All-In with Chamath, Jason, Sacks & Friedberg: E140: LK-99, Sclerotic establishments, Fitch downgrades US debt, Trump indicted... again

Whoa, whoa, whoa sacks found the gel. Oh my god, this guy. He's running for office

If he shows up with the red tie next week, we're fucked. That's the end of the show

He shows up with a red tied a blue shirt. Are you coming out of your law retirement?

Are you gonna be an active lawyer defending Trump sacks? You look really good?

I gotta say with that with the job that looks that's a really good look that's got a shower

I use the comb. Oh the weekly shower in Italy. Good luck, right? It's not a bad look. Did you use soap?

Oh

No, I didn't have time didn't have 90 seconds. I didn't want to keep you guys waiting another two minutes

All right, everybody welcome to another episode of the all-in podcast it is

August and we just might have had the most consequential week in terms of

politics and science

In a long time could be it could be the week of the year Freedberg's been going nuts inside the group chat because

Everyone is trying to replicate this LK 99 room temperature semiconductor

Experiment superconductor superconductor. Yes. So god, I mean

This has been I was it been like 10 days and now everybody is on Twitter trying to recreate this

Maybe I should just let you cue this up Freedberg since this is the first time

Perhaps the last that we're gonna start the show at science corner. So science corner take over a week

Tell us is this legit because you flip from this is a fraud to this is changing the world

Like every day you you seem to have a new piece of evidence. Where are you today with this?

Is this the real deal? I mean, it's probably it's probably somewhere in the middle

But it leads to a path that could get us to the holy grail

Which is room temperature

Superconducting material which we've talked about twice on the show before and I encourage folks to go look at the episode

We did a couple ago after the original

Claim was made a few months ago that turned out to not be true

But the description in the paper that came out on how to make this material was

Chased by hundreds of labs around the world over the last few days

Folks have been live streaming it on these Chinese websites Billy Billy and Twitter and Twitch

everyone from

Russian scientists to Chinese to Korean to American to European. I will say one thing that I think is

Really profound which it is this is the first time in a very long time that I've seen so many people

Share a unified voice about optimism about an abundant future optimism about a big breakthrough rather than

Get on social media to share a voice about fear and

Anger at someone or something and to hear everyone around the world get together and be excited about the potential of this discovery and its applications

It's really profound to see and it's really amazing and wonderful to see now where we are a bunch of labs

Took the described chemical structure of this material LK 99

Which has lead and phosphorus oxygen and some copper in it and put it into these modeling systems

These computer modeling systems to try and understand

Where do the electrons flow?

where do the electrons sit in this material if this material is made the way it's described and

five different labs have now published papers that

Show that the way that this material is supposedly produced

It should create these pathways or these energy states with the electrons that theoretically could enable

Superconductivity at a very high temperature and so that's an a very confirmatory signal that

Computer modeling of the electron clouds because remember electrons even though they move around the nucleus of an atom

We only kind of have a probability statement of where they are

So if you look at all the probability statements of all the atoms stuck together and you try and figure out

What's the aggregate?

Probability of where electrons are it indicates that there are these pathways that theoretically could allow for

Electrons to move freely through the material and be completely

Void of any sort of resistance, which is superconductivity and

And so that's what's really profound about the modeling outputs from five very separate independent labs

Just so we're clear when electricity normally moves down an electric wire or in computers and CPUs GPUs

Whatever, there's resistance that resistance results in loss

It results in heat and the only way we've been able to reduce that loss is by making it freezing cold like

Significantly cold totally right. Yeah, so now if we were to do this when we didn't have to make a cold

That means it these superconducting experiments move from the laboratory where it's forced to be called

To the real world our desktop you used an analogy in chat

That was really interesting of like a superconducting road where and then you don't lose energy right now

How much energy do we lose transporting it to our houses, right?

So, you know, I would say on the order of 70 percent of energy

We produce is lost to heat and friction think about moving a car down the road when you move a car down the road

You're having to put energy and to overcome the friction of the car hitting the road

So if the car could hover above the road

The friction goes away and the energy needed to move the car goes way way down when you build a data center

The electrons that are moving through the copper and the semiconductors bump into other atoms when they bump into the atoms in the material

They shake those atoms when atoms shake that is heat

So that's why copper wire heats up when you put electricity through it

You're moving electrons through it some of those electrons bump into the copper atoms shakes the copper atoms

They get hot and then some of the electrons make their way through the rate at which electrons are bumping into other atoms is

The resistance of the material so and so so all this energy is going into cooling down data centers

and all this energy is lost in

computing to heat and

Same in in electric motors could be reinvented semiconductors

Integrated circuits would be reinvented and like I said if you had enough of this material

You could put it in roads and because superconductors also reflect magnetic fields

You could put magnets on the bottom of cars and float them above the ground and cruise around without any friction

And any of this is true

This 70% loss of and then all this energy put into cooling data centers. We could be looking at

Doubling or tripling

The amount of energy available because we've built a certain amount of energy infrastructure

So this would be all gains if we could figure out how to yeah

Technology massive and massive abundance. It would lower the cost of electricity by ten percent a hundred percent

I mean look assuming huge infrastructure investments, which would take probably decades to do sure you would get there

But in the near term there are these incredible applications quantum computers are built using little superconductors as the qubit

And so the superconductor holds the qubit state

So this idea that we could now have room temperature quantum computing is also a very profound one game changer

Low cost and the first thing that would be changed is likely electronic components

So we would take electronic components and redesign them using superconducting material

That would allow you to reduce heat loss and energy loss and that would have a big transformative effect on for example

The big effort right now to make more AI chips GPU chips to do matrix transformations

There are some precedent for this people are now creating optical

Bridges between GPUs and CPUs in order to reduce the heat so they're using optics basically light to transfer interconnects

Yeah, yeah, that's been the big lift right now from what I understand in GPUs and data centers is you still have to

Data yeah, it's I mean we could go on for hours on that but like yes

I mean this would just be a game changer electronic component photonic chips, right? Yeah photonic chips

But look this this is obviously a little bit separate

But here's where we are so LK 99

There's all these simulation models that show this thing could work

But there's two two things I will say came out of this from some of the simulations

The first is remember this is a crystal with mostly lead atoms and these lead atoms

Some of them get replaced by copper and when when they get replaced by copper

It causes the crystal structure to change by point four six degrees is what the Koreans say the angle changes by point four six

degrees and when that happens that bending

Causes the electrons in all the atoms in the crystal to overlap slightly and that overlapping effect

Causes this free-flowing electron tunnel that that be read that is the theory for why the superconduct now

What the simulation showed is that you have to replace only one of the lead?

Atoms not any of the other ones in order for this to work and that could explain why everyone's having different results in the lab

Trying to reproduce this because when you bake this stuff in an oven if the copper gets into the wrong atom space in the crystal

It doesn't work and so that's why some of these things might end up looking good

And some of them don't look good and some of them there's a lab yesterday in China that published

No resistance, but they had to cool it down to a hundred degrees below freezing

And so it wasn't at room temperature, but it did superconductor did have no resistance 170 Kelvin

Yeah, so a hundred cells a hundred below zero

So in other words there is a key there's a key here in the molecular structure that you have to just thread perfectly

You have to replace the right lead atom with the copper in order for this to work

And so that's a technically very and what happens that's a fidelity issue

That's a tool issue like you have to have the right tool to do it or is it luck or right now

So here's the crazy story and I'll tell you guys this I don't know how real this is but the guys claim so remember

These two scientists Lee and Kim

Supposedly saw this material in a lab in 1999. That's why it's called LK Lee and Kim 99

And so in 99 they came across this and they could not replicate it

They had no idea how to make it again and it disappeared and they didn't have the sample again

They then spent the next 20 years of their life

One was a college professor and the other one worked for LG for as a battery engineer

And they just had these random normal everyday lives

It reminds me of Dennis Quaid in the movie the rookie where he had like this amazing arm

And he was gonna go to the MLB and then something happened and he spent the rest of his life as high school PE teacher

And then 20 years later he gets his arm back and he goes to the MLB and he plays in a major league baseball game

Because all of a sudden in during COVID these guys got some funding they set up a company

They went into a lab and they rediscovered this material and apparently this is the rumor

I don't know if this is real the rumor is they had it

They were baking it in an oven in a vacuum sealed tube and when the guy took it out of the oven

He accidentally bumped into a table and the tube cracked and when the tube cracked

It did something to the material and then they measured it and oh my god

It's room temperature superconductor. That's the current theory of what the rumor of what happened is a video

That's like Peter Parker being bitten by a radioactive spider. I mean

So here's the drama this guy Kwan got inserted to oversee them as like their CTO the guy that gave the money to Q Center

Said he's got to oversee you

Kwan apparently got fired from his job in March and he was kicked out of this company was no longer affiliated and

The rumor is that Kwan took all the lab data and these guys in 2020 during COVID they discovered this

They started filing patents and working on the manufacturing process trying to figure out how to replicate it and do it again

They had all this data, but they weren't going to publish it

They didn't want the world to know about it yet and then all of a sudden Kwan gathers all this data probably disgruntled after getting fired

