All-In with Chamath, Jason, Sacks & Friedberg - E123: Trump indictment, de-dollarization, should VCs back Chinese AI? RIP Bob Lee

Episode Date: April 7, 2023

(0:00) Bestie intros! (4:12) Trump indictment (16:52) De-dollarization: What's real and what's overblown? (39:35) Debt ceiling vote predictions (56:36) US investors indirectly backing Chinese AI startups: should it be allowed? Saudi Arabia discloses VC investments as institutional US LPs cycle out of venture (1:10:02) RIP Bob Lee, fixing San Francisco Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://www.cbsnews.com/news/trump-indictment-34-felony-counts-charges-new-york-read https://nymag.com/intelligencer/2023/04/donald-trump-new-york-indictment-bragg-should-not-be-brought.html https://anncoulter.substack.com/p/youre-being-played-republicans https://theweek.com/donald-trump/1022331/former-manhattan-da-says-federal-prosecutors-asked-him-to-stand-down-on-trump https://www.barrons.com/news/china-brazil-strike-deal-to-ditch-dollar-for-trade-8ed4e799 https://twitter.com/DavidSacks/status/1638957986138959873 https://www.illinoispolicy.org/chicago-has-more-pension-debt-than-44-states https://www.yahoo.com/now/social-security-funds-could-run-120000267.html https://wsj.com/articles/the-coming-biden-bailout-of-blue-states-and-cities-rhode-island-california-pension-liability-underwater-rates-svb-5033c1e5 https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYONGDA188S https://www.longtermtrends.net/us-debt-to-gdp https://pitchbook.com/news/articles/Sanabil-Saudi-Arabia-PIF-disclosures https://www.bloomberg.com/news/articles/2023-03-31/adam-neumann-angles-to-take-new-startup-flow-to-saudi-arabia https://www.theinformation.com/articles/sequoia-and-other-u-s-backed-vcs-are-funding-chinas-answer-to-openai https://twitter.com/rabois/status/1643655946579607565 https://twitter.com/jarvis_best/status/1643667684247371776 https://twitter.com/FrancisSuarez/status/1642862135226126338 https://www.chicagotribune.com/politics/elections/ct-chicago-mayor-election-winner-declared-20230405-plratgzcbrewbngbjcsxwmycgi-story.html

I can't see what's on your hat. What does it say? Super gut. One of my most exciting companies called Ohio. Oh, Mahalo. I still have Mahalo.com. No, not Mahalo. Unrelated, completely unrelated. writing like human curated search result pages. I remember that. Look at Chatchee Pete. So well, you're a great guy to reference the Chatchee Pete thing. Coming out of that. Well, then what happened was they did the Panda update and we went from 10 million down to 500,000 in revenue overnight. What was the Panda update?

They looked at who the top sites were. E how? Hello, yeah, et cetera. And they just said, nobody can get any more than this amount of traffic. They looked at who the top sites were, eHow, Mjolo, etc. They just said nobody can get any more than this amount of traffic. They literally throttled the number of unique users they would send to you. That was it, game over. Then everybody I knew at Google wouldn't return my emails. We don't have partnerships with anybody.

That's what Matt Kutstoni. Are you saying that Mahalo's lack of success had nothing to do with the poor product in sh**y execution? It was Google's malfeasance. It got really rare reviews. It was backed by Sequoia. So did the movie sh**, but it sucked. You know, when you build a company

that gets to 10 million in revenue in 18 months, you can talk to them off, but basically looking at your resume here, I see that you've created nothing in your entire career. When you get any arena, the arena, and you actually build a product, then you can talk to me. I had the number one blog in the world, one of the top five tech magazines in the world, and this is the number one tech and business podcast. I'm so good. I touched a soft spot. I got to the War of Wonder belly there. Jake Halt so rarely goes after Chavoth when he does. It's just gold. It's like, it's a

grunt. You're talking to three founders here, Chimoth. You're the odd person out. So when you want to talk about product, then make one. Okay. So gross. And yet I'm the richest. It's so dilding. It must dild you. Totally fine. Soak Kim Jong Un, Soak Putin. Okay. There's a lot of rich people in the world. But these are three products, okay, dictator? There's your f**king cold open, let's go. What? You're like your winner's ride.

Rainman, David Sack. And I said we open source it to the fans and they've just got crazy with it. Love you guys. I said, we know you can want going on. All right Love you guys, nice. Queen of kilowatt. Going lonely. All right, let's get started everybody. It's been a big week. There's a lot to talk about.

Might be a little bit of a controversial spicy agenda today here on the all-in podcast with me again. The Sultan of Science, who is tearing up the YouTube comments. Everybody asking the Sultan of silence to contribute more and to speak more. But when he does speak, my Lord, he drops those knowledge bombs. How you doing, Sultan of science? I'm hanging in there. You're hanging in there. Okay. Well, I'm hanging in there. Man, if you were, it's, I guess, hanging in there. Okay. Great. With us, again, of course, another Android David Sacks. Sacks. How are you doing? I am doing

fine. How are you? Wait, let me ask G.P.T. What's the question? How are you doing? I am doing fine. How are you? Let me ask G.P.T. What's the question? How are you doing? Let me ask it. Hold on. Let me see what it says. I mean, basically, Chatsy P4 is the ultimate Asperger equalizer. You guys are going to benefit most from this. I asked it. How are you? It says, as an AI language model, I don't have feelings or conscience, so I don't experience emotions or states of being like a human does. However, I'm here and ready to help you with any questions or topics you'd like to discuss. How can I assist you today? That's pretty similar to how you feel except you don't offer to help anybody.

Okay, also with us is the dictator himself. I'm here to talk about topics. Looking forward to today's episode and with us, the dictator with a shockingly, shockingly low cut. There's only one button on the shirt. Only one button. Okay, made from a tiny Albuy L here, right here. They were like, should we put buttons in their life? Why put buttons? And then, conservation movement. Exactly. No, no, no, no, the one button is what counts. That is a baby albino rhinoceros that was killed fed to Chimoff on his vacation and then attached to his linen shirt. I guess let's just get this out of the way. Trump was a arrayed, I guess, is the term he was charged in New York with 34 felony counts of falsifying

business records, Alvin Bragg alleged Trump orchestrated catching kill scheme as well to suppress damaging information before the 2016 election. Of course, Trump pleaded not guilty and did a feisty press conference or speech rally at more a log go after that. Prosecutor say the scheme involved falsifying business records to conceal payments to stormy Daniels. We know all that. Same thing Michael Cohen went to jail for, the indictment wasn't a speaking indictment,

where it explained all the details. So Alvin Bragg hasn't tipped his cards by explaining in detail what the legal theories are and which information he has. And he was pretty clear about that, that he was not going to tip his cards, which makes us even more hard to understand what's going on and creates even more divisiveness. Predictively, the right is framing this as a witch hunt. But surprisingly, many on the left, including former SDNY head, Pete Barara of the Amazing Podcast, Stay Too With Pete, which I love. He felt this was the weakest of the four major investigations that trunk is under, and he expressed some concerns on his podcast that it was light and not detailed and

he might have Not actually pursued this unless he had a 99% or something like that chance because it is the president's Sacks, I guess everybody's expecting us to fight over this, but to just be a little preemptive here As much as I think Trump is like the most unethical person to ever hold the office, this does seem a little light and I'm hoping Bragg has the goods on him because why bring a Mr. Meena case? You know, and these are all I guess Mr. Meeners that are being elevated to felonies because of tax evasion possibly or election interference. So what what are you, steel man, or just generally speak about the case here, because I know that you're a man

of law and water. Well, many people on the left are criticizing this case. Jonathan Chate, who's a liberal writer for the New York magazine, wrote a good column about it. And look here, the reasons why. Number one, the underlying behavior here is that Trump engaged in a private settlement with stormy Daniels.

That's not illegal. Even if it is so-called hush money, that is legal. You're allowed to do that. Number two is that he used personal funds to do it. He did not use campaign funds. This is why Alvin Bragg has had to make this distorted, ridiculous claim that he should have used campaign funds to do it. But does anyone believe that if Trump had used campaign funds, that wouldn't be alleged as the crime. So he's kind of damned if he does, damned if he doesn't here. I think that, you know, what the

law is trying to do with these rules around campaign funds is protect donors from candidates misappropriating them. And Trump had every right to use personal funds to engage in the settlement. It's a major distortion of campaign finance rules. Third, these campaign finance rules are federal laws. They're not state laws. So it's not up to Alvin Bragg to enforce them. And in fact, the feds looked at this and decided not to prosecute it because

if they did, they'd have to enforce similar laws against Hillary Clinton. Recall that Hillary Clinton had a problem where she used campaign funds to fund the payment to Christopher Steel to write the SteelDocca. And that was a real problem. And it was miscategorized as legal fees. And she had to pay a fine for that But no one talked about locking her up over it. No one was talking about You know, inditing her and sending her to jail And so part of the reason why I think the feds Didn't want to look at this is because they'd have to look at similar cases that are even more egregious

And then finally the last thing is that we're well-passed the statute of limitations on this whole matter So Alvin Bragg is really out here on the limb. He's passed the statue of limitations. He's enforcing laws or not his business strength force. They're distorted interpretations of those laws. And the underlying conduct here is fully legal. So I think everybody is kind of like wondering why he's doing this. And I think there's two theories.

