E123: Trump indictment, de-dollarization, should VCs back Chinese AI? RIP Bob Lee

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

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

• 0:00Jason Calacanis?

  I can't see what's on your hat. What does it say? Supergut?

• 0:02David Friedberg?

  One of my most exciting companies called Ohalo.

• 0:05Jason Calacanis?

  Oh, Mahalo. I still have mahalo.com.

• 0:07David Friedberg?

  No, not Mahalo. Unrelated, completely unrelated, nothing whatsoever to do with Mahalo. I remember Mahalo. Great product. Sorry it didn't become like-

• 0:16Jason Calacanis?

  Going up against, you know, we were making $10 million in revenue at the peak.

• 0:21David Friedberg?

  Yeah.

• 0:21Jason Calacanis?

  Had 100 people writing like human curated search result pages.

• 0:25David Friedberg?

  I remember that. Look at ChatGPT. You're a great guy to reference the ChatGPT thing coming out of that.

• 0:32Jason Calacanis?

  Well, then what happened was they did the panda update and we went from 10 million down to 500,000 in revenue overnight.

• 0:39David Friedberg?

  What was the panda update?

• 0:40Jason Calacanis?

  They looked at who the top sites were. EHow, Mahalo, et cetera. And they just said, nobody can get any more than this amount of traffic. And they literally throttled the number of unique users they would send to you. And that was it. Game over. And then everybody I knew at Google wouldn't return my emails. And they were like, we don't have partnerships with anybody. That's what Matt Cutts told me.

• 1:04Chamath Palihapitiya?

  Are you saying that Mahalo's lack of success had nothing to do with the poor product and execution? It was Google's malfeasance?

• 1:12Jason Calacanis?

  It got really rave reviews. It was backed by Sequoia.

• 1:14Chamath Palihapitiya?

  So did the movie, but it sucked.

• 1:16Jason Calacanis?

  You know, when you build a company that gets to 10 million in revenue in 18 months, you can talk to Chamath. But basically, looking at your resume here, I see that you've created nothing in your entire career.

• 1:27Jason Calacanis?

  When you get in the arena, the arena, and you actually build a product, then you can talk to me. I had the number one blog in the world, one of the top five tech magazines in the world, and this is the number one tech and business podcast in the world.

• 1:39Chamath Palihapitiya?

  I touched a soft spot. I got to the warm underbelly there.

• 1:42David Friedberg?

  Jake Howl so rarely goes after Chamath. When he does, it's just gold. It's like-

• 1:47Chamath Palihapitiya?

  It's incredible.

• 1:48Jason Calacanis?

  You're talking to three founders here, Chamath. You're the odd person out. So when you want to talk about product, then make one. Okay?

• 1:55Chamath Palihapitiya?

  So gross. And yet I'm the richest. It's so tilting. It must tilt you.

• 1:59Jason Calacanis?

  Totally fine. So's Kim Jong-un, so's Putin. Okay? There's a lot of rich people in the world. But these are three products. Okay, dictator? There's your cold open. Let's go.

• 2:26Jason Calacanis?

  All right, let's get started, everybody. It's been a big week. There's a lot to talk about. It might be a little bit of a controversial spicy agenda today here on the All In Podcast. With me again, the Sultan of Science, who is tearing up the YouTube comments. Everybody asking the Sultan of Silence to contribute more and to speak more. But when he does speak, my lord, he drops those knowledge bombs. How you doing, Sultan of Science? I'm hanging in there. You're hanging in there. Okay, wow. I'm hanging in there. Man, a few words, I guess. Hanging in there. Okay, great. With us again, of course, another android, David Sacks. Sacks, how are you doing?

• 3:02David Sacks?

  I am doing fine. How are you? Wait, let me ask GPT. What's the question?

• 3:08Jason Calacanis?

  How are you doing?

• 3:09David Sacks?

  Let me ask it. Hold on, let me see what it says.

• 3:11Jason Calacanis?

  I mean, basically, ChatGPT 4 is the ultimate Asperger's equalizer. You guys are going to benefit most from this.

• 3:18David Sacks?

  I asked it, how are you? It says, as an AI language model, I don't have feelings or consciousness, so I don't experience emotions or states of being like a human does. However, I'm here and ready to help you with any questions or topics you'd like to discuss. How can I assist you today?

• 3:32Jason Calacanis?

  That's pretty similar to how you feel, except you don't offer to help anybody. Okay, also with us is the dictator himself.

• 3:39David Sacks?

  I'm here to talk about topics.

• 3:40Jason Calacanis?

  Looking forward to today's episode. And with us, the dictator with a shockingly, shockingly low cut.

• 3:48Chamath Palihapitiya?

  There's only one button on the shirt.

• 3:49Jason Calacanis?

  Only one button. Okay, made from a tiny albino baby.

• 3:53Chamath Palihapitiya?

  Like, right here, they were like, should we put buttons? And they're like, no.

• 3:57Jason Calacanis?

  Why put buttons?

• 3:58David Sacks?

  Why put buttons? It's a button conservation movement.

• 4:01Chamath Palihapitiya?

  Exactly.

• 4:02Jason Calacanis?

  No, no, no, no. The one button is what counts. That is a baby albino rhinoceros that was killed, fed to Chamath on his vacation, and then attached to his linen shirt. I guess let's just get this out of the way. Trump was arraigned, I guess is the term. He was charged in New York. With 34 felony counts of falsifying business records, Alvin Bragg alleged Trump orchestrated a catch and kill scheme as well to suppress damaging information before the 2016 election. Of course, Trump pleaded not guilty and did a feisty press conference or speech rally at Mar-a-Lago after that. Prosecutors say the scheme involved falsifying business records to conceal payments to Stormy Daniels. We know all that. Same thing Michael Cohen went

• 4:45Jason Calacanis?

  to jail for. The indictment wasn't a speaking indictment where it explained all the details. So Alvin Bragg hasn't tipped his cards by explaining in detail what the legal theories are and which information he has. And he was pretty clear about that, that he was not going to tip his cards, which makes this even more hard to understand what's going on and creates even more divisiveness. Predictably, the right is framing this as a witch hunt. But surprisingly, many on the left, including former SDNY head Preet Bharara of the amazing podcast Stay Tuned with Preet, which I love, he felt this was the weakest of the four major investigations that Trump is under. And he expressed some concerns on his podcast that it was light and not detailed. And he might have not actually

• 5:29Jason Calacanis?

  pursued this unless he had a 99% or something like that chance because it is the president's sacks, I guess. Everybody's expecting us to fight over this. But to just be a little preemptive here, as much as I think Trump is like the most unethical person to ever hold the office, this does seem a little light. And I'm hoping Bragg has the goods on him because why bring a misdemeanor case? You know, and these are all, I guess, misdemeanors that are being elevated to felonies because of tax evasion, possibly, or election interference. So what are you, steel man or just generally speak about the case here? Because I know that you're a man of law and order.

• 6:10David Sacks?

  Well, many people on the left are criticizing this case. Jonathan Chait, who's a liberal writer for the New York Magazine, wrote a good column about it. And look, here are the reasons why. Number one, the underlying behavior here is that Trump engaged in a private settlement with Stormy Daniels. That's not illegal, even if it is, you know, so-called hush money. That is legal. You're allowed to do that. Number two is that he used personal funds to do it. He did not use campaign funds. And this is why Alvin Bragg has had to make this kind of distorted, ridiculous claim that he should have used campaign funds to do it. But does anyone believe that if Trump had used campaign funds, that wouldn't be alleged

• 6:55David Sacks?

  as the crime? So he's kind of damned if he does, damned if he doesn't here. I think that, you know, what the law is trying to do with these rules around campaign funds is protect donors from candidates misappropriating them. And Trump had every right to use personal funds to engage in the settlement. It's a major distortion of campaign finance rules. Third, these campaign finance rules are federal laws. They're not state laws. So it's not up to Alvin Bragg to enforce them. And in fact, the feds looked at this and decided not to prosecute it because if they did, they'd have to enforce similar laws against Hillary Clinton. Recall that Hillary Clinton had a problem where she used campaign funds to fund the payment to Christopher Steele to write the Steele dossier.

