The AI Trade Just Got A Warning From Meta

Ed Elson is joined by Ed Zitron to break down Meta’s move to sell its excess AI capacity and why it’s a bad sign for the AI bubble. Then, Melissa Murray joins the show to discuss the Supreme Court’s latest decisions and what they mean for the future of the country. Finally, Ed gives his take on Trump’s personal financial disclosures. Ed Zitron is the author of the Where’s Your Ed At Newsletter, and the Better Offline Podcast. Melissa Murray is a professor at NYU Law and co-host of the Strict Scrutiny Podcast. Subscribe to the Prof G Markets Youtube Channel Check out our latest Prof G Markets newsletter Follow Prof G Markets on Instagram Follow Ed on Instagram, X and Substack Follow Scott on Instagram Send us your questions or comments by emailing [email protected] Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 1:29Speaker 03

  Money markets matter. If money is evil, then that building is hell.

• 1:39Ed Elson?

  Welcome to Prof G Markets. I'm Ed Elson. It is July 2nd. Let's check in on yesterday's market vitals. The Dow was roughly flat to start the third quarter. Meanwhile, chip stocks dragged the Nasdaq and the S and P 500 into the red. Brent crude dropped as the US signaled talks with Iran were productive. On the yield on 10-year treasuries rose after Fed Chair Walsh said inflation was, quote, "too high." Okay. What else is happening? The cloud computing industry has just gained an unexpected new arrival. Meta is reportedly planning a cloud business to sell its excess AI capacity.

• 2:20Ed Elson?

  The company has poured billions into its AI infrastructure and until now, Meta has maintained that all of those investments and the resulting compute capacity would be used for internal purposes. But clearly now, something has changed. Meta stock closed up nearly 9% on the news, but other NeoCloud compute providers such as CoreWeave dropped on this news. So for more on why Meta is getting into the compute game and what it means for the rest of the AI industry, we are joined again by Ed Zitron, author of the Where's Your Ed At newsletter and host of the Better Offline Podcast. Ed, good to see you.

• 3:02Ed Elson?

  I'll just start with the good news on my end because for those of the listeners who follow me on social media, I actually bought Meta last week and it's up 10% since then. So technically I'm happy because my view was that the, the price was pretty cheap relative to the rest of tech and relative to the S and P. So that's the good news. Bad news potentially is we thought that Meta was going to build their own AI products. Now they're saying, no, we're going to sell the compute to someone else for someone else to build their AI products. And that's why I wanted to talk to you because it doesn't seem like a great signal for the AI industry and you've been all over this.

• 3:46Ed Elson?

  So your reactions to this Meta news?

• 3:49Ed Zitron?

  I think it's a sign that Meta is walking away from its AI play. It's Baron Borodovsky over at the Wall Street Journal made this point earlier. Meta was meant to have an API for its Muse Spark AI model weeks ago, just hasn't happened. And now we've got these rumors of Meta allegedly selling off its compute capacity. There's no other way to read this other than Meta has to, they've built too much compute capacity and now they're selling it. I think what we're going to see now is kind of the H-bomber guy thing of sell the compute to who? Aquaman at some point? Because who are the people that are buying this compute? Meta is the, I think, the second or third largest buyer of AI compute. They have a $17 billion contract with Nebius, a $22.4 billion contract with CoreWeave.

• 4:34Ed Zitron?

  I'm not sure how this works and the bulls are already trying to frame this as, oh, this is Meta intelligently, they're monetizing their AI stack. When what it actually is, is Meta is flat out of reasons to have this capacity. They said on their annual shareholders meeting, they thought they had a reason. This, they use the word think, they thought they had a reason to have all this compute capacity, but they might sell it if they don't. And I guess they don't. And I'm not, I'm not sure how else to read this. This is very bad for the AI bubble. This is exactly what I feared, which is that these companies bought way more capacity than they could ever, ever need.

• 5:11Ed Elson?

