E71: Russia/Ukraine deep dive: escalation, risk factors, financial fallout, exit ramps and more

dude sax i love that look look at that shirt look at that man is it too noisy for a podcast you look very relatable you're like you're like a an american man like just like at home doing stuff is he trying to go full tucker on us it is a really really horrendous shirt that you're that is a i mean i that was the same shirt tucker was wearing last week oh my god sax is going to be so appealing to middle america right now he's like absolutely look he's going for the every man he doesn't have a blazer on he's trying to get the purple pills are you going to go chop wood with tucker yeah i may not be a man of the people but i do try to be a man for the people [Music] [Music] hey everybody welcome to another episode

of the all-in podcast it's obviously been an intense week and there is a topic there's really only one topic to talk about this week and that's the russian invasion of the ukraine with me to break all this down i'm going to take it from a couple of different angles the rain man david sacks with his power flannel on today he's going to go chop some wood after this trying to appeal to the everyman power flannel it's a power flannel it's a power flannel i think that was gifted by tucker and the sultan of science hot off the you know how do you know it's uh flannel instead of uh cashmere how do you know it didn't come from one of tomas little um if you sent that shirt to chamathi burn

it that would go right in his pizza i'm gonna burn it but i would wipe my butt with it geez here we go folks uh and hot off the launch of the hannah beveridge printer replicator the sultan of science himself david freeburg and back from a little holiday the dictator himself jamal palihapita with a a jedi robe tell us about the jedi robe that you elected for this week darth palpita well this is darth palpatine hapatia well i i mean this is look this is yes it is cashmere we're running out of time i have to wear through the rest of my few garments my new garments before it's springtime and then i have to go to the you know the linen and the

cotton got it so you're enjoying the final days of cashmere well i do i did find some baby cashmere light thin you know you can wear them probably until april maybe even may so we have that going for us all right well there you go and is there a specific date that you uh shift over from to the linens and to to be honest with you i have a i have a team i consult with the team's working on that right they're working on that they're working on a recommendation all right so we can still laugh uh it's kind of hard to talk about other topics when a war has broken out uh i don't know if i have to go too deep into recapping what's happening because it is a static situation but there's been massive uh fallout from the war both economically lives lost and it's escalated pretty dramatically we had a pretty crazy moment last night

we're taping this on friday march 4th last night a nuclear facility the largest one in europe uh was involved in a firefight it seems to have been secured and the russians have taken control of it but there were people bombing it where to begin here i think maybe saks we can start us off with a little bit of your assessment of the situation as it stands in week two yeah i mean when we broke up last week this war was just breaking out and we were still talking about ways that we might defuse it obviously that was too late and i think everybody probably putin first and foremost thought this would be a cakewalk and it has turned out not to be the resistance by the ukrainians has been fierce

and it's been sort of uh galvanized by their leader zielinski you know at the very beginning of the hostilities he made the decision to stay and fight he had that video that came out with his cabinet standing behind him that galvanized all the people of ukraine stand behind them and then the west now wants to stand behind the whole country of ukraine so it's really been you know amazing leadership by zilinski and um you know it's too bad in a way we didn't have that kind of leadership among our allies and say afghanistan you know we had this guy ghani who got in the first helicopter out of there when when the trouble started um so uh you know his leadership has been strong and admirable and it's basically galvanized the west and i think that putin i think must have underestimated

the level of resistance he would face and also the unity of the west in terms of sanctioning him uh and providing support for the ukrainians all that being said i think we're now at a very dangerous sort of crossroads because the situation is is very volatile uh and you've got so much variance in the outcomes that can occur now um i think you're seeing people prognosticate everything from you know uh kiev gets turned to rubble in the next week and the russians basically power through and win two this turns into a long-term insurgency to you know there's gonna be some sort of uprising in moscow and and you know regime change there and i think because the variance is so high because all the sort you know because the two sides are playing for all the marbles

so to speak and you've even got i think intemperate and insane remarks by lindsey graham basically calling for uh you know calling for putin's ouster you know which i think is going to give i mean yeah it's going to give the kremlin i think a propaganda tool but for for rallying people internally but the the the point is just where it seems like we're playing for all the marbles right now and um i think that's a very dangerous place to be and i'm seeing you know insane rhetoric and commentary by people trying to push us into war and so just the other day you know one of the one of the things i tweeted about is one of the craziest things you hear is we're already in war three well and you know kasparov said this i mean he's kind of a known to be a little bit of a hothead but you also had fiona hill who's supposed to be a russia expert from the state department who frequently is the

go-to source for cnn and other publications also saying we're already in world war three well no we're not i mean if we were in war three you'd see the mushroom clouds assuming you were still alive and not vaporized so it is incredibly reckless for people to be saying things like this and there is just you know this drumbeat of war that is being pushed by cable news and by the twitter sphere and just today uh thankfully this morning nato announced that it would not be uh imposing a no-fly zone over ukraine that was why is that important explain well because because there's all these people who are saying well we shouldn't send boots on the ground to ukraine we don't need to get militarily involved but let's let's do a

no-fly zone to basically help the ukrainians how do you enforce that what a no-fly zone means is that you're going to shoot down russian planes yes that's what it means you are going to war it may not be boots on the ground it's boots in the sky so had we done that had we given in to the emotional appeals and i think we all feel the tug on our heartstrings but had we given into that we would be potentially in a shooting war with russia and that would be the most serious we're already in i think the most serious foreign policy situation in my lifetime and you know i'm almost half a century old so you know it's um it's very dangerous and um you know i've been saying for the last month on this podcast i've been actually advocating

for the cause of not getting militarily involved and a month ago it seemed like an argument i didn't need to make but now it really does because uh both sides are are sort of and this is there's almost a unanimity in washington that we need to continue escalating the situation sex my concern is less about the washington um intent to put boots on the ground or boots in the sky and i'm much more concerned about nato allies there's 30 member nations in nato and um if any one of them does something stupid if there's any action by any even rogue element within the military or um some statement even by some politician at some nato member um you know you could see a reaction potentially from putin and then article five kicks in which is this collective

defense article in nato and then the united states has an obligation to enter the conflict uh and and that's the one scenario you didn't mention which is the scenario i am most concerned about most frightened by is we don't know when the when or if a franz ferdinand moment could occur here that someone does something stupid some polish tank rolls across the border and shoots down some shoots at some russian you know tank and then the russian tank crosses over and then all of a sudden we've got to go to the rescue and we've got to go defend that that nato member and then all of a sudden this whole thing sparks into a wildfire it felt like last night could have been that when you look at the fog of war you know

it was basically this nuclear reactor if it explodes if it has uh you know an episode would do just tremendous damage to the whole continent i mean if you're living in a nato country or in moscow if that thing had gone up which i know is a very um uh would be a rare occurrence and they were shutting it down et cetera so but there was that last night it felt like there could be a tipping point nuclear material is like a whole nother level it's like um it has nothing to do with war at that point it has to do with uh extinction you know a nuclear reactor is almost like a temple on earth to god it's like this holiest of holies no one can should or ever could consider that to be a point in conflict ever it's nothing

should be touched let the wars of humans continue on the rest of the earth surface but nuclear weapons nuclear reactors that's unleashing the fury of the gods on olympus and when they come down they scorch the earth and nuclear material you know is an extinction kind of or is you know kind of a cataclysmic event for this planet and so you know that that goes well beyond this idea of like is it nato or did someone shoot at someone let's all go fight it becomes like almost existential to the to the condition of humans well so what does that say about putin then i mean putin targeted that facility no hold on a second hold on i think that's fake news at this point you see the tweet by michael shellenberger so hold on a second you said this is false

nice tweet i did see last night's tweet okay so i don't necessarily think this is fog of war i think this might be disinformation so here's what happened is it and it wasn't just misreporting zielinski tweeted out a video where he basically was saying this plant has been attacked it's on fire it's going to be chernobyl times 10 for all of europe and then the foreign minister of ukraine came out with another statement just like that simultaneously so this was coordinated and then i saw on all the cable news networks all of them there's no difference between fox and cnn msnbc same reporting they were all in a panic about this and then you know and that now then we find out very

quickly the truth which was confirmed by the white house which is no radiation no explosion um the fire was sort of tangential it wasn't core to the plant so i think we have to be very careful now to guard ourselves against disinformation that is designed frankly to escalate the situation and pull us to draw us into a war simultaneous with this there was a new york times op-ed by zielinski and and one of his aides who was standing next to him sort of transcribing and the headline was something like i'm fighting to the last breath look that that is heroic i mean i think we can all recognize zilunsky's bravery and courage in in in doing that