Puts it into a paper and puts it on the internet. So that's the first paper that came out because there's a website called our

AR X IV is there a pronunciation for this website? So this is where you can open source file

Scientific papers, right? Okay. So this is a place for

dropping papers outside of the

the traditional yeah, the the traditional journal process requires peer review and there's editors at the journal that decide whether or not to

Publish your paper. So sometimes gatekeepers. Yeah gatekeepers

And so if you don't want to do that, you just want to get a story out to the world right away

So during COVID everyone was publishing on the site while their updates on research

They were doing to help the world figure out what's going on with COVID

So it's a great place to just hit the world with your data hit the world with your findings

This is like acoustic raw papers and it's called archive

AR X IV.org if you want to go see it archive

So anyone anyone can publish a PDF. No one knows if it's real or not. It hasn't been peer reviewed, etc

So this guy won yeah

So Kwan drops the paper with his name Lee Kim and Kwan on the paper only three people can win a Nobel Prize

So the theory is he did this to get his name out there to make sure he could lock in his name for the Nobel Prize

Wow, and then within a day Lee and Kim and four people they've been working with

It's some including some folks in the US

Publish another paper with better data, but it was also rushed out and so both papers are pretty ugly

I got to be honest. They're like pretty messy. They don't have a great deal of clarity. There's errors in them

There's mistakes. There's redundancy. There's little basic chart editing errors stupid stuff

Clearly this was a rushed job, but these guys rushed out and said, you know what if this is going to be public

We now have to correct the the the story and say what happened

They wanted to get their claim in to get their Nobel Peace Prize, which would indicate

That would lean towards a piece of evidence as would people funding them 25 years later

That would indicate maybe there's something there two things worth noting on the simulation stuff number one

Obviously, you got to get the copper in the right place and the production way to do that

How do we actually engineer that to happen? It's not really clear baking it in an oven clearly is creating what's called heterogeneous results

Meaning everyone's getting different results around the world that have been doing this for the last couple days

And everyone's really confused. Is this real? Is it fake? I don't know

But that simulation explains why there's maybe lots of different results another comment

It turns out that one of the simulation team said hey if you put gold instead of copper in the spot

It's a better superconductor. It could actually be a better material

So it's opening up all these paths for exploration that we had never considered before

That there's this whole new approach to creating superconducting materials that was not on anyone's radar before

So this is opening up a whole new realm and I think this is going to unfold over the next couple of years

With more material discovery more invention coming off of this initial discovery and simulation model that then

Offers all these other opportunities for creating potentially new materials that maybe are easier to manufacture and better to produce

And the final thing I'll say is that there are some teams that are commenting

That are saying that this thing may be superconducting

But only on one dimension which means along a line of atoms or line of molecules in the material

so

Normal superconductors think about him as like a 3d matrix and the electrons can flow through

Freely through any direction through the matrix through the crystal and in this case

They're saying the electrons can only flow freely across a line in this material

And so now there's another question of wait

How do you manufacture lots of lines to run in parallel to make this thing truly superconducting at scale?

So that's all the hard technical stuff that's emerging right now

Whether or not this actually does turn into a room temperature superconducting material that can be industrialized and used in all these

Applications everyone's really excited about I think it's probably months to years away from knowing but at this point

There's a great set of indications that oh my god. We might be onto something new

There's a whole new path of discovery a whole new path of engineering and invention

And it's amazing to just see everyone gather around this and get so excited about it because it really will

Change so much about the world and create extraordinary abundance and prosperity for humanity

If this proves to be real and industrializable and scalable

Chomac, but can I ask a simple question here when you say if this proves to be real if nobody has reproduced the result

Why is there any belief that this is real? There are properties of this that you know

I think we have to take a step back

We have found superconductive materials in the past there are many ceramics that are superconductive

Mercury is superconductive

There's all kinds of elements and materials and compounds in the physical world that we've already figured out have these properties

So this is not like a new thing that's never been found before

It's just this idea of trying to find it at a certain temperature where it could exist naturally in the normal world without all this expensive

Cooling, okay, but there is a separate thing which is that we also have found a whole bunch of

Materials that look and behave like

Superconductors but are really not they're what's called just diamagnetic

And I think right now what what people are trying to sort out is is this a clever

Diamagnet is this diamagnetism?

Or is it superconductive and these are huge differences that swing this from yeah, it's kind of a cool thing

And yeah, whatever there's a bunch of other materials we found that are like this too

Wow, this is transformational and right now we don't know any of that and I think that

All of the mystery around this is mostly because people can be on one side of the debate or the other

Literally by the second based on what new simulation or what new

piece of research people are putting out there

But you have to remember like

Diamagnetism is like a property of matter superconductivity is a state of matter. It is totally different

All superconductors are diamagnetic, but all diamagnets are not superconductive. So we could just be

Extremely excited about not much of anything

Or this could really be a breakthrough if what the Chinese guys said is that they were able to cool this thing down and get it to

Be superconductive then that does at 170 k. It doesn't mean much in my opinion

Right, it's not room temperature, but it does indicate that this material can be superconductive

Look, there are many materials like this

There's like a lot of forms of red matter that we've already found that at that temperature

Gradient at that range of temperatures can be superconductive. It's not practically useful at that point

Yeah, that's right

And I'll think you're gonna see like some massive revolution. So I'm a betting man

I make bets I think I've talked about when there was this guy

Ranga Diaz that had to try this stuff and he was sort of refuted in what he was working on

But 18 months before that happened. I was trying to get a deal done with the University of Rochester to buy all that IP

So I've been grinding in and around this space for a couple of years

My intuition on this is that this is diamagnetic

And I think and I think we're gonna find that you know, it was

It's like yet another material added to the list of materials and it's okay

But hopefully what it really does is it is it sparks an interest in

In a lot of other people putting more money behind this Nick if you could pull up this

manifold markets, uh, there's a prediction market called manifold dot markets that people have been sharing a link from

betting markets where people bet either side of this will lk

99 room temp ambient pressure serving conductivity

Preprint replicate before 2025 and you can see it's about 30 chance

You what do you think of the prediction markets assessing this free bird?

Yeah, I think it's probably that's probably a good handicap for where we are

I'll say when you look at a

diamagnetic material

And so what that means a diamagnet will expel magnetic fields of both

polarities a paramagnet will

Reflect the north or the south pole its north pole will reflect the north pole of another magnetic material, right?

Diamagnets you can put north or south pole and they reflect both

And there's plenty of videos you can watch of putting a frog

In like a 10 tesla machine and the frog floats technically a frog is diamagnetic

But what happens typically with a diamagnetic materials is they orient themselves while they're while they're freely floating

Into a particular direction

So there's going to be three things people are going to be looking for in terms of confirmatory proof on lk 99

The first is does this material float like a superconductor over a magnetic field because remember superconductors perfectly spell magnetic fields

They are diamagnets to the

Absolute degree they perfectly reflect all magnetic fields

So if you put a superconducting material above a magnetic field it should kind of float freely and spin around and stuff

If it orients back to one position it probably means that there's something going on

Where it's maybe not a perfect superconductor

Now all these videos the second thing you're going to look for is zero resistance

So can you actually pass an electric charge through it and have no resistance in the material?

So you're seeing data coming out now that's indicating we're seeing that but we're seeing it at a low temperature

No one's yet replicated this at room temperature

And the third thing is a transition which means that there's a point where it shifts because that's a classic

Characteristic of superconducting materials if there's a transition temperature transition phase where the material becomes superconducting or it's not superconducting

So those kind of generally those three experimental proof points and what everyone's looking for thus far

The videos we've seen look like ufo or bigfoot videos. They're friggin grainy

They're like, you know, you guys have seen some of these videos that have come out. They're like at a distance

It's like wait. Why didn't you do the whole angle? Why did you only take a picture?