• 7:40David Sacks?

  And that was a real problem and it was miscategorized as legal fees. And she had to pay a fine for that, but no one talked about locking her up over it. And no one was talking about, you know, indicting her and sending her to jail. And so part of the reason why I think the feds didn't want to look at this is because they'd have to look at similar cases that are even more egregious. And then finally, the last thing is that we're well past the statute of limitations on this whole matter. So Alvin Bragg is really out here on a limb. He's past the statute of limitations. He's enforcing laws that are not his business to enforce. They're distorted interpretations of those laws and the underlying conduct here is fully legal. So I think everybody is kind of like wondering why he's doing this. And I think there's two theories. Either Alvin Bragg is incredibly stupid. Which he's not. Or he's incredibly smart. Yeah.

• 8:25David Sacks?

  And the, the sort of three dimensional chess explanation that Ann Coulter has is that this is all a giant honeypot for Republicans because they're all rallying around Trump here because they perceive, I think correctly, that he's being railroaded and he's being, he is the victim of a political prosecution. But in rallying around him to defend him. You see that Trump's poll ratings among Republicans in the primary are going through the roof, dissances are going down. And so what Ann Coulter fears is that this is all an elaborate ruse to make Trump the nominee because Biden would much rather face a reelection against Trump than against a young youthful vigorous governor like a DeSantis.

• 9:04Jason Calacanis?

  Do you think Bragg has a bunch of more information and maybe that tax evasion is the issue he'll go after because that seems to be the other theory here is he's not going to do the federal, you know, election stuff. He's going to go after the tax evasion, which is what they already got the Trump Organization on when Wiseau, I guess the CFO is going to jail for six months.

• 9:23Chamath Palihapitiya?

  It's going to be hard to connect the dots on these things.

• 9:25Jason Calacanis?

  And they did 1.6 million fine for that company. Good job, Matt.

• 9:27Chamath Palihapitiya?

  These are misdemeanor crimes and to convert them to a felony, the crime needs to have been done in the process of aiding and abetting another crime. And

• 9:37Jason Calacanis?

  Right. Tax evasion is the concept here, Tom.

• 9:40Chamath Palihapitiya?

  When he listed the bullet point list of all of the reasons that or all of his evidence, it seemed to point to what David said, which was just these campaign finance violations.

• 9:50Jason Calacanis?

  Yeah.

• 9:51Chamath Palihapitiya?

  This whole thing just seems like such an enormous waste of time. Just think about the amount of money that will have to be spent on just securing New York City every time he shows up. The five car motorcades, the Secret Service, the police, the this, the that, the disruption to people for what really ultimately I think is right is kind of like, you know, it's a bit of like, man, this case should have been brought years ago or not at all.

• 10:22Jason Calacanis?

  Well, in relation to that, they were told to stand down from doing that because of the you can't indict a sitting president and that's paused. So that's another legal theory that's going to have to be tested.

• 10:32David Sacks?

  Jason, the feds looked at this years ago and they decided not to press charges.

• 10:35Jason Calacanis?

  They were told to not do it because he was a sitting president. No, they were.

• 10:39David Sacks?

  No, he's been out of office now for a couple of years. Why didn't they move forward?

• 10:42Jason Calacanis?

  They were. That was the process they were doing. So that that's been established. The previous DA said he was told to stand down because the person was in office.

• 10:53David Sacks?

  Cyrus Vance decided not to prosecute on the same underlying offenses. That was his decision. He decided not to. Who who told him to stand down? No one could tell him to stand down.

• 11:01Jason Calacanis?

  Yeah, the Office of.

• 11:03David Sacks?

  Cyrus Vance decided not to move forward with this very same case when the statute of limitations had not expired. Now it has, and Alvin Bragg's moved forward. I mean, you really have to stretch here to come up with any kind of plausibility to this to this case. And I mean, you have to wonder why he's doing it. Is it just naked partisanship? Or are they trying to make Trump the Republican nominee?

• 11:26Jason Calacanis?

  Well, here's what Vance said on Meet the Press this weekend. I was asked by the US Attorney's Office in the Southern District to stand down on the investigation. And they were asked to stand down as well because of the you can't indict a sitting president. So anyway, all this stuff's going to get done in the wash. I don't think we have to spend too much time on it because we'll find out, I think, in the coming weeks.

• 11:46Chamath Palihapitiya?

  Do the Democrats actually want him to get convicted? Then what? He's going to be under house arrest in Mar-a-Lago because he's not going to be sent to jail. And then what? Then DeSantis actually will win the nomination. So what exactly is the perfect outcome? Which is to create this theater, waste taxpayer resources, only to have Trump acquitted just so that he can win the nomination and then he can go against Biden and lose? This seems so far-fetched and idiotic. Move on. Close this chapter and move on.

• 12:15David Sacks?

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

• 12:56Jason Calacanis?

  That was Preet's position. I think it's a logical one. I don't disagree. What do you think of the other three cases? January 6, the interference in Georgia, where they recorded him on tape, and then the stolen documents in the. Obstruction of justice. Or do you think all four cases are politically motivated and none of them have any validity to them, Sacks?

• 13:13David Sacks?

  I mean, look, the question you have to ask is if Donald Trump was a private citizen who never ran for president, would he be the target of any of these prosecutions? I mean, he was, you know, a high-profile business figure for decades, and he wasn't prosecuted like this. And so that's really the question you have to ask.

• 13:28Jason Calacanis?

  Well, in this case, you actually had Cohen go to jail. Cohen did go to jail for the same crime, so the answer is yes.

• 13:34David Sacks?

  What? Michael Cohen wasn't prosecuted till after Trump was president.

• 13:37Jason Calacanis?

  No, what I'm saying is, you asked if, if he was not president, if he would... Let me finish. You, you asked if, if Trump was not a president, if he would have been prosecuted for this crime. In fact, another person, Michael Cohen, was prosecuted for this crime and did serve jail time. So the answer is yes, he would have been. And they, and they brought these cases, this spanking kind of cases, and they brought the other one for the 1.6 million fine, and weasel were going to jail. So I think they would, actually. But, anyway.

• 14:02David Sacks?

  I don't think so.

• 14:03Jason Calacanis?

  My question to you was, of the other three, are any... Do you think all four are politically motivated is my question to you? Or you think any of them have validity?

• 14:10David Sacks?

  Look, I can't, I don't want to comment on the other cases until I see what cases actually made and what the merits of them are. However, I don't believe that all these prosecutors all over the country would be looking at Donald Trump this way if he was just a private citizen who never ran for office. And I think we have a big problem in our political system when political disagreements are criminalized. And this has been a nasty trend that's been going on for many years. It was usually, I guess, practice against staffers, you know, here or there, you'd have some, you'd have some executive branch staffer would, you know, find themselves on the wrong end of a prosecution, and they'd end up going to jail. Maybe they get pardoned or not. But now it's reached all the way to the, the top, and you have presidential candidates basically being prosecuted. And I do not

• 14:53David Sacks?

  believe they'd be prosecuted if they were not major political figures. And it looks really bad for the political figure who is leading it right now in the Republican Party to be Joe Biden's opponent in the next election, to be prosecuted by one of Joe Biden's political allies. I mean, if this were happening in some other country, the United States would be criticizing it as some sort of, you know, banana republic-type move. So this is not the direction we want our politics to go. And, and look, I don't, I, I, I don't want Trump to be the nominee. I support a different candidate. But I think that to be... Interfering in our elections for Alvin Brackby interfering in the political process

• 15:34David Sacks?

  this way is a reach and it's setting a horrible precedent for the future. I mean, we're talking about major presidential candidates being prosecuted by local DAs. I mean, why would we want this?