however the point of that article was to tug on our heartstrings to get us to involved in the war and what he said in that that article was you don't need to send boots on the ground but impose the no-fly zone which we just talked about is a declaration of war yeah but no what i was talking about with the nuclear power plant is not that it wasn't being hyped up by the media certainly like this was becoming like their ratings bonanza and they were definitely hyping it up and maybe zolinsky was giving a warning hey this could escalate but the russians did target that they were bombing around it they were firefighting sort of freeberg's point like this is i think crazy behavior by russian troops

by putin to actually you know try to seize a nuclear power plant it seems pretty crazy chamath you've been silent thus far let's get your moth involved here there's a 17th century phrase that says adversity makes for strange bedfellows and i think what happens when you are in the middle of enormous adversity um you know you need to do whatever it takes to win right that's i think why silence is so patriotic and viewed so heroically around the world now um he's trying to defend his country and his people um i want to take the counter of david what you said i actually think we are at war but it's the most positive form of it in the sense that we are learning

a different kind of warfare now if you think about how we used to fight up until basically the persian gulf war it was armaments and tanks and then that evolved in the middle east because we had to fight insurgents and you know urban terrorism in many ways right i think this is a way in which we are learning that there's a different kind of warfare as well which is fundamentally economic and so you know it may not take the same shape as drones and missiles and fire and guns and bullets but i think you would be foolish to make the mistake that we are now not at economic war with russia and at the end of the day the outcome is the same which is either they survive or they don't survive and everything we've done points to that we are willing to fight um and we are willing to put a lot of economic collateral um and chips on the field in order to win this battle so i think in that respect we are kind of at a war did we are we on it is this

a nuclear level economic uh decoupling everybody has a historical framework where they want to go back to how the natural path of escalation works and i think this is a very different form of escalation that we need to consider and i think that this is the kind of warfare that may actually um you know be the the way in which wars are fought in the future you seize assets you shut off access to supply routes you make it impossible for anything to work so you know i'll give you a simple example form of warfare is what's happening right now in the sense that you know for example the russian skies are completely clear not just because that you know no uh external airlines will necessarily fly there but because boeing and rolls-royce and ge and airbus basically pulled all of their

support all of their parts right um we've gone to war with respect to their petroleum and lng supplies how not necessarily because we won't still stop payments which we are still enabling but because the actual refiners won't take the oil on the lng because they then would be subject to sanctions the people who would ship that are no longer taking those uh payments or those those barrels of oil into the marketplace because they can't get insured by international banks so in all of these various ways we are actually at war and i think you know maybe this is the way war should be fought in the future

because it'll save thousands of lives in in the more classic way of describing how lives are sacrificed for i want to make a counterpoint my concern to mock is that we've rushed into a reactive response with respect to sanctions and seizing assets in a way that maybe not be calculated over the long run meaning like are we setting ourselves up for another iraq afghanistan situation where we rush into a war and we don't have an exit strategy and the issue is that a lot of the assets that we've effectively wiped the value down to zero have a repercussive effect on global businesses and the global economy as a as an example you know this company that we were texting about called luke oil they were worth 60 billion dollars a few

days ago we effectively wiped them out to zero and um 65 to 70 percent of the shares in that company were held and owned by public uh um retirement funds pension funds mutual funds that are used for retirees in europe and the united states and um and so you know a significant amount this is a complete red herring i i've told you this in the private chat i think this is a complete complete red herring and the reason it's a red herring is that the global total market cap of all of these businesses is meaningfully different than the amount of total capex that these guys represent and inasmuch as you are gonna take the equity values of certain of these companies to zero it's in the grand scheme of things not that much

equity value we can absorb it we're not talking trillions of dollars forget about the equity value just think about the economic repercussions where there is leveraged uh positions and swaps and derivatives in place counterparty swaps in place with a lot of these companies that are now going to default and we're not going to know that till the end of this month when everything has to settle and no one's going to be able to make their payments a small price to pay freedberg if well hold on one sec this applies both to russian companies that are suppliers and buyers of assets um products and services from international businesses and all of a sudden that line item just zeros out i don't believe the economic

value of all of that oil exceeds the market cap of luke oil i don't believe it and i don't believe further that the economic value that's held by uh non-russian actors is meaningfully more than a few tens of billions of dollars we're going to find out pretty quick for sanctions by the way russia and the ukraine combined account for roughly 25 of global wheat exports let me let me say differently that wheat goes to egypt and from egypt it goes throughout africa and there's a lot of nations and a lot of people that depend on that food supply and that food supply is now cut off okay i understand but now we were talking about something different you want to talk about wheat we can talk about wheat generally i'm talking about zeroing all

this stuff out and cutting them off completely hold on a second one of the things you have to realize freeburg is that the purpose of sanctions is to create massive pain that stops a madman dictator 100 from invading other countries and causing a world war so while it is tragic that's some pension hold on let me finish while it is tragic that people will suffer and people maybe can't get their netflix or can't get their facebook or some wheat will get disrupted all of this is the the is the better choice than going to war with putin and it's meant to create pain and suffering it does not create pain and suffering then russia will not change i understand the point of sanctions jkl i

totally get it i totally understand the intent and i totally understand the point my point is have we really done the calculus because when you make this much of an impact this fast when you rush into what we might call an economic war with such significant abrasion in such a significantly short period of time i don't know do we really have a sense of where the calculus is because i don't know where the wheat imports are going to come from for egypt now and i don't know where the millions of people that depend on that wheat supply are now going to get fed from and i don't think we have an answer if we had a strategy that said here's the solution here's the solution from an energy perspective from a food perspective from a capital perspective to fill all these holes otherwise we may all end up sharing that

cost over the long run and it's going to be a big cost to bear i think you're wrong and the reason why i think you're wrong is we've already seen how this has played out before so in the last two years we learned what governments are willing to do when you have supply shots in demand shocks and what they do is they turn on the money printer and they create enormous amounts of stimulus okay and what we have now is a point where if these shocks are really really really meaningful globally i think you're going to see the federal reserve and the ecb and the bank of canada and the bank of japan step in in a very coordinated way to provide liquidity to these markets and i think what that has the byproduct of doing is blunting the economic consequences to everybody but

the person who is sanctioned do you think that's inflationary as well no and the other thing in fact it's the opposite i look david and i have been the ones that said the risk is to a recession we are now teetering towards a recession nick you should throw this thing that i sent to you guys before if you look back over the last 30 or 40 or 50 years and you look at every single period of when there has been a recession what's interesting to note is that it's not always been the case that the price of energy has risen by 50 percent in a recession but it is always the case that when energy prices spike by 50 we enter a

recession we will contract as an economy the government will have to become more accommodating that is the price of this economic war that we have started and i think it's a just price because what's happening is not supportable so tamath you are sure that we're or you you feel strongly that we're not entering into a condition of significant stagflation where we're not able to restimulate the economy and we inflate everything with all this money printing i don't even know what stagflation is to be completely honest with you i don't think i've ever seen it i know how it's classically described i think it's like pseudo-intellectual kind of gobbledygook speak what i can tell you is i think that prices are

too high in certain core commodities and goods i think what's going to happen is we are going to find a way to subsidize those prices coming down and i think the simplest way to do it is for the government to step in and become a buffer and it will drive massive deficits it'll drive increasing amounts of debt but i think that is a simple way for us to make sure we put and ratchet the pressure and just to speak on this other point we have only just begun meaning just today as we started the pod uh biden came out with an incremental new set of sanctions on russian crude so we're not at the even in the beginning we're at the beginning of the beginning i'm just worried this is a new kind of nuclear war i mean it's just well it's right now

if this is if this is the new nuclear war then it's a blessing because we're not going to have millions of people die sacks is are the sanctions just right too strong too little i think like versus going to war i think what free we're saying is that we're on an escalatory path here that starts with sanctions then leads to more and more sanctions that includes arming the ukrainians and i don't know that's not that's a big that's a big leap and i think i think already the germans gave the gave the ukrainians javelin missiles last week yeah i mean i know absolutely right and there's there's a lot more coming so you know what i would say is back to something said which is we're already at war i you know call me a call me non-binary call me a non-binary thinker but

i don't i don't like dividing our options in that simply into war and peace i think there's like a spectrum here and there and and you could call that spectrum an escalatory path so there's sanctions there's arming them and and so on down the line and i don't like characterizing what we're in or what we're doing is war because once you're in war then it justifies anything and for the other side too so you're such a pacifist sacks it's awesome keep going look we have to remember wait no let me just clarify what i'm saying yeah let me just wait i didn't say we're at war i said we're at a form of a war it's an economic war it's just a difference i hope it stays economic then you know i

