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E72: Impact of sanctions, deglobalization, food shortage risks, macroeconomic outlook and more

March 19, 2022 / 01:14:38

This episode of the All-In Podcast covers the ongoing war in Ukraine, food supply issues, and the impact of sanctions on Russia. Guests include David Friedberg, David Sacks, and Chamath Palihapitiya.

The discussion begins with an update on the war in Ukraine, highlighting the death toll and the strategic miscalculations made by Russia. David Sacks emphasizes that the West may also be overconfident about the outcome of the war.

David Friedberg shares insights on the potential food supply crisis resulting from the war, noting that Russia and Ukraine are major wheat producers. He warns that the ongoing conflict could lead to widespread famine.

The conversation shifts to the economic implications of sanctions imposed on Russia, with Sacks and Friedberg discussing the long-term effects on global markets and food security.

Finally, the hosts reflect on the need for a new approach to foreign policy, emphasizing the importance of resilience and self-sufficiency in energy and food production.

TL;DR

The episode discusses the Ukraine war's impact on food supply, sanctions on Russia, and the need for a new foreign policy approach.

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i now have a chief of staff he's pretty

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great he's worked for me for a while and

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he's he's doing a great job but it's

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actually really helped i will say that

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and then i uh started a family office

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wow congrats

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what does that mean you have a place in

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your home

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that you call an office

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yeah you don't like to break by your

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refrigerator there's an office is that

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the family office yes the family goes in

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there to talk about all this stuff

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where does jade put the stickies that

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say we're out of granola bars

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[Music]

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[Music]

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hey everybody welcome to another episode

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of the all-in podcast episode 72 part du

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with us today again

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the prince of panic attacks the sultan

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of science david friedberg

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ah yes and also the zephyr of zoloft

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and also as you're hearing cackling the

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duke of degeneracy

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uh the dictator himself

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holly hoppity and of course everybody's

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uh favorite the rain man himself the

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drunk history channel uncle

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david sachs i mean david i i follow you

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on twitter

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you're tweeting 50 times a day oh i was

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thinking the same thing when do you work

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what has happened to you you you won't

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meet with startups anymore i i bring you

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startups she said you know what i'm no

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longer

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you're like stuck in your room tweeting

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i just i don't do first meetings

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that is the end of your career huge

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mistake

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no it preserves it preserves my energy

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there's nothing more draining than

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endlessly spending your day in first

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meetings no why don't you just have a

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short first meeting like a 15-minute

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first meeting well that's what you know

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we have a team for

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is

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there they don't because we know exactly

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what we're looking for sas investing is

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very metrics driven and so the first

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meeting

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yeah exactly so it's like

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the first meeting we just find out do

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they meet our basic threshold for love

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it for growth yeah exactly fantastic

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yeah so we run the numbers and i i will

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meet with them if they look good

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i love this i would like all vcs to take

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the same approach and i will let

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everybody know my dm's are open jason at

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cal academy i will take the first

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meeting saks i need to call you after

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this

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one of our businesses which is not in

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sas has started to sell sas software and

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we've already booked 40 million dollars

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of [ __ ] acv

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by complete accident

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from zero wow you stepped in it

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uh and i need some advice okay yeah

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let's talk all right everybody uh it's

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been a bit uh of a crazy couple of weeks

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here and i we have to start

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with the war in ukraine and and do a bit

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of an update it's been over 20 days the

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death toll continues to climb we don't

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know exact numbers here it's very hard

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to get information we're not experts we

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don't have boots on the ground

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uh but according to uh the new york

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times seven thousand russian troops have

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been killed

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and zolensky said on march 12 1300

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ukrainian troops have been killed i

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think we've got three or four angles we

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need to talk about here one i want to

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talk about food supply

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with freedberg since you ran climate.com

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and have a lot of expertise in that and

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of course

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ukraine and russia are the breadbasket

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of the world

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trabot i want to talk about markets of

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course but let's go to our history

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channel uncle first uh sacks

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you have been

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going down the rabbit hole looking at

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the history of this

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let me just ask you

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just a pointed question

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is russia losing

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the war

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and if they are losing the war if that

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is a pos is that even a possibility that

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they're losing the war are they losing

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the war and then what is the exit ramp

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here and what does it mean on a go

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forward basis right i think great

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question so here's where i think we

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stand three weeks into the war is that

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putin clearly miscalculated he thought

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this would be a cakewalk obviously has

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turned out not to be the ukrainians have

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put up very fierce resistance the

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russians have taken very serious

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casualties and losses

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um and so the war is very much you know

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up in the air the the outcome is very

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much in doubt so i think you know putin

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was overconfident uh made a political

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economic and you know obviously

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humanitarian mistake but i think three

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weeks in here is where i would

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characterize things is it feels to me

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like the west might be making a similar

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mistake of sort of excessive

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overconfidence and triumphalism meaning

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that we think the rest of this war is

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going to be a cakewalk and the reason i

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say that let me just give you some

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examples and then tell you why it may

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not be a cakewalk so you've got francis

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fukuyama had a piece this week basically

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he's back with the end of history he

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predicts that you know imminent russian

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defeat and that there's gonna be a new

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birth of freedom

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uh for the west it's going to be like

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the bush doctrine and 20 years of failed

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policy in the middle east never happened

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you got david from you know all but

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predicting mission uh accomplished just

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like the iraq war he said the

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springtime's gonna be bad for anyone who

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bet on putin his words which in his view

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is anyone who isn't a basically a neocon

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who favors regime change you had a piece

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get a lot of circulation over the last

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week in the u.s china perception monitor

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by um

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by i think a former chinese

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observer named hugh way and he basically

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predicted that china would be under so

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much pressure

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by what the the russians have done you

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know in terms of humanitarian

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uh losses that they would come out

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basically denouncing russia and support

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the west and then of course i think the

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final example of what you might call

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western triumphalism right now is that

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absolutely no one in washington seems to

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be pushing for a ceasefire they're all

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you know they're all paying lip service

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at least to snow flows fl no-fly zone

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idea biden and the squad seem to be the

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last holdouts

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uh for the idea of not imposing no fly

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zone so i would say right now the west

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seems to be very confident about the way

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this war is going and not inclined to

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make any compromises or concessions i

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just want to flag quickly why that you

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know why there might be some clouds on

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this silver lining so you had a

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washington post article first of all

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warning it was very interesting that

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ukrainian military progress may not be

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as great as there's quote stratcom the

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strategic communications

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you know aka propaganda so in other

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words the ukrainians are very effective

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at fighting the information war but the

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the russians are still making progress

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on the ground you also had this um

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washington post story about neo-nazis

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flocking from all over europe to ukraine

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to fight for the cause again that story

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got it's it's very troubling and it got

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no likes or retweets because it just

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doesn't fit the great narrative here

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you've got the slow motion humanitarian

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is that true like this yeah but let's

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come back to let me lay out all the

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issues that we can come back to you've

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got the slow motion humanitarian

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disaster of you know a billion people

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across the world potentially starving if

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the spring planting doesn't happen which

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we should let freeburg speak to more

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you've got the fact that russia can

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still escalate this war i mean they

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could still rubble cities uh by elorus

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could enter the war and you know god

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forbid they could even use wmd

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and then we you have this idea this

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dream of toppling putin probably look it

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could happen but probably a fantasy you

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had 200 000 protesters pro-war

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protesters turn out in moscow today

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nationalism is still strong in russia

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yes there's anti-war protesters there

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but the russian people at the moment

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seem to be still behind putin and then i

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think you had today um

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the foreign minister of china came out

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with a statement really throwing cold

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water on the idea that they support the

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west they basically denounced the west

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for nato expansion so this whole idea of

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of the chinese bowing to western media

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pressure which they in other contexts

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called the baizou influence i think

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that's a fantasy that is not going to

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happen so look i think that you know you

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know we all support the ukrainian cause

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uh we all support their desire for

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freedom to their freedom from domination

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from this um this russian war of

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aggression but what i wonder about is

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whether this would be the opportune time

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to for washington to try and push for a

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ceasefire instead of a no-fly zone and

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we should talk more about what that

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might look like

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can i give you a psychological

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assessment of i think what's happening

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right now yes great just as somebody who

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as as you know you guys and i were just

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joking but

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six days just being mostly off the grid

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with my notifications off

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i was really like honestly like you you

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kind of like go through this dopamine

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fast and what it actually helps you do

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is pick out better signal

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and you know with all respect sex i

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think like a lot of what you said is not

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really a

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as meaningful signal as the following

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which is the most important thing that

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happened was both sides

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basically said the surface area of a

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deal was very much in sight

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and that they were down to three or four

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points and i think that that didn't get

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reported nearly as much as it probably

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should have

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and what i thought was psychologically

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interesting was that as soon as that was

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said

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the next few days was when the rhetoric

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got ratcheted up extremely aggressively

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on both sides

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and the way that i interpret that

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typically is having done deals that's

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typically when you're closest to a deal

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and you're trying to get the last few

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t's in c's and

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in that same construct as applied to

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ukraine and russia i suspect what's

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happening is they both put out the trial

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balloon it was well received on both

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sides the surface area is now down to a

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few points

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i'm not saying that those are

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justifiable in the end but i think that

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if both of these two folk parties want

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to come to a ceasefire which i think it

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does

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we're probably much much closer than

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anybody thinks and right now all of this

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rhetoric is meant to basically try to

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get the other side to budge a little bit

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more and so i suspect and you know i

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could be completely wrong

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um is that we're much closer to a

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ceasefire than anybody thinks and i

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suspect that you could see something in

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the next two to three weeks

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and i think that that's really hopeful

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because you want this thing to come to

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an end the thing i'm trying to parse

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here uh and i don't know if anybody here

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can even answer this

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is

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how

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did how did we

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either underestimate or over estimate

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depending on the time

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russia's

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ability

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to invade another country i think i

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think the thing is we we have we can't

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even estimate correctly so for example

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there was something that said there was

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a hundred out of a hundred russia has

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170 battalions apparently i don't know

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if that's true or not right of which 100

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were sent in we don't know if that's

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true or not of which you crane

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apparently destroyed 50 of which we

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don't know if that's true or not so

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we're left to guess and unfortunately

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what that does is that people

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psychologically then fit as david is

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used in the past your priors what are

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your biases

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right what narrative fallacy do you want

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to believe and then you're going to fit

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so the pro-russian factions will say

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that's entirely not true the

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pro-ukrainian factions will say actually

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it's even greater than that huge

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sustained military losses

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the truth is somewhere in the middle

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that will only get accounted for after a

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ceasefire is in place so i think we

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almost need to again

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we can get caught in this fog of war and

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and talk about this stuff in ways which

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we don't accurately know or we can level

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up and say the thing that we both know

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is there was on the record statements by

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the foreign minister of russia and the

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president of ukraine that a cease-fire

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and the surface area of that ceasefire

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is within sight

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and unless something is materially

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changed and then in the last three days

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which it hasn't

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it means we are really really close to

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this being done so i agree with a lot of

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what jamal said i don't think it

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contracts anything i said before i agree

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that there was a big piece of news this

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week that caused markets to rally for

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three days which is the announcement of

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a proposed 15-point peace deal

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and the we do know sort of the key