• 15:47Jason Calacanis?

  So let me ask a follow up question then. Do you, the DOJ is currently investigating Hunter Biden and then obviously that goes up to the big guy with the 10%. Do you think the DOJ should be investigating Hunter Biden or do you think we should be giving a pass to presidential, of presidents and their families?

• 16:03David Sacks?

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

• 16:34Jason Calacanis?

  For sure.

• 16:34David Sacks?

  And you know, the, and influence peddling should be looked at.

• 16:36Jason Calacanis?

  Hunter Biden and Trump and his family are both shady, is my feeling on it. We gotta get better candidates in here. Nikki Haley, your candidate, Chamath, raised $11 million last week. She's on fire. Friedberg, you want to jump into this and, and touch the third rail? You want us to move on?

• 16:51David Friedberg?

  Uh, let's move on.

• 16:52Jason Calacanis?

  All right. So there's been a lot of Twitter back and forth about the de-dollarization. And if it's real, if it's happening, if it's not, last week China and Brazil struck a deal to trade in their own currencies. Uh, the Brazilian government announced the two countries will no longer use the US dollar as an intermediary. I don't know if that's for everything they trade or for certain things they're trading. It'll be a straight yuan for reais. Trade. China is the top US rival, obviously, and Brazil is one of the largest economies in Latin America. What are your thoughts, generally speaking, Friedberg? I know that you have some exposure here, you know, with your company that I think you spacked recently and you have some knowledge of the space, right?

• 17:36David Friedberg?

  Well, I mean, China and Brazil are pretty sizable trade partners. I think it's around $150 billion a year of bilateral trade. So China historically has made a lot of investments through their companies in.

• 17:51David Friedberg?

  Railways, infrastructure, waterways, ports, and infrastructure to support the agriculture, manufacturing economies in Brazil. And it's a very deep tie. Obviously, the closeness of that relationship. China became a bigger trading partner for Brazil in 2009, surpassing the US. By the way, China has had similar trading strategies in Africa, in Australia. They've bought several companies in Australia. They've made massive infrastructure investments. The currency of trade is one element of a broader intertwining that China has kind of enabled by using its resources to invest in infrastructure development

• 18:35David Friedberg?

  and then participating in the economic value and gain that arises from that. It still also supports the local country, the local population, the local economies in a meaningful way. I think it's worth noting that the anti-globalization moment that we're having in the US, and it may be a longer-term trend, doesn't mean that globalization and global trade is going to slow down between China and other really important well-resourced nations around the world. So the Brazil-China summit that happened a week ago, where a lot of Brazilian executives went to China and had a very deep set of dialogues, but they also signed a ton of agreements on trade. And also, in some of those cases, the trade being done

• 19:20David Friedberg?

  in non-US-dollar-denominated currency. It's worth noting as being that if the US does continue to push for de-globalization, we can only leverage our side of those relationships. China will continue to make investments, continue to develop trade, and continue to develop really deep tie-ins with countries around the world. From a resource perspective, from an economic perspective, and ultimately, the leverage will sit with them on what currency folks are going to trade in. So, you know, what we're seeing with the China Saudi discussion around the Petro Yuan, which doesn't seem to be really a standard thing yet. But we're starting to see inklings of some deals happening in Yuan, but it's more related

• 20:01David Friedberg?

  to the depth of the Chinese trade relationship with all these nations around the world. So, the more we kind of, as the US, think we want to deglobalize and reduce our trade relationships with other nations, the more, you know, we're out of the way in allowing China to do that. I think it's worth observing that the Chinese economy will grow, the depth of their relationships will grow, potentially, the strength and importance of their currency will continue to mount as they build these really deep infrastructure and investment tie-ins around the world.

• 20:30Jason Calacanis?

  Chamath, what does a party trading in Yuan do with the Yuan? Do they buy a bunch of stuff from China? What happens to the Yuan?

• 20:38Chamath Palihapitiya?

  This whole thing is a huge nothing burger. This is the third deal that China has done. The other two countries are Pakistan and Brazil. And the reason why is I see like people on Twitter now breathlessly rambling on about de-dollarization and all of this stuff. And I think if any of these people would think from first principles, the first thing that you would know is that the Yuan is pegged to the US dollar. And so as long as it's pegged, whether you trade through the US dollar or you don't and you directly go to Yuan, you're indexed to the US dollar. And then you use a dollar swap to convert it into the currency you need. So, I don't know, I think this is kind of like a lot of folks who don't really know what's going on.

• 21:23David Friedberg?

  What do you think about the depth of China's trade relationship? So, forget about the denomination of the currency, but the fact that the statistic now is that China is the top trading partner with 120 countries. You know, they surpassed the US with many of these countries over the last, you know, decade or two in particular, and continue to increase the scale relative to the US, where we're kind of decreasing our dependence on. On nations and reducing our trading.

• 21:50Chamath Palihapitiya?

  The reason why China has had so much dominance as a trading partner, and the reason why China's central bank has the largest amount of foreign US dollar reserves, about three and a half trillion dollars, is exactly because of the thing that you want to ignore in order to have this high-faluting intellectual conversation. It is pegged to the US dollar. And until it is unpegged in a free-floating currency, we will never know what the real market clearing price is. And just to be clear- And so China has been able to, hold on, China has been very effectively able to manipulate this currency since they were brought into the WTO in order to engender that trading partner status.

• 22:32Chamath Palihapitiya?

  They were able to artificially suppress the value of their currency so that exports from China could gain traction in countries all around the world. You have to take into account this currency peg, and you have to ask the question, where would the currency be if it wasn't free-floating? And then, what would the incentives be for folks to replace the dollar? And I think that there's a lot of interesting questions there that are worth asking, but I think you have to be a little bit more intellectually honest to have the discussion.

• 23:03Jason Calacanis?

  And just for clarity, Chamath, you said they already have these deals with Pakistan and Brazil?

• 23:09Chamath Palihapitiya?

  Pakistan and Russia.

• 23:10Jason Calacanis?

  You meant Pakistan and Russia, I think. They already have those deals with those two.

• 23:13Chamath Palihapitiya?

  Pakistan and Russia.

• 23:15Jason Calacanis?

  Right, okay, good. I just want to make sure it's clear there. Sax, do you have any thoughts on this? Is this an example of people just maybe taking the Ray Dalio book and it fits a certain narrative and overhyping it? Or do you think this is an actual, real trend in the world to be concerned about?

• 23:31David Sacks?

  I think de-dollarization hasn't happened yet, but I think it's a risk. And I think there's a bunch of reasons why the risk is growing. So first of all, we have thirty-two trillion dollars in debt. Someone has to finance that debt. And the bigger that number gets, the more unattractive our debt is because they have to be concerned that we're eventually going to monetize the debt, pay it back by printing a bunch of new dollars. So that's point number one, is we have these massive deficits and debts. Number two is that we have, I think, in the last couple of years, really weaponized the dollar. So if you look at like what we've done with Ukraine and Russia, we basically seized hundreds

• 24:15David Sacks?

  of billions of dollars of Russian reserves that were held in dollars. We've excluded them from the SWIFT banking system. We've imposed massive sanctions on them. And in fact, we now have sanctions on a huge number of countries all over the world. So we're very sanction happy. All of which makes these countries view the dollar as an unreliable store of value. Why would you store your money in something that can be taken away by the US and specifically by the State Department? So I think this is a major change in the way that we view the dollar the last couple of years is we're going to use it as a weapon. That, again, that makes it view-

• 24:56Jason Calacanis?