Why didn't you do the video? There's this woman in russia who's

Now in ufo territory people are

Yeah, look at this. I mean it's super like there's a raw there's a little flake of here's a video of a little flake

Of a material that someone supposedly made in the lab or it could be just on the camera

Right and they put it over the super the over a very strong magnet and this is the video. They got it super blurry

There's a woman in russia and she totally reinvented the manufacturing process

She's actually well known scientist

So she's not bs and she said I made this thing in my house using a furnace and I used a whole new process

So she does this whole new process

She livestreams the whole thing and then she puts out a video of the thing floating in a straw

It's a sorry a video photo and it's a blurry photo and people are like show us the video show us that it's real

And she's refusing to so this whole thing is feeling a little like there's ufo big foot type people out there

That we're not really seeing clarity on is this real and then obviously the resistance data

There's very credible academic universities coming out and I will also say there are a number of labs

There's one in china and the one in china that measured the zero resistance at negative 100 degrees

They created 8 000 samples. So they found one that worked

There's another lab that did eight different pathways of manufacturing it in china and they said we can't find any that work yet

so, you know, there's a lot of

Negative indications as well, which is why the prediction markets are probably right

But I do think that this theoretical explanation

That you have to get the copper atom to replace the correct lead atom in the crystal structure

Explains a lot of the heterogeneity and results and the reason why people may not be able to replicate this

And if someone could crack the code on how do we actually

engineer this thing and produce it correctly

Based on the theory

Maybe we'll see different better results

But again, that's also theoretical because no one seems to have nailed the manufacturing process here

So lots of data coming in every day by next week. We could be clapping and you know cheering

Or you know, we could sort sort of be on this very long grind sort of like russia ukraine

Just a long grind and it's a it'll last years

And maybe someone will win maybe someone won't or maybe it just opens up a whole new set of explorations

For new superconducting materials at room temperature that could change the world

I gotta say the thing I love most about this is like we have this oppenheimer film comes out

And at the same time this happens. We got ufo

testimonials, you know

In congressional hearings all of this energy at the same time

Of people who are just really stoked do material science to do basic science to figure out big problems

And uh, I agree with you the optimism around all this

Is is I mean how

Fantastic something else

Tell me something else in our lifetime in our in the last decade or two where we've seen the whole world

Say in a positive way something great could happen

Instead of something bad could happen and someone's to blame for something

I mean it really is in my mind the first time I've really seen this happen in a very long time

Maybe the internet was a was a kind of great moment. Yeah, everybody being connected everybody being able to share information

For all over the world

They're doing it on twitter and billy billy and youtube and like all sharing this stuff

And saying my gosh, we could have this breakthrough together as a

As a civil as a species not like a country not a individual not a who messed up who did something wrong

Who's to blame who's on the other side? It's like dude if we all do if this happens

We're all going to be like chilling on the beach. It's going to be amazing like this is awesome

We're going to have a rash of vcs running into this next

And start funding this stuff material science. Yeah, I mean my attitude is kind of like wake me up when you know

It's real

Because it's nice that if

This is real then

It's great that there's all this positive energy around it, but that's like a big caveat

Until we know that there's something real here

I think it's premature for everybody to say that this is like some wonderful thing now

If we find out that the science is real and then it's just a debate over commercialization of it

Then yeah, I agree that would be like a really positive moment

I just love the fact that when something positive in the world happens or when something negative happens

We have this amazing platform for everybody social media x.com formally twitter

Where everybody can get together around this campfire and just start discussing it and speculating now some people don't like speculation

Obviously, if there's a school shooting or a tragedy a building burns down

The fog of war as we've seen in the constant ukraine

Coverage, you know, you can have it's very easy to make mistakes when you're caching this stuff in real time

But I love the real-time nature

Of the world and the pace we're moving at it's it's kind of delightful to me

I don't have a problem with the speculation and there is a fun element to it

But when you start talking about investing in it

Like I said wake me up when you know, it's real. There's a really funny meme that vc brags posted

Nicky, shout out vc bra

It's this is a famous meme of a kid drowning

While the mom is playing with another kid and not paying attention to the drowning kid

It's sort of like

The guy who's holding hands with his girlfriend

But looking over his shoulder and whistling at the other woman by and superconductors is the happy little kid

Vcs is the mom and generative ai is drowning

But then they show in the

Underwater. Yeah, somebody who's tied to a chair with chains of skeletons the last hype cycle

The last hype cycle creator economy crypto f3. Yeah, it's pretty funny. It's pretty I will say sex

I um, I told gemat this when we were in italy last week

But uh, when I was 13 years old jcalc can make fun of me now

I did a science fair project on superconductors. Actually, I was doing it when I was 13

And I bought this superconductor from the back of popular science magazine, you know, this old ytrium barium copper oxide

That was the one that won the Nobel prize

You could buy it for nothing

And I got liquid nitrogen at UCLA and I did a demo at the science fair and I did a poster board and I

I had hypercard on a macintosh lc and I showed everyone

This is the future. We're about to have room temperature superconductors

It's about to happen

And we're going to have flying cars and we're going to have limitless energy and limitless battery storage for energy

By the way, which is one of the big applications

And it's it's just on the brink and this was when I was 13 years old 1993, you know, here we are 30 30 years old 30 years later

And everyone feels like this moment might be upon us

But it has been this thing that's always been elusive that everyone's always thought it's around the corner

Well, it sounds like cold fusion, you know, we've always been

10 years away from some breakthrough in cold fusion self-driving cars

Artificial general intelligence. Yeah

Well, I think there's a difference between

this physical world material sciences type innovation and then software innovation and

One of peter teal's critiques is that we've had tremendous innovation in software

But in every other aspect of the economy

There's been little snow innovation planes, for example, are getting slower not faster

Would you believe that position from from him? I I don't buy that

position

Well, I mean with the exception of like what elon has been doing with the genomic revolution

He he misses life sciences entirely in that point. I don't know. I mean genomics is largely software based at this point

If you look at the revolution driven by gene editing

Oncology the breakthroughs. I mean, look, it's all slowing down

I do agree with him if you look at the number of

Approved drugs every year and the cost per drug cost per drug is going the wrong direction

And the number of drugs per year is going in the wrong direction

So there is an argument to be made there

But there there are arguably some quantum leaps in the types of medicine that we're applying

We didn't have biologics, you know 40 years ago. We didn't have gene therapy 10 years ago

These are new modalities for for therapies that didn't exist as we've engineered the molecular world to do amazing things

In the biochemical application space. So I think there's elements of this that I disagree with

But I think the general trend lines as he points out is totally true

Yeah, but with planes

I think we made a conscious to see he always cites the plane issue. Hey, we don't have the concord

We're going backwards in terms of speed. I think that was a deliberate

Cost-cutting measure because people aren't willing to pay to go faster and burn more fuel

So they have an innovation the price gets cheaper. That's right. That's right

Same with electricity same with energy like electricity is getting more expensive not cheaper

But if you look at the massive if we wouldn't have the massive gains in

artificial intelligence and machine learning if it hadn't been for the revolution in gpu storage and data centers and

microprocessors and

The isle but that's kind of the point is that we were promised flying cars and instead we got 280 characters

Not that twitter slash x is bad, but that's just where all the innovation has been as an it

That I agree with so they figure it out

They keep figuring out I put more circuits on a transistor or whatever and you know keep morse law going or I don't know

I could show you

I could make a different argument by showing you human lifespan

And agricultural yields. I mean agricultural yields continue to climb

Because of our ability to engineer in a smarter and better way every generation there

There's a there's a lot of

Counterarguments to them. I would say what's valid about it is we go ahead Truma

I was going to say the reason you we don't see these kinds of innovations is because

The ruling class has clogged up and sclerotically dominated all the places where you'd have this massive

Forms of innovation like and regular regulatory capture. Yeah, no, no, no. No, no. No, that's like I'm talking about

That's like a that's like a boogeyman. So get the boogeyman out because the regulatory capture is there forever

like why was this paper published on arxon because

Every other form of publishing mechanism is sclerotic. It's establishment. It's hierarchical

It's about people basically dominating their own little forms of paola

Right. And so nature, jamma, all of this stuff works this way. And so what happens?

You don't get fundamental innovations that happen in labs. You have things that feed

research proposals that feed

People who need to basically establish their supremacy

You saw the stanford professor get booted out because of stuff that you know, he the president of stanford

The president said so why is all this happening? Well, peter is right

The reason why this stuff is happening is that instead of places where true fundamental innovation can happen

If you look at the noble prize winners and you do distribution by age, what do you find?

People win no bells in their 60s for work that they did in their 20s and 30s

Right. And so you have a system now that rewards people staying in their positions. I wrote this in

One of my annual letters if you look at the average age of like leading people in schools

They're like 70 years old if you look inside a congress

So there's all of this stuff that just kind of sclerotically prevents

Young naive people from basically going out and really pushing the boundaries in specifically this case of science of fundamental science

And so for every innovation, I think the question to ask is what other innovations are we missing?

and if innovations are on a fundamentally

Well-established pathway that defends a bunch of work of senior people before it

It'll get supported and I would say that genetics is a perfect example of that

The other if you look at the if you look at the number of rare diseases that have still that are still like unsolved

Or the lack of understanding of immuno disease. It's just crazy like it's I just think that that's really what's happening

I think peter's more right than he's wrong. The other issue here sacks is

And I like to get your feedback on this is if you look at how venture capital works

You got a 10-year window you want to get returns for your LPs

You look at how this fundamental research we just said this started in 1999. That's why it's called dash 99

This thing took 25 years to get to this point

Is is part of this issue that you have this big opportunity zone between

Say ventures window 10 years and then academia, which you put at like four decades there to mop 20

You know year olds getting their rewards in their 60s

How much of this has to do with we don't have a platform in between venture and academia? That's not the problem

I mean, so it's true that vc funding typically you want to go to the commercialization of an idea

And that the underlying platform shift already exists and usually that comes from some sort of breakthrough that happened

In academia. I mean that's basically what happened with the internet. So yeah, you do not want

VC funding typically going to

Basic rnd, you know fundamental science rnd. It's just really expensive takes too long and too unknown

So you want that stuff kind of done more at the academic level

The question I have is how much of what's happening in academia is basically

Either irrelevant or fraudulent. So Chumath you brought the Stanford president

I think the the story there is he had five papers

about Alzheimer's research and you know related topics like that

Where they found out that the papers are basically bogus and

quasi fraudulent

So how much of the the work that's being done in academia? How many of these papers are basically bogus?

