Midterm Blood Bath, $4T AI Sell Off, Data Center Freeze, What’s Next for Trump

All right, everybody. Welcome back to the number one podcast in the world. It's the All-In podcast. And I'd like to start by saying that All-In recognizes that we are on the sacred land in Austin, Texas of the Ko, [laughter] the Comanche, the Kikapoo, and the Tonkawada. And uh we appreciate all their sacrifices and bring us here. And uh we will be evaluating I just talked to our HR department. We'll be evaluating a fifth bestie, Brad. too white, too male. So, we're looking for alternative DEI fifth Bessies to include in the round table. >> Wow. >> So, some big changes coming to the >> DEI is back is what you're saying.

>> DEI is back. Sax, what did you have anything for the docket this week? >> I have an announcement. >> You have an announcement. Okay. >> I'm transitioning [laughter] >> from a douchebag to an [ __ ] [laughter] [music] >> Let your winners ride. Rainman David [music] >> and it said we open sourced it to the fans and they've just gone crazy with it. >> Love you. >> Sax, where do you want to start? You want to start with um >> I think there's some really important news around SAS out there. I mean maybe Salesforce launched a couple of new features. Definitely top a docket type material.

>> I'd like to start with science corner. [laughter] words nobody in our fan base have ever said. >> I'm ready to go. You guys want to talk about exponential time hypothesis? >> I think that's what the audience wants. They want the the SAS update from Sachs and the science update and then we can get our market review and we'll wrap the show up. No, in all seriousness, there was an election this week. We had an amazing uh live stream. Over a million views so far. Uh crazy Shimoth. I don't know if you knew this, but 400,000 people tuned in live, making us, I believe, the number one election night

live stream. >> Not true. It was 500,000. And just to put it in perspective, the far right streamers got about 87,000. The far-left streamers got 250,000. We got 500,000, which was bigger than most cable as well. So, we were the biggest and bigger than, I think, most if not all cable as well. Apparently, America wants hot takes from Tech Bros. I don't Who would have thought? >> Who would have thought it? And by the way, that was with only three of our allstars on the court. Sachs had a board meeting uh Thursday night and couldn't make it Tuesday night. He was busy. >> Yeah, I was busy that night. I was uh I

think I was passed out in the bar. >> Pass [laughter] drinking the Sax is the only guy who goes to the bar with his own bottle of tequila. [laughter] He's like, "Can you put this behind the bar and serve it to me at $50 a glass?" Special thanks to Ted Cruz, Rahm Emanuel, Shane Copelan of Poly Market. Man, did he have a great night. I think Poly Market nailed it. 99% of their uh prediction markets turned out to have it perfectly. The hilarious fifth bestie Tim Dylan, Taylor Loren's based Taylor Loren was fantastic and insightful. Brad Gerser did a solid job, brought some charts, and Ben Shapiro from the right. So, it was a really great great uh panel

and today we're going to take a a pretty um systematic approach to what happened this week. We're going to start with a postmortem on the midterms and then second uh we're going to talk about the second half of Trump's term, the next two years. So, I'm sure data centers will come up in our in our recap postmortem, etc. But we're going to do a deep dive into the AI trade potentially cracking. So let's start with our postmortem on what just happened in the midterms. Obviously the Democrats sweeped both chambers of Congress and they won at least 29 governor races. Dems will wind up with 54, 55 or 56

seats depending on how Alaska and Mississippi wind up. They have a lot of um votes still coming in in the House. Dems will have at least 250 seats, maybe even 260. The bigger story is where the Republicans lost deeply red states that haven't gone blue in generations went blue, including the great state of Texas. Please don't blame me. I've only been here for 3 years and uh you might be surprised at what my voting ticket looked like. Kansas, Iowa, South Carolina for the first time in decades. Trump won all of those states by double digits just two years ago. compared to 2024. The GOP lost ground in every voter group, even white men. So, let's go

around the horn. Sax people want to hear from you most of all, I guess. So, what went wrong here? What are the lessons the Republican party can learn? And and what did the Democrats do right in the last 18 months leading up to the midterms? >> This was a shacking. This was a blowout. It was, I believe, the biggest midterm loss since the Watergate midterm loss. So, this was obviously a big defeat for the Republicans. There's no sugar coating it. What's the reason for that? I believe the vice president, JD Vance, explained it very well. It was this war. And I the only thing I would add to that

is it was this war and the economic consequences that follow from the war. So, what am I talking about? Price of gas, it was around three bucks before the war, went over four and higher. Price of diesel even higher. And then that factors into the cost of food, all the goods that have to be transported. Also, fertilizer costs went up. And so you saw the inflation rate at the beginning of the year back in January before the war, it was down to 2.4%. We finally had that problem licked just about. Remember, it was 9% under Biden. And in the first year of the Trump administration, we brought it down to 2.4. The market was expecting multiple rate cuts this year. And we were

forecasting 5% GDP growth, which I don't think was too overly bulliant based on what we were seeing at that time combined with the expectation of rate cuts. >> Aggressive. Unbelievable. Unrealistic. Not unrealistic. Yes. Okay. And by the way, the prediction markets back in January were showing a 70% chance of Republicans holding the Senate and then the House was perceived to be a tossup. I think that if this election had happened back in January, it would have been a pretty successful one for the Republicans. What happened since then? Well, you got inflation going from 2.4 to 3.7%. again mostly driven by the cost of gas

and diesel and all these other products where you have to pay a higher cost of transportation and you end up not having any rate cuts. You end up getting a rate hike that brought the cost of mortgages to roughly 7 12%. And that overall fed this narrative around affordability. So, it's the war plus the perception of the lack of affordability is what really created this title wave. Now, you know, I I have to admit I thought that I mean, look, I didn't think this would be a great election for Republicans, but I thought that it wouldn't be this bad. I I I was wrong. >> You said it was a spritz. It would be a

sprit. >> I thought it could be a spritz. That was based on a couple of things. Number one is that the last few elections the pollsters have all been wrong and and Trump has always managed to defy the odds and I thought that this polling data must fall into that pattern. And then the second thing is that the economy is not that bad. I mean in fact it's quite good. So just today we had a new jobs report. It was a very robust jobs report. The number of new jobs created is being revised up. You've got unemployment tick down to almost record low 4.1%. You've got still pretty healthy GDP growth in the first half of the year was

around 2.1 to 2.5% and then third quarter the tracking by GDP now is 3.7%. So I thought given the fact that you got great employment, you got solid GDP growth, I thought the fact that inflation was too high would not result in this type of title wave. I thought it'd be more like the Biden midterms where he had extremely high inflation, but the economy itself was still pretty decent and it ended up being more of a red spritz as opposed to a red wave. So that was my pattern recognition. It was wrong. And I think one of the reasons why it was wrong here is because I think the public is in a pretty ordinary mood. They're very concerned about affordability. It doesn't matter how

good the economy actually is. It matters how good people perceive it to be for them. And in the first year of the Trump administration, we made enormous progress in delivering real post tax household income. It rose by like 3.1%. But because of the inflation numbers over the last 6 months, you're starting to chip away at that, right? Because again, as long as inflation is growing faster than your wages, you're losing purching power in real terms. I think the elector was getting ordinary about that. And just one other thing I want to say about it, which is there's one other piece of why the war I think was so bad, which is it fractured the Republican coalition and the Republican base. Jake,

you've pointed this out. We lost all the podcast bros. I mean, obviously it was Tucker Carlson and Joe Rogan and Theo Vaughn and and that whole set, Megan Kelly. So, you know, a house divided against itself cannot stand. I mean, we lost a huge part of our base. And I would say that the Republicans in particular are dependent on the podcast circuit. Let's call it alternative media. Why? Because the mainstream media hates us. Legacy media hates us. They will never get >> 90% left. So, it is Yeah. And I think one of the reasons why Trump produced such a resounding victory in 2024 is he appealed to that whole podcasting circuit. And and frankly, we should have

done a better job giving them all front row seats in the White House press room. We should have stayed connected to all of all of them because they are our media. By the way, they don't, you know, they don't work for us. They're willing to defect. Obviously, >> they have their own opinions. >> They have their own opinions, but we have to pay attention. I think our side has to pay a lot of attention to them because without them we don't have any media that supports us. So I think that losing them was a big deal. It fueled the sense and I think that a lot of those people showed up and then did a protest vote cuz they wanted to send the

message that they want out of this war. Friedberg, just a couple of quotes for you to react to. Ted Cruz called it a Watergate level repudiation. Chimamath to Santa said quote close to an extinction level event for the current GOP and uh in a very long expost that JD Vance did that was pretty surprising for everybody that there's some uh reporting it was approved maybe not approved we we'll get all that out later but what's important is what he said he's in line with you the Iran war was the driving force here in the loss and that the GOP has to rebuild trust with voters on four axes. Ending the war, focus on cost of living, putting America first,