  Well, that's not the first time we've ever done that, right? We've done sanctions against many different dictatorships.

• 25:00David Sacks?

  We've done sanctions, but as far as I know, we've never seized foreign currency reserves and excluded a country from SWIFT, which is the banking system. So as an instrument of US foreign policy. So, I mean, I could be wrong about that, but this was a major event when it happened. Remember, we also did stuff like seize the yachts and the foreign holdings of Russian oligarchs. Remember their ill-gotten gains? We suddenly decided they were ill-gotten. Let me tell you, we didn't think they were ill-gotten when those Russian billionaires were buying those yachts or buying New York real estate or London real estate-

• 25:32Jason Calacanis?

  Or investing in Facebook.

• 25:33David Sacks?

  Or investing in companies here or buying sports teams or what have you. So we didn't think they were ill-gotten-

• 25:41Jason Calacanis?

  The New Jersey Nets.

• 25:42David Sacks?

  Hold on, we didn't think they were ill-gotten at the time that they were actually made and spent, but we decided subsequently, we're just going to seize those things. Well, again, if you are a foreign country or a wealthy person in a foreign country or just trying to decide where you're going to keep your money, you may not want it to be liable to the vagaries of US foreign policy. So I think all these things do matter. And when you're running the kind of debt and deficits we have, and you're making the US dollar less attractive, you are running a risk.

• 26:13Jason Calacanis?

  So we should be keeping people we have disagreements with on the dollar standard because that's good in terms of power for us, which I think opens us up to a broader discussion.

• 26:22Chamath Palihapitiya?

  Hold on, just to clarify this. It's not even the dollar standard, right? Like what this deal was is to use this thing called CIPS. And CIPS is the non-dollar competitor to SWIFT. And so you settle, right? Across, let's just say you have two trading partners in two completely different countries that use a bank in each of their local areas. They typically swap to dollars and then they transfer, right, using this backbone of the financial infrastructure called SWIFT. China has built a competitor to it called CIPS, C-I-P-S. And China's been going around and signing folks up. Makes a ton of sense, right? Hey, listen, if we're trading between each other, let's just use that.

• 27:05Chamath Palihapitiya?

  So I think it's important to not paint this with more of a brush than it should be. I'm not saying that de-dollarization couldn't happen. I just think that everybody tries to take one random data point and conflate it altogether to reinforce a redalio point from a book three years ago.

• 27:19Jason Calacanis?

  I do think there's a group of catastrophists who maybe are maybe hoping this happens or it's a great Twitter fodder.

• 27:26David Sacks?

  I think we are headed for some sort of government debt crisis. I said that there's going to be three prongs to this financial crisis. One was these long-dated bonds having unrealized losses, which is causing problems in regional and community banks. The second piece of it's the commercial real estate crisis, which I think is metastasizing right now, which is also going to be a banking crisis once all those unrealized losses come due. And the third piece of it is government debt crisis. We have this $32 trillion debt that we're now having to refinance at much higher interest rates. I've read somewhere that half our government debt, so 16 billion, is going to come due, 16, sorry, trillion, yeah. And it's going to have to be refinanced in the next three years.

• 28:08David Sacks?

  The average rate on that debt is 1.7%. Well, if you want to refinance it at 10-year rates, you're going to be looking at somewhere between 3.5% and 4%, maybe more. So you're looking at a doubling of the interest costs. And I also read that by 2030, we're going to have over a trillion dollars of interest expense. owed by the US government every year. That is money that's not funding anyone's social security. It's not funding anyone's healthcare. It's not funding one weapons program. It's not funding anything we want. It's just the vig. It's gonna be more than a quarter of our total federal budget.

• 28:42Jason Calacanis?

  Yeah, and this is where you start gambling. When you're chasing that vig payment, you start taking risks.

• 28:46Chamath Palihapitiya?

  This is also where you have to expect the Fed will really want inflation to stay high. That's sort of what we've said before. The only way out of this mathematically is to keep rates high. But the other thing, David, that you, when you mention all of this is, what about every other country? If you think that's happening in the United States, I think it's important to make sure we at least consider every other major economy, because it's not as if they're pristinely sitting on the sidelines while this happens to the US. This is my whole argument the whole time, which is if you're gonna have this argument, you need to do it thoughtfully and relatively, right? Because the euro is in the same amount of trouble. If you look across, it's not as if China is actually sitting pretty and smelling like roses either.

• 29:28Chamath Palihapitiya?

  Every major economy or trading block in the world is gonna go through this at the same time. So it becomes a relative trade argument. And there, I just don't know enough to know whether the US is poorly positioned versus Europe or China. But it just seems like you get back to a place where it's like, okay, we need to find the flight to safety. What is the canonical flight to safety? If it's not a commodity like gold, it's probably the dollar until it's not.

• 29:52Jason Calacanis?

  Yeah, okay, Friedberg, obviously, other countries have even more acute problems, higher debt to GDP, which means higher debt payments. Just rounding third here on this issue. Any final thoughts on de-dollarization and servicing our debt?

• 30:08David Friedberg?

  Look, it's, we're in trouble. And it's, uh, it's unclear the timing and the path, but the arithmetic is pretty simple. In addition to the point Sachs made, you guys saw the news. The city of Chicago has a $44 billion pension hole. That's just the tip of the iceberg on unfunded pension liabilities from both state government, city government.

• 30:34David Friedberg?

  Even private institutions, this is, again, hundreds of millions of people worldwide that are expecting money coming to them from institutions that ultimately the federal government of the US is likely going to have to backstop to some degree. So that's another huge check that's going to need to be written that the federal government is inevitably going to have to write because we're not going to just let all these people have no money and become starving. And social security right now is projected to go bankrupt sometime between 2030 and 2035. So we're going to have to write a check to cover the hole there. Plus the interest payment checks.

• 31:10Jason Calacanis?

  What about Schumacher's point, Friedberg, of like relative to other?

• 31:14David Friedberg?

  Let me just say two things.

• 31:16Jason Calacanis?

  Let Friedberg finish. Relative to other societies, other countries.

• 31:19David Friedberg?

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

• 31:56David Friedberg?

  If the US defaults on obligations it has on treasuries, there will be a real shift away from using those assets as the baseline of the risk-free rate worldwide. What the net, what the other thing will be, I don't know. I'll speak about the challenges I see with Bitcoin, you know, if we want to at some point.

• 32:18Jason Calacanis?

  Oh, did it hit a million yet? House apologies back.

• 32:21David Friedberg?

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

• 32:56David Friedberg?

  Lost in the washout.

• 32:58Jason Calacanis?

  Sacks, you want dead?

• 33:00David Sacks?

  Well, I just want to add a couple of details there because Fribourg went pretty quickly over a couple of those examples. So just to take that that Chicago case, the numbers I saw in an article this week, I think it was in the Wall Street Journal, was that 80% of the property taxes in Chicago are now going just to pay for pensions. So 80% are going to pay former workers, not current city workers. And moreover, those pensions are only 25% funded. So they've already overpromised by 75% benefits that they can't afford. How is this going to work? And you saw that we just had an election there. And rather than fix the problem, they voted for a candidate, Brandon Johnson, who is even softer on crime than Lori Lightfoot.

• 33:45David Sacks?

  And the reason for that is because the the government workers unions basically all supported him. So you have a situation in these blue cities and states where there's a massive civil service. They are the strongest special interest in local and state politics. They have already taken huge appropriations out of the state budget in the form of these pensions, which aren't even adequately funded. We can barely afford them as they are.

• 34:12Jason Calacanis?

  Should we have pension sacks? What do you think? Should we just have people doing 401ks?

• 34:16David Sacks?