Either Alvin Bragg is incredibly stupid, or he's smart yeah and the the sort of three-dimensional chess explanation that and culture has is that this is all a giant honey pot for republicans because they're all rallying around trump here because they perceive i think correctly that he's being railroaded and he's being he is the victim of a political prosecution but in rallying around him to defend him you see that trumps poll ratings among republicans in the primary are going through the roof. Dishances are going down. And so what enculture fears is that this is all in elaborate ruse to make Trump the nominee because Biden would much rather face a re-election against Trump, than against a young youthful vigorous governor like a DeSantis.

Judging Bragg has a bunch of more information and maybe that tax evasion is the issue he'll go after because that seems to be the other theory here is he's not going to do the federal election stuff. He's going to go after the tax evasion, which is what they already got. The Trump organization on when Waisel, I guess the CFO, was going to jail for six months. It's going to be hard to connect the dogs to- They don't want $1.6 million. Fine, for that company. Good, Jim.

These are Mr. Meanor crimes. And to convert them to a felony, the crime needs to have been done in the process of aiding and abetting another crime. And the tax evasion is the concept here. When he listed the bullet point list of all of the reasons that or all of his evidence, it seemed to point to what David said, which is just his campaign finance violations. This whole thing just seems like such an enormous waste of time.

Just think about the amount of money that will have to be spent on just securing New York City every time he shows up, the five car motorcades, the secret service, the police, the this, the disruption to people. For what really ultimately, I think is right, it's kind of like, you know, it's a bit of like, man, this case should have been brought years ago. Well, in relation to that, they were told to stand down from doing that because of the, you can't indict a sitting president and that's paused. So that's another legal theory that's going to have to be tested. Jason, the feds looked at this years ago and they decided not to press charges. They were told to not do it because he was a sitting president. No,

they were. No, he's been out of office now for a couple of years. Why didn't they move forward? They were. That was the process they were doing. So that should take two years to decide. The previous DA said he was told to stand down because the size of his advance decided not to prosecute on the same underlying offenses. That was his decision he decided not to. Who told him to stand down?

No one can tell him to stand down. Yeah, the office of... SIR is Vance decided not to move forward with this very same case. When the statute of limitations had not expired, now it has, and Alvin Bragg's moved forward. Yeah, you really have to stretch here to come up with any kind of plausibility to this, to this case. And I mean, you have to wonder why he's doing it is a disnaked partisanship. Or are they trying to make Trump their Republican

nominee? Here's what Vance said on Meet the Press this weekend. I was asked by the U.S. Attorney's Office and the Southern District to stand down on the investigation. They were asked to stand down as well because the, you can't indict a sitting president. Anyway, all this stuff is going to get done in the wash. I don't think we have to spend too much time on it because we'll find out I think in the coming weeks. Do the Democrats actually want him to get convicted? Then what? He's going to be under House

arrest and Mar-a-Lago because he's not going to be sent to jail. Then what? Then DeSantis actually will win the nomination. What exactly is the perfect outcome? Just to create this theater, waste, taxpayer resources, only to have Trump acquitted, just so that he can win the nomination, and then he can go against Biden and lose. This seems so far fetched in idiotic. Move on. Close his chapter and move on. Totally.

This is ripping the country apart for no reason, and such a stupid case. Such a stupid case. Even the people who would like to prosecute Trump, like you, Jason, I think, have a problem with it. And one of the reasons why this is going to be counterproductive, even to the anti-Trump forces is that by going first with this case, Alvin Bragg is poisoning the well for any future case he might bring against Trump. Because now all future cases against Trump are going to be seen as painted with the same brush, which is a nakedly partisan sort of witch hunt. And there may be other cases out there that have more validity to them, but they're all

going to be seen as of a piece with this sort of Alvin Bragg. Yeah, that was pre-exposition. I think it's a logical one. I don't disagree. What do you think of the other three cases, January 6, the interference in Georgia where they recorded on my tape, and then the stolen documents and the obstruction of justice. Do you think all four cases are politically motivated, and none of them have any validity

to them, sex? I mean, look, the question I have to ask is if Donald Trump was a private citizen who never ran for president, would he be the target of any of these prosecutions? I mean, he was, you know, a high-profile business figure for decades, and he wasn't prosecuted like this. And so that's really the question you have to ask. And well, we want to go to jail. Cohen did go to jail for the same crime. So the answer is yes. What Michael Cohen wasn't prosecuted till after Trump was president. No, what I'm saying is you asked if if he was not president, if he would, let me finish,

you asked if if Trump was not a president, if he would, let me finish, you asked if Trump was not a president, if he would have been prosecuted for this crime, in fact, another person, Michael Cohen, was prosecuted for this crime and did serve jail time. So the answer is yes, he would have been. And they brought these cases, the spanking kind of cases, and they brought the other one for the 1.6 million fine and weasel were going to jail. So I think they would actually. But anyway, my question to you is, I think this is actually, but anyway, I don't think all four politically

motivated is my question to you. I don't want to comment on the other cases until I see what case is actually made and what the merits of them are. However, I don't believe that all these prosecutors all over the country be looking at Donald Trump this way. If he was a private citizen, he never ran for office. And I think we have a big problem in our political system when political disagreements are criminalized. This has been a nasty trend that's been going on for many years. It was usually, I guess, practice against staffers. Here or there, you'd have some executive branch staffer who would find themselves on the wrong end of a prosecution and they'd end up going to jail

Maybe they get pardoned or not, but now it's reached all the way to the top and you have presidential candidates basically being Prosecuted and I do not believe they'd be prosecuted if they were not major political figures and it looks really bad for The political figure who is leading it right now in the Republican Party to be Joe Biden's opponent in the next election to be prosecuted by one of Joe Biden's political allies. I mean, if this were happening in some other country, the United States would be criticizing it as some sort of, you know, banana republic type move. So this is not the direction we want our politics to go. And look, I don't want Trump to be the nominee. I supported a different candidate, but I think that to be interfering in our elections

for Alvin Brackley interfering in the political process this way is a reach and it's setting a horrible precedent for the future. I mean, we're talking about major presidential candidates. Let me ask a follow-up question then, sir. By local DAs. I mean, we're talking about major presidential candidates, but we asked a follow up question then, so by local DAs, I mean, why would we want this? So let me ask a follow up question then. Do you, the DOJ is currently investigating Hunter Biden, and then obviously that goes up to the big guy with the 10% do you think the DOJ should be investigating Hunter Biden? Or do you think we should be giving a pass

to presidential, of presidents and their families? Well, the Hunter Biden case, I mean, this is one where you've got foreign governments basically paying off Hunter Biden for political access. Now that may ultimately be legal because I think influence peddling is kind of a business that takes place all over Washington but that actually does speak to the integrity of our political system. At the end of the day, would I send Hunter Biden to jail? No, I don't think so. Like I said, I don't like criminalizing political disagreements, but what Hunter Biden did was definitely pretty shady.

And if he's willing to look up. I think he's willing to look up. Hunter Biden and Trump and his family are both shady. Is my feeling on it. We've got to get better candidates in here. Nikki Haley, your candidate, your mouth raised $ $11 million last week, she's on fire. Freeberg, you wanna jump into this and touch the third rail you want us to move on?

Let's move on. All right, so there's been a lot of Twitter back and forth about the D dollarization. And if it's real, if it's happening, if it's not, last week, China and Brazil struck a deal to trade in their own currencies, the Brazilian government not, last week China and Brazil struck a deal to trade in their own currencies. The Brazilian government announced

the two countries would no longer use the US dollar as an intermediary. I don't know if that's for everything they trade or for certain things they're trading, it'll be a straight one for Rai's trade. China is the top US rival obviously and Brazil is one of the largest economies in Latin America. What are your thoughts, generally speaking, Freybriger?

I know that you have some exposure here, you know, with your company that I think you spacked recently. And you have some knowledge of the space, right? Well, I mean, China and Brazil are pretty sizable trade partners. I think it's around $150 billion a year of bilateral trade. China historically has made a lot of investments through their companies in railways, infrastructure, waterways, ports, and infrastructure to support the agriculture, manufacturing, economies in Brazil. It's a very deep tie.