and maybe a little controversial uhly change our relationship with Israel. What are your thoughts on JD's post and the other reactions and just why did this turn out to be a tsunami? >> I don't know if it's as much of a positioning and marketing issue as it was sort of fundamental. I'll go back to the clip from the prediction show right after Trump was elected. >> Okay. >> Can we pull that up, Nick? >> I think that the the party line is that socialism was defeated in this election cycle and that there was a resounding kind of vote from the American populace against socialism. And I actually think my my contrarian belief is that we'll see a rise a dramatic rise in socialist

movements in 2025 in the United States. >> Okay. >> And I think that we are going to see, as Gavin pointed out, an acceleration of progress. We're going to see an unleashing of uh economic growth because of deregulation and AI. But I do think that some industries and some companies are going to be huge winners and some companies are going to be huge losers. there's going to be some parts of the economy that are going to be big winners and some parts of the economy that are going to be big losers. So, I just wanted to dailed it there, Freeberg. I was uh very accurate for the first year of the presidency. >> And so, if you just zoom out a little

bit, the macro condition was there was a moment after the election when there was this idea of Doge, this idea that government spending would be reduced, which I believe fundamentally would have affected the cost of living. And we can argue about that. People disagree, they wash that point away. I do think it is the fundamental driver on the cost of living is government spending. The more the government spends the more expensive things get. I believe that and we can go through the analysis on what happened in France. You know government spending as a percent of GDP is one metric. How many

people are employed or depend on government checks is another metric. But as the government's involved in more of the economy, things get more expensive. So when Doge was coming around, the idea of Doge, the idea of government efficiency, the idea of making sure that every dollar spent by the government has a positive ROI for the people was a great idea. We visited DC in March of 2025 and we visited Elon and we talked about Doge and he was struggling. It was pretty clear he was struggling not just internally but with Congress and with the public perception of what was being done there. And I came away from that

visit in March of 2025 where I also met with multiple members of Congress on that visit, Republicans and Democrats who did not give a [ __ ] about improving government spending efficiency, did not care about the total government spending as a percent of GDP. It was not a priority. And on June 5th of 2025, Elon left and it was the end of Doge. The idea that Doge was going to continue was over. And I said China just won because to me at that moment, the day that that this ended, that this administration ended that effort is the day that it was clear that we were going to have a runaway cost of living and a challenge for progress for the majority of

Americans. And the end result of that is voting in more of these kind of socialist principles, socialist policies, socialist politicians. So for me, my tweet on June 5th was China has just won was the day that it was announced that Doge was basically coming to an end. And then the one big beautiful bill passed in July of 2025, which had some uh entitlement cost reductions, but all of the fundamental spending in the government had not been reduced. And we're still running a $7 trillion a year government budget with a$2 trillion$2 trillion year deficit. So I don't think Congress was ever on board. It is a structural fundamental problem and no one's on board with it.

And I think that was key to what happened here. For the majority of Americans, they don't feel like they're getting ahead. They don't feel like they can afford things. They don't feel like healthcare is accessible and they are struggling. And it wasn't addressed. My view was it wasn't addressed in the way it should be. And we can all disagree on policy matters. But that's my view. And as a result, people still felt that way. And that's what drove the vote. But I do think on AI, it's this idea of this oligarchy. If I'm not getting ahead, someone else is because, quote, "The

economy is growing. Quote, the stock market is growing. Who is getting all of that growth?" Because I'm not getting it. The AI guys are, the tech oligarchs are, and so on. And I think that that's why AI was poised for this. But I do think that there was some external influence that happened on AI. And I'll pull up this chart here real quick, which I shared around on the group chat yesterday, which is an incredible Gallup study that shows AI optimism and pessimism in countries around the world. The most optimistic country for AI is China. 93% of Chinese citizens think AI will mostly help people in the country. And 93% of people think AI will make

their daily lives better in China. And we can believe or not believe how Gallup does their surveys in China. The US is fourth last. We are worse than Afghanistan and we're just slightly better than Malawi and Bangladesh. were fourth on the list of countries at 36% of Americans believing that. And so I think that in addition to the priming of the pump, which is if I'm not getting ahead, someone's getting ahead and the AI guys because we create the AI in this country are getting ahead, made it really easy to attack with this oligarch narrative that there is a group of people that are benefiting and making a lot of money and then there's a large percentage of people that aren't. And so

I think it's pretty clear that this this vector was a really effective one. Whether it persists or not is TBD and I think we should talk a little bit about what's next later in the show because I do think AI is going to play a major role in how the politics are going to play out over the next year. >> That's two incredibly um concise and candid recaps of what happened there. Chimoth and just as a side programming note, great job on Rick Rubin's podcast this week. If you haven't checked that out, Chimath was on Rick Rubin and it was awesome. Thank you, >> Chimath. Did you sit barefoot in his backyard with him, Chimoth, or Yeah. >> Yeah. I mean, by the way, when you go to

Rick Rubin's recording studio, he walks you around and he's like, "Oh, Chimoth, here's Bob Dylan's old touring van. That's where we recorded Adele's album." And then he's like, "This is where Kanye and I laid down this album. And then here's where Jay-Z and I." I mean, it is the craziest place, but it puts you in a totally centered state of mind, I got to say. Yeah. and we sat around in his studio barefoot sitting across each other just talking and then they they put it out telling people this is where I in some polyat [laughter] >> uh so greatest stock market highs of our lifetimes lowest unemployment of our

lifetimes and we still had the tsunami when you look back on it Chimath what do you think happened here and you said you were uh in a moment of great cander and self-reflection during the live stream. You said, "Hey, listen. I had a blind spot here. >> I got it totally totally totally wrong. I got it totally wrong." >> Okay, unpack. >> I'll go through all the ways in which I got it wrong, but I I just want to first acknowledge what my blind spot is. Like most people's blind spots, but I can just speak for myself, is through the lens of my own lived experience and very narrowly what is in my best interests. And I think what we had was

a move away from the culture wars. That was very much in my best interest, but I think it was in everybody else's best interests as well. I don't think that was on the ballot. But what I don't think I understood clearly enough, and I think that this election has made extremely clear, is that since co we have moved past political ideology. And I want to say this again. I do not think Democrats or Republicans matter. That is my real takeaway after this election. There is a central block of people that vote the preient issues of our time. It was a gargantuan win for Biden. Then it was a gargantuan win for Trump. And then it was a gargantuan win for the

Democrats in these midterms. What are these people voting for? I think what they are shouting now and they were trying to signal and now they are shouting is a broad-based belief that the economy has completely decoupled from reality and is broken. The economic reality in America is broken. There is a small percentage of people, the four of us on this pod and all of our friends, who are the asset owners of America. And we have benefited in every weather condition. When rates were zero, we benefited because we were able to build our businesses with very cheap capital. When rates were high, we benefited because we had pricing power. And in

every condition in between, whether there was tariffs, whether there were not tariffs, whether there were subsidies, whether there were not subsidies, we've all managed to continue to accumulate and grow assets, but we are few and far between. And then there's everybody else who are wage earners, and the structural capacity of the American economy to support and grow wage earners is broken. It's clear. Why do I say that? I do not think, and I disagree with Freeberg, I don't think this has anything to do with socialism. I don't think the far-left won particularly more than they were expected. I don't think the far-right

won particularly more than was expected. This is a complete and total repudiation about the state of the economy. The economy is broken. I have a few charts to support my point of view. Number one, if this was ideological and if ideology mattered, money in politics would have had a more direct impact on the election. But when you look at the amount of money that was spent, all of this money was wasted. All the money that went into taxes was wasted. All the money that went into Senate raises in Ohio was wasted. The better bet was to look who was being spent money on. If you had taken the opposite candidate who had no money, you

would have been overwhelmingly more right. So money follows ideology. Money did not work in this election. Ergo. In my opinion, ideology did not matter that much. Next chart. Redistricting and gerrymandering also follows ideology. You try to set up the geographies in a way so that you could gain more seats. Look what happened. Of the 15 Republican seats that were redrawn so that they could capture all of them, Democrats won 11 of them. Republicans only won one. So again, ideological gerrymandering also totally failed. So we have ideological spending in politics failure. ideological gerrymanding failure. Next chart. And what you had

were centrists, normal people. These were not people running around talking about communism. These were people that very narrowly focused on one thing and one thing only, which was affordability and the functioning of the United States economy. And they spoke to a large block of people that were both Democrats and Republicans. initially supported Biden, overwhelmingly supported Trump, and then overwhelmingly went to the Democrats largely to vote the displeasure with the economy. That's it. I don't believe Iran really had much to do with it. I don't believe Israel had much to do with it. I don't believe AI had much to do with it. This is the American society asking for