don't i don't like using that metaphor but let's not debate semantics but to jason's point am i pacifist what i would say is you know during the cold war we have to remember that this philosophy of containment that we had the goal was to prevent the spread of communism while conceding that the countries that were already communist that were behind the iron curtain we would not challenge we would not seek to roll that back why because we did not want hot war with the soviet union and everything was calibrated to make sure that we did not blunder ourselves into nuclear wars mutually assured destruction and yet it almost happened anyway most notably with

the cuban missile crisis but rules of the game evolved right and so we did things like arm the mujahideen you know rebels in afghanistan with stinger missiles so that would be sort of the equivalent of the javelins but we sure as hell didn't put the american flag or a nato flag on the boxes and on the trucks delivering those weapons we delivered them through pakistan through intermediaries there are rules of the game that we all understood now i hope we are following some of the rules but it feels to me like we are and i think one good thing is that both biden and certainly putin remember the cold war they were very involved in the cold war they're old enough to remember it and hopefully we remember those rules the most encouraging thing i've heard bin say this entire time was when he

reiterated at the state of the union that we would not get militarily involved it's very important that he keeps saying that because you know the russians are looking at these statements so we just have to remember that again we're on this escalatory path and and one of the things that's going on here is is is a purity spiral so there's a social media version of this and there's like a partisan version of this so the social media version of this is that the way that you show that you're on the the side of the good of ukraine is you advocate for the no-fly zone you advocate for the escalation but if you advocate for slowing down or de-escalating or just taking a breath you're called a putin bootlicker you're called neville chamberlain i've already

gotten about a thousand reply tweets coming at me saying that so the purity spiral on twitter that we've seen in so many other contexts now pushes everybody into the into world war three similarly there's a partisan dynamic where no matter what biden says or does no matter what new sanctions he imposes the republicans will always announce him for weakness and the media and fox news will always announce him for weakness it's a one-way ratchet how much more do you want him to do is the question and i think freeburg asks you know a great question which is what is the end game here what are we trying to accomplish and what i'm worried about is that the dynamic this this um frenzy

that you know what what biology is called the chimp frenzy of social media right with cable news and now social media and partisan rhetoric it all pushes us towards continual escalation and war three and who are going to be the grown-ups who say listen this is foolish stand down take a breath by the way we might want to keep some of these cards in reserve we don't have to play every single thing right to your point um i saw lady g trending i guess this is his nickname but lindsey graham literally explicitly said somebody in russia needs to assassinate putin i mean this is a crazy escalation and then on the other side inside the you have people saying you know putin's a genius and so we are going to continue to ratchet up these economic sanctions guys we are this is

the beginning of the beginning of the economic sanctions we're not even in the middle of them what do you think he's going to do like what is the exit ramp for putin if we keep doing this and he's in a corner i have no idea but i think that it's clear it's pretty it's pretty plain as day if you're going to be unemotional and just look at this from our from the american and european perspective which is the only end game now uh is regime change right and one step before regime change is a complete sort of detent and somehow you know um [Music] surrender by putin in the sense that he pulls back from ukraine not if seventy percent of his people support him which is what a poll pulling figure showed this morning right and and you're

careful with those polls i mean people in russia are not exactly gonna say i'm anti-putin in a survey well j cal i mean look you can say that to to kind of defend what you believe about i know i'm not saying it to defend whatever i'm saying like i'm saying just just suspend it and assume for a moment that maybe that is the position of those people maybe they do believe in pride of nation like the united states would believe in pride of nation if we were attacked if everyone took economic sanctions against our country would we not stand up and defend our president and our nation and say that our country is the prime country and our way of living and our life and we should be left alone you know this is um this is

not an issue for the world to get involved in okay let's play this out and so how do you end up assume that is the case how do you end up having a regime change where you don't have a country that's actually in revolt but you have a country yeah but let's play this out like look people are rallying for what this guy is doing if that is the case right let's move our conversation to exit ramps from where we are there's there's two options right there's two options option one is ukraine successfully defends itself right and option two is russia quote-unquote wins okay let's just go down that branch for one second or they settle there's a third one jamaa they come to a peace treaty which is what's happened previously

oh there's a third and then there's like i guess what you're saying jason is like everybody just kind of stops where they're they are in place yes they do a peace treaty they give them the east of the ukraine of ukraine got it well let's let's play so then what happens to all of these economic sanctions are they undone that would be part of the negotiation right yeah maybe undone based on conditions the question is are their reparations paid one way or the other and how do those get funded well those should be imf get involved and say hey we're going to fund your 300 billion dollar war damage bill to the ukraine and you know there's a big confiscate the 650 billion dollars sitting in foreign bank accounts that's owned by the central bank of russia again like how do you go back and lead a

nation and how does a nation accept that how do they accept that um their sovereignty has now been challenged when a few months ago so they were the aggressor right they don't already look at what happened to japan by the way you know i mean you know it's it's a very similar kind of um psychological shock that that may not be as easy to swallow with modern russians don't all roads then lead to this is going to take a really long time to figure out a long it's either going to take a long time or it's going to catch on fire i thought georgia took like 11 days so i mean i there's a sun tzu quote uh which i don't want to butcher but uh it was

build your opponent a golden bridge to recruit retreat across there needs to be a golden bridge here that's what we talked about we we did talk about it two episodes ago where we said well we're not what if we're people running the country i'm talking about like where's biden and where's the rest of the state department and saying here's an exit path for putin and clearly stated over and over again and give him something to win right like i think we gave a suggestion david correct but i'm wrong if you suggested or i did two weeks ago when we started talking about this which was hey why don't we just say hey we're not going to allow the to allow ukraine to join nato for a decade if you leave now you know we're so past that we're so passionate are we that has nothing to do with i think what's going on now you had countries you had countries like that

came off the sidelines and have done things they've they haven't done 30 40 50 years and in some cases ever i mean their industry just got gutted this week house so like we should understand that there's there's a there's a hundred million people worried about there's a hundred million people worried about food if we had done it preemptively i think i think it made a huge difference like look at germany as an example germany under 40 years of policy you know they had consistently been under investing relative to their gdp in the military and they made an explicit commitment to basically just ramp that up back above two percent you know they've also made commitments around their energy independence you

know switzerland is freezing bank accounts something that they've really never done and they've always stayed neutral sweden sending uh uh military support so there's a lot of countries in europe in continental europe that have found a voice well it's terrifying right chamoth i mean to live with this threat just east of you this would be like us living with this threat in you know central america or something this is like two steps away and i think that's what people forget is the geography here of you know france germany uh paul and ukraine i think this nato commitment doesn't necessarily get it done at this point yeah i agree with that i mean i didn't have to be part of anything what's the actual

ramp in my opinion is that you ratchet these economic sanctions up so severely that then you know look the thing is hopefully in the aperture of war memories are short in the sense that you know if you ratchet these things up very aggressively now all of a sudden something from even two weeks ago seems like a much much better place to be right and so that could be an off-ramp which is like you basically find a way to take a lot of pressure off these economic sanctions in return for it to taunt i mean i don't know but i'm making this up i have no idea i mean it feels like there's no exit here because putin has a lot of pride and nuclear weapons is this

an a no exit situation saks i think there's always an exit we have to be willing to to contemplate what that is i think to your question let's go back for a second up to your question would it make a difference if we had taken nato expansion off the table say last year i think this year was probably already too late but i think the answer is yes regardless of whether you believe that nato expansion is a real issue for the russians or whether you think that's a pretext because you know people are in one of those two camps putin has been saying since 2008 in 2008 there was a nato summit in bucharest in which they basically declared they

proposed that ukraine and georgia could eventually be eligible for membership that basically started this whole thing the russians at the time said this is an absolute non-starter for us it's a red line no way will we allow this to happen and in fact later that year they rolled the tanks into georgia to put a stop to that idea in georgia in ukraine the conversation was deferred they had this basically pro-russian democratically elected prime minister president yukanovic who was deposed in a coup in 2014 a coup that was supported by our state department and probably the cia okay in reaction to that putin sees crimea not a year later not months later days later the reason why he was able to seize it so quickly is the russians actually have

a naval base there at sevastopol okay it's it's at least the area is leased from ukraine but they have a naval base there it allows them to control the black sea so the the russian thinking on this if you believe it goes that listen we're about to have a pro-western ruler come into ukraine installed by what an american-backed coup and now we're going to lose our main naval base in the black sea and it could be replaced with a nato base there's no way that's happening so they moved to seize crimea and then after that they started backing russian separatists in the donbass and the civil war began okay so that