Obviously, the closeness of that relationship, China became a bigger trading partner for Brazil in 2009, so passing the US. By the way, China has had similar trading strategies in Africa, in Australia. They've bought several companies in Australia. They've made massive infrastructure investments. The currency of trade is one element of a broader inter-quining that China has enabled by using its resources to invest in infrastructure development and then participating in the economic value and gain that arises from that. It still also supports the local country, the local population, the local economies in a meaningful way. I think it's worth noting that the anti-globalization moment that we're having in the US, and it may be a longer term trend, doesn't mean that globalization and global trade is going to slow down between China and other really important well-resourced nations around

the world. So the Brazil-Ch China summit that happened a week ago, where a lot of Brazilian executives went to China and had a very deep set of dialogues, but they also signed a ton of agreements on trade. And also in some of those cases, the trade being done in non-US dollar denominated currency, is worth noting as being that if the US does continue to push for de-globalization, we can only leverage our side of those relationships. China will continue to make investments, continue to develop trade and continue to develop really deep tie-ins with countries around the world from a resource perspective, from

an economic perspective, and ultimately, the leverage will sit with them on what currency folks are going to trade in. So, you know, what we're seeing with the China Saudi discussion around the Petro-Uwan, which doesn't seem to be really a standard thing yet, but we're starting to see inclinings of some deals happening in Yuan, but it's more related to the depth of the Chinese trade relationship with all these nations around the world. So, the more we kind of, as the US think, we want to de-globalize and reduce our trade relationships with other nations,

the more we're out of the way in allowing China to do that. I think it's worth observing that the Chinese economy will grow, the depth of their relationships will grow, potentially the strength and importance of their currency will continue to mount as they build these really deep infrastructure and investment clients around the world. Tremoth, what does a party trading in one do with the one? Did they buy a bunch of stuff from China? Not from China? What happens to the one?

Nothing. This whole thing is a huge nothing burger. This is the third deal that China has done. The other two countries are Pakistan and Brazil. And the reason why is I've seen like people on Twitter now breathlessly rambling on about de-dollarization and all of this stuff. And I think if any of these people would think from first principles, the first thing that you would know is that the yuan is pegged to the US dollar. And so as long as it's pegged, whether you trade through the US dollar or you don't and you directly go to yuan, you're indexed to the US dollar

and then you use a dollar swap to convert it into the currency you need. So I don't know, I think this is kind of like a lot of folks who don't really know what's going on. What do you think about the the depth of China's trade relationship? So forget about the domination of the currency, but the fact that the statistic now is that China's the top trading partner with 120 countries. You know, they surpassed the US with many of these countries over the last decade or two in particular,

and continue to increase the scale relative to the US where we're kind of decreasing our dependence on nations and reducing our trading. The reason why China has had so much dominance as a trading partner and the reason why China's central bank has the largest amount of foreign US dollar reserves, about three and a half trillion dollars, is exactly because of the thing that you want to ignore in order to have this high-faluting intellectual conversation. It is pegged to the US dollar. And until it is unpegged in a free-floating currency, we will never know what the real market

clearing price is. And just to be fair. And China has been able to, hold on, China has been very effectively able to manipulate this currency since they were brought into the WTO in order to engender that trading partner status. They were able to artificially suppress the value of their currency so that exports from China could gain traction in countries all around the world. You have to take into account this currency peg and you have to ask the question, where would the currency be if it wasn't free-floating? And then what would the incentives be for folks to replace the dollar? And I think

that there's a lot of interesting questions that are worth asking, but I think you have to be a little bit more intellectually honest to have the discussion. And just for clarity, Tremoth, you said they already have these deals with Pakistan and Pakistan. You met Pakistan and Russia, I think they already have those deals with those two. Pakistan and Russia. Right. Okay, good. I just want to make sure it's clear there.

Sax, do you have any thoughts on this? Is this an example of people just maybe taking the Ray Dahlio book and it fits a certain narrative and overhyping it or do you think this is an actual real trend in the world? That to be concerned about. I think D dollarization hasn't happened yet, but I think it's a risk. And I think there's a bunch of reasons why the risk is growing. So first of all, we have $32 trillion in debt. Someone has to finance that debt. And the bigger that number gets, the more unattractive our debt is because they have to be concerned that we're eventually going to monetize the debt, pay it back by printing a bunch of new

dollars. So, that's point number one is we have these massive deficits and debts. Number two is that we have, I think in the last couple of years, really weaponized the dollar. So if you look at what we've done with Ukraine and Russia, we basically seized hundreds of billions of dollars of Russian reserves that were held in dollars. We've excluded them from the swift banking system. We've imposed massive sanctions on them. And in fact, we now have sanctions on a huge number of countries

all over the world. So we're very sanctioned and happy. All of which makes these countries view the dollar as an unreliable store of value. Why would your store your money in something that can be taken away by the US? And specifically by the State Department. So I think this is a major change in the way that we've viewed the dollar for the last

couple of years, is we're going to use it as a weapon. That, again, that makes it... Well, that's not the first time we've ever done that, right? We've done sanctions against many different decansions. We've done sanctions. But as far as I know, we've never seized foreign currency reserves in excluded a country from Swift, which is the banking system. So as an instrument of US foreign policy, so I mean, I could be wrong about that, but this was a major event when it happened.

Remember, we also did stuff like seized the yachts and the foreign holdings of Russian oligarchs. Remember, there are ill-gotten gains. We suddenly decided they were ill-gotten. Let me tell you, we didn't think they were ill-gotten when those Russian billionaires were buying those yachts or buying New York real estate or one real estate or investing in Facebook or investing in companies here or buying sports teams or what have you. So we didn't think they were ill-gotten at the time that they were actually made and spent,

but we decided subsequently we're just going to seize those things. Well, again, if you are a foreign country or a wealthy person in a foreign country or decide where you're going to keep your money, you may not want it to be liable to the vagaries of US foreign policy. So I think all these things do matter, and when you're running the kind of debt and deficits we have, and you're making the US dollar less attractive, you are running a risk. I mean, that's the fact.

So I think people we have disagreements with on the dollar standard, because that's good in terms of power for us, which I think opens us up to a broader discussion. No, I'm just, just to clarify this, it's not even the dollar standard. What this deal was is to use this thing called Sips and Sips is the non-dollar competitor

to Swift. You settle across, let's just say you have two trading partners in two completely different countries that use a bank in each of their local areas, they typically swap the dollars in and they transfer, right, using this backbone of the financial infrastructure called SWIFT. China has built a competitor to it called SIPS, the CIPS, and China's been going around and signing folks up, makes a ton of sense, right? Hey, listen, if we're trading between each other, let's just use that.

So I think it's important to not paint this with more of a brush than it should be. I'm not saying that de-dollarization couldn't happen. I just think that everybody tries to take one random data point and conflate it all together to reinforce a radalia point from a book three years ago. I do think there's a group of catastrophes who maybe are maybe hoping this happens

or it's a great Twitter father. I think we are ahead of for some sort of government debt crisis. I said that there's gonna be three prongs to this financial crisis. One was these long-dated bonds having unrealized losses, which is causing problems in regional community banks. The second piece fits the commercial real estate crisis, which I think is metastasizing right now, which is also going

to be a banking crisis once all those unrealized losses come to you. And the third piece of it is government debt crisis. We have this $32 trillion debt that we're now having to refinance at much higher interest rates. I've read somewhere that half our government debt, so $16 billion, is going to come to you, $16 trillion, yeah. And it's going to have to be refinanced in the next three years. The average rate on that debt is 1.7%. Well, if you want to refinance it at 10 year rates, you're going to be looking at some

of between three and a half of 4% maybe more. So you're looking at a doubling of the interest costs. And I also read that by 2030, we're going to have over a trillion dollars of interest expense owed by the US government every year. That is money that's not funding anyone. So security is not funding anyone's health care. It's not funding one weapons program. It's not funding anything we want. It's this the big.

It's going to be more than a quarter of our total federal budget. Yeah. And this is where you start gambling. When you're chasing that big payment, you start taking risks. This is also where you have to expect the Fed will really want inflation to stay high. I've sort of what we've said before.

The only way out of this mathematically is to keep rates high. But the other thing, David, that you, when you mention all of this is, what about every other country? If you think that's the happening in the United States, I think it's important to make sure we at least consider every other major economy because it's not as if they're pristine sitting on the sidelines while this happens to the US.

This is my whole argument the whole time, which is if you're going to have this argument, you need to do it thoughtfully and relatively, right, because the euro is in the same amount of trouble. If you look across, it's not as if China is actually sitting pretty and smelling like roses either. Every major economy or trading block in the world is going to go through this at the same time. So it becomes a relative trade argument.

