00:00:00
So, uh, Gavin, were you at the Coldplay concert in Boston last night?
00:00:05
Uh, sadly I missed that. It's amazing. Exactly. I was at home with my wife, but
00:00:12
yeah. Wow. How insane. There's just so many layers to that story. It's impossible to get away from.
00:00:18
It'll be 72 hours of memes. Dave, um, were you at the Cold Play concert in
00:00:25
Boston last night? And if so, were you with Woody, your astronaut friend?
00:00:30
Did you take Woody to the concert? No, counselor. I was here in Santa Cruz last night.
00:00:36
You were in Santa Cruz on a business trip. The funny thing is, if they had not
00:00:41
reacted the way they did, the camera would have just panned away. Yeah. Nothing. No one would have ever known.
00:00:47
There is some great irony to the head of people and human resources being in an
00:00:52
affair with the CEO apparently. Allegedly. Don't take conclusions, Jason. No, it could have. I
00:00:58
He could have been cracking her back. You know, like when you get your back tight chiropractic Yeah. chiropractic move.
00:01:05
Oh my god. Let your winners ride.
00:01:11
Rainman David. We open sourced it to the fans and
00:01:17
they've just gone crazy with it.
00:01:23
All right, let's get to work. It is uh the slow slow news weeks of summer and
00:01:29
we are delighted delighted to have fan favorite super intelligent bestie Gavin
00:01:35
Baker with us from a treaties. How are you sir? How's your summer shaping up? Fantastic. Um it's been awesome.
00:01:42
Stock market is back. That's good for you because you invest in both public and private companies. Yeah,
00:01:49
my firm does. Yes. Yeah. Gavin, let me ask you a question. How do you price tariffs today? So, where do
00:01:55
you think this ends up? Obviously, there's a lot of back and forth and you know, everyone's trying to make a read
00:02:01
on what the endgame is. What's your market take as you're making investments right now and where we end up on the
00:02:06
tariff front? It is a good question. It's it's open. We're going to see what happens with
00:02:12
sectoral tariffs. I think it's it's hard. You're doing the winning AI
00:02:17
summit. It's going to be hard to win in AI if we put um tariffs on semiconductors.
00:02:22
But for a lot of what I do for now, tariffs are not super relevant. But, you
00:02:29
know, for for the market, for the economy, they are relevant. But for AI, they're maybe a little less relevant
00:02:34
because I think everyone is is maybe a little more sophisticated about the downsides of tariffs for constructing
00:02:41
data centers here in the United States. Mhm. And ultimately, don't we look at the tariff situation
00:02:48
and say despite the shock and awe of the opening salvo, it's quite a boring
00:02:56
position now. It just seems to be reciprocity and reasonable reciprocity
00:03:02
at that. Yeah, that's how we would sort of categorize the endgame here. I would say for everyone but China. Um,
00:03:08
you know, it is and you know, we've clearly reached some sort of deal with China. you know, rare earths for H20s
00:03:15
and MI308Xs. But it's interesting and one of the the
00:03:20
trade deals that has been finalized is Vietnam, and there's a special carveout for goods that were trans shipped from
00:03:26
China through Vietnam. So, they are clearly focused on China more than
00:03:31
almost any, you know, any other country, rightly or wrongly. But yeah, and I do think there is,
00:03:39
you know, there was maybe three months where where Trump said he did not care about the stock market, but
00:03:46
now he's back to quoting the market at all-time highs. Yes, he clearly cares and is clearly very
00:03:52
sensitive to market feedback. So, I think that that will be a um
00:03:57
dampening mechanism on tariff volatility.
00:04:02
But, you know, they passed the bill and he immediately went back to tariffs and, you know, we'll see where we land in
00:04:08
August. But I just think the most important thing in the market by far is AI. It kind of overwhelms everything
00:04:14
else. Absolutely. And, uh, I guess the other big story with the market, and we'll get
00:04:20
into the H20s. Uh David Sax will be joining us in a moment, so he'll be jumping in halfway through it, but let's
00:04:26
start with maybe this uh soft launch of the firing of Jerome Powell. On
00:04:32
Wednesday morning, Bloomberg reported that Trump was likely to fire Pal soon after talking with Republican lawmakers.
00:04:38
Shortly after that, the New York Times reported that Trump had actually drafted Pal's termination letter. Market
00:04:44
instantly reacted negatively, dropped 1%. Bond yields rose about 10 basis
00:04:49
points. You can see the blips here on these charts starting around 11:30 a.m. when the article was published. Poly
00:04:56
market reported Jerome Powell out as Fed chair in 2025 spiked up to uh 30% on
00:05:03
Wednesday before dropping back down to 20%. Trump uh quickly squashed these rumors. Markets rebounded and Trump said
00:05:10
we're not planning on doing anything regarding Pal. Some people speculating maybe this was Trump testing the market
00:05:16
reaction. As you talked about earlier, Gavin, he uh he does seem to care about the market as most presidents do. If you
00:05:23
remember, Trump nominated Pal as Fed chair November 2nd, 2017. And he has
00:05:28
gone on a tirade the last couple of months, calling Pal stupid, numbum skull, stubborn, low IQ, a knucklehead,
00:05:34
mentally average. It's a long list of descriptors of the person he placed. Pal's term ends May of next year. White
00:05:41
House officials have confirmed Trump is in the process of selecting his successor. Poly market says that could
00:05:47
be Kevin Walsh 22%, Kevin Hasset 19%, Scott Besson 15%. This hasn't actually
00:05:54
ever happened, right? We've never had a Fed share fired. But
00:06:00
we have inflation coming back a bit. If you all remember, there's a dual mandate for the Fed to keep unemployment low.
00:06:06
Check. That's pretty good. And keeping inflation under control. That's been going very well since our massive
00:06:12
inflation spike over the past couple years. And uh here we go. CPI ticked up
00:06:17
10% from 2.4 to 2.7% 30 basis point increase over May. So any thoughts,
00:06:25
Gavin, on these macro issues around inflation coming back a bit, the the
00:06:31
stock market at an all-time high and unemployment. If you believe the unemployment data,
00:06:36
and we've had a bunch of debates here about that, you know, how how correct is it being at close to an all-time low in
00:06:44
our lifetimes. Let's go macro. Yeah, I wouldn't
00:06:49
read too much into the CPI bouncing up a little bit. There's base rate effects, I
00:06:54
think, on a month-over-month uh basis. And if you looked at, you know, what what economists call core, super core,
00:07:01
different, you know, ways to maybe smooth out CPI, I think inflation is still
00:07:07
relatively contained as far as, but I mean,
00:07:14
a lot of very smart people are convinced that tariffs will lead to inflation. We'll see. There's certainly sound
00:07:20
theoretical arguments for why they will, but it does look like maybe the um overseas exporters are eating a little
00:07:27
bit more of the tariffs than than people thought that they would, which is which is good for US inflation. But, you know,
00:07:33
the combination of a very weak dollar and tariffs theoretically should lead to a little more
00:07:39
inflation. Firing pal, I worry that the market only went down
00:07:46
1%. I do think the market would go down quite a bit more if Trump did fire Pal.
00:07:52
I think it would be a mistake. I hope he doesn't do it and you know there are
00:07:57
very sound reasons for the Federal Reserve to be independent and I hope he does not read from that
00:08:06
trial balloon down 1% that that's all that would happen. Look, the world would continue spinning, America would go on,
00:08:13
but it would be a mistake. Freeberg, we have uh this idea that there would be a couple of rate cuts and
00:08:20
maybe we get monetary velocity going again. People will be able to take more loans out, invest more in business. But
00:08:26
with the stock market tearing it up, there's a lot of wealth being put into the system with the big beautiful bill.
00:08:32
There's a lot of spending in there as we've talked about here. Putting that aside, it feels like the economy is in really great shape. Chances of a rate
00:08:39
cut has now flipped. No change is now the favorite option for September. whereas a week ago the favorite option
00:08:46
was 25 bips. So this idea that we're going to cut or the Fed's going to cut that seems to be changing as well. So
00:08:53
your thoughts on the um the macro picture here? So I'm not sure like the
00:08:59
firing of Jerome Pal necessarily solves the US fiscal challenge which is rising
00:09:07
interest rates on the long end of the Treasury curve. So, if you look at the the 30-year Treasury yield over time,
00:09:15
and Nick, maybe you could pull this up while I'm talking, but as of today, we're at exactly 5% on the 30-year. And
00:09:23
you can see that this 5% yield, which is what the market is demanding the United
00:09:29
States government pay in order to be loaned the money to make the bill
00:09:34
payments that the US government has to make every year is the highest it's been. The borrowing cost is the highest
00:09:40
it's been since going all the way back to 2007 as of today. And I think this is
00:09:45
the real story for the United States. We have 36 trillion of debt. The average
00:09:51
interest rate we're paying on that debt today is 3.3%. That's the average of all
00:09:56
the treasuries that the federal government has issued, the Treasury Department has issued to borrow the money that it is using and has used to
00:10:03
pay all its bills. And if you look at the 5% number, that's a 1.7% hike.
