the price of oil and then that could have a big impact on the economy so look I think the Baseline is that the
00:07:11
economic Outlook is good but there's definitely potential for things to still go
00:07:16
wrong free bre we've talked about the debt here in this country 35 trillion now or so what are your thoughts in
00:07:26
terms of how politicians are going to look at the future now and spending when you know they keep spending and markets
00:07:34
keep going up and maybe it's good for elections and getting votes as well I put a chart from Paul kman here he put
00:07:43
out this tweet analyzing unemployment against inflation over the last 20 years and plotted on a graph how they're
00:07:52
related and as you can see there's a pretty linear relationship between unemployment and inflation except for
00:07:59
the last couple of years since covid where inflation has spiked completely off the charts while unemployment has
00:08:06
remained low and I think if you look at what's happened from a federal debt perspective over this period of
00:08:13
time we've seen US federal debt climbed from $22 trillion at the end of 2019 to $34 trillion which is where it sits
00:08:23
today an extraordinary increase in in federal debt in the last couple of years which largely explains what happened we
00:08:31
effectively took this massive hole in the economy that arose from the pandemic and the shutdowns around the pandemic
00:08:39
and we filled that hole with money and we took on debt to fill that hole and as we filled that hole assets inflated
00:08:47
Financial assets inflated so the stock market went up even as you know core inflation and economic growth meant
00:08:55
that we were paying more for Less so things look good the stock market as an indicator looks good but it's largely
00:09:03
been filled by the capital that we've now taken on into the economy through fiscal and monetary policy over the last
00:09:11
couple of years which has driven up inflation over this period of time and now at some point we're going to have to
00:09:16
pay the cost for the whole in the economy over the last couple of years so we bridge the gap but we've got a bigger
00:09:21
problem looming on the horizon if rates don't decline fast enough I think I tried to do the math on this every day
00:09:28
that interest rates are off are 1% higher based on the current federal debt level we're paying an incremental
00:09:34
billion dollars in interest payments per day the US is that makes sense I mean actually let's pull up this chart real
00:09:41
quick I think the average interest rate on our debt is now around 3% that's up from about 1 and a half% in 2020 so
00:09:51
during the the Zer period and the tenure is still at what 4 4.1% so there's still
00:09:57
room for that number to move up um even with rate cuts on the front end of the curve and you can see that if you
00:10:04
annualize the Q4 interest that we paid it's around a trillion dollars which makes sense right you got
00:10:11
about 34 trillion of debt about to be 35 trillion 3% is 1 trillion and so freir to your point 1 billion a day 365
00:10:19
billion a year yeah that's basically 1% of a $ 35 trillion debt number so yeah that makes sense you know it's pretty
00:10:27
scary because it's already consuming a large chunk of the federal outlay and we're still running $2 trillion deficits
00:10:34
and not a single person is talking about how we end that why is it important we have to keep the stock market up we had
00:10:39
to keep financial asset prices up because we're so heavily levered and if they fell down pensions retirement funds
00:10:46
everyone's housing value where most people have most of their net worth tied up collapses it creates a cataclysmic
00:10:53
effect so we had to inflate all these assets and that's what happened we filled that hole over the last couple of
00:10:57
years now we've got the quand of how do we get out of the hole that we're going to have to pay back overtime yeah and we
00:11:03
cut these rates to lower our interest payments what's going to happen people will take money that's sitting in cash
00:11:10
as you've pointed to chamath there trillions of dollars sitting in cash and they want to look for some returns some
00:11:16
Alpha they're going to put it into markets and so then we have a rush into the Magnificent s and maybe even you
00:11:24
know the next TI of stock that's what gonna I think that's what's going to exacerbate all of this because
00:11:30
you you can't correlate stock market returns with the number of people that are actually making money so even though
00:11:39
the top seven stocks are going up those Holdings may actually be concentrated enough that it's not the case that the
00:11:49
millions of Market participants are actually seeing those gains it's just that a smaller percentage that's going
00:11:54
to further exacerbate this sense of fomo that everybody has because they own all of these other stocks let's just
00:12:01
take the top 500 so even if you own the S&P 500 or some component of it there are 493 other companies that people just
00:12:09
don't care about right now and that's crazy so all of that pressure is just going to create a lot of psychological
00:12:16
necessity in people's minds at some point where they just see these things going up where they say I need to be a
00:12:22
part of this and I think that's what unlocks a lot of this money on the sidelines and then as long as you have
00:12:29
rate cuts and reasonable inflation and reasonable growth there's no reason to think that the that people will not
00:12:36
reinflated risk assets and just so people know about 60% of Americans own equities it always goes between 50 and
00:12:43
60% interestingly it kind of parallels the uh home ownership in the country which is also low 60% uh it went as high
00:12:51
as I think 67 68% home ownership right before the Great Recession so 2006 2007 it kind of peaked so now everybody chth
00:13:00
runs into equities those go up and then consumers maybe some percentage of them feel affluent they feel rich again and
00:13:08
they start spending again and then the inflation might kick back up is that the cycle we might see here I don't think so
00:13:14
I think that rates are probably I think that we're in a much more interesting and nonobvious Trend that I
00:13:24
think is worth talking about which is that for most of us forget Boomers per second so take people that are 50 years
00:13:31
and down we've spent 20 years of our productive economic lives so for us Jason that's 2third of our productive
00:13:40
economic life as workers for younger people it's 100% of the productive economic life as a worker in a zero rate
00:13:47
environment and we adjusted and we made decisions because of some variables that
00:13:54
were true that may fundamentally no longer be true and one of the things that I think we've never really
00:14:00
understood is how to build a business in the face of sustained rates that are not
00:14:04
zero that are not always getting cut that don't have trillions of dollars of stimulus because of government stepping
00:14:11
in as freeberg while said to fill these holes if that doesn't happen over the next 10 or 15 years we're in a different
00:14:18
phase which we've not really seen for our generation and I think that's really what is worth debating is are we at this
00:14:26
inflection point where rates will always be between 2 and 4% for a very long time
00:14:31
and then you know we said this last week this is why there will be gross margin Decay this is why the governments will
00:14:37
step in to make sure that Winners don't get much much bigger all of these things
00:14:42
are about using the tools of capitalism to basically reallocate who the winners and losers are and to reallocate what
00:14:48
the risk-free rate of return will be in a world where it's just very different than what it was and I think that that's
00:14:55
that's the really big question that I have in my mind yeah and if we were to look at the FED funds rate we've lived
00:15:02
since 2010 with almost no yeah 0% interest rates essentially but if you go back to the 80s and 90s when we were
00:15:09
first starting our careers it was a much different situation for mortgages and for this is the Fed funds right
00:15:15
mortgages you can add a couple points to this to get the equivalent so what do you think that'll be saxs if we're going
00:15:20
to be operating businesses differently in this environment what is the new discipline going to be here or do you
00:15:26
think we're going to get right back to you know when interest rates come down to 3% or 2% or whatever we're going to
00:15:32
just get back to the party I don't think it's ever going to be quite the party that it was in 2020 and 2021 where both
00:15:39
the fed and the federal government were just airdropping money into the economy at that beginning of covid the economy
00:15:45
was Contracting at an annual rate of about 30% and we ended up adding what 7 trillion or so to the national debt to
00:15:52
basically paper over that problem that we largely created through the lockdowns so in any event it's never
00:15:59
going to be like that again because we're never going to have that magnitude of money air dropped on the economy but
00:16:05
will things get a little bit frothier if rates go down absolutely yeah but I think that just because short rates come
00:16:13
down meaning the FED drops the FED funds rate from where is it now like five and
00:16:17
a half to I guess spe to come down to four doesn't mean that the long-term rates call it the tenure will come down
00:16:24
much I mean normally the yield curve is upward sloping so you know in a normal economy it's not
00:16:32
clear that the 10 years is going to be going to be going back down to 23% where it was during the Zer period it probably
00:16:39
will be around 4% plus or minus so just Capital will be a little bit scarcer and
00:16:44
valuations will be lower more normal but things could pick up for sure relative to where they've been the last
00:16:52
couple years last couple years been brutal but yeah I'm I'm with the rest of the panel here I don't think we're going
00:16:57
to see I don't I think In Our Lifetime we're going to see that 2020 2021 again I don't think that's happening for 20
00:17:02
years or so all right listen speaking of like the economy layoffs have continued not just
00:17:10
at tech companies but I wanted to point out just how brutal this has been for media companies recently in 2023 20,000
00:17:17
job Cuts that's on top of 30,000 during the covid era and it's not stopping Business Insider just announced 8% Cuts
00:17:24
LA Times cut over a hundred people the billionaire owner of the LA Times says he's getting close to a billion lost
00:17:31
owning that asset use air quotes on the term asset con asked cutting 300 people and all of this is happening while
00:17:41
unions are hosting what I'll just call meaningless protests Sports Illustrated in Pitchfork two really well-respected
00:17:48
Brands obviously they're done basically they're cutting 1007 Sports Illustrated Vox cut another 4% Jezebel shut down
00:17:56
Vice went bankrupt last year it's just absolute complete chaos and Bill Amman is loving
00:18:02
it Business Insider is a sleazy unethical defer of some of our greatest heroes it's a worthless P rag run by the
00:18:09
lowest of the low in journalism it is a stain upon Humanity was his quote today his commentary on the Press Jason you've
00:18:18
run like these media businesses before like what's the underlying economic condition here
00:18:25
that's changed in the last couple of years that's causing all these layoffs to happen like what what do you think's
00:18:30
actually yeah going on like financially with these businesses is it advertisers running away or what is it advertising