And there I just don't know enough to know whether the US is poorly positioned versus Europe or China, but it just seems like you get back to a place where it's like, okay, we need to find the flight to safety. What is the canonical flight to safety? If it's not a commodity like gold, it's probably the dollar until it's not. Yeah. Okay. Freeberg, obviously other countries have even more acute problems, higher debt to GDP,

which means higher debt payments, just rounding third here on this issue, any final thoughts on de-dollarization and servicing our debt. Look, it's, we're in trouble. And it's, it's unclear the timing and the path, but the arithmetic is pretty simple. In addition to the point sax made, you guys saw the news. The city of Chicago has a $44 billion pension hole. That's just the tip of the iceberg on unfunded pension liabilities.

From both state government, city government, even private institutions. This is, again, hundreds of millions of people worldwide that are expecting money coming to them from institutions that ultimately the federal government of the U.S. is likely going to have to backstop to some degree. So that's another huge check that's going to need to be written, but the federal government is inevitably going to have to write because we're not going to just let all these people have no money and become starving.

And social security right now is projected to go bankrupt sometime between 2030 and 2035. So we're going to have to write a check to cover the whole there. Plus the interest payment checks. So about your mock's point, Freeberg, of like, we can't have two other, let me just say freeberg finishes.

Relative to other societies, other countries. Yeah. So the very likely case is that relative wealth will decline. So in the near term, I think it's inevitable we have higher tax rates. I've said this before because in order to kind of meet the gap, even if we have these austerity measures or reduce costs or reduce the budget, as the Republicans are going to push for is the stat ceiling debate reaches its apex in 60 days from now, which you better believe this is going to be pretty, pretty damn dramatic.

And there's going to be real questions of what happens if the USD faults on its treasuries. If the USD faults on obligations that has on treasuries, there will be a real shift away from using those assets as the baseline of the risk-free rate worldwide. What the other thing will be, I don't know. I'll speak about the challenges I see with Bitcoin, if we want to at some point. Oh, did you hit a million yet? How is that?

But if you put all of this together, you're going to have to source income somewhere. You're going to have to take a piece of the assets and a piece of the income away from the private citizenry. So you're going to have to tax. And that tax will be used to kind of fill some of the whole. And then more of the whole will be filled by printing money. And that will lead to this kind of inflation of asset values, which ultimately means that the relative cost of things go up and relative wealth goes down.

And I think that's the point to take note is that anyone who's concentrated assets is going to have them effectively lost in the washout. Sacks you want to add? Well, I just want to add a couple of details there because Frieberg went pretty quickly over a couple of those examples. So just to take that Chicago case case the numbers I saw in an article this week I think I was in the most journal was that eighty percent. Of the property taxes in Chicago are now going just to pay for pensions so eighty percent are going to pay former workers not current city workers and more over. Those pensions are only twenty five% funded. So they've already over

promised by 75% benefits that they can't afford. How is this going to work? And you saw that we just had an election there and rather than fix the problem, they voted for a candidate Brandon Johnson who is even softer on crime than Lori Lightfoot. And the reason for that is because the government workers unions basically all supported him. So you have a situation in these blue cities and states where there is a massive civil service. They are the strongest special interest in local and state politics. They have already taken huge appropriations out of the state

budget in the form of these pensions, which aren't even adequately funded, we can barely afford them as they are. Should we have pension sacks? What do you think? Should we just have to do a few more one-chays? Sure. So what happened in the 1980s when there was a lot of pension reform in the private sector is you move from defined benefit to define contribution.

So you start having more defined contribution like 401k, the way that these public pensions work is defined benefit. So you know, what they'll do is they'll say that we're going to take your last year of employment with the city or state. And whatever your, whatever the amount of money was you made that last year, you're going to get 80 or 90% of it for the rest of your, not just your life, but your spouse's life too. And moreover, any overtime you earned becomes part of that calculation.

So everyone knows this game. And so what you see is in their final year, state or city employees will load up on the overtime, they'll earn twice as much. And then that's a 90% of that. Yeah. They get 90% of that for the rest of them and their spouse's life. We just can't afford to have rules like that that don't make any sense. And so, but the point is that the benefit that's been defined bears no relationship to the

amount of money that's gone into these pensions, right? And so you have a huge, simple solution here. You have a huge unfunded liability. But to Freembers Point, every blue city and state in the country is gonna have this problem and who's gonna pick up these expenses? You bring up great points,

but you just mash them all together in this mashed potato of random things. Like unfunded pension liabilities, you want Remimbi-re-eyyes trading and they're like the same thing. They're not the same thing. They're driven by totally different subject. But we're talking about listening to that.

And you just kind of throw them in this like a malgum soup and outcome like the front investigation. So I'm just saying like if these are important topics, but I'm just saying I do think they're motivated by totally different things and they're not related as much as we think they are related. I think they're related.

Let me walk you through how they're related. Okay, I want to hear how the REI's you want trade is connected to the Chicago pension system. The holes need to be filled. So the money is not going to just not get paid to the pensioners. Social security is not going to go away. Just like we saw in France, if you start to do that, you have revolutions in the street. There's literally bonfires at intersections in France, in Paris today, because people don't want to wait another two years before they get their pension payments. So ultimately, that check has to be written. When you add up the column

of how much money is not on the balance sheet today, how much liability is not on the balance sheet today that is ultimately gonna have to get paid out. And the US government is going to print money to pay it out. It indicates that there is a higher degree of uncertainty on whether or not I'm actually gonna get the value back for the bonds that I'm buying in US dollar denominator form or that the US dollar is actually gonna be strong enough to cover the cost or has enough kind of, you know, or has too much volatility because of this uncertainty. And I think

that that's really where people start to say, well, maybe the US dollar isn't that risk-free rate where it's a strong economy with a great balance sheet, great economic growth. There's certainly extraordinary potential because of the freedoms that we have to operate in this country as individuals through the enterprise, through the innovation, through the entrepreneurship, through the attraction of talent from all over the world to come here. But at the end of the day, we do seem to have a very big set of checks that we're going to have to write. And as those liability start to mount, there becomes a real question on, do I really want

to hold dollars? Maybe I want to hold something else. And maybe I diversify a little bit. And maybe instead of holding just dollars, I also hold other things. And as that starts to happen, you see a little bit of a shift. It's not an overnight thing. It's all catastrophic. One or the other, but it starts to bring into question whether the US dollar is the standard de facto system that's used for trade around the world. That's the point. And Saks, there is a solution to this superannuation is done in the UK and in Australia, where you contribute, you're

forced to contribute to your 401k, essentially, but you get to learn how to put money away and you become a little more authority over your future with these pensions where you're responsible for saving and you're kind of forced to save. And it seems to have worked really well in Australia and other places where people have great savings and you don't have this major debt load by the government doing it. So it's something for people to look into. Sax, did you want to add anything to this? Yeah, I mean, be this one to the death.

Just make it quick. I don't think we're just being this a death because I think it is a huge issue. I mean, look, the part of Chimau's argument that I agree with is that you do have to evaluate the dollar on relative terms, and you can argue that the US and the dollar, it's still the, you know, this is called the most eligible bachelor in the leper colony. You know, nothing started falling off on the man yet, but that doesn't mean that it won't. That's really good. That's really good. By the way, the first default might be the nose's fault.

The economist here upstein once said that if something cannot go on forever, it won't. What we're doing right now cannot go on forever. We are running defts and debts and unfunnered liabilities that we cannot afford. And so it will stop. And the only question is how it stops. Well, I think there's, yeah.

And it may stop in a way that is not, it's not a voluntary choice by us. We crash the car, basically, yes. You guys wanna make a bet, a friendly wager for charity. Oh, what happens in June? I'll make a bet with you guys. What would you mean the debt ceiling? Yeah, what do you guys think happens?