00:10:10
At 3.3%, which is the current average rate we're paying across $36 trillion,
00:10:15
we're we have a run rate interest expense. So just the money we're paying each year and the interest of the outstanding debt is $1.2 trillion a
00:10:23
year. And if this spikes up to 5% from 3.3, we're talking about nearly $2
00:10:29
trillion a year in interest expense. And that number is only going to get bigger as we borrow more money each year and
00:10:35
the loan balance goes up, the outstanding debt goes up because we are still running a deficit. The government
00:10:41
is spending more than it's making every year. So the crisis that America faces
00:10:46
is a more profound fiscal crisis where the rates that we're having to pay are a
00:10:52
function of what the market is telling us. The market does not want to loan the United States money over a 30-year
00:10:57
period for less than 5% as of today. And so making adjustments to the short end
00:11:03
of the Treasury curve, making overnight loans cheaper, which is what the Fed can do, will stimulate the economy and make
00:11:10
more money flow easily because now you'll be able to borrow money overnight to do stuff like build a building and
00:11:15
then sell the building next week or next month or take out a car loan and pay it down and use your car to go drive for
00:11:20
Uber and grow the economy and other things. So the theory is that if we can, you know, drive rates down on the short
00:11:26
end of the curve, we'll grow the economy such that we'll be able to make those payments on the long end of the curve.
00:11:32
Um, but there comes a point where again, you're only going to be able to move the market so much until the more important
00:11:39
fiscal situations are going to be addressed, which is spending, taxation, and some of the
00:11:45
other key policy issues. So I think what the market is saying is it's not as much about Jerome Pal and frankly getting rid
00:11:50
of a prudent individual may be more challenging than it is beneficial when the real challenges facing the United
00:11:57
States need to be more hardily addressed. So I think that's my kind of take on this whole yeah go ahead Gavin build on it.
00:12:03
So point number one the 30-year has gone up since Pal started cutting rates. So
00:12:09
that is just empirical proof that what David is saying I think is right. And second,
00:12:17
the deficit has been a feature of American politics dating back to Ross Perau's,
00:12:24
you know, 1992 presidential run, his independent third party run. His independent third party run.
00:12:30
Here we go. But yes, but it the deficit never really mattered because interest
00:12:36
rates kept going down such that even as our debt grew, interest expense has kind
00:12:43
of a percentage of the government's budget stayed relatively low. Now that rates have gone up and don't seem like
00:12:51
they're, you know, going down anytime soon, the deficit does matter and it really
00:12:57
matters. And you can kind of run a a couple of scenarios, but like pick your
00:13:03
pick your metric. If the deficit kind of continues at current levels and we were to refinance
00:13:10
the debt at the prices that uh you know David was talking about,
00:13:16
you know, it's it's only a few years before spending on interest is significantly larger than spending on
00:13:22
Medicare and Medicaid or Social Security or the military. So, pick something you care about. But you know our current
00:13:29
course in speed it's it's in the not tooistant future where interest expense
00:13:34
is the biggest line item for the government and that is not healthy and that's why the deficit finally matters.
00:13:41
It's just that rates are higher. But the great thing is is there is a virtuous cycle here. Has you close the deficit
00:13:48
rates should theoretically come down and then those both feed on each other
00:13:55
to kind of help the problem. And it is possible. There's no silver bullet here,
00:14:00
but some combination of slowing government spending, extra revenue, and
00:14:06
you know, tariffs are effectively, we've never had a consumption tax here in America, which I think is a good thing
00:14:12
because consumption taxes are very regressive. But the reality is like even when Obama
00:14:19
controlled the House, the Senate, and was the most popular Democratic president of our lifetime, I don't think
00:14:24
federal government tax receipts, has a percentage of GDP got above 18 19%. So
00:14:30
that's kind of the ceiling. And it for income taxes alone, and
00:14:36
tariffs are really just a consumption tax that kind of insense domestic manufacturing. I mean, there's all sorts
00:14:42
of reasons they're bad ideas. You know, David Ricardo, the theory of comparative advantage,
00:14:48
100% correct. Free trade is a good thing. But introducing some sort of a
00:14:54
consumption tax, growing the economy a little bit faster through deregulation and slowing government spending.
00:15:01
I think there is a way out of this for America. Yeah. But it's important to find the way because the deficit finally does matter
00:15:08
after really never mattering in my political lifetime. It is interesting. We've never had to
00:15:13
worry about our debt. It was always manageable because it wasn't that large. And even when it got large, it wasn't compared to
00:15:19
GDP because the country was doing so well. We had the PC revolution. We had the internet boom. I mean, we've had
00:15:25
boom after boom after boom in efficiency that we've led the world. When these companies like Google or Apple take over
00:15:31
the world and all those tax receipts and income comes into our country, that does sort of um make you not look at it. I
00:15:38
guess I you know, I've been talking to you Gavin. uh not to make this super political, but both parties have proven
00:15:43
that they have no interest historically and in in the current one with cutting spending. It's just the nature of it.
00:15:50
So, we can sit here whether you're a Biden fan, Trump fan, put it all aside. Both parties love spending and they're
00:15:56
not stopping. One of our friends has proposed, hey, maybe in the midterms we have a couple of uh these House
00:16:03
positions, couple senators, maybe we try to flip them and create a new party that cares about this issue. What are your
00:16:09
thoughts broadly on that? If a couple of more Joe Mansion types were in the
00:16:14
House, the Senate, could this country maybe start to make this the um the
00:16:20
deciding issue? And maybe could we see some movement on the other two parties, some pressure on them by a third party,
00:16:27
an America party perhaps? Yeah. Well, I think a few things.
00:16:32
I do think there is room for a much more centrist party in America. you know, the way the primaries work,
00:16:40
it, you know, leads to more maybe extreme candidates
00:16:45
than anyone would actually want, you know, be being each party's candidate. I think a third party would
00:16:52
be helpful, you know, and you know, I think there's plenty of room for a party that is, you
00:16:58
know, kind of a, you know, fiscally conservative, you know, reasonably socially liberal,
00:17:07
pro-American energy production, all kinds of energy production,
00:17:12
including solar importantly. So, I think there is room for that. And
00:17:18
I think it is right that if you just target a few races, you can have a big impact. But I would just say, yeah,
00:17:23
humbly, I think the American party is a great idea. I just don't know that it is the highest
00:17:29
and best use of Elon's talents at this moment in time with what's happening
00:17:34
with AI. and just you know to the extent uh Elon
00:17:40
is a friend of the pod I just think staying focused AI Mars that might be
00:17:46
the highest and best use of his particular talent 100% hasn't that been the case for for some
00:17:52
time Gavin and anytime there's something whether it's Neurolink or Boring Company or some other new project that there's
00:17:59
these claims that this is a distraction away from the highest priority work that
00:18:05
should be I mean, is the political stuff unique? And then his point of view on the political stuff, just like it was with
00:18:11
Twitter, is that it's existential to society and civilization and our ability to function and to do, you know, to
00:18:18
achieve the progress that he aims to achieve and his core function. So obviously he is succeeding being the CEO
00:18:24
of many different companies but you know I think a big part of what
00:18:31
makes him kind of exceptional as a CEO is the perfectionism the drive and you
00:18:37
know politics is not a game of perfection it's a game of compromise so I am sure if he sets his mind to the
00:18:44
America party that he will succeed but I think there are other things for him to focus on and you know the Boring company
00:18:51
Neuralink. These are games of perfection. These are, you know, this is about engineering. This is about solving a
00:18:58
problem. It's not, you know, compromise in the art of the possible. So, I think
00:19:04
he would succeed. I just think that there are other things that maybe a
00:19:10
higher calling for him. Yeah. Yeah. I mean, and the the cost of being
00:19:15
away from his businesses this last time around, as he said very publicly, was severe. It was intense. And he's had to
00:19:22
really regroup. But we got this incredible news when Grock 4 came out. And I think we should maybe talk a
00:19:28
little bit here about what that big prize is. The big prize, I think, is most well, it's actually going to be an
00:19:34
open question. uh Freeberg, I think the big prize is whoever wins general intelligence, super intelligence or the
00:19:41
biggest cluster or the most power to power the biggest cluster that powers general super intelligence. So where do
00:19:48
we sit on the language models today, Gavin and Elon's recent,
00:19:55
let's just call it what it is. I mean, incredibly dominant release of Grock 4.
00:20:00
I don't think people expected that. They didn't expect him to be able to leaprog everybody. And and let's be honest,
00:20:06
people are leaprogging each other every four to six months. So I I fully expect Gemini will leaprog rock and open AI
00:20:13
will have their time in the sun again as well. But this was pretty impressive, right? I would say this is the biggest leaprog
00:20:20
we've seen in quite some time. And I think the benchmarks that matter are RKGI2 and humanities last exam where it did in
00:20:28
in the case of RKGI2 it's called semi-private which is important because it means that some of the questions were
00:20:35
held back because a criticism of these models is they memorize the answer and so RKGI2 it has not seen the questions
00:20:42
before and it did roughly twice as good as you know the state-of-the-art Google
00:20:48
open AI and anthropic models and then a humanity 's last exam, you know, we can call it 50 to 75%
00:20:55
that are, you know, exceptional humans score 5% on that. It scores in the 40s.