00:18:38
and classified businesses got gutted and obviously print got gutted over the last
00:18:43
20 years Google and Facebook all the gains and advertising have gone to those two firms and now Tik Tok obviously and
00:18:49
Amazon Uber building respectable ad businesses as well so all of that takes ads out of Publications and puts it
00:18:56
closer to the point of purchase right you're on Amazon you're you're right there with the buy button so would you
00:19:03
advertise in the New York Times Are there so if you were to look at like say a journalist salary pick a 100,000 all
00:19:10
in fully baked most journalists are at 50 60k in the United States you know get up to 80 90 100K would not be
00:19:17
abnormal well your overhead is going to typically be two or three times that so you can put that journalist at2 or
00:19:22
$300,000 in cost you look at that what can a journalist do in terms of the number of stories a we if you had them
00:19:29
as a beat reporter maybe two stories a week you do two stories a week if you're you know 100K salary and you have
00:19:37
like maybe two or three hundred fully baked with overhead and managers and salespeople that means each story is
00:19:43
costing about a thousand bucks if you were to do a $10 CPM or RPM on that that means every story to break even in
00:19:51
today's market we need 100,000 people 150,000 people to read it obviously that's not happening so these
00:19:56
Publications are just hammering hammer and cash if you were to put that same journalist on a subscriber platform that
00:20:03
means they got to get like 15 20 subscribers per story for a year to hit their just their salary so the economics
00:20:09
are just hugely broken except for subscription businesses and there's a ton of other Nuance but I could drone on
00:20:16
and on about it but the the math basically does not work at the same time Sachs you have experts right who are now
00:20:22
going direct so if you want Draymond Green and JJ reck to tell you about basketball you can watch them talk about
00:20:28
it yeah I did a tweet on this the other day or if you want this is you know just
00:20:32
not to TW our own horn here but we're the number one business and Tech podcast and we do this as experts in the field
00:20:37
we're not journalists obviously so that's probably I would say experts encroaching and people going direct to
00:20:43
sources that's probably taking 20 to 30% of an already crippled business so it's
00:20:47
going to get worse and worse and of course having unions and going on strike freeberg at the same time is like
00:20:52
literally the kitchen staff on the Titanic you know like going in Pro doing a walk out after Titanics hit an iceberg
00:20:59
like it's completely meaningless I think that there's this like slow attrition over time away from
00:21:06
centralized sourcing of data and centralized analysis of that data to a more decentralized sourcing of data and
00:21:14
then distributed analysis of the data which is the evolution of the internet has enabled that to compete traditional
00:21:22
media has largely had to create sensationalist approaches to taking the data that's out there and creating
00:21:30
stories around it that are more Sensational that bring emotion that make people upset that make people happy that
00:21:35
drive an emotional reaction if you look at the New York Times and you can look at these archives online from the 1960s
00:21:41
the articles are so damn boring like you read them it's like literally just reading a ticker tape of information
00:21:48
there's nothing that we see today represented in the media of old which was really the source of data it and now
00:21:55
it's had to have become a narrative it's had to to have become a storytelling operation in order to keep people's
00:22:01
attention and to drive clicks the problem with that is that over time the media businesses have lost the trust and
00:22:08
faith of the viewership and the readership because they see how much of this is biased and opinionated and they
00:22:14
don't just get pure analysis and pure data so in the current model which you you've described well I think it's more
00:22:20
about the fact that you've got all these crowdsource citizen journalism type systems whether it's Wikipedia or
00:22:25
Wikileaks or Twitter where people are pro or YouTube people putting direct video direct evidence direct data direct
00:22:30
documents on the internet and then analysts like we're a good example of four people on a fraking podcast that
00:22:35
just talk about stuff that we're reading and data that we're picking up and we analyze it in a way that people then
00:22:40
choose which analysts do they want to go to for which understanding of data that's out there and that model totally
00:22:46
breaks the old media model which unfortunately is evolved into this like untrustworthy biased and opinionated
00:22:52
source to keep the business alive so it's definitely a breaking that's happening I think it's very hard for
00:22:57
that model of centralized sourcing of data and centralized analysis of data to happen in one place to continue in that
00:23:03
old form and this is definitely the breaking of the old I went to trends. goole.com and I just compared wsj.com
00:23:09
tobi.com to twitter.com to New York times.com and what's incredible is two takeaways the first is that media is
00:23:18
really the least relevant it's ever been and they really are on a Lifeline that's
00:23:24
number one and second is if you just scroll down a little bit Nick Twitter is really like a
00:23:29
universally relied upon resource in the United States the wsj actually also does
00:23:35
a pretty good job but if you look at for example Business Insider it's really three states Texas California and New
00:23:43
York and if you look at the New York Times a little bit further down it's a bunch of the traditional democratic
00:23:51
States so what you have is this Regional kind of segregation that's happening in
00:23:56
terms of information but for the most part nobody cares about these print outlets and I think that that explains
00:24:03
why you're forced to lie if telling the truth which is basically a commodity it's weird but it actually is
00:24:12
a commodity it's just there the truth is there and you can't build the business by telling the truth you have two
00:24:21
choices one is to opine on the truth opinion but that then is a function of to be honest your intellect and how
00:24:30
interesting you are as a person and how you relay that information and you see the people that do that well you can
00:24:36
debate the truthfulness of all of these people but the Rachel madow and the Ben Shapiro of the world Tucker Tucker
00:24:43
they're just extremely eloquent interesting Arbiters ofic the information they they may take spicy
00:24:50
takes on the truth but they don't outright lie and then you have everybody else who's frankly not nearly as good as
00:24:56
them and the choice is is to lie and that's why Amman can say this about Business Insider because Business
00:25:02
Insider doesn't have a Rachel madow nor do they have a Tucker Carlson or a Ben airo and so what choice do they have
00:25:10
except to lie and so for all of us it's a very simple litmus test you're better off
00:25:17
trusting a really opinionated articulate person why because the thing that they probably don't want to lose is their
00:25:25
Fame but the anonymous person Business Insider has gone into a totally different direction they've decided to
00:25:32
lie as a service and so you just have to ignore it all yeah because you can't rely on
00:25:39
it that's my simple takeaway looking at this yeah no I like it it's good take hot take spicy yeah I mean look I think
00:25:45
there's several things going on here one is that Outlets like Business Insider have an incentive to be Sensational and
00:25:53
to either lie or to cherry pick in the way that jth is saying and basically they put out a lot of clickbait
00:25:58
defamation I mean that's basically what acman is saying um second I think there's a glut of a lot of mainstream
00:26:06
media Publications all putting out the same thing and it's not the truth it's the official narrative so you know how
00:26:14
many political reporters do we need just being stenographers for the White House
00:26:18
kind of party line and if you're not going to actually dig deeper to expose how the official narrative they're
00:26:26
telling you is not the truth if you're simply going to print whatever they tell you to print then why do we need so many
00:26:31
of you so I think that there's a glut of Publications this all putting out the same official narrative I think the
00:26:38
third thing is there is a go broke Dynamic going on I mean you talk about like the LA Times the reason why they're
00:26:44
losing so much money is that family that bought it they put their woke daughter in charge of it this is basically like a
00:26:52
a woke nepo baby on steroids basically an Alexander Soros type who's made the LA Times the most radical woke
00:27:00
publication you know within the range of the mainstream media remember they're the ones who put out that ridiculous
00:27:05
story on Larry Elder called the new face of white supremacy or something yeah in
00:27:10
the case of Sports Illustrated they they basically pulled a Bud Light and they lost a lot of subscribers when they put
00:27:15
a trans person on the cover I mean look the suit issue the swimsuit issue I mean
00:27:20
look they had a formula that work there what Their audience wants is Christy Brinkley on the cover not Dylan mulany
00:27:26
okay I'm not mean to offend anyone by saying that it's just the truth and then I think the last thing is Jason what
00:27:34
you're saying about the experts I do think that the gel Man Amnesia effect may be wearing off remember what Michael
00:27:40
kryon said about the gel Man Amnesia effect where you read one part of the paper where you actually know something
00:27:46
about the subject matter and you realize it's all just lies or lazy reporting but
00:27:51
then you turn the page to some other part of the paper you don't know as much about you just assume it's true I think
00:27:55
because experts are able to go to direct for every section of the paper now people are realizing that the whole
00:28:00
thing is bogus and I think Jo Man Amnesia is starting to wear off and people are realizing that they should
00:28:05
just go around these official channels and get their news direct so it's not because these
00:28:11
Publications are telling us the truth in a boring way that they're losing readership I think they're losing
00:28:17
readership because they're just not telling us the truth at all and I think a boring version of the truth would sell
00:28:22
better than what they're doing right now this is why I think subscriptions are starting to work people are doing
00:28:27
subscription podcast subscription newsletters you know it's a little bit of Back to the Future but you can lower
00:28:33
your overhead have one person doing real journalism and there you could actually
00:28:37
thread the needle you could get a thousand people to give you a 100 bucks you can get two 3,000 people to give you
00:28:42
a 100 bucks or 200 bucks and that's enough to cover a couple of solid legit journalists doing legit journalism I
00:28:49
have a question for you D you think there's a business opportunity to actually build like an AP News which which is
00:28:57
just basically like there's no by line and they just write the truth and they make it super cost effective for anybody
00:29:05
else to just license the truth so that they know it but why do you need an arbitrator well somebody got to be boots
00:29:10
on the ground to go somebody has to be boots on the ground to just tell the truth doesn't the distributed model work
