Debt Spiral or NEW Golden Age? Super Bowl Insider Trading, Booming Token Budgets, Ferrari's New EV

2/13/202673 mincomplete

0:00All right, everybody, welcome back to the number one podcast in the world, the all

0:04-in podcast with me again, the core four, the original quartet, David Sachs, David Friedberg,

0:12Chamath Palihapiti, I'm Jason Calacanis, and we have a very full docket today.

0:17All right, topic one, gentlemen, AI acceleration.

0:19It was a big week for AI.

0:23New study published on Monday, February 9th in the HBR, Harvard Business Review, suggesting that

0:30AI tools intensify work but do not reduce it.

0:34Two UC Berkeley researchers spent eight months embedded at a 200 -person tech company.

0:39So this is one company's experience.

0:41What they found, employees who use AI worked at a faster pace, took a broader

0:46scope of tasks, and extended work into more hours of the day.

0:51Workers reported feeling more productive, but they also felt a little more stress and burnout.

0:57Sachs, your hot take here, your quick take on this study.

1:00Obviously, it's just one company, but it does track, I think, some of my experiences.

1:06All right, well, a few points here.

1:07Number one, as you may recall on the prediction show for this year, my most

1:13contrarian belief is that AI would increase demand for knowledge workers, not put them out

1:17of business. And I think you see in this UC Berkeley study, the reason why

1:21that might be the case is because the employees who use these tools, like you

1:26said, they worked faster, they took on a broader scope of tasks, they actually ended

1:30up working more hours in the day.

1:33So they did more work, not less, and even more effort rather than less, not

1:37because they were required to, but just because they were more motivated.

1:41And I think they were more motivated because their work was getting up -leveled, right?

1:45They're kind of able to offload more menial tasks to AI, and it made their

1:52work more purposeful and meaningful.

1:54So I think we're kind of moving from what some people, I think maybe Jensen

1:58has called task -based jobs to purpose -based jobs.

2:02And I think a key skill of employees is going to be the ability to

2:06structure work for themselves and their AI agents.

2:11And the employees who can do that are going to be far more productive than

2:14those who can't. That kind of brings me to point number two, which is that

2:20I think there's a tremendous opportunity this year for employees who are early adopters of

2:26these tools, who are so -called AI natives, to demonstrate their value to their employers.

2:33They're going to be able to get a lot more done, they're going to appear

2:35to have superpowers, they're going to be the people in meetings who can take an

2:38assignment that would have taken days before and get it done in two hours.

2:42Whether it's a presentation or a spreadsheet, people are going to be shocked at how

2:46quickly they can get these things done, because they're going to be facile at working

2:49with AI. So I think there's a big opportunity there.

2:52And there was an article that went viral this week by Matt Schumer called Something

2:56Big is Happening, where he talked about this career opportunity that's going to be available

3:00to kind of AI early adopters.

3:02And I think that brings me to my third point, which is, I think that

3:04you're going to see massive enterprise adoption of AI, not just chatbots, but agents this

3:11year. But I think it's going to be driven by the bottom up, it's going

3:14to be driven by these early adopter employees coming in to their workplaces, bringing in

3:19these kind of consumerized AI tools, start using them at work, as opposed to top

3:24down initiatives. I think there's a lot of top down company transformation initiatives that are

3:29happening in large enterprises where the CEO has tasked a team with figuring out how

3:33to use AI, how to transform their business with AI.

3:36Those initiatives are kind of minor I have to keep building a thing in large

3:38organizations, they need to keep building a going to take months.

3:39They're going to be studying what tools they should use.

3:41They're going to be doing RFPs.

3:43And I think it's ultimately going to be very slow.

3:45And while those things are trudging along, I think there's going to be these early

3:49adopter employees who just make the transformation a fait accompli by, again, bringing these tools

3:53into the workplace from the bottom up.

3:55So I think in the same way that you saw consumerized SaaS tools spread from

3:59the bottom up in enterprises, I think you're going to see consumerized AI tools spread

4:03from the bottom up in enterprises.

4:04And I think it'll ultimately be one of the big themes this year.

4:07Sure. Couldn't concur or agree more.

4:09Nick, throw up that tweet I did.

4:11I did a tweet and it got 2 million views.

4:13Basically, I said, listen, if you got laid off by Amazon or Microsoft over the

4:16last two years, just wear an open claw and automate your previous job, show you

4:21know how to use these tools, go back to your boss and say, hey, I

4:23want to come back and automate everything or go to startups.

4:26Every startup I know is hiring for this position, which is somebody who knows how

4:31to build and manage agents.

4:33There is no job rec for this yet or a title.

4:37We should come up with what this person does.

4:39But it used to be called prompt engineer.

4:41It's no longer just prompt engineering.

4:43It's managing and educating and offloading work to an agent and then making sure they're

4:49actually doing it. And right now, it feels like the people in my organization have

4:54four of them who are focused on this out of 20.

4:56I would say that their leverage is between 10 and 20x the other 16.

5:00So now I'm going down the slope of employees from most technical to least and

5:08trying to get each one of them to adopt and create an agent for them.

5:12It'll probably take six months.

5:14But when we do, I think our leverage versus a competing firm is going to

5:17be 10x. As an example, in the podcasting SpaceX, we now have it going through

5:22podcasts, looking for the best moments, or you can just give it a moment.

5:26And it will clip the clip for you and put it in the Google Drive.

5:29So imagine we're all in, I don't know, our little group chat.

5:34And you said, Oh, from the last episode, can you get me a clip of

5:38minute three to minute six?

5:39And then it's just on your iPhone.

5:41It's just in the group chat.

5:43Boom. Nobody has to go find it.

5:45It just clips it. That's the kind of work it's doing.

5:47And then we have it looking at our YouTube stats, we have it looking at

5:50our Instagram or TikTok stats, and then trying to tell us which clips are going

5:55the most viral, which ones have the most comments, and then giving us strategies to

5:58how to make them go more viral.

6:00It's really weird, because it's coming up with really great suggestions and taking eliminating all

6:04the reporting work that knowledge workers do.

6:07Chamath, do you have a take on this?

6:09I know you've deployed the software factory, which is, I think, you know, aligned with

6:14obviously this revolution happening in real time, last couple of weeks have been pretty big

6:20with Claude Opus 4 .6 coming out, ChatGPT Codex coming out, a lot of advances,

6:25and obviously the open claw revolution that I've now done seven podcasts on in a

6:30row. What are your thoughts, Jamal?

6:32I think there are two open questions that I find really interesting right now.

6:37The first question is, I tweeted it this morning, but is on -prem the new

6:44cloud, which is weird to think that that could even be possible.

6:49But we've spent since 2008 migrating everything to cloud because there were these economies of

6:56scale, and it created better margin and lower OpEx and lower CapEx because you could

7:03essentially share infrastructure with other companies.

7:06And that's how AWS and GCP have built such gargantuan businesses.

7:12The counterpoint to that, though, is that in the AI revolution, companies, I suspect, like,

7:16areó arms of high will be fighting for their lives.

7:18And I think it's very much unclear whether it makes sense for a company to

7:23allow the natural leakage of their edge and their confidential and proprietary information out into

7:30the wild versus the control that they would get if they ran on -prem.

7:35That's a really important question.

7:36What do I mean by all that?

7:37Once you use these tools, it is very difficult for a company to be able

7:42to control how their data is used subsequently thereafter.

7:47Meaning, if I gave you, Jason, a PDF of some really important strategy document or

7:52a PowerPoint deck or a really critical model, and you're interrogating it with one of

7:58these models, if you're just using ChatGPT, the mainline instance of it, you're leaking all

8:05of that prompt and response metadata back to ChatGPT, back to Gemini, back to Cloud.

8:11And there's nothing a company can do about that.

8:14If you're using a set of agents to act on all that information, all those

8:18agent traces are going back to these model builders.

8:21That may or may not be a problem for some, but I suspect it is

8:25a deep problem for others and they just haven't uncovered it yet.

8:28When they realize that that is a problem, the enterprise will have to decide, do

8:34I just give up and keep running all of this stuff in the cloud in

8:39a shared experience? Or do I bear the incremental cost of running this stuff in

8:44a more coordinated manner that I control on -prem?

8:48And that would be a crazy shift just to completely go back to where we

8:52were 20 and 30 years ago.

8:54That's a non -so -obvious thing that may happen.

8:56So that's number one. And then number two, I also tweeted this.

9:00There was this really interesting ruling around what happens inside these cloud environments, which was

9:07a judge saying there is no attorney -client privilege and confirming that once you start

9:13to use those tools, all of that stuff is complete public domain material.

9:18If you put these two things together, it creates a very interesting set of questions

9:22for enterprises. You will need AI to survive.

9:25But if you use the tools as they exist today at a public endpoint, you

9:30will give up all control, all security, all confidentiality that you today have, and the

9:37ability to follow through and control what your employees do with it.

9:40The only solution is to have the pendulum swing all the way back and have

9:44private provision networks, which increases costs.

