SBF gets 25 years, Trump's meme stock, RFK Jr picks VP, Biden's 2025 budget & more
Full transcript · Read the full conversation in order, with its original context.
Contents7 chapters
§01Bestie Intros: Late night poker snacks!§02SBF sentenced to 25 years§03Trump's meme SPAC: modern trading card, protest vote, or something else?§04RFK Jr. selects Nicole Shanahan as VP§05Biden's budget plan for 2025: how to confront America's existential crisis?§06Science Corner: Why the price of cocoa has skyrocketed!§07Movie talk and wrap!§01Bestie Intros: Late night poker snacks!
Not and I have goals when I play poker. She always leaves me with the following. Play well, check, Have fun. Check. Do not eat late at night.
Never a check. Never Jason chance.
As soon as we finished dinner within 20 minutes, back at the poker table tomorrow. It's like, may I have my haagen dazs now? So may I have my second haagen dazs now? Hellmuth. You buy the
meat tonight. Literally on the melts.
Fire up the cheeseburger belt.
Did you see Freberg? You shouldn't have seen last week. Helm youth at the dinner table, Sean made some like, incredible, I thought, like, fresh sorbet of some fruit or whatever. He at the dinner table ordered from DoorDash double saporios. Some naughty butter sets of jelly beans.
They arrived when we left dinner and got back
to the quiver room. It was so disgusting. And then
the next day, my whole household, everybody, not the kids are like, what are these things? They were like holding up these knutter butters. They were never seen them, but the best part about
cell home mutes DoorDash addiction is that Like, at least once a month, Shamoff would be like, somebody ordered, like, 4 entrees, like, pastas and 2 desserts to my house, and I didn't order it. And it feels like, oh, that's me
on the group jet. That's me.
Yeah. Because he doesn't take the time to change his address back to his house. And then you see the naked truth of what's glittering. For what your winter's ride. Rainman, David Sachs.
And I said we up and source it to the fans and they've discovered
One person who's not gonna be eating well is SBF. He was just sentenced. Breaking news Thursdays continues here. At the all in podcast episode 172. But SPF was just sentenced with me again today on the pod.
Course, the dictator chairman, Shamoff Polyhappatthia, Seltdowns Science, David Friedberg, and the rain man. Yeah. David Sacks, I'm Jason Calacanis. Welcome back to the number one podcast in the world. Episode 172, the only podcast, your favorite SPF just sentenced 25 years.
They're always overhyping.
Always hyped, man. Always what I do. Absolutely.
I'm a I'm a hype man. I'm like favor flavor flavor of this organization. SPF, Sam Bank Manpreet, of FTX, was found guilty, as you know, couple of months ago in November, and he just got sentenced to 25 years. In total, FTX customers lost 8,000,000,000 investors lost 1,700,000,000 and lenders lost 1,300,000,000.
§02SBF sentenced to 25 years
Is that without petrol parole? When is he eligible for?
What was that? That is a
good question. It doesn't say what the parole could be. The prosecutor said There's
no possibility of parole in federal, criminal cases.
Yeah. So federal prosecutors start 40 to 50 years. So the judge went a little bit light, I guess, and gave half in his sentencing. Judge Lewis Kaplan said SBF had lied throughout the trial and showed no remorse quote, he knew it was wrong. He knew it was criminal.
He regrets that he made a very bad bet about the likelihood of getting caught. But he is not going to admit a thing as is his right. In related news, FTX is also selling the majority of its stake in anthropic. For 884,000,000 to Mubadala, the sovereign one of the sovereign wealth funds from the UAE and other investors, including Jane Street, where SBF worked for a hot minute, the Ford Foundation, Fidelity, and some other investors. From CNBC, a lawyer's representing the Sacks see a state told the judge in Delaware last month that they expect to fully repay customers and creditors with legitimate claims in the FTX case.
That doesn't take into account equity holders. So it looks like that one investment could save a lot of people their deposits.
I saw an analysis recently that showed that they were gonna be in a surplus. So investors were gonna get money back and all the depositors were gonna get their full 100% Sacks.
I don't know how much Bitcoin or other coins they owned, but if they didn't sell the Bitcoin at 30 or 40 and it's at 60 or 70 now, yeah, that would be material. Right?
The crazy thing is that SPF was not it turns out a terrible investor. He made us see investment in an anthropic that's worth 1,000,000,000 now. He made a seed investment in Solana that I think is worth billions now, especially now that Solana's recovered. I think that Salana was hard with the brush of being a Sacks coin because SBF invested in it. But as it turns out, as far as we know, it's a completely legitimate projects.
Sam was an investor, but not, participant. And you look at the price of it. It's not rallied to something like an $80,000,000,000 market cap.
Yeah.
The point being that a lot of the investments you made ended up being pretty good investments. And FTX itself, the trading platform as far as we know, was a functional workable business. I mean, it was a offshore crypto marketplace, so I don't wanna initially use the word legitimate, but I think that it was, I think, as good as any of these trading form. So the the crazy part of this is I'd say unlike the Madoff case where from the beginning with Madoff, it was entirely a ponzi scheme. There was nothing of value there.
In this case, you had a, call it, legitimate or semi legitimate crypto platform combined with some legitimate Angel Investments. And so what I think went wrong here was Alameda that Sam decided to siphon off customer deposits to gamble with his hedge fund, which was completely optional. He didn't need to do that. I mean, he already had a winning business and winning bets in his portfolio. So this whole Alameda thing he didn't need to get into, and then, of course, siphoning off customer deposits spray around for political donations to feel like you're a big shot was also really stupid.
So the this is the crazy thing I think about SBF is it it was sort of like this this manic. There was like a a manic element to it. There was a messianic element to it. He wanted to take shortcuts He wanted to believe he was gonna save the world and then did all these criminal things in pursuit of that that he didn't really need to in order to be successful. And that's why I think it's such a curious case is it's not it wasn't full made off in a way because there were some legitimate elements to to his portfolio.
You're right about the messianic thing. These guys were all drunk on this effective altruism concept that I think whatever crimes they committed by stealing the deposits and then going and investing them. They saw themselves as Robinhood. We're gonna these deposits. We're gonna make a ton of money, and then we're gonna give it all away.
Of course, they didn't have a CFO. Nobody did diligence on these investments. There were no controls in place. And he was literally stealing his customer's money to gamble. I should Sacks.
And I think I think actually one one quote that I saw reported, from the judge was that if you steal customers money, go to Vegas, gamble it.
Yes.
You're still guilty even if you can pay them back with the winnings. Yep. But that suggests to me that actually the the FTX trustee is on a path to repaying the 11,000,000,000 of customer deposits that were absconded with.
I just found it.
I don't know if that's true or not.
It is true. In early February, the trustee said they now expect a 100% payment back to the depositors and all the accounts, and all the excess will go to the shareholders and FTX all the preferred holders that invested in the stock. I don't know what the total press stack was in FTX, but it sounds like there's gonna be recovery there as well after all of the customer deposits are made
Wow.
So this is my point is he didn't need to do this. I mean, it was so insane. I mean, FTX, like I said, was a workable business. He made workable seed bets, but then he went crazy with Alameda and the the Robinhood stuff and it's just such a interesting case.
By the
way, Sacks, Calacanis what he started with. So he he started a firm that was meant to arbitrage crypto market because there's all these different markets that didn't connect around the world. So the original concept was that he would set up a hedge fund like a Jason Street to arbitrage. And so he would arbitrage crypto pairs using different exchanges around the world. He set up all these different accounts, and he would trade long one way short the other way.
And make a spread. And then he made so much money on the hedge fund, and he said, why don't we just do this all centrally? And he started setting up FTX was it's a his own cryptocurrency exchange. So, like, the legacy was that Alameda was there from the beginning And the arbitrage across these illiquid, no transparency type markets was really the core driving principle when he started all this work. The crypto exchange came later.
So it was like he always had this orientation that he was trying to arb everything. And I think I told you guys this when I saw that video on YouTube right after he got arrested, and then they took it down off of YouTube, It was like an hour long video showing him trading and doing his day job in the office. It reminded me of, like, a mouse in a maze, like, chronic, like, everything was, like, arp, like, he was finding little arps he could make everywhere, nonstop.
A ton of money. And then he puts this ding bat in charge of Alameda who proceeds to lose billings of dollars. I mean, the whole thing was so stupid.
I mean, it's gonna be such a great movie. I can't wait for the movie.
I think one of the craziest parts of this is he had co founders in FTX who weren't part of Alameda and they just let him do this. Why would they do that? I mean, their own stakes in FTX minus Alameda could have been worth Many 1,000,000 of dollars, 100 of 1,000,000,000 of dollars, maybe $1,000,000,000.
I mean, the truth is in business, you can do all kinds of criminal and crazy things. Until you get caught. And these folks were doing insane crazy things that the system is based on trust, and people can break that trust. We saw it. Remember with, What was, full tell poker, they were also taking the customer accounts and gambling, oh, those dollars.