You think this is gonna be a fructus chaotic thing where the markets get roiled? No, I think it's going to be a pretty rubber straight forward deal where it's going to come down to the wire, but my guess is no one's going to want a default on the debt. Yep. And there's going to be some concessions on spending. And ultimately, the debt ceiling will get extended and that those concessions on spending will allow the Republican Party to save face with their voters and say, look, we we got some concessions here. I'm not sure

they're going to be enough to really address any of the major problems that the US is facing over the longer term. But you know, certainly letting the debt ceiling hit and defaulting the is catastrophic. Everyone knows that. I was freeberg. I think the majority case is a bunch of hand-arranging and then they make a concession. All the people that are interested in this topic, I would go use the way back machine and go and read all of the articles in the 80s where you could replace China with Japan. And what happened with Japan is that Japan just hit a demographic wall, not to similar to what China's about

to hit in the next 15 or 20 years. Right, it's a good counter argument. Yeah, that's a really good point. And I think that there is this element of, you know, China as the primary threat, but I think the bigger problem, Chimalt, is that we have voted ourselves into a stupor. We have allowed ourselves to accrue these liabilities that are in many cases not on the balance

sheet that we simply cannot afford to pay. And the social unrest that will arise, if and when we don't pay them, or the economic cost of us actually paying them, either of those are going to be pretty significant. But that's under the bridge and it has nothing to do with China. It has just everything to do with how the US is spending. Thank you for being intellectually honest. This is my point. I agree with you about the importance of these unfunded liabilities. I just completely disagree with you that this argument about these things being so hyper connected or that all of a sudden we're at the cliff of de-dollarization. I don't think it's rooted in facts, and I think, again, it ignores this unbelievably important

piece of logic that all of you guys that say this tend to ignore, and it's still not even well addressed in Dalio's book, which is it is a pegged currency. And the minute you unpack it, none of you know what happens to it, except that it probably isn't where it's trading today. And if you actually then have to factor in dollar reserves that everybody holds, that thing would skyrocket in value and it would crush the export value of the you on. And it happens to all currencies. And this is this funny thing that has happened to the United States, which is that it ran

forward and it transitioned its economy to a service-flight economy faster than other countries and other economies and other currencies did. And nobody wants to just talk about that. Except if the fall was talking about the... And that's what sort of drives us. Good, Zach. I don't think the big risk is that all of a sudden the dollar gets replaced by the yuan as the world's reserve currency. I think Freeberg lays out a more intermediate path, which is people start to hedge their dollar exposure

and decisions that used to be automatic, like trading oil and dollars, the so-called petro dollar, now it becomes a little bit more of a decision. So the Saudis. That's what happened with the pound sterling. It was a similar story, and it was not an overnight collapse.

I mean, there were certainly these kind of punctuated moments where they were hits. But, you know, the history is that there was a slow devaluation over time, and the, you know, as a result of obviously the economic pressure and the uncertainties. Actually, no. What happened to pound sterling was that it was pegged to the US dollar, and then it became unpegged. So exactly what I'm talking about. Even post that.

Chama. Even post that, if it's a free floating currency, yeah, you're proving my bread. No, dude, you're proving my point. When Soros broke the back of the US dollar, what he forced George Brown or what he forced the chance for the extract of due was to basically depag the pound. And then yes, you're right. It's been like this ever since. Yeah, it was what I'm saying. It was saying. If you let it be free floating, nobody wants to trade in that other currency, everybody wants the dollar. That is the dollar, David's right.

It is the worst affected leper in the leper colony. Yes, the guess is leper so in the colony. This is why you have to have, if you're gonna be intellectually honest, just have a relative conversation about all of the currencies and all the things that they're also going through, which are also not perfect. The debt payments for the emerging and the frontier markets are extraordinary. Just realize that if you want to go and peg your economy to somebody else's back, they

also come with their own trials and tribulations that you have to risk manage as well. And now you have to decide on balance, Do you want to risk manage a centrally governed economy, right, from a central bureau or a freewheeling democratic? Like these are all the discussions that people should eat there. Yeah. It's a lot of choices there. Just back to the non-currency part of this for a second, there are a lot of like connections between these things. I actually think there is a strong connection between what's happening, for example, in Chicago with the out of control civil service and the unfunded pensions all the way to the dollar status. But there's also a connection between commercial real estate and these pensions.

So on a previous show, we talked about the commercial real estate looming crisis. And a lot of people thought that some you know, some of the comments were, you're just talking about a book, which is not true. I don't own, I don't have a dollar investing in these office towers. But you know who does? Pension funds.

Yes, they do. These office towers. So you're talking about pension funds that are three quarters unfunded. And they may have a lot less funds than they even think they do because we're about to have a huge reck funds and they even think they do because we're about to have a huge reckoning

we're all of a sudden these office towers that were supposed to be blue chip that were supposed to have the best collateral there was in major american cities now the sudden they may not be nearly as valuable as they thought they were yet and and if they don't know the building they definitely on the debt a hundred percent for sure in the fixed income portfolios of all these pension systems are the debt that was used to finance these buildings by the REITs and by the big real estate funds that put those things together.

So you're absolutely right. They are 100% impacted by what's about to happen. We're not going to allow, given the civil unrest and social unrest risk and obviously as a democracy, we're not going to allow, given the civil unrest and social unrest risk and obviously as a democracy, we're not going to allow that all to go to zero and we're not going to let pensioners not get paid. Ultimately, that's just a kiss of death. Maybe pension payments are reduced to some degree. But again, Paris is a really great example of, as you start to try and shift the economic guarantees that have been made to pensioners even slightly. Yeah, what was it, two years in retirement?

62 years. Yeah, they tried to move retirement age by 62. Yeah, and it was certainly like, you know, you could sit here and argue what people for years for their whole life had this expectation set. We have all for our whole careers invested in the social security benefits that were owed as retirees through every paycheck that we've received.

And those social security payments may not end up coming back to us if social security is allowed to go bankrupt. So ultimately, the government has to step in and issue new dollars to make that up. Then, the economic question is what happens to the value of the dollar, what happens to the value of the economy, and so on, as you issued trillions of dollars to fill these holes? what happens to the value of the economy and so on as you issued trillions of dollars to fill these holes. Let me ask a question that's a little more positive here perhaps, which is, is there a path out of this, you know, debt cycle we're in, and what are the top ways in which we're going to get ourselves out of this? I have three that come off the top of my head.

Increase productivity. Hold on, I have three of the top of my head. Number one is austerity measures. Number two is productivity through technology and perhaps number three is maybe recruiting more entrepreneurs here to start more companies and you know, fill some of these jobs. So intelligent immigration, which is higher taxes. Yeah. Number one is higher taxes. Yeah, number one is higher taxes. In terms of what's likely to happen. That would be a fourth one. That's a standard. Yeah, so look, higher taxes because you can go after assets,

you can go after wealth. So there will be higher taxes. Okay. So I still think we'll end up seeing 70% tax rates on the wealthiest people in the country. 70%. I don't see it being unpopular. I think it's going to be unpopular with the wealthy. It's going to be popular elsewhere to fill the hole.

Second is cut back on spending, but that's a really hard thing to do because, you know, as we've talked about in the past, people vote to get more stuff. So you put the politician in, it's going to vote to get you more stuff. You don't vote people in to go cut spending. So generally, you know, we're going to likely see number one happen first. Maybe there'll be a reckoning where you kind of reduce spending. It's going to take extraordinary political will and an extraordinary depth of education and diffusion of understanding of this key critical economic problem amongst the voting class, which is a really hard thing to realize. I think number three-

Do you say and get the public to understand- To understand that- To understand that we have to have austerity measures. Yeah, and then number three, and basically people are going to have to make sacrifices. So the first sacrifice will be the wealthy. They're going to have to sacrifice through higher taxes. The second sacrifice will be everyone else by seeing reduced spending and reduced kind of- Services. The services, etc. The third is the hopeful one, but we don't have a guarantee on this,

which is do we see economic growth through productivity gains? Can we create leverage with our resources and our people by using new technologies to get more with less? And you know, any time, yeah, like again, I gave the example last time, but when a tractor was introduced in agriculture, all the people that were farming the ground didn't have a job anymore. But what happened is new jobs emerge in making tractors and servicing those tractors in, you know, gas pipelines to get gas to the tractors. All these economies emerge as a result of that economic technical innovation.

So I think as we see AI and other innovations hit the market You know new economies and new industries. Hopefully Really blossom and and we can benefit from that economic growth and also lower costs for people on Purchasing goods and services. We've identified four things when Reagan came in Wasn't was it the highest tax rate like like 70% yes. Yeah, that was the top marginal tax rate is 70% and 70% is not unheard of it will happen again in the US well and but Reagan unleashed an economic boom by flattening the tax structure because marginal tax rates created a distant center for people to work and produce more and so there is a big economic hit from this yeah and remember what this 1970s were like it was the malaise days of Jimmy Carter. We had a horrible economy with high inflation

and everybody was paying high tax rates and the government wasn't making that much revenue because there wasn't as much economic activity going on. And during the 1980s, we had an economic boom and the government actually collected more revenue with lower tax rates because so much economic progress was in law. Sacks, we identified four things.

Just like we've learned nothing. Which one is the most important here? Which ones are the most important? We talked about austerity. We talked about increasing taxes. We talked about innovation and efficiency. And then we talked about immigration recruiting. We're highly talented people.