9:47But then if you save a bunch of money because of AI, maybe it all

9:51balances out. That is the big question that I'm wrestling with right now.

9:54Good insights there. And I have some thoughts on the on -prem because I'm actually

9:58doing it right now. Freeberg, your thoughts on this moment in time when we have

10:03people saying it's happening faster and it's become recursive.

10:08Recursive, obviously a fancy word for those in the audience who haven't heard it before.

10:12Just these models and these agents can go out and improve their own work.

10:16So after they do some work or a job for you, you can have another

10:19agent say, hey, here's how to do it better or go learn these new skills.

10:22Go use this skill last 30 days to go find the last seven days or

10:2630 days of best practices with this tool and make yourself better and do that

10:30every night at 1am. What are your thoughts, Freeberg, on the moment in time we

10:35are in right now? Well, I think the thinking historically was that it was going

10:40to be about recursive model development where we were going to continuously improve the actual

10:46model. And we were waiting for a context window where you could feed the model

10:51back to itself. So you're effectively retraining the model.

10:55The model can continue. continuously.

10:56And it may be the case that the output is with recursive.

11:00And that turns out is having the effect that everyone was waiting for.

11:05So it's kind of a surprise.

11:07I saw a lot of computer scientists that have worked in AI for some time,

11:11I think, be a little bit surprised about this moment that we're in, that we're

11:14seeing such incredible strides in model performance just by making the output recursive.

11:19So let's see how far it goes.

11:21Are you still obsessed with OpenClaw, J .G .L.?

11:23I am. We have now seen that every week, five to 10 % of the

11:28work we're doing inside of our venture firm is being moved over to OpenClaw.

11:32We call them replicants. You can think of them as personas.

11:35So we now have three or four of these.

11:37We give them a Notion account, a Slack account, and we give them a Google

11:42Docs account. They have their own email.

11:44And I think all of this technology was here all along.

11:48It was really, or maybe for the last six months, let's say, really good models

11:52out there. But no company would give the keys to the kingdom to allow these

11:57agents to actually act on your behalf.

11:59Why? Because they don't want to be responsible if it ships your Bitcoin keys or

12:04your passwords to somebody else.

12:07So in order to use these, you have to trust them.

12:09And if you trust them, and then you are monitoring them, the results are unbelievable.

12:16We have also, to your point, Chamath, fired up Mac Studios.

12:20We have Kimmy on them.

12:21We are moving all of the work onto these.

12:24And then they'll use Kimmy for most of their easy jobs, which is free.

12:29Then they will use Claude 4 .6 Opus to orchestrate things.

12:33We also, now that we have four of them, Freedberg, we've created OpenClaw Ultron, which

12:39is one meta replicant that is managing the other four.

12:46And it checks their work.

12:47It talks to them all day long about what they're doing, and then summarizes it.

12:52And we're building skills into each one of these.

12:54So one of the skills is like doing deep research.

12:57One of the skills is being able to go into our sales database, which is

13:00in Pipedrive. The gains we're getting, I was able to go through everything my Athena

13:06assistant was doing. And I was able to take about, and I know, Chamath, you

13:09have an Athena assistant too.

13:10I was able to take maybe 30 % of the Athena assistant's work and give

13:14it to the replicant. That let the Athena assistant work on higher level stuff.

13:18I would say on the average investment team individual, we now have probably 20 %

13:24of their work being done by agents in real time.

13:26And the best part about it is they don't forget to do work.

13:30They don't make mistakes. So once you put this in, you don't need to have

13:34checklists. They just do it perfectly every single time.

13:38Crazy. And they work. It's nuts, Chamath.

13:42So now I'm building, and I've been talking to Benny off a lot, because he's

13:45got Slack bot, Claude's got co -work, but none of them have the keys to

13:49the kingdom. So what I'm doing is I'm upgrading to the enterprise version of Slack,

13:53Chamath. You're, I think probably your number two investment in your career.

13:56What an amazing investment that was.

13:59It's number four. Number four.

14:01Okay. Listen, keep grinding. Top five investment for you.

14:05I'm upgrading to the highest level, and I'm ingesting every single Slack message.

14:11And then I'm upgrading and giving the API key for every single email in our

14:15organization to Ultron. They will know everything going on in the organization.

14:18It is mind blowing how fast this is going.

14:21And then finally, just a plug, I'm investing in 10 startups in open claw space,

14:28125k each to come to the accelerator.

14:30If you're doing work on this, open claw at launch .co.

14:33you're, you know, email me what you're doing because we want to invest in at

14:36least 10 or 20 of these companies right now.

14:39This is the 100 % focus of our firm.

14:42It is insane. When do you guys think enterprises have a huge freak out around

14:47all of this and say, wow, we're leaking all of our most important information out

14:51into the wild? But Sachs, to your point, the industrious person trying to get ahead

14:55all of a sudden is using an open endpoint to make a deck better.

15:00And somehow all of that stuff is out in the wild.

15:02They find out people are going to have a freak out moment here soon.

15:07I think there's a big opportunity to take something like OpenClaw and make it enterprise

15:11grade and secure and all that kind of stuff.

15:14One of my partners at Kraft actually created a new tool called Lobster Tank, which

15:19is a version of OpenClaw that's got some enterprise security wrapped around it.

15:22This is what I mean.

15:23OnCrem is back. It's going to happen.

15:25It's going to happen. It's cost savings plus, do I want to give all of

15:30the secrets in our organization, every piece of intellectual property to Sam Altman, who's got

15:35to make a billion dollars a year to keep up with his spend, right?

15:38He's going to build every application.

15:40Let's not make it about Sam.

15:41Do I, if I'm Geico, want to have all of my actuaries using all of

15:50our proprietary, private and confidential data on risk pricing in an open instance of an

15:56LLM? The answer is no, that's obvious.

15:59Yeah. So now the question is, how do you adapt to that?

16:02How do you actually generate tokens in that kind of a situation?

16:06How do you reason in that kind of a situation?

16:08That is a very expensive technical problem.

16:11It's not necessarily complicated, but it is technical.

16:14That will bloat the OPEX because you're going back to a place that you had

16:19said didn't make sense anymore.

16:21It felt very antiquated if you ever heard a company was on -prem, but AI

16:24may be the reason where you can't afford to be not on -prem.

16:28Yeah. And it's, it's going to be on your desktop too, because one of the

16:32solutions to this is just giving each employee a really powerful desktop that is capable

16:40of running a local large language model, which right now takes a Mac studio with

16:44512 gig or, or daisy chaining, two of them.

16:49And I think that's what people are doing.

16:51Remember these VAX terminals? I think that you could actually see a resurgence of that

16:55idea. So you have a centralized computer and you have a bunch of dumb terminals

16:58and you have a CLI.

17:00And so you can interact with it that way.

17:02But again, it keeps everything inside the, but you could also fire up, you could

17:07also fire up your own instance in the cloud and just run it.

17:09Too expensive at scale. Like for example, 80, 90 is a top 20 customer bedrock.

17:14It's too expensive already as it is because of all this overhead because of their

17:19margin, because of all the nonsense that's inside of AWS that you have to pay

17:23for in order to just get access to bare metal.

17:25So then you go to CoreWeave.

17:26Okay, fine. But what does CoreWeave tell you?

17:28They're an excellent business. A, it's all training.

17:31B, you have this situation where too much of what you have has to be

17:36guaranteed into the future because for them, it makes no sense to price it on

17:39spot. And if you buy on spot, you just get these surges, you can't deal

17:43with it. So there is no solution today that makes any sense.

17:46It's absolutely correct, Jamal. I'll just put some numbers behind it briefly.

17:50We, with our agents hit $300 a day per agent using the cloud API, like

17:57instantly. And that was like doing maybe 10 or 20%.

18:01That's a hundred thousand a year per agent.

18:03We're getting to a place where we have to basically now say, what is the

18:06token budget that we're willing to give our best devs?

18:09And then if you aggregate it across all people, You can clearly see a trend

18:13where you're like, well, hold on a second.

18:14Now they need to be at least 2x as productive as another employee.

18:18That is actively happening inside my business because otherwise I'll run out of money.

18:23Yeah, this is a very interesting trend that you're not going to hear anybody else

18:27talk about, but when do tokens outpace the salary of the employee?

18:32Because you're about to hit it.

18:33I'm about to hit it.

18:34I think superstar developers are already there.

18:37Yeah. I think the rank and file is probably 10, 20 % max, more than

18:41likely they're spending a few thousand.

18:43The average non -technical employee is probably in the hundreds to low thousands.

18:49But to your point, the trend is what matters.

18:52So unless we have some gigantic leap forward in generating output tokens at one -tenth

18:57the cost of what they are today, which I suspect we will have.

19:01So bear with everybody for a while because I think NVIDIA and Grok and Google

19:06and AMD, AMD, they're all incentivized to massively ramp up the energy density and massively

19:11push down the token cost.