00:29:14
for that that people just post you don't know I mean listen we we all the time have this when we're building the docket
00:29:20
like Kane COA you know random Twitter account or you know Tyler Duran you know zero hedge like who are these people
00:29:29
what are their motivation you don't even know their names that doesn't mean they
00:29:32
don't get stuff right but you may want to have somebody actually go check that this person exists in the real world so
00:29:38
to your answer your question you know you would need people to subscribe to that service an economist AP news and
00:29:43
reuter are the closest to what you described The Economist doesn't use people's by lines they have people work
00:29:49
on the story together and The Economist is the brand AP and Reuters obviously do
00:29:53
typically have the journalist names on it but describing news wires they're they're not great businesses I think AP
00:30:00
and Reuters are just as bad as everything else I think what I'm saying is like you know maybe Twitter should
00:30:04
have like a news service which is just like here's the truth I'll argue that page rank which is Google's algorithm
00:30:12
for determining which sites to rank higher or lower and the protocol for Bitcoin and other systems that operate
00:30:20
on the internet have all kind of followed the same model where there's some system for scoring or for voting
00:30:26
the quality of the site in in page rank's case it's how many Links come in in Bitcoin there's a voting system that
00:30:33
determines whether or not the um the transaction should be approved and I think in Twitter the number of followers
00:30:40
seems to be a proxy for the quality of the account there's some version of that chamat that I think just naturally
00:30:47
evolves on the internet versus saying let's pick the Arbiter of the data and let that be static versus let it be
00:30:53
dynamic and let the system of consumers dynamically vote on what is the arbit of
00:30:57
the data which seems to be working with Wikipedia seems to be working with page Rank and other systems fairly unless you
00:31:03
look at your own Wikipedia page and you realize it's completely biased and yeah is the function of the people you trying
00:31:10
to say something what happened to your there something bad on your Wikipedia page I went to the early Wikipedia
00:31:15
conferences in the first couple years of Wikipedia and the bios of living people
00:31:19
blps were the biggest problem they had because you had people like let's say you know you had a company fail or
00:31:26
something somebody was investor in it you know they're motivated to write something on your Wikipedia page you
00:31:32
fired somebody whatever and so the the people who have the wherewithal to edit your Wikipedia page if you're a human
00:31:40
alive today sometimes is your detractors and that's just yeah but over time if you're doing that and you get downvoted
00:31:46
you no longer have authority on Wikipedia that's part of how that system works I think that it doesn't work very
00:31:52
well it's been totally it's been totally weaponized I don't think it's been weaponized by people people with money I
00:31:57
think it's been weaponized by interest groups yes mainly leftwing interest groups activists who are well funded and
00:32:05
it's their full-time job to basically disseminate their propaganda on sites like that ideally that becomes a
00:32:11
temporal phenomenon that they're because if you picked an Arbiter and you said this is my source of news my source of
00:32:16
data my source of Truth over time that Source becomes hacked it becomes biased in some way and so I think having a
00:32:22
system that's Dynamic where those who are doing the editing those who can be voted up and down and the system uh can
00:32:29
be voted on by the consumers of the system so anyway I just think that's naturally how the internet's going to
00:32:34
evolve anyway I think it's crazy to rely on One Source especially Wikipedia although I do use Wikipedia for some
00:32:40
things but I guess what I do is I try to triangulate to the truth based on having
00:32:45
a number of sources I mean isn't that one the bestch and that's why X you know formerly Twitter is the best way to get
00:32:52
news it's the main way I get my information is because I can triangulate towards the truth by
00:32:57
looking at my feed and I'm following a couple hundred people who I take seriously and you can kind of figure it
00:33:01
out well yeah because if you saw a Business Insider story over here and then you hear Bill Amman give his side
00:33:06
of the story now you've got the principal in the story going direct and I think that's where going direct and
00:33:12
experts have created that triangulation you could listen to this podcast you go to direct to Wikipedia and check our
00:33:18
facts you could look at people criticizing us or creating derivative podcasts of this one of which there are
00:33:23
many and like you can kind of get all these uh different vectors and angles to to kind of find the truth but your
00:33:30
answer chamath rich people you can't get rich doing what you're describing and running a company
00:33:36
so smart people are looking for opportunities to maximize their compensation and that's it's kind of
00:33:43
like teachers it's we don't pay teachers enough you can't pay journalists enough
00:33:47
because the system is broken therefore you're just getting lower and lower quality people in the profession who the
00:33:54
smartest people leave and become venture capitalist Market Mar Communications people developers whatever or they do
00:33:59
solo stuff so I think the solo journalism the independent voices is going to wind up being the solution
00:34:04
because nobody's going to want to try to hire a thousand journalists for 100k each and then if they get really smart
00:34:10
what do they do they get hired by somebody like you right your they'll come work for one of us or come work for
00:34:14
one of our companies when they get to the ceiling of what they can do at Business Insider or vice or wherever
00:34:20
they're going to go try to look for a $200,000 a year job I think this is important for the
00:34:26
following reason I I think that Society if Society doesn't have a good way of getting to the truth it just ends up
00:34:33
really decaying in very bad directions and there's all kinds of truths that are out
00:34:40
there that we ignore because people can actually just totally change it where I would rather be in a
00:34:47
place is there's the truth then there's the opinion on the truth and then there's fiction and I I'm fine with all
00:34:53
of it existing it just needs to be better arbitrated because I think there's a lot of people who don't know
00:34:59
any better who should know better and who will just make an assumption and then that's a very limiting limiting decision
00:35:09
for them the whole process is got super messy but that's actually a good thing to happen the reason it's getting messy
00:35:15
is because people are challenging the sources of the news so you don't just believe a politician about what's
00:35:19
happening at the border you don't just believe a publication about what's happening at the border you see citizen
00:35:25
journalists going to the Border whether it's Elon or RFK went to the Border people are going there and saying well
00:35:31
I'm going to go check it out for myself and see what's happening there actually I'm not just going to trust a
00:35:36
publication I'm not just going to trust a politician I'm going to go myself and and and that messiness has now led to a
00:35:42
more vibrant system but it's it's messy I think it probably also LED in part to Texas suing the federal government yeah
00:35:51
which we'll get to in a moment yeah for sure and you know if you think about that we were trying to parse the numbers
00:35:56
here remember we had the number um and we were trying to parse the number of encounters so we we never were able to
00:36:02
get a number we still don't have a number how many people the num I didn't finish my sentence we don't have a
00:36:08
number knowing how many people have gotten past the Border we know how many people got intercepted we don't have the
00:36:14
number of the people who didn't get intercepted by definition we don't have that we only have the ones that are
00:36:18
encounters that's why they call an encounter sex you've been running interference on
00:36:23
this point for like a year on this pod like saying that we don't know the numbers and Fox News is just providing
00:36:30
you know bias footage and it's not really a crisis at the border and no no I said I said I wanted to know the
00:36:37
numbers but the only numbers we can get was encounters not how many people ENC something like six million encounters
00:36:43
since B took off updated those numbers the numbers like a hockey stick show the chart of it it's looks like a hockey
00:36:50
stick every last year it wasn't that was the point when I showed it last year every week every month every year comes
00:36:57
out when we looked at it last year it was flat I'll pull up the episode wasn't at the time it was flat it was it was
00:37:04
only in the last year going up like a rocket since Co okay we'll pull it up we'll pull it up so if you look at this
00:37:09
chart this explains it perfectly so let I'll explain this chart where's that from this is from the CBS The Border
00:37:18
Patrol so this is the exact chart that we pulled up last time and as you see yellow 2022 was essentially flat and
00:37:26
then the dark blue 2023 2021 Spike see this this chart is not correct and then if you look the one
00:37:34
thing that does look like a massive spike is 2024 so there was time it's showing from June to December a 50%
00:37:42
Spike yes that's what I'm saying but if you look when we looked at this last year in
00:37:46
2023 it was it was right there June when we started talking about last year at this time it started to spike but the
00:37:53
other years it was flat it's my point it was flat and then it just started the n
00:37:57
and that's why I think even trusting the numbers is my point like I mean I don't
00:38:02
know numbers weren't Chang like from October of 21 there was 100,000 encounters at the border to this last
00:38:10
way, look at the look at the yellow line tripl it's like tripled since in the last two two years that's crazy here's
00:38:19
another chart from The Wall Street Journal this goes back a long way this is from I believe October so it's
00:38:24
already 4 months old but zoom in on 2020 like I said it was at a low there you know under half a million well yeah and
00:38:34
then but even if you go back it looks to me like since about 2010 we've been holding it to under half a million and
00:38:41
since 2020 basically since Biden took over it shot up like a rocket and what I've been reading in recent articles
00:38:48
again is since October every month every week every day is a new high it's not a
00:38:52
stable number because obviously there are Millions hundreds of millions of people all over the world who would like
00:38:59
to come to the United States if they could yeah so as the word gets out that we have an open border they're going to
00:39:05
come and that's what been happening it's gone viral is what's basically happened
00:39:08
and also what went viral was there are YouTube videos now of how to claim Asylum so everybody's kind of hacked it
00:39:17
it's completely I guess we could go which way do you want to go do you want to go right to the border now since this
00:39:22
has come up or talk is is Texas going to seced from the Union all right what's going to happen do you
00:39:29