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features of that deal it means that the

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three big features are you uh ukrainian

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neutrality so they don't become members

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of nato you had zilinski saying that

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nader membership was off the table

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ukraine can't host foreign troop spaces

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or weaponry there'd be limits on

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ukraine's military but they would get

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security guarantees from the allies uh

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so it wouldn't be a complete

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demilitarization

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and then the the other pieces of it were

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ukraine recognizing russia's control of

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crimea recognizing that's not coming

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back and then some sort of independence

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recognized for the disputed territories

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in the dawn bass so i think you're right

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chamath that

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everybody now knows the broad contours

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of what a peace deal would look like

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and the markets are starting to price in

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them getting to that peace deal but i'm

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worried that if you look at it from the

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point of view

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of what people in washington say

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that

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there's no pressure here

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coming from washington

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for zielinski are who's basically our

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client he's an american client to make a

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deal

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you know if you compare this to say the

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1973 yom kippur war where the us was on

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the side of israel but still acted as a

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peacemaker and got a ceasefire done you

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know kissinger got that deal done even

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though we were on the israeli side you

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don't really hear anyone in washington

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saying let's get a deal done so i hope

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you're right but it's because you're not

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we're not talking about the elephant in

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the room which is that in the yom kippur

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war the unitary resolve and the military

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dominance of america was undisputed and

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so as a result its ability to be the

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mediator was also undisputed we've

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already talked about this when biden

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called the uae in saudi they wouldn't

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even pick up the phone the people that

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are negotiating this priest

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peace treaty right now are naftali

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bennett and emmanuel macron so we're not

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at the table so i think a lot of what

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we're hearing as well is just a lot of

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the rejection and the psychological you

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know kind of anger that we have to not

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being even part of the process

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maybe the world doesn't want us to have

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such an outsider the point is it's we've

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moved past that whether you wanted us to

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be involved in it or not we're not

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involved and we are not the principal

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mediators in this and we i hope to god

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that israel and france and whoever else

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is at the table gets this done

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yeah i agree with that but here's my

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concern is i think everyone knows the

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broad contours of the deal but if you're

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russia or you're ukraine you're getting

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daily reports of what's happening on the

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battlefield and if you think you're

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winning you have an incentive to stall

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the peace process to cement greater

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gains and get more leverage for those

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remaining details and negotiating points

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and so if zolinski thinks that the

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ukrainians are making progress on the

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battlefield he's going to wait and so

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neither one of them i think left to

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their own devices can be fully trusted

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to make it deal i think you need the us

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applying some

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pressure or acting in a pot in a

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constructive way towards the process and

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i think it's a huge problem that the us

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is not viewed as a peacemaker uh we're

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basically viewed as so partisan and on

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the side of ukraine that no one wants us

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involved david we've talked on this pod

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about us not being the global police

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officer of the world and that other

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people need to stand up so maybe the

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lesson here is

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you know maybe strategically jason it's

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not like we were called on and we didn't

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stand up we weren't called on well okay

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that's we assume that i mean we don't

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have perfect information either but

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let's let's get to friedrich here i

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think the other

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wrinkle in all of this

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and i think it's quite positive is

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sanctions uh are seeming to have a

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profound impact here and people are

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looking at them as potentially

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maybe

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cyber warfare and

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just you know actual tactical warfare on

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battlefields is less important than

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economic warfare and russia has been

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essentially cancelled from the global

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economy from visa to mcdonald's

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uh to exports and these sanctions are

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not just

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uh government sanctions these are people

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opting into them whether it's

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corporations uh and other entities

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saying we're just not going to do

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commerce with russia

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unfortunately

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and this is something you have great

00:15:59

expertise on and so we're lucky to have

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you here to talk about it

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people may or may not know this i'm

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happy to be here

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this is the bread basket of the world