a reset on the economic principles on which we operate. And I think the obvious thing to do for the ambitious candidate on the left or the right is to take these three charts together and have one very precise takeaway which is the economic populist platform will be the one that you can take to the presidency in 28. And the path is really straightforward because if you look at what happened to Harris and then you look at how aggressively all of these states moved towards what I think is economic centrism, what you have is for either side to not worry about whether you're a Democrat or

whether you're a Republican. But if you embrace reasonable standards of economic fairness, you will win. So, I got this wrong. I thought top down economics can still work. I thought that when you had asset owners building assets and investing in the economy, these things can get to everybody else. It's clearly not happening. It's not true. I have to update my priors. And my new framework is we need to figure out how to stop all the loopholes. We need to figure out how to do some of the things we've talked about before. Stop the federal underwriting of loans. Combine that with getting rid of student

debt. Take all federal taxes beneath a certain band, probably 150k to zero. There's all kinds of things that can be done now to allow the wage earning class to feel more ownership of the United States economy. And until it happens, my prediction is not that Democrats or Republicans win, but they will violently keep going back and forth away from the status quo. Because if you are in power and you do nothing, they will vote against you. So now the Democrats have a really interesting challenge. What will you do with the majority in both houses? Are you actually going to try to legislate economic fairness or are you going to spend your time distracted with

impeaching Trump? Because then you will find yourself, if the Republican candidate embraces the economic populist platform, you'll find yourself losing the way the Republicans lost in the midterms. >> All right. Incredibly. Um, well explained there, Chimath, and I agree. Now is not the time to dunk. Now's the time to dissect all this. And who could have ever seen this coming? Nick, roll the tape. [laughter] This is why they will lose the midterms. The Democrats are going to shellac the Republicans in the midterms. Trump sold people that prices would go down. We're back up to 3% inflation, folks. Not only

is it not going down, it's going up. Trump has failed the middle class. That's the bottom line here. It's basically going to result in the Democrats doing a clean sweep in the midterms. Trump promised not to start a war. He did. He promised to solve inflation. He didn't. The end. >> Well, a stop clock is right twice a day. Jay Cal, >> absolutely. I was [laughter] I did cheat out, but let me uh >> my take on that is that you were not right until the war began. That last clip that you did, you were vindicated, right? Because it's it's the war and inflation. I mean, those are the two things. Specifically, the affordability problem that results when you have this

inflation. Look, price of gas. Everyone goes to the pump to fill up every week or two and the average household is paying 200 bucks a month more in gas cost. Then they go to their grocery store and everything is much more expensive because the cost of agricultural products has gone way up and so on down the line. And at the end of the day, that's what matters to people is their pocketbook. It's like, do you have more purchasing power in real post tax postinflation terms? That's how you measure if you're doing better off. And the Trump administration delivered that in the first year. We did 3.1% increase in real household income. It

was negative during the Biden years and it was positive during Trump 45. What happens? The war begins. price of gas and diesel and all the rest goes up and purchasing power starts to go in reverse. And then on top of it, you lose the young males who are again the fans of all these podcasts. That's where they get their news from. Young males flipped their vote by 36 points in this midterm relative to the 2024 election. So again, in my view, it's very simple. It comes back to the war and its economic consequences. Now, here's the good news is if we get out of the war, we can make rapid progress on this. All the other economic numbers are still good. Again,

job growth, the job report today was great. Economic growth is still good. There are lots of very positive economic numbers. The issue is fundamentally the price of oil, the price of gas, price of diesel, and the way these things flow through the economy. If the war has ended quickly, those prices will drop very quickly. Inflation will come back down. that will give the the Fed permission to cut rates so mortgage costs come back down and we can get back on track. >> Sax, you're right. The uh endless war, endless inflation were the straw in the back of the camel. But I think you're absolutely wrong when it comes to what

happened previously. All of the polls were correct. Everybody on the right said the polls were wrong. all the prediction markets were correct and everybody on the right was saying that those were wrong and those were being manipulated and uh for a year plus on this podcast and and I'd like to dissect this moment by moment I had pointed out this chart and this is the silver bulletin which is just absolutely nailed this cycle they did a great job Nate Silver is phenomenal at what he does and here if you look at it it's really worth looking at it's not just for liberation day. People forget the tariffs. Trump started the term at 5% plus net approval rating. He ended it

at -28. This is like an over 30% swing. And liberation day, as I pointed out when it happened, was far too chaotic. And and I spoke to the CEO of Cuts Clothing, if you remember, we had this discussion on the podcast, and he's a Trump loyalist. And and people were arguing at that time, oh, these these tariffs are going to be great. these are awesome and that no prices would be added uh and the and the American public didn't have to pay for it and this was going to balance the budget. Not only did it not balance the budget, it did spike inflation and and uh President Trump should have just worked with Congress. Remember, he had to go to the Supreme Court. He lost there and this is

a leak in President Trump's game. Then over the summer, we had some pretty hot discussions here about the ICE uh enforcement. And I said, "Listen, you no Americans, including people I know in law enforcement, people I know who employ people who have been here for 20 years and yes, who are illegal aliens technically, uh, nobody wants to see this. Nobody wants to see masked agents without body cameras beating people up and without their badges on, right? That was a huge mistake." And he had a massive uh drop and then started to hit -20% net rating. This is all before the Iran war started. And if you look at the summer of 25 with

those ICE actions, it also had the Epstein files. And that's where you lost all the podcast bros. They did not want to have Trump reig on sending the the Epstein files out. And of course, you get all the way to the war and the endless allegations of grifting and the endless inflation and that then just plummeted from 20 to -23. that that's a series of events that happen. And uh I just want to state for the record here. I'm an independent. I I vote now 55% Democrat in my life, 45% Republican. When we started this podcast, it was probably 7030. I have moved significantly towards the right because of the lunacy of the left. But what happened here is the Trump 2.0

agenda, I think, got abandoned and there were tons of distraction. President Trump has the right ideas, but often his execution is extremely variable. And that's just a way of being very generous to say it's chaotic. And if you have that chaotic uh moment and then everything is about the data centers, everything's about our industry, everything's about helping us. And uh people laugh and mock at the idea of raising the minimum wage. up. You sort of pointed out here during your talk. The the K-shaped economy is kind of what you were invoking there. It doesn't feel fair to people and I think you made a very accurate point that people are just swinging and just hoping somebody will

care about the bottom half of non-equity holders. That's exactly what it is. And Trump didn't make people feel like he was working for them. That's why they abandoned him. And the grifting allegations, whether they're true or not, is all going to come out. But that's what we need to talk about. And it leads us to our second topic here. Our second topic uh which is going to be what the next 24 months are going to be about. So Saxs, you wanted to get to this next 18 24 months. Is there a path to redemption for President Trump? Is there a way to turn this presidency around and maybe save his legacy? Well, first of all, let me put up some

charts here since you guys are doing the chart game and I didn't know we were going to play the the chart game today. So, Nick, can can you uh >> the best chart? >> Yeah, Nick, can you throw up these charts? Okay. So, so look, JC, there's all sorts of issues out there that people are going to point to and I know you've got yours and I'm not saying that every single issue has been executed perfectly. I do think that President Trump deserves enormous credit for completely sealing the border and solving that immigration issue. >> Agree with that >> just as an example. But look again, the question is why was this not a normal

midterm result? Look at the Trump approval rating versus the price of gas. It maps perfectly. Okay, Trump net approval maps to the price of gas. Okay, next chart. This was the prediction market for which party will win the Senate in 2026. And what you see is that the Republicans were expected to win by a very large margin throughout the entire first year of the Trump presidency. All through the things you were talking about, Jal. Okay. So, the tariff roll out did not affect this whatsoever. That was the liberation day in April. Not even a blip here. Okay. April of 2025 wasn't a blip. >> And to be clear, not a blip on the