basically is what's been leading up to this and then last year they started getting very exercise about the possibility of this nato proposal which again goes all the way back 2008 becoming formally recognized and ukraine joining nato and for again this is from the russian perspective okay and we could talk about whether there's a pretext in a second but from the russian perspective they said that listen and putin gave a speech like this if ukraine joins nato because of article 5 the next time we have a border dispute which is all the time right we could end up getting drawn into a war three with you guys and so there is no way we're going to allow ukraine to be part of nato and so they propose they basically by december had given an ultimatum to the state department

now what was the response to that lincoln came out at the critical moment and said nato's door is open and will remain open basically said you guys can you know take a hike um now obviously that was an extremely provocative thing and the russians invaded ukraine days later now i think it's pretty obvious that if you take the russians at their word that they believe forget about whether you think it's true or not but if you believe take them at the word that the same word they've been saying since 2008 that this is a red line for them and they have a serious vital national interest there then you should have diplomatically tried to resolve this issue but even if you believe it was a pretext and putin is making up this whole red

line thing and his real goal is the expansion of mother russia and all that reunification or reunification let's say that's his real goal it still would have been a good idea for blinken to basically declare that we were going to take nato expansion off the table which is simply an affirmation the status quo it's not appeasement you're not giving anything up you're reaffirming the status quo why would they blocking something from happening in the future right why why would that have been a good idea because the polling on this showed that the russian people by two to one were in favor of basically taking this kind of

military action against ukraine to prevent nato expansion but they were not in favor of doing it purely for reunification so you would have if this was a pretext by putin for his expansions dreams you could have taken away that card and it would have changed his calculus would have prevented the war we can't say but in his calculus he's got to think well wait a second maybe the people won't be behind here's the good news too if you had given him that chip and said we're not going to let them in tornado and then he does invade now you've proven that this person is in reunification mode and he's deranged and he's a warmonger and that this could go to other places and finland and poland and other people have no real reason yes

you would have so it would have been a much better chess move right so there was a failure to listen and um and this is what concerns me so i want to you know uh george herbert walker bush who i think was a great foreign policy president only wasn't so good on domestic only got re-elected didn't get reelected but everyone recognized him as a great foreign policy president and um he has a quote about this style of foreign diplomacy that we that his son practiced dick cheney and rumsfeld and the same people now in the binding administration it's all the sort of neocon foreign policy he said though he he called this iron ass foreign diplomacy he called cheney and iron ass and he called sold arrogant and um you know what he basically said is that

these guys he's talking about cheney and rumsfeld they don't listen they just want to kick ass and take names they never want to listen to the other guy's point of view and um you know he thought this was tragic he thought it ruined bush 43's presidency and i gotta wonder i mean are we practicing the same style of iron ass diplomacy here you know um well now it's too late we're already at war i mean i think if we had practiced i i i think if herbert walker bush and james baker had been president last year and and james baker was secretary of state do you think we'd be in this mess i don't think so i think james baker would have

figured out a way to defuse it who is the political who's the political scientist that you shared that uh link from in the group chat uh from the university of chicago who have yeah this guy john mearsheimer who's sort of king i watched the video from him it's quite convincing that we should have an approach that was hey we we don't need to incite ukraine to break off we could let them make their own decisions and that we're kind of taunting the russians that i don't think you know he makes a pretty convincing argument there and i don't think you need to be a putin apologist you can keep in your head this person's a dictator this is a communist country he's a murdering sociopath and at the same time we should not provoke him and let the ukraine make their own decisions but not encourage them to come

into nato and we should have taken nato off the table it's pretty clear that that would have been a better uh decision here but we we still can't think of an exit ramp here which and i don't hear what's talking about putin has never said i want x well no i think you know there there have been times where he well i mean look i think his demands have been a non-starter with us i think at this point he wants crimea he wants the don bass to be independent maybe uh under the suzerainty of russia some protectorate basically uh and he's talked about this uh denosification demilitarization of

ukraine i mean so now i think the demands are escalated because they're at war and he's lost too much he needs to get more right i mean part of the the problem is you're saying he's stuck he needs to no i think once you've you know once you've invested 100 you've got to make 150 back whereas before he had invested 10 he would have been happy taking 50 out you know and i think at this point he's put too much in to walk out with the same sort of deal you know he was like what are the chances he's overplayed his hand like the economic cost at this point to him the loss of jobs the loss of customers the loss of the value of his currency i mean you add all this stuff up

uh so much has been taken away it's very hard to see him coming feeling like he can come out of this thing ahead and so he's only going to keep plowing forward does he face the risk of ruin chamoth i mean is this like at this point here in 2020 russian gdp was 1.483 trillion dollars now what percentage of that do you think is actually exports versus a domestic economy let's say half let's be just take a guess right so you're talking about 750 billion dollars of exports so let's just say that you know between the boj bank of canada ecb and the federal reserve we all just collectively printed five trillion dollars you can absorb many many years of russia's export loss now it does have some gnarly implications you know you probably have to work more closely for example with iran you

have to get an iran nuclear deal done why so that we can get access to their oil right so it blunts the loss of the of the russian reserves as an example you know we'd have to do um some clever things on sustainability and farming my point is though that i think the economic calculus of this decision is not as grandiose as it once may have seemed post a covet scenario where we were printing you know hundreds of billions of dollars a month i think there's a the only good news i can take from this acts is you know the the free world has now learned about what a dependency like we've literally woken up from the delusion that we can intertwine hold on let me just finish this once a minute i want to get your feedback on it we have woken up from a delusion that we can intertwine our economies with

rich nuclear-powered dictators in communist countries both china and russia and now i think the great decoupling and the great independence is upon us with us moving semiconductors back on shore going nuclear maybe fracking seems i think even any environmentalist will take fracking in europe fracking in the united states over a dependency over a dictator so is that a silver lining here yeah i mean look i think it's so obvious now to everybody that we need to be energy independent that it was insane for us to throw away that energy independence we've restricted it i think that if there was a bill introduced i think

it's being talked about to uh repeal all the restrictions on fracking it would pass the senate 75 25 meaning all the republicans would vote for it half the democrats would vote for it so i think everybody's on board now and there was some remarkable uh you see the tweets from michael shellenberger about it it has come out that you know who is backing all these anti-fracking environmental movement in russia in europe exactly and they fell for exactly the germans fell for it and turned off nuclear and now all of a sudden they're dependent on russia and he has the pretext to now invade right these environmental groups in in europe have been useful idiots for putin and the kremlin

yeah that's that's what's so sad i think i saw a tweet it was something uh to the effect that 25 years ago or 30 years ago europe actually produced more liquefied natural gas for europe than russia did and the whole thing flipped because all these environmentalists forced the outsourcing they outsourced their guilt but it turned out that all a lot of those organizations may have been funded by russia to basically affect that change i wanted to say something jason before you know there's a common thing that you hear right now which is oh economic sanctions don't work and i just wanted to talk about that for one second which is i think i think there's a lot of people there's a lot of chatter that historically economic sanctions aren't enough which is why you can't

draw a very clear bright line between that and military intervention as well and i thought and i as i thought about it this is why i think you can actually fight an economic battle and an economic conflict without it pulling you into a military one and the reason is actually because of what's happened in the last 40 or 50 years you know you have like the the most critical infrastructure in the world i think is the financial infrastructure whether we like it or not right because you know energy infrastructure tends to be more localized other forms of infrastructure are localized but the one real asset that is absolutely global and universal is the financial payments infrastructure and you know what has really happened is that you can really [ __ ]

a country or an entity when you blacklist them from these organizations and these networks and so this is why i actually think people underestimate the severity of um [Music] of economic sanctions if done correctly and i think before you've never really other than you know venezuela and a couple of other you know north korea north korea cuba venezuela cuba you've never really explored the totality and the impact of this kind of sanctions on a large global actor which this is almost greater than sanctions you're being you're not allowed to participate it's not even like you're saying you can't export this you can't import this it's you're now not allowed you have no seat at the table i think the crude oil example and the airline industry example are two incredible examples of the ripple

effects of these sanctions right so again just to reiterate like if you're a european-based refiner in order for you to go and buy that oil you may have you know a working capital line from a german bank well that would violate the terms of that bank now and so you can't go and get that right if you actually have that oil on hand and you refine it into gasoline and you want to put it into the open market and you call flexport as an example and say help me get this stuff to xyz location or mersk or somebody else they won't do it i mean you look at the tech sanctions that have started it sounds minor but you have netflix is pulled out of the country apple is not selling products in the country google is starting to restrict services in the company