19:12That's going to happen, but it doesn't change the trend and it doesn't change the

19:17incentives on confidentiality. Let's talk about prediction markets, gentlemen.

19:22They hit critical mass this past weekend at the Super Bowl.

19:26More than a billion bet on CalShe, 700 million on Polymarket, almost $2 billion in

19:31wagering. The media has been obsessing a bit about market manipulation, insider trading, and all

19:38these issues that are totally valid to discuss around prediction markets, which are something new

19:43in the world, at least at this scale.

19:46Two specific examples from the halftime show.

19:50A day -old anonymous Polymarket account correctly predicted 17 out of 20 halftime show bets,

19:56including the special appearances by Lady Gaga, Ricky Martin, but it only profited 17K, a

20:01tiny amount. And then another account created less than 24 hours before the game correctly

20:06bet on Bad Bunny's set list.

20:08Wall Street Journal this morning with an article titled, Israeli soldiers accused of using Polymarket

20:14to bet on strikes. Israel arrested several people, including Army Reservists, for allegedly using classified

20:20information to place bets on Israeli military operations.

20:24Quote, the account in question raked in more than $150 ,000 in winnings before going

20:29dormant for six months. It resumed trading last month, betting on when Israel would strike

20:33Iran, Polymarket data shows. The name of the account, Rico Suave 666.

20:39Suave. Rico Suave. Rico Suave.

20:42The name of the account, Rico Suave 666.

20:44I think that's also the alias that you were using in Vegas for a little

20:47while there at your hotel.

20:49Rico Suave 666. The platforms are regulated, of course, by the CFTC.

20:55But, you know, questions here about society getting used to this new platform.

21:01Here's Calci's CEO talking about this on CNBC.

21:06Let's say there's a cameraman happens to be in the stadium during the rehearsals.

21:12You could argue that would be like somebody at a hotel who sees a rehearsal

21:16of a CEO given a presentation prior.

21:21Those guys would have normally probably had to sign NDAs by the company because they

21:26would be worried about these issues.

21:27But in the context of this, they probably wouldn't.

21:31It's either one of two cases.

21:33Either this information can be public and that's OK, or it's information that cannot be

21:39public beforehand and that's communicated to the staff, right?

21:42The cameraman or the dancer.

21:43The reason why you don't know what song is going to be played first is

21:45even that it's not public and not everybody knows beforehand.

21:48It's a little bit of a surprise at the Super Bowl.

21:49Yeah, but it's - Yeah, but it - It's not material information that can't be

21:54shared. You're making it that by putting it on this betting platform, but they have

21:58no obligation to say, we're not going to tell anybody our opening lineup because there

22:01might be money made on this other place that's now betting on this.

22:04The responsibility is not on them.

22:07Your thoughts just broadly on what I consider society getting used to these new platforms

22:12and what they represent in the marketplace of ideas?

22:16I think the question is, is it really insider trading?

22:21If you and I were making a side bet and I knew something about you

22:25and I had some edge or some advantage and I made a bet with you,

22:29is that fair? Should the government have a role in regulating that?

22:33This kind of goes back to securities regulation that everything needs to be registered.

22:37And then there's this concept of insider information.

22:40It's a real challenge and a real question on keeping the open platform of opportunity

22:47for trading on anything while also trying to mitigate the risk of what people call

22:52insider information in these trades.

22:54There's a good chart that I think we talked about in our group chat that

22:58shows the distribution of accounts.

23:02There's a few accounts that have a huge amount of money and make almost all

23:05the profits. And then a lot of accounts that have a very little amount of

23:08money and they get burned through very quickly.

23:10They actually don't have an edge.

23:11So the accounts that have a lot of money, they generally only trade in things

23:15where they have an edge where they make markets, they actually have an arbitrage or

23:19yeah, sharps and they eat up all of the capital.

23:22So if you're a marketplace like this, you probably also want to be thoughtful about

23:27the fact that over time, you could burn and churn through all of your customers,

23:32all of the users on the platform, if they're constantly going to be making trades

23:36where they simply don't have an edge and all the capital, all the liquidity is

23:40coming from the accounts that do have an edge and effectively trade off of inside

23:44information. So just be that these things end up eating themselves up.

23:49Shabbat, man, we had in trade, I'm sure you remember that.

23:53And I don't know if that was in the early 2000s.

23:55This idea has been out there, but it has clicked right now for some reason.

24:00What are your thoughts, broadly speaking, on the value of these platforms to society?

24:05Let's define some terms first.

24:06So in betting, there are two kinds of people.

24:09There are the sharps who know what's actually going to happen with a better edge.

24:14And then there are the squares, which is everybody else.

24:18And they are grist for the mill.

24:20And in a traditional market, like a sports betting market, there have been edge cases

24:28where you try to throw a game or throw a fight or shave points.

24:33And the sharps are involved in that, but it's increasingly harder and harder to do

24:38because the sports leagues analytically are studying these things so closely to make sure that

24:45that never happens. But what you get are people with a smarter sense of what's

24:50going to happen and people with less of a smart sense of what's going to

24:52happen. The thing with prediction markets is it's not just that.

24:56There will be those things, but then there are going to be these fundamental markets

25:01that are purely about inside information.

25:06And the question is, what can a regulatory body or a society do about that?

25:12And I think the answer is not much.

25:14And the reason is, is that if you try to regulate this, it looks like

25:17a securities market. And I think the problem there is that these things are too

25:22fluid and too dynamic and too ephemeral for them to be legislated like a security.

25:29And so why are these things happening?

25:32It's because there's too many of these prediction markets that can be manipulated this way.

25:37Somebody knows something that somebody else doesn't know, and there's no way to arbitrate that.

25:41This used to exist in the securities market, too.

25:44And this is where now I'm going to get a lot of people really upset

25:46with me. In 2000, we introduced the law called Reg FD.

25:52And what was the point of Reg FD?

25:54It was basically that if you're a CFO, you cannot talk to an individual stock

26:01manager and tell him something that you then don't tell everybody else, essentially inside information.

26:08That used to be not illegal.

26:10I won't say that it was legal.

26:11I would just say that used to be not illegal.

26:14You call your buddy, he says, hey, how you doing?

26:16He goes, man, Cordo is a blockbuster.

26:18You would go and buy the stock.

26:20And starting in the 2000s, it became illegal.

26:23And there used to be these networks of information arbitrage that took advantage of this.

26:27Now, this is an example of Warren Buffett's returns, pre and post Reg FD.

26:32Now, what do you see?

26:34His returns were double the market returns when this kind of information sharing was legal.

26:42And the minute that it became illegal, and you had to basically act on the

26:47same edge as everybody else.

26:50His returns went to the market return.

26:52He generated zero alpha. In fact, he probably on the margins lost a little bit.

26:57So this is the single best investor in the world.

27:00This is what happens when you have information symmetry.

27:04So it's just meant to explain that markets thrive when there's asymmetry.

27:11Billions and billions of dollars will be made in asymmetry.

27:13The prediction markets today, unless they are regulated out of existence or shut down, will

27:19look like the stock market free Reg FD.

27:23And there's nothing we can do, except choose not to bet it.

27:26Because otherwise, what you're going to have are a ton of sharps, taking advantage of

27:31a ton of squares. And I think that's the end state, why is it good

27:35or bad for society that these exist?

27:37You have a take on that?

27:38There are a certain percentage of these prediction markets that are about the well functioning

27:42of society. And the use of inside information gets to the truth faster.

27:50And I think that has value, especially if it uncovers corruption or misdeeds.

27:57And so if people make money along the way, and that's the incentive that it

28:01takes for folks to work around what would otherwise be whistleblower laws or something else,

28:06to get to the truth and get it out there faster, that probably benefits society.

28:12Now, there's a bunch of other things where some people will just set up a

28:16market that they know about, and that they can control that other people aren't unaware.

28:20That's not good. But unfortunately, there's no way to discern when a prediction market gets

28:25created, whether it's A or B.

28:28And so you have to decide whether it's more important that you can understand these

28:32current events faster with more accuracy or not.

28:35And I think that's where this decision has to come to.

28:37And that's what politicians need to decide.

28:39And society needs to decide.

28:41All right, we're really excited that we're doing another event.

28:44Yes, a new event from your friends at All In.

28:47The besties are hosting a new conference, a retreat, a summit in wine country, May

28:5531st through June 3rd. It's called Liquidity.

28:57This is for capital allocators and LPs and GPs.

29:01Chamath, maybe you can talk a little bit about the vision we have here for

29:04the event. There are... ...

29:07... A handful of conferences that happen every year where money is made.

29:11I'll give you a couple of examples.

29:13All the top market traders have been invited to this thing called Irosone every year,

29:21where you go in front of a large audience, present your best long or short

29:26idea. And you can be a debt trader, a credit trader, you can be an

29:32equities trader. I've done it several times.

29:35Ackman has done it. David Einhorn has done it.

29:38Cliff Robbins has done it.

29:39These are incredible places and you pay like $10 ,000 a ticket.