  Sure. So what what happened in the 1980s, when there was a lot of pension reform in the private sector is you move from defined benefit to defined contribution. So you start having more defined contribution like 401k. The way that these public pensions work is defined benefit. So you know, what they'll do is they'll say that we're going to take your last year of employment with the city or state. And whatever your whatever the amount of money was you made that last year, you're going to get 80 or 90% of it for the rest of your not just your life, but your spouse's life, too. And moreover, any overtime you earned becomes part of that calculation. So everyone knows this game. And so what you see is in their final year, state or city employees will load up on the overtime.

• 35:02David Sacks?

  They'll earn twice as much and then they'll get 90% of that.

• 35:05Jason Calacanis?

  Yeah.

• 35:05David Sacks?

  They get 90% of that for the rest of them and their spouse's life. We just can't afford to have rules like that that don't make any sense. And so but the point is that The benefit that's been defined bears no relationship to the amount of money that's gone into these pensions, right?

• 35:22Chamath Palihapitiya?

  Yeah, there's a simple solution here.

• 35:24David Sacks?

  You have a huge unfunded liability.

• 35:25Chamath Palihapitiya?

  Yeah.

• 35:26David Sacks?

  But to Freiburg's point, every blue city and state in the country is going to have this problem, and who's going to pick up these expenses?

• 35:33Chamath Palihapitiya?

  You bring up great points, but you just mash them all together in this mashed potato of random things, like unfunded pension liabilities, yuan, renminbi, reais trading, and they're like the same thing. They're not the same thing. They're driven by totally different... No, we're talking about two different subjects here, but we're talking about the existential threat of all this debt. And you just kind of throw them in this amalgam soup, and outcomes like these prognostications. So I'm just saying, like, if you... These are important topics, but I'm just saying, I do think they're motivated by totally different things, and they're not related as much as we think they are related.

• 36:06David Sacks?

  I think they're related.

• 36:08David Friedberg?

  Let me walk you through how they're related.

• 36:09Chamath Palihapitiya?

  Okay, I want to hear how the reais yuan trade is connected to the Chicago pension system.

• 36:14David Friedberg?

  The holes need to be filled, so the money is not going to just not get paid to the pensioners. Social Security is not going to go away, just like we saw in France. If you start to do that, you have revolutions in the street. There's literally bonfires at intersections in France, in Paris today, because people don't want to wait another two years before they get their pension payments. So ultimately, that check has to be written. When you add up the column of how much money is not on the balance sheet today, how much liability is not on the balance sheet today, that is ultimately going to have to get paid out, and the US government is going to print money to pay it out. It indicates that there is a higher degree of uncertainty on whether or not I'm actually

• 36:55David Friedberg?

  going to get the value back for the bonds that I'm buying in US dollar-denominated form, or that the US dollar is actually going to be strong enough to cover the costs, or has enough kind of, you know, or has too much volatility because of this uncertainty. And I think that that's really where people start to say, well, maybe the US dollar isn't that risk-free rate where it's a strong economy with a great balance sheet, great economic growth. There's certainly extraordinary potential because of the freedoms that we have to operate in this country as individuals through the enterprise, through the... Through the entrepreneurship, through the attraction of talent from all over the world to come here. But at the end of the day, we do seem to have a very big set of checks that we're gonna have to write. And as those, you know, liabilities start to mount, there becomes a real question on, do I really want to hold dollars?

• 37:39David Friedberg?

  Maybe I want to hold something else, and maybe I diversify a little bit. And maybe instead of holding just dollars, I also hold other things. And as that starts to happen, you see a little bit of a shift. And it's not an overnight thing. It's all catastrophic, one or the other. But it starts to bring into question whether the US dollar is the standard de facto system that's used for trade around the world. That's the point.

• 37:58Jason Calacanis?

  And Sax, there is a solution to this. Superannuation is done in the UK and in Australia where you contribute, you're forced to contribute to your 401k essentially, but you get to learn how to put money away and you become a little more

• 38:15Jason Calacanis?

  you have a little more authority over your future with these pensions where you're responsible for saving and you're kind of forced to save. And it seems to have worked really well in Australia and other places where people have great savings. And you don't have this major debt load by the government doing it. So it's something for people to look into. Sax, did you want to add anything to this?

• 38:34David Sacks?

  Yeah.

• 38:34Jason Calacanis?

  Because I think we've beaten this one to death. Just make it quick. Yeah.

• 38:37David Sacks?

  Well, I don't think we've necessarily beaten it to death because I think it is a huge issue. I mean, look, the part of Chamath' argument that I agree with is that you do have to evaluate the dollar on relative terms. And, you know, you can argue that the US and the dollar, it's it's still the, you know, let's call it the most eligible bachelor in the leper colony. Um, you know, nothing's started falling off on the man yet, but um, but that doesn't mean that it won't.

• 39:04Chamath Palihapitiya?

  That's really good. That's really good.

• 39:06David Friedberg?

  By the way, the first default might be the nose is falling off, you know?

• 39:10David Sacks?

  The economist Herb Stein once said that if something cannot go on forever, it won't. What we're doing right now cannot go on forever. We are running deficits and debts and unfunded liabilities that we cannot afford. And so it will stop. And the only question is how it stops.

• 39:25Jason Calacanis?

  Well, I think there's, yeah.

• 39:27David Sacks?

  And it may stop in a way that is not, it's not a voluntary choice by us.

• 39:33Jason Calacanis?

  We crash the car, basically.

• 39:35Chamath Palihapitiya?

  You guys want to make a bet, a friendly wager for charity?

• 39:38Jason Calacanis?

  Oh.

• 39:38Chamath Palihapitiya?

  About what happens in June? I'll make a bet with you guys.

• 39:41Jason Calacanis?

  June, you mean the debt ceiling?

• 39:43Chamath Palihapitiya?

  Yeah. What do you guys think happens? You think this is going to be a fractious, chaotic thing where the markets get roiled?

• 39:49David Friedberg?

  No, I think it's going to be a pretty

• 39:51Jason Calacanis?

  Rubber stick.

• 39:51David Friedberg?

  Straightforward deal where they're gonna, it's gonna come down to the wire. But my guess is no one's going to want to default on the debt.

• 39:57Chamath Palihapitiya?

  Yep.

• 39:58David Friedberg?

  And there's going to be some concessions on spending. And ultimately,

• 40:04David Friedberg?

  the debt ceiling will get extended and that those concessions on spending will allow the Republican Party to save face with their voters and say, look, we, we got some concessions here. I'm not sure they're going to be enough to really address any of the major problems that the US is facing over the longer term. But, you know, certainly letting the debt ceiling hit and defaulting is catastrophic. Everyone knows that.

• 40:28Jason Calacanis?

  I'm with Friedberg. I think the majority case is a bunch of hand wringing and then they make a concession.

• 40:33Chamath Palihapitiya?

  All the people that are interested in this topic, I would go use the Wayback Machine and go and read all of the articles in the eighties where you could replace China with Japan. And what happened with Japan is that Japan just hit a demographic wall, not dissimilar to what China is about to hit in the next 15 or 20 years.

• 40:51David Friedberg?

  Right. It's a good counterargument. Yeah, that's a really good point. And I think that there is this element of, you know, China as the primary threat. But I think the bigger problem, Chamath, is that we have voted ourselves into a stupor. We have allowed ourselves to accrue these liabilities that are, in many cases, not on the balance sheet, that we simply cannot afford to pay. And the social unrest that will arise if and when we don't pay them, or the economic cost of us actually paying them, either of those are going to be pretty significant. But that's water under the bridge and it has nothing to do with China. It has just everything to do with how the US is spending.

• 41:27Chamath Palihapitiya?