and this is going to have a massive impact on their ability to just participate in society they just turned off proactively this morning if you saw that it was right as we were getting on air facebook's been bad instagram is still on twitter still on but the russians now are are turning off information into the country while every other country every other company is turning off their services there i think the global economy or not even the global economy i think japan europe canada america can collectively support five six seven trillion dollars of subsidies to blunt the economic impact of these sanctions that's effectively shutting russian

exports off for eight nine ten years think about the the so you know this this is that is the damage any thoughts here as we kind of come to no way out here and just well i think economy so so i i think that if we're going to figure out a way out we need to assess what our objectives you know what our objectives are and we talked earlier on on on the show about this idea of regime change and that there wouldn't be an answer without regime change i disagree with that um i you know just those two words regime change to make everybody cringe because regime change was the justification for the iraq war for afghanistan for libya for syria and every single one of those things been a disaster when has the united states of america successfully

achieved regime change in the last 20 years without creating enormous blowback there's an assumption that somehow if putin gets toppled by an internal coup that we end up with gorbachev 2.0 well maybe we do maybe we end up with a hardliner who's even worse i don't you know i don't know so what should the goal be uh obviously regime change would be wonderful if the russian people chose that but what is this ceasefire right yeah i agree ceasefire um so i think putin miscalculated the resolve of zelensky and the west you know zolensky was like this tv actor became president he was very before this he was like 25 popularity now he's at 90 something percent i think putin underestimated his resolve would you say information more i mean that that's pretty staggering i mean it's pretty clear that putin thought he could win

this information warren this is the first night i don't even see the first meme yeah i agree it isn't me more i think we're being heavily propagandized but the west is winning the propaganda war but it's not just the west yeah but i mean look at where you're sitting right ukraine is engaged in that effort too right i mean you had you had the whole snake island thing where basically the um you know that wind up being confirmed as fake news that was fake okay you had snake island where the 13 ukrainian soldiers said we're going to bring us death rather than surrender it turns out they actually surrendered you had the old woman walking up to the

russian soldiers with time to get the hell out of it yeah exactly that was a fake um what else i mean i think this everything's fake this chernobyl 2.0 was fake oh the um well that was the fighter pilot the fighter pilot was the the ghost of kiev yeah exactly that turned out to be a fake so look we are being heavily propagandized now i don't blame zielinski or the ukrainians for trying to propagandize us because they're a small country fighting for their lives and if they can pull us into the war it would help them it might also cause world war three or just win hearts and minds and you know flip russian sentiments there's something else that's really interesting i just went to uh the world bank site just to check um whether the gdp number that i just gave you was right and it is right but what's even more interesting is that russian gdp has actually decayed 35 in the last

decade it what it peaked in 2013 at 2.292 trillion dollars and so and all the way down to now 1.483 so i think the point is with you know all of these other things that they've been having to deal with because of their foreign adventurism um you've seen a contraction of their economy already freeburg did we over did the west and everybody overestimate uh russia's capabilities here i mean is that a possibility because they seem like they're getting beaten pretty uh or they're they're being fought back at a way people didn't think they would be able to first of all i have no freaking clue second of all i don't know like what people think that they thought they knew or do or don't know but i think importantly we don't really know what's going on over there you know we are hearing stories every day that we feel is conclusive and factual and on

the ground reporting and then a few hours later we find out may or may not actually be true you know this is the fog of war and i wouldn't take anything that i'm reading on twitter or seeing on cnn or hearing some commentator from the united states making some comment about nor would i feel the same about any commentator in the ukraine or russia or anywhere else for that matter facts are going to be facts i'm not sure facts are necessarily going to get to us and so i don't know what's going on the ground with russia there's a convoy supposedly that we know we can see from satellite imagery that's moving towards kiev it's stopped we don't know why it stopped there's claims by one group of

people that says they're out of food and they're defecting there's claims by another group of people that say they're waiting to encircle the city and then command pressure and use this as leverage effectively to try and get a good negotiated deal to exit we don't know and so you know for us to be like you know four guys commentating at starbucks i think is a bit of a mistake because there's very few facts that we can't actually say is objectively true at this point now um what we do know is russia has a lot of nukes and so regardless of what's going on the ground with tactical stuff you know any sort of assumption that leads to our belief that an alternative intervention or or some other force can ultimately win against russia

uh is is completely false because russia has thousands of nuclear warheads and um you know if russia wanted to exert its military authority over anyone in the world they can and um and so i wouldn't kind of take any of this stuff um that russia is going to lose a war uh you know a a war on the ground in the ukraine i mean at the end of the day they've got the ultimate trump card well and also they haven't brought out the heavy the heavy argument they have earth i mean yes rubble okay bunker buster bombs they've got stuff that yeah what is the strategy here to just listen they can pull a grozny they can pull a fallujah i mean look you know we they we can a dresden let's not pretend like we

haven't done it too they can bomb these cities into rubble from the sky and they're not they're because it would be too bad you know their back would be too bad from the west we don't know we don't know but there's certainly there's certainly a strategy these guys aren't a bunch of idiots scrambling around trying to figure out what to do they've got the second most powerful military on planet earth that can literally destroy every human on planet earth they are they are pretty smart and they are going to figure something out to get themselves some sort of an advantage ultimately what that is we don't know you know we're sitting here trying to figure out how to play chess when we've never played it before i mean sax that might be

something worth discussing there is a contingent that say listen putin isn't thinking about this strictly logically yeah i understand that point of view uh you hear it a lot on on the press what do you think here's why well here's what i think is i think putin underestimated uh zielinski's resolve ukrainian resolve and i'd say the west resolve i think it would be a mistake however for us to underestimate his resolve yeah and uh that's what i'm afraid of next is that he doesn't want to give up um and listen to go back to you know the mirsheimer point so there's a school of realism and what mirzheimer says and he predicted a lot of this so you have that's amazing yeah he gave a great talk in 2015 and i watched it um right before we got on air right one of

the ways yeah one of the ways i i assess who i want to listen to and learn more from is when i see someone making far sighted predictions that come true i'm like okay one yeah yeah exactly you're like okay this guy has a mental model that seems to predict the world right i mean like carl popper said famously that the difference between science religion is that science makes predictions that are falsifiable if you make predictions one prediction after another that ends up becoming true maybe you have a way of thinking about the world that is predictive so this guy i would just say i can't summarize all this thinking here but i would just say i mean i went down kind of a rabbit hole on youtube just

watching his stuff obviously not all of it is right okay but and but you know the media has been demonizing this guy because for the few things he's gotten wrong about the situation instead of all the things he's gotten right and you know if you were to do the washington establishment by the same standard they've gotten far more wrong than he has especially over you know since the iraq war over the last 20 years but anyway the point he makes is simply this or one of the points is listen this situation in ukraine is to the russians what the cuban missile crisis was to us meaning it is not a pretext for putin to go in and expand his empire what is really going on here is they have defined this

as a red line they see as a vital national security interest and so we should be thinking about them and their resolve the way that we thought about the cuban missile crisis so in other words the russians are acting like the americans did in the cuban missile crisis remember fidel castro thought he had the sovereignty he thought he had the the right to go make a treaty and a deal with whoever he wanted and he went to the freely went to the to the soviet union to try and make a deal and the americans said no way and you know not in our backyard and we imposed a blockade and we were flying the bombers and kennedy had advisors and generals who were willing to go to nuclear war to win that standoff in that confrontation and ultimately the way that they solve the problem is jfk sent bobby kennedy to

go secretly cut a deal with the russians to pull the jupiter missiles the warheads out of turkey so there's a quid pro quo they kept it secret for six months kennedy got to declare a victory but the the russians the soviets got something out of it too they were able to defuse the situation so if there's any way to make a deal like that i think it would be a good idea yeah i mean the reason don't you think the reason he's don't you think the reason facts that he is misunderstood is because we are propagating democracy and when we do something well it has the shine of hey we want people to be free we want individual freedom we want individual human rights we want individual expression these things are the height of human existence and when communist countries do it well they're trying to spread communism and authoritarianism and reduce humans

uh individualism and freedoms and and that is a valid argument but he says in his talks like listen you can put that aside and just say you know missiles in your backyard not good yeah exactly so this is the the fundamental dichotomy and sort of the in foreign policy thinking or international relations between idealism and realism idealism says it's all about values and so we're going around the world we're promoting democracy we're supporting allies who we think will spread democracy there's good guys and bad guys we're on the sides of the good guys and that's who we support and we change the regimes that are the bad guys but the realists just think of this as great power rivalry and we have to understand the way that great powers have always reacted and behaved and great powers