00:16:08

they export more wheat than anybody and

00:16:10

they also export fertilizer soybeans and

00:16:12

some other inputs

00:16:14

uh which we've talked about previously

00:16:16

that uh provide meat uh for the world uh

00:16:20

so what can you tell us about the

00:16:23

downstream effects of

00:16:25

there not being potentially uh

00:16:28

or half as much crops coming out next

00:16:30

year and what would happen in places

00:16:33

that are the beneficiaries or dependent

00:16:35

on wheat and fertilizer from russia

00:16:39

so there's a number of

00:16:41

um first order and then second order

00:16:43

effects

00:16:45

that are not just about sanctions but

00:16:47

also about export controls by russia

00:16:49

that

00:16:51

are creating swings in food markets like

00:16:53

we've never seen

00:16:55

and will almost certainly lead to

00:16:57

widespread famine by the end of this

00:16:59

year at this point

00:17:00

so

00:17:01

the first

00:17:02

important point to note is about 15 of

00:17:05

the world's calories come from wheat

00:17:07

about a third of that wheat comes from

00:17:09

russia ukraine russia has banned export

00:17:11

of wheat

00:17:12

and um the the wheat spring planting

00:17:15

season is like now this week and there's

00:17:18

not a lot of planting going on you know

00:17:20

a lot of commodity folks are in the

00:17:21

field trying to figure out who's

00:17:22

actually going to go to field and plant

00:17:25

but um no one's making

00:17:28

you know the concerted effort that they

00:17:29

normally would under normal

00:17:30

circumstances so not only is the current

00:17:33

wheat supply in russia ukraine blocked

00:17:35

up and cannot make its way to countries

00:17:37

like africa or countries in africa and

00:17:39

elsewhere but the future planting season

00:17:42

um is now significantly at risk and

00:17:44

again that's 15 of global calories

00:17:47

and i just to take a step back the whole

00:17:49

planet earth operates on a 90-day food

00:17:52

supply so

00:17:53

once we stop making food humans run out

00:17:55

of food in 90 days so another way to

00:17:57

think about that is our food supply

00:17:59

excess our capacity

00:18:02

in excess is about 25 of our global

00:18:04

production

00:18:05

so if our global production goes down by

00:18:07

12 we've lost half of our global food

00:18:09

supply and that's not just linearly

00:18:11

across all nations what happens is the

00:18:13

most vulnerable nations lose their food

00:18:15

supply first and the richer nations buy

00:18:17

that food supply to secure their

00:18:19

population calories and so you very

00:18:22

quickly see a bifurcation happen when

00:18:24

you have a shortage in a food supply

00:18:25

like this of just a few points where

00:18:27

suddenly famine is a real risk and we

00:18:29

already have

00:18:31

about 800 million people on earth that

00:18:33

are subsisting on below 1200 calories a

00:18:36

day so this very quickly tips the bucket

00:18:39

in a significant way in a number of

00:18:40

countries that's going to be really

00:18:42

awful

00:18:43

and that's just on the wheat

00:18:45

supply and wheat planting problem the

00:18:47

bigger problem is the energy price

00:18:50

problem and the phosphorus and potassium

00:18:52

problem

00:18:53

all fertilizer is made up of nitrogen

00:18:55

phosphorus or potassium those are the

00:18:57

three major types of fertilizer that

00:18:58

farmers around the world have to use

00:19:00

every year in order to grow that crop

00:19:02

without fertilizer plants don't grow

00:19:04

nitrogen is made from natural gas 98 of

00:19:07

the world's ammonia is made from natural

00:19:08

gas

00:19:09

natural gas prices as you guys know have

00:19:11

doubled and the futures market looks

00:19:13

like in some places natural gas prices

00:19:15

going up like 4x

00:19:17

as a result the price of ammonia

00:19:18

fertilizer nitrogen-based fertilizer has

00:19:20

gone from 200 a ton to a thousand

00:19:23

dollars a ton so it's five times as

00:19:25

expensive to buy basic ammonia

00:19:27

fertilizer today than it was a few weeks

00:19:29

ago or a few months ago and so this is

00:19:32

now leading a lot of farmers around and

00:19:33

then the other big problem is phosphorus

00:19:35

so

00:19:37

phosphorus

00:19:39

you know by some estimates i mean you

00:19:41

know there's a little variation around

00:19:42

here but about 10 of the world's

00:19:45

phosphate comes out of russia

00:19:47

and um about

00:19:49

you know call it

00:19:51

um 25 of the world's potassium comes out

00:19:53

of russia but potash both of those

00:19:55

markets are blocked up they they are

00:19:56

they are sanctioned and they have banned

00:19:58

exports russia has through the rest of

00:19:59

2022. so around the world the cost to

00:20:02

make nitrogen fertilizer has skyrocketed

00:20:04

because of natural gas prices because of

00:20:06

the russia problem and russia is not

00:20:08

exporting potassium and phosphorus and

00:20:10

as a result the price of nitrogen has

00:20:12

gone from 200 to a thousand the price of

00:20:14

potassium has gone from 200 to 700 and

00:20:16

the price of phosphorus has gone from

00:20:18

250 to 700. so now it's so expensive to

00:20:21

grow a crop that a lot of farmers around

00:20:24

the world are pulling acres out of

00:20:26

production and they're actually going to

00:20:27

grow less this year than they would have

00:20:29

otherwise because it is so expensive and

00:20:31

they cannot access fertilizer locally to

00:20:34

plant crops so not only do we have the

00:20:36

wheat problem

00:20:37

we now also have the fertilizer problem

00:20:40

and the acres coming out of production

00:20:41

problem and so food supplies are going

00:20:43

to go down even further and this is

00:20:45

going to become even more catastrophic

00:20:47

and so there's a scrambling going on

00:20:49

right now you know food prices around

00:20:50

the world as a result everyone starts

00:20:52

buying up all the commodities they buy

00:20:53

up all the corn they buy the soybeans

00:20:55

they buy up the wheat and the price for

00:20:56

corn has nearly doubled whereas you know

00:20:59

from where it was in july of 2020 uh the

00:21:02

price of soybeans the price of wheat are

00:21:03

all skyrocketing and in a lot of

00:21:06

countries they cannot afford to um

00:21:09

acquire and individuals cannot afford to

00:21:12

uh to buy food with the skyrocketing

00:21:14

commodity prices can ask you a question

00:21:16

uh

00:21:17

i think it's estimated that the u.s food

00:21:19

supply

00:21:21

if you could x out the waste would

00:21:23

actually feed most of the developing

00:21:24

world because i think 30 to 40 of all of

00:21:26

our food is wasted can you do something

00:21:28

with that yeah that that is actually

00:21:30

true um a lot of that happens at the

00:21:32

point of consumption so it's in people's

00:21:34

homes so it's a reverse supply chain

00:21:36

problem um where you know we throw away

00:21:39

a lot of like stale bread and cereal

00:21:41

that goes bad or whatever

00:21:44

there's some in the fresh vegetables

00:21:45

market but generally the core calorie

00:21:48

producing commodities are rice

00:21:51

wheat potatoes

00:21:53

and corn

00:21:55

those commodities don't go bad in the

00:21:56

supply chain they end up getting tossed

00:21:58

out at the end of the supply chain which

00:21:59

is at the point of consumption at home

00:22:01

so you know i'm not sure there's a real

00:22:03

solution there right now the the bigger

00:22:04

issue is like how do you get bulk

00:22:06

commodities to the places that are going

00:22:08

to need them over the next 12 months so

00:22:09

look right now we're reducing food

00:22:11

supplies stocks around the world there

00:22:13

are strategic reserves that are getting

00:22:15

opened up and being released

00:22:17

as that starts to get the plenish um

00:22:19

diminished and as the production kind of

00:22:22

numbers start to come out it looks like

00:22:23

less acres are in

00:22:24

production you know and god willing we

00:22:27

have a good weather year everywhere this

00:22:28

year because you know a bad weather year

00:22:30

in some markets could completely

00:22:32

decimate the remaining supply that's

00:22:33

coming out this year regardless it is

00:22:36

going to be a humanitarian disaster

00:22:37

within a year and we will see hundreds

00:22:40

of millions of people go starving and

00:22:42

there will be potentially i think you

00:22:44

said hundreds of millions of people

00:22:45

hundreds of millions of people never

00:22:47

happened in the history of 100 million

00:22:49

people already live on below 1200

00:22:52

calories a year right now so you're

00:22:54

predicting that 100 over 100 million

00:22:56

people will die because of this i don't

00:22:57

know about death salmon like famine is

00:22:59

this like you know short of calories you

00:23:00

know within within a market it's not

00:23:02

like hey there's no food like you know

00:23:04

there will be strategic reserves

00:23:05

released there will be stuff but it

00:23:06

won't be enough we just don't have

00:23:08

enough in the way supply chains are set

00:23:09

up there just isn't enough and so so

00:23:12

once again we found another supply chain

00:23:14

weakness

00:23:15

uh like we did in covet over and over

00:23:17

again and so the free surprise will be

00:23:19

released

00:23:21

but then hoarding is starting so david

00:23:23

you take it after this but the one

00:23:25

question i had was maybe talk to me

00:23:26

about this concept of hoarding because

00:23:29

there seems to be a cascading effect and

00:23:31

you you kind of well yeah it's not just

00:23:33

a little bit as with any market guys as

00:23:35

you know

00:23:36

when there's scarcity people come in and

00:23:38

buy at a faster pace you know everyone

00:23:42

and so this is a market dynamic it's not

00:23:43

like people are physically hoarding

00:23:44

loaves of bread but commodity traders

00:23:48

countries strategic reserves they start

00:23:50

buying up what they can get to prepare

00:23:51

for the famine that's coming then prices

00:23:54

go even higher and then it kicks other

00:23:55

people out of the market that couldn't

00:23:56

afford to buy it and the whole thing

00:23:58

gets really ugly really and there's no

00:23:59

off ramp here there's no way to solve

00:24:01

this well what freeberg yeah the thing i

00:24:03

want to ask you is if we had a peace

00:24:04

deal right now a ceasefire would we

00:24:06

avoid this outcome i mean like how long

00:24:08

how long do we have to avoid we need

00:24:10

russia to reopen fertilizer export

00:24:12

markets now

00:24:14

we need natural gas prices to come down

00:24:16

now and we need them to plant the spring

00:24:18

wheat those are three things that need

00:24:20

to happen to solve this problem if those

00:24:22

three things don't happen we're going

00:24:24

into spring right now so around the

00:24:25

world in the northern hemisphere

00:24:27

farmers are making plans they're

00:24:29

planting they're deciding how much

00:24:30

fertilizer to use and so as this market

00:24:33

starts to kind of work itself out over

00:24:35

the next few months

00:24:37

a lot of the commodity traders and the

00:24:39

the ag departments they publish these

00:24:40

planting reports and they talk about how

00:24:42

many acres of what were planted and then

00:24:43

everyone forecast how much the supply

00:24:45

will be and we're going to start to see

00:24:46

these uglier numbers come out over the

00:24:48

next few weeks and months meanwhile

00:24:50

we're seeing supplies dwindle and russia

00:24:52

is holding all this stuff so you know

00:24:53

they're holding hostage uh phosphorus

00:24:57

potassium and the natural gas pricing is

00:24:59

just what it is remember there are

00:25:01

ammonia plants everywhere the ammonia

00:25:03

plants and i and all ammonia plants use

00:25:05

natural gas to create

00:25:07

you know to create this nitrogen-based

00:25:09

ammonia let me make a statement and i'd

00:25:10

love your reaction

00:25:14

we're finding out all of these

00:25:16

externalities that was made with

00:25:18

underlying

00:25:19

poor scientific ra reasoning that has

00:25:22

caused these issues to be exacerbated so

00:25:24

we know for example that our

00:25:26

over-reliance on russian hydrocarbons

00:25:28

could have been mitigated with nuclear

00:25:30

but we fell for shoddy science and we

00:25:32

fell

00:25:33

for uh a bunch of uninformed people who

00:25:36

ran this banner of like

00:25:38

environmental protection right

00:25:40

so they screwed us okay and those people

00:25:43

now have meaningfully less credibility

00:25:45

let me give you another cohort

00:25:46

freebergen you tell me all the people

00:25:49

that pushed back on gmo and said gmo was

00:25:53

unacceptable it could never happen it

00:25:55

has to be x y and z way

00:25:57

and there are ways where we could have

00:26:00

been working on

00:26:01

plants that had different mechanisms of

00:26:04

action in order to actually absorb and

00:26:06

retain nutrients from the soil in

00:26:08

different ways that would have made us

00:26:10

less reliant in exactly the way in which

00:26:12

fertilizer works true or false yeah gmo

00:26:15

technology

00:26:16

as a former monsanto executive so you

00:26:18

can call me a monsanto chill here

00:26:21

but

00:26:21

yeah gmo technology has been hindered

00:26:24

globally

00:26:25

by a challenge

00:26:27

to adopt it and there are techniques and

00:26:30

technologies that have not been

00:26:32

aggressively developed because of the

00:26:35

concern on approvals just to get a

00:26:37

single gmo trait approved in the united

00:26:38

states today and get it to market can

00:26:40

take seven to 13 years

00:26:42

and um even then you have to still go

00:26:44

get china to approve it because they're

00:26:45

the biggest importer and you have to you

00:26:47

know get all these other market

00:26:49

participants to approve it and there are

00:26:51

multiple agencies to get to approve it

00:26:53

europe is finally the eu is finally

00:26:55

coming back to the gmo problem and

00:26:57

saying you know what precision gene

00:26:58