  Well, just to go back to the quote from Mark Zuckerberg, this is from May. He said, quote, when asked, sorry, about whether he would do what he's doing now, which is sell the compute, he said, quote, "We haven't done that yet because we think we have a use for the compute. But obviously if we get to a point where we feel that we have overbuilt, then that is an option that we have. And that is partially what gives us confidence in investing in building this out." So this seems to be the answer to that point, which is we did overbuild thinking that we were going to use all of the compute to build our own stuff. But now we're kind of admitting defeat and saying, no, we're just going to sell the compute to someone else for someone else to build the stuff.

• 5:54Ed Elson?

  To be fair to the bulls and, and, you know, explaining why the stock is up right now, I think Wall Street was concerned that they were building this stuff and they had no plan to monetize whatsoever. Why are you building all these data centers? Why are you building up all this compute? They've come out with an answer now. It's just not a great answer. It's probably the laziest answer you could come up with. And so this brings us to the question of who is going to monetize this stuff? Because if Meta had all those engineers and they had all of this, all of the resources and they are deciding, no, we're not going to monetize AI ourselves with a front-end product, who's going to do it? Will it be OpenAI? Will it be Anthropic? I mean, what do you think?

• 6:36Ed Zitron?

  Well, I said on Twitter a few weeks ago, you know that we're at the end when Anthropic buys compute from Meta. I think that if we see a deal sign with OpenAI or Meta or Anthropic and Meta, we're at the end. They're out of ideas because right now there are no large buyers of compute other than OpenAI and Anthropic. Meta was the other one. This whole time I've been saying, wow, Meta has no AI story. Meta doesn't really have a use for this compute. Turns out that Meta has no use for this compute because they don't have an AI story. So this will be actually an interesting demonstration of how much actual compute demand there is because Meta, I don't imagine uses much of the, and they have a large amount. They have almost as much capacity as I think Microsoft. They were one of the largest buyers of H100s and H200s at the beginning.

• 7:21Ed Zitron?

  They're building that vast Hyperion data center, which PIMCO owns most of the bonds of, which is interesting. It's great, great to hear where our retirement funds are going. But it, it's weird though. I thought that they needed all this compute. I thought it was very important they had this compute and it just makes me wonder whether they ever had a strategy. Because people want to say, oh, their strategy failed. I don't think they had one. I think that they just bought all the compute because that's all Mark Zuckerberg can do. He sees someone else do something and he goes, I'm going to do that. And now he's becoming what? A really big, boring cloud infrastructure provider? I mean, it's also the question of how much money they'll make of this because I've seen

• 8:03Ed Zitron?

  some fanciful projections, some truly ludicrous ones with people saying they'll get $20 billion a gigawatt. That has no precedent because Oracle, which is building Stargate Abyssal, the 1.2 gigawatt, I think it's 880 megawatts of critical IT for OpenAI, they're only expecting to make about $10 billion a year from that once it's fully built. So, okay, let's say that Meta gets lucky and makes $15 billion a year from their capacity. All right. I mean, for how long? Who can afford that? Because really the answer is OpenAI and Anthropic. No one else is buying that much. I think Jane Street is getting 100, 200 megawatts maybe, but who are the other large buyers? Because there certainly isn't an aggregate of gigawatts of capacity demand.

• 8:48Ed Zitron?

  And this is the larger point I've been making about the build out, which is that the demand does not exist at scale and the largest consumers are two bulbous fail sons that only lose billions of dollars. And I don't know, I, I'm seeing people try and rationalize this. I must, I must warn them that this is a very, very bearish sign.

• 9:07Ed Elson?

  Yeah, I, I think that's exactly right. And, and I mean, going back to the, the parallels to the dot com bubble. I mean, the trouble that we keep running into is we keep hearing that there's all of this demand for compute and there's all of this demand for chips, which there is, which is why all the prices of this stuff is going up. But when you go to the demand for the AI products on the front end from the consumer's perspective or from, you know, a B2B perspective, yes, they're, they're technically spending money on this thing, but not nearly enough compared to the losses that we have seen and you've reported on from Anthropic and from OpenAI. And so it does certainly seem that this is.

• 9:50Ed Elson?