Well, the thing with peer review is like it's presented like it's a great incredible solution to the world's problems

But I think what it has inherently wrong with it. So the positive part of it is theoretically you have error correction

Right

But here what you don't find is that that error correction actually even happened

And so it takes like some young 20 year old kid at stanford who's a journalist whose family were journalists to basically figure that out

So instead what were those journal? What were those papers doing?

They were supporting a rising up and coming person because they thought that you know

He would support them at some point. This is like the whole corrupt Fauci system at the age

Freedberg their chumath and sacks are presenting academia as corrupt

Do you agree with that? I don't know if corrupt is the right term because I think that implies mal intent

I think that the incentives are wrong. So in order to get funded

You have to show results. No one gets a grant

To disprove someone else's work. No one gets a grant to do confirmatory work on someone else's work

Should you get a grant you get it? Yeah, I mean, that's that's the argument that that some folks make

You get a grant to do breakthrough research and have breakthroughs and if you have breakthroughs you get more money

That's the way the system is set up. But this is why this guy. This is why well, let me just say it's corrupt

I think it's corrupt. There's no funny breakthroughs. Come on

Okay, whatever you want to define it as the guy at stanford if you read some of the testimony

From people in his labs

They said that he encouraged people to have big findings and if you get big findings you get to progress in the organization

You get more funding etc

So the the incentive structure that he set up for people was not necessarily to go in and disprove stuff

Or try something and show that it didn't work

If you try something and show that it didn't work and publish a paper on that

It's going to be very hard for you to turn around and get a trophy or get some money or get a grant

That's not what he did

There was like a bunch of error in the data that they went back and were like, hey, this is this was incorrect and he's like

Oh, yeah, it was sloppy. I just didn't do a good job of reviewing

So yeah, so what happened was if you read some of the testimony the people that worked in his labs

The students and the the graduate students and so on they said that he basically encouraged people to get good results

And in that process and in that way

There was some fuzziness in the data or some tweaking of the data that he didn't double check for sure

But he was encouraging this sort of system of performance and the system of performance says you've got to show results

You can't show non results and if you show non results, there's no money

And yeah, the reason they're doing that is marketing. They want to market and get more attention

So they get more donations. Yeah, exactly the problem with with a pure research

Is that you have to get funding to do your research? Where do you get your funding from?

You get your funding from federal agencies from nonprofits from your

You know your donors and so in order to get that money you have to say here's what I'm going to do

Here's not what uh, here's you don't say I'm going to go not prove something you say I'm going to go prove something

No, no, but the problem is you're hiding the cheese. Can you stop hiding the cheese?

That's not what these people are saying these people aren't saying I'm not going to not prove this these like

Most of these people are working on

Very thin incremental extensions of work that's already been done because it allows them

A more defined path to get tenure ship to be a well-respected professor to work through the hierarchy of a university

that's what's happening today

And the reason why that stuff gets funded is that those are the same people that are in charge of the funding infrastructure at NIH and all these other places

what we don't have

Is something that says go and write the most ambitious proposals and i'm going to go fund it

I think both things are true. I sorry. There's no market mechanism

I'll just say both things are true because what you're saying chimac is a point of failure

If you say i'm going to go try something crazy like do a search for a room temperature superconductor using lead crystals

You're not going to get funding for that. It's too out there

I mean you guys today are talking about how low probability stuff isn't that interesting

I'm not going to fund it until it's real and so when things are real

You have some molecule that has some effect on cancer cells. Then you get funding to

Make that molecule go to the next phase or go to the next stage

That is more fundable than the outlandish crazy thing where the probability of it going to zero is 99 percent

You could throw elizabeth hums into that right?

I mean she came up with this absurd idea that she could do 200 tests on one drop of blood

And they left her out to do research that that was just a statement about engineering

That wasn't ready and wasn't another company just got funded to do the same thing that theranos promises is going to do

Yeah, do you see this?

But I did not see that no

Yeah, I mean some pretty good vcs invested in it actually and they especially said we know this is the same ideas theranos

But for that very reason we think it's very unlikely to be fraud because it's being held to such a high standard of scrutiny

I want you guys to think about this. I want you guys to think about this as vcs

An entrepreneur comes to you and the entrepreneur. She says I've done this thing. I did this thing

I did this thing. I did this thing. I did this thing five different things. None of them work

I want to have money to do this next thing

You're less likely to fund that person than the entrepreneur that shows up and says

The first thing I did work the second thing I did work the third startup. I did work

They weren't home runs

But they actually have the opposite and I had good results

That's basically what happens in in you know, the scientific research is you've got to get something that's fundable

And often that means not doing something that's likely to go to zero

And that's where the incrementalism comes in chimot. Is that orientation? I think that I hate to uh

Give my playbook, but one of the great successes I've had is finding people who got their asses kicked on the last two companies

Talking to them about why they got their asses kicked and then how they're going to avoid getting their asses handed to them with this third company

Then if you look at travis with uber, he did scour got got you know, sued for a quarter trillion dollars

He did red swoosh

He got like a 30 million dollar exit and then he did uber, right?

His first two companies were very hard steeve jerbetson and future ventures

He took his venture fund and he told the lps. It's a 15 year term not 10

So he specifically

Is trying to do a little bit of a longer window. I think that is actually a possible solution here

I think smart independent thinkers find ways to make money. I've been looking at

This superconductor space for the last two years and so

It's not like people are are shy and have money and aren't willing to write the checks

I just don't think that's what it is the body of work that's coming out of academic institutions today for the amount of money

That's put in is modest and I think that's the best way to describe it

It's the fairest way and the reason is modest is not because of the intellectual capacity of the people

it's because of the incentives and the hierarchy and the

Establishment elitist politics that infuses how these organizations are run

and I think the only way to break that apart is to basically

Disrupt who is in charge of these institutions nick just throw up this chart

These are people that for decades and decades and decades

Are in a grind

And who are now in control and so what is the incentive of these folks to explain the change?

Yeah, what is this?

This is a chart that I put together which is just the generational distribution of academic leadership across all the leading research institutions in america

Okay, well isn't isn't fouchy a prime example of this the birth here

No, listen, you had the most important person hold on a second the most important person

Probably in the federal distribution of grants in the medical field was fouchy, right?

He literally was running the NIH since the 1980s

He's been there for 40 something years

And the mass was peeled away during coven and we saw how much power he wielded really I think in a corrupt way

Jason used the word corrupt you had that letter to the land set

That he got a whole bunch of scientists to sign

That claimed that covet was not made in a lab. That was a conspiracy theory that

The only place it could have come from was the sort of the zoonotic leap naturally occurring from animals

We know that he used his power over grants to basically pressure

Those people into signing the letter or they thought it would be in their interest to do so

Even though fouchy had already been updated by a bunch of scientists that it likely had come from a lab

They could just look under a microscope and see if you're in cleavage sites, which are the telltale sign

So they knew that this thing likely came from a lab

There was no basis for calling it a conspiracy theory certainly and yet the whole the whole field got behind that

But sacks did you see the did you see that slack messages where they were trying to manipulate the new york times science writer?

I mean they basically but the question you have to ask is why were all these scientists willing to go along with this?

Because because these guys have been grinding for 40 or 50 years in a hierarchy

And so to all of a sudden put a pin in it and just say you know what?

I'm going to dispense with all of it

And now i'm going to basically like be completely open-minded. How likely was that the odds of that were very low look?

Look at the number of people who have basically grown up in one segment of society

That are sclerotically in charge of every single leading research university in the united states

That is why we don't have flying cars

This is why

Because after 40 years of working in a specific hierarchy being rewarded in a very specific way with a very specific set of incentives

When some young brash 22 year old naive person writes an extremely ambitious research proposal

You're like no you will not be a part of my lab to do that

But you can do this incremental thing that that further reinforces my leadership in society

That is what this chart shows. Yeah, it's also perverse inside of government

We didn't talk about it. I don't think last week, but mitch mcconnell

I don't know how to say it, but I guess he froze while he was speaking and you know

We got to have an upper eight in the diane feinstein thing. Remember when she started

And their staff are whispering saying just say I you know when she starts going on that's like philibuster

No, jc you're right

We have a sclerotic political system run by octan's generians because the boomers are not

Relinquishing political power fucking we're not really inquisiting bureaucratic power

Can we just pull up this lancet letter for a second? They say here's zoom in on this the rapid open and transparent sharing of data on

This outbreak is now being threatened

By rumors and misinformation

Around its origins. We stand together to strongly condemn

Conspiracy theories suggesting that covet 19 does not have a natural origin

How could they say that at that point in time?