editing can actually be beneficial to

00:27:00

growing better more stuff

00:27:02

now would it have solved this particular

00:27:04

crisis

00:27:05

can i just say what's so ridiculous

00:27:06

about this the fact that we have a

00:27:08

modern agrarian economy is because we

00:27:11

actually did figure out a way to do gmo

00:27:13

except we use the punnett square and we

00:27:15

use successive iterations but the minute

00:27:18

that you try to scientifically scale it

00:27:19

in a lab all of a sudden that same

00:27:21

process

00:27:22

is not uh does not make any sense to me

00:27:25

that's

00:27:26

it's just intellectually so inconsistent

00:27:28

yeah the thing that really scares people

00:27:30

about gmo look i mean i've spent a lot

00:27:31

of time on gmos and and the reason

00:27:33

people are upset i have a broader

00:27:35

philosophical do you believe in that do

00:27:36

you believe in that in consisting that

00:27:37

intellectual inconsistencies like how do

00:27:39

you think somebody from you know pre-bc

00:27:41

to today i think that agriculture

00:27:43

iterated on our roots no i think

00:27:45

agriculture itself is technology think

00:27:47

about it humans humans used to go out

00:27:49

and just eat whatever was lying around

00:27:50

what nature gave us then we started

00:27:52

making rose in the ground and putting

00:27:54

seeds in the ground and putting water on

00:27:56

the ground we engineered the earth to

00:27:58

make sure we started to breathe and then

00:27:59

we used plant breeding and traditional

00:28:01

plant breeding through enormous normal

00:28:03

energy save the world

00:28:06

modifying things it is and then what we

00:28:08

did with gmos which is the distinction

00:28:09

just to be really clear about the

00:28:10

definitional distinction between gmo and

00:28:12

traditional plant breeding gmo is when

00:28:14

you take dna from another organism and

00:28:16

you put it in the plant's dna to get

00:28:18

that plant to do something very specific

00:28:20

and jason you came with me to monsanto i

00:28:22

mean

00:28:23

you're sure

00:28:24

cautious we should be cautious about any

00:28:26

time we're doing stuff like that right

00:28:27

but

00:28:28

and then there's generally like a very

00:28:30

visceral reaction when i make that

00:28:31

statement and people are like wait

00:28:32

you're taking the dna from bacteria and

00:28:34

putting it in plants and how do i know

00:28:36

that's going to work and so there's

00:28:37

these layers of concern which you know

00:28:39

are deeply psychological layers but we

00:28:41

can you know scientifically resolve this

00:28:43

over time but look at the end of the day

00:28:46

humans today you guys remember last year

00:28:48

how much i was talking about that stark

00:28:50

synthesis paper and how important it was

00:28:52

we don't need to grow plants to make the

00:28:54

stuff we need to consume if every city

00:28:57

around the world had a starch

00:28:58

synthesizer and it took co2 from the

00:29:00

atmosphere and water from the ocean and

00:29:02

had this technique developed out it

00:29:05

could synthesize its own calories in a

00:29:06

physical device without needing to rely

00:29:09

on the ammonia supply chain and the

00:29:11

phosphate supply chain and all of the

00:29:13

systems that we rely on that are super

00:29:15

outdated that are all a scaled up

00:29:17

industrialized version of old-school

00:29:19

agrarian techniques humans today i think

00:29:22

have the ability to synthesize and print

00:29:24

food and over the next couple of decades

00:29:26

particularly catalyzed by what's going

00:29:27

on in russia ukraine today we're going

00:29:29

to see these technologies accelerate

00:29:31

it's obviously where i spend a lot of my

00:29:32

time but i'm super excited about it yeah

00:29:34

i think we suffer from a very insidious

00:29:37

kind of plague in the world which is the

00:29:40

plague of over-educated dumb people

00:29:43

and it's it's almost as if you know

00:29:45

because of their degree in the school

00:29:47

you give them inordinate power to make

00:29:49

value judgments

00:29:51

that really put the world in a very

00:29:52

difficult position and so when you have

00:29:54

something like a war in ukraine

00:29:56

it just lays everything bare

00:29:59

you find all these things like you know

00:30:01

another another version of this example

00:30:03

how did an entire continent and

00:30:05

specifically i mean europe

00:30:07

abdicate their entire energy security

00:30:10

to the group of it to a group of

00:30:11

environmentalists and to you know to a

00:30:14

16 year old girl

00:30:16

without even thinking about what the

00:30:17

right answer was for themselves from

00:30:19

first principles that's really crazy

00:30:21

that that happened and you need a war

00:30:24

you know where tens of thousands of

00:30:25

people have to die to realize that that

00:30:27

was a really bad set of decisions that

00:30:28

have been compounding for decades here's

00:30:30

another example where food security is

00:30:32

yet another one where you know we

00:30:34

weren't able to think cleanly from first

00:30:36

principles and so depending on who had

00:30:37

more money or who was able to create

00:30:40

more psychological guilt or fear

00:30:43

was able to get an outcome that

00:30:44

fundamentally puts the world

00:30:46

at a hundred million person plus famine

00:30:49

so somehow we need to rethink how our

00:30:51

institutions work because we are giving

00:30:53

folks

00:30:56

who haven't proved that they can handle

00:30:58

power the ability to influence outcomes

00:31:02

for the wrong sets of reasons what's

00:31:04

even worse tomorrow these people you

00:31:05

talk about who are smart dumb people

00:31:07

they're so privileged that they're

00:31:09

living in some bubble making decisions

00:31:11

for people who have food insecurity or

00:31:13

energy and security and it's only when

00:31:16

kovid showed hey oh semiconductors i

00:31:18

can't get my car that i want because it

00:31:20

doesn't have the chip in it or i can't

00:31:22

get drugs or i can't get ppe then all of

00:31:25

a sudden they see the value in

00:31:26

redundancy and supply chain

00:31:28

but when they were living high on the

00:31:30

hog and had nothing to worry about in 20

00:31:32

different flavors of captain crunch that

00:31:34

you know they can't even think about

00:31:35

people in africa jacob i think it's

00:31:37

really important to speak to the

00:31:38

capitalist incentive and how you get

00:31:40

there so okay we've globalized supply

00:31:43

chains because as a business it doesn't

00:31:46

make sense for me to do every step of

00:31:48

the thing that i want to do because you

00:31:49

can get better utilization out of capex

00:31:52

if a system is running all the time to

00:31:54

make stuff so if one step of the system

00:31:56

doesn't need the other system running 24

00:31:58

7 it's going to outsource that and

00:32:00

that's kind of think about like

00:32:01

semiconductors think about food

00:32:02

manufacturing right doesn't make sense

00:32:04

for a farmer today to make his own

00:32:06

ammonia so there's a pneumonia plant

00:32:08

that centrally makes that stuff 24 7

00:32:10

distributes it out to a bunch of farmers

00:32:12

that brings the cost down per unit of

00:32:13

production and so these systems have

00:32:16

existed because we've had less capital

00:32:18

with a higher roi on capital invested at

00:32:20

every point in the system by you know

00:32:23

distributing and having a kind of you

00:32:25

know centralized supply chain system

00:32:26

like this now

00:32:29

what we're looking at today is what

00:32:31

happens when one part of that system

00:32:32

fails and now i think the big trend for

00:32:35

the next decade or two everyone's going

00:32:38

to have like an institutional memory of

00:32:40

this and you're going to see companies

00:32:41

that are going to start to vertically

00:32:42

integrate supply chains they're going to

00:32:44

vertically integrate their their

00:32:46

manufacturing we're going to see a lot

00:32:48

of businesses make what traditionally

00:32:49

would have been really quote unquote bad

00:32:51

capex decisions and bad investment

00:32:53

decisions and they're going to say you

00:32:54

know what we need to have redundancy

00:32:56

because we cannot face the cataclysmic

00:32:58

kind of circumstance that we faced in

00:32:59

the past i also think those are by the

00:33:01

way the easy decisions i also think that

00:33:03

there are some more complicated ones of

00:33:05

morality that we

00:33:08

may have also misappropriated i'll give

00:33:10

you one example so

00:33:11

if you think about energy independence

00:33:13

of america i think there's there's not

00:33:14

going to be there's not going to be many

00:33:16

who think that it's not critically

00:33:18

important well

00:33:20

then you go and say we have a short-term

00:33:22

bridge with hydrocarbons and the

00:33:24

long-term solution is renewables but

00:33:27

underneath renewables is the idea that

00:33:29

you have to store these things right you

00:33:30

have to store the energy you make

00:33:31

whether it's from wind or solar even if

00:33:33

it's from nuclear okay

00:33:35

and all of that results in us needing

00:33:37

batteries while batteries need lithium

00:33:39

there's enormous lithium deposits in the

00:33:41

united states that today

00:33:43

can never get accessed because we've

00:33:45

decided that the you know the upper land

00:33:48

grouse of the state

00:33:50

is more important than america's energy

00:33:52

independence right so when push comes to

00:33:54

shove a small rat like creature is

00:33:57

prioritized more importantly than

00:33:58

america's energy independence the

00:34:00

downstream implications of that are now

00:34:01

obvious rising costs inflation

00:34:03

unemployment potential recession war

00:34:06

death famine

00:34:08

is the upper land growth

00:34:10

that fundamentally more important than

00:34:12

all of these systemic risks to humankind

00:34:15

and the thing is for a long time we

00:34:17

would never even think about the

00:34:18

trade-offs to actually think about why

00:34:20

that decision should be made that way

00:34:23

and now we actually have the ability to

00:34:24

remake these decisions so it's going to

00:34:26

be really interesting to see whether we

00:34:28

upend

00:34:29

all of these existing frameworks you

00:34:31

know and there's enormous environmental

00:34:33

lobbies that have been created that have

00:34:35

raised hundreds of millions billions of

00:34:37

dollars to fight these battles

00:34:40

systematically wherever they come up

00:34:42

and in some ways now what people will

00:34:44

say well you've really prevented

00:34:45

progress and you've actually done more

00:34:47

damage that's going to be a really

00:34:49

interesting point

00:34:52

good intent save the environment and

00:34:54

then downstream impacts let's go to sax

00:34:57

about the

00:34:58

sanctions we saw a level of sanctions we

00:35:01

didn't expect

00:35:03

they were ferocious they were unilateral

00:35:05

they

00:35:06

they're you know

00:35:08

undeniably having an impact do you think

00:35:11

putin would be at the table do you think

00:35:12

these sanctions

00:35:14

are having a dramatic impact and do you

00:35:17

think that there will be a tool that we

00:35:18

should use in the future or do you think

00:35:20

maybe

00:35:21

we need to be more thoughtful about them

00:35:23

in other words

00:35:24

cancer culture comes up as a an analogy

00:35:27

here people are saying oh it's like

00:35:28

cancer culture for a country i think

00:35:30

it's pretty great that a country that is

00:35:33

murdering their neighbors

00:35:34

doesn't get to participate but obviously

00:35:37

you could have some serious concerns if

00:35:39

fertilizer

00:35:40

and supply chain issues as we just

00:35:41

discussed are going to cause famine so

00:35:45

what's the balance here

00:35:46

yeah i think i think it's a great

00:35:48

another great example of um

00:35:50

you know

00:35:51

we're not thinking through the second

00:35:53

and third order consequences of what

00:35:55

we're doing we're just reacting and so

00:35:57

to to freeberg's point um

00:36:00

so you know first of all we have to

00:36:01

realize this was more than just

00:36:03

sanctions this was a complete severing

00:36:05

of economic ties i mean basically every

00:36:07

western country pulled up stakes

00:36:09

out of

00:36:11

they russia

00:36:11

mean they did it on their own too i mean

00:36:13

they did it because for the reasons you

00:36:15

said because they wanted to make a

00:36:16

statement that what putin did was wrong

00:36:18

so every russian who was working for one

00:36:21

of these companies basically got fired

00:36:22

and all the stores closed and and so on

00:36:24

so i think i think it is

00:36:26

the repercussions of it are going to be

00:36:28

severe however these things the

00:36:30

economics of it take time to play out

00:36:33

and so do i think it creates pressure on

00:36:35

putin to make a deal yes

00:36:37

but

00:36:38

you know if the if this is going to be

00:36:40

determined on the battlefield one way or

00:36:42

another in the next month do i think it

00:36:44

has time to operate

00:36:46

in that time frame

00:36:47

probably not and

00:36:49

i think what's likely to happen here

00:36:53

is that

00:36:54

in the same way that the real

00:36:56

repercussions

00:36:57

of this war are going to be felt in

00:36:59

grain production in six months

00:37:01

you know there is an economic tsunami

00:37:04

headed for our own economy as a result

00:37:06

of the blowback from basically

00:37:09

severing you know 144 million russians

00:37:12

from the global economy um there's also

00:37:15

going to be geopolitical uh blowback i

00:37:17

mean

00:37:18

you know

00:37:19

i think it's very likely that

00:37:21

the way this is going to play out

00:37:22

geopolitically is that russia will

00:37:24

become a chinese client and you know all

00:37:27

of those natural resources that china

00:37:29

produces

00:37:30

the the gas

00:37:32

you know all the the mineral wealth that

00:37:35

those resources are going to flow on a