They literally mix the operations budget and the customer deposits at full toe poker back in the day.
Part of the if I remember right, I read the the Michael Lewis book on this. And part of the rationale SBF gave to Michael Lewis was that Alameda was supposed to be a market maker liquidity provider to the exchange. So they were playing an active role on the exchange of making trades available to create the market. And that was a key aspect of getting the market moving was that they had this well capitalized market maker And then you had an actively prayed on a platform, and they just built their own platform, and then they were able to attract with more liquidity, more participants onto their exchange. And that was
because that that might have kick started it. Yeah. But that could have kick started it, but, like, you know, 5 minutes into it, you could probably turn that off. I mean Right. You know what I'm saying?
Like
Yeah. They didn't need to
do that once you get to a certain point.
Also, these people were all on speed. So there is that.
It contributed to the mania.
Yeah. I think, like, they were they were hopped up on speed and they felt that they were gods and that, you know, stocks go up, coins go up. They can do anything they want. They can hang out with celebrities. They just got diluted, and they were super entitled.
I mean, This is a level of entitlement and criminal behavior that we rarely say. Doesn't matter if their tokens went up.
When I had my one and only interaction with SPF, which was over a Zoom, I asked for a model and this arrogant ding dong that worked for him sent me like a five line excel spreadsheet. And I thought and I thought this is the worst example of arrogance and hubris I've ever seen.
I I had one interaction with SBM.
Uh-oh. Do
you wanna hear it?
Yeah. I
got a little bit of a of a tiff with him. So is that a at a tech conference? It was a few years ago. This one, he was absolutely at his, like, peek. Like, everybody wanted to talk to him.
He was sort of holding cord. He had a bunch of lackeys around him. And this is like a pretty exclusive tech conference. I'm not gonna tarther name by mentioning them in this context. But so a friend of mine said, you wanna go over and meet with SBF.
And so I said, sure. Whatever. So we go sit down. And I started asking him about this ballot initiative that he was funding in California to raise our taxes to fund a pandemic prevention center. And as it later turned out that his brother was gonna run this thing.
And so I I said to him, you don't even live in California. What are you doing funding a ballot initiative here in my state where I live? You live in the Bahamas or whatever. In order to fund this boondoggle, which by the way is looking in the rearview mirror. We don't need it like COVID's over.
And even if we did need a pandemic the federal government should do it, not California taxpayers. And he starts getting very animated David defenseless thing. We and the we sort of get into an argument. And, so I kinda, you know, ended it by saying, well, Jason, I'm gonna, just let you know, like, I'm gonna publicly oppose this, you know, vigorously. And, because I, you know, I just wanted to let him know, like, I'm gonna call you out for this.
Standing up
for the little guy.
Sacks enough for his state.
So when I got back from that conference, I actually talked about it on this pod. I talked about that ballot initiative in California. Yeah. And that was the the origin story of that.
Yeah. They capitulated. Right?
No. That's right. Yeah. Like a month later,
they
dropped that thing because it was too much heat. But little did we know that they were enmeshed in all this criminality and they were absconding with all this money?
What is Sam Bankman Friedberg brother's name? Banned Bankman Free.
Was it like Gabe or something?
Oh, Gabe. Nice.
I have one interaction with him at some, at a annual general meeting, I got asked to interview him, and it was like a private affair a couple of months before this all blew up. And he's dressed like a slob, you know, like, literally, it doesn't look like he showered. It's closed on fit. He's wearing flip flops and shorts is kinda like the schtick. And he's a billionaire blah blah blah.
And I start talking to him, and his leg is shaking. Like,
restless leg syndrome. I mean, it but, no, it's
he's got his hand on. Does
he did he
have restless leg syndrome? It's bouncing. I kid you not, like, a hundred times a minute. It was disturbing. And so I'm wondering if this guy's got a panic attack or what's going on And I kind of like tone down my crypto skepticism questions because I felt so bad for him always having a panic attack.
And then I realized this guy's hopped up on speed. And he's got so much, of Adderall or whatever these these kids were taking some patches that you wear to release and stuff. I am convinced that these guys were taking a level of speed. Unbelievable. That would kill an elephant, like Vietnam war level.
Yeah. Like, these guys were out there. I mean, he would I mean, patches, these guys were wearing patches, And he was shaking
them. Was it like this?
Oh, oh, yeah.
Did he ever have
He was apparently Right. Kendall was
also on speed. That looks like he's on amphetamines there. Yeah. It was kind of almost exactly like that. Oh my god.
Where is that? For people who don't know, the 3rd Reich was on speed. There's, like, many, many stories about this. Yes, Sacks, but they were hopped up on speed.
I believe so. I'm not sure. Yeah. I believe so. Think entire books have been written about
Yeah.
Drug use by the the 3rd Reich, but
Yeah.
I haven't delved into it.
Yeah. No. No. I've I've listened to a couple podcasts about it, in Sacks. And, so it must be true.
I've listened to some podcasts. Alright. Moving on in the
If it was on MSNBC, it must be true.
For Fox or Fox or if it was beep the grape. You're anonymous friend on Twitter who must be true. Alright. Trump just made $5,000,000,000 on paper with his memes back Trump social network has finally deshacked. It's now publicly traded.
§03Trump's meme SPAC: modern trading card, protest vote, or something else?
You can go by Donald Trump's back at DJT is the ticker symbol They are on pace for a whopping $4,500,000 in revenue on a $60,000,000 loss that grown like 3 x year over year. And the company is not disclosing any user metrics. This quote from one of their recent filings is next at this juncture in its development, TMTG. The Trump Media And Technology group believes that adhering to traditional KPIs such as sign ups. Average revenue per user add impressions and pricing or active user accounts, including monthly and daily active users could potentially divert its focus from strategic evaluation with respect to the progress and growth of its business.
So they're not tracking
Isn't that the business? I
I mean, it's so laughable. Like, you can barely get through it.
That's crazy. They said that.
Literally, they said it. It's a crazier SEC filing. Wow. According to similar web estimates, whose social had about 5 to 5 million visits last month. As of Thursday morning, it's worth about 8,500,000,000.
Same as reddit or close to 2000 times top line revenue company had about $300,000,000 of cash after the merger. By comparison, reddit, has 800,000,000 in revenue. Their market Sacks 8,400,000,000. Or about 10 times revenue. So, it should be about 5, 6, 7 times revenue would be more realistic according to basic media comps.
Reddit had 2,000,000,000 visits last month with 73,000,000 daily active users. That's pretty significant. This Sacks took a long time to close. There was an SEC investigation into 3 men allegedly making 23,000,000 buying then dumping shares of DWAC. After the merger was announced, they all face at least 5 fraud and conspiracy charges.
Of course, this is what happened before it was dispatched. And so What do you think, Shamal? Thoughts on this?
So just to be clear.
I I
I just think we should be really clear because You're just floating this insider trading thing out there as part of the introduction, which is a huge allegation. And we have to be really clear that is related to a few investors and not to the company itself, and there's the company's Sacks was approved by the Sacks just need to be clear clear
about that. Yeah. Just to be super clear, Sacks charges former, DWAC board member, and others for insider trading. DWAC.
I just don't think this is the story. This is just not
the story. The reason was delayed. So just to be clear, it was the the whole this whole thing's been delayed. A couple of years because
of this.
Okay. Fine. So it was delayed. The SEC approved it. The company is now trading.
Yep. What do you think of the valuation?
And that's the real topic, isn't it?
Here's what I'll say. I think that this is a really important watershed moment, and it reminds me of 1997. Sacks, throw this little image up. In 1997, David Bowie issued what was then famously called a Bowie bond, who was 55 dollars that yielded 7 a half percent, which is about 80 bps above the 10 year at the time. These were 10 year bonds.
That's awesome. I didn't know that.
The bond payments were linked to 20 albums that Bowie had released before 1990. And so these are like 280 songs, and what he basically said was like, Jason, folks, you're essentially buying a piece of me, and in this case, my past work. And I'm gonna take this $55,000,000 upfront, and you're gonna get paid this interest based on the royalties that I generate off that historic library for a 10 year period, we think you're gonna get paid the 55,000,000 plus a 7a half percent a year, and then I'm gonna take back the rights. And if I default, if these bonds default, you will own the songs. And it turned out that it was an incredible bet the people that bought it, I think it was Prudential, which was an insurance I think I think it's an insurance company.
They got paid. The bonds did not default. In 2007, Bowie took back The ownership of that catalog of that back catalog, but instead what he had was 55,000,000 up front, which allowed him to go and buy all kinds of other parts of his catalog that he didn't otherwise own. So why is this interesting? This was the first example I think of people monetizing themselves their name and their likeness.
In this case, it was done via debt. I actually think when you look today, What's happening is a a more sophisticated version of that movement, but at much larger scale. I mean, we all joking that there was a bunch of meme coins that launched, not with any of our support, by the way, but, you know, with our names, with all these other quasi famous people's names. Those things went up and were worth 1,000,000 of dollars of value. And I think what this Donald J.