want to just go you want me to Tea it up or you want to just St well I think we should explain it let's just talk about
00:39:33
it last year as everybody knows Texas started installing razor tape razor wire along the Rio Grand near Eagle Pass
00:39:40
Federal border agents the feds removed it in October Texas sued the federal government to stop them from removing in
00:39:46
December a federal appeals court temporarily banned the border of Patrol Agents from removing the Raisor tape
00:39:51
then the Biden Administration asked the Su Supreme Court to intervene then last week Biden's office told scotus that a
00:39:58
couple of migrants tragically died a woman and two kids near that same area we got a ruling on Monday Roberts and
00:40:05
Amy Cy Barrett actually voted against party lines and supported the feds the justices didn't explain their decisions
00:40:13
but this basically upheld a prior ruling they gave the federal government so responsibility for border security
00:40:19
Governor Abbott has responded and he is saying that he's going to challenge the Supreme Court ruling and that Texas is
00:40:26
under Invasion and it's going to defend itself that Authority is the supreme law
00:40:31
of the land and supersedes any federal statutes in the country he said so sax what are your thoughts here is this I
00:40:38
guess there's two things I'll ask you about is the ruling a good ruling and is it in terms of Law and Constitution but
00:40:45
is it a bad implementation given the circumstance of the Border well I think Governor Abbott here
00:40:52
is probably going to lose in a court of law but he he going to win in the court of public
00:40:58
opinion the public by a huge majority wants this border enforced they want to have border security they can see the
00:41:06
photos and the videos and the numbers and the charts of record-breaking illegal immigrants streaming into the
00:41:13
border and again it's not stopping it's growing so I think that Governor Abbott is on his way to being a national hero
00:41:20
for standing up to this and it's outrageous that the Border agents are actually removing the border security
00:41:29
that Texas has added we're supposed to have a border wall you know I'd rather have a wall than barbed wire but if we
00:41:35
can't have a wall then you take the barb wire and they're actually cutting it down and this is following in a pattern
00:41:41
of the Biden Administration remember when Biden first came in there were pieces of Trump's wall that hadn't been
00:41:47
finished and they basically stopped construction and they sold off these large pieces of wall that were just
00:41:53
laying on the ground as scrap metal for two cents on the dollar and remember that Robert F Kennedy flagged this when
00:41:59
he went to the border at the beginning of his campaign and said that it was petty and outrageous that Biden had done
00:42:05
that then Biden changes the whole of Mexico policy and he starts granting Asylum to um to what are basically
00:42:15
economic migrants who are streaming into the country and what the Asylum rules say is that the immigration officials
00:42:22
are required to detain Asylum applicants who are not what's called quote clearly
00:42:28
admissible so if you're not clearly admissible you're supposed to be detained you're not supposed to just be
00:42:33
let into the country and the Biden Administration has basically paroled millions and millions of these economic
00:42:40
migrants who are not clearly eligible for Asylum into the country they just hand him a ticket and say show up in
00:42:46
court in 3 years we know that's never going to happen it's gotten to the point where the mayors of blue cities like New
00:42:53
York and Chicago have tapped out and said we can't handle this we've run out of space we run out of hotel rooms we've
00:42:59
run out of budget to accommodate all of these migrants and these are Sanctuary cities and yet the Biden Administration
00:43:06
has persisted in this policy and now they're actually removing border security they're actually cutting the
00:43:13
wire it's unbelievable and when Texas has tried to reinstitute it they've actually gone to the Supreme Court I
00:43:18
mean to do that Biden has to send his solicor General to the Supreme Court to take on the state of Texas so look at
00:43:26
the end of the day Governor Abbott may lose this case but I think he's going to win over the American people and I can't
00:43:33
understand why Biden in an election year is pushing this this losing argument I mean I think this is his worst issue
00:43:41
maybe inflation is slightly worse but there's not a worse issue for Biden and the Democrats than border security and
00:43:49
to actively be fighting Texas on this when Texas is just merely trying to reinstate a border
00:43:56
just seems to me like a crazy political strategy and it just shows you how fanatically wetted the Biden
00:44:02
Administration is to this policy yeah and the country is not if you look at the CBS News
00:44:09
poll this is just from September to now should be tougher 55% to 63% just just one second here which is just it's
00:44:16
important to note that I don't think Biden's contesting Texas has anything to do with
00:44:25
their desire to actually keep the Border open I think what they were saying again
00:44:29
we can debate whether it's right or wrong but what they were saying is the federal government needs do access to
00:44:34
all of these places and we need to get we need to cut through this concertina wire to get access and we can't now
00:44:42
because this wire's there and the Texas National Guard and all of these folks are there and so just give us the due
00:44:48
Authority that that we have to do what we need to do that was what they were saying in the lawsuit now that sounds
00:44:54
like total nonsense to me the byproduct David is what you're saying which is it does then facilitate
00:45:00
more illegal migrants to be able to cross in the intervening time because I think that then what the government
00:45:06
federal government isn't saying is here's our plan to secure the Border they're just saying we need
00:45:11
access in order to render critical Aid if one of these folks gets sick or drowns or what have you and that's why
00:45:18
these three people died so cut get you know remove this wire so that we can do what we need to do that's what they're
00:45:23
saying yeah so on the migrants who who drown po what governor Abbott says is look if you
00:45:30
actually had security along all of these points where you've put in the wire it forces the migrants to go to the 20s
00:45:37
something checkpoints where you actually have an organized process which is where
00:45:41
you want them to go they wouldn't be trying to swim across the Rio Grand and enter through all these different areas
00:45:47
if you could funnel them through border security to the checkpoints and the federal government does control those
00:45:52
checkpoints and I'm sure that you know if Republicans could control that Republicans like Abbott they would be
00:45:58
detaining Asylum Seekers that weren't clearly admissible but they don't control those checkpoints so the federal
00:46:04
government can still implement the policy at once I actually think that fewer people will be drowning the Rio
00:46:10
Grand if they were actually to again push everyone to these checkpoints so I don't really buy that argument and it
00:46:16
looks to me like the Biden Administration has now crossed over from failing to do its Duty because again it
00:46:24
is a federal responsibility to enforce the border and the president has a constitutional duty to enforce the laws
00:46:31
of the land so he's moved now from failing to do his duty to active sabotage I mean this is actual sabotage
00:46:39
where what little border security that we have in these parts of Texas they're taking down they're cutting the wire I
00:46:46
think to most Americans they can't fathom that this is Biden's policy what is the reason that this if if Biden
00:46:54
wants there to be free flowing immigration which he says he doesn't but if he did why would he want that what's
00:47:01
the what's the reason there's some arguments I've heard from economists that the fundamental value
00:47:10
the US can gain from the flow of immigrants across the border at an accelerated rate is to lower the cost of
00:47:16
Labor and so you get lowc cost labor to participate in the labor market we have skyrocketing costs for you know basic
00:47:24
goods and services many of which are tied ultimately to the cost of Labor in the US due to the tight
00:47:30
labor market and so if you can open up more manual labor roles in the US or fill those manual labor roles with a
00:47:37
lower cost of Labor you can bring inflation down you can bring the cost of goods and services down so there's an
00:47:42
economic argument for doing that and it also grows the economy because fundamentally when you have more
00:47:47
productivity through more participation in the labor force you see the GDP grow and you also increase the consumption of
00:47:53
goods and services in the US by the immigrants that are coming across Ross the border so the there there's an
00:47:57
economic argument the that's a theory that folks don't want to say out out loud they don't want to be very public
00:48:03
about it but there is kind of an underlying kind of economic story that behind closed doors folks are making
00:48:09
about why you want to see this happen particularly now so chth what do you think of that theory as proposed I'm not
00:48:15
saying that you're endorsing that freeberg but I have also heard people say that that's the
00:48:20
reason and why would Democrats be in favor of that over say Republicans wouldn't both of them want to see the
00:48:26
economy grow and have more labor available in record low unemployment you know whether you agree with it or not so
00:48:33
or is it just become a political uh weapon now yeah what do you think I think that theory is stupid if
00:48:39
that theory were to be valid let's let's try to steal man why that theory could be true even though it's was probably
00:48:45
thought up by a nitwit you would want to know first of all all of the different types of Labor
00:48:55
shortages that exist and then you'd want to know all of the different types of Labor inputs that
00:49:02
these people can provide and then you'd need to know all of that labor Demand by geography and then you could
00:49:12
sort of like do a reasonable job of allocating that supply and demand so if that was really the case it's even more
00:49:22
reason to have an organized border why because David said you get them through very specific points that allow you to
00:49:31
actually enumerate these details about these people and then actually send them to the places where they are actually
00:49:38
needed so that then they can become a productive part of the economy where they can lower labor costs Etc what that
00:49:44
explanation does is actually tell put a nice lie in front of what is the actual truth I think that there are a lot of
00:49:54
people who feel fundamentally guilty because a lot of the quality of their life they didn't earn
00:50:03
necessarily and so they have this self-loathing that they feel like they can appease by allowing all of this
00:50:10
other stuff to happen and one of them in this weird way is immigration but if you
00:50:16
actually ask an immigrant somebody like me I kind of feel that it is very unfair
00:50:23
for those of us who actually stood in line who waited years and in some cases I know decades highly skilled
00:50:32
individuals to try to actually fill this labor Gap that you talked about who are
00:50:36
prevented or who are slowed down from actually doing what you say that they is all about so I I just think that this is
00:50:43