00:21:02
So, this is incredible progress. And I think it's worth mentioning this model was trained on Hopper. So,
00:21:09
this this model is probably about as far as you can take the last generation of Nvidia GPUs. the next models we see, you
00:21:17
know, Gro 5, you know, '05 from OpenAI, whatever they're going to call gym, the next Gemini,
00:21:23
they will be trained on Blackwell and I think that will be a really big step function. But I do think the ultimate
00:21:29
prize here is um artificial super intelligence. Like I think artificial general intelligence will create a lot
00:21:35
of economic value. But you know and you know maybe we will be able to work less as humans. But I think ASI artificial
00:21:42
super intelligence is what is really exciting you in terms of maybe you know being able to live longer you know
00:21:48
really kind of fundamentally kind of change the fabric of our lives. Can you take a stab at explaining that
00:21:54
difference in definition to the audience who they hear these terms and we kind of bundle them into either a transcendent
00:22:02
intelligence that we haven't seen before that we as humans can't comprehend. It goes beyond human intelligence or this
00:22:08
is the smartest human on the planet and where we are right now in this journey because I think these terms are all
00:22:14
getting muddled together and I think we have an interesting conversation here if we parse them. I think artificial
00:22:19
general intelligence, I would define it as an AI that can take economically
00:22:25
useful actions in a variety of domains and be better than the average human in
00:22:31
most domains, all domains. But that's very different than super intelligence.
00:22:36
You know, being, you know, being able to draft a contract, that's not super intelligence, but it is useful. Being
00:22:42
able to do a medical diagnosis, not super intelligence, but it is useful. you know, being able to book my travel,
00:22:47
so on and so forth. Super intelligence means exactly what you said that it is
00:22:53
smarter than any human. It has, you know, access to all of human knowledge. And I think one of the most interesting
00:22:59
questions is what will the economic returns to super intelligence be? And they are definitionally unknowable
00:23:06
because we have never seen super intelligence before. If as humans we have kind of um pushed the limits of
00:23:14
physics, biology, chemistry, the laws of the universe, then maybe the economic
00:23:19
returns to super intelligence won't be that high. But if super intelligence is curing cancer and inventing warp drives,
00:23:25
then the returns are going to be really, really high and it's fundamentally unknowable. Yeah. Okay. So, we're at general intelligence.
00:23:33
Hey, your lawyer, your tax, your accountant is going to go much faster. They'll have a co-pilot. This is all
00:23:38
going to be great for a business. Every business gets 10% more efficient a month. Seems like a reasonable bogey,
00:23:45
which means every 7 8 n months, every business is going to get twice as efficient at these kind of chores. Yeah,
00:23:52
I think that I wouldn't say that's a reasonable bogey. I think that might be a little aggressive. It's, you know, the
00:23:58
world the world always it's, you know, I think it's a a Bill Gates quote. You know the the world always changes less
00:24:05
than you expect over the next 1 2 3 years but way more than you expect over 10 years. Just takes time for
00:24:11
technologies to diffuse. You know maybe really nimble startups will see some of the gains you know that you were talking
00:24:17
about but I mean if we doubled productivity I mean that would be like an economic revolution.
00:24:23
I mean we're seeing it in programming. I I I for sure if you talk to the average developer, they I think would say
00:24:29
they're getting 5 to 10% better a month. Better being defined as faster shipping more code.
00:24:35
Rule of 72. Hey, you know, every year at least, you're going you're going to be twice as good. I think that actually
00:24:41
seems to be happening with developers. I think it is happening with software. I think software is the first area where
00:24:47
you've seen a real true kind of economic productivity impact
00:24:52
generalized. A lot of companies are having incredible success with AI for customer, you know, support for sales. I
00:24:58
think you see it more in startups than big companies, but it the impact it has had on coding is undeniable.
00:25:04
Freeberg, let me swing this around to you. We've got the super intelligence out there. We've got AGI out there.
00:25:11
One of the things Gavin said was by definition, you can't quantify the gains of super intelligence. That is the big
00:25:17
prize here. That's why people are putting this much money into these kind of data centers. Yeah. In your mind,
00:25:24
it's not just the general intelligence. That would be the silver medal. People are going for the gold here, not general
00:25:30
intelligence, super intelligence breakthroughs that we can't imagine. Am I Would you say that's a fair way to uh
00:25:35
sum up the massive interest in investing in these projects?
00:25:43
Yeah. I mean, I think there's something where everyone has identified this
00:25:50
asmmptoic return moment where if you get to that moment, you're limitless in
00:25:57
terms of the upside. Is there one winner? I don't know. I don't think so.
00:26:02
But I I would also kind of reframe this as being some binary condition that I think we're talking about it as being
00:26:09
quote general intelligence, super intelligence as being on a spectrum of
00:26:14
leverage towards complexity. M complexity meaning like I can do a
00:26:19
simple task like instead of writing a letter and putting it in an envelope and
00:26:26
having some guy carry it to my mom, you know, and she gets it the next day, I
00:26:32
can digitally get her that message instantly over email. That creates an incredible amount of leverage and solves
00:26:38
a lot of the complexity of getting her that communication from me. So if I as a human said I would like to harness
00:26:44
fusion power similar to what the sun uses to make energy and I want to do that on earth today we're in call it
00:26:51
year 40 or 50 of a research cycle of humans trying to solve that particularly
00:26:57
complex problem. It's a scientific problem. It's a discovery problem. It's an engineering problem. And this idea of
00:27:03
super intelligence is that it could give us immense leverage in solving that complex problem
00:27:09
that we otherwise may be challenged to solve over decades or hundreds of years or think about one day solving a problem
00:27:17
that would take humans thousands of years to solve. I I don't think that humans are limited in our ability to solve problems. I think we're limited in
00:27:24
terms of time. And what intelligence what digital intelligence gives us is
00:27:30
leverage on time so that we can now tackle ever more complex tasks that as you think about these tasks the amount
00:27:37
of time isn't just an incremental one year or two years but it becomes a hundred years or maybe a thousand years.
00:27:42
So this relates to I think projects around physics, around chemistry, around
00:27:48
transportation, around biology where we're probably fundamentally
00:27:54
scratching the surface today and where the super intelligence is an enormous leverage creator for us. And so I don't
00:28:00
view it as some like species or race that independently persists in its own intentions. But it is a tool that
00:28:08
provides leverage in a way that is orders of magnitude greater than the leverage we got from yesterday year's
00:28:14
digital tools and probably today's AI tools and probably tomorrow's general intelligence tools is kind of how I
00:28:22
would I would think about it. And you know maybe it's because one model does so much stuff better than any human you can call it super intelligence. But I
00:28:28
think functionally leverage and into complexity is is where this becomes super compelling for humans. And it's
00:28:34
why I think we can and should be highly optimistic about living very long lives
00:28:39
and traveling anywhere we want and having abundance in food and having abundance in resources and having
00:28:45
abundance in recouping our time to do the things we want to do instead of the things that we have to do today because
00:28:51
we don't have access to this incredible leverage. So that's where I get kind of I love it. I think it's a great way to
00:28:57
look at it. But I want to go back to the silver metal here in this sort of competition. Gold being super
00:29:03
intelligence. We start solving fusion and really big problems on deep research cycles and the velocity of that goes up.
00:29:09
But just going back to the silver, you know, everybody in the economy becomes I don't know single digit. It's more
00:29:16
efficient every month and you know some amount every year. I've been trying to back of the envelope what I think the
00:29:22
value is for uh a human being in the west in the modern world
00:29:29
and what they should spend on AI per month. I've come up with a number of about 75 bucks somewhere in that range
00:29:38
is a nobrainer to spend on your AI per month as an individual working in the
00:29:44
world. If that's the premise, right, I think there's a billion people in the
00:29:49
developed world who could spend, let's call it a hundred a month. It's 1,200 a year. Doesn't take a genius to figure
00:29:55
out this is a trillion dollar in revenue based on market cap. That's probably 10
00:30:01
trillion in market cap. And then we just have to back into the spending of what it costs to build this. You're doing
00:30:07
these kind of calculations, I'm sure, at a treaties. Yeah. and and where this
00:30:12
general back of the envelope that I've come up with in my mind for a mental model that there's a $10 trillion prize, a trillion dollars in revenue just in
00:30:19
the silver medal, does that jive with the spending we're seeing today? I think
00:30:24
people are putting in 10 billion worth of equipment a year across five different companies, right?
00:30:30
Well, I think they're putting in quite a bit more than 10 billion per year um um each.
00:30:36
No, no, Google alone's doing 70 billion this year. each 70.
00:30:41
But is that is that 70 billion they're putting in this year going to be repeated for the next five years? So it'll be 350 billion
00:30:47
if you look at if you well yeah TBD the future is always uncertain but um you know if there are economic returns
00:30:54
to that they will keep doing it for sure. Something interesting is you know AI is you know as we've discussed in
00:30:59
previous all-ins extremely compute intensive and it's just at no point in
00:31:05
my career as a tech investor except the very beginning which was kind of the end of the PC wars which Dell won by being a
00:31:11
lowcost producer going direct cutting out the working capital you know the components and a PC depreciate so if you
00:31:17
have to go through a store um where where it sits on the shelves you're at a big disadvantage from you know either a
00:31:24
you know call it a cost or quality perspective. But at no point in the 25 years I've been a tech investor has
00:31:29
being the lowcost producer mattered. Being the lowcost producer is really going to matter in AI because um at some
00:31:38
level the amount of tokens you produce is intelligence because of test time compute um you know post-raining
00:31:44
reinforcement learning and so if you can produce those tokens at a lower cost you'll have a big advantage. You know,
00:31:50
if for that 75 billion or 30 billion or 50 billion that you're spending per year in capex, you can produce more tokens,
00:31:59
that is a profound advantage. I don't like your your calculations like just
00:32:04
has a back of the envelope, you know, kind of scratch. They seem
00:32:10
reasonable to me. the trillion dollars a year in revenue because of AI seems
00:32:15
quite reasonable when you frame it as a thousand dollars for a person to be
00:32:21
whatever 30 40 50% more efficient at work every year. Yeah. And it's just you we could
00:32:26
probably go back and look at kind of like the early days of you know cell phones and what were people willing to
00:32:31
pay relative to disposable income. Your PC analogy would actually be the perfect one. A PC at back in the that
00:32:38
era was what three $4,000 per person. and they lasted for 3 years. So it was exactly a thousand a year.