29:41And if you take those portfolios, they tend to do really well.

29:44Separately, there are conferences that investment banks organize that are off the record, not publicly

29:49accessible, where they ask their biggest traders to come to a room and they'll give

29:56them each a few minutes to present their best long and short ideas of public

29:59stocks. Then there are these equivalent conferences that investment banks do for private companies, where

30:06the best fast growing private companies show up and the CEOs get on stage and

30:10they give presentations. All of these things have been closed.

30:14I would like to blow that wide open.

30:16So what will we do?

30:18We will convene the best investors in public markets, the best hedge fund managers, the

30:28best private market investors, the best growth investors, the best credit investors, and the largest

30:34cohort of LPs representing trillions of dollars of capital and the CEOs of the fastest

30:40growing and most important companies in technology.

30:44And what we will do over the course of a few days is we'll have

30:47some presentations, we'll have best ideas, we'll build relationships.

30:51There may be some investments that may happen as a result of that.

30:55We're going to shut down all of Yonville.

30:57We're going to shut down the French laundry.

30:59We're going to shut down all of it.

31:00And it'll be ours for a two -day playground where we will build relationships, allocate

31:05capital, and maybe make some money as a result.

31:10So you need to apply.

31:12We will make some allocations to some folks that may not otherwise get in.

31:17We'll make some allocations to emerging managers who may need to raise capital and scale

31:21up, but can show us good returns.

31:26And over time, we'll find a way to increase a lot of this and make

31:29it more and more publicly accessible.

31:31We have what we are going to essentially take all of these things that I've

31:34been a part of that have been in closed rooms, and we're going to put

31:37them together and open it up.

31:38Yeah. Well said. Well said.

31:40It's going to be a wonderful event.

31:42Freeberg, anything you're excited about in terms of the event?

31:47No, I love Yonville. We're going to Yonville, so I'm looking forward to that.

31:50It's going to be great.

31:51I mean, a beautiful location, and I think there's going to be ample time for

31:54meetings, networking. J. Cal, if you're an investor, you can go to the website to

32:00allin .com slash events, and you can submit your application.

32:03We can't have everybody there, and this is not like a general admission type event.

32:08It is specifically for this group of people, capital allocators.

32:11So apply at the website, allin .com slash events.

32:13It's going to be wonderful, and Shamath is putting his focus on it.

32:16I can tell you because I brought him my first five ideas, and he was

32:19like, no, no, no, yes, but better, yes, yes.

32:23So he is engaged, and he's going to make it super tight, and tight is

32:27right. Judging. I'm being judgy.

32:29Good. I like it. I like it.

32:30You know, all great events, all great art has some perspective behind it, and we're

32:36excited to have your sharp perspective behind this one.

32:39Liquidity, May 31st to June 3rd, allin .com slash events.

32:42Okay, let's move on to our next topic.

32:44The new CBO report is...

32:45out freeberg you said we are in a debt death spiral the congressional budget offer

32:51released its long -term budget forecast on wednesday february 11th here are the numbers 2026

32:57deficit is 1 .9 trillion that's nearly six percent of gdp much higher than the

33:03three percent gdp target we heard from scott bessett on this podcast social security we

33:08talked about that before freeberg trust runs out in 2032 uh one year earlier than

33:13previously expected that's obviously going to trigger all kinds of discussions around austerity measures that

33:19folks will not like the debt will now grow from 31 trillion today to 56

33:23trillion in 2036 so it is not stopping folks we are looking at an average

33:30of 2 .5 trillion per year from 2026 to 2036 also currently we're at 120

33:37debt to gdp house committee on budget expects it to be 135 so slightly up

33:44in 2036 for comparison japan is 237 singapore 176 venezuela 164 the greeks 154 uk

33:5294 20 years ago our debt to gdp was but 60 percent here's a direct

33:58quote from the report the fiscal trajectory is not sustainable okay dr doom what do

34:07you think freeberg this is your story your chance to shine well there's no outlook

34:11to three percent gdp there he is and if you look at the assumptions one

34:19of the key assumptions is that the short -term interest rate which is largely how

34:24a lot of the debt is getting refinanced is modeled to be around 3 .1

34:29percent but if rates climb closer to five percent as i mentioned in the past

34:35just using the current debt levels it adds another 650 billion dollars a year of

34:39interest expense which takes interest expense almost up to two trillion a year just paying

34:45the interest on the past debt and because we're running a deficit that new interest

34:49expense increases the debt every year so the debt goes up and up and up

34:54just by adding interest on past debt and so this becomes the death spiral that

35:00we've kind of highlighted many times so there's nothing in this report that i think

35:05changes the outlook it's pretty scary um i'll say that the trigger point that i'm

35:10getting more and more concerned about if the democrats win the midterms and you end

35:15up with a democrat in the white house in 2028 i think that there's a

35:19bigger problem at foot which is all of the state and local obligations we've talked

35:26about social security looks like it's going to run out of money in a few

35:29years here and so they're going to need to print a lot more money to

35:33fund social security obligations uh it's very unlikely they're going to make a massive cut

35:38to social security because no one will get elected if they did that and no

35:41one will get elected if they promise to do that um and there's a similar

35:45problem at the state and local level which is that there's pension obligations we've talked

35:49about this extensively california has nearly a trillion dollars of unfunded pension obligations to its

35:55public retirees or public employees that are going to retire if you end up with

36:00a democrat controlled house and a democrat president in 2028 you'll very likely see a

36:07federalization of that obligation meaning that the federal government will step in to bail out

36:12or support those state and local governments because otherwise there's going to be a real

36:17kind of economic crisis afoot so when you add that liability coming to hit this

36:23cbo report you which doesn't include any of that in the next five to 10

36:27years. I think that could be not just the straw that breaks the camel's back,

36:31but the concrete that breaks the camel's back.

36:33And that's the thing I'm most worried about.

36:35There is a deep connection between what's going on with the socialist movements at a

36:40city level, and now increasingly the state level, and what we should expect to happen

36:45with the US dollar, and how it relates to federal spending and federal deficits and

36:50federal debt. And these are going to be dragging each other into a bad place

36:55in the next couple of years, one way or the other.

36:57So that's kind of what I'm more worried about at this point.

37:01It seems if it's very hard to cut spending, or get Congress to approve budget

37:05cuts that we need to save ourselves from this debt depth spiral, imagine how much

37:10worse it's going to be in the next couple of years if we have to

37:13bail out or federalize state and local debt and state and local pension obligations.

37:18It's going to be really nasty.

37:20So that's the thing I worry about the most in my doctor, Dr.

37:22Doomhat. Yeah. And I think that that's one of the things that no one talks

37:25about at the federal level, and everyone ignores it because they assume it's a state

37:29and local problem. As we've talked about, and I'll bring it up again, and I'll

37:32ask my colleague who works in the administration to think about this idea that, you

37:37know, if we can find a way to declare bankruptcy, to restructure the fiscal obligations

37:42or the pension obligations that sit at the state and local level, we may have

37:47a way out. But short of that, that's going to pile on to this federal

37:51problem. Saks, your thoughts on the CBO report and this death spiral, debt -death spiral?

37:59Well, we all agree about the problem of federal spending and the deficit and the

38:03debt, and we're all concerned about that.

38:05With respect to the CBO study, however, I'll just note that one of the key

38:10assumptions here is that CBO projects that real GDP will only grow by 2 .2

38:17% this year in 2026.

38:20That's a very low assumption given that we grew by over 4 % in Q3

38:25last year, and the preliminary number for Q4 was over 5%.

38:29And I think all of our predictions for GDP growth this year when we did

38:33our predictions episode was 5 % plus.

38:36So 2 .2 % is a pretty low number.

38:38And then they predict that it's going to slow to 1 .8 % after 2026.

38:46So again, these are very meager, anemic growth assumptions.

38:50And if you believe that all of this CapEx that's being invested in AI infrastructure

38:55is going to have a payoff, then the growth rates could be a lot higher.

39:00And that ultimately, I think, is the way to get out of the debt spiral

39:03is we need strong growth.

39:05Without that, we're not going to get out of this problem.

39:07So look, I think that if you believe in growth, then the situation is not

39:11quite as dire. You know, what would I do?

39:14Well, I mean, if I could wave a magic wand, the two key charts you

39:18want to look at are federal net outlays as a percent of GDP.

39:21This is from Fred, right?

39:22And then you want to look at federal receipts, which is tax receipts as a

39:27percent of GDP. And you just don't want those lines to be more than call

39:31it 3 % apart. I think that's what Secretary Besson said is try to reduce

39:35federal deficits to 3 % of GDP.

39:39Historically, tax receipts have bounced around 17%.

39:44And the federal net outlays have bounced around 20%.

39:48So if you get back to that, we'd be in pretty good shape.

39:51And we were before COVID, our federal net outlays, which means spending as a percent

39:57of GDP was around 20%.

39:59But then with COVID, it bounced all the way up to 30%.

40:02And we'll be in pretty good shape.