When you look at those four, do you have any to add to that list to get out of this? And which ones do you think are the most important? And why? When you look at federal tax revenue over a 50 year period, go look at the Fred charts. What you see is that quite independent of the top marginal tax rate, the amount of federal receipts of the government's able to collect is roughly around 19%, plus or minus 2%. And so you can only get so much blood from a stone.

You can try to raise the top marginal rates, but then rich people have an incentive to basically find more tax protected strategies. So the history of the thing going back 50 years is you can only extract so much from taxes. And what you're better off is a lower tax rate that is broader-based. And you go for economic growth, that produces more activity. But look, if you're spending too much, there's no way out of that.

So austerity, critically important and entrepreneurship. I mean, when Bill Clinton left office, and I think Reagan through Clinton was the biggest 25- year period of economic boom we've ever had. Federal spending as a percentage of GDP was 18 and a half percent. He got it down from like 22 percent. He did a three economic growth and he bragged about it. So, you know, look, where you want to be is I think federal spending should be in the low 20s. I think you want tax revenue to be in the high teens 19%, you can have a small deficit.

Those are the conditions for economic growth. Jamal, any thoughts here on our way out? I'm going to take the complete opposite of all of this, which is the anti-chicken little version, which is I think not much at all changes. I think that debt to GDP will continue to rise, not just for us, but for every other country in the world, whose fate is worse than the United States. And I think that on a relative basis, the United States will continue to be exceptional, and that this will not really be

an issue in our lifetimes. OK, and I'm not saying that's a good thing, and I'm not saying that's a just thing, and I'm not saying that's what I want to happen. But pragmatically, I think that that's what will happen. And I don't think that there is a magic number where all of a sudden things start to break, where there's some magic number for debt to GDP where all of a sudden everybody finds religion. Instead, I think that it just creeps higher.

And by the way, if you look at where debt to GDP was at the turn of the 19th century, and then what happened through the World War II, what we've really done is, you know, we've retraced a lot as well. So there have been moments where we've been out over our ski tips a lot. And so I think it's just important to keep in mind that sometimes what works just continues to work. And I keep asking myself the relative question, which is, what country, what economy, what group of human capital is better positioned than the United States, and despite all of the things that are screwed up with this country, it's hard to find a better example.

So, yeah, unless you happen to have the lucky mineral or oil club, like Norway or Saudi Arabia, you're going to be hard pressed to find a better place to plant your money. And I think entrepreneurship and immigration are the two most important things we can do, as well as austerity. And I think Joe Manchin is like at all of these moderate candidates in the middle who might actually be able to talk about cutting. But by the way, you said something, you said something really interesting, which is if you look at Norway, Saudi, Abu Dhabi, what are those countries effectively becoming by monetizing the oil? They invest in all of the economies that are working.

Perfect segue, thank you. It's not as if the Saudis and Abu Dhabi and the Norwegians aren't trying to invest in America. They're trying to put as much money to work as possible. They're just trying to pace it out so that they have time diversity and asset diversity. So to your point Jason, so this is a, it's sort of a bit of a self-fulfilling prophecy, I think, that what has worked continues to

work and then the burden for disruption gets higher and higher that changes. There's two things that work in the world. Halfing those natural resources or having entrepreneurship. Let's make a segue here. This week, we've been final point for 20 minutes. Go ahead. Quick final point. This is an important discussion, I have the final point on that. Oh, God, we've been final point for 20 minutes here. Go ahead, quick final point. This is an important discussion, I think. Adam Smith once said that there's a great deal of ruin in a nation, meaning it takes a lot of political bungling to screw up something as big as a nation, especially a nation. That's the number one superpower in the world that has the world's reserve currency.

So we are, in some ways, the beneficiary and hosting on hundreds of years of excellence of economic performance and great political leadership in this country. And the question to ask is not whether we can still host on that, but whether the political leadership we have today is living up to the standard we had in the past. And I think it's clearly not. And the only question is when it breaks. And it's hard to predict exactly when it's going to break, but what I do believe is that if we keep going the way we're going, it will have to stop.

Well said, we're definitely bending it right now. And when you bend it, sometimes it breaks. Right. And by the way, the reason why we are going to pursue AI at breakneck speed, even though it may lead to some sort of weird dystopian future, is because we need that productivity boost. We have no choice now because we are so likely better us than the next guy. Absolutely. Whoever gets their first man.

And another perfect sandwich. Two major stories this week that we need to discuss. The first is Saudi Arabia's public investment VCRM. Took a very interesting PR step of listing their funds that they have backed and it's a significant list. Everybody from injuries and horror wits to co-to not surprising there. And Mark and Dresan and Ben Harowitz and Adam Newman had a major keynote at a Saudi startup conference. I was actually asked to keynote the next one in Riyadh, which I'm debating doing. And then in sync with that happening, at the same time, there has been a debate of should LPs in America be backing firms like Sequoia, China, Matrix, China, etc. Because those firms are now backing open AI competitors. And if we believe AI is the big race here, should we, as a country, we don't, we're not allowed to, to back military stuff, obviously in these countries, but how

do we on this global chessboard decide should we be taking money from Saudi, should we be investing money in AI startups in China. So I think Tramoth, you've got a big perspective here globally. Let's start with you two separate issues. Any surprises here by Saudi, the kingdom, actually releasing the list of who they're backing and why would they do that at this point in time? And then us investing in China, because we are at a moment here across roads, I think, of should we be engaging or not engaging and building bridges with China and Saudi, you know, for obvious

reasons. Look, Saudi Arabia, Abu Dhabi, all of the UAE, these are countries that are really important on the world stage and increasingly so because they manage peace and prosperity regionally now, right? They have huge balance sheets that can accelerate all kinds of projects all around the world. And so they have to be taken seriously. And so this is a very smart marketing move. By the p if which is to essentially say look we are an established blue chip LP. Of the blue chip organizations that you're used to hearing about and celebrating.

And I think that's very smart of them because what it does is it reinforces the feedback loop that. Other great firms should be going to them to raise capital when it comes time for them to raise their N plus first fund. And so I suspect, especially now, it makes even more sense because everything we've heard Friedberg mentioned in a couple of episodes ago, the United States limited partner market is essentially closed for business. They have huge misallocation problems. The endowments are sort of closed. The universities are closed.

A lot of the family offices are licking their wounds. And so this is a perfect time for folks in Saudi Arabia and the UAE to basically put the foot on the gas and basically tell everybody, hey, we are open for business. So I think that makes a lot of sense. And I think that it'll be successful. It'll work, especially in a moment now where US dollar flows from US dollar limited partners are very difficult and harder to come by.

Well, and we're also selling billions of dollars in weapons to the kingdom. And we are a major partner of ours. They're a valuable security partner of the United States. They're a valuable economic partner of the United States. It's no different than doing business with any other country. I think it's smart by the PIF. On the other thing though, with US firms investing in Chinese AI, it should not be allowed. And I do think that the folks that are responsible for SIFIUS need to get a handle on this. Look, I've done a bunch of deals where I have had to jump through a bunch of sypheus hoops where

explains sypheus place. So basically, sypheus is the committee on foreign investment in the United States. Now what that means is if folks want to invest in certain things that are on a list of things, and I'll tell you the things that I've been involved with that came under sypheus, rocketry, and certain chip technologies are so advanced that the United States have very specific rules that limit the ability for foreign actors to invest in those businesses. And in those situations where a few folks invested beside me in some of these companies, we have to go through a process to get SIFIAS

approval before that investment was allowed. Now, what's interesting about that is that's about money coming in. But I do think that the reverse now becomes important because if US dollars are going to go and see these extremely complicated advanced technologies abroad, especially into the hands of countries that are frenemies at best of the United States. I think we have a responsibility to have a point of view on that. And so I think Keith Roboi was the one that was very definitive and said they should not be allowed. I do think it is so early, Jason, we talked about this,

we're on this curve of fuck around and find out, which means there will be some crazy examples of stuff that are very uncomfortable. Yep. I don't think we want US fingerprints on this stuff being perfected outside of US borders. Sax, when we look at the history of engagement with China, maybe we can take a multi decade globalization perspective

here, when you look back on it, the engagement with China created so much prosperity, so much intertwined dependency, iPhones being the best example possibly, we're selling them in China, we're making them in China. China loses Apple as a customer that would be absolutely devastating for them, and it would obviously be devastating for Apple as well. So when we look back on that as a general rubric here, do you think we enabled a competitor or we avoided future conflict

because of the interdependency? And where do you sit in terms of thinking about engagement versus maybe isolation or something in between those two, frenemies, best of frenemies, et cetera? The policy of constructive engagement, as it was called 20 something years ago, the idea behind it was that if we engage with China economically and help make them rich, then that they would become more like us. They would somehow turn into a democracy and they would

have tremendous gratitude towards us and we'd become friends. It's not the way it worked out. There were people who warned that this was a foolish approach. So, most notably, the realist scholar, John Mirschheimer, at the University of Chicago, warned back in 2002 that that was not the way this was gonna play out. If we made China rich, they would seek to convert that wealth into political power. And then they would act the way that all other great powers have behaved throughout human history which is they want to dominate their region and they would seek to push

the United States out of Asia and the future that he predicted twenty years ago is the future that's come true and i think the you know all the constructive engagement i think has an egg on their face now i understand where they're coming from This is a fundamental difference between whether you see the world in economic terms, which is about creating positive sum games, basically trade, or whether you see the world fundamentally in geopolitical terms, which is about the balance of power, which is more of a zero sum game. And I think that both views, they're both extremely important. We want to engage in positive sum relationships that generate more trade and more wealth through the United States at the same time.