00:32:43
But this is why this is why creating such delineated distinction
00:32:48
between different types of AI is
00:32:53
is also like the equivalent of trying to create distinctions between other types
00:32:58
of technology. So the the automobile, the airplane, the telephone, the
00:33:04
computer, all of these technologies are tools that created leverage uh leverage
00:33:10
on things that were otherwise complexity and reduce them down to simplicity from a human perspective. pick up the phone,
00:33:15
make a call instead of giddying up on your horse and going across the country to deliver a message or using a computer
00:33:23
to do a spreadsheet that calculated everything for you rather than calculated by hand and so on and so
00:33:29
forth. like all of these tools reduce complexity to simple tasks for humans and the everinccreasing complexity of
00:33:36
what we can accomplish with digital tools is you know continuing in this kind of era now but that's why I think
00:33:43
it's very similar Jason like we this is not some new concept it's it's the continuation of human productivity it's
00:33:48
the continuation of the improvement of what humans can do what we can produce what we can and and yes there's a
00:33:54
concept now that intelligence has become such a like it's caught up to everything But and Gavin, I don't know if you think
00:34:00
that there is this concept of some moment of singularity, but it it does feel to me like there's just extraordinary leverage that's being
00:34:06
created that feels similar to Yeah, for sure that's true. I hope that's true. I hope your vision of it being a
00:34:14
productivity enhancer for humans is correct. You know, I do think, you know, people deep in AI
00:34:21
do think there's some probability that it goes sideways, but I hope I I hope that you're right. But coming back to to
00:34:27
JCAL's, you know, $10 trillion prize and, you know, relative to, you know, the market caps and the companies
00:34:33
involved, it it it needs to be at least $10 trillion. Something that I think is is interesting and and and relevant
00:34:40
particularly to Grock 4 being the best product is the best product doesn't always win in technology.
00:34:46
No. Yeah. Yeah. In sports, you know, they say uh defense wins championships and on the
00:34:53
internet distribution wins championships and Gro four has formidable competitors with lots of distribution and Google
00:35:01
and you know Meta if they get their act together Microsoft and so from an
00:35:07
industrial logic perspective something that I think makes a lot of sense particularly since OpenAI bought Johnny
00:35:13
Ives hardware startup which will place them into competition with Apple at some point is XAI and Apple are natural
00:35:21
partners. There's been a lot of news about Apple thinking about buying Perplexity or Mixedraw, but that's just
00:35:27
a band-aid. Those companies don't get Apple what they need. And Apple's had an incredible partnership for many years
00:35:34
now with Google that's generating tens of billions of dollars for both companies. And I think there is solid
00:35:40
industrial logic for a partnership. you could have Apple Grock, safe gro, whatever you want to call it, you know,
00:35:46
so that Apple feels comfortable and that probably also helps Grock in the enterprise and then it also helps both
00:35:53
Apple and Google with this DOJ trial. And so I think in this, you know,
00:35:59
incredibly high elo chess match that is being played between the leading labs
00:36:05
like that is that partnership makes a lot of sense for both companies. first time I've
00:36:12
heard anybody sort of make that natural connection. But you're right, Eric Schmidt and Steve Jobs at one point had
00:36:17
this discussion which was, "Hey, we've got search and you've got a browser now
00:36:23
because the iPhone didn't have a browser, you know, uh or you know, they could have built their own search
00:36:28
engine. They could have partnered with Yahoo, but they decided to make this long-term partnership with Google and man that dropped what, 20, 30 billion to
00:36:35
the bottom line at Apple and cemented Google's search franchise." Absolutely.
00:36:41
And right now that deal is being litigated by the DOJ and the DOJ is
00:36:46
considering remedies. And so if you bring on a really kind of effective,
00:36:52
credible AI provider, I think it could help both Google and Apple with their antitrust issues. And
00:36:58
at the end of the day, you know, Google, they have Android and their Pixel phones. OpenAI is making hardware.
00:37:05
Anthropic is kind of a captive of Amazon. Meta is kind of a um you know
00:37:13
they're they're in a death match with Apple. So I think there is really sound logic for that partnership. I think it'
00:37:19
be good for both companies. Love to see it happen. It feels to me like the interface is going to be the browser. I know this
00:37:25
sounds crazy but I've been playing with the comet browser from Perplexity. Did you play with it yet, Gavin? Or look at
00:37:30
some of the demos. Yeah. What are your thoughts here? because it's really and and then chat GPT just
00:37:38
launched a virtual desktop that pops up to go do your, you know, little
00:37:45
web-based scrapes, agents, assignments, whatever you I'm going to call it,
00:37:50
assignments, you know, homework, chores, go do your chores. What What are your thoughts on this modality?
00:37:57
Yeah, the browser is part of distribution winning championships. Apple has Safari, Google has Chrome, and
00:38:02
if you're not going to strike a partnership with one of those distribution channels, you will eventually need to do your own browser.
00:38:10
And you can extend that logic, you know, all the way, you know, that's why they Google, they did a browser, they did a
00:38:16
phone, but I also do think the um, you know, the companions from Grock have
00:38:22
been interesting to play with and they certainly make it more engaging that becomes the agent. It's a kind of
00:38:28
incredible, mind-blowing concept for that to be the interface.
00:38:33
All right, listen. Here we go. Calling in live. Got a breaking bestie coming on
00:38:40
board here. Uh, David Sachs calling in live. I I see the pale yellow paint uh
00:38:48
and an ancient building. You must be in some sort of wing of the great White House. Is that correct, David?
00:38:55
I am. Well, I'm actually not in the White House, per se. I guess I'm on the White House grounds. We're in the
00:39:00
Eisenhower Executive Office Building. That's where my office. I can tell from that I've been here.
00:39:06
Yeah. No, I they said great things. I And I checked my calendar. I'll I'll send you some photos. It's great.
00:39:12
Well, no, but the calendar's wide open between now and the All-Ins Summit. Allin.com yada yada. So, the windows
00:39:18
there, Sachs. The windows wide open. And I'll see you in the cafeteria, I guess. Play your cards right on stage next
00:39:24
week, Jake. And you might get invited after the the AI summit we're doing. Yes, absolutely. The AI event in DC next Wednesday, which
00:39:31
has been publicly announced, so it's going to be exciting. David, you uh you brought a friend today. Maybe introduce your friend and
00:39:36
tell us uh what you got done. What have you gotten done in the last week for the American people? They want to know what
00:39:41
because you weren't here last week doing the pod, so you must have gotten something done for the American people. Let's hear it.
00:39:47
Well, first of all, this is the Zar behind thesar, Bohe. Okay. He's the executive director of the
00:39:53
president's working group on digital assets. So that's the working group that
00:39:58
I chair, but he actually does all the work. He's the executive director and he's here every day. And um he's been
00:40:06
working on crypto pretty much non-stop since we started the administration.
00:40:13
and he's kind of the unsung hero within our operation here on these two
00:40:19
bills that just passed the house which are historic and quite momentous.
00:40:26
So, uh, Bo, welcome to the program and, uh, maybe you could tell us a little bit
00:40:31
about these bills and what they do for the American people. Yeah, well, first of all, David, you're
00:40:36
you're too kind. We've had a blast working together. I mean, we connected uh back in transition, I think in late
00:40:43
November, and we started mapping out a plan for this, and to see it come to fruition this week is is really like
00:40:48
it's unbelievable. Um the fact that we had the bipartisan votes we did today in the House um is remarkable. It's
00:40:55
unprecedented and it shows you that, you know, leaders on both sides of the aisle understand that our country has to be at
00:41:02
the forefront of this technological development. But let's start with genius because I think genius is really the foundation
00:41:09
for everything else we can build upon in this space. A lot of industry cares about market structure as do we and we
00:41:14
want to see it done on the president's desk as well. But genius is unique because it really updates the payment rails inside of our current financial
00:41:21
system. I mean the payment rails have been archaic and I've likened it to the fact of the ways in which we've communicated have changed quite
00:41:27
dramatically over the course of the last several decades. the ways in which we move money really haven't and we have
00:41:32
the technology there and blockchain technology. So what we're doing here is we're fixing
00:41:38
the plumbing of our financial system. We're securing US dollar dominance for decades to come. If you want to access
00:41:43
our capital markets, you're going to have to use a dollar back stable. You're also providing a pathway for, you know,
00:41:49
tokenization of public securities and 24/7 markets and the things that people have dreamed about for for quite some
00:41:55
time. This is a revolutionary piece of legislation and the fact that it had this much bipartisan support is
00:42:02
incredible. It's a testament to President Trump's leadership. It's a testament to our fantastic AI and cryptosar, David's leadership. I mean,
00:42:08
he's truly been the guiding star behind the ideology and what we're pushing here. And, you know, he has a phenomenal
00:42:14
team as well. I mean, I I'd be remiss not to thank Tracy who's David's chief of staff. I mean, in the midst of all
00:42:20
the chaos to get this done and like there was so many steps to this, we had to beat the banking lobby to get it
00:42:25
passed the Senate, then it moved over to the House in which we had to to to basically fight some members that that
00:42:31
really misinterpreted or misunderstood what this bill actually did. And the president stepped up. David stepped up
00:42:37
in the enormous way. It wouldn't have happened without either of them. And so now we have this bill heading to his
00:42:42
desk tomorrow. And to pivot to market structure really briefly, this provides like the rules of the road for the
00:42:48
exchanges, the brokers, everyone in the space, they desperately need it so that we can break down the wall between
00:42:54
traditional financial institutions and these digital asset players. I think that's that's well underway. Obviously,
00:43:01
you know, getting a vote as strong as they did in the House is indicative of what can happen in the Senate. If we deliver on these two pieces of
00:43:06
legislation, I mean, that's about 90% of what needs to be done for crypto to make the US crypto a capital of the world.