Trump, the DJT company, what it represents, is effectively a trading coin A baseball card, if you will, a trading card via a stock on the value of Donald Trump's enterprise value, his name, his recognition, and his likeness. So this, I think, is the modern instantiation of the Bowie bond. And what's incredible is you can see Bowie 30 or 40 years ago, he could have generated $55,000,000 in inflation adjusted dollars. That's about a 100,000,000 in today's dollars. Trump 3a half 4000000000.
I think it sits on top of this idea that these very famous people the Kim Kardashian's of the world, the Donald Trump's of the world, the mister Beast of the world, can eventually take companies public. And when you take a company public, you have to remember, Jason, There's the revenue and the profits, right? But if you look at the balance sheet of a company, there is always a line item called goodwill. And goodwill is what people use to separate the assets and the liabilities and whatever is left over to generate the shareholder in this case, Donald Trump, the GJT company's balance sheet will show a ginormous entry in goodwill. And that is the value of his name.
Coca Cola has such a goodwill line item. PepsiCo does. Gatorade does. Nike does. And this company does.
And I think there's gonna be a lot of other companies that will go public that effectively generate a huge goodwill line item that represents the name brand value of the person associated with it. So you're a buyer? I'm not saying that. I'm just saying that there is a lot of people that will be buyers that essentially will buy this as a Donald Trump, a directional bet on the value of his brand. And I'm also predicting that many other individuals will go public and have enterprise values that are levered in the same way as DJT, and that is a modern version of the Bowie bond from 97.
Freight, your thoughts on the Tremont's argument that this is a proxy for the value of Donald J. Trump's brand?
I think that's certainly one reason why people are buying the stock and driving the price up. And another one is probably a vote against traditional media that there's a contingent of folks who are basically voting with their dollars and saying we want an alternative to traditional media and traditional publishing platforms that have censorship that we don't agree with or have editorialization that we don't agree with. And that this investment, I think, represents a way for them to vote and say I don't want the old way. I want a new way. And while this may or may not be the new way that succeeds, it may or may not be a great business, and it may or may not even have much viewership or or usefulness, it's a mechanism by which people can put some money down and say I'm voting on an alternative.
I wanna see an alternative So I do think that there's a flashpoint indication that arises from this that's more than just the me main aspect of it, which is certainly fun. Everyone adds into a stock. Stock price goes up. It's kind of like to the moon and so on. I think there's also this element of demand for alternative media.
There's demand for a different type of publishing platform. And so I think that that's what this most represents to me from a, what the market is telling us perspective.
I think there's one other thing going on here. Which is that this represents a populist reaction to the law fair against Donald Trump that I think Trump supporters want to support him against all of these lawsuits and this persecution that he's been facing. And I think one proof of this is if you turn the dial over to MSNBC, they've been losing their minds all week over this, because they thought they had finally gotten the man. There was this $450,000,000 judgment in New York that he was fined for Supposedly in inflating the value of of assets against what she got loans, even though the bank did its own independent appraisal of the properties and even though the Sacks fully got paid back and said they wanted to keep doing business with him. So they thought they had finally gotten DJT.
And he was gonna have to pay 100 and 1,000,000 in fines. And then lo and behold, the Sacks comes along and he makes 1,000,000 and 1,000,000 of dollars. Now that's not locked in yet. We're still in this lockup period where for 6 months, there's a very small float. And it's probably the case that once there's more shares on a liquid market, we'll find out what the real valuation is.
So let's call the valuation we're seeing today based on a very small float, let's call this more of a preliminary number, and Trump can't sell yet. But presumably after 6 months, when the locket comes off, he'll be able to sell. So look, I think fundamentally what's going on here is this is political. Trump's enemies are angry about this Sacks because they see that it gives them a lifeline. And I think Trump's supporters are deliberately buying the stock to support their guy and to say that this law of arrogance Trump that basically seeks to imprison the man or bankrupt the man instead of simply run against him is a new low in American political discourse.
And I think there's millions of people who agree with that, and some of them are willing to buy this stock as a as a protest vote.
I agree a 100% with the protest vote. It's, you know, he had, what, 60, 70,000,000 people vote for him. He got 74%. 74,000,000, rather, 46.8 percent to Biden's 81,000,000. If but 2% of those people wanna buy the stock, it's a million and a half people, And that's exactly what's happening here.
They don't care if they lose the money. Actual value of this company with 5,000,000 in revenue, 4,000,000 in yearly revenue. I mean, if you really want it to be absolutely insane and give it a 100 x valuation, it's worth 400,000,000 And so then if whatever goodwill Donald Trump's likeness is, maybe that's another 500,000,000 But you'll lose a large amount of money I predict if you buy this. And if you're buying it as a protest vote, sure. Go for it.
Why don't you, Jake? How? Why don't you shorter. It was a J.
Frederick. The stock, and I I I I'd think
Remember Gabe Plotkin?
No. This is
Oh, remember from, Melvin Capitol? He thought he could
He blew up his funds. He wouldn't gain stuff.
He thought he could outsmart all the apes.
Yeah. That's, I mean, that's exactly why I wouldn't do it. I've never shorted. I think that, you know, you get these trump motors, and it starts going up because of the small float, which is what's happening now, they might send this thing to $80,000,000,000, you know, who knows what is possible with the short float and a mode motivated you know, 1000000, 2000000 people.
You guys are bringing up something else as well, which is we've shifted from fundamental based stop trading being the overwhelming driver to there's a lot of, like, very speculative day over day activity that you can't control anymore, and I think it's part and parcel of what's happening in other markets in America as well. So when you look at sort of like what happened in 2016 when the Supreme Court David each state can regulate sports gambling? All forms of, like, online gamesmanship and betting just started to skyrocket. It could be casinos, lottery, sports betting. It didn't matter, but everything just caught a massive ginormous bid.
And when you look at the products that service the retail market, they've also become increasingly gamified. Robin Hood is probably the best example of having built an incredibly good business by making things more like a game. And then recently adding fuel to the fire are things like 0 day options, which are just like and there was a big article in the Wall Street Journal where, like, one of the reporters, she became addicted to it. And, like, the Wall Street Journal gave her, I wanna say, like, like, a few thousand bucks, but she had to disgorge the profits and she, like, 2000 x or or shit. She got, like, a 2000% return or something.
Specking 0 day options. Via Robinhood. So the point is that on top of the whole movement to sort of allow individuals to monetize their own name and likeness via the stock market, which we just talked about. The second movement is that A lot of these things are becoming less financialized and more gamified. And so you just have many more participants.
And so to your point, you can have a gamestop moment in any of these things, you can have these 0 day options run the stock to the moon. I would be I would tread very lightly here.
Yeah. And just another warning, you know, the the stock market Jason things ultimately on, like, earnings and profits. And so when we look at this as a proxy and Mr. Beast would have the same issue where Martha Stewart, you have a key man key individual riskier, I. E, this person goes to jail, they die, whatever, which Martha Stewart always had on her businesses, And then what is included in this is key.
So when if he does another TV show and it becomes a hit again, Is that included in this? No. If he has another building or his buildings included in this? No. The golf courses included in this.
No. What's included in this? Included in this deal when you buy DJT is apparently just a really crazy No. You know, social network that nobody uses. So just be clear what you're buying.
No. You're right. The the more sophisticated version of this trading card analogy would be if Donald Trump contributed his brand licensing revenue in perpetuity to the asset. And then it really is a longitudinal forward bet on the trump name. Yeah.
And that that's sort of more like if virgin like, if Richard Branson took the virgin hold co public? Yes. That's effectively what that is as well. Like, you know, Branson over 40 or 50 years has built an incredible business I think the stat that I heard when I got to know him was he's created 20 businesses worth at least a $1,000,000,000 or more. Over his lifetime.
With the virgin brand. With the virgin brand. And the virgin brand is a licensing model where he holds that right, and he will license it to you for a share of the revenue. That's independent of anything else that he may do with these businesses. And so if he took that Virgin Holdco public, then what you're buying is a longitudinal discount of cash flow on the value of virgin.
And to your point, if Trump contributed that name and likeness licensing capability into this. By the way, he could also still do that. So to the extent that this business saw a contraction and maybe the truth social thing didn't end up being that valuable, But the other aspects of the media business he could create by basically saying, okay. Look. This will get a share of my licensing revenue from my name.
Would effectively be a proxy to do So he's got a lot of outs here to maintain this market value. And then on top of that, to your point, there's 70,000,000 odd people who would wanna support him in one way, shape, or form?
I would not go anywhere near short given his, his fan base is incredibly likely to keep buying these shares. And if you want to know the actual value of this business today, I'm an expert at this. It's a $100,000,000. It's $200,000,000. It's not anywhere close to this.
Could you remind
me where
your mouth is?
We just no. No. We just explained. When you have a small float like this and a David group of people who are gambling, you you will get your face ripped off. You'll get flocking.
What's that?