00:37:37

conveyor belt on a belt and road

00:37:38

conveyor belt from

00:37:40

moscow to beijing and they're going to

00:37:42

fuel the chinese economy yeah yes and no

00:37:45

because the reality is the the the thing

00:37:48

we have to remember is china is still a

00:37:49

fundamentally

00:37:50

export-driven economy of which 35

00:37:53

percent

00:37:54

just alone goes to the united states

00:37:56

when you add in europe and other oecd

00:37:58

countries it's almost 60

00:38:00

so i think the idea that all of a sudden

00:38:02

you

00:38:03

russia will be able to back door all of

00:38:05

these things through china into the rest

00:38:06

of the world i think is not really

00:38:09

realistic and this is actually why i

00:38:10

think the rhetoric is so high

00:38:12

because those two countries specifically

00:38:14

are put in a very difficult situation

00:38:16

like what do you think the china

00:38:17

calculus on taiwan is looking what's

00:38:18

happening to russia

00:38:20

hasn't completely exported because it's

00:38:22

completely off the table completely off

00:38:24

the table they would never consider

00:38:26

invading taiwan knowing that it would

00:38:28

put apple in a position or other

00:38:30

companies that are entwined in the

00:38:32

chinese economy i think they would have

00:38:34

to again i've said this before everybody

00:38:36

has was always you know sort of like

00:38:38

land-basing economic sanctions you know

00:38:40

even on this pod people it's never going

00:38:42

to work it doesn't do anything

00:38:44

and it turns out it's just not true to

00:38:46

be clear i think sanctions are an

00:38:48

appropriate way to create economic

00:38:49

pressure so that we can get a ceasefire

00:38:52

and a peace deal made okay so i do

00:38:55

believe in the same way that i believe

00:38:56

we should arm the ukrainians so they can

00:38:59

defend themselves while i'm against the

00:39:00

no-fly zone the the issue is just are we

00:39:03

actually using the leverage that we're

00:39:06

creating

00:39:07

to drive this process to a success i'm

00:39:10

trying the ceasefire process to a

00:39:12

successful resolution because if we just

00:39:15

make this the new normal which is

00:39:18

you know a

00:39:19

basically an insurrection in ukraine

00:39:21

that drags on forever and uh the china

00:39:24

and russia cut off from the global

00:39:26

economy and becomes a client of china i

00:39:28

think there's a parade of horribles that

00:39:31

flow from that and freeburg just

00:39:32

outlined one of them which is hundreds

00:39:34

of millions of people across the world

00:39:35

potentially starving so

00:39:37

my point about sanctions is not that

00:39:40

we shouldn't have done them but

00:39:42

there are going to be big repercussions

00:39:44

for our economy if

00:39:46

we don't resolve the situation in

00:39:48

ukraine let's do best case worst case

00:39:50

with these new this new economic order

00:39:52

here in economic sanction ability that

00:39:54

the west has now demonstrated um you

00:39:57

know quite effectively

00:40:00

for me the best case scenario here is if

00:40:02

you want to participate in the global

00:40:04

economy and globalism globally

00:40:06

globalization 2.0 means you're going to

00:40:09

have to be hit some base uh behavior

00:40:12

level of being a good actor in the world

00:40:14

if you want to participate in the wider

00:40:17

economy

00:40:18

therefore as chamath just pointed out i

00:40:20

think quite correctly

00:40:21

taiwan's off the table i mean china does

00:40:23

already is having massive

00:40:26

economic downturn and headwinds the the

00:40:29

idea that they would face what russia is

00:40:31

facing right now in terms of sanctions

00:40:32

globally would be cataclysmic for them

00:40:35

so

00:40:36

do we think what's that what's the best

00:40:38

case in your mind friedberg the worst

00:40:40

case of this new economic sanctions that

00:40:42

we've just outlined best case worst case

00:40:44

much of this is driven by um

00:40:48

russian decision making not just our

00:40:50

decision making and so you know there's

00:40:53

a lot of question marks around what

00:40:54

they're gonna they've said

00:40:57

definitively

00:40:58

we are banning all fertilizer exports

00:41:01

through 2022

00:41:02

okay so like

00:41:04

does changing a sanctioned model at this

00:41:06

point get enough resolve for them to

00:41:08

kind of come back to the table do we

00:41:10

need to kind of weave that into some

00:41:14

discussion peace discussion that they're

00:41:16

having with ukraine i think there's

00:41:17

going to need to be this multilateral

00:41:19

like global either support or

00:41:22

partnership model

00:41:23

that's going to have to kind of emerge

00:41:25

for this to all get resolved positively

00:41:27

i don't think that it's just about

00:41:28

russia and ukraine agreeing to a bunch

00:41:29

of terms we're all going to be affected

00:41:32

by what's going on and what russia has

00:41:34

chosen to do back to us and we all think

00:41:36

we're in the power and we've blocked

00:41:38

them and destroyed the ruble and you

00:41:40

know knocked them back to the stone age

00:41:42

yada yada but like we're hurting

00:41:44

ourselves far more than we realize and

00:41:46

we have to go get something back from

00:41:48

russia in order to resolve this so

00:41:49

nuanced i'm not sure i totally agree

00:41:51

with that i actually think that you know

00:41:53

necessity what is it

00:41:56

necessity is the mother of invention

00:41:58

um i think that this has the ability

00:42:00

just circling back to what we said

00:42:02

before

00:42:03

for us to rewrite

00:42:04

all of these other decisions that were

00:42:06

frankly not necessarily rooted in either

00:42:09

first principles or long strategic

00:42:10

thought in a way that can actually

00:42:12

improve the state of play for everybody

00:42:15

not just including us for the next 50 or

00:42:17

100 years so i'm not completely

00:42:19

convinced that it's as catastrophically

00:42:20

bad as you think

00:42:22

well what about this uh friedberg if if

00:42:24

we were thinking about food stability

00:42:26

you mentioned your slurry and you know

00:42:28

being able to make these calories

00:42:30

without actually planting any food

00:42:33

if we it's not going anywhere if you

00:42:35

call it a slurry but yeah okay

00:42:37

let's call it a protein bar you know

00:42:40

like ultimately jason we can actually

00:42:42

create pasta bread rice i mean that's

00:42:45

where this all goes perfect by the way

00:42:47

just so you guys know i want to frame

00:42:48

this up it's super important 60 of the

00:42:50

world's calories come from carbohydrates

00:42:53

which are basically two molecules

00:42:55

amylose and amylopectin okay that's what

00:42:57

makes up starch so if we can synthesize

00:42:59

amylose and amylopectin we can make it

00:43:01

how long would it take how long would it

00:43:03

take what would it cost to build your

00:43:06

pasta making machine

00:43:08

and rice making machine you know uh to

00:43:10

have more decades-long scale-up problems

00:43:13

right this is not like this is like hey

00:43:15

we got a solar it's similar to nuclear

00:43:17

or solar exactly yeah yeah okay but

00:43:20

there are solutions to this i look i

00:43:22

mean this is why i keep coming back to

00:43:23

saying like we're evolving the global

00:43:26

economy and planet earth away from this

00:43:29

model of centralized industrial

00:43:32

manufacturing into a production system

00:43:34

that looks more distributed more

00:43:35

decentralized with better technology and

00:43:38

that that's really a big trend for this

00:43:40

century for for our global economy and

00:43:42

that's why right now i think the

00:43:43

near-term trend is in de-globalization

00:43:45

people making less capital-efficient

00:43:47

decisions that create redundancy in

00:43:49

supply chains and there's a lot of ways

00:43:50

as investors to play that by the way

00:43:53

sax were your thoughts on maybe the the

00:43:55

high order bit for the west being a race

00:43:58

to resiliency or a race to redundancy in

00:44:01

energy in semiconductors this race to

00:44:04

resiliency in food supply yeah i mean

00:44:06

look trade creates economic wealth but

00:44:08

it also creates dependency and we're

00:44:10

realizing the downsides of having that

00:44:12

dependency if we're dependent and or

00:44:14

europe is dependent on russian gas or

00:44:16

you know you saw during covid we've

00:44:18

become dependent on

00:44:20

chinese pharmaceuticals all the pharma

00:44:22

companies have moved their manufacturing

00:44:23

over there and then you know that got

00:44:25

when china was rattling the saber uh

00:44:28

because we were blaming them for covet

00:44:30

this is back in in 2020 they all of a

00:44:32

sudden started implying we might not get

00:44:33

access to pharmaceuticals so look we are

00:44:35

going to have to rethink all those trade

00:44:37

relationships you can't have trade

00:44:39

without trust because

00:44:41

again if you if you you are empowering

00:44:43

the producer to cut you off when you

00:44:46

make yourself dependent on that yeah so

00:44:48

so look i think we're going to rethink

00:44:49

all of that but can i go back to your

00:44:51

best case worst case question yes i was

00:44:53

trying to get somebody in there on this

00:44:54

i think that's a good question and you

00:44:56

know i hear here let me lay out the best

00:44:57

case and then the worst so the best case

00:44:59

look the best case

00:45:01

is this sort of the fukiyama argument

00:45:04

the sort of the from argument is this

00:45:06

western triumphalism which is luck

00:45:08

sanctions are going to drive the

00:45:10

russians into submission they're going

00:45:12

to topple putin the people are going to

00:45:14

rise up they're going to lose this war

00:45:16

we are going to strike a great blow

00:45:18

against autocracy and liberal democracy

00:45:20

is going to win okay i understand that

00:45:22

argument okay now what's the

00:45:24

the worst case scenario worst case

00:45:26

scenario is

00:45:29

freeberg's right we end up with hundreds

00:45:30

of millions of people starving the war

00:45:32

drags on because the russians aren't

00:45:33

gonna give up so the sanctions

00:45:37

you know while be while hurting the

00:45:39

russians don't end the war and in fact

00:45:41

drive them into the arms of the chinese

00:45:43

you know the russia has been called a

00:45:44

big gas station with nukes that gas

00:45:47

station will now fill up the chinese

00:45:48

economy henceforth

00:45:50

worsening the balance of power in cold

00:45:52

war ii

00:45:53

and then there's a big you know tsunami

00:45:55

or boomerang headed for the u.s economy

00:45:57

we we have a recession later this year

00:46:00

as gas prices go to seven dollars and

00:46:02

ten dollars a gallon

00:46:04

and so it ends up hurting us and

00:46:07

so

00:46:08

i don't

00:46:09

i i certainly see the case for sanctions

00:46:11

um

00:46:13

but um but i wonder if people are really

00:46:15

thinking through the downside scenarios

00:46:17

and

00:46:17

what i what i do think is that if

00:46:20

that that the removal of sanctions

00:46:22

should be certainly something we're

00:46:24

affirmatively putting on the table in

00:46:26

these ceasefire negotiations and and

00:46:28

that sounds obvious but i saw a tweet

00:46:30

from ian bremmer who's sort of part of

00:46:32

the foreign policy establishment

00:46:34

think tank guy who has been pretty good

00:46:36

on like smart he's smart and he's been

00:46:38

good on no-fly zone he's been saying the

00:46:40

same things i've been saying like guys

00:46:42

this is tantamount to a declaration of

00:46:43

war we're not going there uh also

00:46:45

basically saying that listen no matter

00:46:46

what the russians do we are not gonna

00:46:48

get into war three here he's been

00:46:50

cool-headed about that but he also

00:46:52

tweeted that listen as long as putin's

00:46:54

in control of russia we can't ever do

00:46:57

business with them again sanctions are

00:46:59

sticking around basically forever and i

00:47:01

just wonder if that is

00:47:05

an overreaction if if we're gonna make

00:47:06

that policy i'd rather see us

00:47:09

as america be willing to put economic

00:47:12

relations back on the table

00:47:14

as you know in this peace process as

00:47:17

opposed to saying that the russians are

00:47:18

cut off forever because otherwise

00:47:21

they're just going to become a chinese

00:47:22

client state i don't see how that

00:47:24

benefits us long term well again i did

00:47:26

but again david what do you think they

00:47:28

do with china china what are they going

00:47:30

to do take 60 percent of their goods and

00:47:32

still export them to us even though it

00:47:34

just contains russian materials that are

00:47:36

now considered contraband

00:47:38

so they can't absorb it economically is

00:47:41

my point there's not enough demand

00:47:42

outside these oecd countries to absorb

00:47:44

all of that

00:47:45

well

00:47:46

here's what i think it's just

00:47:48

mathematically not possible

00:47:50

i think so look i think you make a point

00:47:53

but i think if you're going to look at

00:47:54

this from like a 50 000 foot level i

00:47:55

think there's like two grand narratives

00:47:57

about what is happening in the world one

00:47:59

narrative sort of the neocon

00:48:02

sort of liberal hegemony narrative is

00:48:04

that we're in a great battle between

00:48:06

democracy and autocracy the other

00:48:08

narrative is that we're in cold war ii

00:48:10

is that it's more of a great power

00:48:12

rivalry between the us and china i tend

00:48:15

to think that the latter is where we're

00:48:16

really at in the world and the reason

00:48:18

why i say that is you look at there's a

00:48:20

lot of autocracies who frankly we

00:48:23

support because we want them on our side

00:48:25

for example

00:48:27

you know turkey is run by an autocrat um

00:48:30

you know erdogan is becoming more

00:48:32

autocratic

00:48:33

in egypt

00:48:34

we had sort of democracy there for a

00:48:37

brief moment

00:48:38

when mubarak got overthrown guess what