All the evidence suggested it was made in a lab now. Certainly. I think you could take the other side of that but to condemn

The lably theory as a conspiracy theory that was corrupt. I'm not sure that that's corrupt

You know what's corrupt is not retracting that and apologizing

That's where the real corruptions we have not gotten our post but the lancet letter was organized

It was organized. This is just like the 51 spies who lied claiming that the hunter buying the laptop was disinformation

This is the establishment

willing to use its credentials and

Respectability and expertise

To sign a letter. They know is false to perpetrate a fraud

On the american people in order to protect the people in charge

That's the motivation here because Fauci had funded gain of function research in the Wuhan lab

I think the same rot that is in some of these leading research institutions and leading academic institutions

And politics they all share the same commonality which is

We are sclerotic

We are in desperate need of a generational shift of power

And right now there is no incentive because at the same time, you know, the people that are 70 and 80 are thinking to themselves

Well, I'm probably going to live to 100. What should I do for the next 20 years being in power is pretty good

Right. So we're we're in this weird clash

I was thinking a lot about

The fiscal spending problem in the us and we should talk about the Fitch rating downgrade that happened this week

I've got some data. I'd like to share one thing I was thinking about was how tied

the age of congresses

To our fiscal spending problem

If you think about someone who's young

They're going to want to invest for their future and think about the future

If you're someone who's old you live for the day

And you don't think about the future and I worry so much that the aging of the establishment that makes the decisions about how

Money is spent creates a a psychological barrier

Yeah positioning that's all about giving away all the money today

Instead of making the right decision to make sure that we have a prosperous tomorrow

And that's why I think so many of these things

Kind of slipped through if you put a 20 year old in charge

That was well informed in charge of some of the fiscal policy environmental policy energy policy decisions defense policy

It would be a very different set of decision making than someone who's in their 80s inheritance tax

Yeah, yeah

I mean so anyway, we should talk let you want to talk about the Fitch downgrade because I think it's a really important story this week

Fitch the rating agency

Downgrade of the us's long-term debt

by one notch from AAA to AA plus

Only nine countries have AAA ratings from the top three rating agencies s and p global fitch and moody's

Those are Germany, Denmark, Netherlands, Sweden, Norway, Switzerland, Luxembourg, Singapore and Australia

What you can take from that is you got to have a good balance sheet and you have to have high functioning

Governments the highest functioning governments in the world are the Nordics

That's why you see Denmark, Netherlands, Sweden, Norway there according to npr

The negative reaction hasn't been as strong as uh 2011

That was the first time the us was downgraded from AAA to AA plus by the s and p

That also had to do with the debt ceiling the markets kind of shrugged off

Largely shrugged off the Fitch downgrade main reasons for the downgrade

is obviously

Higher interest rates aging population the debt to GDP ratio, which we've talked about here

But government kept coming up

Over and over again and how dysfunctional our government is and the debt ceiling is one of the key manifestations of that

Your thoughts on this for the first half of the show freeberg. You're an optimist

But are you now going to switch to declineist? I wouldn't say declineist

Are you going to switch to declineist mode now? Or are you still in optimist mode?

I mean in jakell's view unless you're a cheerleader for every stupid government policy

You're a declineist. I know it's it's jakell listen it

I want to be honest. I I don't think so. I think he like

And I concur

I think you can highlight that there are concerns with us fiscal policy

That are putting us in decline in our spending spiral

With the us currency reserves, which there are now diversification efforts underway and i'll talk about this in one second

And that doesn't mean that the us isn't the most exceptional place to do engineering and entrepreneurism

And have freedom of speech and thought and so on but there are elements of the us that put things at risk

So let me just point out these two charts if you guys pull the first one up

This is a pretty striking chart and I think I showed this before this is federal government interest payments that are being made

We're we're now up to you know a trillion dollars

The chart as you can see a year has spiked and by the way that number is spiking further and we'll talk about this in one second

As a result of rising interest rates and increased fiscal spending

So this is now becoming a pretty sizable part of our budget and as of now

paying the interest on our debt

Is a larger capital outlay for the federal government than defense spending the second chart shows what happened in the last week

Which is that 30 year treasuries have been sold off and as that's happened treasury yields have climbed

So there's been about a 10 percent decline in pricing and you know a concurrent nearly 10 increase and bill ackman

You know basically said today that he's shorting 30 year treasuries

He thinks we're going to go to five and a half percent long term rates

Currently the 30 year treasury sitting at 4.3 and remember I told you guys this after this thing I went to a few weeks ago

that

There were two prominent economists who shared

That they think we're going to be facing long term rates in the five to seven percent range very long term rates for a very long period of time

That it is a new fiscal regime

And then if you pull up the last link I sent nick this is a report made

By the treasury borrowing advisory committee of the treasury department

And I just want to read a couple of quotes from this report

This just came out today and it was published that it was sent over to the secretary of the treasury yesterday

And it said since the advisory committee convened convened in may two year treasury yields are about 100 basis points higher

Well, 10 year treasuries have increased by about 40 basis points

The bank holdings of non-mortgage backed government securities mainly treasuries have actually declined

By 146 billion so far this year so that means banks are selling off their treasuries

The committee goes on to say at the same time

Treasury investors have noted the treasury supply will need to increase

To address the rise in public deficits as tax revenues have come in weaker and government spending has increased

issuance needs will be additionally impacted by the timing of a recession so on then they said

Based on the marketable borrowing estimates published on july 31st treasury. This is crazy treasury currently expects

privately held net borrowing of

1.007 trillion dollars in this quarter

With an assumed end of september cash balance of 650 and then they said we expect

another

852 billion dollars of borrowing next quarter that means treasury is going to try and issue and sell

2 trillion dollars worth of treasury bonds

In the next two quarters, that's 2 trillion dollars of new borrowing by the federal government to pay our bills

At the start of the year, they were estimating 1.6 trillion for the year, which was an insane number

Now we're talking about 2 trillion in just two quarters

So rates are climbing as a result

We need to borrow more and this is a perfect manifestation of the debt spiral problem that we've talked about multiple times

Our fiscal spending outlay and the rising interest rates combined to create an insurmountable debt spiral

That is now manifesting in the fact that we need to sell 2 trillion dollars of

Treasuries and here's the crazy statistic that they said in reviewing recent demand for us treasuries

In auctions the committee noted that an increasing percentage of supplies being absorbed by investment funds

While foreign participation has remained range bound

That means as we're trying to sell more treasuries governments foreign governments are buying fewer of them

Which means that the u.s. Currency as a reserve is no longer the place that everyone wants to plow their money as much as it used to be

It is in decline

Now the other thing i want to share which i think is is absolutely critical is how do we address this gap?

Well, the one way is these entitlement programs and so several republican presidential candidates nicky hailey

Ron DeSantis and mike pence have all publicly stated on the

The campaign trail that they're promoting programs to cut social security benefits for people that are 30 and 40 years old

And here's the response to that

So so they've gone out and they've started saying that

A poll was done and on that poll 82 percent of voters

Oppose the push to cut social security for americans under 50 82 percent

So where is this going to take us? This is what is so scary to me jay cal. I'm not an american declineist

I believe in the american system it benefited me and my family

But I do worry that we find ourselves in a whirlpool that it's very hard to get out of because

The populace says we don't want to make the cuts that are necessary in order for us to save ourselves

That's what's so scary to me

And I said it before I think it's worth saying again. That's it

I'm done. It's not a problem of populism. I mean the elites are saying it too

There's no appetite in the dnc to cut or reforms or security. You're kidding. It's very unpopular. How do you get?

How do you get elected? I don't know why those republicans get elected saying I hadn't seen that article

I would advise all those campaigns not to touch that rail. They're going to electrocute themselves

I think trump has the right political instincts on this point, which is you cannot

touch the security

As a single party effort it has to be bipartisan and there is no bipartisan will to do anything

So I think you're you're right about the larger point. Chamath your thoughts on

freedberg's

manifesto that

80 percent of the public does not want to cut spending they're in favor

Of social security for people under 50 years old and we have a trillion dollars in debt payments

And we're in a death spiral because we're borrowing two trillion in 180 days. We're borrowing an extra two trillion

That's the real point the the end of the end of the fiscal end of days

For at the start at the start of the year the the expectation was they were only going to borrow 1.6 trillion for the year

Now we're borrowing two trillion in just these two quarters. Let me just state what I think about the dongrave. It's irrelevant

The s&p did it 13 years ago. Fitch is a

marginal credit rating agency

They're at a minimum 13 years late at a maximum. They're just anxiety like other people are

The sky is true. So that's my first point

The second point and the more important one is that I none of you who are always freaking out about this understand

This conversation about relativism

All of these conversations are relatively you can deal with them in absolutes

On a relative basis japan's debt to gdp is 270 and growing on a relative basis our debt to gdp is half of that

We are the most important economic force in the world

It is going to continue to be the most economic force in the world and all I see actually on every single monetary basis

Is every other country struggling more than we are so my question to all of the chicken littles is

What do you do if you're a central government?

Where you have to have foreign reserves

Do you all of a sudden double down on the euro?

Do you double down on the yuan which is basically a proxy for being for doubling down on the us dollar?