just frankly like a lot of folks that live in a very very comfortable way who feel fundamentally guilty and so
00:50:53
they're like let me share my largest and riches with other people and maybe that
00:50:57
comes from a good place but the manifestation of that is bankrupting all of our major cities and it's creating an
00:51:05
enormous security vulnerability for this country yeah I mean you could ascribe it
00:51:11
to having an open heart and and wanting more people to come into the country but
00:51:14
it's crazy because you have to have at least some control over this uh we talk about control what about just
00:51:20
documentation and awareness of course yes I mean terrorists could be flowing across the what right now who knows
00:51:26
Jason what about what about something even as simple as like communicable diseases I mean yeah gang members the
00:51:35
cartels gang members and criminals also like we should we we've talked about this before Point based systems and
00:51:40
Merit based immigration yeah we could have a skills based system but that wouldn't get in as many people as
00:51:46
quickly as just having an open border yeah and look I think there was an economic rationale for this a while ago
00:51:53
yeah we talked about that yeah Republic were in favor of it 20 years the Wall Street Journal editorial page like 30
00:51:59
years ago wanted to support a constitutional amendment to have an open border I mean they just saw the world
00:52:03
purely in economic terms and having free trade free movement of capital and free
00:52:08
movement of labor was all part of that conception I think it was naive in a lot of ways and I think
00:52:16
now if you're still supporting it it I don't think it's for economic reasons I think it's mostly for political reasons
00:52:22
and look there's this clip from Tucker that just went today explaining it I mean if you want to play it the numbers
00:52:29
you need to understand Yale University released a study last week by three researchers all them liberal I believe
00:52:35
who concluded that the actual number of illegal aliens in this country is not 11
00:52:38
million it's north of 22 million 22 million Fact one fact two the Democratic party is now as a matter of policy
00:52:46
calling for the legalization of all illegals in this country citizenship voting rights 22 million new voters fact
00:52:53
three the overwhelming majority of first time immigrant voters vote Democrat fact
00:52:57
four the largest margin in American presidential history was 17 million votes 1980 election rather 1984 election
00:53:04
between Mondale and Reagan and Reagan yeah 17 million you would add to our voter roles 22 million at least
00:53:13
permanent electoral majority in perpetuity that's what this is about it's not about making the country better
00:53:18
serving our labor needs helping the population it's about putting Democrats in power forever how do you how do you
00:53:23
react to that how I react to it yeah you as the question like why would the Democrats want to do this that's
00:53:32
that's a votes to get votes is what he's saying we we just had a conversation here that just I think it was on the
00:53:39
predictions episode that we all felt that more immigrants people of color were going into the Republican party so
00:53:45
there there's only that I don't think all 22 become magically liberals we we talked or Democrats here so I don't know
00:53:52
if that part of the ARG the vast majority do I think tuck is saying that if you I think what Tucker is saying
00:53:58
effectively is that if if 22 million people are converted to US citizens by a given political group they will be
00:54:05
rewarded by the vast majority of those people with at least one cycle vote in their favor you believe it jaman you
00:54:11
believe that that's why Biden has an open borders to get votes no I think that actually my opinion is what I just
00:54:17
stated which is I think that highly overeducated liberal Elites have a certain amount of self-loathing
00:54:23
about their lifestyle that they believe is not earned and so they have this weird thing of
00:54:33
like they need to feel better well instead of just like looking at the truth which
00:54:38
is yeah they didn't earn it and a lot of it was given to them by their Rich parents and just move on and do
00:54:43
something good with their life they want to just destroy everything Sach you believe it you believe chucker argument
00:54:48
there that this is a democratic vote getting conspiracy well I don't think it's a
00:54:53
conspiracy I mean or strategy Democrats have actually said on a number of occasions that this type of immigration
00:54:59
is good for the country because a diversity and B it these people will eventually vote Democratic or you know
00:55:05
when they get citizenship or they'll have kids and because of Birthright citizenship they are more likely be
00:55:11
Democrats Democrats will say this and say it's a good thing but then when someone like Tucker says it they'll
00:55:16
basically say it's great replacement Theory it's a conspiracy it's racist no he's saying the same thing that you're
00:55:22
saying he's just saying it's a bad thing and you're saying it's a good thing so I
00:55:26
never said it's a good thing no say it's a good or a bad no I'm talk about other
00:55:29
people oh okay so I I didn't get my opinion yet yeah what do you think Jason well I wanted to hear saaks s so saaks
00:55:36
do you agree with him that this is a a strategic move by Biden to get more votes I think it's like a lot of things
00:55:41
it's an issue where the party that's championing it can claim that it's kind of like doing well and doing good they
00:55:50
think that they're doing good but it's also highly motivated by their own desire to benefit dual function yeah
00:55:57
yeah I'm the rest of the country we should have an orderly process here and it should be Merit based I've said that
00:56:03
a thousand times on this podcast that we should be a point-based system and we should re-recruiting people we should
00:56:08
have some compassionate slots and then everything else should be a weit list and we can we should pick a number of
00:56:14
how many people we could absorb based on the labor markets and do it very thoughtfully maybe we need a half
00:56:18
million teachers no you've described Your solution many times we're asking for your opinion on what Tucker just
00:56:24
said I would go with Sax's position that it's probably convenient that you it might go
00:56:31
6040 7030 for votes I don't think it's 100% of them are going to vote there I think this could blow up in Democrats
00:56:38
faces if if it is their strategy because a lot of people who are coming here immigrants don't want to be part of the
00:56:44
democratic any the liberal woke Democratic party they want to be part of the Republican hardworking party I want
00:56:50
to go two for two last week saaks I mean freedberg pulled up stats that showed that a bunch of people got
00:56:58
really angry and quit the Pod when I said that Andre basically put in the money to generate AUM and we were joking
00:57:07
in our group chat that was all the VCS that stopped listening I would once they all hit the stop button at once yeah
00:57:14
because it was again the truth the uncomfortable based truth so I want to ask you guys I just a reaction to my
00:57:20
comment that there is an amount of self-loathing amongst liberal Elites that causes them to embrace some of
00:57:26
these ideas that are not rooted in actual logic but are rooted I think in their own insecurity can I just get your
00:57:33
reaction to that you guys think that's true I think that among this Elite this call it woke
00:57:40
Elite who defines our politics in terms of social justice which basically means you divide the world into oppressor and
00:57:49
oppressed groups and you try to figure out with every issue who the oppressed group is and you take their side that's
00:57:55
basically how politics works for this group so in their view of the world all these poor migrants who are streaming
00:58:01
across the border they're the oppressed group and so we should help them we should let them in and you saw Gavin
00:58:05
newsman in California just extended Health Care to illegal immigrants so all these government services basically
00:58:12
being provided and they think that's a good thing that's official policy so I do think that there is this ideological
00:58:19
view that we should be doing as much as we can to provide help and benefits to these people I think that at a certain
00:58:26
point it gets to to a place where the system breaks and again you have mayors of New York Chicago other blue City
00:58:33
saying it's breaking we can't afford this there has to be some common sense around what we can afford you know can
00:58:41
we afford the social services the hospitals the schools the infrastructure do we have enough housing for all these
00:58:48
people and I think we've just like become completely unored from common sense now I think that's the ideological
00:58:54
people people in the party but I don't know if that's Biden in the Biden Administration I do think that for the
00:59:00
administration they think more about some of these other calculations but even so I don't really understand their
00:59:06
motivations and their actions because recruiting more democratic voters is more of a long-term proposition it's
00:59:13
something that they can achieve over the next couple of decades but Biden could lose the election this year over this
00:59:20
issue I mean this is his crazy part this is on this I mean he's actually sending
00:59:27
his solicitor general to the Supreme Court to get permission to cut the wire at the border right and you know again
00:59:37
he's shining a spotlight on an issue where the vast majority of the country and even I think half of Democrats don't
00:59:44
agree with this policy so I just don't I that's what you're 100% right on saxs this is like for Republic this is uh
00:59:51
abortion is to Republicans as the border is to Democrats you you have to solve this problem look at this chart to be so
00:59:57
disconnected from the populace only 7% of people reported and this is a recent poll this is from this
01:00:05
year that it's not much of a problem the situation of the Border 45% and 30% very
01:00:09
serious or a crisis that 75% think it's a crisis or very serious and then 18% think it's somewh serious that is the
01:00:15
majority overwhelming majority of Americans and you just have to change your policy here this is uh there's too
01:00:22
many people flooding across the border period full stop right just like for Republicans like they shouldn't have
01:00:27
overturned roie Wade and we should shut down the Border you know on the Democratic side but I come from a blue
01:00:32
collar F I can tell you there are two Democratic parties right now there's the the workingclass Democratic party that
01:00:39
totally doesn't understand what Biden is doing with the Border because they want
01:00:44
to see wages increase they want to see low unemployment they want to see their wages increase and not have to deal with
01:00:50
illegal immigrants you know fighting for jobs that's a real thing wages have gone
01:00:55
up in this country because of low unemployment that's great for the bottom half of the country and and they
01:01:02
live in New York and New Yorkers want to see services for their families not for
01:01:09
families that are streaming across the border it's that simple and so what you're saying chamath about like woke
01:01:14
liberals that's not the majority of people in New York that's like a really Elite Class they control the Democratic
01:01:19
party that's the thing they control it for now they control it for now but I think they're losing control I me this
01:01:24