00:48:40

they elected the

00:48:42

um the muslim brotherhood and we didn't

00:48:44

like that too much and now we got

00:48:45

general al-sisi in charge we like that a

00:48:48

lot better

00:48:49

you know we are still allies with the

00:48:52

the saudis and they're they're a more

00:48:54

autocratic government so i tend to think

00:48:56

that you know

00:48:57

the better way to describe what's

00:48:59

happening in the world is a

00:49:01

balance of power rivalry between the us

00:49:03

and china which is only going to pick up

00:49:05

momentum in the current in the coming

00:49:07

decades and we have to think about who's

00:49:10

on our side of the ledger and who's on

00:49:11

their side of the ledger and

00:49:14

you know i think

00:49:15

at this point

00:49:17

it's we've pretty much driven russia

00:49:18

completely onto the chinese side of the

00:49:21

ledger and um

00:49:23

i think it's gonna have like very bad

00:49:24

consequences for us all right let's

00:49:26

segue from here into uh the economy

00:49:29

inflation and markets

00:49:32

in a previous episode chamath you talked

00:49:34

about the the psychological cycle of

00:49:38

you know ignoring good news then

00:49:40

accepting it being outraged by it and

00:49:42

then maybe not taking the good news

00:49:45

in the

00:49:47

bad news column obviously inflation

00:49:48

continues uh last six months of cpi

00:49:51

numbers year over year obviously

00:49:54

uh september 5.4 i'll fast forward to

00:49:56

november 6.8 january 7.5 february 7.9

00:50:00

excluding food and energy core inflation

00:50:02

still rose 6.4

00:50:04

that being said um we have

00:50:07

11.x million jobs uh available for

00:50:11

americans five or six million people

00:50:13

unemployed who are looking for work

00:50:14

obviously there will be some uh mismatch

00:50:17

in terms of geography and skills there

00:50:19

uh and then corporate earnings great but

00:50:21

a recession possibly looming where are

00:50:24

you on this uh and obviously the

00:50:26

market's bottomed out so where are you

00:50:28

at with the economy hope fear and

00:50:30

otherwise

00:50:32

um well i think that

00:50:34

we're in the midst of

00:50:36

what i would call a melt up so you know

00:50:39

probably the next

00:50:41

month month and a half

00:50:43

there really isn't much quote-unquote

00:50:46

bad news that hasn't been priced in the

00:50:48

the thing that i've learned over the

00:50:50

last few years is that

00:50:53

markets don't actually care what the

00:50:54

news is

00:50:56

they

00:50:57

they can process good news and bad news

00:50:59

equally well

00:51:01

what they despise is the uncertainty of

00:51:04

what the news could be

00:51:06

and so

00:51:07

this week was really important because

00:51:08

we had two um huge buckets of

00:51:12

uncertainty

00:51:13

taken out of the market so the one we've

00:51:15

already talked about which is when when

00:51:17

the market saw that there was a surface

00:51:20

area of a deal between ukraine and

00:51:21

russia

00:51:22

that was really constructive

00:51:24

because neither side would have signaled

00:51:26

something if both parties were very far

00:51:29

apart so that that meant to the markets

00:51:31

were a few weeks out from something

00:51:33

getting done

00:51:34

and then the second thing was jerome

00:51:35

powell and the federal reserve

00:51:38

they finally had their meeting they

00:51:39

raised rates 25 basis points but even

00:51:42

more importantly they gave you a very

00:51:44

prescriptive forecast

00:51:46

of what the next year will look like at

00:51:48

a minimum and possibly even two years

00:51:52

and once you could have that

00:51:54

you were able to then go and redo all of

00:51:56

your expectations and what people

00:51:59

realized was okay you know inflation may

00:52:02

actually start to get tamed in the back

00:52:04

half of the year

00:52:06

the economy is still quite strong uh and

00:52:08

we could actually support two two and a

00:52:10

half percent interest rates

00:52:12

and still actually grow really well and

00:52:14

so what you've seen in the last three or

00:52:16

four days is a reaction to

00:52:18

the loss of uncertainty

00:52:21

and so

00:52:22

there really isn't you know

00:52:24

uh

00:52:25

the only thing defying the ointment

00:52:26

could be if

00:52:28

the war all of a sudden escalates not

00:52:30

that it gets dragged on because at that

00:52:32

point that's also i think been priced in

00:52:34

but if something very meaningfully

00:52:36

different and some and and russia in

00:52:38

this case ratchets up the intensity

00:52:42

by going you know nuclear something else

00:52:44

although i think that's a very long tail

00:52:45

chemical weapon seems a possibility or

00:52:48

carpet bombing i think these are all

00:52:49

very very low probability events um but

00:52:52

in the absence of these things

00:52:53

you basically have really constructive

00:52:56

dynamics right now for at least the next

00:52:58

month and a half maybe even two months

00:53:00

how much of this has to do with retail

00:53:03

investors who were yolo huddlers

00:53:06

speculators stemi chats

00:53:09

super active for two years and then

00:53:10

maybe getting super spooked right now

00:53:12

and maybe needing the money to deploy in

00:53:14

their lives look the the thing to

00:53:15

remember and and and i hate to be this

00:53:18

blunt but it's true

00:53:21

retail is not a very good

00:53:24

signal of anything in fact

00:53:26

um if you actually look at retail flows

00:53:30

typically you will make money by doing

00:53:32

the exact opposite of what retail does

00:53:34

and i posted this in the group chat to

00:53:36

you guys you know

00:53:37

every single day of

00:53:39

since the beginning of this year

00:53:41

retail was a net buyer in all of those

00:53:44

days the market got punched in the face

00:53:47

finally at the beginning of march retail

00:53:49

capitulated

00:53:51

right and i posted that same day and i

00:53:53

said guys this is the moment to buy

00:53:55

and it lo and behold what happened the

00:53:57

markets rallied meaningfully from that

00:53:59

point

00:54:00

and the reason is because they were

00:54:02

going into the end of q1 you have a huge

00:54:04

tax bill due in april 15th people were

00:54:07

starting to just finally give up they

00:54:08

were buying every single day and they

00:54:10

finally gave up but that capitulation

00:54:12

was the moment that you buy so if

00:54:14

anything retail is is is the you know

00:54:17

you know i've said before you fade your

00:54:18

faith list

00:54:19

you know retail flows are something you

00:54:22

typically will make money by fading by

00:54:24

doing the exact opposite of whatever

00:54:25

retail is doing

00:54:26

um and you just need to have access to

00:54:28

that information if you have access to

00:54:30

it you can kind of

00:54:31

um you know profit from it so

00:54:35

where are we going from here probably up

00:54:36

david you've been pessimistic uh we're

00:54:39

seeing a lot of changes in the private

00:54:40

market funding rounds taking longer a

00:54:43

lot of funds getting closed uh you know

00:54:45

venture funds that is

00:54:47

but seems like a lot more diligence is

00:54:49

being done the time mean time to closing

00:54:51

a deal has definitely extended massively

00:54:55

what's your batting strategy now as a

00:54:56

venture capitalist i think that there's

00:54:58

going to be a trickle-down effect of

00:55:00

what's happened in the market to

00:55:02

privates and the valuations are going to

00:55:05

go back to their pre-coveted levels i

00:55:06

mean ar multiples pre-covered we're like

00:55:08

20 not 100. so we're seeing a massive

00:55:11

repricing

00:55:13

of deals and that's going to continue

00:55:15

and i don't think it's just going to be

00:55:16

this like transient effect everything's

00:55:18

going to bounce back in a few weeks

00:55:21

on the public markets the defining

00:55:23

characteristic of these markets is

00:55:24

volatility i mean the vix which is the

00:55:25

measure of volatility is

00:55:27

at one of its all-time highs and so it's

00:55:30

true that over the past week we saw a

00:55:32

nice sort of melt-up or a rally

00:55:36

because

00:55:37

there was speculation about this peace

00:55:39

deal the financial times had that

00:55:41

article on the 15-point plan

00:55:43

chamath is right that if that peace deal

00:55:46

gets signed i think the market rallies

00:55:48

strongly because you know it went up

00:55:51

considerably just on

00:55:53

hopes that it might be signed but on the

00:55:55

other hand if this peace process falls

00:55:57

apart

00:55:58

i think the market will give back all

00:56:00

those gains and then some i think we are

00:56:02

nowhere near out of the woods on all the

00:56:05

risky scenarios that could develop from

00:56:07

this war

00:56:08

i think that if there is no peace deal i

00:56:11

think you can almost expect

00:56:13

russia to escalate in the war

00:56:15

they have said this is an existential

00:56:17

issue for them

00:56:18

i think that would mean at a minimum

00:56:21

you know heavy bombing of ukrainian

00:56:23

cities and then that will step up the

00:56:25

pressure even more on biden and

00:56:27

washington to get militarily involved

00:56:29

this situation could still spend out of

00:56:31

control so

00:56:32

you know i think in the absence of peace

00:56:34

deal and then finally we have all the

00:56:36

risks of recession we we definitely are

00:56:38

seeing a slowdown in the economy right

00:56:39

now and i think if this war continues

00:56:42

and we don't get the spring planning and

00:56:45

things keep you know deteriorating i

00:56:47

think we're headed for a very serious um

00:56:49

recession in this country i think we'll

00:56:50

go from slow down to recession so if i

00:56:52

were advising biden of course no one's

00:56:55

listening to me but if i were advising

00:56:57

biden i would be telling biden listen mr

00:57:00

president we are going to have a

00:57:01

horrible midterms in november and you

00:57:03

know we are going to have a really hard

00:57:05

time in 2024 if this war continues and

00:57:08

you know we head down into a recession

00:57:10

or any of the other catastrophes that

00:57:12

could happen we need to push for a peace

00:57:14

deal right now

00:57:16

and the u.s should be playing a

00:57:17

constructive role and we should be

00:57:19

applying pressure wherever we can to

00:57:22

make a deal because the broad contours

00:57:24

of this deal to jamaa's point have been

00:57:27

set

00:57:28

i don't think any of the details now

00:57:30

that we know look it's about crimea it's

00:57:31

about dawn bass about neutrality

00:57:34

none of the details that we're still

00:57:35

fighting over are more important than

00:57:37

getting a piece right now and if i were

00:57:40

in the white house i'd be singly pushing

00:57:42

for that

00:57:43

yeah it's uh it's complicated there the

00:57:47

the counter to that obviously is this

00:57:50

could be you know the beginning of the

00:57:51

end for putin and you know even if

00:57:53

that's a 10 chance or 20 chance the

00:57:56

possibility that in our lifetime you

00:57:58

know russia could have a leadership

00:58:00

change could be tremendous obviously

00:58:02

it's a coin toss which way it goes uh

00:58:04

but change could be i think

00:58:06

so look that's certainly in the cards

00:58:08

and um and look if somehow magically

00:58:10

putin got toppled and replaced with a

00:58:12

democrat that would be a wonderful thing

00:58:14

um

00:58:15

however

00:58:16

before it's rare but it happens yeah

00:58:18

well tell me when does it happen

00:58:20

uh east germany

00:58:22

right on the wall

00:58:24

yeah i mean that was a reunification

00:58:27

here's the basic problem

00:58:29

we understand the russians in the

00:58:30

russian system you've got all these

00:58:31

oligarchs are basically like bosses or

00:58:33

mob bosses and then putin's like the

00:58:35

boss of bosses right so what are the

00:58:37

odds if you take out the boss of bosses

00:58:40

that he's replaced with someone who's a

00:58:42

democrat versus the next biggest baddest

00:58:44

boss

00:58:45

um i think you know look that that's

00:58:48

certainly a possibility but my concern

00:58:50

is that when you play for maximalist

00:58:51

upside like that you're also taking

00:58:53

maximalist downside and a lot of people

00:58:55

have made this point that look if

00:58:57

putin's life is on the line he's going

00:58:59

to be more willing to do anything

00:59:01

and i think that the better approach and

00:59:03

you've heard people mention this idea of

00:59:05

the golden bridge from sun tzu which is

00:59:08

give your enemy a golden bridge to

00:59:10

retrieve i mentioned it so that he's not

00:59:12

fighting for his life

00:59:14

that was a really clever um

00:59:16

framework jacob i think yeah i think i

00:59:18

mean

00:59:20

if you guys went and created a tally and

00:59:22

i'm not trying to be debbie down here

00:59:24

but you know since the advent of the cia

00:59:26

the number of times that we have tried

00:59:28

to

00:59:28

incite regime change

00:59:30

and then the number of times it's been

00:59:32

successful what is that percentage i

00:59:34

mean we don't know because we don't know

00:59:35

how many times we've tried well we know

00:59:37

we know of many attempts yeah i mean

00:59:39

we've chased a lot of two outers which

00:59:41

every time we try it we either get the

00:59:43

same or worse so for example syria we

00:59:45

tried to get rid of assad he's still

00:59:46

there and now it's worse uh afghanistan

00:59:49

we tried it the taliban are back in

00:59:51

power well no but hold on we finished to

00:59:52

take it to the calculation is what if it

00:59:54

does change hold on iraq we got rid of

00:59:57

saddam and now we've handed that country

00:59:59

to uh iran on a silver platter the

01:00:01

ayatollahs control it

01:00:04

gaddafi in libya we got rid of him

01:00:06

because he was so horrible and now that

01:00:08

country is in chaos you've got to try

01:00:10

open air markets

01:00:12

we tried in um

01:00:14

in ukraine we tried in ukraine in 2014.