  An admission of that point. I mean, I really, you'd really think that if someone was going to figure out how to make AI an extremely profitable consumer product or business to business product, Meta would be that company. But they have decided with this move, it seems, that they can't figure it out. And we'll see what happens. We'll see if they maybe go back on this. This is kind of initial reporting. Just going to that phrase, though, excess compute. That's a crazy phrase to hear. And that was exactly what was written in the article, that there is excess compute, and that's why they're making this move. I mean, what

• 10:30Ed Elson?

  do we know about compute supply? I thought that there was, there was no access. I thought that we were completely constrained.

• 10:38Ed Zitron?

  So based on my analysis across all of these companies, I would say 80% of all AI compute is owned by or used by OpenAI or Anthropic, with the rest of it being Meta. Meta is, mate, they have those multi-billion dollar deals. They've been, I'm sorry, I actually thought they are also doing 1.2 gigawatts with Crusoe, just slipped my mind there. So what's happening is it's a mirage of demand. What it is, is two large companies are taking up an absolute crap time. They're buying anything they can get, leaving scraps for the rest of us. Well, well, not me, but you know what I mean. So these companies taking up all this space. So of course, the success compute, Meta isn't using it. I don't even think Microsoft is using all of their compute. I don't think anything that's being like

• 11:21Ed Zitron?

  Google recently also said, well, it was reported that Google couldn't give Meta all of the access they needed for Gemini. And people, because they have capacity constraints and people were saying, well, that's a, that's a bullish sign because it shows the demand. No, it's Anthropic. It's all Anthropic. Anthropic is just rapacious in their demands for compute. So the excess compute is whatever is left over, the dregs that are left over from Anthropic and OpenAI. So I think that the moment there are large bumps of compute then to the market, such as Meta leasing, it really comes down to how much they, if it's 10% or 30%, maybe. If they do more than 50%, this is just going to flood the market. Because aggregate customers,

• 12:02Ed Zitron?

  I've really looked, I've done a lot of analyses on this, I've looked and looked, I can't find companies providing inference or people paying for AI compute in anything more than 10s or maybe a hundred million dollars a year in spend. The demand is not there. And that was before we got to this weird thing where everyone's cutting back. There was the UBS study that said 60% of organizations are, are token minimizing, they're limiting their token spend. We're not in a supply constraint situation. It's that just two companies are taking it all up. And if Meta dumps this onto the market, oh, boy, we'll finally get to see whether we're truly in a supply chain crisis. It's really just having two oaths, taking it all up.

• 12:43Ed Elson?

  Just thinking about how this might end, if it is true that the ROI, that the business model doesn't work, this has been your contention, that's what you've been saying for a long time. I mean, I just think about how it would play out and who would get hurt. Clearly, if you're spending hundreds of billions of dollars on CapEx to build out the data centers, and it turns out that the ROI isn't as large as we thought, down the chain, then that's going to hurt for you, but you might figure out a way to monetize those data centers eventually. That's sort of a question. The people, the companies for whom this will really hurt, clearly in my view, it's the companies that are offering the AI product

• 13:27Ed Elson?

  whose job is to do the difficult task of figuring out how to make more money than they spend on the AI, and who have not proven their business models yet. And that would be OpenAI and Anthropic. And if those are the only two companies that are essentially buying up all of that compute, when you've done your analyses and tried to figure out who's buying this stuff, and it's just those two, it seems that those are the ones who get hurt at the end of the day, in a very significant way. Would that be your view?

• 13:57Ed Zitron?

  I mean, it's, everyone gets, I think it's all of the construction firms. I think the construction firms underlying the data center. So I think there are going to be just a bunch of data centers that get built and never get used, which will be hellish for the private credit funds, which are backed by people's pensions and insurance annuities. I think it could, OpenAI and Anthropic will be able to find the compute they need, but then they will run out of money and then that will leave all of this compute sitting fallow. I think that this still hurts Meta. Because, look, if Meta drops all this compute onto the market and they can't sell it, that's also bad. That means that Meta has got a bunch of compute it can't use and will, depending on how bad things are, actually have to take an impairment if they don't think they're going to be able to use all that compute.