What are you supposed to do and I never get a good answer because on a relative basis the us will still continue to do

Well, I think that debt to gdp

Is a red hearing for a lot of people

And I think that the way that people run their personal lives, which should take income to debt into

consideration

I don't think applies as much to governments and I think these things are going to march forward as a group

There's not going to be a single g8 country that all of a sudden moves away and starts printing surpluses

It happened almost as an accident an aberration during the clinton administration. It'll never happen again

And I think that we shouldn't worry so much

Because I just don't see an alternative

So give me instead of telling me how bad this is because you think about your own life

And how it would be bad if you had debt to gdp of a hunt. I get it

As a country give me the alternative country

But just start with that. Can you answer that question? What is the alternative country?

Yeah, where would you put your your wealth if not the dollar?

Well, let me paint a scenario. That's not as dire as a collapse of the u.s. dollars world's reserve currency

Okay, so on this fitch, right? That's not that's not what I think happens, right? I think this is just purchasing power goes down

That's it. But go ahead sex relative to who?

Be specific anyone

But what does that what does that mean relative to anyone? Let me paint like a non catastrophic scenario or non apocalyptic scenario

Which is what you saw on this fitch ratings downgrade

Is that the bond market did move at the margins?

There was a sell-off in the tenure and as a result the tenure bond yield moved up to 4.2 percent

So it wasn't a case of everybody shedding all of their u.s. Treasuries

It's just that there were market actors at the margins who adjusted their portfolios

Okay, now freeberg is saying that the treasury is going to have to do another

$2 trillion bond offering and we have trillion dollar plus deficits as far as the eye can see

And we've got entitlement

Liabilities on the horizon and then a political unwillingness to do anything about it

So the deficits are only going to get bigger and bigger now. What does that do?

It's supply and demand when the u.s. Treasury needs to keep issuing more and more bonds at some point the demand for those things

Gets incrementally saturated and they have to offer a higher yield

So what happens? Well the bond rates go up and so the tenure goes up

Like freeberg was saying from 4.2 to somewhere in the five to seven percent range

And that doesn't mean that u.s. Dollar is not the world's reserve currency

It just means that it gets incrementally

Harder and more expensive to keep financing our debt now. What is the result of that? Well, if I as an investor

Could theoretically get seven percent

From the u.s. Treasury as the risk-free rate

Why would I want to take equity risk and put it in the stock market?

Which historically has yielded somewhere in the five to seven percent range

So if I can get my five to seven percent

From a risk for u.s. Government bond, of course, I'm going to do that

So the discount rate on equities will go up

That means that the stock market relatively on a relative basis will go down risk capital will go down

Go down and there'll be way less risk capital available for things like venture capital and private equity

Just risk taking of all kinds

And so the economy will just grow slower. It's not like there'll be a collapse

It'll just be this yeah huge albatross

Yeah around the neck of the private sector and this is called crowding out

Here see I'll give may I give a counter here

I think if you look at the amount of sovereign wealth funds and the investment coming from around the world into us venture capital

That will keep the venture machine

Cranking here in america, but three charts to just look at here nick pull up the first one the 30 year fed

So to counter this argument really the aberration has been

2010 to 2020 when we had you know low single digit mortgages three percent four percent

The majority of our lifetime it was between five and ten and if it sticks up in the five to ten

Basis that that's what we experienced for most of our life and then the second chart

This is the lowest unemployment we've had in our lifetimes if you look at the unemployment rate in the united states

3.6 is

Unbelievable and then combine with it something we've talked about here for two years that we can't understand

Is when do all these jobs burn off we peaked?

You know during the post covet era at about 11 million job openings and then you know, we're still over nine

So for there's two or three job openings for every american who wants to work

And we've shut down the borders largely even though we have some illegal immigration coming in

It is basically shut down the united states to immigration. It's about a third of what it was

Before trump and biden decided to shut things down

I don't think we're looking at the same video that that i'm seeing

Yeah, if you're looking at videos, those are very distracting

I would encourage you to look at the numbers of the actual migration into the country

It's a third of what it was just seeing what's happening in new york city. They got lines around the blocks

Clips on from the border. I would just look at the raw numbers sacks and the wrong numbers

Yeah, because we count them and we can't we count the all those we have to estimate them because they're illegal

But they got seven million

Numbers and the actual statistics than anecdotal videos because both sides will manipulate the hack out of them for their own purposes

But the fact is americas just crushing it in terms of employment

And that's why we didn't have this crash landing and the and I think the soft landing is because of employment

And i'll just end there

And if we can keep ourselves employed and everybody from the middle east to japan

To high net worth individuals in europe are pouring their money into the u.s. Venture ecosystem

I think the setup here is we got a control spending as you've said correctly freeberg

We get a little bit of control on spending

Hopefully and then we are going to have to slowly burn off some of this

You know debt we can't live with this kind of debt payments. Here's a little data for you. This is from

congressional research service off of fed data

So foreign holdings of u.s. Treasuries have declined

From 40 percent to 30 percent of total treasuries 70 percent of treasuries today are held by

domestic investors

This is the data that was being described

In the treasury advisory committee

The borrowing advisory committee letter that I just said is that they're seeing less demand

From foreign buyers of treasuries now I can argue we can argue theoretically about what else are they going to buy and what else are they doing with their money

I don't know but the the data is showing a decline in purchasing intention

Buy foreign buyers of u.s. Treasuries and we're having to pick up the slack through investment funds held by the u.s

Mostly pension mostly retirement funds

I would guess that are buying these treasuries. That is not what this chart shows the chart shows the effect of quantitative easy

That's what this chart shows because when you're buying treasuries from the market and retiring them

Of course the percentage of foreign and domestic holdings of publicly held debt is going to go down

So this last period explain this x of qe explain it. Sorry. I don't understand what you're saying

This is a measurement of the amount of people that own treasuries. Is that right domestic versus foreign?

Yeah, so who who owns so as of december 22 there was

24 trillion

I'm going to assume because this chart is fucking worthless if this if it doesn't assume

That the domestic holding the gray bar that adds up to 100 doesn't include the fed which it must

And that is because the fed has been buying treasuries

from the market

Okay, so just let me just give you the numbers for a second and then we can

Take out. I'm just looking at the chart. The chart is a great bar. That's his domestic holdings

I'm going to give you there's an orange bar. That's his foreign holdings. You've had 10 years of the the fed buying

Treasuries, I'm going to give you the numbers. There are 24 trillion dollars

of treasuries publicly held treasuries outstanding

7.4 trillion held in foreign hands the foreign holding

Of publicly held debt between december of 18 and december 22

Increased from 6.3 trillion to 7.4 trillion while other investors increased from 16 trillion to probably 23 trillion

So, you know, it's we're having to pick up the slack investment funds private investors

Are having to pick up the slack because of foreign demand for treasuries lagging at this point

That's the point of the chart. I don't know what I don't want to tell you

I think what this chart shows me is that the balance sheet of domestic holdings grows

Goros because the fed has been buying treasuries and in a in a world of qt

I suspect that this bar chart will change in the next 10 years

If you look at the histogram 10 years from now if you assume that qt sticks around

So, I don't know you can interpret whatever you want to feed your anxiety

It doesn't change that there's a relative problem at hand, which is you cannot sell one thing without buying another

That's just the way it works in financial markets

Here's the number the federal reserve during that same time period increased their treasury holdings. Here's the exact numbers

From 9 3.7 trillion to 9.7 trillion. So they bought 6 trillion of that debt

I think the fact that we're going to go from quantitative easing to quantitative tightening over the next decades another overhang

But because I'm holding on a second because not only does the u.s. Government need to sell another 2 trillion

of bonds every year to finance its deficit

Which is basically the addition to the debt you've got the fed now shedding what like 8 trillion

They're not they're not they're just they're letting them roll off

They're letting them roll off and they're not reissuing them

But you actually said the right thing earlier, which is that the risk premium has been shrunk so massively between equities and bonds

these 2 trillion of bonds that these guys will issue that between

The strip will trade from 5% all the way down to

There'll be a line

Out the door I guarantee you and the reason why is exactly what you said before David

Which is like why not own 5% paper from the u.s. Government

Versus having to like all of a sudden speculate on the sb 500 or something else

It's a no-brainer and I totally agree with you

But that this last 2 trillion that'll be the easiest 2 trillion to sell there will be a line out the door

Guarantee well, there's a line out the door at some price

So my point is that the yield will have to go up to attract those incremental buyers

And as the supply of t-bills becomes a glut

Obviously, they're gonna have to make the yield more attractive in order to keep

Attracting that marginal buyer

It's just that simple. So yeah at some price, they'll be able to find a buyer

But that yield will have to get higher and higher over time and then that crowds are private investment

Because why in the world would you invest in a risky stock when you get 7% risk-free?

What's your alternative because again, like what do you think the spread to jgb's is going to be if that's true?

If u.s. Treasuries, okay

If 30 your treasuries are all of a sudden in five and a half of bill ackman's right

Which you could very well be the other part of what he's not saying is what did jgb's look like?