01:00:17

so our track record is not super good

01:00:20

yeah no i mean

01:00:22

i i think regime change

01:00:24

is like chasing someone out or something

01:00:26

you know if we're a company at some

01:00:28

point we would have been pipped for our

01:00:29

ability to do regime change

01:00:31

i don't i don't think it's a great

01:00:33

strategy i'm not necessarily advocating

01:00:35

for it but

01:00:36

i'm not saying that i'm saying whether

01:00:37

or not it's a good strategy i think that

01:00:39

we are particularly not good at it yeah

01:00:41

we need a performance improvement plan

01:00:42

on that front well we should just i

01:00:44

think we should just stop trying that we

01:00:45

shouldn't be going for a regime change

01:00:47

we should be this is a good question you

01:00:48

and i had this thing where i said you

01:00:50

and i are in sync that we both want to

01:00:51

contain dictators and maybe isolation

01:00:54

and you're like i'm not into isolation

01:00:56

so i think a definition of like what is

01:00:58

the strategy for containment

01:01:00

going forward post a peace deal with

01:01:02

russia

01:01:03

and isolationism you know i guess is a

01:01:06

bit of a trigger word and it's loaded

01:01:07

but well yeah i'm not an isolationist

01:01:09

next person i would describe my strategy

01:01:11

as selective engagement meaning that we

01:01:14

still engage internationally on behalf

01:01:15

of vital american interests in our core

01:01:17

interests but we don't stick our fingers

01:01:20

in the pie of the internal affairs of

01:01:22

all these countries all over the world

01:01:23

to try and foment regime change so for

01:01:26

example like what's an example of a

01:01:27

vital american interest i would say

01:01:30

standing up to to china in the sense

01:01:33

that we do not want them dominating asia

01:01:35

and becoming a pure competitor to the

01:01:36

united states that can then challenge us

01:01:38

all over the world so some more

01:01:40

pragmatists on it and that would be more

01:01:41

productive we can be isolationist with

01:01:43

north korea because there's literally

01:01:44

nothing they can do for us

01:01:46

and and look i would not be throwing

01:01:48

countries like turkey and egypt and

01:01:51

saudi arabia out of our coalition in

01:01:53

cold war ii because we don't like the

01:01:56

the nature of their governments and i'm

01:01:58

not saying i support autocracy i don't

01:02:00

know but the reality is dialogue is

01:02:03

reasonable because if you don't then the

01:02:05

other side will the foreign policy

01:02:07

playbook

01:02:08

is going to get fundamentally rewritten

01:02:11

after this russia ukraine war

01:02:14

in large part because of the

01:02:16

effectiveness of

01:02:18

government sanctions plus

01:02:21

corporate social responsibility whatever

01:02:23

you want to call that csr public

01:02:24

sentiment

01:02:26

or whatever you want to call it yes i

01:02:28

agree but the combination of these two

01:02:30

things has proved to be incredibly

01:02:32

effective

01:02:33

at setting the stage for

01:02:36

some sort of compromise or regime change

01:02:38

the spectrum of outcomes is there but

01:02:40

the point is that's an incredibly unique

01:02:42

set of circumstances where before we

01:02:43

never would have thought an economy that

01:02:46

large or a country that important on the

01:02:48

world stage

01:02:49

would ever have

01:02:51

compromised in the absence of military

01:02:53

intervention and i think that that's

01:02:54

important to think about as we think

01:02:56

about what our forward going china

01:02:58

policy looks like i think really like

01:03:00

the the importance of like the oecd

01:03:04

right the importance of all these

01:03:05

organized nations that consume from

01:03:07

china

01:03:08

uh becoming more organized now probably

01:03:11

makes more sense i said this before in a

01:03:13

tweet but the importance of the us

01:03:14

dollar has become completely primary

01:03:17

which has been an incredible benefit you

01:03:19

know benefit of what has happened

01:03:21

because of this war

01:03:22

you know very small silver linings in

01:03:24

the grand scheme of all this

01:03:25

humanitarian crisis but

01:03:27

those are going to be really important

01:03:29

things that the united states can seize

01:03:30

on so you know we may in some ways have

01:03:32

have had some diminished power in order

01:03:35

to facilitate peace in this truck in

01:03:36

this conflict

01:03:38

but the downstream capital that we could

01:03:40

accumulate by organizing these countries

01:03:42

more effectively i think could be really

01:03:44

important and then separately we have to

01:03:46

have a moral conversation in the united

01:03:48

states about all these things

01:03:50

like environmental laws like our

01:03:52

approach to agriculture that may have

01:03:54

been underrated absolutely yes with

01:03:56

faulty logic a little more pragmatism

01:03:58

would go a long way yes it would i'm a

01:04:01

little more pessimistic about our

01:04:02

foreign policy establishment and part of

01:04:04

the reason i say this is because i'm

01:04:05

very disappointed in the republicans the

01:04:07

republicans used to be the party a vital

01:04:10

national interest meaning america did

01:04:12

not get involved all over the world

01:04:14

unless we had a vital national interest

01:04:16

you just never hear them making that

01:04:17

case anymore it's all the way back to

01:04:19

sort of bush doctrine and you know as an

01:04:22

example they're all pushing for the

01:04:23

no-fly zone they're all pushing for the

01:04:25

delivery of the migs despite they want

01:04:28

war

01:04:29

just say the words they're weird i mean

01:04:32

those right wingers are crazy why are

01:04:34

they so not war i've been very critical

01:04:36

i mean i've been the war on this i don't

01:04:38

understand well

01:04:42

anxiety

01:04:44

i think i think there's two

01:04:45

possibilities i think is it free what is

01:04:46

it anxiety

01:04:48

yeah

01:04:49

and this is why i predicted war at the

01:04:50

end of last year but you know i think

01:04:52

that trying to be a great prediction

01:04:54

right look i've been i've been very

01:04:55

disappointed in the republicans and i

01:04:56

think i think here's what i think is

01:04:58

going on i think if any of those

01:04:59

republicans like say uh mitt romney or

01:05:02

something and look i think lindsey

01:05:03

graham is just a crazy sort of warmonger

01:05:05

but but you take someone like mitt

01:05:07

romney who's basically saying all these

01:05:10

um sort of more uh bellicose and

01:05:12

escalatory things if he was actually in

01:05:15

biden's shoes

01:05:16

i bet he'd be making the same decisions

01:05:19

as biden

01:05:21

because he would not want to risk war

01:05:23

three but it's such a cheap easy

01:05:25

partisan political attack to say that

01:05:28

biden is being weak and he's not doing

01:05:30

everything

01:05:31

at all i think history will look back

01:05:32

and think two things about

01:05:34

about this whole thing with it with the

01:05:36

american lens the first thing was

01:05:39

for whatever set of reasons we lost it

01:05:41

and we diminished some stature in the

01:05:42

world

01:05:43

as a perceived arbitrator and mediator

01:05:45

in these kinds of conflicts but

01:05:47

separately i do think biden has done a

01:05:49

very good job in seeing the forest from

01:05:51

the trees he held the line on military

01:05:53

intervention and he has really ratcheted

01:05:56

up the ability for others to impose

01:05:58

economic sanctions beside and behind the

01:06:00

united states and i think that will turn

01:06:02

out to be a master stroke i give him

01:06:04

credit and i think that that he deserves

01:06:06

to be acknowledged for that i'm going to

01:06:07

agree with you because i i think

01:06:09

the uh biden has done an amazing job of

01:06:12

just saying outright we're not going to

01:06:14

war we are not starting

01:06:16

to

01:06:20

i mean and sacks you've lauded them i

01:06:21

think that shows some intellectual

01:06:22

honesty on your part and to your point

01:06:24

there's a reason why we lost our

01:06:26

credibility these misadventures of

01:06:28

saxophonism in the middle east have been

01:06:30

disastrous we made huge mistakes and we

01:06:34

need to take a different approach i'll

01:06:36

give a trump a compliment he didn't

01:06:37

start any wars and if you look at every

01:06:40

president who came before him in our

01:06:41

lifetime

01:06:42

every time they start two or three

01:06:44

conflicts and he was like we're going to

01:06:45

have a no war policy and now he got by

01:06:47

and say we're not going to go to war

01:06:48

either this could be a tipping point and

01:06:50

our focus i think the ultimate checkmate

01:06:53

should be biden coming out and the eu

01:06:56

coming on saying we are going to start a

01:06:58

race to resiliency and here's how it's

01:07:00

going to look jason it's an incredible

01:07:02

point that you just made i just want to

01:07:03

reiterate it since reagan i can i can

01:07:06

explicitly point out

01:07:09

incremental conflicts

01:07:11

that the president of the united states

01:07:13

has approved and greenlit to get us into

01:07:16

since reagan so we've been we've been in

01:07:18

seven wars

01:07:20

we've been in seven wars since the end

01:07:21

of the cold war it's amazing the

01:07:22

american people trump was the only one

01:07:24

that did not start a new war right

01:07:26

before biden you want to know why

01:07:27

because he was a populist and the people

01:07:29

of the united states of america don't

01:07:30

want these crazy wars they are sick of

01:07:33

all these wars it is the foreign policy

01:07:36

establishment that is pushing for all of

01:07:38

these wars and listen why and obama the

01:07:41

same way obama let's just go back

01:07:43

obama beat hillary clinton for the

01:07:45

democratic nomination because he was

01:07:46

against the iraq war and she was for it

01:07:49

yeah obama had the right instincts on

01:07:51

ukraine he did not want to escalate the

01:07:53

situation remember in 2014 when they

01:07:56

took crimea he said america does not

01:07:58

have a vital national interest that

01:08:00

justifies us going to war he was right

01:08:02

the president that tried to incite

01:08:04

regime change it's it's right

01:08:06

you know why you want to know why

01:08:08

because

01:08:09

because the state department lifers you

01:08:11

know who institut who incited that

01:08:14

are under secretary of state

01:08:16

for russian affairs was victoria newland

01:08:19

who was a foreign policy advisor for

01:08:20

dick cheney and these people bull weevil

01:08:23

their way into the foreign policy

01:08:24

establishment they're in the think tanks

01:08:26

they're in the state department what did

01:08:28

you just use bull evil they they like

01:08:30

it's like

01:08:32

they are the permanent hold on a second

01:08:34

they are the permanent establishment of

01:08:36

washington the president's come and go

01:08:38