00:43:13
And, you know, it's it's just remarkable. I mean, we're we're over the moon. Okay, Saxs, you got these two things
00:43:19
over the finish line. Congratulations on that. Lots of compromises you had to make. So, I want to get into what were
00:43:25
the compromises to get this done. Just to clarify one thing when you say finish line. So, like Bo was saying,
00:43:30
there's two bills. There's the Genius Act, which is the stable coin legislation, and then there's the
00:43:36
Clarity Act, which is market structure. It's basically all the other tokens besides stable coins. Where we are is
00:43:42
that both passed the House today, but GDS has already passed the Senate, so it
00:43:48
is going to the president's desk tomorrow, and it will become law. We're doing a bill signing with the president.
00:43:54
By the time this pot is released, it will probably be law. I think we will have the the signing.
00:44:00
Clarity started in the House and so it has passed the House and now it's going to the Senate and they still have to do
00:44:05
their hearings and markup on it and we expect that'll happen over the next couple of months. In fact, the chairman
00:44:11
of the Senate Bank Committee, Tim Scott, has said that he wants to finish with
00:44:16
the market structure legislation by the end of September. So, if all goes well,
00:44:21
then we could be looking at a second bill signing in say October. And like Bose said, that would be
00:44:29
pretty much the crypto industry's wish list for having a clear legal
00:44:35
framework in the United States for both stable coins and other crypto tokens.
00:44:41
So, it's really pretty amazing. I mean, when I started this job, I'll just tell you, one of my friends in Silicon Valley
00:44:47
said that, you know, you may be able to get some AI things done, but you'll never get anything done on crypto. And and the
00:44:53
reason is because the entrenched interests are too powerful and they'll stop it. The banking lobby will stop it
00:44:59
or Elizabeth Warren will stop it or just all the status quo players who could get
00:45:06
disrupted by blockchain based technology will somehow find a way to stop it. And
00:45:11
that didn't happen. Like we've actually now move forward. Genius is about to become law. And I think Clarity is
00:45:18
looking like it's going to have the votes in the Senate as well become law. So, it's really pretty amazing how much
00:45:23
progress we've made in just 6 months. And like both said, this really comes down to President Trump's leadership. He
00:45:29
made the promises during the campaign to prioritize crypto, to make the United States the crypto capital of the planet. And it was his negotiating skills and
00:45:37
deal making that made this all happen. I mean, this past week has been a little bit of a roller coaster. There were
00:45:43
reports over the last couple of days that the whole thing was falling apart. And would it happen? There was a moment.
00:45:49
I think this has been publicly reported but give you some color on it is there were 12 members of the house whose votes
00:45:56
were necessary to advance the bill to this vote today and at a certain point
00:46:02
President Trump brought him into his office the oval office and worked out all the differences personally and
00:46:08
that's what put this bill over the top. If it wasn't for the president's direct involvement and action and understanding
00:46:14
of the issues, he listened to all the concerns and he paid attention to the ones that were real and then rebutted
00:46:20
the ones that weren't. If it wasn't for his direct involvement, we would not be here today. And he understands crypto. He's involved
00:46:28
in it. Is uh seems to have an understanding of the value of stable coins for the US dollar. That seems to
00:46:35
be a key motivator for this being bipartisan. you got a twice as many Democrats as you thought you would get.
00:46:41
Is that because people want to make sure the dollar supremacy gets locked in in stable coins as a way to do that?
00:46:47
Because you can't have a stable coin unless it's backed by a dollar. Yeah. I mean, like I've talked about on
00:46:52
this show before, it shouldn't be that hard to sell regulation to Democrats. I
00:46:57
mean, what we're doing here is providing a regulatory framework for the industry. They didn't have one before. And that's
00:47:04
why the number one stable coin player in the world right now is an offshore entity. They will have to come onshore
00:47:10
as part of this bill in the next 3 years. So what we're doing here is creating a regulatory framework. But the reason why it's substantially bipartisan
00:47:17
is because the industry wants this regulation because they want the stability it gives them in terms of
00:47:23
having that legal authorization. They want to make sure that if you know
00:47:28
4 years, 8 years from now, 12 years from now, whatever, there's not some new Gary Gendler who comes in and turns the whole
00:47:34
industry upside down because he doesn't like some aspect of what they're doing and he just starts prosecuting them, which is what the industry experienced
00:47:40
over the past four years with Biden's war on crypto. So, we meaning that the
00:47:45
Trump administration could fix the the Gendler issues just with agency rulemaking, and we're certainly on that
00:47:51
path to do that. But if you want long-term stability that goes beyond just this administration, you have to
00:47:57
get legislation, you have to canonize it into law. And that's why the industry was so interested in getting these bills
00:48:03
passed. So I think that's why you're seeing some bipartisanship here. Like both said, I do think that there's a
00:48:09
substantial number of Democrats who understand that this technology is the future and it's a positive thing for the
00:48:14
US. What could be bad about allowing digital dollars which extends the
00:48:20
dollar's dominance online so that it basically bolsters the dollar status as
00:48:25
the world's reserve currency over time as we get challengers from bricks for example this is going to make the US
00:48:31
dollar stronger and every time a dollar token trades somewhere in the world on a
00:48:37
crypto wallet there has to be a physical dollar in a US bank account invested in
00:48:43
a US treasury And that creates demand for our debt, which is another positive thing. And there have been studies done
00:48:48
that show that the results of this bill could be trillions of dollars of new demand for our debt, which is only a
00:48:55
positive thing. And if you don't allow a legal way to do this and you don't have a proper framework, you have you've been dancing
00:49:01
around this person who has three years to get their act together. That's Tether. I'll say it. You can type You
00:49:07
can do a search for Tether controversies or uh shenanigans and you'll find plenty of them. And I don't think it's fair to
00:49:12
say they don't have their act together. I think they have their act together. It's just that they did not know how
00:49:18
they'd be treated operating onshore in the US under Gary Gendler and the Biden
00:49:24
administration. And so they operated offshore and and and what was happening
00:49:29
under the last administration is that the last administration by creating all this uncertainty and doubt was driving
00:49:35
all the innovation offshore. Okay, fine. I They have a sorted past. That's my statement, not yours. But now
00:49:41
they have to clean up whatever messy stuff they have in their past. That's me saying it, not you. You can have your opinion. I'll take mine. But I we're
00:49:48
we're in agreement that if you don't have a framework, they would be doing even more things that were maybe off the
00:49:54
reservation of my mind. Gavin, any thoughts here on crypto? I'm not sure you've participated in it particularly
00:50:00
because it didn't have a framework. Yes, I would just say um one, David, congratulations. Seems like an
00:50:06
incredible achievement. two, I try to invest in areas where I feel like I I at
00:50:11
least believe I have some sort of uh competitive advantage and it's not clear to me that I have any sort of
00:50:17
competitive advantage in crypto. But three, David, I am curious for the stable coins. Is it does the Genius Act
00:50:24
limit them to dollarbacked stable coins? So, it's not like you can create the stable coin and then swap in something
00:50:31
other than a dollar. Is that is that true? Well, I mean, anybody can create a
00:50:36
stable coin that's backed by anything. And in fact, I think there are like euro backed stable coins out there, for
00:50:41
example, but nobody uses them. I think if you look at the stable coin market share, it's like 98% US dollars, 2%
00:50:48
euros, because there's a flight to quality. I mean, everyone wants to use the best one, right? And this is why
00:50:54
it's in the interest of the United States to basically enable this technology to continue flourishing is
00:51:00
because as the best fiat currency, we're the one that's going to get used the most. There's no reason to have multiple
00:51:07
fiat stable coins. Not really. So that this is going to acr to the benefit of the United States. Jake, I'll let me go
00:51:13
back to something you said. So I don't necessarily agree with your criticisms
00:51:19
of of that particular company, but where I I will agree is that this bill will provide additional comfort for consumers
00:51:27
and additional protection for consumers because now all the stable coin companies will have to operate in the
00:51:33
United States. They'll be subjected to quarterly audits and we will know that every stable coin that's been issued is
00:51:41
fully reserved or backed up by a dollar in a US bank account. And so therefore,
00:51:46
when a stable coin holder eventually wants to cash out and they go to basically an off-ramp,
00:51:52
the money will actually be there. Now, I'm not saying that the money isn't there with any of the current providers.