Senate balance. Yeah. Yeah. >> Yes. But but I'm using this approval rating I showed, right? >> I get it. But I'm using this as a proxy for what just happened where we lost what, like eight or nine Senate seats. Okay. Where does it start to change? March. March of 2026. What happened? When did the war begin? February 28th of 2026. Very clear. That's where everything starts to change here in terms of losing the Senate. Next chart. Okay. Now just ask voters what did you vote for? Why' you vote? Question. Thinking about your vote for Congress, how important to you was the war in Iran? Crucial. 34% a major factor 40%. So basically 74%

of the electorate said that it was either crucial or a major factor. And then of those they broke massively for blue. And this doesn't just include Democrats obviously. It includes a lot of independents and it even includes I would say younger Republican voters. There's a huge divide in the party I think between you kind of got the Fox News group. It's kind of the over 50 or even over 60. They're I think still supportive of the war. But you look at the younger voters, young males, highly against this. Again, it ties back to the podcast bros. So again, there's abundant data to show what I've been saying. Now,

your question was, can Trump fix this? I think absolutely. Because the reason top three things he can do to fix it, >> just get out of the war. >> Okay. End the war. >> That's my number one, my number two, and my number three. Because what will what will happen? The price of Brent crude will drop precipitously. On the day of the election, the price of Brent crude dropped 10%. Is that because something changed in the straight of war moves? No. It's because the market started to price in the mere possibility that the war would end sooner and we got a 10% cut in the price of Bren crude. It will

go from, you know, it's been as high as 117. It'll go from 110 to 70 if this war ends. Gas prices will drop, diesel will drop, the price of food will drop, and then the underlying strong economic growth, the GDP growth and the employment picture, which are still robust, will come into focus. And I think that Trump's popularity will rebound maybe back in the 40s. >> Okay? >> So I that's the thing we need to do. And if we don't do that, >> look, if this war continues, hold on, let me finish this one point. If the war continues, the Republicans will continue

to bleed popularity. >> I don't think this is the war in Iran, meaning it is in as much as it adds to a broken economy. Since co the economy has been structurally broken and I just think that there's a huge voting block that keeps swinging back and forth to either side asking them solve the problems and giving people mandates to solve a problem. That's why I think somebody needs to understand economic populism. Do you buy that argument or do you think that it's more narrowly just the war in Iran? >> I don't want to make it like so overly abstract. Like to me the issue is affordability. Okay. And I think the electorate really cares about that. It's

like the central pocketbook issue. >> I agree. >> And I think that both economic data and the prediction markets showed that in January of 2026, we were in pretty good shape on that issue. And since then we went backwards and I believe that we can get in good shape again without turning to socialism or completely restructuring the economy. >> You remember the 24 election. I agree with you that economic affordability can be an abstract term but I think that the voting electorate is smart enough to use a message as a vessel. And I remember in 24 the vessel which again I

didn't hear it loud enough but if I look back and maybe I'm just imposing my narrative bias on it was do you remember the whole controversy around the price of eggs and Trump hammered Biden and Harris on the price of eggs? >> Yes. Over and over. Yeah. >> It wasn't the price of eggs. I mean yes it was but it was a window into a broad problem and an idea. And I think gas is a problem, but I also think it is a window into a broad class of problems. And I think people focus their energy on a thing because it's easier to message around a thing repeatedly. >> But the broad data centers, that's what look I I was listening to >> Gina uh Henosa. This is the new um

governor elect of Texas. So, frankly, it's a race I wasn't even paying attention to because I don't think anyone was going to win, >> going to win. A very successful three-term governor in Texas presided over an economic boom. That's why we moved to this state >> and uh we thought I mean honestly I think it was the biggest shocker of the whole night. Anyway, so I started watching some interviews with her to kind of catch up on on what I had obviously missed. And I watched one interview she did with the New York Times where the interviewer kept trying to draw her out on social issues on like

let's call it woke issues, identity, politics, and she said, "Listen, I'm not participating >> in your culture war." >> And then she laid out the case for economic populism as she saw it. And then she connected it to data centers, which is that the reason why data centers are bad is because they are making your utility bills go up, right? You're paying more for electricity and the data centers are using up your water. I think that's why the data center issue was resonant is because I mean there is anxiety about AI and and the potential job loss that could come from that. But I think the big reason why people hate the data centers so much

is they perceive that it's driving up their utility bills and the oligarchs are getting rich off the data centers while they're paying more >> the oligarchs are getting tax breaks and you're getting higher utility >> which goes to Chamat's point of people feel they're they're unheard and they're going to take the only action they can which is going to the voting booth Freedberg. Uh, so Freeberg, you've heard my breakdown. You heard um Chimat's breakdown and then Sachs with a little bit of a rebuttal there. Let's uh do an alternate history here. Freeberg, if the war had not started, what would the midterms have looked like? And then what

do you think happens in the next 18 months of Trump's presidency? Is there a way to uh turn around his legacy? And if it there is a way, what two or three pieces of advice would you give this administration to focus on in their remaining 18 to 24 months uh of power? I kind of agree with the notion that the AI data center hysteria and the hatred for the Iran war are both rooted in this idea that you haven't solved my economic problems first. So, I don't think that they're the primary. I think that they're a reflection of the consequence of not focusing on my issues first, my economic cost problem first. So, I think that's still the biggest issue. I think two

things are are about to happen in 27. One is I think it's going to be very hard with this Congress and the sitting president to to come to a a resolution on a on a clean budget. And as a result, I think things are going to continue as is. And I worry about the cost of things continuing to climb. And by the way, I I'll just reflect on Shimov's point. COVID was an accelerating moment for this unaffordability problem for people that don't own assets in the US. And the reason is we doubled government spending. That's what happened. And by doubling government spending, everything inflates, including assets, which is why people who are asset owners benefit. And

people who are earners for their labor lose because the cost of everything goes up. And if you're making money from a paycheck every week, you can't afford your healthare, your education, your housing bill, your food, your gas. I do think that the Iran war was acutely off target because it was declarative at the beginning. We're not going to do any new wars and then there was a big war that was started. So, it was an easy target. So, I do think that this this budget question is a big one. What's going to happen with spending in 2728? And as we talked about a couple weeks ago, I think the bond market will tell you where they

think that's headed because if we continue this $2 trillion year deficit spending, things are going to remain expensive. They're going to get worse. And it's not about people choosing socialism as an ideology. To counter Chimath's comment earlier, I'm not saying people are choosing socialism as an ideology or as a set of principles. Socialist outcomes arise from the policies that people think are going to solve their cost issues. That's what ends up happening here. That people think the best way to solve the cost of things is to have the government do more and then you have more socialist policies. It's not that people are saying I want to be a socialist and

that's where you end up in this slippery slope spiraling problem and I worry about how we're going to resolve to a budget going into 27 and 28. I do think AI is going to continue to be this really big political hot point. I think the um like AI is almost like the ring of Sauron. Okay. And like both sides want the ring of Sauron. It's this ultimate kind of tool, this ultimate power. It is a risk to the state. It is fundamentally something that takes power out of the government's hands and distributes it. Let's just assume that there isn't a company making AI and there isn't a company that owns all the data centers. Assume that there's a million data

centers and a million variants of open source AI. In a world like that, there is no oligarchy that's making money off AI. So just assume that that's the case for a moment and that we can get to that end state. In that end state, the tools of AI pull a lot of power, a lot of influence away from government, from the state. And as that happens, I think the actors that want the state to be central, central command, central planning, central authority and ultimately central power structure are going to react violently against that and they are going to want to have the AI. So I actually think the calls to stop the development of AI are actually

calls for them to have absolute control over AI because it is way too powerful for them to not have the control over the AI. They want the AI. And I think a lot of the policy stuff that we're gonna end up seeing here, and this is where if you play the game theory out, my I I still think I could be wrong, but I still think we end up in a place where the the the government says we want to regulate compute. They're not going to regulate the chips or the models because those are too hard to kind of catch up on and you're never going to be able to regulate development of software. It's very hard to regulate deployment of software, but the utilization of that

software is fundamentally constrained by how much access you get to compute. I think the data centers end up being treated like utilities in the future and I do think that the government are going to try and move down this path. They're going to realize it's the best path to get what I just described which is the ability to control and manage who gets access to this technology. Yeah. And at a minimum they're going to get a great tax basis. I think a lot of the data center stuff is performative. They just want to get a better deal. If you look at how Gina from Texas looked at data centers, she's looking at it from the community first perspective. If you look

at how Trump uh President Trump looked at it, it was from the companies and the economy, the GDP's perspective first, but they all they both wind up in the same place, which is don't disturb your neighbors, don't pollute, you know, be a good citizen and and maybe uh splashy cashy a little bit of the funds there. >> By the way, so in terms of the what Trump can do, I I have a a take some people might find a little shocking. I'm not a big fan of uh pardons, right? But they're the law. They're built into the system. Both parties uh use them liberally and every uh administration gets more aggressive in using them. So until we change that, I think Trump right now should pardon everybody right

now this week. Pardon his family, pardon himself, pardon every single person in the administration because he's going to do it anyway. And then that takes off the table the Democrats doing an endless amount of investigations or it neuters it to a certain extent. And then he should say to them, let's work. Let's make a deal. And the deal he should make number one is do some tax reforms on the capital gains laws. Now listen, we all make our money from capital gains. Uh and then I'm assuming you know most of the people in our uh circle leverage margin loans. In other words, taking loans against our uh equity holdings. We should just say anything over 10 million, you tax it at 50% uh of the