  Thank you for being intellectually honest. This is my point. I agree with you about the importance of these unfunded liabilities. I just completely disagree with you that this argument about these things being so hyperconnected, or that all of a sudden we're at the cliff of de-dollarization. I don't think it's rooted in facts. And I think, again, it ignores this unbelievably important piece of logic that all of you guys that say this tend to ignore. And it's still, and it's not even well addressed in Dalio's book, which is, it is a pegged currency.

• 42:01Chamath Palihapitiya?

  And the minute you unpack it, none of you know what happens to it, except that it probably isn't where it's trading today. And if you actually then have to factor in dollar reserves that everybody holds, that thing would skyrocket in value and it would crush the export value of the yuan, and it happens to all currencies. And this is this funny thing that has happened to the United States, which is that it ran forward and it transitioned its economy to a service-led economy faster than other countries and other economies and other currencies did. And nobody wants to just talk about that, except it's the facts, and that's what sort of drives us. Go ahead, Zach.

• 42:38David Sacks?

  I don't think the big risk is that all of a sudden the dollar gets replaced by the yuan as the world's reserve currency. I think Friedberg lays out a more intermediate path, which is people start to hedge their dollar exposure. And decisions that used to be automatic, like trading oil in dollars, you know, the so-called petrodollar, now it becomes a little bit, you know, more of a decision. So, you know, the Saudis-

• 43:01David Friedberg?

  And that's what happened with the pound sterling. It was a similar story. And it was not an overnight collapse. I mean, there were certainly these kind of punctuated moments where there were hits. But, you know, the history is that there was a slow devaluation over time and the, you know, as a result of, obviously, the economic pressure and the uncertainty.

• 43:17Chamath Palihapitiya?

  Actually, no. What happened to pound sterling was that it was pegged to the US dollar and then it became unpegged. So exactly what I'm talking about.

• 43:23David Friedberg?

  No, even post that, Chama.

• 43:24Chamath Palihapitiya?

  Even post that, if it's a free-floating currency, yeah, you're proving my-

• 43:28David Friedberg?

  Post Bretton Woods.

• 43:29Chamath Palihapitiya?

  No, dude, you're proving my point. When Soros broke the back of the US dollar, what he forced George Brown, or what he forced the Chancellor of the Exchequer to do was to basically de-peg the pound. And then, yes, you're right, it's been like this ever since.

• 43:42David Friedberg?

  Yeah.

• 43:43Chamath Palihapitiya?

  That proves what I'm saying. If you let it be free-floating, nobody wants to trade in that other currency. Everybody wants the dollar. As bad as the dollar is, David's right, it is the worst-affected leper in the leper colony. Yes.

• 43:56David Sacks?

  The has-beats left are still in the colony.

• 43:58Chamath Palihapitiya?

  This is why you have to have, if you're going to be intellectually honest, just have a relative conversation about all of the currencies and all the things that they're also going through, which are also not, not perfect.

• 44:07Jason Calacanis?

  The debt payments for the emerging and the frontier markets are extraordinary.

• 44:10Chamath Palihapitiya?

  Just realize that if you want to go and peg your economy to somebody else's back, they also come with their own trials and tribulations that you have to risk manage as well. And now you have to decide on balance, do you want to risk manage a centrally governed economy, right, from a central bureau or a freewheeling democratic, like these are all the discussions that people should need to have.

• 44:33Jason Calacanis?

  Yeah, there's a lot of choices there.

• 44:35David Sacks?

  Just back to the, the non currency part of this for a second, there are a lot of like connections between these things. I, I actually think there is a strong connection between what's happening, for example, in Chicago with the out of control civil service and the unfunded pensions all the way to the dollar status. But there's also a connection between commercial real estate and these pensions. So on a previous show, we talked about the commercial real estate looming crisis. And a lot of people thought that, you know, some of the comments where we're just talking our book, which is not true. I don't own, I don't have a dollar invested in any of these office towers. But you know who does? Pension funds.

• 45:15Chamath Palihapitiya?

  Yeah.

• 45:15David Sacks?

  That's who owns these office towers. So you're talking about pension funds that are three quarters unfunded and they may have a lot less funds than they even think they do because we're about to have a huge reckoning where all of a sudden these office towers that were supposed to be blue chip, that were supposed to have the best collateral there was in major American cities, now all of a sudden they may not be nearly as valuable as they thought they were.

• 45:40Chamath Palihapitiya?

  Yeah. And, and if they don't own the building, they definitely own the debt 100% for sure. In the fixed income portfolios of all these pension systems are the debt that was used to finance these buildings by the REITs and by, you know, the big real estate funds that put those things together. So you're absolutely right. They are 100% impacted by what's about to happen.

• 45:59David Friedberg?

  And again, we're not, we're not going to allow, given the civil unrest and social unrest risk and obviously as a democracy, we're not going to allow that all to go. To zero and we're not going to let pensioners not get paid. Ultimately, that's just a kiss of death. Maybe pension payments are reduced to some degree. But again, Paris is a really great example of as you start to try and shift the economic guarantees that have been made to pensioners even slightly.

• 46:24Jason Calacanis?

  Yeah, what was it, two years in retirement? Sixty two to sixty four?

• 46:27David Friedberg?

  Yeah, they tried to move retirement age by two years. Yeah, and it was certainly like, you know, you could sit here and argue what people for years, for their whole life, had this expectation set. We have all for our whole careers invested in the social security benefits that we're owed as retirees through every paycheck that we've received. And those social security payments may not end up coming back to us if social security is allowed to go bankrupt. So ultimately, the government has to step in and issue new dollars to make that up. Then the economic question is what happens to the value of the dollar? What happens to the value of the economy and so on as you issue trillions of dollars to fill these holes?

• 47:05Jason Calacanis?

  Let me ask a question that's a little more positive here perhaps, which is, is there a path out of this, you know, debt cycle we're in? And what are the top ways in which we're going to get ourselves out of this? I have three that come off the top of my head. Hold on, I have three off the top of my head. Number one is austerity measures. Number two is productivity through technology. And perhaps number three is maybe recruiting more entrepreneurs here to start more companies and, you know, fill some of these jobs. So intelligent immigration, which I'll call it.

• 47:42David Friedberg?

  Higher taxes. Yeah, number one is higher taxes in terms of what's likely to happen. Or reduce spending.

• 47:47Jason Calacanis?

  That would be a fourth one. That's austerity.

• 47:50David Friedberg?

  Yeah, so look, higher taxes because you can go after assets, you can go after wealth. So there will be higher taxes.

• 47:55Jason Calacanis?

  Okay.

• 47:56David Friedberg?

  Right, I still think, I still think we'll end up seeing 70% tax rates on the wealthiest people in this country.

• 48:01Jason Calacanis?

  Seventy percent?

• 48:03David Friedberg?

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

• 48:45Chamath Palihapitiya?

  You're saying get the public to-

• 48:48David Friedberg?

  To understand.

• 48:48Chamath Palihapitiya?

  To understand that we have to have austerity measures.

• 48:51David Friedberg?

  Yeah, and then number three, and basically people are going to have to make sacrifices. So the first sacrifice will be the wealthy. They're going to have to sacrifice through higher taxes. The second sacrifice will be everyone else by seeing reduced spending and reduced kind of-

• 49:04Chamath Palihapitiya?

  Services.

• 49:05David Friedberg?

  The services, et cetera. The third is the hopeful one, but we don't have a guarantee on this, which is, do we see economic growth through productivity gains? Can we create leverage with our resources and our people by using new technologies to get more with less? And, you know, anytime, yeah, like, again, I gave the example last time, but when a tractor was introduced in agriculture, all the people that were farming the ground didn't have a job anymore. But what happened is new jobs emerged in making tractors and servicing those tractors in, you know, gas pipelines to get gas to the tractors. All these economies emerged as a result of that economic technical innovation. So I think as we see AI and other innovations hit the market, you know, new economies and

• 49:46David Friedberg?

  new industries hopefully really blossom and we can benefit from that economic growth and also lower costs for people on purchasing goods and services.