40:02And if we go to our federal net outlays, then you can in 2020, because

40:04of both the function of all the stimulus, but then also the fact that the

40:07economy shrank because of COVID.

40:09And we've never quite gotten back to that magic 20 % number.

40:13Right now, it's trending around 23%.

40:15So we're doing a lot better than we did under COVID, but it's still just

40:19a few percent higher. I mean, if it was up to me, I would just

40:22freeze federal spending until the economy grew to the point where federal spending as a

40:28percent of GDP is 20%.

40:29And then you could let federal spending continue to grow as the economy grows.

40:36And we're not even talking about cuts here.

40:37We're not even talking about shrinking the size of the government.

40:40We're just talking about limiting the rate of growth until the overall size of the

40:45economy can catch up with it.

40:47But look, as we know, it's very hard to get Washington to go along with

40:50that because there is just a lot of spending pressure in Washington.

40:54One thing I will say though, I mean, just to give some credit to the

40:57administration here, is that the level of federal employment is at the lowest level since

41:031966. So during President Trump's second term here, we've gone from roughly 3 million federal

41:11employees to a little bit under 2 .7 million.

41:14So, you know, over 300 ,000 federal employees have been cut.

41:17I think that is a good start.

41:19I mean, you've seen - 10 % is a good start for you.

41:20By the way, I think that's really important to just pause on, just so people

41:24understand. This isn't like some hurtful thing about firing people, they lose their jobs.

41:29But when people move from the government workforce into the private workforce, they become productive.

41:34They're making things that grow the economy and theoretically, they should also make more money.

41:39So this is positive from an economic point of view to move the workforce from

41:43public to private. It also, to my point, historically, I think it's very important to

41:48avoid the socialist spiral, that if you have too many people employed by the government,

41:53it becomes impossible to not employ people by the government.

41:56And that becomes ultimately de facto socialism.

41:58Chamath, your thoughts here? Obviously, great thing that we're shrinking the size of the government,

42:05those people becoming more productive going into the private sector.

42:07That's a big win, we all agree.

42:0910 % great job in the first year, hey, maybe 5 % the next two

42:12or three years would be even better.

42:13But the debt continues to be a problem.

42:16Are you worried? Do you think there's a solution here?

42:19What would you do if you were running the show?

42:23I think you have to take a broader historical context to this.

42:28Does debt to GDP matter?

42:31It depends on many things, but mostly I would say it doesn't matter.

42:37And it's very easy for people to get agitated about that.

42:41Now, there are things that matter when you print too much money, which is the

42:47value of the dollar, the value of exports, the cost of imports, and how to

42:52actually protect your earnings and your wealth.

42:55That's a different question. This is a historical look back from about 300 years of

43:01debt to GDP of the largest functioning economies in the world.

43:04Now, what do you see?

43:05What you see is the trend where you, you know, if you smooth it out

43:09for wars, which by the way, has this weird effect of first escalating the debt

43:15to GDP, but then severely impacting it in a positive way.

43:19The Napoleonic War, the Fanko -Prussian War, World War II, these things all had positive

43:24effects on bringing debt to GDP once the war was over.

43:28But the general trend since 1700 to now is up and to the right.

43:34And the key observation is that it moves in unison, that these things are relative.

43:41problems. So if the entire world moves in unison like this, there is an argument

43:48to be made, which is that you could end up at 300, 250, 200 %

43:54of debt to GDP. But if everybody is there, nothing really changes that much.

44:00The real question is if one country is able to decouple itself, and its economic

44:06output is so meaningfully different than everybody else's.

44:09So my first take on this whole debt to GDP thing is I think you

44:13have to look at it together as a group.

44:15Separately, is it important to contain the debt?

44:19Absolutely. But for these other reasons, for earnings, for inflation, for all of those very

44:25practical reasons that impact your daily lived life.

44:28And what do we know there?

44:30We know that President Trump was elected on a massive mandate to secure the border

44:37on one hand, but to look at waste, fraud, and abuse on the other.

44:40And on that side, what did he do?

44:41He drafted the most important and prolific private businessman in the history of the world

44:47to be his tip of the spear.

44:49And what happened? They identified hundreds of billions of dollars, but when it came down

44:54to it and Congress had to act to solidify these cuts, they haven't done much

44:59of anything. Which is a way of saying that if the most conservative Congress in

45:04the history of the United States has not done much to solidify these cuts that

45:09were identified by the White House and Doge, then as Friedberg said, it'll only get

45:14worse if there's ever a democratic house and democratic control.

45:18So what do we have to do?

45:20I think we have to just acknowledge that if debt to GDP continually moves in

45:25unison, the music isn't up for a very long time.

45:28That's just an observation. I'm not saying it's right or wrong.

45:30It's just the observation. But you got to find ways of hedging and owning real

45:34durable assets. Because the underlying currency that is used in these economies, even on a

45:42relative basis, will fluctuate wildly and just fall off of a cliff, which will mean

45:46that it will erode the value that you have created for yourself and your family.

45:49That, I think, is the most important takeaway from all of this, which is we

45:53probably see things like gold do much, much better over time because people will be

46:03afraid about the durability of their dollar -denominated resources.

46:06But it will also be true for all these other denominated resources.

46:11But I think debt to GDP, quite honestly, if I had to be a betting

46:13man, will trend into the two, three, four, five, six hundred on a relative basis

46:18for all countries. Because I just think the governments of these countries are addicted to

46:22spending. And there is no reason to stop safe of some other planetary species invading

46:30planet Earth. Yeah, a black swan event.

46:33Yes. Yeah. There's also a question of what Fed action will do to the capacity

46:40for excess deficit spending. So if Kevin Warsh really does want to tighten the Fed's

46:48balance sheet, and the Fed is effectively the first -in -line buyer of treasuries, meaning

46:54they are printing money to fund the government spending, and they slow down or actively

47:00slow down and stop doing that, then there is a real kind of question on

47:04what action will Congress and the administration need to take.

47:07Because what will happen, as you know, if the Fed stops buying treasuries, treasury yields

47:14will go up. And if treasury yields go up, that means the interest on the

47:17existing debt will start to go up.

47:18And if that last for a period of time, and you start going from three

47:21and a half to four to four and a half to 5 % on the

47:25short end of the yield curve, then it starts to become way too expensive to

47:31fund this level of deficit spending, because the interest expense will just start to climb

47:35and eat it all up.

47:36So I think like the Kevin Walsh question is, if he really is going to

47:40reduce the balance sheet, what's that going to do to rates?

47:42What's that going to ultimately force Congress, force the administration to do with spending?

47:46Jason, what do you think?

47:48Ah, you know, we are in a consumer driven economy, and the employment rate in

47:55this country is absolutely fantastic.

47:58So just three quick charts here.

47:59You know, this is the number of job openings we still have, even if we

48:05burned off in 2022, from 12 million to 7 million jobs, we still have a

48:10ton of jobs available. Then if you look at our unemployment rate, it's still at

48:14historical lows for our lifetime.

48:16If you were born in 1970.

48:18This is as good as it gets 4 .456 is what it's been ticking up

48:23modestly, but still lowest of our lifetimes.

48:25And then finally, the employment participation rate number of people in our society who are

48:30working and able to work, it peaked at 68 % or so during the Clinton

48:34years. And this is still low 62%.

48:37We still have people who could be participating.

48:40So all of these problems will be solved if more people were to participate and

48:45take those jobs. Why don't they take those jobs?

48:47Sometimes it's a geographic mismatch.

48:50Sometimes it is a skills mismatch.

48:53But very often it is the jobs are not paying enough.

48:57So if you want to give Trump his flowers, by closing the border, you've reduced

49:02the number of people taking the jobs off the books.

49:06And then you have America, the businesses are going to have to raise their minimum

49:11wage, they're going to have to raise their offering wage, which then might get the

49:157 % or so that are sitting on the sidelines to take their jobs.

49:19Crazy prediction. I wouldn't be surprised if we see Trump, who is obviously a populist,

49:24and I tweeted about this the other day, got almost a half million views or

49:27400 ,000 views. What if Trump decides he's going to raise the minimum wage, not

49:32saying I endorse this or not, but it's incredibly low at seven bucks an hour,

49:36obviously, in different cities and states, it's 15 to 20.

49:39But what if Trump said, we're going to add $1 to it, or $2 to

49:42it over each year of the next three, this would be incredibly popular.

49:46And it would get some of those people off the sidelines and maybe take these

49:50jobs. So just a crazy prediction there.

49:53But I think it's a possibility.

49:55And I think they're going to lose the midterms as it stands right now, it

49:59looks like. I think that's the consensus opinion.

50:02And they haven't been able to do something with this affordability.

50:07Well, I think most Americans would say if you raise the minimum wage, that that

50:11would increase affordability. You can make the counter argument, it's going to just be inflationary.

50:16But I think most Americans are going to believe in that.

50:18So I wouldn't be surprised if you saw Trump take action there, because he does

50:21take populist actions like this from time to time.