We have to be aware and concerned about the balance of power. We do not want a number two country in the world who can rival the United States in terms of power who basically could win a security competition with us. And we certainly don't want a country in the world to be more powerful than us. So I think this is sort of the end in the Yang is geopolitics versus economics. And I think what's happened with China over the last several years is it's flipped. I think we used to see the relationship primarily in positive some economic terms. Now we see it in geopolitical terms.

And I think there's a lot of firms now in the United States who haven't embraced this new reality. And to go back to your question about when should have entered capital firm take money from a foreign country and when it shouldn't. I think there's a very simple rule for this, which is if the country is a US ally, I think it's fair game, because the US has said this is a partner of ours so why can't you do business with them but the united states government has said this is an adversary

you're putting yourself in a really difficult precarious spot by doing business with them because then you have to explain yourself to the u.s. government this is the very simple rule we would use is that i don't we would never consider taking money from russia or no i don't know yet any country that money from Russia or China. Yeah. Any country that the US government says is an adversary of ours, but if the US government says this is a partner in an ally, then I think you can consider it. Do you think there's a way sacks to salvage the relationship with China and make it productive? Or do you think it's

a far gone conclusion at this point? Because one might argue and I've heard people argue this, maybe China would have invaded Taiwan already if it wasn't for the interdependency. So I know we're dealing with a lot of predictions here, but do you think it can be salvaged and do you think it would have been a worse relationship if we hadn't had this interdependency that's been built on? I'm not quite sure that the economic interdependence theory preventing war has been definitively proven if you go back to war one for example It was the case that Britain and Germany actually were each other's number one training partners

And they still got in war one for reasons that in hindsight seem really silly so I'm not sure that economic interdependence can prevent, it certainly doesn't prevent security competitions from arising and therefore I don't think it can necessarily prevent a war. Although having business ties can lead to positive interactions. Yes. So I'm just saying that Jerry's still out on that theory. But I think that, like I said, I think once you're in a security competition,

the way that we are with China, I think geopolitics rather than economics is in the driver's seat. And that's what's happening right now. Super easy freeberg intellectual leeway. I think to process this, you would never invest in a North Korean AI company, a Russian AI company or an Iranian AI company. How do you think about China? And then just generally this topic of when to engage, when venture capitalists, when startups, you know, and trade partners should engage with various countries. How do you think about it, Freeberg?

In what role as an investor? Well, we could take multiple roles here. Founder investor would be the top two for this program, I think. Or taking money from any of those three possibilities. Very few portfolio companies that don't benefit some way from the trade relationship with China. So, you know, to SACS' point, I'm not sure you can really say China is a true and complete adversary in the sense that we're on opposite sides.

There's obviously deep interdependencies. So, you know, it's hard to kind of say, I draw the line at this kind of technology investing there, but I benefit from their technology investing that's going on there in other ways with some of my other businesses. Right? I think that that's really where you kind of run bit of a conangrum that we do have a deep interdependency. With respect to investing in China, I don't know, I think the investing in China thing is

pretty difficult given that there is a single power that gets to decide what does or doesn't happen. I mean, look at what happened with Alibaba. A lot of shareholders got pretty wiped out there. These governments where you have like the potential of getting completely wiped out by government action is a pretty scary place to invest in general. It would be more oriented as an investor around those concerns than I am about, you know, it's really hard to do the calculus on am I helping or hurting America versus China? You know, you could argue 100 ways each of those sides.

What do you think of SACS as framework? If we're partners, you know, fair game, if not partners, not a good idea to put your neck up. But we're part, sorry, are you asking, are you saying like we're not partners with China? Well, it seems like the US government has said we're adversaries now and that we're in a pretty doggy competition. Well, Jacob, this will be specific. I'm talking about a situation in which you're taking money from them.

Yes. Situation where you're taking money. I do think that selling them products that are not super strategic. I think selling them on most advanced chips is dangerous. But look, I think if you're selling them products that help restore the trade deficit and correct that, I don't have a problem with that. Yeah, I don't have a problem with selling movies or cars or something like that to China. The question is, though, I think if you're a venture capital firm,

do you take their money? That's what I'm specifically talking about. And I think whether you're allowed to or not, we don't because we just don't want to think about what complications I could cause down the road. Also getting your money out of China, also a difficult task it seems these days. Cash app creator Bob Lee,

a K.A. Crazy Bob on Twitter. That was his Twitter handle. He was stabbed to death, the tragic read in San Francisco earlier this week. He was squares for our CTM. He worked at Google, on Android. He was a chief product officer at Mobilecoin, also an angel investor in a ton of companies, FigmaSpace, X Clubhouse, well known in the industry. Officers responded at about 2.35 a.m. to report of a stabbing on the 300 block of Main Street and arrived to find Lee who had been taking to hospital and succumb to his injuries there. No arrest has been made. A lot of San Francisco politicians are sending their thoughts in prayers, but obviously San Francisco

is still a very dangerous place, it seems. Any thoughts on this and how it might act as some sort of crossroads or not and thoughts in prayers, obviously, to his family? I think this is a pretty tragic event. There's a lot of people who I knew that were pretty close with him. I got several messages on his passing. He was, I didn't know him personally. I think we maybe once or twice.

He worked on Android at Google and obviously that up key role it's square in the early days. And was a pretty impactful and important person, but also supposedly, I didn't know him very well. Again, but everyone says just such an incredibly kind and generous person. So, tragic loss. I used to live two blocks from where the event happened. I'll zoom out.

Where is your freeberg? Is it a bad person? It's in Soma, that ring con center, right by the big condo towers there, and it's right where the Salesforce office offices used to be. And you know, blocked from the waterfront. Is it part of all that drug craziness? No, it's not in the heart of the camping district. It's just a nice area and so I'm a quiet area right so at night there's no one there.

I went to San Francisco a few weeks ago. I told you guys I pulled up to a restaurant on the Barca de Rho and I joked with my buddy in the car. I'm like, oh my car's going to get broken into while we're at dinner because I'm parking on the street. We went to dinner 90 minutes later, came out. Of course, my car had been broken into. The trunk had been popped up, but it's just like, you know, 100% aerosol, very fancy area. So look, here's the thing. If you park at a parking meter in San Francisco for eight minutes too long, you get a $60-$100 parking ticket. And San Francisco has become an upside-down town. What I mean by that is I think that, like, so much of the response that we've had in the last couple of years to power dynamics and concerns about

the powerful having too much influence over those who are less powerful, who have less influence, and who suffer as a result of their demeaned influence. The response has been to turn things upside down, which is to give those who are lacking in the power structure, everything, and to try and take everything away from those who are at the top of the power structure. So if you want to deal drugs in the open air, if you want to walk into Walgreens and steal thousands of dollars of goods and walk out, nothing will happen to you because you were embedded with this powerless kind of position in life. But if you have a car and you park at a parking meter, and you save a parking meter for more than 10 minutes, you get a ticket. And the consequences of responding to power dynamics by flipping the power structure upside down is obviously

Can be more negative as we're kind of experiencing I think acutely in San Francisco, but also around the nation and by the way I think that this applies in a lot of other ways in terms of how we're doing college admissions In terms of how we're selecting people for jobs in terms of you know recent applications for pilots for doctors where the assessment is less about, did the person who was disadvantaged at the beginning of their life or career or trajectory or educational path be given greater opportunity and greater resources to catch up and to get there? Or did we just flip the power dynamic upside down and just give them the endpoint? And as a result, there's a massive kind of detriment that I think can arise.