00:51:58
In fact, I think it is. But now consumers will have the additional
00:52:03
protection and confidence to know that all these entities have been audited.
00:52:08
They've passed these audits and they're regulated entities under US law. And that creates confidence for the market
00:52:14
and it's good for everybody and it will spread the adoption of this stable coin product.
00:52:20
And if they don't, they can't participate in our market, right? So that's the the good news here is, you
00:52:25
know, if you choose to not go through those audits and you do a test stations or other fugazi fugazi stuff offshore,
00:52:32
you know, not saying anybody's doing that, but people have, you know, then you just don't get to participate. And and this is the great thing about having
00:52:38
some basic rules of the road. We should talk a little bit here about infrastructure sacks. You were in
00:52:45
Pittsburgh this week. There was some announcements. This was another bipartisan win. I think Shapiro was
00:52:50
there. a bunch of investment going on there. Maybe tell us a little bit about the progress made in Pittsburgh with
00:52:58
regards to AI and infrastructure. This was a energy and innovation summit that was organized by the Pennsylvania
00:53:04
Senator Dave McCormack and his wife um Dina Pal McCormack and they did an
00:53:10
amazing job bringing together all of these different companies and interests that have a stake in energy in
00:53:16
Pennsylvania and and the development of AI. And Pennsylvania is I think it's the number two energy producing state in the
00:53:22
US. It has tremendous amounts of natural gas. They feel like they can expand that. I think there's been a lot of
00:53:28
fracking in the past there for example. They even have nuclear Westinghouse is there and it makes sense to have the
00:53:34
data centers near the power source, right? And so we know that these big AI data centers are going to be powered by
00:53:39
either natural gas or nuclear. And so Pennsylvania just makes a lot of sense as a place to build this AI
00:53:45
infrastructure. So this was a summit to announce new investment in Pennsylvania,
00:53:50
something like $90 billion. President Trump was there to keynote the summit and talk about these investments. It's
00:53:57
his policies towards energy that he started describing long ago. I mean
00:54:03
remember uh he made the campaign promise of drill baby drill. He's been talking about the need for energy expansion in
00:54:10
America for many years. And I think he was very far-sighted in seeing that
00:54:17
energy is the basis for everything. It's the basis for AI. It's the basis for all other kinds of growth. So by promoting
00:54:24
energy dominance, we also get AI dominance. And we've talked on this show before about how we're going to need that energy to power the electricity of
00:54:31
all these new AI data centers. So this summit brought together all these different groups. And the thing I
00:54:37
thought was really interesting, the thing I learned from it was just how diverse the business interests are that
00:54:43
are going to participate in this whole AI boom. It wasn't just big tech. Yes,
00:54:48
Ruth Porf from Google was there. It's also small tech. There was hardware
00:54:53
companies. There were robotics companies, but there were also these energy companies. There was nuclear. There was gas. The trade associations
00:54:59
were there. It's construction. It's electricians. It's carpenters. And so there's a huge diverse array of
00:55:06
different parts of the economy that are going to experience growth from this AI boom that's taking place. It's not just
00:55:12
a Silicon Valley thing. So that was what I took away from Pittsburgh and it was a really cool experience being
00:55:18
I thought there were two interesting notes as well. Hydro, I saw Google was investing in hydro and upgrading some
00:55:24
dams there. This is I think Gavin one of the great upshots of the AI boom is that
00:55:30
the AI companies whether it's Meta or Google they're so motivated that they'll
00:55:37
actually go and upgrade the infrastructure they'll invest in the you know small modular nuclear reactors that
00:55:43
are coming and uh even gas turbines obviously natural gas as a major part of this as
00:55:50
well and you saw that up close and personal with the buildout of Colossus. TI gam.
00:55:55
Yeah, absolutely. I mean, electrical production is fundamental to AI. If we
00:56:00
do not significantly increase kind of domestic energy production and electricity generation,
00:56:06
you know, we are already at a disadvantage to China and I do think we want to close that kind of electrical
00:56:12
generation gap as quickly as we can. You know, and natural gas is great,
00:56:18
nuclear is great, solar's great, batteries are great. We need it all. Yeah. all of it. And Sachs, I saw your favorite governor,
00:56:26
Josh Shapiro, was there and he was being very positive about finding common ground on energy, economic development,
00:56:34
and uh saying, "Hey, this is like a great example of bipart bipartisan efforts to collaborate." So maybe you
00:56:40
could talk a little bit about that because you had two great moments of collaboration between the Trump administration and the Democrats. This
00:56:48
is uh this is good for the American people. Yeah. both on the crypto project and on AI in Pennsylvania.
00:56:54
I've never met Shapiro. I did see him there at the event, but I didn't see him on the stage. I don't know if he was
00:56:59
part of the round table, so I don't know exactly what his status was. But what's interesting about Pennsylvania
00:57:04
right now is that it's a state that's turning red. And so you see that
00:57:10
Federman, who's probably the most right-wing member of the Democrat party in the Senate, and Josh Shapiro
00:57:16
obviously is tacking towards the center because they see the direction of travel in Pennsylvania. So yeah, I think you've
00:57:22
got some centrist Democrats in that state. Yeah, working out pretty well. Josh Shapiro every two days tweets
00:57:30
something about how he's deregulated something. He's made it easier to do business. Like he is he's on the
00:57:35
program. seems like a sensible man. Yeah, 100%. I'll just give a final shout out to Bo
00:57:42
here for all the work that he did on Genius. I mean, he's kind of the unsung hero. Bo, how are you uh how are you doing all
00:57:48
this while finishing up your degree? When do you when do you graduate from college? The kid looks like he's 20 years old.
00:57:54
How old are you, Bo? I have the baby face. I'm 29, turning 30 next month. Look at you. 29 in the White House
00:58:01
leading and working with David Saxs. This is a dream come true for you, huh? It is. I mean, David's been incredible.
00:58:07
I've learned so much from him. Just the way that he negotiates and the way that his his brain works. It's been it's it's been a blast just to be a part of it.
00:58:13
But I have a 10-month-old now, so I should have bags under my eyes uh from lack of sleep. But Jason, I'll make one
00:58:20
more point before I jump off on on the Tether topic. Like the one thing that I think your viewers should know is
00:58:25
this year they'll be the fourth largest purchaser of US treasuries. And I think that's something that, you know, we should really contemplate. You know, I
00:58:32
agree with David's sentiment on this. I'm excited to see what they do here in the US. I'm glad they're going to be a part of our system under the regulatory
00:58:38
regime, but so will everyone else. And I think that's a great thing for our country. It allows us to have control.
00:58:45
That's great that you guys are backing them up because they've been banned so many times by other governments. I'm glad you got their act together. I'm
00:58:51
going to I'm going to keep on those Tether guys until they get their act together. So, keep qualifying that you speak only for
00:58:58
yourself. I only speak for myself. I've been following that Tether story for a long time and I think it's great.
00:59:04
I want to make this point. I always know that our critics have never actually watched the pod when they start talking
00:59:11
about the all-in point of view on something, right? as if there's a singular point of view uh from the
00:59:17
all-in pod. Like, you know, it's like the all-in pros whoever think something when anyone who's watched the show knows
00:59:23
that we've been fighting like cats and dogs for years and there's four distinct points of view
00:59:29
and sometimes we agree, but there's almost always some disagreement. So, we we've disagreed about this issue. We
00:59:36
also uh Trump and I, as you know, are relentless supporters of Ukraine. We
00:59:41
believe we should be giving them weapons and support. And David, you happen to disagree with me and our president on
00:59:49
that. You've had a different position historically. So, here we are. I'm going to stay in my lane on that one.
00:59:56
David, can we talk about the H20s or would you rather not? cuz I feel like you have been like so dead right about
01:00:02
this and I am you know I it seems like the export um they're going to get the
01:00:09
licenses and that is 100% the right decision for America and I do give you
01:00:14
credit for championing that. I'm happy to talk about why I think it's great, but we're just, you know, can you frame it for a second for the
01:00:20
audience, Gavin, what we're talking about here, Nvidia obviously was banned from selling their latest and greatest
01:00:27
to China and even the last generation, the H20s, and obviously that creates u an opening
01:00:34
for Huawei and and other players to create competitor products as opposed to using the standards built here in
01:00:39
America. Yeah. Well, I think I mean I think you said it well, but first of all, it's not the latest and greatest.
01:00:45
is not the latest and greatest. We're not gonna I don't think we're going to let the latest It's not even the last gen. It's a
01:00:51
deprecated version of the last generation, right? Yeah. So, remnants.