whether it's russia or the soviet union or us will behave viciously and ruthlessly towards anything they perceive as a threat to their national security their vital now security interests what are your thoughts on this being the moment we we make the next big transition we were in a bipolar world order we've been in unipolar for the majority of our lifetimes where we only experienced the united states and now is this the moment we move to multipolar sacs where we're gonna or have we moved there already it's uh it's it's it's a transition that's happening mainly because of china so we're and i you know it seems like what we're doing is pushing russia irrevocably into into g's arms because he's a huge mistake he's part of that

well i'm i'm surprised to hear you say that jacob well i said it two weeks ago i mean i said this sounds crazy but if we could get putin to be you know in talks with us then he's not in talks with xi jinping and when you saw him with you know taking pictures with xi jinping that should have been a red alarm bell to everybody that our foreign policy is not working because if he's talking to xi jinping supposedly and who knows if this is true again fog of war to freeburg's point you know maybe xi jinping told him can you wait till after the olympics to do this invasion if they're coordinating at that level that's really problematic for the us we

need him on our side we need to get pakistan on our side india south korea we need to build an alliance to deal with the eventuality of china going into the south china sea and taking over taiwan so chamath what are your thoughts on does this give xi jinping a window or not and is there any path to getting russia back in uh talks with the west maybe he can help get them uh restarted in a way that could normalize relations is this uh well the real question is like if you're g do you look at this and say uh it emboldens me or i have to be even more strategic and crafty what do you think i say the latter yeah yeah

it's the latter right if russia had rolled right he'd be this is one good this is one good thing i'll sort of contradict what i said a little bit before look i i i don't i'm not passionately attached to either the realist or the idealist school of thinking i think they're interesting we need to consider both perspectives what i would say is that the resilience the ferocity of the ukrainians the resistance defending themselves giving putin a punch in the nose we can all support that because we know that she is watching and if he sees wow the russians really got a tough time with ukrainians what you know am i going to be facing a similar situation with taiwan and what's interesting is that the way the ukrainians they basically were

willing to arm every man woman and i don't know child but every man and woman there they were handing out the ak-47s basically they israelized right you wonder how israel has survived in a neighborhood where everyone wants to kill them every single adult serves in the army and they get guns it's like you know they're in the second amendment over there yeah exactly so yeah so i think that the ukrainians have shown a model that's really based on the israel model which is listen if taiwan really wants to be independent every adult there needs to learn how to fight and they need to have weapons and that's gonna be the best guarantee

we can be their ally but that's gonna be the best guarantor is creating a credible deterrent to she moving on them i mean do we transition to another story here i mean this is this is one of the problems when we're living in these kind of times is that if you talk about anything other than when the decision trees can i saw a tweet when all the decision trees can go to zero meaning that like there's a one percent chance of or 0.1 or 0.01 chance of of war 3 the nuclear war then yeah it's hard to talk about anything else hard to think about anything else so yeah um i watched ozarks this week amazing ozark is that good oh great jason bateman amazing great perfect is so

freaking good on it breaking bad 2. that series twice and i've fallen asleep in episode one both times no no no you you got to keep going it rolls it's it's it's basically breaking bad 2.0 yeah phenomenal yeah i started season two of euphoria oh my lord don't ever let your kids watch it oh my god it's either that or it's like the best deterrent so like you make them sit and watch it and they'll not only will they never not do drugs but like they'll they just won't do anything they'll just like stay in the house it's scarring it's basically requiem for a dream meets like disney plus afternoons like these are disney

stars living in requiem for a dream i need to decompress after i watch it if you have kids it's terrorizing it's terrifying it's terrifying it's absolutely terrible it's scarring it's very artistic too i have to say i give them a lot can we talk about markets i mean you know i i feel like there's let's go to markets important discussion because the markets are so volatile during these kind of volatile information times times with you know information that's changing day to day intraday you know where do you guys think about kind of spending your time right now are you kind of just putting your head in the sand and saying we'll pull it out afterwards i mean how do you i mean guys what's funny is like sax is curled up in a ball you know in times of in times of uncertainty you

actually want to be deploying so you know uh i announced what was it last week i think it was a solar deal the solar deal you know i put 228 million dollars into this thing and then i did another deal i put 45 million bucks into this thing you guys know about which we haven't announced yet yep so um but other than that i've been literally uh white-knuckled uh i don't like to open the stock app there's no point take some dramamine before you open your morgan stanley stock up the stock and what's so funny is like my bloomberg terminal which is right beside me here at my desk i have not logged into it okay put it in a drawer unplug it yeah there's just no point like at the end of every week i get a report right kind of

like our p l and i just look at the top line like connor always sends me the top line is like you know and and the last like eight weeks in a row we've lost one percent we've lost two percent we've lost three percent the time that this wishes he lost one percent i celebrated i got so drunk that night i was like this is where it really does help right sacks to think in decades like if you think in decades and you're a venture investor you can kind of just put the stuff out of your mind which is what i'm doing and the great thing is i'm seeing amazing companies great founders deals are taking longer to close people are starting to do diligence again and people are discussing what the right valuation for this early stage startup is

which is good that's healthy i think we're getting like i don't know what you're seeing in the in the early to mid stage market privately but i'm seeing really healthy discussions and late stage madness is gone it's over yeah i mean i think 100 times ar is over but we no one really knows where it's landing so i've seen some deals get done at 60 to 80 times but um no one really knows where it should be you know i sent you guys his tweet from morgan housel who is a great guy and he has this fabulous tweet he says this he he it says this the shock cycle and it's this beautiful cycle assume good news is permanent oblivious to bad news then you ignore the bad news then you deny the bad news then you panic at the bad news but then you accept the bad news and then you ignore the good news you

deny the good news you accept the good news and then you assume the good news is permanent that starts the cycle if i if i could just put it out there i don't know today if you guys saw non-farm payrolls but we had a huge print in um unemployment like really great print meaning like a lot of employers were able to find people to take jobs it was a big number but the interesting thing about it was we didn't see wage inflation tick up with it and if i had to look at that and if you actually look at a bunch of the earnings reports that have come out in the last three or four weeks i actually think we're in the part of the cycle here where we're starting to ignore the good news

and we're so negative and we're so emotionally wrapped up in everything that people forget that actually the world tends to um keep moving forward right we are not in world war iii by any measure are we not we are not anywhere near that okay and so i just think it's important for people to take a step back and take a really deep breath but i think that there's a lot of good news out there there's a ton of good news and for people who don't know the term we're ignoring some people don't know the term print when we say there's a print that is just a colloquialism in the financial markets that something was formatted for printing previously and you got good news so an official report is sometimes called we got a price i agree with i think what's going on is there is some underlying good news right but there's this overhead of a small

chance of something catastrophic happening so how do you price that in right it's it's it's uh it's like a one outer right yeah yeah exactly but it's this guy's quads were set over set yeah it's a one hour to one hour to the apocalypse basically if this tiny probability thing happens the game is over so you know so it doesn't matter it doesn't right like it doesn't matter if it's the cost of your house does it matter if there's a nuclear war that's right this is this is the thing that people underestimate is like that's not a that's not a risk that one should be hedging in any way financially right at that point the only thing that matters is the health and safety of your

family and your friends but really your immediate family like can you take care of them and make sure they're safe and so you know if you're if you're an investor in the financial markets or you're building a company managing for that externality in my opinion i'm not sure makes a ton of sense because i don't think you can manage to that externality you have no impact on it it's something it's a controversial scenario yeah so i think you have to manage to the 99.999 of normalized outcomes and i think right now there are some what's called green shoots meaning like some positive news in the world and some positive data by the way the other thing that we saw today was or this week was jerome powell and you know the jerome powell testimony was also in the middle of massive

amounts of bad news some actually pretty decent good news which was he said he's going to raise by 25 basis points in march everybody knew that right so we took the 50 basis pointer off the table but then he was very clear that they were going to be data driven and in the language of the federal reserve what that essentially means is like we're going to be patient and wait and see and if you couple it with what i said before which is the economic cost of these economic sanctions towards russia can be calculated and i think that we have proven a willingness to print capital and money and so if you put those two things together i think there could be a real possibility that powell becomes very accommodative

and you know he and biden and the entire administration come together with europe and everybody else and say get the money printer back going because we are we're going to stand the line on these economic sanctions and we're going to you know sort of soft land the economy here because we think there's recessionary risks afoot let me just provide a little bit of a counterpoint which is where i'm most concerned we don't know what the repercussions are fully in a dynamical system of global capital of pulling out this much capital and devaluing assets at this scale so quickly the shock to the system i don't think has yet been realized and i think we'll know at the end of this month when books close what things actually do to businesses to swap agreements to trades you know trade balances that are outstanding and you could talk about economic stimulus as being the way to