is why Biden did that huge debt forgiveness program that the Supreme Court found unconstitutional is because
01:01:29
yeah of course professional Elites college graduates and specifically ivy league graduates are the people who run
01:01:35
the Democratic party as well as the media and all these other professional institutions they're the center of
01:01:42
gravity and the power within the party and the blue collar the lunch paale type Democrats the union Rank and file not
01:01:48
the leadership they are starting to move to the Republican Party the working class in bigger and bigger numbers and I
01:01:54
think that's Trump's appeal is he actually knows how to appeal to those those people absolutely he does knowing
01:01:59
a lot of both my experience is there's a lot less self-loathing amongst Republicans right now than than there is
01:02:04
among Democrats 100% of my middle class family does not want an open border they
01:02:09
may move to their Republicans one day Jason oh I no they are they they there are literal people in New York proving
01:02:15
my point in Brooklyn in you know the Burrows who are looking at it saying like I I don't understand this W crazy
01:02:22
ideology I don't want any part of it and they might they might vote Republican shath is right it is
01:02:27
self-hating it's self-destructive it's the same thing that we have with these Das you know who are letting all the
01:02:33
criminals out of prison you know the decarceration movement Democrats want Law and Order Jason you keep saying
01:02:39
nobody wants that but I think the people that are making these decisions live in
01:02:42
high-rises that are 50 stories up where there's doormen insecurity or they're living behind a gate with private
01:02:49
security and so they can make these decisions because they don't feel the impact not yet this is why why what's
01:02:54
happening in these Elite cities is so important because For the First Time the broad infrastructure of a city is
01:03:02
getting crippled in a way where these folks have to live with the implication of their decision and actually
01:03:09
understand for themselves why did I endorse something that is so fundamentally destructive to me and the
01:03:14
people around me and this is the first time and so in many ways what the southern states have been doing by
01:03:21
sending migrants to all of these major ities is it is actually allow the leadership of the liberal Elite in these
01:03:29
cities to confront why have I been proposing these programs and these Solutions in this way they've never had
01:03:37
to exact same thing that's happening to the Republican party as well their leadership Nikki hel Etc the the neocon
01:03:44
warmongering Republican party is now losing to Trump as well everybody's going populist now you you need only
01:03:51
look at the statistics the majority of people want the the Border closed that is across both parties the majority of
01:03:58
people don't want to be involved in Foreign Wars that's across both parties and that's why you know Trump and RFK
01:04:04
are just crushing it in the polls and that's why they're they're both having such a great showings because they're
01:04:09
appealing to the majority of Americans and the majority of Americans don't want to be involved in foreign worlds it's
01:04:13
not a republican position Republican position is the opposite they're neocons they want to go to war let's go to
01:04:18
fintech on the topic of fintech and uh more journalism a bunch of news has been leaked recently we can get into that
01:04:28
aspect of the story as well confidential financial data from brex and anthropic were leaked this week if you don't know
01:04:36
brex they offer credit card and expense management software It's pretty dope actually very hot startup they raised a
01:04:41
billion five between 2017 and 22 and they were last valued at12 billion earlier this week it was reported that
01:04:49
brex was burning 17 million a month 200 million a year on net revenues of 280 these are select leagues we don't have
01:04:56
like the full p&l here so we we can't tell you exactly what's reality or what parts of this are true but later that
01:05:02
same day after the leak brex announced it was cutting 20% of its sta 300 jobs which it said would help it extend its
01:05:09
Runway by two years anthropic one of the breakout AI companies that's building a
01:05:13
proprietary large language model called Claude it's really dope actually as well
01:05:17
another cool product they've raised over 7 billion at of1 19 billion valuation recently and
01:05:24
their gross margin was leaked this week two Anonymous sources said it was between 50 and 55% obviously we talked
01:05:30
here about SAS software being a 70 to 80% margin business so freeberg you want to maybe I don't know which way you want
01:05:37
to go with this stuff being leaked by the press or the finance side I wanted to ask you guys your opinion do you
01:05:44
think it's almost like the gossip version of business when you get private companies financials and report on it
01:05:54
with like an angle of being effectively disparaging towards the business look how much they're burning look how bad
01:05:59
the business is it hurts employees it hurts shareholders any one of us who have been investors in or involved in or
01:06:06
on the board of a company where the Press then writes an article where they got the hand on confidential financial
01:06:12
information about the business always hurts the business it's almost like taking photographers outside of
01:06:17
celebrities homes and taking photos of them through their windows I don't understand the true newsworthiness and I
01:06:23
just like to take a step back because we always kind of dive into these conversations and treat it as totally
01:06:28
appropriate when private confidential information about businesses is leaked and discussed like this and we kind of
01:06:34
have accepted it as the standard but you know do we really identify the newsworthiness in this or is this really
01:06:40
just like the gossip fodder for hurting businesses and it's the kind of sensationalism that we've kind of come
01:06:46
gotten used to in in in the news in general who does the the reporting benefit what the journalist would say is
01:06:52
it gives the public the ability to understand business and trends at a deeper level and that's good in a free
01:06:58
Society that's what they would say but you could argue like what's the point of this isn't it a sensational story it's
01:07:03
like oh look how much money this company's burning oh wow that's why we should all talk about it like they would
01:07:08
say maybe it speak look at the mega yacht that the billionaire is on you know or like look at the yeah look at
01:07:13
the celebrity at the beach you know like look at how they're dressed the journalists who reported this would say
01:07:18
it's no different than us talking about the Zer era or overspending and it's just part of the reporting
01:07:24
yeah that's a general framing of like Market at I don't know I just think like going in and getting confidential
01:07:28
Financial info it hurts the employees it hurts the shareholders it hurts the board it hurts the company and the
01:07:34
customers of the company then end up questioning the business from a journalistic perspective there's nothing
01:07:39
about this that to me seems to benefit the public at large by revealing all of this salacious information it's a
01:07:45
private business that's not required to disclose their financials and all of their shareholders privately own the
01:07:49
stock and someone took some private company data and leaked it I can tell you in you know when we ran in gadget
01:07:56
90% of the leaks 95% of the leaks were calls from within the building so totally disgruntled employees well I
01:08:02
think in this case it's actually an investor who doesn't want to see them burning 17 million a month and wants the
01:08:07
runway to go further and they leak this because that's who would have access to it the accountants and lawyers would
01:08:13
have access to it but that would be the end of their careers in their firms if they did leak it so somebody who has a
01:08:18
financial interest in this typically an earlier stage investor or an investor who's frustrated with the agement that
01:08:24
they won't cut the burn leak this in order to create pressure so in other words the Press is just a tool being
01:08:29
used by the Insiders and that's how this went down 95% of the time I think it's more likely to be a low-level employee I
01:08:36
think that's typically where this comes from a board member has a fiduciary duty
01:08:42
to basically keep proprietary data secret I really don't see most investors wanting to take the chance of it coming
01:08:50
back on them by again violating their Delaware obligations their refy duties furthermore I think even passive
01:09:00
investors who aren't on the board generally don't want to hurt their Investments I think it's generally
01:09:06
disgruntled employees who do this I'd say lower level disgruntled employees and the reason they do it is that either
01:09:13
they feel like the management of the company is asking them to do something unethical or is non-responsive to their
01:09:20
concerns so I think it is the motiv you're talking about jcal but my view on it is that lower level employees have
01:09:28
less to like what do you think the journalists like objectives are besides sensationalist headlines on like what's
01:09:35
the newsworthiness to the public on reporting these stories well I mean you talk about how damaging these stories
01:09:41
are and they hurt the company so why would the reporters do it and the reporters are like right they're not
01:09:46
there to help companies they are there to hurt companies and sell clicks by doing it so now is it new newsworthy
01:09:54
what I would say is it's annoying when the media gets a hold of proprietary information and puts it out but it's
01:10:01
hard to argue that it's not newsworthy I wish the media would do it in a non-clickbait way like if they're going
01:10:07
to put out some numbers don't cherry pick one or two these are private companies so so by by that vein
01:10:14
shouldn't a journalist go out and try and get the private financials of every private company in Silicon Valley they
01:10:19
would if they could and just publish it on our website okay but if they did ask for that explicitly that would be
01:10:25
illegal so they can take inbound but they can't go out and try to steal it themselves obviously so right so why
01:10:30
wouldn't someone just set up a wikle leaks for Private Financial information if you look at every journalist now they
01:10:35
have a pgp key or whatever they have a phone number they say Anonymous hit me on these Anonymous services and that's
01:10:42
how this is done having been on the other side of it it's back in the engaged days people used Yahoo I think
01:10:47
they used Proto I know I just reacted kind of negatively when I see these stories and I'm always like what's the
01:10:52
point here why are we reporting and hurting companies based on like reporting finals that is the point to
01:10:57
hurt them well but the media has a different incentive than you do to get a subscriber if you put this behind a pay
01:11:03
wall and you have all the salacious details and you have one story like this every week then you know the fifth time
01:11:09
somebody comes to the paywall they're like you know what yeah this is great Insider information I'm getting smarter
01:11:14
because of it I'll pay the 25 bucks a month all right if people in our industry didn't want to see this happen
01:11:18
they shouldn't subscribe to the Publications that do this freeberg did you read the article yes got some
01:11:24