01:00:56
It's a less powerful version of the Hopper chip and now they're on to Blackwell. So, it's Anyway, Gavin can
01:01:02
explain. Yeah, it is. It's many many years behind. But while it's many years behind the kind of state-of-the-art here
01:01:08
in America, it is I think kind of devilishly clever because let's call it two years ahead of kind of the chips
01:01:15
from Huawei. And so it kind of gives America an advantage while preventing
01:01:21
China from developing kind of a domestic and biddy alternative. And the real threat is cuz China they do have more
01:01:27
electricity. They can do things that we cannot do here in America. You know, the Blackwell racks are exquisitly designed
01:01:34
to be as power efficient as possible. If you don't care about power, you can make very different kind of design decisions.
01:01:41
Huawei has something called the Cloud Matrix 384, which uses fiber optics instead of copper to link the chips
01:01:47
together. And while it's not nearly as power efficient as the Blackwell and VL72,
01:01:54
they have all the power they need. And so I think it's very it's it's it's a smart decision for America to sell this
01:02:02
chip that gives America an advantage in AI and keeps China from developing kind
01:02:08
of their own domestic alternatives which could eventually kind of challenge, you know, Nvidia, AMD, you know, other kind
01:02:15
of American AI accelerator champions globally.
01:02:21
We don't want that h that to happen. So I thought it was a mistake when they banned the chips and I'm really happy
01:02:27
and thinks it's really good for America if that is being reversed and kudos to you. David
01:02:32
G, you said it so well. I don't think I have anything to add. Can I just say one thing on crypto? You guys can put it in or not, but it I
01:02:38
thought it was interesting. David, I was always worried about stable coins as a risk to the dollar, but I think you make
01:02:44
a very good point that when you are the dominant currency, they entrench the
01:02:50
dominance. And I just had not thought of them that way. Well, I think what's going to happen with these dollar-based stable coins is
01:02:57
they'll start being used all over the world. Let's say that you're in a country, maybe it's a developing world
01:03:02
country where the fiat currency is not trusted and now all of a sudden you can transact
01:03:07
in dollars using a wallet on a phone, you know, and the merchant also has a
01:03:14
wallet on a phone and now you can just transact in dollars. you could see a large portion of these economies
01:03:21
dollarizing from the bottom up because again once you have your choice of fiat currencies through stablecoin why
01:03:26
wouldn't you just use the best one and that that's what I think is really interesting so I do think it extends the the dollar's dominance internationally
01:03:33
into the online realm yeah and previously people were basing their stable coins on a basket of
01:03:40
assets some treasuries some real estate investments because they were seeking yield Gavin So they would buy real
01:03:48
estate or you know short-term long-term treasuries. They might put equities into it. They might keep some cash and none
01:03:54
of that was known. And so that's where this big fear came. Hey, these things are getting pretty big. There's
01:03:59
obviously a demand to use this concept of a stable coin. But what if there's a
01:04:04
run on the stable coins? And that was always the big fear with various players was what if everybody wants to withdraw
01:04:10
their stable coins? Are there enough dollars or liquid assets in there? And that's where I think certain players
01:04:16
have maybe, you know, moved the asset allocation and in order to be in the US
01:04:21
market, Tether's going to have to be 100% in treasuries, right? They're not going to be allowed to be, say, in real
01:04:27
estate. There was a, you know, concept that maybe they were buying Chinese paper for real estate back in the day
01:04:33
and people were concerned about that. So, this cleans all that up and they have an easy path, but you can't make
01:04:39
interest on it. That's actually a very interesting portion of this. So that will have to come at a later time so the
01:04:45
banks don't lose anything here. Right. Well, just just clarify one point on that. One of the concessions that was
01:04:50
made to community banks is not to have an interest feature because the community banks were worried that this
01:04:56
new stable coin industry would put them out of business. I think that that fear was wildly overblown on their part. I
01:05:03
don't think that's what's going to happen remotely, but when you have a new technology like this and a very
01:05:08
established industry, you can see why maybe they'd be afraid. But the bill allows for all sorts of marketing,
01:05:16
promotions, rebates, that kind of stuff. So maybe it's not called interest, but it there there are mechanisms to create,
01:05:24
let's say, rewards for stable coin holders. So it's not as like black and white as just, oh, there's like nothing
01:05:31
a stable coin issuer can do to attract or incentivize or reward one of their
01:05:36
holders. It is a dimension they could compete on. So maybe if I were to buy $10,000 worth of a stable coin, I could
01:05:43
get mileage like points or maybe a loadin gift card or maybe I don't know. Yeah, we have to
01:05:48
interpret the language, but the mechanism is there. Okay. Well, there you have it, folks. All right. Reporting from our capital,
01:05:57
David Saxs or Zar of AI and cryptocurrency. I'll see you next
01:06:03
Wednesday in DC for a very important summit. All right, besties. I'm here at the
01:06:08
White House with Senator Bill Hagerty from Tennessee, the principal author of the Genius Act. He, I would say, along
01:06:14
with the leadership of President Trump are the reason why this bill happened. And we have stablecoin legislation just
01:06:19
signed into law by President Trump. Bill, you did a phenomenal job. I got to observe this whole process and you
01:06:26
really played the critical role. You were a very skillful legislator crafting delicate compromises. You were kind of
01:06:32
the glue that held the whole thing together. Congratulations on getting this done. Is this your first bill that you've gotten done as a senator? It
01:06:38
it is. Um I I've served in the Senate for over four years, but we were in the minority for the past four years. So,
01:06:43
this is the first opportunity since the Senate uh was taken by the Republicans to actually drive legislation through.
01:06:50
And the fact that we had the House of Representatives, the Senate, and the White House made this possible. It was just a threshold concern. We worked so
01:06:56
hard, as you know, to retake the Senate in 2024, to retake the White House in 2024, and hold on to the House of
01:07:02
Representatives. It worked. And that's the only thing that's enabled us to deliver this type of meaningful legislation. And I say this too, it's
01:07:09
been a great team that has done this. I may be the author of the legislation, but the leadership that you've brought to bear from the White House coming in
01:07:15
and, you know, donating your time from the private sector, working as a volunteer here, but making certain that
01:07:20
the leadership and the vision is present here in the executive branch. You've been absolutely great. And that vision,
01:07:26
I think, has carried forward into the Senate, the House. More and more people are understanding this and catching on. And I think what we've done today is
01:07:33
launch the catalyst for what's going to make America the crypto capital of the world. Yeah, it's been it's been really amazing
01:07:40
and interesting for me to watch this whole process. They say that you shouldn't watch legislation or sausages
01:07:46
being made. But, you know, earlier in the week, the media was reporting that this bill was dead because there were a
01:07:51
dozen hold outs and President Trump made calls late into the night. He gathered people into the Oval Office. He
01:07:57
cajolled. He twisted arms and uh and he also persuaded and he he got us over the
01:08:03
finish line. It was pretty incredible. Well, I think the founding fathers made it actually quite difficult to legislate for a reason. But it is difficult. It's
01:08:10
taken months upon months to get to this point and the legislation the the the Genius Act has been killed a couple of
01:08:16
times in the media. Uh Elizabeth Warren declared victory uh early on that she killed the bill. That didn't happen. She
01:08:21
didn't have the juice to do it. But there have been many many that's a big deal because until now the crypto community has been living under
01:08:28
Elizabeth Warren's reign of terror. I mean she basically was calling the shots during the Biden administration on
01:08:33
crypto and I was there when the Genius Act passed the Senate. I was up in the bleachers or whatever
01:08:39
and she was not happy. I mean you there were photos of her and she she she did not like losing.
01:08:44
There's there's a fundamental reason for this David because Elizabeth Warren and her crowd want to see a central bank
01:08:51
digital currency. What they want is control of our transactions. They want the ability, they're the ones that wanted to go to a $600 threshold for
01:08:57
your Vinmo transactions, reporting everything. They want the ability to do choke point 3.0,
01:09:02
right? And if you think about it, they had visibility in our transactions, the ability to centralize and control them.
01:09:08
They could control our lives. That may be okay for the Chinese Communist Party, but that's not going to work here in America. And this legislation put the
01:09:14
final nail in the coffin to that. It's really amazing that you got it through. And to get this passed, the Senate, you had to have 60 votes, right?
01:09:21
Because reconciliation, you only need 50 plus one. But for a regular order, I
01:09:27
guess to get past the potential for a filibuster, you need 60. That's exactly right. That's exact. So, what demands did that put on you in
01:09:34
terms of getting Democrat votes? Because the Republicans have what, 53? Yes. So, we didn't have all the Republicans.