• 14:41Ed Zitron?

  They're not going to be able to monetize it. Meta is actually in a position to mothball much more of this because they can just claim, oh, yeah, we're working on ad models, just ads, just doing some ads on the backend. No one's ever going to find out. It will get bad from the Microsofts and Googles of the world. And I think that the apocalyptic conditions that there will be, if I'm right, will be quite severe. I think we're going to see a lot of incomplete data centers. I think we're going to see data centers that just cannot pay, they'll be assumed by lenders. And if that happens at scale, it's going to be, it's going to affect, it's going to affect anyone who's invested in this. It's going to affect the Japanese stock market because of SMBC, a sumitomo bank, two of the largest banks in Japan, who are heavily levered in the data centers. I think the

• 15:26Ed Zitron?

  spread of this will be hellish, but it's going to kill the Neo clouds. I'm so tired of people on Twitter being like, oh, Nebius and Iron, they're so good. No, they're all invested in by Nvidia, they're all backstopped by Nvidia, and their customers are Microsoft for OpenAI, OpenAI, Anthropic, and Meta. So it's just, I don't think people realize how bad it is, if I'm right. I'm not even saying that this is not a bit, this is just, if the demand is not there, there is allegedly over 100 gigawatts of compute capacity under construction. If we can only sell six gigawatts, if there's only demand for six, and that demand is mostly coming from two unprofitable companies that pretty much only make money

• 16:08Ed Zitron?

  because of a hype cycle and also subsidizing a lot of their products, what does that look like in the future? It looks like a disaster. And unlike the dot com bubble, there is no useful infrastructure here. AI GPUs do not have other monetizable use cases, anywhere near even a fraction of what's been promised of AI.

• 16:28Ed Elson?

  Final question for you before I let you go. Some news has occurred since I last had you, specifically OpenAI reportedly delaying their IPO. I have a tinfoil hat theory that the reason they did that is because of you, specifically the financials that you leaked on OpenAI and kind of the, the shitstorm that that caused, reactions to OpenAI apparently not going to go public in 2026 anymore.

• 16:55Ed Zitron?

  Rat a tat tat. That's what happens when people see your stinky numbers. I'm serious. My tinfoil hat theory is that OpenAI's numbers in their S1 differed from mine. I don't mean fraudulently, just to be clear. They just presented them in a different gap variant, or they just didn't show all of them. I also think that just, there was a very large, loud discussion of the numbers. And I don't know, I imagine, because the whole reason that they delayed, per the Times, that they say was their investor, their advisors wanted to get a trillion dollar valuation, and they couldn't. That's very bad, because their last valuation pre-money was 750 something billion, I think, something around there.

• 17:36Ed Elson?

  Yeah, they were right up there. You'd think you, just one little step. Yeah.

• 17:40Ed Zitron?

  Like a 30% premium. That shouldn't be a huge ask, unless, of course, bankers looked at this and said, mate, that's not worth 700 or even 500 billion, which kind of lines up with something. From a few weeks ago, SoftBank tried to get a margin loan in which they used all of their OpenAI shares, which on paper are worth over $100 billion as collateral, a $6 billion loan, and the banks would not give it to them. That probably suggests that banks might have some issues with them. And people will say, well, Anthropic will be fine. Anthropic is exactly the same kind of business. They run in the same way. Oh, they use the enterprise more. Everyone's on the enterprise now, even OpenAI. So my reaction here is, I don't think the future is going to be better for these companies

• 18:21Ed Zitron?

  to list up. And I think that this is, I don't know if OpenAI ever goes public now. Maybe they will. Maybe they slop this thing out there. Maybe they find a weird way in. But I don't know. If they want a trillion dollars, it's very clear that valuation isn't realistic, at least at this point in time.

• 18:38Ed Elson?

  Well, it's a shame because I was looking forward to seeing those financials. That was going to be my big, that was going to be my Super Bowl.

• 18:45Ed Zitron?

  I want that S1.

• 18:46Ed Elson?