You'll get flocking.
Yeah. Yeah. I mean, it's It's disastrous. I mean, they what did they say? We can be stupid longer.
They can be retarded longer than you can be solvent. The rhetoric.
It's such a great line. I mean, but you can gamble like this on Sacks. Yet you cannot invest in private companies. I don't get the legal system in America. Be careful out there, folks.
You will lose a large portion of money. It's my prediction if you buy the stock, but feel free if you wanna gamble.
Look, I think I think this is all part of the ongoing backlash to law fair. Yeah. Joe Biden instructed his justice department to prosecute Trump. It's, in my view, it's utterly impressive in American history for one president to try and prosecute in prison and bankrupt his main opponent in the political election. And there are millions of Americans who are absolutely disgusted by this.
I think it's a new law in American politics Jason god bless all the people buying these shares to support Trump. Just as a protest vote, I don't know whether they're gonna make money or lose money. Like I said, I don't think you can justify the valuation based on fundamentals, but you can sure as I'll justify it based on payback.
Yeah. I mean, if you wanna give your money to a billionaire, buy the stock. Absolutely. Feel free. I think prob I agree with you, like, maybe 2 of them Sacks lawsuits are a bit weak.
I think the 3 or 4 other ones, you know, he committed the crimes, and he's just paying the price. But, you know, we can agree to disagree on this pot. Intelligent people do. Speaking of intelligent people, RfK Jason, you just picked up his running heat. This is a little bit crazy, and I'm really interested in hearing your thoughts on it.
§04RFK Jr. selects Nicole Shanahan as VP
He chose a thirty eight year old bay area lawyer Nicole Shanahan, as his VP, RfK, explained why he chose her. She knows big tech very well. How they use AI to exploit the public, how they censor and vail Americans to push certain agendas. She understands the health consequences of toxins in our air, soiling food. And he wanted a younger person to represent millennials and gen z.
He says younger generations feel like nobody represents them in Washington. He also wanted an athlete in good shape to inspire Americans to live healthier lives. And he Shanahan donated 4,000,000 in support of RFK Junior's Super Bowl ad that ran earlier this year. Sacks, what do you think of this pick?
Well, this pick does not excite me. I'll I'll be frank. That I mean, since I'm gonna say something critical, I want to let me start by saying something positive because I I really, you know, I love Bobby Kennedy. I mean, I think that he represents a number of really great issues that I agree with. I mean,
first of
all, he's been the most articulate critic of the Ukraine war understands it deeply and has explained it extremely well. He stood up for sealing the border. He went down there, showed that it's out of control. Completely agree. He was a vocal critic of Fauci and lockdowns was completely right about COVID.
He's he supports civil liberties and free speech. So, you know, I wanna say, like, Bobby Kennedy is great. The issue I have with this pick is that she doesn't represent any of those issues. She has a completely different issue matrix. And, I I watched her speech.
And just to say something positive about her, I mean, I like her enthusiasm. I think she's 38, and it's nice to have someone running for political office who's not in their seventies or eighties. And I think she's genuine. I actually think she's saying what she really believes, and that's really nice and refreshing. But again, if you go back to the issues themselves, she brought three issues.
Number 1 is she says she wants to make Americans healthy again. It's the focus on chronic disease. I'm not saying she's wrong about that. That's not my issue. Number 2, she brought up criminal justice reform.
This one concerns me. Apparently, she donated to Jason, who's a Soros, who help destroy San Francisco and then failed upward to LA. So apparently, she's a gasco and supporter that does not fill me with confidence. That is a quite frankly, luxury, liberal belief and this, decarceration idea. So I'm not excited about that.
Her third issue was climate and environment related, but but in a very specific way she went after big agriculture, she said, we can no longer support extractive corporate agriculture. I'm gonna let Friedberg speak to that one. I can't really say whether she's right or wrong, but that's not one of my issues. So Jason, at the end of the day, I feel like this pick accentuates and underlines the issues in Bobby's platform that appeal to the to the left, frankly, to to liberals. And I look, I think Bobby's candidacy is a complex candidacy that brings together people from both left and right.
But, again, this pick does not speak to me. It speaks to the more liberal parts of his coalition.
Does it increase his chances and who would have been the person who would have increased his chances most?
Tulsi.
Well, the person who would have been amazing would have been Tulsi Gabbard. Okay. If he had chosen Tulsi, what a blown the doors off.
Lambda. Yeah. I mean, in Tulsa, he's been saying Chamath publicly that she would be proud to serve with Trump, and it's seeming likely that she's got a a shot at that. Yeah? Being the VP for Trump?
I'm not gonna comment on that. Okay. Let me just say something else. I think Chelsea Gabbard is really impressive. I think she's independent, and I think she really stands firmly on her own 2 feet.
In a way that I find inspiring. I Sacks Sax have many, many positive thoughts about Bobby Kennedy. I think he is He was really a breath of fresh air, Jason, this in this election cycle because he was able to say the unsayable things and made those things more easy to be said by others. And I think that there's a really important role in that, and I think he deserves a lot of credit for that. And then the fact that he David things that were so unconventional and not mainstream that are now mainstream views, I think says a lot to the fact that he was pretty grounded in first principles thinking on those topics.
And I think that having those kinds of people in office are really good for America. All of that said I do agree with David that I think the pick was meant to be more about covering his left flank, and I found that an odd calculation And I wonder whether it wouldn't have been easier to cover the right flank, and there are different folks that are that could have been in the mix to do that. So I think that it was a calculation, though. And I think it's about he has a core set of issues. It's about whether he appeals more to this side or to this side in order to get the totality of the votes that he think is possible.
2nd, he was under a little bit of a time constraint because some of these states need the VP candidate named and he's under a shock clock that the other 2 are not. So I mean, I I wish Bobby the best because I think some combination of Bobby doing well, and some a people between the Democrats and the Republicans is really the only chance we have of having a credible third party. Well, let's see now what happens. By the way, we should just say, like, you know, Joe Liberman passed away, which is really unfortunate. You know, he was a really independent thinker as well.
Let's see what no labels really does here. There's a little bit of chaos over at no labels, I think, but so there's a lot of moving parts. So It was clearly calculus. I don't totally understand what that formula was though.
Just to build and to make Shamasset, there's a report by Colin Rug that the DNC realizes what Jamas said about this covering Bobby's left flank rather than his right flank. And apparently, they're in somewhat of a panic about this. And I think what you're gonna see is that lawyers from the DNC and the Biden campaign are gonna fight tooth and nail to keep this ticket off the ballot, at least in the major contested states, like the 5 or 6 states, where the presidency will be decided in 2024. And of course, they'll be, say, they're doing this to save democracy, but you're gonna see, I think, a full court press by D and C lawyers to keep the Kennedy Shanahan ticket off the ballot.
Yeah. This seems really like it's gonna damage Biden, which is my original prediction. And that a lot of Jason why a lot of the right wing were supporting RFK was because they wanted they saw this as a clear path to take away a couple of points from Biden. And it seems like that's what's happening. Yeah.
First part of what you said is a 100%. Right? I'm not sure that A bunch of Republicans are gonna get organized, Jay Cal, to vote for RfK in that way.
Oh, no. I don't think they're gonna do that. I think they supported him publicly in order to build him up as a centrist candidate knowing that it would take away from Biden. So I just think on a strategic political basis, all these Republicans
do that for for Maryann Williamson? Why not? Sacks
not collectible. No. No. It's because she's not electable. I mean, she's, by the way, and not like a viable candidate.
It's it's pretty clear. She's not
Why can't you just accept that people on the right like the issues that Bobby spoke to. Isn't that the simple
situation for? I think
that they're partisans, and they just wanna win. So I don't think it has anything to do with what you were saying. We should be like, particularly liking and connecting with what he's saying. I don't think it was that. I think it's a strategic plan to try to pull Biden votes.
And I think Republicans are smart. You
think he's a plant?
I think their support for him is for nefarious reasons. They're supporting him to take votes away from Biden, and here it is. We're all agreeing that this is gonna take votes away from Biden. So I think it's a very clever strategy on the GOP. Hold on.
I just just to add one point to that, Remember that when Bobby entered the race, he did so as a democrat. He did so. Yeah. Challenging Joe Biden for the nomination of the democratic party. Did the democratic party react?
They kept him off the ballot. They wouldn't give him a fair shot. Yep. That's why he went independent. So he did not have to be this, you know, sort of what you're kind of implying like a fly in the ointment type 3rd party candidate.
He tried to be the democratic candidate.
Yeah.
They wouldn't let him compete. If they let him compete in a fair way, maybe he would have stayed a democrat.
I would have loved to have a massive competitive field of Democrats. I think the Democrats are screwing this up big time. I I think this could be the mo this could I think they he could peel off a couple of percentage points, yeah, in those I
think you're right.
I think it's more than that. So, I mean, I think it's more than that.
So we all agree. That's what's happening here, then we're just disagreeing.
No. I I I think this is I think this is where
It's taking points away.