What do european bonds look like? You know what they're going to be they're going to be

Trading at 300 to 500 basis points above that

It is cataclysmic for the entire world economy and so we all move in unison

When we suffer we will suffer less in other countries

And when we win we will generally win more than other countries that has typically been true

I suspect it will typically be true and I don't see anything changing that well

Hold on. Let's assume that you're right

And what happens is that the let's call it the western world and all these governments are basically mired in debts with a few exceptions

I guess australia is good switzerland's good, but the rest have massive debt to gdp as well

So their bonds have to move up with ours

And so their risk premium has to go up as well

So you're right in lockstep with the u.s. But now why wouldn't global growth just slow down

Across let's call it this whole western dollar complex coupled with inflation coupled with inflation, right?

Which is inevitable. That's basically what's happened in japan right is that they have like a 200 debt to gdp

And they've been very active and you'll curve control

And so they've controlled the interest rates, but the price of that's been total economic stiflation

Which is the pop emissions declines. They have demographic problems as well

But that's the main issue there is young people there. There's just not a lot of young people there. I mean, they're the housing is crazy

If you just look at it and I think the united states has a lot of innovation, so

We will innovate our way out of it is is my belief which is kind of what we've always done

You know what's so exciting guys? We can have this conversation with larry summers himself at the all-in-summer

Okay, great. There you go. Wait, do we have ray dalio too?

We have ray dalio, yeah

Are they gonna be on a panel together or are we really interesting to discuss this topic with the two of them?

Maybe overlap. I'll look at the schedule everyone

Unfortunately, all our speakers are in tight schedules on when they're in and out, which is why I need jcal to respond to my

I am to him about

finalizing some of our other speakers, but

Hey, do you mean texted me because like apparently he's in like london or he has to go to london right after you got to figure

How to get him back? Yeah. Yeah, he said he'd fly out, but we got to figure out how to do that

But yeah, we can have this conversation in la september 10 through 12th

Well, it's sold out so way to frustrate everybody. I'm getting like

All kinds of like LPs and giant folks are like, can I buy a VIP ticket and I'm like, listen, it's sold out

You had two months to do that. So in other news

The GOP's lead candidate for

The 2024 race donald trump has been indicted for trying to overturn the 2020 election

and stop the peaceful transfer of power the indictment has four counts

And is the third criminal case for those of you playing along at home four counts include

Conspiracy to defraud the u.s. Conspiracy to obstruct an official proceeding obstruction of an attempt to obstruct

an official proceeding conspiracy against

rights trump campaign

Not shockingly called it fake news

The indictment feels like it's got him dead to rights

And this is on top of the oath

Keepers founders steward roads getting 18 years and a bunch of other cases in addition to that

The doga prosecutors also accused trump of ordering employees to delete security videos

And the classified documents case to cover up of course being worse than the crime

Looks like they got him dead to rights on that one as well

All of this against the backdrop of disantis spending tens of millions of dollars and falling

in his percentage

sacks explained to the audience why this is hunter biden's fault and uh, that's a deep state conspiracy

I kid

What are your thoughts on this when you say they have him dead to rights like what what do you mean by that?

What's your basis for saying exactly? What do you dead dead to rights on what charge?

Yeah, so in this indictment the 45 pages if you read it

You will see that they put up fake

electorates and they knew that it wasn't going to work

And they did it anyway after losing 60 cases. So

that's the

Belief of why this is such a serious case

and then also the cover-up

obstructing justice and it looks like

Some of these maintenance workers are potentially flipping and mark meadows

They claim has flipped as well. So but you know, he listened everybody

This case is is sort of separate. I mean, I think we should just stick to this

The the big news here is what do you think of the fact that he tried this allegation that he tried to delete the videos?

Do you think it's real or do you think it's made up? I don't know that that's a that's a detail about a piece of evidence in that case

I do think the documents case

is

on a sounder legal footing

Then the more dangerous to him you're saying more dangerous to it doesn't involve as many novel legal theories

Now is it really dangerous? I think the american people think that at the end of the day that documents case is sort of a paperwork case

And there are many other people who violated the classified requirements

Rules like sandy burger like david portray us like hillary clinton never prosecuted

So I think if they have him dead to rights on any of the cases is the documents case

But I also think that in the lines of american people

That in the minds of the american people feels like dc inside baseball now. I think on this january 6th case

About the documents case. What do you personally think? I think if you're going to prosecute trump for that

You need to prosecute all these other people who violated classified documents rules

What do you think about him sandy burger who worked for clinton?

It was a national security advisor stuffed his pants

Yeah, with classified documents from one of those clean rooms

And got away with a slap on the wrist. What do you think about trump trying to overturn the election?

Well, look, do you think he tried to overturn the election? I mean just a basic fact

Let me state right away that I think that

What trump did in the wake of the 2020 election was indefensible. I said so at the time

I said that I did say it

What I said is that once the supreme court once the courts in general throughout his case

And once the supreme court denied certiori it was time for him to stop

And he kept going yeah, it was time for him to stop and he did it

And so I think that his actions were indefensible

However, when you're talking about criminal prosecutions, they can't just be an expression

of condemnation

You actually have to prove that somebody engaged your criminal behavior and the issue here

With this January 6 case is that it relies on novel legal theories

There's actually a really good article in the new york times of all places explaining this

Do you think there was a possibility that he if he could have he would have turned over?

The election if pens had gone along with it

You're getting into a bunch of hypotheticals here. The question is whether

These charges will actually stand up to scrutiny. Let me read you

What david leonhardt from the new york times reported

Because I actually think when you have the new york times saying that the case is weak

I think it's really indicative. So

What the new york times says or leonhardt says is shocking as it was trump's behavior on january 6 did not violate

Any laws in obvious ways? He never directly told those the january 6 rally to attack congress

During his speech that day. He even said he knew that protesters would behave peacefully and patriotically

It was part of a long-standing trump pattern in which as my colleague maggi hamerman puts it quote

He is often both all over the place and yet someone careful not to cross certain lines and quote as for trumps brought her effort to overturn

The election result no federal law specifically bars politicians from attempting to do so

Without such a law smith has relied on a novel approach

She has charged trump with committing criminal fraud

And violating conspiracy laws that were not written to prevent the overturning of election result

And then he says that a key part of these laws they revolve around a person's intent

And tend to score to the notion of fraud only if someone is knowingly

Trying to deceive others can he be committing a fraud and he says that's why the case seems likely revolve around trump's state of mind

So the problem with this is they have to know only prove

That what trump did in the wake of the election was indefensible and

Outrageous and all the things that you believe they have to prove that trump knew

That he lost the election and knowingly perpetrated a fraud

And I don't think you'll be able to ever prove that beyond a reasonable doubt

But even though yes, there are statements that they point to yeah

They got all those statements and then bill bar mark meadows

Everybody's flipped on and pence has flipped on them. They're all flipped on them now same as those people

Yes, but trump also had this whack pack of lawyers. So you had juliani and you had

sydney powell

And john easman and michael indell the pillow guy

They were all in the white house telling trump that listen you won the election

You've been robbed and there are valid legal grounds for you to contest this and trump for years has been maintaining the stolen election narrative

Even when his advisors have told him this is not good for you. The the guy has stolen election on the brain

Okay, every

Interview he's brought this up even when it's manifestly harmful to himself and the republican party

So this idea that you can prove that he doesn't really believe the election was stolen

The one thing I believe about trump is that he really does believe the election was stolen

And I think you will never be able to prove beyond a reasonable doubt that he is knowingly lying about that

And as a result of this you can never prove this case

Now it also relies on this novel theory

They are turning the civil rights law into a pretzel to try and figure out a way

to indict

Trump or prosecute him under this novel legal theory of committing quote fraud against the american people

Okay, this is a novel legal theory that's never been

Tried before and by the way if you're going to create that as a precedent

I hope we're going to go after those

The signers of the lancia letter we talked about because they committed a fraud against american people

I hope that we will prosecute the 51 spies who lied because they perpetrated fraud against american people

I hope awesome. I hope we will go after the authors of that steele dossier

Because they perpetrated a fraud of the american people. There's a lot of people in washington who've perpetrated a fraud in the american people

I hope we're going to go after all of them

But my point is this it's not the job of a prosecutor to be creative with the law ever

I mean, they are supposed to apply the law strictly as written

they're supposed to bring cases that are open and shut and what

Jack smith is doing here is going for this bank shot where

He wants to charge trump with incitement, but he knows he can't win that case

So he's going for this backdoor or civil rights law to sidestep the first amendment problem

And it might be this is an abuse of prosecutorial power and once you let prosecutors get creative like this

You're on a slippery slope to show me the man. I'll show you the calm as install in russia

So listen, I believe that again trumps actions were illegitimate and outrageous

But again, the purpose of criminal law is not to express disapproval. You have to be able to prove

These cases in an open and shut way without novel legal theories

I just want to say I need to give I need to give sacks a 10 out of 10 for this last piece. That was

Excellent. Absolutely. Excellent. Jason. Here's the question. I ask you go ahead

Do you believe that trump was guilty of inciting an insurrection? Absolutely. Yeah, when he told those people to

Yeah, when he told those people to go down

Why hasn't jack smith indicted trump?

They've indicted trump on all these different charges with over 500 years of jail time

And they have not indicted him for incitement. Why not?