numbers and I mean I got it like so you did read it yeah yeah so they accomplished their goal oh I I read it
01:11:30
because you guys sent it to me but I hate all these articles that I see on the internet that people do you
01:11:34
subscribe to the Publications that do no no I don't subscribe to any of that no I
01:11:38
don't either I don't want to read about every startup is a challenge every startup is a disaster until it's
01:11:43
suddenly not like that's reality and it's it's really awful for years to have seen like Tech reporter after Tech
01:11:49
reporter who's supposed to be kind of covering the news The Innovation the prog in the industry Target and focus on
01:11:56
the inevitable failure that every business is dealing with on a frequent basis and make that the headline story
01:12:03
which just ultimately hurts the business hurts the employees hurts the ecosystem
01:12:06
hurts progress doesn't really benefit anyone except their viewership I thought you wanted to talk about the quality of
01:12:11
these businesses let's talk about the quality of businesses I think it's hard to have a conversation about the quality
01:12:15
of these businesses based on a couple of these data points because I think they could be cherry-picked I think one of
01:12:20
the problems with these articles is you don't get the p&l you just get like one or two numbers I can't tell you based on
01:12:26
yeah I mean look 17 million a burn is not good that's almost always a red flag but I don't know if that was one month
01:12:33
or like the steady state I need to see the p&l I can tell you in five minutes if it's a good business or Not by
01:12:39
looking at the pnl yeah in the bre case if we for those of us that know the the founders they're really sharp guys
01:12:47
Enrique is a really really sharp guy so I don't are you guys investors in in that company anyone I am not no but I'm
01:12:53
friends with Enrique and I think he's wonderful if they are cutting the burn by 20% who knows we we don't like SX is
01:12:59
saying we don't know the denominator here we don't know the total spend we don't know how net revenue is defined
01:13:04
it's just what your views on fintech go ahead freeer is fintech a great business
01:13:08
or not I mean is it a tech-based business do you believe in the category so I started metromile which was an
01:13:14
online auto insurance business with a telematics device that plugged in the cars back in
01:13:19
2010 and the term fintech wasn't used at that time and in the years that followed fintech
01:13:25
became a term where it was like technology companies or software companies Reinventing Financial Services
01:13:31
in different ways and you know so we're now 14 years past that and a lot of quote fintech businesses are looking
01:13:37
like fin businesses without the tech meaning their margins and their LTV to CAC or their return on invested Capital
01:13:45
it looks the same or in some cases worse than the traditional Financial Services
01:13:50
businesses that they're meant to disrupt and so this Insurance to lending to banking because the the technology
01:13:58
Advantage was meant to AC either a better margin or you know better return profile or a better call it LTV to CAC
01:14:08
meaning you can acquire customers for less or you can get more money from those customers by retaining them longer
01:14:12
and get more money over time I always used to sit at the board meetings at Metro Mile and I would
01:14:17
scream guys if if we don't demonstrate margin Advantage the business will eventually trade like the market trades
01:14:23
which is one times revenue and if we trade at one times Revenue we're already overvalued and we've burned so much
01:14:28
money it was always a challenging conversation about pulling up the margin pulling out the LTV to CAC numbers the
01:14:34
truth is over the years a lot of fintech companies fell into the same trap that dtoc businesses did which is to grow
01:14:42
they started acquiring customers through Facebook and Google and Facebook and Google became all the page views on the
01:14:48
internet and It ultimately got competed away and the price went up and the conversion rates went down and so the
01:14:55
CAC went through the roof there was a lending company I was involved in early on as a main shareholder and we were
01:15:01
spending $4 to acquire a customer making 12 bucks a month in gross profit fast forward 24 months and it was costing
01:15:08
north of $30 to $60 to acquire a customer and gross profit per month declined to $2 to $4 so you know this
01:15:16
this margin Advantage went away as the business scaled and the CAC went up and so the LTV to CAC ratio started to look
01:15:22
worse than traditional lenders so what do the fin tech companies do in response when this happens which many of them
01:15:27
faced is they had some inherent margin advantage or some inherent growth advantage that over time got competed
01:15:33
away well they start giving product away for free in fintech it's really easy to
01:15:38
grow by giving away a dollar for 90 so you could drop the price of auto insurance and suddenly everyone buys
01:15:43
your auto insurance and your Revenue growth goes through the roof but your margin profile is terrible you'll lose
01:15:48
money over time because you'll have higher loss ratios and same in lending in lending you can offer people a lower
01:15:53
rate Revenue goes through the roof everyone signs up for loans from you and over time you end up having defaults
01:15:58
that eat away your gross profit and you end up losing money on that product so many of these th tech companies it takes
01:16:03
a couple of years for those economics to play out are now starting to run into that headwind which is they couldn't
01:16:09
just grow through some um unique margin or CAC Advantage they acquired traffic and when they couldn't acquire traffic
01:16:14
with a good LTV to CAC ratio they had to start doing this give stuff away and then the margins get eaten up over time
01:16:20
or the business gets unprofitable and they can't get out of that cycle so I think we're in this kind of like
01:16:24
realizing the truth which is that a lot of fintech businesses or just thin businesses there are a few that are
01:16:29
doing great but many of them for many years I think Mas graded as having some unique Tech Advantage until those
01:16:36
numbers started to play out which demonstrated that in fact they did not yeah and you can understand the customer
01:16:43
acquisition cost that's what CAC stands for for those of you who don't know very
01:16:47
easily because I was an investor in Robin Hood and one of the genius things they did was a give to get program it's
01:16:52
called in the referral space if you if I get you to sign up with my referral code
01:16:56
they would give me a share of a company and they would give you a share of a company so you get a free share but you
01:17:01
have to then sign up you know and put your bank account in and all that kind of stuff they'll pay a referral program
01:17:07
a couple of hundred bucks e trades Etc of the worlds to get a funded customer Robin Hood was able to do it for giving
01:17:13
away two fractions of a share and you weren't getting like a $300 you know Tesla share you were
01:17:19
getting a whatever 1% of that you get $3 worth of Tesla shares or whatever and they did it with a little device like um
01:17:26
a mystery box so it was quite addictive and in the mystery box they would have dollar shares $2 shares whatever and
01:17:31
they would and they would net that out to be well below tens of dollars instead of hundreds of dollars and I I maxed out
01:17:37
the program because I tweeted it and got 250 people now they're doing one where if you move your money into the account
01:17:42
they give you 1% so if you move a million dollars of shares in they'll give you like $10,000 to build up their
01:17:47
assets under management so you need to have something that is cheaper than what's in the market like TV is very
01:17:53
expensive too I'll say two things which are build on what I've said before and maybe I'll try to make the point clearer
01:18:00
do you guys know what the average gross margin is of the S&P 500 and how it's changed over time my guess is gross
01:18:07
margin yeah my guess is 28% I'm wrong but it's a good guess it's about 43% over the last kind of 25 years
01:18:21
except in two years and those two years were on the tail end of the web 1.0 bubble bursting so the average is about
01:18:28
43% in 20 202 it went to 30% 2003 it went down to 23% so a half right of the steady state
01:18:40
average that's one comment but the second comment is when you actually look at the S&P 500 right so it has all of
01:18:48
these different sectors but this is the 500 best companies in the world right everything else is much worse than this
01:18:55
and you look at who has the highest probability and the highest correlation over long periods of time of generating
01:19:02
high gross margins it's actually the companies in the markets with the lowest gross margins so if you put these two
01:19:09
things together what is it saying it's saying that high gross margin companies are rewarded for growth but they
01:19:15
generally speaking have a very poor rack track record of two things one is generating profitability and two is
01:19:23
actually doing it in a consistent Manner and so I think this is just a way of saying
01:19:29
what I said last week but I'm just going to keep harping on this because I think
01:19:33
this is a huge Trend over the next decade is technology freeberg to your point is no longer a definable sector I
01:19:41
know that we want to point to a company and say it's the tech company but I think it's much you'll be much safer if
01:19:48
you say this is a tech enabled version of X and X is all of these other historical sectors of the economy that
01:19:55
have existed energy Consumer Staples Consumer discretionary materials it Industrials real estate utilities
01:20:03
whatever it is it's actually that company and those companies have a prevailing gross margin a prevailing
01:20:12
gross profitability a prevailing ability to convert gross margin into gross profit and that has not changed that
01:20:18
much and so all of these companies that are massive outliers to these trends are
01:20:23
going to go through a process of getting refactored and maybe your example of fintech being more fin than Tech is a
01:20:32
very early sign of what may be happening to the rest of all of these companies that we point to and say that is a tech
01:20:39
company actually that may just be a real estate company that's Tech enabled yeah
01:20:44
it it used to be the case that tech companies sold technology to traditional companies and now traditional companies
01:20:50
are getting rebuilt quote as technology companies but maybe don't have as big of
01:20:55
an advantage as the incumbents who can easily adopt technology themselves so it becomes ubiquitous that technology is
01:21:01
you know the way the market evolves but could you imagine if we have a mean reversion to the average gross margin
01:21:08
profile oh by the way the other thing was a gentleman made a very I think misguided
01:21:15
comment when we posted the Pod last week about how gross margins can never change
01:21:18
and this is crazy and I just wanted to explain that for second let's just say you have a
01:21:24
software company that has 80% gross margins but you have an accounting Rule now all of a sudden that changes the
01:21:30
capitalization of R&D I think saaks you said it last week but I'll reiterate it if all of a sudden these companies go
01:21:38
totally pair way pair shape because of these kinds of accounting rules where you can't capitalize these Investments
01:21:44
over five years but now you can only you pay for them upfront but you can deduct