capital gains rate. If you wind up paying the loan down, you get that as a credit. If you wind up selling shares, you pay the rest of the capital gains. Get that out there. Smooth it out. It's a revenue stream and it makes it feel like, hey, when rich people take these loans, at least some tax revenue comes in and you get rid of the Bernie Sanders, these people haven't paid taxes and this year they paid zero. Uh, then we got to work on healthcare. I'll leave it up to other folks with um more experience to say what that should be. But Trump should say, "Hey, let's work on healthcare." I'm going to keep harping on the minimum wage. Uh there's two ways to do it, obviously. You could

say no taxes on people under a certain revenue or income threshold as you sort of evoke their earlier chimoth, but just say two years a year for four years, get everybody up to $15 an hour. I know that people will call me a libtard for saying this, even though I'm a moderate independent. I think it would be good for the aspa corpse. It would counter this narrative that we don't care about the bottom half of society. And in fact, there's only 10 15 million people who are impacted by under $15 an hour. So, it's an easy thing to do. I would go with uh number four, a ban on trading stocks in office and doing business with foreign countries. Rahm Emanuel has this

proposal. People on the right have it. Uh so I think we should go get some consensus on that from everybody. And then finally, I think Trump should come to him and say, "Hey, listen. We know housing is the thing that's frustrating people a whole bunch. Let's come up with a plan to incentivize the building of new homes." And he should go right into deal mode. He should go right into populist Trump, which everybody loves. If he solves two, three of these out of five, I think it would redeem his presidency. And obviously to your point, Sachs, he's just got to end the war. He's just got to end the war. Uh, however, it's possible. And I think the Dems may force his hand and then he

might say, "Well, you know, the Dems forced me to do it." And that gives him this golden bridge to cross. Look, before we totally throw the baby out with the bath butter, I think it's important to realize that if you look at Reagan's presidency, Reagan's presidency has only grown in its stature over time because the structural changes that Reagan made were more obvious to see in its totality the further you got away from it. And I think the reality is, even though the Democrats may not want to admit this, an economic populist will have to understand that keeping the borders closed is an incredibly important thing

because the base of people that you need to vote for you want more of the pie. And so sharing more of the pie with people streaming across the border is just mathematically a bad decision. So you have that. Then you have tariffs which if you partner it with the amount of money that people have committed, if that money follows through and it actually revives domestic manufacturing, the further and further you get away from it and is allowed to compound, that's going to look positive. So I don't I don't think it's fair to say that they lost the midterm, but I don't think it means that history will look at his presidency as failed right now. I think what people will say is that these

policies, some are obviously good, closing the border and some I think people will say are a question mark and then some I think people will say you're going to have to get out of it like Iran. And the further you get away from it, it'll be clear. So what should he do? Jason, to your point is I think he should probably figure out ways to support the parts of his agenda that will endure. So to your point, what is a great trade-off to make? keep the border closed in return for some amount of economic changes. Maybe the Democrats want a higher minimum wage. Okay, maybe what they should do, again, I think the simpler thing to do is 125k or under, just wipe out the federal taxes. It's

it's a nothing burger. It doesn't really matter in terms of the revenue that it generates. Close a few loopholes, >> but trade it off for parts of his core strategy because that's what we'll endure. And people will know the president as having had the the courage to close the border when nobody else would or when when Biden just let it stream in. And then the populist economic president that then sits on top of those decisions in 28 whether it's a Democrat or a Republican will have to thank Trump because that's how the votes will have come to them and that's how people will feel like this economic malaise is being

fixed. >> Okay, Saxs, any final thoughts here? I'll give you the last word again. Aside from getting out of the war, we all agree that's number one on the list. What else can President Trump do in the last 18 months that would be productive for the country and for his legacy? >> All right. Well, look, let me just give you three examples of previous midterm elections. Okay. So, we've had big midterm elections before. 1994, Bill Clinton lost the House. It was a huge defeat. That's when N. Gingrich became speaker. Clinton still went on to win re-election in 1996. So, he made course corrections.

Obama lost seven Senate seats and 63 House seats in 2010. That was the schlacking, made adjustments, still won re-election in 2012. So, presidents can definitely come back from midterm defeats. It's pretty obvious. You just have to make corrections. What's the one that didn't work out so well? In 2006, George W. Bush lost a pretty bad midterm because the Iraq war. People were very unhappy with it. This was 3 years after the start of the Iraq war and then he wasn't up for re-election, but the Republicans then lost again in 2008. Why? Because Bush basically, what did he do after the midterms there? The surge.

So, you know, he could have adjusted course. Instead, he doubled down. So, I think this is really what it comes down to. There are a lot of people, neocons basically, who are encouraging the president to do some version of the surge, some version of doubling down, some strike, pickaxe mountain, car island, what have you. I think if you do that, you're basically going to reenact the whole 2006 2008 playbook. If you course correct and get out now, I think you'll have a very successful next two years. That's what it comes down to. >> All right, we we we dipped our toe into data centers. Let's go do a double click here and dive right in. Stocks got killed earlier this week. Nvidia,

SpaceX, Tesla, AMD, Micron, everything across the board. Took a massive haircut. Close to $4 trillion in market cap wiped out. Now again, Trump has overseen the top ticking of the market for the last two years. So overall, I think the market is still up during a second term, but this was the second uh this was the worst single day in the history of the stock market by total dollars, not percentage obviously, and and it's the worst day for a little while. This puts a bit of a dark cloud over Anthropics IPO and of course after that open AI's poly market our great partner at Poly Market thanks for Shane for coming on on Tuesday says that uh they're going to have a 71%

chance of going public this year. It was 95% before the midterms. And the Wall Street Journal reported today that the haircut could be baked in now. Instead of 1.5 to 2 trillion and then going to three or four trillion, as Gavin Baker said on this podcast, we could be looking at a 1 trillion 1.0x trillion. Today, markets have rebounded a bit. And all of this is based upon chimoth. Are these data centers going to go forward or not? Are they going to be stopped? And then what is going on with governor specifically Saxs evoked what happened here with Abbott losing to Gina Hosa um who took the time to do a a little presser last night and give her position

went on all the top shows. She's being pretty clear she wants a great deal and uh it doesn't seem like she's against them. She's going to let people build them out until 2028, but it's unclear what happens after that point. You're obviously connected, I think, Chimat, to a lot of the major players in the AI space. What's going to happen with data centers? Can the Democrats afford to pop the AI bubble by then putting cold water and slowing down data centers because that will tank the economy? I think we all understand that. So, is that in their best interest? and is this posturing and positioning to get

better deals for their local communities as is their job. >> There was an incredible video where the SpaceX team went to Coochis County in Arizona to present their plans for this new 6 gawatt data center. And if I had to characterize that video, it's on X if you want to find it, but it's these two very bright, earnest people from SpaceX trying to explain how they're going to reduce electricity cost by 40%. They don't use water. They'll reduce property taxes by 20%. They will be able to fund enough revenues to pay off a bond in the county. And it's just a litany of things. Yeah. Meanwhile, the audience is

just screaming. And what you see, the two people were very poised. Riley and Katie, those are their names. Good SpaceX employees. They should be proud of how they conducted themselves. But they were getting run over. if you listen to this video and my takeaway is Jason that this is an emotional issue that is not tethered to the facts as Freeberg says. It represents a totem around the oligarchy and the uh economic fissure that exists in the US economy. But it also represents that the deals that have happened are a little gratuitous. Meaning, should it really be the case that the most powerful seven or eight companies

need a tax break to invest 30,50 billion to then generate 345 $500 billion? Probably not. Now, they're doing smart deals because that's what made sense. But I think what the incoming governors are going to say is these things are off the table and instead we want to have directly measurable economic impacts before we even entertain this. I think what it means is we're going to see a slowdown. And I think what that does is it benefits the hyperscalers because they have existing capacity. I think it's very bad for the neoclouds because they're renters and it's pretty bad for the foundational models because they are so short this

capacity and they need it to grow. So to the extent that these frontier models are so much better than everybody else's product, they are the ones that need this capacity. It sets the hyperscalers to be a kingmaker and they have this interesting game theory now. >> Can you just say who the hyperscalers are just so people understand the difference between them? Yeah. >> Amazon, Meta, Microsoft, Google, SpaceX. >> Yeah. >> And what they'll be able to do is make a decision. Path number one is continue to rent in the way that you're doing it today. So the status quo, rent to some customers, large corporates, right? rent

to the Neoclouds, rent to the foundational models. That's what they're doing today. Everybody does that. But then there's the path less traveled, which all of a sudden becomes really interesting. You could decide to take all of the incremental compute and advantage your own products. So Google has a ton of capacity coming online. They could say, I'm going to give it to Gemini. What does that do? It actually allows Gemini to catch up in quality relative to the foundational models. Why? Because if you constrain the amount of assets that can actually generate compute and a smaller surface area of it is available to the leading companies,

those leading companies will have to pay more. The user experience will decay and then other products can have time to catch up. And now that is important because Anthropic and OpenAI are in a very fast recursive loop. They're on a 60 to 90day loop in improving their models. So now all of a sudden without an infinite amount of supply coming online you can slow these folks down. That's that's the path less traveled. Then there is the crazy path. >> Crazy path. >> You should look for this one very narrow thing. You and I talked about this before on the pod but SpaceX and Anthropic's compute deal has a mutual 90day out.