Yeah. I think we agree about that, but what I'm saying is that this is where we've ended up. I don't think it was constructed to be this way. Interesting.
Freeburger thoughts on this candidate specifically around her love of organic food and wanting to take on the pesticides, toxic food, you know, and the and the industrial food context.
In my commitment to there being only one major issue facing this country. And that is the federal debt and the deficit. We are increasing the federal debt by a trillion dollars every 100 days. That number is not slowing down. The current budget proposal from the Biden administration calls for over $7,200,000,000,000 to be spent next year.
That makes the US federal government roughly 1 third of our country's GDP, the outrageousness of the condition that the US is in right now makes it so insane to me that we are talking about any other topic like big agriculture or whatever other nonsense was being spattered about as important topics to this particular person, if every voting citizen of the United States does not recognize the severity of the deficit and debt problem that the federal government Sacks, you are wasting your vote. And no candidate is speaking to what is clearly the biggest issue of our time and we need to address this issue headlong. So I don't care about this person or anyone else who's running for office that is talking about stuff that we cannot actually address and problems we cannot actually solve if we don't get our physical affairs in order. That's my point of view.
Got it. And, respect for that. Can anybody win the presidency on a, hey. We're gonna balance the budget. We're gonna cut spending platform.
Nope.
So they can't win, and it's an existential issue.
That's why I look. I mean, I'll I'll keep shouting into the abyss. I hope that a few people hear it and that at some point, it becomes a topic that folks do begin to focus on. I I think that the necessity of raising tax rates, the necessity ultimately of cutting entitlement programs, the necessary inflation that will arise because of the condition of the federal government's debt level because we're gonna have to keep printing money These are the sorts of things that are like a boiling pot that one day folks will wake up and say, well, what the heck happened? Everything got mismanaged.
And it's not a Democrat problem. It's not a Republican problem. It's a it's a fundamental problem of people voting themselves all the money and people getting voted into office by saying I'm gonna do more than it's being done today, and that costs money. And no one actually addresses the rampant misuse of funds, the lack of accountability in spending, and the fact that we have an incredible amount of negative ROI spending And the fact that we've effectively created an economy that's fundamentally dependent on federal spending, and I'll go through some statistics when we talk about Biden's budget later in the show. But I think that the significance is just overlooked by all of these candidates, and we're not really talking about the thing that matters.
So Alright.
§05Biden's budget plan for 2025: how to confront America's existential crisis?
So let's write down. Biden's proposed budget of 2025. Post budget was 7,300,000,000,000 for fiscal 2025. That starts in October of 2024. It's up 18% from 2023, projected deficit 1,780,000,000,000, which is similar to the deficits we ran in 2324.
The budget projects an average deficit of Sacks trillion per year over the next decade. National Debt as, Friedberg was alluding to is insane. It's a 34,500,000,000,000. But we made some charts here to go through all of this. Let's pull up the first chart, and this is comparing Biden's proposed budget in 2025 with budgets from 2005 and 2015.
Defense spending has actually grown pretty modestly during that time, but entitlements, interest payments and non defense spending have jumped significantly. US will owe 965,000,000,000 in interest on its debt next year. Now that's 65,000,000,000 more than the Pro's defense budget. And in 2026, the US will surpass 1,000,000,000,000 on interest owed on its debt, and we'll talk about that more in a minute, but Let's start here with this first chart ending. Jump out to you, Shamoff here.
That's notable and worth discussing.
All the areas that we need to cut, or we can't even have a conversation about, so they'll never get cut and they'll keep growing. So I think that we probably need to figure out what the alternatives are. So if you can't have a conversation about expenses, the only logical place is to have a conversation about revenues. And What that means for the government is in taxation. And so I don't know, Jason, what we do here.
There could be a couple of saving graces. So there are some things happening, for example, on the Medicare side, that could be profoundly disruptive. They are now I'm again, I'm just gonna put this out there as it's happening. I don't know if it's good or bad, but they are looking at reimbursing things like Bogovi and Ozempic and whatnot. If you look at the underlying costs of those kinds of chronic diseases, diabetes, heart disease, etcetera.
And you put a large swath of the American population on those drugs the reimbursement value of those drugs versus the cost of actually the chronic care management would save you many 100 of 1,000,000,000 of dollars a year. So that's something. Second is on the defense side, there's a large portion of that budget that's migrating away from traditional tactical warfare to things that are unmanned vehicles and cyber and whatnot. That could save 2 or $300,000,000,000 there. So there are places where you could save 500,000,000,000 to a $1,000,000,000,000, but I think it's gonna be a almost impossible conversation, and it'll happen by accident.
So then the only forced conversation that I think we are going to have as a society is around taxation. And that's really bad for You know, a lot of people that don't believe that's the path to generating growth.
One of the challenges is that there are and and we should reference these in the show notes Nick, but there are well researched economic studies that show that when a government tries to increase the taxation level, north of 20 percent of GDP of that economy that you actually see GDP growth go negative. That event that there's a certain natural equilibrium on which you can tax the system. Beyond that level, investment dollars go down and growth begins to shrink. And that's what triggers the spiraling problem because then the government spending needs to go up to continue to grow and support growth in the economy, and it creates this inevitable
Totally.
Spiroling.
Would you call this the Atlas shrug, the Atlas shrug effect? His investment goes down?
There's a Fred chart. Showing percent of GDP that's federal tax receipts and then percent of GDP that's spending.
Exactly. And the
and then the gap is your deficit. Okay. And Friedberg right that I think in the absolute best economy, best years of the best economies. So it's like, you know, the best year of the Reagan boom and the best year of the Clinton boom when we have the government surplus. I think the government was extracting just shy of 20 percent of GDP.
And in the seventies, when marginal rates were at 70%. So before the Reagan tax cuts, we were actually extracting a lower percentage of GDP. So there's only so much blood you can get from a stone. If you raise tax rates on a marginal basis high enough, the economy performs worse and you actually end up collecting less or people spend a lot more money on lawyers and accountants to basically figure out more structuring schemes to avoid paying taxes. So the years in which we've got the highest percentage of revenue out of the economy are in good economic years where we've had reasonable levels of taxation as opposed to the highest levels of taxation.
And so the problem is with the spending, I mean, we used to be able to keep spending to somewhere between, I'd say, in the past years of of the the years of the Clinton surplus. I think spending as a percent of GDP was like 18.8%. It's around 20% of GDP goes to federal spending. That's that was normal.
Or
but then the spending got out of control during COVID, and it went up to, like, 25, 30% of GDP went to federal spending. It's starting to come down, but it's still way too big a number. Anyway, my my point is that a starting point for dealing with next year's budget is free spending. Just free spending. You know, the 18% increase is not a good idea.
If we wanna get this problem under control, free suspending, we can talk about taxation, you're only gonna get so much blood from the stone.
An increased spending is stimulatory, and so it works well in an election year. I would say we took 2 major crises and we had crisis level spending, and then we normalized that spending and allowed it to carry forward. Starting with the OA financial crisis with our monetary policy, and then being accelerated with COVID and and our fiscal policy. I'll give you guys I I did some back of the envelope map, I'm sure there are economists who have done a better job of this than I. There are directly 3,000,000 Americans that are directly employed by the federal government.
That is a 167,000,000 workers in the US. So 3,000,000 are directly employed by the federal government. If you take the rest of the federal spending that flows into the economy, it's about 3 and drilling a year and assume 30 percent of that capital goes to equity holders and businesses that own businesses that benefit from that spending and the rest flows through to labor. That's about 13% of GDP flowing through the labor. And assuming average annual income, that's another roughly 45, 50,000,000 people.
That are directly benefiting that are directly earning income because of federal spending. There's another 50,000,000 people in the US that rely on social security here's another important statistic. There's somewhere between 12,201,000,000 people in the US that pay more than 50% Sacks rate today. So those people are effectively working for the federal government because half of their their income goes back to the government when you add this all up, there's there's over a 100, 120,000,000 people in the US that are directly working for or getting paid by the federal government in the US That is such a significant percentage of our economy that is such a significant dependency on individual income on a federal government It I I don't want to use the term socialism, but the the ability for US labor to earn is so largely dependent and largely driven by federal spending at this point, it becomes this critical lynchpin to enabling progression economically to enabling the labor force to continue to participate that the federal government is now the primary customer or employer of most of the labor force in the United States today. That is a deeply and profoundly different circumstance than what I think the founding fathers envisioned when the federal government was supposed to be this lightweight overseeing organization of a federated republic.
Of states. And unfortunately, I think we find ourselves in a condition, as Tamara points out, that's very hard to get out of. This is gonna require a dedicated multi decade effort to create a slow unwinding from this deep dependency that our labor force has on federal spending. And I I'm just, like, so shocked that this isn't the the critical problem of our day that we're not all spending time on, folks have pointed out that this only goes one way at this point.