01:21:48
them over 15 or 20 years which is what is happening right now companies will Lobby the standards
01:21:55
bodies to change the definition of gross margins so that those gross margins look
01:21:58
very different because they'll want to deduct them immediately and now you'll see gross margins Decay by a thousand
01:22:05
and 2,000 basis points all of this is to say that this may not be new and different
01:22:14
it just may be a rhyming version of the past and we know what that past looked like and the new the numbers are kind of
01:22:21
unavoidable sax any thoughts on this fintech Reckoning bubble or some other perspective you might have I think
01:22:30
you're right it is a reckoning and the reason for that is because fintech is one of the hottest spaces during the
01:22:35
bubble I have the saying that the hotter they are the harder they fall and so when a space gets really froy and
01:22:41
speculative obviously the Reckoning is going to be that much bigger in terms of your question
01:22:46
about Revenue multiples and how to think about that I agree that it's a big mistake to think of fintech Revenue as
01:22:57
having the same quality as say SAS Revenue I mean the gross margin profiles of ftech businesses typically are very
01:23:04
different a good software business 70 80% gross margin fintech businesses typically have transaction costs on
01:23:12
every transaction that are pretty high so like freeberg mentioned if you're making loans you're going to have a loss
01:23:19
rate on that portfolio if you're doing Insurance you're going to have claims payouts if you're doing payments you're
01:23:26
going to have transaction fees that you pay to save Visa Mastercard and certainly we saw this at PayPal where
01:23:34
the margin on any particular payment was pretty low and I I do think that investors who were putting 100 times
01:23:40
plus multiples on fintech Revenue definitely were not taking the the margin profile into
01:23:47
account you know another mistake that I think investors make is they'll think in
01:23:52
terms this is certainly true with with payments companies I mean I could I saw this all the time after PayPal is that
01:23:59
people will confuse gross payment volume and revenue with a payments company what you have to understand is
01:24:07
you know take up a payments business that's doing maybe a billion dollars in payment Revenue that sounds like a lot
01:24:14
right but if they charge two and a half% transaction fees on that that's only 25
01:24:18
million in Revenue okay now let's say that of that 2 half% 1 and a half% on average goes a Visa Mastercard and
01:24:26
another 50 basis points is fraud losses and another quarter point is customer support costs on transactions where
01:24:33
there's a problem okay now your real margin your real gross profit on that transaction is 25 basis points 10% so
01:24:42
really of your 25 million of Revenue you only have 2 and a. half million of true
01:24:47
net revenue and then you have to use all of that Revenue to pay off all the overhead of the company all the R&D all
01:24:53
the sales and marketing all the the GNA the overhead kind bars yeah exactly so you very
01:25:01
quickly shrink from a company that's doing a billion dollars in payment volume to one that really is only doing
01:25:07
two and a half million of net revenue so I mean unless you're a company like I don't know like only fans that's able to
01:25:12
charge 10% uh transaction fees but they're rare you know and they tend to be kind of in
01:25:17
these you know subprime or kind of sketchy spaces so people just don't really understand
01:25:25
the the scale that you need to make a payments company work I mean it needs to be not just like a billion is not enough
01:25:33
you need to be doing tens or hundreds of billions of volume to make these businesses like exciting at all and I
01:25:41
think there's something probably pretty analogous with some of these other areas
01:25:45
like loans of various kinds or Insurance because of the losses the margin are just way smaller
01:25:53
than people think and therefore you just need huge volumes to make them interesting yeah so I think that's part
01:25:58
of what's going on here yeah and people conf FLT the numbers especially in the early stage of startups people were
01:26:04
referring to Airbnb and Uber and door Dash's Revenue as the gross Market you know transactions and like well yeah
01:26:13
Airbnb is taking what like a 15% rake and that's all margin yeah but you know people would take the whole you know
01:26:20
five day stay and attribute that to like oh this is the revenue of Airbnb it's just intellectually dishonest all right
01:26:27
fredberg I've been seeing a bunch of tweets about this Arc storm hitting California is this going to be amazing
01:26:33
snow is this going to be floods and disasters is this the day after what's reality here yeah there's
01:26:40
this like rumor that is you know not corroborated by science that this Arc storm event is going to
01:26:48
hit us in the next week or two in California which is this massive storm Nick if you pull up that tweet that I
01:26:56
sent you last night so this is the 200 mile cross Pacific jet scream oh yeah I saw that with the you know very hot and
01:27:05
moist Pacific so a lot of energy the ocean temperatures are hotter than they've ever been on record so uh this
01:27:12
causes the air to move more quickly it causes more moisture to go into the air and then it gets moved and pushed all
01:27:17
the way to the Western United States and so some people have said wait this is going to lead to an arc storm event so
01:27:23
what's an arc storm event in 1861 to 1862 in California there was a atmospheric River Event for 43 days so
01:27:33
water poured down for 43 days straight completely flooded the Central Valley Sacramento Los Angeles all of these
01:27:40
regions were underwater for six months at the time causing $100 million in damage and the USGS the United States
01:27:48
Geological Survey did a analysis on what they projected Ed would happen if such an event were to happen again this day
01:27:54
and age these sorts of events are predicted historically to happen every 150 to 200 years but based on the warm
01:28:00
temperature in the oceans we see it's now predicted that these will happen every call it 25 to 50 years or much
01:28:05
sooner and these high temperatures are driving a higher increased frequency and severity of these sorts of events so the
01:28:11
most recent model called arkstorm 2.0 which was an analysis done by the USGS showed that if this
01:28:19
sort of an event were to occur again would drive over trillion dollars in Damages in California so based on the
01:28:26
image that you just saw which showed this massive 200 mph hot wet jet stream plowing towards the Western us a lot of
01:28:34
people on Twitter started speculating it's arkstorm 2.0 it's coming our way and a lot of meteorologists have looked
01:28:39
at the Ensemble which is the simulation model forecasts and said you know what it's not going to be arkstorm 2.0 it's
01:28:45
going to be wet over the next couple of weeks it could be very wet but this isn't the big Mega flood event that
01:28:51
everyone's been worried about so rest assured it's not imminent I know a lot of people are talking about it saying it
01:28:56
is imminent but I do think it's worth being aware of and cognizant of this arkstorm 2.0 type scenario and you know
01:29:01
it's the kind of thing that folks are waiting for and now you know predicting every other week as is about to happen
01:29:07
when these sorts of things happen last year they refer to the storms we had in California as atmospheric River and the
01:29:13
arc the AR in at in Arc storm is for atmospheric River I see so last year we had flooding we had damage to our house
01:29:20
I think like $50,000 in damage um Tahoe was nuts yeah the snow in Tahoe the floods
01:29:27
in the Bay Area it was crazy it was it was Bonkers and how many days was that it was only like 10 days so basically
01:29:33
it's going to be like wet warm moist but it's really not going to be like dripping and like I got it just not
01:29:45
GNA be drenched it's going to it's going to be drenched it's going to be wet but
01:29:49
not drenched it's going to be wet for 25 days there you go upward 25 days there you go anyway it's worth being cognizant
01:29:58
we talked about the hurricane event in the Pacific couple weeks ago these sorts of events more frequent more scary more
01:30:05
significant hotter oceans are driving these events but this doesn't seem to be the mega flood event but it could happen
01:30:12
some point got to be cognizant that's the reality there people are buying like sandbags and stuff like that and putting
01:30:18
things around their homes these days to to prevent this kind of stuff so yeah and then hopefully it hits I got a leak
01:30:24
in my office here right now I got a tarp on my roof you got a tarp on your roof this is at your house or this is at your
01:30:30
office my house my office at my house your home started leaking like water was pouring in through the roof the other
01:30:36
day you have wood shingles or do you have other I've got composite shingles uh but apparently underneath it there's
01:30:42
some Hol they got to redo the roof anyway I have to take I have to take the wood shingles off because we can't get
01:30:48
the insurance people to yeah sh is no longer because of fires in California and you can replace up to 30% of them is
01:30:56
what I was told and so you can do like patchworks from off but if you want to at a certain point they won't let you do
01:31:02
it and you just have to replace the whole damn thing this happened to me in Brentwood and those wood shakes that you
01:31:07
have the sun dries them and they become like Tinder basically so you actually don't want to have those those Shake
01:31:12
rofes anymore it's super D no I think that I think they're treated to be fire but they look so beautiful and
01:31:19
now we have to replace them with composite shingles or like you know anyways we're about to start but we
01:31:24
don't we can't even get five days straight of good weather for the folks to come in so that's what's so crazy
01:31:28
about this thing is we could be sitting here six months from now and have 25 days of moisture yeah I mean 40 days I'm
01:31:35
gonna tell that 40 days straight of wet moisture wet and moist yeah but not dripping not
01:31:43
drenched for 40 days that's it consistently 40 days of moist consistent 40 days of just yes wet and warm
01:31:52
moisture and listen if you were up in Tahoe it would be flurries and yeah soft powder which is what I'm hoping for
01:32:03
all right everybody for the day why is he laughing keep it together please uh for the dictator Tran poopa and is there
01:32:13
when we look at these atmospheric things that occur does any way does this have any kind of um gravitational pull
01:32:20
multiplan freberg any planetary effects that might pull the oceans out like the gravity of the moon or I'm turning off
01:32:28
my microphone Uranus nothing none of those would causes all right everybody goodbye for
01:32:36
for consultant of science davidg the dictator chairman dictator cha and David sa love you yeah love you besties we see
01:32:45
you next time byebye byebye let your winners ride Rainman David and in said we open source it to
01:32:58
the fans and they've just gone crazy with it love you queen [Music] of Besties are that's my dog taking your
01:33:14
driveway oh man oh man my we should all just get a room and just have one big huge orgy cuzz they're
01:33:23
all this useless it's like this like sexual tension that they just need to release
01:33:27
somehow what we need to get [Music] merch I'm going all [Music] in