  Yeah, that S1. When it happens, you and I will have to do some live stream or something and react in real time. But we'll have to wait. If it ever happens, we'll see. Ed Zitron is the author of the Where's Your Ed At newsletter and host of the Better Offline Podcast. Ed, appreciate your time. Thank you.

• 19:03Ed Zitron?

  Thanks for having me.

• 19:07Ed Elson?

  After the break, takeaways from the Supreme Court's first term. And for even more markets insights, you can subscribe to my weekly newsletter, simply put, at simplyput.profgmedia.com.

• 19:26Speaker 06

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• 21:33Speaker 01

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• 22:09Ed Elson?

  We're back with Prof G Markets. The Supreme Court has wrapped up its term and left the presidency more powerful than it found it. While the court dealt the administration some blows preserving birthright citizenship and blocking the president from firing Federal Reserve Board Member Lisa Cook, it also handed the White House some significant wins. The justices ruled that Trump can fire members of independent federal agencies without cause. And in a separate decision, the court struck down limits on how much political parties can spend on candidates. Taken together, the rulings reshaped the balance of power in Washington, strengthening both the presidency and the role of money in American politics.

• 22:51Ed Elson?

  Here to discuss the court's recent rulings, we are joined by Melissa Murray, Professor at NYU Law, co-host of the Strict Scrutiny Podcast, and author of The U.S. Constitution: A Comprehensive and Annuated Guide for the Modern Reader. Melissa, thank you so much for joining us, helping us to make sense of what's going on with the Supreme Court right now. I'd love to just start with the Lisa Cook decision, because this is a markets podcast. This is something that we've been keeping our eye on. What is the independence of the Federal Reserve really? And it seemed as though they protected the independence of the Fed and said, no, you can't fire her.

• 23:32Ed Elson?

  But then there's the other ruling, which says the president can fire officials at other agencies. It sounds kind of like a contradiction. How do we make sense of it?

• 23:42Speaker 08

  It's a terrific question, Ed, and it's one that a member of the court asked. Amy Coney Barrett, who dissented in the Cook decision, basically posed the same question. In her view, the two decisions are irreconcilable. It can't be the case that the president is free to remove the heads of independent agencies whenever he wants to, but somehow the Fed is off limits. And the court in the Cook case really didn't provide a very principled account of why the Fed is different. They talked a lot about history and the Fed's roots in the First Bank of the United States and the Second Bank of the United States. But the structure of the Fed is congressionally ordained, and to the extent that there are limits on the president's power to remove a governor of the Fed because Congress has imposed them, one would think that the same sorts of limits would exist in circumstances

• 24:27Speaker 08

  where Congress created agencies and created limits on the president's authority to remove the members of those agencies. So it does seem to be a little incongruous. Some have argued that one thing that may explain it is the economy. And Brett Kavanaugh, in his separate opinion, basically said as much, you know, like, nobody wants to see turmoil in the markets and people have a vested interest in the stability of fiscal policy, and that is what the Fed does. And, you know, we've said on our podcast, this is a court where every single person has a 401K, and then maybe that's the explanation. I do think there is a through line that unites both Slaughter, the case about independent

• 25:09Speaker 08

  agencies, and Cook about the Fed, and the tariffs decision, which was decided earlier by the court. And, you know, one thing I think that unites them all is that there are decisions that corporate interests can really get behind. So the Fed is something that corporate interests are actually very interested in. We all are, because we want stable markets, we want stable economies, and it's good for business if those are stable and not in turmoil. In the same vein, though, regulated industries, corporate industries, are not as interested in the kind of heavy handed regulation that at times independent agencies can dish out. So for example, I thought it was really interesting that Rebecca Slaughter, who was the person

• 25:53Speaker 08

  who was removed from the Federal Trade Commission sparking this entire litigation, she noted that when President Trump was inaugurated for the second time, the array of moguls behind him at the inauguration were the heads of corporations that the FTC was either investigating or were in active litigation against. So it makes sense that if there is a president who is perhaps less friendly to regulation, if you're in an industry that is regulated, heavily regulated, you might want the president to have more authority to be able to align that agency with his priorities, because they're your priorities as well. In the same vein, the tariffs case might be understood as one that really aligns with corporate interests, because although everyone talked about how bad the tariffs were for