50:24Are you actually reading the economic literature on what raising the minimum wage does?

50:29Yes, it can increase inflation, and it can lower the, it can raise inflation, and

50:34it can lower the profitability of businesses.

50:36Yeah. And move stuff offshore.

50:38No, what it does is it makes it illegal to hire someone whose labor is

50:44worth less than the minimum wage.

50:46And so it is shown to create higher unemployment in those segments of the economy.

50:52It's like one of those core findings of economists.

50:56So yeah, it's true that.

50:58Some people will be a beneficiary of getting a higher minimum wage, but then there'll

51:03be other people who just lose their jobs.

51:05And it creates an incentive for those employers to shift more labor towards automation.

51:10So if you're already worried about those people losing their jobs to automation, that's a

51:14downside. So anyway, if the minimum wage were a panacea and it just increased everyone's

51:21living standards without having downsides, why wouldn't you make the minimum wage at $100 an

51:25hour? Everyone would just keep raising it infinitely.

51:29Obviously, it doesn't work because if you raise the minimum wage too much, which is

51:33to say more than the value of someone's labor, then they just get unemployed.

51:37Looking at what happened in the different cities or in Australia or other countries, they

51:43have a much higher minimum wage and they have much more happiness.

51:46Businesses and prices go up about 20%, 10 % to 20%.

51:49So in Australia, if you go to a restaurant or if you go to a

51:53Scandinavian country, things might cost 10%, 20 % more, but you have a happier population.

51:59And yes, it could lead to more automation.

52:02We got rid of cashiers because it became too expensive in New York to pay

52:0515 to 20 bucks for a cashier.

52:07Sure. But we have really low minimum.

52:10We have very low unemployment now.

52:12And the businesses can clearly afford to pay an extra buck an hour or two

52:16bucks an hour. So there's the theoretical academic argument, which you are correct on and

52:21I understand it fully well.

52:22And then there's the reality on the field, which is Seattle, San Francisco, New York,

52:26Los Angeles, Australia, other places have a much higher minimum wage.

52:31They have higher happiness in the population.

52:32I don't actually think it will have any impact because I think it's artificially low,

52:36but that's just one man's opinion.

52:38I think it would change the game here in America.

52:40And I think it would actually do something to your concern, Freeberg, about socialism.

52:45I think that if people felt that there was a, you know, kind of a

52:49backstop against this low, low cost of labor, it might actually make people pretty stoked,

52:55you know, that they could get a higher paying hourly job and it might take

52:58some of that edge off in the same way universal healthcare might do that.

53:01But again, just one man's opinion.

53:03I got to say on all this economic data, I think we're kind of missing

53:06the lead here, which is we are at the beginning of an economic boom.

53:12Again, we saw it in the GDP growth rates in Q3 and Q4 last year,

53:15over 4 % Q3, over 5 % Q4.

53:18We just had a January job report where the economy added 172 ,000 new private

53:24sector jobs. This blew away the expectation, which was around 70 ,000.

53:28At the same time, the government shed 42 ,000 jobs.

53:33The net of this was to bring the unemployment rate down to 4 .3%.

53:37So I remember a few months ago, J -Cal, you were wringing your hands about

53:41the fact that the unemployment rate had ticked up.

53:43Well, now it's back down.

53:44And you're seeing a lot of jobs being created in construction, especially non -residential construction,

53:51has to do with the data centers, the AI boom that's going on, 33 ,000

53:55new construction jobs in January.

53:58You've seen in President Trump's second term, you've had 615 ,000 new private sector jobs

54:04have been created, while again, like we talked about, over 300 ,000 government jobs have

54:09been cut, which increases the productivity of the economy.

54:12And it does what Secretary Besson says, which is reprivatize the economy.

54:17So I just think that the overall economic news is really good.

54:21Again, we have this AI boom going on.

54:23There's a new chart showing that the CapEx for this year, that's expected, just from

54:31the four leading hyperscalers, is $600 billion.

54:35Just from four... ... ...

54:36companies. That's a roughly 2 % tailwind to GDP growth right there.

54:41That is just the CapEx.

54:43That doesn't include all the ROI that you might get from that infrastructure on the

54:48software side, on the application side, the productivity side.

54:52So we have a boom going on.

54:53And I feel like everyone's kind of blackpilling about this.

54:56They're focusing on this CBO report that has unrealistically low growth rates.

55:03We're going to print 6%.

55:04Right. Or they're doom scrolling about Epstein or what have you.

55:08And I just think when we look back on this period, it could end up

55:10being a little bit like the late 90s.

55:12Remember when we had, you know, we look back on the late 90s.

55:15We're like, wow, we had like phenomenal economic growth.

55:17Golden age. Yeah. Golden age.

55:19Labor participation. The internet. Zero debt.

55:23Right. But if you remember what politics were like at that time period, all anyone

55:26talked about was whether Bill Clinton got a blow job from Lewinsky.

55:30So my point is just, again, I'm not sure we're focused on the right things.

55:34I suspect we'll look back on this time period as the beginning of a new

55:38golden age. I agree. I think you're correct.

55:41And just in terms of the hand -wringing comment, anytime a statistic is 10, 15%,

55:45I highlight it. I wouldn't use hand -wringing.

55:48I would just say, we generally look at that.

55:51When we went from 4 .1%, which is where Trump inherited it, went up to

55:544 .5, it's about a 10 % increase in one year.

55:57If that trend were to continue, that would be notable.

55:59But to your point, it's gone down.

56:02And that is because the border, I believe, the southern border is closed.

56:06And as you're pointing out, we've got a lot of good news in the economy.

56:10So people are hiring still.

56:11And so we are in really good economic shape.

56:14I would say it's hard to deny that.

56:17Yeah. All the job creation has been enjoyed by native -born Americans as well.

56:22All the job loss has been on non -native -born Americans, which is pretty remarkable.

56:27So that, I think, is also going to accrue to the benefit of more Americans.

56:32By the way, just on the unemployment thing, there was a slight tick -up in

56:36October because of the October 1 buyouts.

56:39Remember, Doge created the buyout program?

56:42Yes. They all hit September or October?

56:44When did they hit? It was October 1st was the deadline for that.

56:46And so we had a tick -up in unemployment related to that.

56:49But remember, all of those were voluntary buyouts.

56:52They all chose the Doge option.

56:54That's what created the tick -up in unemployment.

56:56But again, it was all, I think, a good and voluntary tick -up.

57:00And now the unemployment rate has ticked down.

57:02So again, the job creation right now is strong.

57:05And to just put a finer point on it, the top two areas where illegal

57:09aliens are working in the United States, most people don't know this, construction, number one.

57:14And the second one is leisure and hospitality.

57:16So you got two and a half million people working in those two categories, which

57:19is why I said if you want to see more Americans take jobs and you

57:23want to see wages go up, if you went to those businesses and you find

57:27those businesses for hiring illegal aliens, which is the easiest thing in the world to

57:30do, you just show up at a construction site, you take pictures of everybody who

57:35is working illegally, which is what they used to do in the ICE agency.

57:38They would then do surveillance of construction sites, and then they would go and find

57:43the construction person, and then they had to hire Americans or that construction company would

57:48get in serious trouble. There's been multi -million dollar fines done over the last 20

57:52years, specifically on construction sites.

57:54And that would drive more people to raise the wages of construction workers, which would

57:58even lower unemployment more and increase labor participation.

58:02That's where the big win is.

58:04Go to construction sites, go to hotels.

58:05So you want ICE to randomly raid employers, construction sites, farms.

58:12And just check everyone's papers.

58:14You want... You want eyes showing up everywhere.

58:16You want a police state.

58:18Okay, number one, they're doing this already, gentlemen.

58:20This is well within their purview.

58:21Look up the legal. They have been doing this for 30 years.

58:25This is actually the technique they used before raiding cities in a chaotic way.

58:30They went, they surveilled, which is their right to do.

58:33They have the right to do that.

58:35I didn't say raid. I said surveil.

58:37That is a peaceful, quiet thing to do.

58:39And then they find business owners.

58:40The business owners are the people who are causing this problem.

58:44If there was not a job available in construction for 20, 30, 40 bucks an

58:48hour off the books and not paying taxes, those immigrants who are crossing illegally would

58:54not be here. If they couldn't get a $30 an hour off the book job,

58:58working at a hotel or as a dishwasher, they would not come.

59:01And the businesses need to stop hiring them.

59:03Okay, so you mean very simple.

59:06Explained surveil. So how do they, with a camera, figure out if someone's illegal?

59:11What's the camera figuring out?

59:12Okay, so you guys, it's very simple.

59:14Oh, you have to retina scan first.

59:16No, no. And so then you'll know who's a citizen.

59:19This is already been done.

59:19I want to hear the surveilling.

59:21If you want to hear the answer and how misinformed the three of you are

59:23and biased, I will tell you.

59:25You're all misinformed and biased.

59:27This is what surveillance is.

59:27I don't know how you're going to surveil someone to figure out they're illegal.