they stay forever yeah she was there

01:08:41

she was caught on a phone call basically

01:08:44

picking the new leader of ukraine after

01:08:47

a coup in 2014. she is she the one that

01:08:50

had that famous quote that said uh putin

01:08:52

[ __ ] putin was that he said no he said

01:08:54

he said yeah she said yas is our guide

01:08:56

basically picking yatsenyuk to be the

01:08:58

new leader and she said [ __ ] the eu when

01:09:01

the eu wanted to take a more temperate

01:09:03

approach okay okay look at william f

01:09:05

buckley here you going saks i think the

01:09:07

mistake biden made listen i think biden

01:09:09

has good instincts on this i think he

01:09:11

had good instincts last year in june

01:09:14

when he called for basically an

01:09:15

emergency summit with putin to dial down

01:09:18

the tensions and i think that summit was

01:09:20

successful so what happened okay the

01:09:23

intercept just had a great article

01:09:24

talking about how tensions ratcheted

01:09:26

down after that june summit but they

01:09:28

picked back up in october november what

01:09:30

happened between june and october i'll

01:09:32

tell you what on september 1st zielinski

01:09:35

met with biden in the white house and

01:09:37

the state department issued a joint

01:09:39

statement basically reaffirming that

01:09:42

ukraine would be part of nato they would

01:09:44

reaffirm military ties economic ties and

01:09:46

then on november 10th they published a

01:09:49

giant charter agreement between the

01:09:50

united states and ukraine that was

01:09:52

signed by blinken now look did i know

01:09:54

about this yes but this is the state

01:09:57

department agenda and it was on the

01:09:59

heels of this charter agreement that the

01:10:01

russians basically said they had reached

01:10:03

the boiling point

01:10:05

they basically delivered the ultimatum

01:10:07

to the us in december and precipitated

01:10:10

the crisis that preceded this war so my

01:10:12

point is just listen we have a state

01:10:14

department with its own agenda it loves

01:10:17

regime change it loves having clients

01:10:20

all over the world and inserting its

01:10:22

fingers in the pie and unless biden hold

01:10:25

on if unless biden stands up to his own

01:10:27

state department we will not get a

01:10:29

ceasefire and we will not get a peace

01:10:31

deal and that will be disastrous for his

01:10:32

presidency what i will say is um i think

01:10:35

biden has done a very good job

01:10:37

and uh i i know tony really well and i

01:10:40

think tony's trying to do the best job

01:10:41

he can i think he's done a pretty good

01:10:43

job all things considered as well that's

01:10:44

awesome

01:10:45

final thoughts here on uh

01:10:48

you know

01:10:49

a very difficult time period we're

01:10:51

living through the global order

01:10:53

is being restructured

01:10:56

it's

01:10:57

predictable i think again if you read

01:10:59

ray dalio's book which i recommended

01:11:00

heavily last year

01:11:02

um it's surprising how much of that

01:11:04

simple

01:11:06

um rubric uh is playing out uh today

01:11:10

exactly as that rubric kind of estimated

01:11:12

it would

01:11:13

um and you know the look i mean by the

01:11:15

way one way to think about the china

01:11:17

russia us dynamic you know you got a one

01:11:19

two and three player game theory number

01:11:21

one wants two and three to be at it

01:11:23

because then they'll you know end up

01:11:25

diminishing value number two wants one

01:11:27

and three to be at it number three wants

01:11:29

one and two to be at it and so we're

01:11:30

seeing that um

01:11:32

that multi-party game theory play out

01:11:34

right now

01:11:35

um and you know again based on that

01:11:37

rubric you could probably predict where

01:11:39

this is all gonna end up brilliant point

01:11:40

listen if you were to look at this from

01:11:42

the chinese standpoint they must be

01:11:44

loving what's going on loving it

01:11:47

old saying i think napoleon said it

01:11:48

never interrupt your enemy when he's

01:11:50

making a mistake why is china

01:11:52

so quiet right now well yeah because

01:11:55

they love their dreams

01:11:57

their dream is the us and russia

01:12:00

attacking each other yeah we have to

01:12:02

implement

01:12:04

energy independence

01:12:06

writ large

01:12:07

and we have to make sure

01:12:09

that it is very clear we have influence

01:12:11

amongst all these oecd countries because

01:12:14

if china takes one foot over the line we

01:12:17

have to have the ability to do to them

01:12:19

what we've done to russia economically

01:12:21

it's the only way in which we can

01:12:23

ratchet down all this tension and find

01:12:26

peace

01:12:26

yes the new war is the war on our

01:12:28

dependency on dictators we must must

01:12:31

must have a race to resiliency we're

01:12:33

going to talk about this and more at the

01:12:35

all-in summit

01:12:38

no more

01:12:39

may 15 16 and 17 all in summit miami

01:12:43

uh 500 of the 700 tickets are gone if

01:12:46

you want to apply for a scholarship you

01:12:47

can apply tell us how much you love the

01:12:48

show at the website just do a google

01:12:50

search for all in summit really excited

01:12:52

to announce keith reboy will be joining

01:12:54

us uh one of sax's besties a very

01:12:56

iconoclastic person we're going for

01:12:58

iconoclasts next up brian peterson

01:13:00

friend of the pod from flexport

01:13:02

talking about all these supply chain

01:13:03

issues

01:13:04

the number of speakers we're going to

01:13:05

have is going to be extraordinary brad

01:13:07

gerstner friend of the pod is going to

01:13:08

come talking about markets education joe

01:13:11

lonsdale is uh halfway in again another

01:13:14

iconoclastic controversial person and

01:13:16

then

01:13:21

we'll keep announcing more every week uh

01:13:24

apply for a scholarship if you like and

01:13:26

uh we'll see you all there for love you

01:13:28

guys sultan of science the rain man and

01:13:30

the dictator i'm jake al

01:13:32

love you besties bye bye bye best love

01:13:35

you sacks love your socks love you free

01:13:37

bird back at you those are good feelings

01:13:39

for you to have

01:13:41

let your winners ride

01:13:44

rain man david sacks

01:13:48

and it said we open source it to the

01:13:50

fans and they've just gone crazy with it

01:13:54

[Music]

01:14:11

we should all just get a room and just

01:14:13

have one big huge orgy because they're

01:14:14

all just useless it's like this like

01:14:16

sexual tension that they just need to

01:14:17

release

01:14:18

[Music]

01:14:22

your feet

01:14:25

we need to get

01:14:26

back

01:14:29

[Music]

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Episode Highlights

The War in Ukraine
An update on the ongoing conflict reveals significant casualties and uncertainty.
“Putin clearly miscalculated; this has not been a cakewalk.”
@ 04m 01s
March 19, 2022
Food Supply Crisis
The war's impact on global food supply could lead to widespread famine.
“15% of the world's calories come from wheat; a third from Russia and Ukraine.”
@ 17m 05s
March 19, 2022
Fertilizer Prices Skyrocket
The price of nitrogen-based fertilizer has surged from $200 to $1000 per ton due to natural gas prices and geopolitical issues.
“It's five times as expensive to buy basic ammonia fertilizer today.”
@ 19m 25s
March 19, 2022
Global Food Supply Crisis
Farmers are pulling acres out of production due to skyrocketing fertilizer costs, leading to a potential food supply crisis.
“Food supplies are going to go down even further and this is going to become catastrophic.”
@ 20m 45s
March 19, 2022
The Need for Rethinking Institutions
The current crisis highlights the need to rethink how institutions operate and make decisions.
“We need to rethink how our institutions work.”
@ 30m 51s
March 19, 2022
Economic Tsunami Ahead
The repercussions of severing ties with Russia will create significant economic challenges globally.
“There's an economic tsunami headed for our own economy.”
@ 37m 04s
March 19, 2022
The Role of Sanctions
Sanctions can create necessary economic pressure for a ceasefire and peace deal.
“Sanctions are an appropriate way to create economic pressure.”
@ 38m 48s
March 19, 2022
Retail Investors' Influence
Retail investors often signal market trends, but doing the opposite may yield better results.
“Retail is not a very good signal of anything.”
@ 53m 21s
March 19, 2022
Massive Repricing of Deals
The venture capital landscape is undergoing significant changes with a massive repricing of deals.
“We're seeing a massive repricing of deals.”
@ 55m 05s
March 19, 2022
Reassessing Regime Change
Discussion on the effectiveness and consequences of regime change strategies.
“We should just stop trying for regime change.”
@ 01h 00m 41s
March 19, 2022
Dependency on Dictators
Highlighting the need for energy independence and resilience against authoritarian regimes.
“The new war is the war on our dependency on dictators.”
@ 01h 12m 28s
March 19, 2022
All in Summit Miami
Join us for an exciting event in Miami on May 15-17!
@ 01h 12m 39s
March 19, 2022

Episode Quotes

Key Moments

Podcast Episode 7200:45
War Update02:46
Skyrocketing Prices19:25
Institutional Reassessment30:51
Sanctions Discussion38:48
Retail Investor Trends53:21
Global Order Shift1:10:53
Love You Besties1:13:32

Words per Minute Over Time

Vibes Breakdown

Podcast thumbnail

01:41:58

E84: Markets update, crypto collapse, Russia/Ukraine endgame, state of the podcast

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37:59

E76.5: Food shortage, China's grand plan, inflation, French election plus an All-In Summit preview

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01:35:54

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

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February 24, 2023

01:31:32

E117: Did Stripe miss its window? Plus: VC market update, AI comes for SaaS, Trump's savvy move

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01:36:18

E73: Late-stage VC markdowns and mistakes, market strategy, Ukraine/Russia update with Brad Gerstner

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01:56:25

E118: AI FOMO frenzy, macro update, Fox vs Dominion, US vs China & more with Brad Gerstner

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November 03, 2023

01:28:38

E152: Real estate chaos, WeWork bankruptcy, Biden regulates AI, Ukraine's “Cronkite Moment” & more

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01:39:11

E74: Market update, inverted yield curve, immigration, new SPAC rules, $FB smears TikTok and more

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01:33:32

E134: Ukraine counteroffensive, China tensions, COVID Patient Zero, RFK Jr reaction & more

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01:35:26

E85: SBF's crypto bailout, Zendesk sells for ~$10B, buyout targets, US diplomacy, AlphaFold & more

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February 05, 2022

01:38:57

E66: $FB's big drop, Rogan/Spotify mess, Xi/Putin meetup & supply chain issues with Ryan Petersen

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February 25, 2022

01:11:18

E70: EMERGENCY POD! Russia invades Ukraine: Reactions, Putin's ambition, Biden's response and more