Hey, Nick, can you bring up that 1st Friedberg? This is federal receipts as percent of GDP, and it goes all the way back to World War 2. To Friedberg point, we've never gone above 20%. Look at that. And we've had tax rates as high as 90%.
I'm saying top marginal tax rates as high as 90%. I think after World War 2, because we're trying to get out of the deficit that was created by the war spending.
You can't get above 20.
Yeah. Exactly.
The economy shrinks.
No. But hold
on. The the
I I gave you this OECD report. It says that since 2000, we've been In the mid twenties, and the OECD average is 34 in terms of tax to GDP.
Sacks to GDP. Is this this includes state and local then. Right?
Probably. Yeah.
Yeah. I just showed federal.
I think this probably includes state and local. Yeah. And if Which by the way is a whole another Bollywood, because I didn't include those numbers in my employment statistics. The US Bureau of Labor Statistics estimates that about 20,200,000 Americans are employed by local and state governments directly employed by local and state governments. So, again, when you add this all the majority of the US labor force is employed by the government or is a beneficiary of the government of the primary customer.
Or is supported by government entitlement programs?
If you go back to that Friedberg for a second, I mean, if you if you basically acknowledge the point that 20% is the ceiling, on how much we can extract from an economy based on 80 years of data, okay, with all sorts of differing tax schemes. Then I think what we should say is that federal spending will be capped at 20% of GDP. Yeah. We should you see what I'm saying? Like, if we came from above 20% of receipts That's it.
Cap Federal spending
at 20 percent. Constitutional amendment. Right. That's it.
And then and then on the revenue side, we should say what is the best tax code to achieve that 18, 19, 20 percent? Because what we do right now is we just say we'll just tax the rich, but what we've seen is we've been taxing the rich as high as 90% in the past and you didn't get more revenue. So we should be much more scientific about saying, well, given that our target is, let's say, 20%. What's the best way to do that? And no one really has that conversation.
No. None of the conversations have to do with data or building a a bulletproof system. The same thing we could say about immigration where we try to talk about the numbers here of what's a reasonable number of people and tying that to an actual number, and it's pretty obvious. We should have 1 immigration policy when we have 5% unemployment and a different one if we had got forbid 15 or 20 percent unemployment.
Wait. Can we just stay
on budget for a second? The fundamental
structural problem I'm highlighting is that we've created an economy that is so deeply dependent on federal spending, that the federal spending levels are what support so many employed and so many companies in the US.
You're answering your own question. That's why I can't stop.
Right. I
don't think the real economy that creates all the innovation and all the value and all the the the good paying jobs, I think that is separate
from what's the inflationary economy. That's the that's the true market based deflationary economy. The problem is once we've layered in all of these layers of dependency from federal dollars flowing into businesses or into people's pockets, it's very difficult to back out of that.
Don't call that dependency. I call that special interest. I think there's a lot of special interests who are basically looting the federal government and taking all this money and then they turn around and use some of it to to donate back to the politicians and lobby for more spending. So what you're calling dependency is really more special interest. Meaning that I don't think we need to have this level of spending in order to have a successful economy.
I think it makes our economy less successful.
Yep. It's still stimulatory. Cause, Sacks, remember Mitch McConnell, when they were talking about supporting Ukraine, his primary argument, as you remember, was that all of these dollars are gonna go into defense contractors pockets, which is gonna go to employees pockets, which is gonna stimulate our economy. That's the fundamental thinking behind it. I know, but that's the thinking behind it.
Right? I mean, that's the political system that
Okay. Let me just walk through this real quick. If the government prints a bunch of money and hands it to people with STEMEACH X. We all understand that creates no economic value. It just creates inflation.
Okay. Now If the government does the same thing, but instead of a STEMI check pays people to dig holes and fill them back up, that's the exact same thing. No economic value, just inflation. Now let's say the government pays people to create bombs that create holes in other countries. Exact same thing.
No economic value for the country. It just creates inflation here. Why is that? Because the only thing that creates economic value in the United States is the production of goods and services that people can actually consume and use and that they want. And so federal spending on basically make work projects or things that people don't really want or they don't use or even worse bombs that get dropped on poor people in other countries.
None of that creates any value. But I don't think it's a real economic dependency. I think it is just a special interest that keeps lobbying for all
this stuff. What about housing and health care and education because those are the 3 biggest line items, and it's been inflationary across all three of those line items in the US economy. Federal government has stepped in to provide broader access to housing, broader access to healthcare, and broader access to education. And in the process,
that's why the price goes up.
Yeah. You
know, there's that famous chart showing inflation by category. And all the categories where the federal government provides subsidies, the prices have gone up, and all the categories.
Health care
and housing and
housing. The more
the government tries to subsidize it, the more the providers realize within a second, we can charge whatever
we want. Correct. There's one customer. They'll always pay.
You know, once that's That's gotta be completely reformed.
Yeah. Here's a chart of all employees in government And I think this red chart includes all employees in government, which would include state and local. And as you can see, we're
Yeah. That's right. It's 20,000,000 local and state, 3,000,000 federal. And then the math I was highlighting was just my back of the envelope math where there's 50,000,000 people that are on Social Security in the US. Plus, if you do the Chamath on how government spending flows into employers in into employees pockets, it's about another 45,000,000, 50,000,000 people that benefit from federal spending in the US.
We're already kind of at a point of Sacks dependency, if you will.
Yeah. I mean, if you look at this chart, we have had 20,000 people working in government since the late nineties. Yeah. 20,000,000 since the late nineties. It's it's now hitting a peak.
And the question is, you know, how far up does it go from here? It's 23. Obviously, the country is growing as well each year. So as a percentage, we don't have the percentage, but as a percentage of Americans, and hasn't grown that dramatically, but it certainly feels like this could keep going in the wrong direction.
The one thing to keep in mind from all the dooms dang, I would just offer you 2 data points. The first is that our debt to GDP Either historically, but also in relation to other countries is still relatively reasonable. And what that basically shows is we have lot more debt that we can issue, which means that there's a lot more deficits to run. Not saying that it's right.
Yeah. Before the great financial crisis, it was running at 50, 60 percent our debt. As a percentage of GDP. And to your point, Shamoff, it's now at 1.2. It's a 120%.
Other countries have much higher.
So we have a lot more to run. Yeah. So, Nick, if you wanna just throw that up and so it means that the countries on the right haven't failed. They haven't done great necessarily, but they haven't failed in the way that we would define failure. And it's not as if the country's on the left, are crushing it the way that we would define crushing it.
And so it's not clear that there's a real correlation between debt to GDP and the performance over large longitudinal periods of times as a country. That's the first thing I'll say. The second thing is if you actually look at all of these countries, the thing to keep in mind is where our populations growing and shrinking because at a very basic level, Jason, you you mentioned this earlier, but when countries are shrinking, there's no fundamental ability to grow GDP. And you're just debating how much it shrinks. And the interesting thing about the United States is we are the only Western's country that is forecasted to grow at reasonable rates above our replacement population.
And so, you know, by the end of the century, we'll be around 400, 400 odd million individuals, and other countries will have been cut in half. And so, again, There's some positive news as well. Now to your earlier point, the problem is politicians will use this as a reason to continue spending. Because they won't be forced to. And that's not a great thing, but this is probably why the status quo will go on for a very long time.
So grab the bag. Get your bag. Figure figure out what your figure out what your thing is.
I don't know, man. I just want people like, voters to people to just understand. Yeah.
They're not going to. Get your bag. Like everybody else we
have is if Okay. Nick, can you pull up the the Friedberg spending chart?
We've talked about this a few times.
Well, okay. So if you look there, there was a huge spike because of COVID because of all that COVID stimulus that was adopted in the economy. I think we're now down to about 22% for 2023.
Mhmm.
But that that's a big number. You know, we talked about how the absolute max you can extract is 20%. So what they should do is just free spending until the federal net outlays as a percent of GDP is down to 20%. That would be the the simple such
an easy solution. What's great about it is it takes out the politicians making this partisan. Hey, there is a logical amount of, you know, taxation we can do before we freeze up the productivity of the country, which if you talk to anybody, when taxes get high, people just start getting Protecting their wealth. I think you alluded to that, which strategies as opposed to investing.
The hard part of it is that I mean, look, I think we should do it, you know, 20 percent cap and and free spending till we get there. The the hard part is that our interest expense keeps growing because as our debt rolls onto more expensive higher interest bonds than our interest expenses increasing. Just a few years ago, our interest expense is only 300,000,000,000 a year, and now it's over a trillion a year. And that's just gonna keep growing and growing. And then the other thing that's gonna grow is all the entitlements related to to demographics.
So are the country's demographics are getting worse, and so the entitlement expenses are gonna go up. So even holding it to 20% if we could get there is gonna take some work.
The la I don't know if you read Larry Sacks letter from BlackRock. It was really good, and you talked about it.
I mean, his 2030 business plan, Jason?