Anthropic can term in 90 days. SpaceX can term in 90 days. Terminate. If SpaceX says, "I'm going to terminate this compute in 90 days." That is the kingmaking move. Why? It's a disproportionate amount of the compute that Anthropic needs. It allows SpaceX to repric that compute at the spot rate, which is probably double >> the market rate, right? the market rate and and it's probably not just double, it could probably triple. >> So, whatever revenue you see on SpaceX's balance sheet from Ant could two to 3x and ANT would have no choice except to immediately capitulate and take the higher price.

It would also show all of the other hyperscalers that they are very far away from having economic yield that is optimized. And so then it forces them to consider should I be giving it to myself? Should I be selling it to the other people? It then forces the Neoclouds to take all of this money that they've raised, whether it's debt or equity, and say, "I have two choices, which is to buy as much compute today as I can at whatever price it's available because the other path is assured destruction and bankruptcy for me because I am just out of the game." And so, what do they do? They will take the last gasp and do

whatever they have. So I think all the game theory, Jason, literally comes down to this one deal and whether Elon decides to rip it because if he rips it, watch out. Yeah. And the the other two factors here, Freeberg and just some predictions right now, we have the tokens here in the United States. If the governors decide they want uh to put the screws tight on big tech hyperscalers and neo clouds and they want to slow this down, they will need to understand that these data centers could be put in Canada, in Mexico, in Singapore, in Malaysia and many other locations. The Middle East is a little bit off the table because of the war. war ends, you start putting these data centers in the

Middle East, then the job of doing the next large model will not occur, Freeberg, on US soil. It might occur in Saudi Arabia, UAE, Qatar, Malaysia, Singapore. We're going to be a net importer of tokens. And this will be the biggest cell phone ever because all those 300, $400,000 jobs building these data centers are going to go away. All of that tax will be collected locally in Malaysia where Google is putting a huge data center and the data can make it around the world quite quickly. It doesn't need to be in the United States which these governors are going to learn a very hard lesson in globalization. What are your thoughts here on the data

centers being banned or if it is just posturing and then Freeberg could we see the United States become a net importer of tokens as opposed to a net exporter? Well, they might ban the use of AI, too. >> Okay. Well, now we're going to >> Yeah, a very far out prediction >> that's being floated. I mean, they're that's the conversation right now. >> Okay. Unpack that. Who's having the conversation? What exactly is the proposal? Because that seems to me to be a little far out there. The farther left you go, the the more vocal politicians get on this point, which is no one sees the quote benefit of AI and they don't

want to see AI being developed being deployed or being used. That's the general statements that are that are being made. So they want to ban both its development, its deployment. They want to ban data centers. They want to ban technology companies from making models. And they want to ban companies from using the models. And I think this sort of rhetoric leads to somewhere that's obviously more constrained than we are today. >> What are the chances something crazy like that happens? But handicap it for us here. 10%. >> California passed legislation and Gavin Newsome vetoed it. I think it's much higher than 10%. We're seeing

state-based legislation. I mean, Sachs spent quite a lot of time on this, but there's a patchwork of hundreds of laws that are passing all over the country trying to regulate model development, model deployment, model utilization, what they're allowed to do, whether the local state government gets to audit and inspect how the models operate, uh how people are using the models, what they're outputting. >> What do you say, Sax? Answer his uh >> and fundamentally remember a model is just a bunch of software. It's a code. It's a point about free speech. Can I actually run code on a computer? that is a restriction on, you know, someone

basically reading a book is a way to think about it because at the end of the day, you're inputting and outputting digits, uh, ones and zeros. >> True sovereignty. Yeah. >> And remember, we have laws and we have regulations about what do those ones and zeros do? So, if those ones and zeros go and take money out of your bank account and put them in mine, I broke a law. I'm a felon. I'm going to get convicted of that felony. If that is used to create a weapon that is illegal, I broke the law. that is a felony and you can go down the long list of things that people should be concerned about. So you have to ask

yourself the question if we already have laws that protect ourselves from the consequence of people using this sort of speech, this sort of software, then what are we actually doing? And I do think once again that the the primal call it unconscious political state is that there is something that threatens the state that threatens government itself. And I think that that's a big part of the motivation here. And I've said for a long time, there's a power play. The question is, and this is me waxing philosophical for a second, is does an organization like Anthropic or whomever end up in a place where they're regulatory aligned with the state such that the state has unlimited access to

that model's capabilities to development and deployment and individual citizens and companies do not. And this is almost like if you go back the the modern like issue, the second amendment issue is no longer about who has the bullets and the guns. It's about who has this technology. Because if the state has the technology but the citizens and the businesses don't, then the state has supreme power. And remember, there's no such thing as a state that doesn't have central planning and command, which means you are giving a small group of people an extraordinary amount of power. And the whole point of the United States and the whole point of the Second Amendment was to always have a check on

that power. >> Okay. >> So if the state ends up getting all of the AI and no one else gets the AI, then you no longer have a check on the power. I think this is like you're getting into Dr. Doom scenarios. I think you're completely wrong. I think there's like a 1% chance something crazy like this happens. But I like that you exist in the world freeberg to present it because it you are the back stop to this level of lunacy out the by by the way Jal, let call me Dr. to do all you want but but this this is a fundamental question about what's the intention of this country. The intention of the country was individual liberty.

>> Yes. >> The right the rights of the citizen the rights of the individual. It is not about state power and it is not about us and and we have a lot of laws that protect citizens from each other. >> Mhm. What we're doing now is creating a different system that extends well beyond the founding principle of the United States to give a small group of actors an incredible amount of power that they're going to centrally command and control. Okay? >> And I think that that's something that we need to pay attention to. And I'm not saying this is happening and the world's over blah blah blah. That's why I'm trying as as this. It's not it's not

binary. As the policies develop, we have to keep in mind what we're doing. >> You're saying it's a slippery slope. You're saying it's a very slippery slope. Yes. Okay. Sachs. But I do think, you know, just like the P doom where people say 10% of people are going to die. I like to put a percentage on it. What are the chances of this happening? Chimoth or Sachs, you you're the closest to this, you know, have it been the ZAR. Do do you think that this is in the realm of possibility? What what Freeberg's describing? If so, maybe you could put a percentage likelihood of it happening. And then what is your take on

data centers and the net exporter, net importer of tokens potentiality here? Okay. So, it's 100% that Democrats are going to make a major push for AI legislation in the next Congress. The question is what that looks like. And I don't think you have to speculate too much to understand where it's going. I believe that Democrats want to create a surveillance and censorship state that's turbocharged by super intelligence. I mean, that's ultimately the end state. How do you get there? You create a department, a federal department of AI. You require that all the so-called frontier models have to be reviewed and approved by that. The regulators give their notes on it. You can't get a model

released unless you address their concerns. And their harms will include all the things that the government is telling us that social media companies should be concerned about like disinformation and misinformation and dissident thought. All the things that the government was pressuring the social media companies to crack down on and censor during co I mean how quickly we forget all of this. They're gonna basically reenact that whole regime again using AI and it's going to be infinitely more powerful because we're talking about super intelligence here. So I I do believe that that is the regime that we're headed towards. So I it may not be exactly the the

version that Freeberg's talking about where Freeberg's saying that only the government can use the tools. I don't think that'll be the case. >> No, not that binary sack. Sorry. I meant like obviously they're going to get access to models and capabilities that the public doesn't. At the end of the day, any amount of distinction between state what a central state actor gets and what the general public gets is really where that distinction of power arises and it's really what makes it difficult for the founding principles to persist which would be a quasi de facto uh nationalization of the technology here Chimath. Uh so what what's your take on this? I'm going to force

everybody to and try to pin you guys down a little bit. You think that this nationalization of the technology, the government having the best version, everybody else uh in the United States, corporations, individuals having 60 70 80% of that version, you think that's a possibility here? No, I don't think this is the priority. Again, I think people will get animated about this issue, but I don't think this matters. And I think that to the extent that people legislate an oligopoly, it'll further entrench economic power. And I think that that's counter to what these people want. So, I think when they put the they connect the

dots, I don't think that that's what's going to get legislated. I don't think they have the energy for that. And I think at the end of >> what's what's going to get legislated is a quid proquo. Okay. The quid proquo is this. The government gets more power and the duopoly of closed model companies get more regulatory capture or moes around their business. That's going to be the quid proquo. The government's going to come in. >> The Democratic Congress is going to say, "Look, we have to regulate this. it's unsafe. What do you think those companies are going to do? Do you think they're going to say, "No, you can't do

that." They're going to say, "Okay, you know, let's work together on this." >> I think what's going to happen is >> and the government ends up with more power and those companies end up with regulatory protection. >> Math, go ahead. I don't think so. I think Yeah, I think that if to the extent that anybody legislates AI, I think it's going to be broad-based and include a lot of coverage around data centers and AI factories. And to the extent that that happens, maybe you'll get some regulatory capture on the one end, but you're going to constrain the supply so severely on the other that the that the real people that will be in control of it are Meta, Amazon, Google,

Microsoft, and SpaceX. And so you have to remember the foundational model companies are not home free. What does home free mean? that they have a fortress balance sheet, a profitable business model and and quasi infinite compute for their own ambitions and right now they are renters and the renter class in data centers as of Tuesday is very much at risk and so if anything I think what's going to happen is all the renter classes will get co-opted for example [snorts] I don't know if you guys saw today but Google just took over a Cruso data center they co-opted the ren They're like, "You're gone. We're going to take it over."