• 26:37Speaker 08

  raising prices, corporations also felt it too, because it narrowed profit margins and it made it a lot harder to do business, because everything was unstable in the global economy because of the tariffs. So if you think about those three decisions in tandem, I think a sort of through line that unites all of them, despite the seemingly irreconcilable aspects of them, is that they really are decisions that would be favored by corporations and corporate interests.

• 27:02Ed Elson?

  This idea that it's the corporate interests that are kind of driving the, or that it seems to align with those interests. I have a quote here that was quite interesting that came out of OpenAI. This was the General Counsel of OpenAI who was upset about the ruling, which I'll return to in a moment. But on this point, it seems as though, and I'm not a legal scholar, so I don't know, but it seems as though if that is the case, what you're describing, it doesn't seem to be grounded in the law as much as one would hope. I guess would be my point. If there's a contradiction that is mostly driven by their personal opinions about politics

• 27:46Ed Elson?

  or about markets, I just wonder, I mean, are we setting a slightly unstable legal precedent if the law surrounding it isn't that strong? That's kind of my understanding, hearing you.

• 28:02Speaker 08

  I want to be really clear about this. I'm sort of speculating as what could be part of it. I mean, I truly believe that these justices think that they're reading the Constitution, doing this right. And to be very fair to them, Article 2 of the Constitution, which lays out the powers of the executive, is pretty spare about the power to remove executive officials. And so the Slaughter case is, in reality, the kind of apotheosis, the sort of coming of age of a theory called the unitary executive theory that argues that the entire power of the executive branch is lodged in the office of the president. So he, because it's all him, he should have the authority to both appoint and to remove executive officers.

• 28:43Speaker 08

  And the Slaughter case is basically the unitary executive theory codified in a Supreme Court opinion. It may be the case that some industries, you know, welcome regulation. I mean, like, regulation may create barriers to entry for new entrants, and that may be a boon for established players in a particular field. But my point about Rebecca Slaughter and her observation is that for a lot of the people who are aligning themselves with this president, a lot of the corporations that are aligned with this president, they didn't want a lot of regulation, and this sort of gives it to them, a sort of a less regulated environment for them, because the FTC is not going to be doing the kind of work that it did before. It's also important to recognize that

• 29:27Speaker 08

  Conservatives have always been very wary of the prospect of these agencies because they argue there is no constitutional grounding for them. That's something that I think people on both sides of the aisle can debate. It's something that constitutional scholars can debate. No, there's no specific authorization in the Constitution for administrative agencies. But in the same way that there's no specific authorization for immunity for the president, you might imply it from certain other protections or provisions that do exist. And again, the administrative state in these agencies is basically how we have come to do modern government. So, you know, part of this is a longstanding debate within the legal community about the

• 30:09Speaker 08

  fate of agencies, the propriety of agencies in a constitutional democracy where agency officials are really only accountable to the president, maybe to some degree to Congress, but mostly to the president. And whether or not allowing the president full authority to remove them at will is consistent with that kind of accountability. That's an ongoing debate that's we have been having for some time. Your point about the instability and whether the justices are doing law or simply prosecuting their own preferences, I think that's a bigger question. You know, one of the things that is important to recognize about the slaughter decision is that it overrules an existing precedent. So this is not the first time this question has ever come up.

• 30:53Speaker 08

  It came up in 1935, again, over a president's efforts to remove a commissioner of the Federal Trade Commission. And there, the court said that Congress, which delegates authority to the executive branch to create this agency, also has the authority to impose limits on the president's power to remove the heads of those agencies. And now we have a court that says, we're overruling that. That's of no consequence. And I think that is the thing that's making people think that maybe what's going on here is more about personal preference as opposed to law.

• 31:25Ed Elson?