solve that but we don't yet know what's broken and they're like let me just give you guys another example today corn i think is trading at 760 a bushel that hasn't happened guys i can't tell you in how long this was a commodity that was trading at 350 a few months ago and so we're now talking about that the trickle-down effect of that price into the beef the trickle-down effect as we're already seeing in california where the or san francisco and the average price per gallon of gas at over five dollars the trickle-down effect on um on purchasing behavior on businesses defaulting because uh suddenly their their counterparties dry up we don't know and we won't know and it's not actually we know some of those we know some of them but we don't know what we don't know and the thing i'm concerned about is this is a imagine when i say

dynamical system from a physics perspective it's like take 100 slinkies and tie them together into a giant graph of slinkys and you start punching one of the slinkies like this if you punch one or two of the slinkys hard enough you don't know how the repercussions will cause a slinky all the way over there to suddenly shoot up or shoot down but you're also denying your ability to change a difference linkey that's the whole point of a dynamic you could put energy back into it but we don't know what's broken and there could be something that's irreparable through these we've gone through these things before and i think you're not learning from history or you're at least not willing to admit it but no i i think we're seeing hold on a second we've seen it in tarp okay we did not know the

total extent of what happened in the gfc and we had to invent a financial framework to soft land the global economy we figured it out when we went through ltcm and john merriweather blew up explain what dennis there was a huge hedge fund in the late 90s that basically had a massively levered exposure to the financial markets to the tune of like tens or tens or hundreds of billions of dollars go read the book when genius failed if you want to read the story it's a it does a good job summarizing it but it's a great story yeah go ahead and again we had to step in uh with a governmental framework and a broad infrastructure of actors across the world to soft land the financial economy in a way not knowing what the actual uh what what part was broken so i i just

fundamentally disagree with this idea that we're running blind yeah look we're talking about i'm talking about capital and energy and food and some combination of those things are going to cause some serious deleterious effects on okay well i think and on markets and look i i get it jamaat i know that there's solutions for repair and i know that we're going to act swiftly and aggressively and every time by the way i just want to point out in each of those scenarios you've talked about we've acted more swiftly and more aggressively than we did in the scenario prior and it's getting to the point that you know what is the value how much debt how much deficit are we really willing to take on everyone obviously has these kind of you know

intrinsic existential questions about how much we really can act long term without the dollar collapsing but certainly in the context of a global economy collapsing the dollar will always be the safe haven but there are other things that play here like you know the cost of gas for the average american you know the the the amount of wheat and the amount of food that people in africa are going to have what you're saying here freeberg is that some of these things we have been through and if you look at gas as one example i think you're bringing up the important ones here food and energy gas we actually know what happens when gas prices go up we saw that not long ago people bought more hybrids and the miles per gallon per car

uh you know when you raise prices consumption goes down and people get created adjustments i'm talking about the short-term acute effects the thing that america has the ability to do is they have the ability to change the financial incentives for actors all around the world in a split second and behavior can change and and so i actually think freeberg the nuance thing that you're saying which i completely agree with but maybe we should say more explicitly is it probably is a reasonable way to manage risk in america europe canada japan but what's going to be very very difficult is the impact that this has on emerging markets in southeast asia asia africa could be really really deleterious for some amount of time and sad and it's a human it's going to cause

a humanitarian problem it's really friggin sad and it's you know whatever progress has been made could be unwound i think you're right by the way i think i think that that is actually really the risk that i think um holding the line on these sanctions really does it pushes the risk towards em countries and then i think we're gonna have to figure out what our moral resolve is to go and fix those that's my point earlier which is we're gonna bear the cost ultimately the united states is gonna have to step up in a really outsized way to solve this problem and while we might not be sending troops on the ground we're going to end up paying several i don't know that it's going to be just the united states free burger the united states seems to be working in coordination with whatever it is in this

situation unilaterally anymore that's a good news we're going to have an economic cost right there's gonna be something there's there's there's no amount of money that you can actually put on human life and so if we can avoid a military war i just think that there's just there's there's no red line on cost there and so if we end up running massive deficits and now we're at you know 150 250 300 percent of gdp uh i think that you know morally that's that is the right thing to do sax is is is the world becoming more idealistic and realistic let me bring saxon here sex is the world becoming more anti-fragile slash resilient pick one of the two i guess to these kind of upending events because of covid because

of china pulling out of financial markets we just went through this freeberg was like hey this is unprecedented actually i think we have a little bit of precedent here we have the complete shutdown of the economy from covet in recent memory and we have china deciding that all these companies are no longer public we've seen they did their own economic sanctions they sanctioned themselves and pulled out of markets so what do you think sex i mean i think the current crisis is a reminder that it's not uh too anti-fragile i think we are in a transition we've the cold war ended about 30 years ago and since then we've been engaging in this sort of unipolar foreign policy where america calls all the shots now the world is becoming more multi-polar i'm not sure it's all the way there yet and you have countries like russia

and china reasserting themselves and that's making the world a more dangerous place well you also have the eu working together in unison and they seem to be maybe they're going to become a bigger actor here because of this right we're seeing them take that that was sort of a positive surprise as long as they don't pull uh franz ferdinand like freeberg said and inadvertently blunder us into the into a war okay folks this is this week in dystopian outcomes let's talk about something good come on another good news is some good news here let's talk about the big carte breakthrough this week there is good news guys good news is that we just the good news is that we're managing um crises after crisis china crisis do you

want to tell people about this revolutionary breakthrough i mean look there's just there was another car t therapy uh approved two of them approved in the last week for um myeloma car t just i think we've talked about it in the past you know every human body has um t cells they're a core part of your immune system t cells are programmed so they have a sensor you know that that tells them where to go and what to destroy and so as t-cells learn what to destroy you know they can be really effective at clearing bad things out of your body clearing pathogens and invasive things out of your body and so a few years ago uh you know humans gained the ability to engineer t cells by adding the genetic

code to a t cell effectively engineering it to go after a very specific thing and so the big revolution in carte therapies has been in oncology and cancer so uh you know programmed t cells to destroy specific cancer cells in the body that you know you would historically have had to use really difficult systemically challenging drugs like chemotherapies and so on to wipe out lots of cells and in many cases it doesn't eradicate all the cancer and car t turns out it can be extremely effective at finding very specific cancer cells in your body and in many cases causing complete remission and

cancer and so you know there was one car that was approved that showed i believe it was an 88 or 90 complete remission in multiple myeloma which is a form of blood cancer so they they take your t cells out of your body uh you just get a little blood draw basically uh they go in a lab they're zapped with electricity which causes them to open up slightly and an engineered a little crisper edit happens and those those cells are now edited the dna in those cells is edited and now those cells know to go after the cancer target you put them back in your body after they grow up for a few days and they filter them and test them make sure they're safe and after they go back in your body the t cells go to work and they clear

all the cancer cells out of your body it's an incredible technology incredible salvage therapies are unbelievable is the name of the company involved in this a2 bio is that the no 82 did something else no so that breakthrough was even even more important i think in the long term what he's talking about is jansen and legend uh are the two companies that basically got approval from the fda now the thing with carte is like you know cartier has been incredibly um believed in blood-based cancers right but that's an entire category that excludes solid tumor cancers what you're talking about jason this week as well what happened was a2 bio basically figured out how to modify

these t cells in a way where you can actually attack and target a very specific solid tumor so there's a lot more work for those guys but if you play that out now you have this incredible ability for your own body to be trained to fight and kill cancer whether it's in your blood or whether it's the solid tumors ah now the the pride the pr the price of these therapies today they're charging call it 400 to 450 000 per treatment and by the way the treatment it's a one-time shot i mean it's like what yeah they pull the blood out of your body they and then the the expensive challenging part is how do you take the cells isolate them engineer them test them screen and make sure they're safe the way that is done today is very expensive and time consuming

because the volume is low and there haven't been as many kind of engineering breakdowns how long does it take you know it takes a month it can take a week to four weeks so before you get one person 10 people is it the equipment that's expensive like i actually um i invited champ to come with me we went and visited one of these labs a few weeks ago but i i won't get into it um but it is it's unnecessarily inefficient in the sense that you can charge so much because when you spend half a million dollars to treat a cancer patient you just save yourself millions of dollars in long-term care for that cancer patient so the price is determined by