• 49:55Chamath Palihapitiya?

  We've identified four things. When Reagan came in, wasn't the highest tax rate like 70%?

• 50:01David Sacks?

  Yes.

• 50:01David Friedberg?

  Yeah.

• 50:01David Sacks?

  That was the top marginal tax rate, 70%.

• 50:03David Friedberg?

  70% is not unheard of. It will happen again in the US.

• 50:06David Sacks?

  Well, and Reagan unleashed an economic boom by flattening the tax structure because marginal tax rates created disincentive for people to work and produce more. And so there is a big economic hit from this.

• 50:19Chamath Palihapitiya?

  Yeah.

• 50:20David Sacks?

  And remember what the 1970s were like? It was the malaise days of Jimmy Carter. We had a horrible economy with high inflation and everybody was paying high tax rates and the government wasn't making that much revenue because there wasn't as much economic activity going on. And during the 1980s, we had an economic boom and the government actually collected more revenue with lower tax rates because so much economic progress was unlocked.

• 50:44Jason Calacanis?

  Sacks, we identified four things.

• 50:46David Sacks?

  Just like we've learned nothing.

• 50:47Jason Calacanis?

  Which one is the most important here? Which ones are the most important? We talked about austerity, we talked about increasing taxes, we talked about innovation and efficiency, and then we talked about immigration, recruiting more highly talented people. When you look at those four, do you have any to add to that list to get out of this? And which ones do you think are the most important and why?

• 51:03David Sacks?

  When you look at federal tax revenue over a 50-year period, go look at the Fed charts, what you see is that quite independent of the top marginal tax rate, the amount of federal receipts that the government's able to collect is roughly around 19%, plus or minus 2%. And so you can only get so much blood from a stone. You can try to raise the top marginal rates, but then rich people have an incentive to basically find more tax-protected strategies. So the history of this thing going back 50 years is you can only extract so much from taxes.

• 51:43David Sacks?

  And what you're better off is a lower tax rate that is broader-based, and you go for economic growth that produces more activity. But, look, if you're spending too much, there's no way out of that.

• 51:55Jason Calacanis?

  So austerity critically important and entrepreneurship.

• 51:58David Sacks?

  I mean, when Bill Clinton left office, and I think Reagan through Clinton was the biggest 25-year period of economic boom we've ever had, federal spending as a percentage of GDP was 18.5%. He got it down from like 22%, and he did it through economic growth, and he bragged about it.

• 52:17Jason Calacanis?

  Yep.

• 52:17David Sacks?

  So, you know, look, where you want to be is, I think, federal spending should be in the low 20s. I think you want tax revenue to be in the high teens, 19%. You can have a small deficit. Those are the conditions for economic growth.

• 52:33Jason Calacanis?

  Chamath, any thoughts here on our way out?

• 52:36Chamath Palihapitiya?

  I'm going to take the complete opposite of all of this, which is the anti-chicken little version, which is, I think, not much at all changes. I think that jet debt to GDP...

• 52:49Chamath Palihapitiya?

  will continue to rise, not just for us, but for every other country in the world whose fate is worse than the United States. And I think that on a relative basis, the United States will continue to be exceptional. And that this will not really be an issue in our lifetimes.

• 53:09Jason Calacanis?

  Okay.

• 53:10Chamath Palihapitiya?

  And I'm not saying that's a good thing. And I'm not saying that's a just thing. And I'm not saying that's what I want to happen. But pragmatically, I think that that's what will happen. And I don't think that there is a magic number where all of a sudden things start to break, where there's some magic number for debt to GDP, where all of a sudden everybody finds religion. Instead, I think that it just creeps higher. And by the way, if you look at where debt to GDP was at the turn of the 19th century, and then what happened through the World War II, what we've really done is, you know, we've retraced a lot as well. So there have been moments where we've been out over our ski tips a lot. And so I think it's just important to keep in mind that sometimes what works just continues

• 53:55Chamath Palihapitiya?

  to work. And I keep asking myself the relative question, which is what country, what economy, what group of human capital is better positioned than the United States? And despite all of the things that are screwed up with this country, it's hard to find a better example.

• 54:13Jason Calacanis?

  Yeah, unless you happen to have the lucky mineral or oil club like Norway or Saudi Arabia, you're going to be hard pressed to find a better place to plant your money. And I think entrepreneurship and immigration are the two most important things we can do, as well as austerity. And I think Joe Manchin is like, or these moderate candidates in the middle who might actually be able to talk about cutting.

• 54:36Chamath Palihapitiya?

  But by the way, you said something, you said something really interesting, which is if you look at Norway, Saudi, Abu Dhabi, what are those countries effectively becoming by monetizing the oil? They invest in all of the economies that are working.

• 54:49Jason Calacanis?

  Perfect segue. Thank you.

• 54:51Chamath Palihapitiya?

  It's not as if the Saudis and Abu Dhabi and the Norwegians aren't trying to invest in America. They're trying to put as much money to work as possible. They're just trying to. Pace it out so that they have time diversity and asset diversity. So to your point, Jason, it's sort of a bit of a self fulfilling prophecy. I think that what has worked continues to work and then the burden for disruption gets higher and higher.

• 55:13Jason Calacanis?

  Yeah.

• 55:13Chamath Palihapitiya?

  That changes.

• 55:13Jason Calacanis?

  There's two things that work in the world. Having those natural resources or having entrepreneurship. Let's make a segue here.

• 55:20David Sacks?

  Wait, can I have a final point on that?

• 55:22Jason Calacanis?

  Oh God, we've been final pointing for 20 minutes here. Go ahead. Quick final point.

• 55:24David Sacks?

  This is an important discussion, I think.

• 55:26Jason Calacanis?

  Okay.

• 55:27David Sacks?

  So Adam, Adam Smith once said that there's a great deal of ruin in a nation, meaning it takes a lot of political bungling to screw up something as big as a nation, especially a nation. That's the number one superpower in the world that has the world's reserve currency. So we are in some ways a beneficiary and coasting on hundreds of years of excellence of economic performance and great political leadership in this country. And the question to ask is not whether we can still coast on that, but whether the political leadership we have today is living up to the standard we had in the past. And I think it's clearly not. And the only question is when it breaks. And it's hard to predict exactly when it's going to break, but what I do believe is

• 56:09David Sacks?

  that if we keep going the way we're going, it, it will have to stop.

• 56:13Jason Calacanis?

  Well said. We're definitely bending it right now. And when you bend it, sometimes it breaks.

• 56:17David Sacks?

  Right. And, and by the way, the, the reason why we are going to pursue AI at breakneck speed, even though it may lead to some sort of weird dystopian future is because we need that productivity boost. We have no choice now.

• 56:30Chamath Palihapitiya?

  Hundred percent. And frankly, better us than the next guy.

• 56:33Jason Calacanis?

  Absolutely. Whoever gets their first wins.

• 56:35David Sacks?

  And we don't have a choice.

• 56:36Jason Calacanis?

  Another perfect segue. Two major stories this week that we need to discuss. The first is Saudi Arabia's public investment VC arm took a very interesting PR step of listing their funds that they have backed, and it's a significant list. Everybody from Andreessen Horowitz to COTU, not surprising there. And Marc Andreessen and Ben Horowitz and Adam Newman had a major keynote at a Saudi startup conference. I was actually asked to keynote the next one in Riyadh, which I'm debating doing.

• 57:16Jason Calacanis?