And it's not necessarily always the case that it will arise. It is not necessarily the case that's selecting someone based on some demographic profiling to be an airline pilot necessarily means that that airline is more likely to have airplane crashes. But in certain cases, when you don't prosecute certain crimes, like robberies or people walking into stores or breaking windows or dealing drugs in the middle of the street or camping on the street, and you fast forward a couple of years, that power dynamic, the flip of that power dynamic causes the whole town to go upside down. And everyone who's

sitting on the bottom ends up becoming a victim themselves. And I think we're starting to see inklings of this in San Francisco. We certainly have for years, sacks is ranted on about this with respect to some of the non-prossecution that's happened historically. And I totally agree with him on those points. And I think that it's come to a breaking point in San Francisco, but that's really a beacon for what else is going on. And you know, some people call it wochism. I think maybe this notion of wochism is one small element or segment of the broader issue with how we are tackling

with and dealing with embedded power structure issues in this world today. And the flipping of those power structures upside down doesn't necessarily yield the outcome we all want. And I think we're starting to see reasons why. Does that have any thoughts here? That's my rant. I can't disagree with you.

Yeah, so sooner or freeberg, I didn't, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, so, I think we suspect, and I would bet dollars to dimes, that the story is very similar to a case we had in LA recently, the Brianna Cuffer case, where a young woman was basically stabbed for no reason by a psychotic homeless person who had been through the revolving door of the jail and criminal justice system, who could have been locked up, who has arrested multiple times, that was not locked up because of this push for decarceration. And you can argue that maybe it'd be better for that person to be in mandatory treatment, or even a maybe a mental asylum,

but this idea of just releasing these people onto the street, I just think is an outrageous abdication of responsibility by our elected officials who run the criminal justice system who pass our laws. And the thing I just wish is that I could lock for 24 hours. The people like our supervisors or our governor or the people who basically make these laws or the people who are pushing for decarceration of these violent offenders by these nonprofits, I wish I could lock them up in a room for 24 hours with the people that

they think are safe to release on our streets. Let's see if they really would take that test because it seems to me that these these elected leaders and these nonprofits are pushing for these outcomes, they are setting loose on us a predatory, criminal or psychotic element that jeopardizes our safety and makes these cities unlivable. And we should not tolerate that. And quite frankly, the responsibility goes beyond those elected leaders. It goes to all the voters as well

because we keep putting up with this. And where was our governor when this happened? He was in Florida doing some sing along at some high school where he was trolling Ron DeSantis because DeSantis is taken on DEI at that school So that's where Newsom was and he's extremely popular in California fighting culture wars instead of saving culture wars in a distant state instead of basically Fixing the criminal justice system in California. That's even worse than that because he's actually shut down to prisons and release lots of people.

So, where is the push for criminal justice reform in California and protecting the citizenry? And until the voters in San Francisco and California start demanding this, there's never going to be a change. And at the same time, let's say to Gary Tan. You know, just vote for who are the fk Gary Tan tells you to vote for, okay? I think it's a probably a good guy. I can't disagree and the supervisor seemed to control a lot of this.

And Chamath, just a sweet mayor of Francis Suarez, is talking about on his Twitter the reduction in homicide shootings. And they have literally counted the, if you want to say a drug addicted mentally ill homeless, there's obviously three or four different things going on here. When you look at the population that's living on the street, some number of them down on their luck, some number mentally ill, some number addicted to drugs, and some number a combination of those things, he seems to be getting it done in Miami. And you know, other states seem

to, and other cities seem to have gotten this under control. Is there any hope for San Francisco to moth or is this just going to take five or 10 years to bottom out? I mean, it takes regency. I think New York had a long period of lawlessness where people were afraid to walk down the streets. It took a handful of mayors to draw a hard line in the sand to increase policing. Sometimes to introduce some pretty controversial concepts at the time, or at the time that were supported, which now seem controversial.

You're talking about stop, ask, and frisk. I think it was called the Broken Windows Theory of Policing. Yep, take care of the words. Take care of the little things so that the little things don't compound into the big things. But whatever you believe needs to get done, I think it's pretty clear that what is being done isn't working. And so the real question is, can people see through the naked partisanship to agree that this is not working. And sadly, what I would tell you guys is that I don't think they're there yet. And the reason is because America is the most divided it's ever been, especially on issues

of race and social justice and social norms. And I think that crime has gotten caught and painted with that brush, which means that the idea of very aggressive policing and safety are now viewed as opposite and antithetical to social justice. And I don't know how that happened, but the result of it is this, which is these folks will never agree that this is not working. And you'll have to go through recall election after recall election. And even then, it's not going to be enough because the smart politicians will say what they want in terms of like safety matters But then a lot of voters will vote the opposite the example in Chicago that David brought up earlier is really interesting because

It was essentially a social justice candidate versus a law in order candidate through their democratic ranks and the social justice candidate won the Progressive candidate won and the person that wanted to tax did it one. The progressive candidate one and the person that wanted to tax businesses and individuals one and the person that wanted to sort of focus on law and order lost. So what does that say? It says that we are still in a moment where we can't agree on what is important. That's really scary. And so I think you kind of have to unfortunately vote with your feet if you are lucky enough to do so. And that's the case. Yeah. Who's left over or a lot of people who are not in a position to just up and leave. And then they are unfortunately left behind.

Trasic situation all around. And I will never host a conference or any event in San Francisco until this is solved. I, um, when people ask us to do events, I'm like, people don't want to come to San Francisco. They're afraid. So I do my events in Napa or in San Matan. Nat, Nat started a bilingual school Italian English. That is on the IB system, international baccalaureate system. And it's a sister school to a school in the city. We had a fundraiser, which was literally right downtown in that encampment area. And when I pulled up, I was like, is this for real?

It's an open-air drug market where folks are doing drugs, selling drugs right in front of you. They're passed out completely incapacitated. About a third of the guys are wearing balaclavas, so you can't identify them. You have no idea what they look like. I grew up in Brooklyn in the 70s and 80s when it was legit, dangerous.

And when I walk in San Francisco, it feels much more dangerous than that crazy era. It feels random. It doesn't feel like there's organized crime, gang crime. Like I grew up in a pretty crappy neighborhood and you knew who the gangs were. You knew who the tough guys were. You knew how to avoid trouble.

They didn't come and randomly come and stab you to death, right? And so, yeah Jason, you become street smart growing up in a culture like that because you know how to avoid it. You know how to be alert. This doesn't feel like that. This is just like a bad role of the dice and you could get stabbed to death just walking on the street.

That does not... Where are the politicians to stop this? I mean, they don't care. The level of corruption in San Francisco is unbelievable. The incompetence amongst those supervisors, the mayor, the DAs, everybody, it's just incompetence and nobody has the hootspout of the were with all to say enough. And I think the other group to blame

are all the rich people and powerful people who just haven't been active in politics. And I know some of us have in different ways, but I think it's going to take a coordinated effort by people who really care to vote out all these supervisors and bring in. It's got to be regime change, and I just don't know if there's the wherewithal to do, because every time as a person who has some means or is successful in some way that you stick your neck out there, like you have done, SACs, the attacks that you will get from this

insane left. I don't want't even use the word woke, I think it's a different derangement. I think it's actual corruption where they're making so much money off of this homeless industrial complex. They're getting paid so much money that the grift is so deep that they are going to fight for this. And it's going to take some really courageous people like Gary Tan and maybe David Sacks and other folks to back a slate of people to change this and we need people to run for government who are brave and who want to put their neck out there and say enough is

enough we're going to police the city. I just don't know if it's going to happen. All right, listen. Yeah, I mean, the issue is that it takes more than one election. So listen, I think we made a positive change by removing chase a boutique and i think brook jenkins has the right attitude she cares about victims i think she wants to prosecute the issue is that you've got a police department that's fifty percent of the number

of officers that they want because they flared with this whole defund the police movement you've got the board of supervisors and you've got an oversight board on the police that basically make their jobs harder. And it's not one election because even the mayor doesn't control it, because the board of supervisors really has all the power in San Francisco. So they take a job that really should be one or two people's jobs, like the DA, like the mayor,

and they break it up into this like board of supervisors where you've now got to be familiar with a dozen different races in order to effectuate a change. Well, the machine knows how to do that, but the average citizen doesn't. So they make it really hard to effectuate change, but there are groups that are springing up in San Francisco, like ROS and you know people like Gary who are on top of it and that's why I just follow them and vote for their recommendations because they're actually cracking how to make a difference. All right, I think on that we will wrap for the dictator, Tremoth Polyhapatia, the Rayman

David Sacks, and the Sultan of science. Pervita. Parvita. Parvita. I am the world's greatest moderator. We'll see you at the all in Summit, 25 to three. Love you boys. Bye. Bye.

Bye. Bye. Bye. We'll let your winners ride. Bring man David Sacks. I'm going on. We. And it said we open source it to the fans and they've just gone crazy with it.

Lumby West, I squee-n-up, you can't walk. I'm going to be a We should all just get a room and just have one big hug or because they're all just like this like sexual tension But we just need to release that I'm going all in!