01:09:40
We lost Republicans. But, but what enabled me to get the other nine Democrats to come on board was really an
01:09:45
education process because at its core, this shouldn't be a partisan issue. This is about taking America's payment system
01:09:51
into the 21st century. This is about making our nation more competitive. This is about great, you know, expanding
01:09:57
demand for the US Treasury securities that we issue. This is about the dominance of the US dollar. It's hard
01:10:03
not to like it. But I I think there's a partisan bent here in Washington that's so strong that their objective is just
01:10:09
to keep Republicans or Donald Trump or David Sachs from from getting a win here. And and through education and
01:10:15
through listening, and frankly, I don't think it's my legislative skills. I think it's the business skills that I brought to the legislative branch. Uh I
01:10:21
think it's through the business skills and the ability to negotiate that we've actually gotten to this point today. And so tell us about that. So before
01:10:28
this, you were a businessman, then you became ambassador of Japan. You met President Trump. You told him you wanted to run for center of town. He
01:10:33
told the story up at the in his speech. He said that uh you had learned Japanese in like 6 months as
01:10:39
ambassador of Japan. It it was a little longer than that. Okay. There's a there's a piece of the
01:10:45
story missing because I I started my career at a place called the Boston Consulting Group and they sent me to Tokyo for three years back in the late
01:10:51
80s early 90s. That's when I learned the language. Um and to go back as US ambassador to Japan under President
01:10:57
Trump in 2017, the honor of a lifetime. I can tell you representing the greatest nation in the world, any place in the
01:11:03
world is an honor. But particularly in a region like that that has so much strategic uh you know so many strategic
01:11:10
initiatives that are underway right now. You think about this, Japan has more US military station there than any place
01:11:16
else in the world. Japan is one of the toughest environments in the world. If you think about the neighborhood that they're in, North Korea, Russia, China,
01:11:23
right at your doorstep. Uh the time that I spent in as ambassador really helped me dig in deeply in terms of the
01:11:29
national security issues that our nation confronts and those that our allies confront. At the same time, we did two
01:11:34
trade deals with Japan. Nobody thought it could be done. Uh, and we were able to navigate that, uh, with Jameson Greer
01:11:40
working right beside Bob Lighheiser. Um, I loved working with those guys and we got two great trade deals done. Jameson
01:11:45
is back now as the US trade representative and I'm very optimistic that we're going to see more trade flourish. President Trump knows how to
01:11:51
do this. I've been with him in the trade negotiations. He knows exactly how to navigate this and I'm looking forward to great results from our trade
01:11:58
negotiations as well. Excellent. And so, we're only 6 months into this administration. It feels like
01:12:03
so much has happened, so much has been done. I mean, we just had the one big beautiful bill. Now we have this
01:12:09
legislation. What's next in in your view? What do you think is is going to happen next? What what's happening right now in the
01:12:15
United States Senate? We just put through a recisions package for a little bit over $9 billion. That's a that's a
01:12:21
small amount. It's a large amount of money, of course, but it's a small amount relative to the entire budget. And the Democrats have had uh they
01:12:27
they've just uh gone apoplelectic over this. Any any effort to cut back on spending somehow they've got to be
01:12:34
against that. They're only for spending and we're trying to bring physical sanity back to America. So the focus is
01:12:39
going to be to continue to find opportunities to basically legislate what has been found at Doge. The other
01:12:45
activities well beyond Doge. Every department head, every agency is looking for ways to streamline regulations and to cut cost and to operate more
01:12:51
efficiently. And I've got to believe there are tremendous opportunities there and many billions more dollars that'll come out of the budget as a result. But
01:12:58
we we've gone into a fairly partisan mode right now. And I think it's going to be tough for the next little while. While we're in this sort of partisan uh
01:13:05
gap, I think what we should be doing is focusing on market structure for digital assets and and we're working on that. I
01:13:10
just talked to some of my colleagues in the House today about how we're going to marshall that forward. I'm going to look forward to your leadership there as well
01:13:16
and many people in the industry. But just so everyone knows what that is. So market structure is the legal framework.
01:13:22
It's the rules for all the crypto tokens that are not stable coins. So the Genius Act just passed that gave the legal
01:13:27
framework for stable coins. Now we got market structure for all the other tokens and it deals with questions like what's a crypto security, what's a currency,
01:13:34
what's a commodity, who regulates those things. Just providing clarity. That's the name of the bill.
01:13:41
So that market participants know what the rules are because the last four years under Gender, they're basically
01:13:46
prosecuted without knowing, you know, how to how to uh abide. Yeah. They called it regulation by
01:13:52
enforcement. You don't know what the rules are, but they just launched an enforcement proceeding against you. I mean, President Trump was funny today because he looked at the audience. He
01:13:59
said, "I guess half of you were being prosecuted here about a year ago by the previous administration. Things are
01:14:04
going to change." He was uh he was on fire today. I mean, people should go back and watch. I mean, he he spoke um off the cuff basically
01:14:12
like he normally does for 20 minutes and was very funny. But part the reason why
01:14:17
he said that is when we did the crypto summit at the White House back in March the uh you know the Wlvoss brothers uh
01:14:24
Tyler and Cameron were there and they told the story about how a year before
01:14:29
they thought it would be more likely that they'd be at in the big house in the White House that that it was like
01:14:35
the fact that they were at the White House was in the big house because that's the way it was looking. I mean they were dealing with so much
01:14:41
unfair lawfare but any event we've we moved past that. So, thank you for your leadership on this. And by the way, on
01:14:46
the recisions, I know that this is the one issue that I think all of the hosts, the four hosts of the all-in pod all
01:14:53
agree on is that deficit spending is out of control. Anything we can do to try and rein it in
01:14:58
and have more fiscal sanity is appreciated. Even Calcanis can uh can agree with that one. He's sort of like
01:15:04
the the token uh lib on the podcast. I'm telling we're going to continue to work along those lanes that the the big
01:15:11
beautiful bill is doing. It's oriented toward growth stimulation, right? Everything that that we can do to stimulate more capital investment in the
01:15:17
United States is embodied in that in the tax law as part of that bill. So with the growth coming out of the big
01:15:23
beautiful bill and if we continue to go through the cuts with recisions, I'm very optimistic that we're going to get back on the right path. That's the
01:15:28
objective. That's the goal. Meanwhile, uh taking us into the 21st century with our payments uh with digital assets,
01:15:34
we're going to continue to work along those lanes as well. And I appreciate your leadership in that regard. Well, and we appreciate you. I think the
01:15:40
state of Tennessee, where, by the way, I grew up, I grew up in Memphis, uh, is very lucky to have you as their senator. Uh, the Republican party is really lucky
01:15:46
to have you. The Senate is very lucky to have you, to have someone with your business background, to have your skills who has now gotten through this first
01:15:53
piece of legislation through, again, this wasn't a budget bill. It took 60 votes in the Senate. I mean, when's the
01:15:58
last time that even happened? I mean, it's been years. Uh, I heard the Senate Bank Committee I mean, I heard they hadn't passed a bill
01:16:05
in like 10 years, basically, because it takes 60. It's been over 10 years to get out of the Senate Banking, but one of my friends wrote me yesterday and he said,
01:16:11
"I I didn't think you could get the Ten Commandments passed out of the United States Senate." So, congratulations. And I I I don't want to take the the credit
01:16:17
for it because it's been a wonderful team. As I said, your leadership in the White House and the executive branch, our friends in the House of
01:16:23
Representatives, my great staff led by Luke Pettit done just a terrific job. Luke Pettit was amazing. We worked
01:16:28
closely with him. Um Bo, yeah, who's the director of the crypto council who was on the show earlier today.
01:16:34
Tyler was wonderful at Treasure. Yep. Tyler Williams at at Treasury, who was Secretary Besson's um staff person.
01:16:40
The staff never get the credit they deserve for all the work they do, right? But but Tyler, Luke, and um and Bo were
01:16:47
amazing through this process. And and in the Senate, too, we we've had great leadership. Our chairman for the
01:16:52
Senate Banking Committee is Tim Scott. He's been a true proponent of this. Cynthia Lumis is is very focused on on
01:16:58
on digital assets, was very supportive of me as she chairs the digital asset subcommittee of our banking committee.
01:17:03
So, we've had great support in the Senate and I think it's going to continue to grow both sides of the aisle. Uh, Cynthia Lumis, she's been great.
01:17:10
I've met with her many times. Tim Scott's been great. Um, I understand that Kristen Gillibrand, the Democrat
01:17:15
from New York, great to work with. She brought in a lot of Democrat votes. I think you got 18. You know, the great thing about Kristen, too, is
01:17:21
she was a Wall Street lawyer at Davis Pulk. She understands the the markets and to have her level of technical
01:17:27
expertise was a huge asset and she was able to to really convey to the Democrat side uh that we were here trying to get
01:17:34
the right thing done for the country. This was not a partisan effort. This was something that really is aimed at growth
01:17:39
uh leadership, technology leadership and frankly dollar dominance that we all should be for.
01:17:45
Amazing. And so I think it's really amazing that we got this done. When you compare this to where we were a year ago, I mean it was non-stop. uh I guess
01:17:53
regulation by enforcement is basically regulation through prosecution lawfare and the crypto community was being
01:17:59
driven offshore there there wouldn't have been a crypto community in the United States and then President Trump won the election and now thanks to the
01:18:06
efforts of Bill and and others it's law the the Genius Act is now law we have a legal framework for stable coins and
01:18:12
market structure is next the Clarity bill is next we're going to try and do that by October so it's really amazing
01:18:18
that this is a you know I thought that working for President Trump would be a once in a lifetime opportunity because he's a president who really wants to get
01:18:24
things done and that's what's happening. It's really been amazing. So, thank you, Bill, for being here. Great. Appreciate it.
01:18:30
We'll let your winners ride. Rainman David
01:18:37
and it said, "We open sourced it to the fans and they've just gone crazy with it." Love you.
01:18:47
[Music] Besties are gone.
01:18:53
That is my dog taking notice your driveways.
01:18:58
Oh man, my appetiter will be up. We should all just get a room and just have one big huge orgy cuz they're all
01:19:04
just useless. It's like this like sexual tension that we just need to release somehow.
01:19:12
Your feet. We need to get mer.
01:19:17
[Music]
01:19:24
I'm going all in.