  What essentially has happened is that the president now has more power. If you believe that the president likes you, then that's probably a good thing. If you believe the president doesn't like you, that's probably a bad thing.

• 31:34Speaker 08

  100%.

• 31:35Ed Elson?

  Which is why I found this quote from the associate general counsel at OpenAI quite interesting. They said, quote, "Trump v. Slaughter will have major implications for the future of AI regulation. If you want a federal body that can independently assess frontier models and then impose binding consequences free from political or partisan influence, that just got a lot harder, if not impossible," seeming to imply that OpenAI or AI companies might not be on the right side of Trump. And perhaps he'll decide that he's going to do whatever he can to influence these agencies to make it harder for those AI companies. I'd just love to get your reactions to that quote and what that says about the future of private industry, given this ruling.

• 32:19Speaker 08

  I don't think you can divorce this ruling from the current landscape that we occupy, right? So this is an administration that has very clear ideas about what it wants to do. There is, I think, some people argue, a kind of pay or play ethos to this administration. And that doesn't always redound to the advantage of those who are unwilling to play, who want to play by the rules as opposed to the rules that a single administration imposes. And one of the comforts, I think, that people had in these independent agencies is that they were staffed by experts who had particular expertise in a particular field and were not necessarily beholden by politics. They were just sort of looking at things straight down the line and making decisions

• 33:04Speaker 08

  based on their expertise. Now there may be all kinds of considerations that come into play when these agencies issue decisions. I mean, the personnel of the agencies are clearly going to change and they're likely going to whipsaw as different administrations come in and out. So the kind of continuity that we've had in these agencies, I think that is no longer going to be the case. And that may be a real problem, given the kinds of institutional memory that builds up in these agencies over time because they are bound by these individuals that are focused on expertise as opposed to politics.

• 33:38Ed Elson?

  Just shifting to this other decision from the court to strike down the law that would have limited, that did limit the amount that parties can spend in elections, that's gone now. My takeaway is more money in politics, following Citizens United, which we cover a lot on this show and which has clearly influenced our politics in a variety of different ways. Is that the right takeaway?

• 34:02Speaker 08

  So as Biggie Smalls, son of Brooklyn, once said, "Mo money, mo problems." I think we already lived in a very distorted electoral landscape. It's been distorted by gerrymandering, both partisan gerrymandering, racial gerrymandering, distorted by the influence of suppressive voter laws and the influence of money flooding our political landscape. And I don't think this helps, right? So what was struck down as a violation of the First Amendment here was a set of rules that prevented or limited the ability of individuals to funnel their donations into the parties and then have the parties coordinate the donation to particular candidates.

• 34:43Speaker 08

  And the reason why that was so important is because individual donors had a limit. It was about $7,000 on what they could contribute in a campaign cycle. But the parties had a much larger limit. So if individuals can funnel their money into the party, they're able to give more money to the party than the $7,000 they could give individually. And then the party could then funnel that into a particular candidate. So it's obviously an opportunity to circumvent the individual contribution limit, to coordinate with the parties in this way. And it will make it harder, I think, for the party that relies more on small donors, like in the aggregate, that would be the Democratic Party.

• 35:26Speaker 08

  It does redound, I think, to the benefit of the Republican Party, which is, I think, in a better position vis a vis larger donors who have the wherewithal and can now funnel their money into parties which have a much bigger capacity to make these coordinated and much larger donations to a particular candidate. It also means that if a candidate doesn't have the favor of the party that's coordinating it, like, they're not likely to be successful. So I think this is going to put more pressure on the primary system, which already, I think, has outsized importance in a world where we are increasingly polarized, perhaps making general elections just less weighty in some circumstances, certainly at the local level.

• 36:10Speaker 08

  But this is going to further distort the playing field and just introduce new interests, new moneyed interests, and make it just a lot harder for individual donors to compete.

• 36:22Ed Elson?