Basically, yeah, it's his way
of extracting value from it, but he did make some salient points in it as opposed to just him talking his book of why you should do his retirement your retirement savings with BlackRock is a short point, but just getting the what age do people retire at? That discussion we need to have, and we were not having that as a country. And then what percentage of benefits do people get at different and how do we incentivize people to stay in the workforce?
Well, at a minimum, don't you agree we should just allow people to opt out of Social Security and in a simple way of saying, I don't need it, and I'll take care of myself. Use these proceeds for somebody else that could use it that who has a better neatly.
Yeah. I mean, and then getting people to participate in the 401 ks, you know, at an early age and defaulting those to on as a defaulting to off. There's a lot of small behavioral things we could do in this country to get people saving
earlier. Well,
I I saw that Robin Hood was running a scheme where if you moved your Roth IRA, they gave you 3% cashback. And I thought, is there an upper bound limit on what on how much you could move over? Cause I wonder if I could
just keep your money in there for 5 years. Yeah.
But that's okay. I'm just wondering, like, will they really write, like, a $100,000,000 check if you move
Actually, yep.
$1,000,000. Robin Hood just sent me something thing. So we had a portfolio company called X One, which was making a new, like, credit card and credit card app. It was, like, awesome. I don't know if you guys used it.
Anyway, they got acquired by Robinhood. And so the guys are just sent me their new Robinhood gold card. Card.
Yeah.
This thing is the heaviest card here. Just listen to it drop. Hold on. Yeah. Tell them.
Don't cut yourself. Don't cut your toe off.
Apparently, it's got $1100 worth of gold in it. That's why I've worked
with myself, and I've I'm proud to say I've sold no shares of my Robinhood I keep all my carbonate chairs.
If my if I move my raw thyroid, they'll have to give you the whole building.
You'll give me a gold side of your building.
Actually, they they sent it to me in a, Louis Vuitton with a Louis Vuitton wallet. This is, like, unbelievable. Yes. It's got
And look, they got a $50,000 add on.
And then You got
a $50,000 add on.
Look at this. You got, like, a little LV wallet there?
Oh, I
like it. There you have it, folks. Send the movie to Tom Molly. Get a free $50,000 ad on the pod. Sign up now for your Robinhood Gold.
Yeah. But you what is it? A credit card?
Yes. A credit card.
It's a credit card.
Yeah. Their their their their whole plan was always to This is hype.
Provide the full suite of services.
Do you guys carry credit cards and money?
Do you have any money for any wallet? But I always carry money.
You have money?
I always carry.
Yeah. Like, to tip tip people or something?
Always have some cash ish. Never you always gotta have a couple of Hyundai just in case. This is a really bad habit. You gotta keep a couple of Hyundai in the bag
put the 100 on the outside. Jay count is a bunch of ones. On the outside. No.
No. No. No. You can what we do is we get rid of the ones, the fives and the tens, so just get rid
of those. You don't even keep
them in circulation. That's That's the best line.
I get cash when I go to Vegas, but that's the only time.
The the best line ever was a woman comes up to Sacks Davis Junior, and she Sacks, hey. Can can you can you can you break, you know, this whatever amount of money and he just pulls out a 100 and gives her a 100. And she's, no. No. Can can you make change?
He says that is changed, baby. That is strange. That's when he considered changes the hunting.
There was a story out of Jeju. So, you know, Triton poker? Yes. Okay. I'm not gonna say who it is, but there's a guy that's playing the high stakes cash game.
And, apparently, so he lost, like, 8,000,000 bucks. Okay. He tipped out 450 k Jason 25 k chips to, like, the staff and, like, the person giving him a massage and stuff. So it apparently became free for all trying to get into this game where everybody was like, are we pulling tips? Are we pulling tips?
And they were like, no. We're not pulling tips. Just flags. He was chipping out flags. Wow.
That is incredibly incredibly generous. Alright. Science Corner, rapid fire. You wanted to get to Coco. Here we are.
§06Science Corner: Why the price of cocoa has skyrocketed!
We're at Coco. Friedberg? You have You
guys you guys asked about Coco. You wanna pull up the commodity price chart on Coco? Look at that.
Okay. This is not cocaine. This is cocoa. This is chocolate precursor to chocolate.
Not coke. This is chocolate. As you guys can see from this chart, Coco's moved in price from about 2000 bucks a ton, which is where it normally trades at to $10,000 a ton. 70% of cocoa is grown in West Africa, in Ghana and Ivory Coast. And in that area, they've been severely hit by this El Nino weather near that we're just kinda coming out of.
So here's all the cocoa production. 73% of it's in Africa, mostly in Ghana and Ivory Coast, That's where most of the world's cocoa beans are produced. Coco is grown from the cacao tree, which is about 10 feet tall. These bean pods, you take them down, you roast the beans, crushing it, you make cocoa. When you eat a Hershey's bar, for example, 11% of that bar is ground up cocoa powder.
So cocoa is like the critical ingredient and all the chocolate products we consume. So we have this massive El Nino event last year. So here you can see see surface temperatures So in q 4 of last year, El Nino spiked like crazy, and that caused a lot of rainfall to hit the west coast of Africa. And as a result, this fungus was spread in cocoa trees. There's a fungus called Black pod disease, and this fungus spreads when rainfall hits the ground and it splashes up, gets in the tree, and then the tree has really bad yield and the cocoa production goes down.
So now if you look at the cocoa production out of Ghana, you can see that we've seen a, like, 50% rough decline in cocoa production on the final bar chart. So that's the effect. So when that happened, basically everyone started to corner the market. So all the buyers of Coco went in and started buying cocoa like crazy. And then all the short sellers got squeezed because there's typically a pretty good balance on the short and long slide in the market.
So the short sellers got squeezed, and it caused this big parabolic jump in price. And that's where we're at today. The companies, again, 11% of chocolate that you're buying at the store is made from this cocoa powder. They're talking about cutting the size of their chocolate bars, raising prices, starting teams other ingredients. So you'll start to see that happen in the shelves in the next couple of months.
But this is the big news in the commodity markets right now as this this parabolic spike in cocoa prices. And, you know, consumers will get hit with high prices and smaller chocolate bars.
Isn't there a scene in trading places
Yeah. The the OJ features. Orange.
Yeah. Ojacenters.
That's right. They squeeze the orange market. That's right. That's basically what's happening, Coco. So there was a bad weather event yields dropped by 50%.
So we got half the production. And then all the traders came in and they squeezed the short side of the market. And price spike. So that's kinda what's going on.
If I had a good start for the the number of times a fungus has ruined a good time, man.
Well, you know, it's interesting. I was looking at this, and I was worried about chocolate prices. I was worried
about chocolate
prices. Specifically.
What happens right now in these
edible anus, grainy's prices have gone
up somehow. So These chocolate, Uranus, prices are skyrockets. How
do you find this? I just typed in Uranus. I took Friedberg uranus and chocolate, and this came up. It was the number one result.
So we know it. We
There it is. Uranus. Awesome. Truck of prices are going up.
I know what I'm getting you guys for Christmas this year.
Well, it's you know, so it's priced in euros, not dollars.
Yeah. It's not available in America.
It's It
was coming from Belgium. I guess they got some serious hint going on over there.
That's if you wanna chocolate Uranus. It's it's there for you. Hype and I just was like Google search. Chocolate your anus. And, yeah, I don't recommend you make that search.
If you're listening to the pond.
Well, when I when I heard those, spike and cook prices, it made me think of this.
Say hello to my little friends.
I went the last time when's the last time you watched squareface beginning to end, not, like, just quite a
COVID. I watched it. Yeah. It holds up. Yeah?
Yeah. I mean, man, it is by the way, I saw it to you too. Chamath, have you seen it?
No. No. Don't say anything because I I need to wait till it comes to streaming.
Okay. I loved it. I'm going back to see it. I'm going
back to see it again. I'm going to see it. I'm actually so you're with me.
I didn't hate it. I just think it's overrated. Friedberg said it was, like, one of the greatest moments It is one of
§07Movie talk and wrap!
the greatest movies I've ever I thought.
No. It's completely overrated. And I'm not saying it's bad. It's just not a
scale of 1 to 10. Give it a number.
I will do anything to have this guy do dune 3. He's talking about whether or not he should do it. He's like, I'm only gonna do it if it's gonna be better than You know, he's a Canadian guy. Yeah.
He did Circario.
Circario and the arrival. Like, he's honestly one of the top 3 director is that Villanueva?
Filanueva? No. Denis Villanuev.
Villanuev. I don't know. The the hero in that movie is like this soy boy type. I mean, I don't really believe that he's leading an
army. I just
that's not credible.
You know, the story? I I read a lot about, you know, these were all, like, short stories published in magazines by Frank Herbert.
That were serialized.
And he was really into drugs. He was really into mushrooms. And so the spice came around from the mushrooms.
Sacks sense.
It was written in 1965 when there was this idea that we needed to move towards 0 population growth because the population spike on earth was gonna cause resource constraints, and we were all gonna die if you guys remember this. And so there was this big movement, it's what marks the hippie movement
David they not have math back in 1965?