>> They did. >> Yeah. So, why is that happening? It's because they have all of the core critical ingredients, specifically the power. So, I think even a reggg capture campaign can only work to the extent the government then goes and violates all these other rules and says, "Here's all this free electricity and go build wherever you want, and we don't care about energy." Because there's no money to pay for that, and there's no political will to do that. So I think the practical reality is that you have the mag seven or mag 8 have more power and when they look at that calculus I don't think politicians want that at all either side.

>> I you know I did a calculation this week. I was looking at the phenomenal impact that agents are having inside of our venture capital firm launch and we're spending 50,000 40 $50,000. >> Say the name of your venture capital launch.com. Where can I go to learn more about that? >> To launch.com. >> Thank you. >> Thank you very much. >> Just I'm trying to let people know I have a day job beyond podcasting. I invest in 100 companies a year and uh we have 20 people. We're spending like $50,000 a year. I think 4050,000 on these subscriptions. Grock Claude being the main ones. I estimate we're getting $2 million in value from that. I

estimate we're getting about a million dollars in incremental revenue for I estimate we're getting maybe 15 to 21 in incremental revenue for the dollars we spend. In other words, the velocity of our investments is going up because we've automated everything. And the velocity in which we create new media properties is going up because we've automated everything. We're building systems. And only 10 or 20% of people in corporate America are using this technology every day on a regular basis. In other words, there's somewhere between five and 10 times as many people to start using this every day. And I believe when they go to Agentic, they start using this because it's so

accessible to the average human being. Uh everything gets abstracted. You don't have to learn to do code or set up your rig or your harness. You just tell it what you want and it uses 50 times as much. So I think there's 500 to a,000 times the need for this. When that happens, this compute is going to go wherever it needs to go. And I can tell you what we're doing is only 70 80% of what the frontier models are capable of. We're not solving neighbor Stokes obviously and so we're on the verge of ordering everybody a Mac studio of [laughter] 512K for $20,000 which would mean $400,000 in compute on people's desktops and running local models first and then falling back to them because we

don't want to be throttled. We want to have unmetered intelligence. So offshore uh data centers will be the trend of the next two years. That's what you're going to see. And desktop usage of local models. I'll just make that prediction here. >> Yeah. Well, let me can I Yeah. Can I can I respond? >> Open source and open source obviously is the power of that. >> I think you're on to something, Jake. Look, when we're talking about AI regulation in the next two years, I think we need to separate. There's two different things, right? There's federal and there's state. What the feds are going to deal with is the the AI safety and creating a federal department of AI

and all of those Orwellian sorts of risk around what could turn into censorship and surveillance and control. Okay, that's one bucket of issues. There's another bucket of issues around infrastructure which will be dealt with at the state and local level, right? And both of them are going to play out. Now, at the state and local level, I I think people are just being way too optimistic about what this election means. I mean, I'm seeing like Gavin Baker saying, "Oh, don't worry. You know, Inosa, she seems totally reasonable. She's not threatening any projects." And, you

know, I've watched interviews with her. Look, I went and watched the interviews that Gavin watched and I don't see the things that she's saying. She does not say that existing projects are protected. She simply says that there'll be no new permits issued until they pass legislation. You're right. >> Dealing with the issues she's talking about. I saw an issue she's talking about. >> I'll I'll explain it. But look, I saw an analyst from semi analysis then come out and say that you do realize that projects that are under construction right now don't necessarily have every single permit they need to actually open for business. In other words, once

you've constructed the data center, you may still have to get an air pollution permit. There's various kinds of permits that sometimes you don't get till the end. So, if you take what she's saying seriously and literally that there will be no new permits passed until this new regulatory regime comes into effect, we could end up with a bunch of stranded half-finished projects. Now, I'm not saying that's necessarily going to happen. I'm not criticizing her because I don't know what she's going to do. She hasn't even taken office yet. I'm simply pointing out that this could go a lot of ways. You know, they could do this in a

reasonable way or an unreasonable way. So you could end up with a lot of halffinish projects. My base case is that the projects that are fully permitted will get done in 2027, but I don't think there's going to be major new projects in this new regime for a long time for the simple reason that there's no political incentive for anyone to grant a new permit or a new project. What's their incentive? Think about this. In this last election, you had both Democrats and Republicans running campaign attack ads on any politician who approved any data center. So, think about if you're a politician or you're just like a civil servant who maybe wants to move up the the ladder.

What is your incentive to stamp approval on anything? I don't see it. I mean, I don't see anyone who is ambitious politically wanting to stick their neck out in any way to approve anything over the next four years. So, look, I think probably the ones that are already approved and fully permitted, I think those probably get done, but the ones that are not approved yet, good luck. I think it's going to be very difficult. So, I think we get by in 2027. I think there'll still be meaningful capex. I get really worried about 2028 and the Democrats I think in a way have a perverse incentive around this because if that capex tanks in 2028 they all blame Trump for that right

>> yeah but they already have set the table they have so such amazing footprint right now they're already in the pole position tanking the economy I think opens up an attack vector for them I think they're much better off just saying here's what we want and extract value from them just extract value. We want free electricity. We want schools. We want this. Just negotiate hard. And if you don't >> Yeah. >> Yeah. And if they don't, if the data centers and the and these governors whose job it is to fight for their people and get the best deals, just like it's the company's job to get the best location, the best deal for their shareholders, if they can't come to an

arrangement, again, these things can be put in Canada, these things can be put in Mexico, these things can be put anywhere. And we have Starlink and Fiber Lines. It's extremely easy. extremely easy. It's very common to run fiber cables everywhere around the world. It's an incredibly speed efficient system we have here. It's not like 20 years ago where you know loading your Gmail in Japan was extremely difficult. It's very easy. It's very crisp. We have CDN technology. It's going to be a no-brainer. Let alone the precience of SpaceX which is severely undervalued as a stock and is SpaceX Tesla. I'm I've been buying shares through this whole insanity.

They're going to space and bring them up there now. Seems like a pretty brilliant idea, doesn't it, Jamal? Like if they're going to block it, all of a sudden once again, Elon saw around the corner, did he not? >> Well, do you remember I think we talked about this, which is, you know, we said his 90-day out with Anthropic is probably because he negotiated and he saw around the corner, not the other way around. Because people used to think, oh my god, this is really bad for SpaceX if they could pull the rip cord. That's not

going to happen. It's now the question is, does it happen the other way around? It's a It's pretty interesting. I think Elon and the Anthropic team have a pretty positive working relationship. >> Oh, this has nothing. Hold on. I want to be clear. This has nothing to do with their working relationship or whether Anthropic is a good or bad company or SpaceX is a good or bad company. This is nothing to do with that. This is a spreadsheet and the spreadsheet will dictate the answer. And the question is if spot spikes you are economically forced to do this beyond a certain threshold. >> Okay. I I I'll take a I'll take a slightly other side to that. There's

still a lot of acrimony between open AI Sam Alman and Elon. >> Elon has aligned himself very deeply with the anthropic team. They have an incredible working relationship. I don't think he just throws it open to spot even if that was the most short-term midterm economic model. Let me finish. No, that's not what I'm saying. You're you're not listening to what I'm saying. >> Just let me finish. Then you can counter. You can You guys are allowed to let me finish my sentences. I know that's hard to believe. >> Not if you miscast what I'm saying. >> You can totally respond to it. Just take a take a beat. Moving to spot might be the the right