59:29It's super simple. You go to the construction site.

59:32Everybody checks in in the morning.

59:33They have a truck. This has been done for decades, gentlemen.

59:36They take pictures of everybody.

59:39Then they go in at the end of the day, after surveilling for weeks, Chema,

59:43and they have done this already.

59:45This is all facts. They've had multiple cases where they go to the construction site.

59:48They take pictures. They take a video.

59:50Then they go to the business owner and say, show us these people's pay stubs.

59:54And the business owner goes, I don't have pay stubs for these people.

59:57And they say, okay, here's a video of them working for eight hours a day.

1:00:01Where's their pay stub? Show us their taxes.

1:00:03The businesses are paying people off the books.

1:00:06That is tax evasion. And then they got multi -million dollar fines.

1:00:12Here's a very important case.

1:00:13This is from back in 2017, the Justice Department and ICE went after a group

1:00:19which was hiring illegal aliens.

1:00:23This is the largest payment ever in an immigration case.

1:00:2695 million recovered, 80 million criminal forfeiture, 15 million in civil payments.

1:00:31That represented, according to our Justice Department, in 2017, the largest ever levied immigration case.

1:00:38We can solve almost all of the immigration issues, with the exception of maybe criminal

1:00:44gangs, just by doing basic surveillance, basic detective work, asking these businesses to show the

1:00:54pay stubs of the people working for them.

1:00:57And ICE has been doing this.

1:00:58They've already been doing this.

1:01:00Your suggestion is to do this for every company in America?

1:01:04Okay, so again, you're being hyperbolic and you're not debating.

1:01:07Which companies do you choose?

1:01:10I said, I said this at the top.

1:01:11You pick the number one employer of illegal aliens.

1:01:152 .5 million people working construction.

1:01:17You start with the largest construction sites and then you work backwards.

1:01:20Then you start with the largest restaurant and hotel chains and work backwards.

1:01:22If Stephen Miller were doing this, you'd say he's not compassionate enough.

1:01:25You'd call him a fascist.

1:01:26No, I have, nope, incorrect.

1:01:27Once again, incorrect. I have stated publicly here on the pod and I have stated

1:01:30publicly on Twitter that this is actually what Stephen Miller should do.

1:01:33Because this would go after the people who are causing the immigration problem.

1:01:38The people causing the immigration problem are the people causing the immigration problem.

1:01:40Hold on, let me finish.

1:01:41Let me finish that. The people causing this problem are the business owners.

1:01:46They are providing the incentive to come here.

1:01:48Stephen Miller should stop doing the crazy raids and he should go and just surveil.

1:01:53You don't think it should go and do it.

1:01:53And government benefits that are incentivizing people to come?

1:01:56I think that's like far down the list.

1:01:59Two, three, four. Far down the list?

1:02:01Yes. Is the free health care and the free food and the free housing?

1:02:03I actually have statistics. I can give a statistic on it.

1:02:05According to this LA Times survey, 75 % of immigrants come here for better job

1:02:12opportunities. People coming to America illegally are coming here for economic reasons.

1:02:17They are not coming here to commit crimes.

1:02:19They are not coming here to get benefits.

1:02:21That is way down the list.

1:02:23That is a small percentage.

1:02:25How is this going to deport all the gangbangers, the rapists, the murderers, the ones

1:02:30who aren't working on a farm?

1:02:32They're not doing legitimate work.

1:02:33That's a total separate issue.

1:02:34They should go do that.

1:02:35That's a separate issue. They should go do those and go after anybody committing crimes.

1:02:37But that is what ICE was doing.

1:02:38They're trying to round up the known criminals for whom they get warrants and then

1:02:44they capture them and deport them.

1:02:45That's a separate problem. Yeah, those are two separate problems.

1:02:48I'm not talking about the problem of gangbangers.

1:02:51You can do gangbangers. I'm talking about if you actually want to move big numbers,

1:02:55the gangbangers are a small number.

1:02:57The people working in construction, the people working at hotels are a big number.

1:03:00Yeah, they're both equally important.

1:03:02Sex, we're in agreement. Okay.

1:03:05The thing we're not doing at scale is going after the businesses that are creating

1:03:11the incentive for the majority of people who come here.

1:03:15Ferrari has a new car coming out.

1:03:17It's going to be their first all -electric vehicle.

1:03:20Very polarizing. Here's an illustration of the vehicle from Car and Driver.

1:03:25This is not the accurate one because it's going to be revealed in May, but

1:03:30this is what they think it's going to look like.

1:03:311 ,000 -plus horsepower, four electric motors, zero to 60 in under 2 .5 seconds,

1:03:37330 -mile range. It's the heaviest Ferrari ever, 5 ,100 pounds compared to the iconic

1:03:43F40, which was but 3 ,000 pounds.

1:03:46It's going to launch in May of 2026.

1:03:48But we got to see the interior, and this is what everybody's buzzing about.

1:03:53It's gone viral on the interwebs.

1:03:55Former Apple design chief Johnny Ive on his team with his partner Mark Newsom, who

1:03:59also designed the iconic Ford O21C concept car, were involved in this.

1:04:05Wait, what is that? This is like if you're a car nerd.

1:04:09This was like this incredibly innovative moment in design that never happened that Ford did.

1:04:13It looks very similar to an Apple product.

1:04:17Here's the key for the new Ferrari.

1:04:20It looks like an animated character in Cars or something like that.

1:04:23You have this beautiful square glass key, like an iPhone.

1:04:27You put it in, and the yellow Ferrari yellow drains out and goes into the

1:04:31shifter. That was one nuance that people thought was very beautiful.

1:04:35The screen looks very Mac -inspired, except unlike Tesla, which is no buttons and removing

1:04:41buttons, they're adding buttons here and making the buttons very tactile.

1:04:45All the sports car enthusiasts love tactile, memory -based buttons that you can just have

1:04:50fun with and flip and feel like you're a fighter pilot.

1:04:52Finally, turning the car on is like starting up a jet.

1:04:58You have a launch button.

1:04:59You twist and press, and it makes the whole car turn Ferrari orange or red.

1:05:03And, yeah, that's the inside.

1:05:07Saks? You buying one? You like it?

1:05:11I saw everyone just, you know, shitting all over this design, and I thought it

1:05:17was a little bit unfair in the sense that I actually overall liked the interior.

1:05:21I thought it found a compromise between, you know, let's call it the all -glass

1:05:26cockpit of a Tesla versus a totally analog old Ferrari.

1:05:31We're all right. We're all right.

1:05:32interior. Like you said, it had a combination of screens, but then also buttons.

1:05:38And they made a point of showing that the buttons weren't only nicely tactile, but

1:05:43they also made pleasing sounds and that kind of stuff.

1:05:45It seemed very heavy duty.

1:05:47So I thought the interior actually was pretty good.

1:05:49Again, nice balance between kind of the interior of a race car, the simplicity of

1:05:55that iPad screen, but also having enough sort of buttons that you develop muscle memory

1:06:00around where all the controls are.

1:06:01You don't have to go hunting for them through a menu.

1:06:04I thought the interior wasn't on the inside.

1:06:06I thought it was on the outside.

1:06:07I hate the look of the outside of this car.

1:06:10It looks to me like - By the way, just to be clear, that look

1:06:13is what people are projecting.

1:06:14It's not the final version.

1:06:16Okay. I think this is terrible.

1:06:17This to me looks like a Corvette maybe, or even like a Friance Am.

1:06:21I mean, I don't like - It looks like a Model 3.

1:06:23Yeah. I don't like the, what's that like the black part of the front or

1:06:27even the - The grill.

1:06:28The grill, it looks terrible and the things going on on the sides.

1:06:32Yeah. And then the back almost looks like a hatchback or something.

1:06:34It's just, you know, a Ferrari should look swoopier.

1:06:38It should look curvier and there should be fewer different pieces to it.

1:06:42100%. So I don't know.

1:06:43It doesn't look right to me as a Ferrari, but I thought the inside actually

1:06:46was fine. I like it.

1:06:49Yeah. Chamop, you buyer. When's the last time you actually drove yourself, Zach?

1:06:53Have you actually used a steering wheel in the last decade?

1:06:57Well, I'll tell you that - When's the last time you actually use this steering

1:06:59wheel? Full self -driving has made me a driver again because I just set the

1:07:03full self -driving. Wow. You're driving yourself.

1:07:05It's such a game changer.

1:07:06Yeah. Well, with FSD. Yeah.

1:07:09Okay. So you're now driving around Texas.

1:07:10I like it. With FSD.

1:07:12Okay. Because the Uber takes forever.

1:07:15So now I'm just like, you know.

1:07:16You like, you've always liked to drive, Chamop, I think.

1:07:20You're driving yourself these days or you - I drive myself in a Model Y

1:07:24with FSD or I take a Waymo.

1:07:26One of the two. Yeah.

1:07:27Waymo's in the Valley now.

1:07:28Yeah. On the Piston. I've had a Ferrari.