the alternative cause they're priced it's like how do you uh save money over the long run for the payer you know the insurance company and so if the if the insurance company knows over the long run they're gonna pay three million dollars in care for this cancer they're just staying in 2.5 they're totally willing to spend half a million dollars to you know to to end the cancer is that the right financial calculus for this thing so if you look at the actual cost of doing this there is a university in the bay area that is doing um car key therapies and their cost is about 40 grand they built their own lab to do this that by the way is also extremely inefficient we i think that over the long run we can get the cost of cell

therapies below 5000 bucks and when you can do that by the way car t can be used not just to go after cancer but you can get it to go after autoimmunity so people with lupus and rheumatoid arthritis there are known b cells in your body that are making antibodies that are causing the inflammation in your body destroying your own body and so down the road we could use car t to destroy lupus to destroy antibodies uh b cells that are producing antibodies that are um you know fundamentally causing autoimmune conditions including what we talked about a few weeks ago multiple sclerosis given that we now have a strong belief that if you can get rid of the ebv the uh ft bar virus uh from your

body uh you can wipe that out so so car t can in the long run be harnessed not just for cancer but autoimmunity and potentially other pathogens in the body in a really targeted way and this this is kind of the beginning of what will likely be a multi-decade kind of new therapeutic modality that's that's you know accelerating i had a question for you on the on the pricing model here of hey the way we price this is how much are we saving the insurer is that too much price optimization is there a better model here i have no idea okay i would like to talk about something else uh related to this jason

there's this massive patent battle going on for crispr yeah uh and i think it's worth jcal if you can give just a two second primer because i think we should talk about patents just for a second and you know there are there's the extreme version which is what elon has done and then there's the other extreme version which is these two folks fighting over so obviously elon has gone with putting the patents out making his patents open source and putting them out there and using them as a deterrent like nuclear weapons have been but the u.s patent trademark office published a ruling on monday in favor of mit and harvard over berkeley the ruling cancels certain patent applications made by the university of california its partners regarding a crispr system known as crispr cas casino

has nine the ruling states that they failed to provide persuasive evidence that they got the gene editing technology to work before the broad group did the central question and dispute is which group got to the crispr cast nine two basically the whole thing here jason is like there was a group led by these two incredible uh scientists who they won uh the nobel prize jennifer dudna and emmanuel charpentier there berkeley and uh and she uh emanuel i think is she's at a university in germany i think but then there was a different team trying to develop a system for crispr cas9 from mit uh harvard at the broad and they all filed patents on top of each other and this whole thing was a thing and you know

the the big implication of all this is what are companies supposed to do right because if you are a company that wants to build a crispr cas9 gene editing thing look there's a lot of situations where uh a single point edit or a broad edit can have a meaningful change in your health so these are businesses that should exist you didn't know what to do because if you licensed the ip from the wrong person you get sued right and many companies now are like trying to license both sets of patents and i just think to me it frustrated me when i read this article and you know this is the conversation i had with you guys in the group chat is i

think we need to think of and imagine a new way for patents to work because it it shouldn't be the case that you know folks are competing for what is really effectively credit and then what stops behind them are all the commercial companies and investors and all of them and just the normal individual day-to-day people who want solutions to solvable problems but the reason it doesn't get to the starting line is because of patent credit and having to deal with patent trolls and i just think that that's a terrible situation for us to be especially if it's something that could change the course of humanity almost feels like an arbitrator has to come in here and force a settlement what do you think freeberg is the right thing to do obviously we have a tradition of people getting to

you know monetize uh dare i say their innovations for some period of time with a patent i have multiple businesses i'm involved in where we uh leverage crispr and uh i will tell you that the um you know the group at harvard so so the history is the group of harvard and the group at berkeley argue each argue that they discovered crispr cast 9 around the same time each or each argument that they have a right to crispr technology based on their discoveries that were made around the same time and so for years each of them have been starting companies and licensing crispr technologies to different companies and all of those companies now including several that are public uh it turns out that if this uh this

ruling you know is to be believed they actually have a license to a technology that they may not actually have a license to so um there is a company that emerged a few years ago and actually made an open sourced version of this uh this system and so i have uh at least one company in gene editing implanted plant gene editing where we leverage this open source version of this system and many more companies many more businesses are embracing that open source alternative i don't think that we see this turning out to be any different than what we saw with the proliferation of linux in computer software where uh you know microsoft or whomever

was trying to you know make everyone pay a licensing fee to use their operating system and guess what markets discovered they discovered that hey if someone is able to make something free and open source and everyone will embrace it and here we are where most of the internet is run on open source software so you know i i i don't know what the right thing to do with respect to patents are because you know the truth is a lot of very difficult very expensive technology r d dollars go into developing a technology that is theoretically someone could look at it make a copy of it and so i do think that there are rights to defend with respect to patents i think that there is if there is something that is a critical resource

that an entire industry really needs to access an open source solution will emerge you know the markets take care of it and i think we've already seen that with crispr so um you know it's hard to say at the end of the day you want to license some you know patent a molecule and be the only person that can make that molecule make money from it go ahead but if everyone's going to need that molecule to run their business and to change the world someone's going to make a cheaper alternative or a free alternative that's just the way markets work so saks would like to recite a poem for peace at the end of the podcast he's gone totally soft the pacifist david sacks no i'd like to i'd like to address what you

said when you called me a pacifist um because i think oh my god here we go after hours this is all in after dark here we go he's an existential pacifist go ahead sax read your power when i become a pastor well i'm not really pat look i still believe in the idea of peace through strength like reagan said okay but i remember when we what is the only clean win that we've had in a war since world war ii america has it was the win straight shot the first iraq war when we drove saddam out of out of kuwait that was george herbert walker bush our last conventional war well it was also the last war that we actually won every other war that we've done has been turned into a fiasco winning was pretty easy to define get

out of kuwait the other ones we were trying to do revolutions but remember everybody wanted him to go all the way and march into baghdad and change the regime replace saddam and he said no and he had the wisdom to stop and everybody called him a wimp but he still had the determination and the the wisdom to stop and then what happened his son comes in ten years later and they finish the job yeah they get they take out saddam and they destabilize the entire middle east that's what the iron ass has got us so what has turned me against these regime change wars it's look when i was in college i thought herbert walker bush was a wimp you know and and george w bush was doing the right thing going into iraq 20 years ago

but we've seen the results and anybody today who doesn't modify their point of view on these regime change wars is a fool i mean they're not paying attention and so for lindsey graham and you know these other guys out there to be a lot of republicans to be talking about regime change that's something we should be seriously promoting they've totally lost the script and they should be denounced as reckless dangerous fools and look i've seen it on both sides of the aisle but what we need to do now listen if it ends up being the case that the russian people want to make a change that's that's their call yes obviously i'm not opposing something that they might want to do but for the idea that that should be our

goal that's our end game that's our objective that is a recipe for disaster yeah we'll just wind up getting in a perpetual war then when we leave it will revert and that's what we saw it reverts back to communist or authoritarianism the people have to really want it revolutions are hard fought and bloody and if you think you can just go in there with a couple of drones and get everybody to decide oh we embrace democracy from this point forward because you've drowned the hell out of the country is farcical and it's proven to be wrong 100 agreement with you no ceasefire is going to be possible i mean it's going to be hard enough as it is to get anything remotely like a deal but it's not going to be possible if you're you've defined regime change yeah as

your objective it's way to dig putin in like that's literally what he wants to you know that that you're giving him all the pretext he needs to keep this thing going if it's self preservation all right everybody there's your overtime sex is uh sax's writers were freaking out in the writers room and i had to get his last point in because before i pinned him as a pacifist there are no writers for this stuff jacob because look everybody on cable news is singing from the same hymnal and following the same script they're all being the drums of war there's only one cheek right now which is we're not doing enough and we're being weak and

biden needs to do more not being weak i agree having patience is nothing we are doing a lot we're doing a lot and we should be careful de-escalation is the opposite of weak these economic sanctions are real we have to work through and i think we have to make sure that the economy is supported while we do it on that note uh let's pray for peace and we'll see you all uh next week on the podcast the all in summit is may 15 to the 17th 16th and 17th are the two days of the conference poker on the 15th tournament for charity events every night of the week and you can apply for a scholarship at the website summit dot all in

podcast.com or just type in the all in summit into google it'll be the first link and 400 of 600 tickets have been allocated either sold or for scholarships we're going to do the best we can to have as great of an audience there as possible and for the dictator chamoth paulie hoppatia the rain man david sachs and the sultan sultan of science hot off the launch of canna congratulations turning literally water into wine david friedberg i'm jake out and we'll see you next time [Applause] [Music] and they've just gone crazy with it [Music] besties [Music] we need to get back [Music]