They could always add to the charges and so I suspect when they start flipping people they will but you know, it's kind of

Meaningless to have this discussion. We should move on to the next one. No, it's not. No, hold on. Hold on. Let me finish

You ask me a question. Here's the thing. You know what 30 percent of people

In the republican party about 30 percent of this country have trump stock home syndrome

They cannot let go of trump and so there's no reason to debate it with the gop

They have tss and it you're going to defend him to the dying day

You're going to do what about isms the republican party will never accept the fact that this person's a criminal

He's corrupt and he's a horrible human being and he it is not fit to serve and you're going to serve him up as your candidate

It's disgraceful. The gop is a disaster for for actually supporting him

Guy has no morality and he would have overturned the government if he had the chance and he will do it again

Can I respond to this? I mean a couple different points here. All right, so look as many points as you want

They're all people who are absolutely fixated

On january 6 and it's the people who've been trying to whip this up and make it into

A crime and event all these novel legal charges and haven't stopped talking about for the last two and a half years

I'm so sick of talking about this whole january 6 thing. I don't want this to be our politics

Okay, the people who've made it our politics

Include the the mainstream media. It's all the people on cnn and msnbc won't stop talking about it and part of the reason why

I think trump likely will be the nominee is because they are creating a backlash

In the gop where people basically think that he's being unfairly

Prosecuted and persecuted now to my question. Why aren't they charging him with incitement?

That is the crime that the media says he has committed for the last two and a half years

So why aren't they charging him because the doj looked at that at the beginning?

Of 2021

Merrick garland's doj looked at that and they did a report and found that they could not win that case

And when that came out the media and even Biden himself said that Merrick garland

Was basically being a wimp and should be tougher

And so that's when they appointed jack smith to be the special counsel to go find some of the way of prosecuting him

And so that's why they've invented this novel legal theory now

I think the reason why we should care about this that has nothing to do with wanting to defend trump

Or make him the nominee is that I don't think our political system should be weaponized this way

Because when they can start inventing novel legal theories to get somebody that's what they've done here jason

It's show me the man. I'll show you the prime now try

To overthrow and reverse the election and he tried to do that by putting up a fake slate

And he tried to convince pence to go along with it pence is an honorable person who wouldn't go along with it

And everybody in his cabinet said this is a bridge too far his

His supporters from bar to pence to meadows all told him please stop what you're doing is illegal

You cannot overturn the government the election results

But are you saying this

Are you saying this as an expression of condemnation against trump or you saying that that jack smith actually has

I think it'll be proven that he broke the law and they were proven in the documents case that he also tried to cover it up

But that's just my opinion. I believe that he's a criminal. I believe he will be held accountable

I think he should be held accountable for trying to overthrow the election. He tried to overturn the election

That is the most treasonous thing you can do you can come up with all of your

Charge him with treason charge him with incitement. They have not done that. They've invented this not only with theory that never existed before

He's a very smart guy when it comes to avoiding

Accountability and I think that it's his the clock is running out for him. You know what jay cal. Do you not think that?

It's a little surprising

That all of these charges are hitting

Years after this event took place in the months leading up to the republican primary

No, I think it's that's the weirdest thing to me is like

Why would it take so many years to prosecute someone all those guys that went into capitol the capitol building?

They all got charged with crimes years ago, you know two years ago

Why is all this stuff falling on trump today? It's like they because the grand jury

I mean in the case. Yeah, and they take time to build these

Because I will say it does feel like it is interrupting a political process that if there were criminal charges to be filed

I would have liked to have seen him file two years ago

So this could all get adjudicated ahead of a political cycle now that it's in the middle of a political cycle

It makes me as a u.s citizen nervous about the fact that there are agencies interfering in the political cycle

You're so right

He could have given the documents back when they asked for them and he could have said don't delete the

We're talking about you're talking about both. Yeah, and it takes it

You change the subject to the case that I'm talking about both cases. I'm talking about both cases concurrently

We're talking about the documents in that case. I will say the document case is more solid but less important

Okay, actually leonard says this in the new york times

But you asked me a question

I think it takes time to build the case properly and it took them a long time to get to the 400 people

Who attacked the capitol and brought tens of thousands of rounds of ammunition

To the capitol and put it in three hotels, which is why the oathkeepers got 18 years 400 people have gotten sentenced in that

For good reason they beat cops

They beat they broke down their way into the capitol and they brought

Dozens of ar 15s and they bought tens of thousands of rounds of ammunition and placed them in hotels around the capitol

These are dangerous domestic terrorists. They would have shot him for that

That's not what he's being indicted for no they i'm talking about who they they already got those oathkeepers on 18 years

I just want to read this one sentence from from leonard just to wrap this up

Because this is the new york times. This is the new york times

He says you can think of the new charges being both more important and less solid than trump's previous federal indictment

Yeah, no, i'm listening. Everybody's gonna have different opinions on this

I I get that I just hope he has his day in court

And I think he's guilty and I think it'll be proven that he's guilty and that it's time to start

Moving this towards a pardon and figuring out how to get him out of political life

And give him a pardon for all these crimes he's committed and let him off the hook

But get him out and so that your party can fail to a good candidate. That's what I hope happens

I think one of the really tragic side effects of these

Prosecutions where they're inventing novel legal theories clearly to get this man for what he did even though it was outrageous

But I don't think criminal in the way you want it to be jason

But the really tragic thing about the way I wanted to be I would rather he didn't do this criminal activity

Yeah, I get it. I get it. I look I don't want him to be already denounced it. I'm not defending his actions

I'm defending the integrity of our legal system

And really the tragic thing about this the tragic thing about this is that I want the 2024 election to be about issues

It's not it's going to be a referendum on what happened in 2020

And there's no way to convince either side of the american people

That they're wrong about that the msnbc cnn crowd are going to believe that trump is guilty of a crime

No matter where this case comes out and by the way, I think trump's actually going to win this case

Maybe not in the dc jury pool, but I think he'll win it

On appeal because I just think the supreme court. Yeah, I think if he has to get the supreme court

He's going to win it because there's a novel legal theory

By the way, jack smith took a case against the virginia governor

To the supreme court got overturned on appeal 9 0 because of an outrageous legal theory there

So that same thing could happen here. I think it probably will but but those people who believe in this will never be convinced

And by the same token trump supporters the other half of the country will never be convinced that

This was not a political persecution. It's tds versus this will tear the country apart

And to free berks point. It's two and a half years later. We could have just moved on

There's plenty of other things. They already have the documents case

So this is a political prosecution by biden's. Do you have any way to get out of this?

What's your what's your solution to get out of this? We should have just moved on

Oh not charge them

Yeah, listen the the proper forum to deal with this was the impeachment hearing

The second impeachment was expressly on the correct charge was was whether trump incited insurrection

They already had this trial

The proper forum was that impeachment trial?

He made it through and it's up to voters to take this

Actually said the proper one was to go criminal. So it was interesting

Yeah, he said the impeachment was the wrong way to do it. They should just do the criminal

So here we are doing the criminal then the country should have moved forward and instead we're going to turn apart

And this is what 2024 is not going to be about. What do you think?

Free berk, which what do you think is a good path forward?

I kind of align with the fact that this is a little bit too late

It's in the middle of an election cycle and the damage that it will cause in terms of

how our country views the

Intersection between the justice system and the electoral process can be more damaging

Then the benefit we would gain from bringing an individual to justice for breaking the law in this case

Unfortunately, the timing is just off and I think it's really scary

All right, jason, you have to ask what what is actually going to strengthen our democracy and what is the wisdom of bringing these charges?

I think this case shows a lack of wisdom. I don't think it's going to strengthen our democracy

I think it's going to undermine it

It's going to make this country more polarized and hyper partisan

And it's not going to help us move past this era of our politics and I believe that a question towards me

I think trump is responsible for part of that polarization, but I think biden now is playing into it from the other side

I don't think we've had a president

Seek to indict

His leading political opponent who's likely to be as involved in this. This is the justice department. He's not he's not driving it

Wait a second. That is not true

Okay

Yeah, he's he's not involved in it. No, there's an article in which biden said

That when merit garland refused the incitement charges

That he thought that it was weak in that biden thought that trump deserved to be prosecuted

And that was a public articles in the new york times and i'll provide the note

Okay, what's your question for me? Do you have a question? You said you want to ask me a question?

Well, no, I didn't say a question. I said you can respond

Oh, but my my point is I now think that biden has crossed a line here

And just remember this is not an independent prosecutor jack smith

Works for merit garland who works for joe biden

This is banana republic type stuff. This is one president's doj

Seeking to prosecute his main political opponent

Who put merit garland in biden appointed him?

Uh, yeah, so, uh, this has been the all-in podcast chamath had to bounce

frieberg congratulations on okay 99. I hope it happens

sacks sorry about congratulations to you too. Congratulations to you too sacks

If it's proven to be real we will all benefit. So it's great. Yeah

Right, and we'll see you all good for next time

You should all just get a room and just have one big huge orgy because they're all

It's like this like sexual tension that they just need to release somehow

What you're about be what you're be

We need to get

We

Machine-generated transcript that may contain inaccuracies.