ruthless economic decision. I think that the the decision made by Elon is going to be in part informed by his relationship with Sam Alman or lack of one and by uh the loyalty of Anthropic and their success making them a great long-term partner especially for the space data center business. So I could see him instead of throwing it up to spot saying hey let's meet somewhere in the middle. That's what I think is a longer >> I'm not saying throw it up to spot. What I'm saying is when spot moves sufficiently, even a long-term offtake moves so much that existing contracts are negative EV. And so you just got to move existing

contracts to positive EV territory. And if you can get out in 90 days and repric something into positive EV territory, you should. So my point is more that beyond a certain point if a bunch of data centers get slowed down a bunch of constraint happens there's going to be a lot less capacity than people think the dollar cost per megawatt per month is going to go through the roof the dollar cost of a GPU hour is going to go through the roof and the people that will be willing to pay the premium are going to be the ginormous companies with huge balance sheets and so you could just sell it to Google or Meta if you

wanted to you don't have to sell it to open AI >> okay sachs The really interesting part of all this just to dip into the science corner is the these uh this infrastructure does two things right inference people using the product every day and then building the next model. If you want to run away with the next model cornering compute at any price is a huge advantage. So for Google which has been behind if they use all their compute to makes their make their model or if Microsoft or Nvidia decide they want to start accelerating their internal models

which they have this could be this could determine who has the best frontier model. Over to you final word >> I'll say something very quickly. When you're talking about infrastructure of this magnitude these gigawatt power data centers they cost around $50 billion. Okay. Nobody can make that investment in conditions of uncertainty. The last thing you ever want to do is break ground on a project like that. And then when you're halfway through, you get enjoined. You end up with a strike by your workers or some community group that stops you. You really need conditions of certainty before you make an investment like that. And I think that we're headed towards conditions of

great uncertainty. You've got our biggest data center states where there's basically been a regime change and all those governors are basically indicating that they favor moratorum until XYZ happens, right? They can be a little bit different in what that is. So my sense is that you look, it may not be a conspiracy to hurt the Trump economy. It may just be the reality of what's going on. But I would expect that I think there'll still be meaningful capex in 2027 as a base case, meaning those fully permanent approved projects can move forward or finish. But I think by 2028, I would expect that the pipeline will either be closed or significantly reduced and that will have a big

economic impact. And I do think that Democrats will try to blame the president for that even though they will be solely responsible for this. >> All right. Everybody has been demanding Freedberg that we do a science corner on this uh exponential time hypothesis. I guess uh a layman's way of explaining it would be computers can't solve important problems quickly. But there seems to be uh some science and some recent innovations that say maybe this hypothesis is no longer true. Please inform our audience. The the reason for doing this science corner on this open AI publication is just to highlight some of the benefit and value that comes out

of AI. These are like pretty substantial breakthroughs that are happening. All the math hypotheses they've published on this one's called the exponential time hypothesis and it starts with like the most fundamental question in computer science which is can a problem be solved with a computer and if so how long does it take? And that tells you whether it's actually practically computable. This is the key point of computer science. We want to create these machines that can solve our problems. And there's a class of problems that are called P problems where you can solve them in what's called polomial time. The bigger the

problem of a particular type, the longer it takes. And polomial time just means size cubed or size squared. It tells you how many seconds or minutes or hours it might take on a specific computer to solve that problem. And so the the problem as it gets bigger takes more time. And then there's what are called NP problems. These are problems where you can very quickly figure out if the answer is correct. So like, you know, it can take a long time to solve a big Sudoku puzzle, but you can check the Sudoku puzzle in a couple of seconds and see if it's right. That's an NP problem. And the key question in computer science has been, do P problems equal NP problems? Meaning can you

actually solve any problem that you can quickly check in a short period of time? And if so, then everything is computable. The entirety of the universe is computable. And that's the big question in computer science. This idea of this exponential time hypothesis which was proposed in 1999 by a couple of guys. And they said for a specific type of problem called a threesat problem which we don't really need to get into the amount of time it takes is exponential depending on how big the problem is. So the bigger the problem gets. It's some you know number to the nth power. So it scales exponentially in terms of how long it would take a

computer to solve it. Which means that they have demonstrated that there is a class of problems that can never be solved in a short period of time and therefore that entire class of problems means that P does not equal NP. So that's been their hypothesis since 1999. And what open AAI did is they disproved that. And they disproved it in a 175page paper. And it comes down to this one little formula which you can pull up on the screen here, Nick, which we don't need to spend a lot of time analyzing to understand. But effectively this little formula right here is OpenAI's paper demonstrating the the outcome of the paper demonstrating that this threes

problem this particular class of problems in computer science can be solved in subexponential time which means it will not take an exponential amount of time. So they disproved this big exponential time hypothesis that everyone thought was real. And what that means is that P could still equal NP, which means that theoretically every problem in the universe can be solved with a computer. This solution, it's it's being evaluated now. So, you know, it's not fully kind of verified by third parties yet. People are still trying to understand it. It's 175 pages with a very novel set of approaches that it's taken to try and get there. They did the

whole thing end to end in less than 10 days. Some reports have argued they did it in a few hours. And so this was a deeply challenging question in computer science and has been for 27 years. Is this exponential time hypothesis real or not? And they just proved that it's not. And they did it in a few hours. So it may be esoteric for the majority of people listening to this, but it it does a couple of things. Number one, it keeps in play the idea that everything in the universe can be analyzed and every problem theoretically could still be solved with a computer. And number two is it's amazing that OpenAI was able to do this in a few hours and deliver this

sort of a result that mathematicians and computer scientists have been struggling over for 27 years and this proof is so far holding. So you know this is amazing and and so everyone in computer science I think was kind of shocked when this came out. >> Absolutely. Yeah. >> It was shocked in terms of how it was presented, how they solved it. It was very novel and again it's one of these moments of humility for mathematicians for computer science being like holy [ __ ] I would have never done that >> and s uh sax you were just very heated about the exponential time hypothesis in the group chat for the past three weeks.

So when you hear freeberg teed up here this crisply how does this impact your thoughts on 2028 election and the future of humanity? [laughter] Look, I think that AI, super intelligence, whatever you want to call it, is going to create a a lot of good things. And the the fear around it, you know, maybe some fear is justified because anything that seems powerful can can make people afraid. And obviously, the future is unknown. So, you can't prove exactly what's going to happen, but I tend to think there's going to be so many benefits to this technology. And frankly, if we don't do it, China's going to they're going to be the ones that benefit. Jal, you're right that if

the US doesn't build the data centers, they'll get built in other countries and we'll be paying to import the tokens. Very dangerous [laughter] in Canada. >> Very dangerous situation. >> So dumb. >> Yeah. >> Crazy. Chimath, I saw you nodding there. >> Yeah, you have a background in computer science. >> My formal education was in electrical engineering, but um I mean I've I've worked around software engineers for so long now. This is an incredibly interesting insight. All right, another amazing episode of the All-In Podcast. The number one, two, and three podcast in the world in terms of the rankings. I think uh wow, what a

week we had. We're number one uh in the live stream and obviously four weeks running. We've hit number one. Thank you to the audience and uh we truly appreciate you being on this journey with us and you can always expect as uh candid a discussion in the world as possible which it was very interesting in your discussion with Rick Rubin Chimath. He was very very taken with the pockets and he is a somebody who understands art and unique moments in the world. I thought it was very interesting that he kept pressing you on what what's the magic here because he's >> he's kind of the sherpa of magic in many ways and I think the magic here is that

we're candid and uh we break each other's chops and we try to move the ball forward with our candidates and you had some very nice things to say about all of us Chimat and I just wanted to say thank you are my brother and I love you. >> Thank you. I love you too. I mean, what I said to him basically at the Corvette is we are a family and we get together and chop it up once a week and it's very rare to have a window into family squables. >> Yes. [laughter] And I think that's basically it's basically why it works. It's kind of unique. You know, that's maybe why the Kardashians work. >> Maybe you had you had such a compliment.

I think said it was the greatest compliment I think I've got in my life. You said, "You know what Jake Al is? You know that quote from the the the scene from the town where Ben Affleck goes to uh Jeremy Rener and he says, "Uh, I need I need you to come with me. We're going to mess some people up and you can't ask me any questions." And Jeremy Ren looks up and says, "Whose car we take, yours or mine?" >> I've I've always felt bad about you. >> That was very complimentary. All right, we'll see you on the next one. Love you, bestie. >> Byebye. [music] Let your winners ride.

>> Rainman David [music] >> and it said we open sourced it to the fans and they've just gone crazy with it. Love you. [music] [singing] >> Besties are my dog taking a notice driveway. [music] Oh man, my habitasher will meet up. >> We should all just get a room and just have one big huge orgy cuz they're all just useless. It's like this like sexual [music] tension that we just need to release somehow. >> Your feet. >> We need to get merch. >> I'm going all [music] in.