1:07:32What I would tell you is that there's just something that's very unique.

1:07:35There's a Ferrari experience that's different from every other car.

1:07:39And I think that the new CEO, Benedetto Vigna, is a very talented executive.

1:07:45And I think that he's probably going to land something beautiful.

1:07:50The thing is that we are racing against time.

1:07:53And I've said this before, but FSD and autonomy is going to shift the number

1:07:59of people that even know what it means to drive.

1:08:02It will feel like when we look at somebody who really embraces thoroughbred racing, it's

1:08:11just going to happen in smaller and smaller places and less and less often.

1:08:16And that's not because these cars aren't beautiful, but it's because the risk will not

1:08:21make any sense for most people under most conditions.

1:08:25And I think that's the big thing that's going to change.

1:08:27Like the car culture in America was a profound part of the American culture.

1:08:32You know, driving from A to B on vacation, the sense of freedom, the building

1:08:38of the interstate highway system.

1:08:39These were huge parts of what made America great and the rails on which all

1:08:44this productivity sat on top of.

1:08:47And now I think it's all going to change.

1:08:49So I don't know. I mean, I think the car will probably be beautiful.

1:08:52Like Ferraris are beautiful. There's a Ferrari dealership in Redwood City.

1:08:56And whenever I drive by it, I slow down and I look out.

1:09:01They make beautiful cars. Piece of art.

1:09:04Yeah. And I think in places like China and India, they're always going to have

1:09:09a market. But I think in places like, United States, it's going to become so

1:09:11expensive to pay for the insurance if you are driving yourself that the idea that

1:09:17you would buy any car is going to feel tougher and tougher just because I

1:09:23think the math is going to be tough.

1:09:25But the experience inside of the Ferrari is second to none.

1:09:29So it probably is that there's going to be a bunch of high -end cars

1:09:31like Ferrari where you pay for the experience, you're in a position to pay for

1:09:36the car, you'll pay for the insurance, the luxury, all of it.

1:09:40And then the rest of us will be using FSD or Waymo.

1:09:44100%. We have two Model Ys and we have to get another car.

1:09:49And it's like, well, what else can we buy?

1:09:51We have no choice. It's either buy one of the last Xs or buy a

1:09:54Y. Well, deprecating the X really bought...

1:09:57I have a real problem now, which is I have five kids.

1:09:59So the X is the only car that can manage seven people.

1:10:04So I need a new solution.

1:10:05There is a three -row, by the way, Model Y, but it's a bit tight.

1:10:08It's a bit tight. It's not good.

1:10:09It's a bit tight. I wish Elon would have made the minivan or the three

1:10:15-row SUV. And who knows?

1:10:16Maybe he does someday. When I was in Abu Dhabi, I saw my dream car.

1:10:21It is this Lexus minivan.

1:10:24And the doors open. And it's like first -class airline seats.

1:10:29Yes. And the front is completely blacked out.

1:10:33So you have total privacy.

1:10:36This car. Yes, this car.

1:10:37Yes. This is not... It's not for sale in the US.

1:10:41It's not available in America.

1:10:42Why is this car or minivan, whatever, not available in the United States?

1:10:45I think it's the Lexus LM and then there's the Alfred in Japan.

1:10:48Oh my God. It's in Japan.

1:10:50It's incredible. It's my favorite cars.

1:10:51This is the car. Can we see the interior?

1:10:52This is the interior. It's two captain's chairs.

1:10:55It's got a full screen.

1:10:56Look at this thing. And a divider between the two with the drivers in the

1:10:59front. And then you have this...

1:11:02Incredible. Those aren't the captain's chairs.

1:11:03Show the captain's chairs. There's the captain's chairs.

1:11:05See those beautiful captain's chairs?

1:11:06They're gorgeous. It's basically like an executive van.

1:11:09These are like Etihad first class airline seats.

1:11:13It's unbelievable. Look at these.

1:11:16Look at these two seats.

1:11:18Unbelievable. Gorgeous. And you have a full monitor in front of you, David.

1:11:21You press a button and the monitor rises and falls so you can talk to

1:11:24your driver or have CNBC on.

1:11:26I like getting in and out of SUVs or minivans.

1:11:28So easy. The height is good for me.

1:11:31So easy to get. And the Alfred is the other one.

1:11:33And none of these are available in the U .S.

1:11:35These are the number one cars in China, Singapore, the Middle East for chauffeur -driven

1:11:40cars. They're incredible. It's called what?

1:11:42An Alfred? What's that? Alfred is the Toyota version.

1:11:46And then Lexus is obviously the higher brand of Toyota.

1:11:49And they make... I think it's called the LS is the name for these.

1:11:53Cannot get them in the US.

1:11:54All right, boys. I love you very much.

1:11:55That's another amazing episode of the All In Podcast.

1:12:00261 weeks and counting. Wow.

1:12:03Episode 261? I think it's 261, yeah.

1:12:06All right, back at you.

1:12:07Let's get out of here.

1:12:07Love you, boys. Love you, besties.

1:12:11We'll let your winners ride.

1:12:14Rain man, David Sack. I'm going all in.

1:12:18And it said, we open source it to the fans, and they've just gone crazy

1:12:22with it. Love you, besties.

1:12:23I'm the queen of kinwaf.

1:12:25I'm going all in. Let your winners ride.

1:12:27Let your winners ride. I'm going all in.

1:12:31Besties are gone. Go 13.

1:12:34That's my dog taking a notice in your driveway.

1:12:36Sex. Wait, no, no. Oh, man.

1:12:39Oh, man. My Abadasher will meet me at what it's like.

1:12:42We should all just get a room and just have one big huge orgy, because

1:12:45they're all just useless. It's like this sexual tension, but they just need to release

1:12:48somehow. Wet your feet, wet your feet, we need to get merch, I'm going all

1:12:58in, I'm going all in.

The hosts discuss the impact of AI tools on the workforce, referencing a Harvard Business Review study that found AI increases work pace and scope without necessarily reducing hours, leading to higher stress but greater perceived productivity. David Sachs argues that AI will increase demand for knowledge workers by shifting jobs from task-based to purpose-based roles, giving early adopters a significant advantage. He also predicts that enterprise adoption will be driven bottom-up by employees rather than top-down by executives.

The conversation shifts to the deployment of AI agents, with Chamath Palihapitiya and David Friedberg sharing how they are using "replicants" to automate tasks, achieving leverage of 10 to 20 times. However, Chamath raises critical concerns about data privacy, noting that using public endpoints like ChatGPT leaks proprietary information and erodes attorney-client privilege, potentially forcing a shift back to on-prem or local models. David Friedberg highlights the concept of "recursive" work, where agents improve their own output, while Jason Calacanis notes the rising cost of tokens compared to employee salaries.

The episode addresses the CBO report on the national debt, with David Friedberg warning of a "death spiral" driven by rising interest rates and potential federalization of state pension obligations. David Sachs counters this by pointing to the AI boom and high GDP growth projections, suggesting that strong economic growth is the solution to the debt problem. Jason Calacanis emphasizes the current economic boom and low unemployment, while Chamath suggests focusing on protecting wealth rather than obsessing over debt-to-GDP ratios. The hosts also debate the minimum wage and immigration, with Calacanis advocating for enforcement of labor laws to bring Americans back into the workforce.

Finally, the group discusses the Super Bowl prediction markets and the ethical implications of insider trading, comparing them to historical securities regulations. They also preview the Liquidity conference for capital allocators and critique the design of the new Ferrari EV, debating whether autonomous driving will eventually render traditional car culture obsolete.

Conversational and Analytical

aiartificial intelligenceagentsenterprise adoptionprediction marketsdebteconomicsfederal budgetimmigrationlabor marketminimum wageferrariautonomous drivingventure capitalchamath palihapitiyadavid sachsdavid friedbergjason calacanis

AI Productivity and Workforce Evolution

Discussion on how AI tools increase workload and scope while boosting productivity, shifting jobs from task-based to purpose-based roles.

Enterprise Security and Data Privacy

Concerns regarding data leakage to public AI endpoints, loss of attorney-client privilege, and the potential shift to on-prem or local models.

Fiscal Responsibility and Economic Growth

Debate over the national debt and deficit, contrasting pessimistic views on interest rates with optimistic views on AI-driven economic growth.

Labor Markets and Immigration

Arguments regarding the minimum wage, labor participation rates, and the role of illegal immigration in the job market.

The Future of Transportation

Discussion on the impact of autonomous driving on car culture and the future of luxury vehicles like the new Ferrari EV.

“I think we're kind of moving from what some people, I think maybe Jensen has called task-based jobs to purpose-based jobs.”

“There is no job rec for this yet or a title... their leverage is between 10 and 20x the other 16.”

“If you're using a set of agents to act on all that information, all those agent traces are going back to these model builders.”

“His returns went to the market return. He generated zero alpha.”

“There is a deep connection between what's going on with the socialist movements at a city level... and what we should expect to happen with the US dollar.”