Yeah. They they really did think this and that there wasn't gonna be improvements in productivity, so there were limited resources. The world was gonna run out of land. And the ecology or the environmentalist movement kind of sprung out of this effort. So a lot of what he wrote about was the ecology and the connection between the fungus and taking mushrooms and better understanding the world around you.
So so much of this was rooted in a hippie movement Sacks. To your point when he wrote these original,
Do they ever explain what the spice is in June?
No. And it was time. They never explained why
he didn't want spike. When Frank
Herbert was interviewed later, he talked about how it was meant to be about, fungus is this the greater of life and this greater of life. And he wanted spice to be representative of mushrooms of fungus
Got it.
Psilocybin. Got it.
And it
looks like it opens your mind and you get more connected with nature and all this stuff. So was rooted in that, but they never really get into details on it in in the book.
So this film to you, Friedberg, is a 10 out of 10.
I do it, like, 10.
Okay. I was about to I was gonna give it an 8 and a half out of 10.
I think the first half was slower. I'd say, like, the second I mean, they're, like, Too much. I'm not ruining anything.
I really like Zendaya. I think she's super cool. I agree with you, Sacks. I'm not a huge Timothy Chalamet fan. I think he's too skinny.
Is it his name? Is it the name, or is it the whole package?
I grew up in Canada with a lot of French people, so I'm cool with that. I don't like He's he's just too skinny. Like, do a couple push ups or something.
It's the vibes, the general. What do you give at Sacks? And, Yeah. I'll
give it an 8 a half.
I won't give it a 9.
I'll give it a 9. I'll give it
a Sacks a half.
Sacks a half. Now if it had a proper lead, who is more than a £120.
Sacks is a good What would you give us? Yeah. Who's a good lead for you, Saks, where you would have given it a 9? It's exactly the same. Everything is the same.
Jake's down a soy boy.
Oh, Jake Gyllenhaal.
Is it is that a is that
a more of a Sacks night?
Like ultimate fighting, buddy Jake Gyllenhaal?
Yes. I mean, who Tom Cruise?
Ryan Dosling?
Right. Awesome. So you think, sir? What would you use a 10 out of 10 for you?
I don't know. You use like a young Russell Pro or something.
Right. Don't you?
I mean
But have you seen the original Dean? That guy, if you think
that Oh
my god.
In a David Lynch movie.
Yeah. It was a little I mean, it was similarly. It was like a soft protagonist. What is what
is the What is a 9 out
of 10 being
a Sacks movie?
Yeah. What's a 10 out of 10 for you, Saks?
Gladiator, could fellas, casino,
Sicarino's incredible. Sicario's incredible. Yeah. All those
are good. All those
are good.
I know. Those are all great.
I I wanna give this a 7. I I mean, I I gotta see it again. I mean, I'll revise up just 7, but it's not more than a 7 in my buck.
Isn't there like a sicario 3 coming in?
I hope so. Sicario 1 and 2
are so rewatchable.
It was ultimately
rewatchable. Sicario 1 was unbelievable. Unbelievable. Sicarrio 2 does it for me. Emily wants
at the border where you hear the noise of, like, what are those locusts? Totally. Yeah. Oh my gosh. No.
No. When they're in
traffic and the cars are parked, Yeah. That's what I mean.
Yeah. I see it. It's like
I'm gonna go over it. It's like the bane scene in Dark Knight.
Yeah. And and also when he's at the dinner table of the drug lord.
Yeah. Oh, god. That's
intense. Intense.
I think that film has probably the best cadence of any modern film. Like, the way he kept pace in that film did not turn off for one second. You were hooked from beginning to end, and you could walk in. Well, by the way, it's like godfather was also like that.
The pacing in Dune 2 is terrible. I mean, he spends all time in the wilderness, and they I wanna
use that now.
That is isn't it. Are you
haven't seen it yet, then why are we talking?
No. Because we're trying to try to come to see you. Conversation Jason time.
Does anyone else think that the arrival is, like, one of the best films of our generation?
No. I mean, it's good, but it's not. I think it's good. Great.
It's like such a mind blowing film.
Oh, Sacks. You know?
I haven't seen that.
Maybe maybe like a a young buff Matt Damon. No?
Uh-uh. Matt Damon? No?
I don't really see him in school.
K. How about, what's that guy's name? Adam Driver?
Yeah.
Young Adam Driver? Yeah. Yeah.
Yeah. Oh,
yeah. Adam driver would work. Yeah.
He could do it.
That's kind
of like a comic Laughlin type pick. You know, he's a
world. Exactly.
Little little email. Yeah.
Yeah. But not so not.
Yeah. I mean, the the idea that he's gonna win all these fights and he weighs a £120 wet out of the showers makes no sense.
Zendaya does?
Does she kick his ass?
Basically. Yeah. I mean, let's not give it up here now. No. That scene with best opening scene of a film.
What do you got, Sacks? What's your best, most intense scene?
Of of any film? Any opening scene? Tense.
The, I mean, the Joker Bancheist scene is incredible. That's good.
That's incredible. Was in the shaft of there will be blood.
Absolutely climbing out of there with the broken leg. Oh
my god. That sets the tone. That's who he is as a person. That's everything.
That's your that's your spirit animal.
That's it.
You're you're bitter and angry. And you have a you have a competition
competition in me.
I don't like to see others Sacks. I'm David Friedberg. I'd like to see the world first.
Strike? Strike.
Actually, it's true.
It's accurate. It's not really accurate.
It's your favorite movie.
It's just no reason. Yeah.
You you admit.
Own it.
Just own it. I drink your milkshake.
Keep the lie alive.
I do have a competition in me. Yeah.
It's funny. The only, like, opening scene of a movie that I really remember is, like, reservoir dogs. You know, when you talk about, like, an opening scene that's memorable.
Pulp fiction?
Well, what was the openings? Oh, yeah. The OpenC is pretty good too with the robbing, the diner.
Yeah. The diner. It's like you're you're hooked on the dialogue, right, the beginning.
Yeah. Yeah. Probably some Tarantino moving. There
was nothing like that. Right? When that came
out, you're like, what is this? And then you're just like Actually,
the opening scene at Goodfellas is really good where the guy's kicking the trunk from the inside. They think he's dead.
Yeah. Yeah. Yeah. Saving private, Ryan.
Also, I'd say he
great, Grant.
Jamal, if you wanna go see it at IMAX. You gotta put heat
on that on that list, Jason.
Heat. Amazing. Yeah.
I mean, heat is definitely top 10. They're coming out with heat too, by the way. They wrote a book and then this coming out. I can't wait for heat too and 8 or 2.
Where where do you go to see the Sacks?
They have a good one in the city in San Francisco.
The metro 1, it's a 70 miller.
That's a 70 millimeter. It's like I'm actually enormous. It's and they're doing the full print at that theater of June 2. So it's like the Sacks he shot the thing in 70 millimeter IMAX. Sort of just, like, extremely expensive.
Like absurdly expensive.
Absurdly. He's been, like, a $190,000,000 on this film.
It's fantastic. Everybody goes to do too.
Sacks, what what films do you have coming out? Anything interesting?
You're producing anything?
What's in the production line?
You bought the rights, right, something?
We released Dolly Land earlier this year with Ben Kingsley playing Dolly. Yeah. Congrats. Actually, Elon just posted a long reminiscence about how we made thank you for smoking, which was kinda cool. Do you guys see that?
Nice. No. I didn't see it. He tweeted it.
Or Someone tweeted like, hey. Did you know that, like, Elon was and Peter Teal and Max Levchin and David Sacks produced this movie. Thank you for smoking, because it's been, like, almost 20 years And so I remember. People don't know about it. So, anyway, someone tweeted it and Elon responded.
There's like a really crazy story behind it, and they were like, oh, tell us. And He wrote up a long tweet explaining how he got the rights and his memory was actually really good. I was like, impressed that he remembered all of these details from 20 years ago. Yeah. I tweeted Sacks, like, look, if if Jason Reitman's up for the sequel, let's do it.
Reitman's doing pretty good. He's doing okay. Alright, everybody. For the rainman, David Sachs, Shamoff, Palihapitiya, the chairman dictator, the Sullivan of Science, and the world's greatest moderator blah blah blah. We'll see you.
Oh, and by the way, if you're listening to this, go ahead and check out. All in podcast on YouTube and subscribe. When we hit a 1,000,000 subscribers, which we're well on our way to halfway there, I think. We're gonna throw a million subscriber party. And so, yeah, subscribe, and you might get an invite.
Then we're gonna try to have as many people at the million subscriber party as possible when we hit, I think 600,000. We're gonna do a live q and a on the Chamath. So really cool milestones coming up for the pod, and we'll see you all next time. Bye bye.
Bye bye.
To let your winter's ride. Rainman, David Sacks.
And it said we open source it to the fans in a car crazy weather.
Uh-uh. You should all just get a room and just have because they're always useless. It's like this, like, sexual tension, but they just need to release them out. We need to get