  I mean, this just makes me furious, to be honest. And correct me if I should feel a different way, but learning what we learned about Trump and his crypto returns last year, if you can call them returns, $1.2 billion last year that he earned on his crypto and his meme coins. And we know that he was hosting these dinners where people basically pay to show up. And we know that he takes a lot of money from people. We know increasingly that, as you said, this is a pay-to-play administration. And we're seeing that increasingly in politics, where billionaire spending is literally skyrocketing every single cycle. And this seems to add on to it.

• 37:04Ed Elson?

  I mean, this seems like exactly the direction that our country should not be going. It seems like the perfect moment to try to reel that in, to suppress the amount that the richest in our society are influencing, not just private industry, but the public sector, too. I mean, I'm very angry about this. Do you think that that is justified, I guess, would be my question?

• 37:31Speaker 08

  I think you are justified. This wasn't, I think, how the framers imagined electoral cycles would work. One, they really did not anticipate the rise of political parties. I also don't think they anticipated the ability of political parties to be able to garner and funnel so much wealth into the political process. And removing this coordination limit only exacerbates that kind of capacity that the individual parties have to do so. This is going to have an impact. I don't know if it will be as cataclysmic an impact as, say, for example, Citizens United, which really did change the landscape. The landscape has been pretty changed and it's been pretty bad.

• 38:15Speaker 08

  I do think it will be very consequential for the Democratic Party, which has, I think, historically been more reliant on small donors, like small amount donors, as opposed to very large mega donors, who are now then able to funnel their contributions outside of those limits.

• 38:32Ed Elson?

  I could ask you questions for hours, but I know that you've got a flight to catch. So I'm going to let you go. Melissa Murray is professor at NYU Law, host of the Strict Scrutiny podcast, which I highly recommend, and author of The U.S. Constitution: A Comprehensive and Annotated Guide for the Modern Reader. Melissa, thank you so much. We really appreciate your time.

• 38:50Speaker 08

  Thanks so much for having me.

• 38:56Ed Elson?

  Trump's personal financial report was just released and the numbers are crazy. The 927 page document reveals that in his first year back in office, President Trump personally made more than $2 billion. That is up 233% from the year before. Where did most of the money come from? You guessed it, crypto. Trump made $1.2 billion on his crypto ventures last year. That includes roughly $500 million from his crypto firm, World Liberty Financial, and more than $600 million from his meme token Trump Coin, which has since lost 98%

• 39:39Ed Elson?

  of its value. You might be wondering, how do you make $600 million on a coin that's down 98%? Well, the answer is simple. You sell at the top. More than 800,000 people lost a collective $2 billion trading Trump Coin. And as I've explained before, meme coins are a zero-sum game, meaning anything you lose has to be lost to someone. Well, now we know for certain who that someone is. It's the president. But it's not just crypto. Trump traded way more stocks than we previously thought, and the trades he made didn't just look like insider trading, they were insider trading. For example, Trump

• 40:21Ed Elson?

  bought a large position in Intel on August 18th. That was less than a week before he announced that the government would purchase a 10% stake in the company. So the level of corruption here is unlike anything we've ever seen, and it's happening in broad daylight. Why isn't anything being done about it? Well, I'll end this episode with a stat that I believe explains most of it. This is from a report from the House Judiciary Committee. Nearly half of Trump voters say Trump hasn't profited from the presidency at all. So if you're ever wondering why people don't seem to care about this stuff, or why it doesn't seem to bother certain people, just remember that many of them live in a completely different

• 41:05Ed Elson?

  universe from you. You might think we're all looking at the same data and the same evidence and the same stories, but we're not. Despite living in the same country, we are quite literally worlds apart. So the corruption train chugs along, and now with even more power to influence the SEC and the CFTC and the FTC and all the agencies whose job is to prevent things like this, courtesy of the Supreme Court, one thing is very clear, this train isn't stopping.

• 41:38Ed Elson?

  Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Shalan, Isabella Kinsel, Kristin O'Donoghue, and Mia Silverio. And our social producer is Jake MacPherson. Thank you for listening to Prof G Markets from Prof G Media. If you liked what you heard, give us a follow. I'm Ed Elson. Tune in tomorrow for our conversation with Tom Lee.

• 42:06Speaker 06

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• 42:44Speaker 02

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