  And then in sync with that happening, at the same time, there's been a debate of should LPs in America? Be backing firms like Sequoia China, Matrix China, et cetera, because those firms are now backing OpenAI competitors. And if we believe AI is the big race here, should we, as a country, we don't, we're not allowed to back military stuff, obviously, in these countries. But how do we, on this global chessboard, decide, should we be taking money from Saudi? Should we be investing money in AI startups in China? So I think, Chamath, you've got a big perspective here globally. Let's start with you.

• 58:01Jason Calacanis?

  Two separate issues. Any surprises here by Saudi, the Kingdom, actually releasing the list of who they're backing and why would they do that at this point in time? And then us investing in China? Because we are at a moment here, a crossroads, I think, of should we be engaging or not engaging and building bridges with China and Saudi? You know, for obvious reasons.

• 58:22Chamath Palihapitiya?

  Look, Saudi Arabia, Abu Dhabi, all of the UAE, these are countries that are really important on the world stage, and increasingly so, because they manage peace and prosperity regionally now, right? They have huge balance sheets that can accelerate all kinds of projects all around the world. And so they have to be taken seriously. And so this is a very smart marketing move by the PIF, which is to essentially say, look, we are an established blue-chip LP of the blue-chip organizations that you're used to hearing about and celebrating. And I think that's very smart of them, because what it does is, it reinforces the feedback loop that other great firms should be going to them to raise capital

• 59:05Chamath Palihapitiya?

  when it comes time for them to raise their N-plus-first fund. And so I suspect, especially now, it makes even more sense, because everything we've heard, Friedberg mentioned it a couple of episodes ago, the United States limited partner market is essentially closed for business. They have huge misallocation problems. The endowments are sort of closed. The universities are closed. A lot of the family offices are licking their wounds. And so this is a perfect time for folks in Saudi Arabia and the UAE to basically put the foot on the gas and basically tell everybody, hey, we are open for business. So I think that that makes a lot of sense. And I think that it'll be successful. It'll work, especially in a moment now where

• 59:47Chamath Palihapitiya?

  US dollar flows from US dollar limited partners are very difficult and harder to come by.

• 59:55Jason Calacanis?

  Well, and we're also selling billions of dollars in weapons to the kingdom. And we are a major partner of theirs.

• 1:00:01Chamath Palihapitiya?

  They're a valuable, they're a valuable security partner of the United States. They're a valuable economic partner in the United States. It's no different than doing business with any other country. I think it's smart by the PIF. On the other thing, though, with US firms investing in China's AI, it should not be allowed. And I do think that the folks that are responsible for CFIUS need to get a handle on this. Look, I've done a bunch of deals where I have had to jump through a bunch of CFIUS hoops where

• 1:00:26Jason Calacanis?

  Explain CFIUS, please.

• 1:00:27Chamath Palihapitiya?

  So basically, CFIUS is the Committee on Foreign Investment in the United States. Now, what that means is if folks want to invest in certain things that are on a list of things, and I'll, and I'll tell you the things that I've been involved with that that came under CFIUS. Rocketry and certain chip technologies are so advanced that the United States has very specific rules that limit the ability for foreign actors to invest in those businesses. And in those situations where a few folks invested beside me in some of these companies, we had to go through a process to get CFIUS approval before that investment was allowed. Now, what's interesting about that is that's about money coming in. But I do think that the reverse now becomes important

• 1:01:11Chamath Palihapitiya?

  because if US dollars are going to go and see these extremely complicated advanced technologies abroad, especially into the hands of countries that are frenemies at best of the United States, I think we have a responsibility to have a point of view on that. And so I think Keith Raboy was the one that was very definitive and said this should not be allowed. I do think it is so early, Jason, we talked about this. We're on this curve of fuck around and find out, which means there will be some crazy examples of stuff that are very uncomfortable.

• 1:01:43Jason Calacanis?

  Yep.

• 1:01:44Chamath Palihapitiya?

  I don't think we want US fingerprints on this stuff being perfected outside of US borders.

• 1:01:51Jason Calacanis?

  Sax, when we look at the history of engagement with China, maybe we can take a multi-decade globalization perspective here. When you look back on it, the engagement with China created so much prosperity, so much intertwined dependency, iPhones being the best example possibly, we're selling them in China, we're making them in China. China loses Apple as a customer, that would be absolutely devastating for them, and it would obviously be devastating for Apple as well. So when we look back on that as a general rubric here, do you think we enabled a competitor? Or we avoided future conflict because of the interdependency?

• 1:02:31Jason Calacanis?

  And where do you sit in terms of thinking about engagement versus maybe isolation or something in between those two? Frenemies, best of frenemies, et cetera?

• 1:02:41David Sacks?

  The policy of constructive engagement, as it was called 20 something years ago, the idea behind it was that if we engage with China economically and help make them rich, then that they would become more like us, they would somehow turn into a democracy, and they would have tremendous gratitude towards us, and we'd become friends. It's not the way it worked out. There were people who warned that this was a foolish approach. So most notably, the realist scholar John Mearsheimer at the University of Chicago warned back in 2002 that that was not the way this was going to play out. If we made China rich, they would seek to convert that wealth into political power, and then they would act the way that all other great powers have behaved throughout

• 1:03:26David Sacks?

  human history, which is they want to dominate their region, and they would seek to push the United States out of Asia. And the future that he predicted 20 years ago is the future that's come true. And I think the, you know, all the constructive engagers, I think, have some egg on their face. Now, I understand where they're coming from. This is a fundamental difference between whether you see the world in economic terms, which is about creating positive-sum games, basically trade, or whether you see the world fundamentally in geopolitical terms, which is about the balance of power, which is more of a zero-sum game. And I think that both views, they're both extremely important. We want to engage in positive-sum relationships that generate more trade and more wealth for the United States.

• 1:04:10David Sacks?

  At the same time, we have to be aware and concerned about the balance of power. We do not want a number-two country.

• 1:04:18David Sacks?

  In the world who can rival the United States in terms of power, who basically could win a security competition with us. And we certainly don't want a country in the world to be more powerful than us. So I think this is sort of the yin and the yang is geopolitics versus economics. And I think what's happened with China over the last several years is it's flipped. I think we used to see the relationship primarily in positive, some economic terms, and now we see it in geopolitical terms. And I think there's a lot of firms now in the United States who haven't embraced this new reality. And to go back to your question about, you know, when should a venture capital firm take money from a foreign country when it should, and I think there's a very simple rule for this, which is if the country's

• 1:05:00David Sacks?

  a US ally, I think it's fair game because the US has said this is a partner of ours. So why can't you do business with them? But if the United States government has said this is an adversary, you're putting yourself in a really difficult precarious spot by doing business with them.

• 1:05:15Jason Calacanis?

  Because then you have to explain yourself to the US government, yeah.

• 1:05:18David Sacks?

  This is the very simple rule we would use is I don't, we would never consider taking money from Russia or China.

• 1:05:24Jason Calacanis?

  North Korea.

• 1:05:26David Sacks?

  Any country that the US government says is an adversary of ours. But if the US government says this is a partner and an ally, then I think you could consider it.

• 1:05:33Jason Calacanis?

  Do you think there's a way, Sax, to salvage the, the relationship with China and make it productive? Or do you think it's a far gone conclusion at this point? Because one might argue, and I've heard people argue this, maybe China would have invaded Taiwan already if it wasn't for the interdependency. So I know we're dealing with, you know, a lot of, we're doing a lot of predictions here, but do you think it could be salvaged? And do you think it would have been a worse relationship if we hadn't had this interdependency that's been built up?

• 1:06:00David Sacks?

  I'm not quite sure that the economic interdependence theory preventing war has been definitively proven. If you go back to World War I, for example, it was the case that Britain and Germany actually were each other's number one trading partners, and they still got in World War I. For reasons that in hindsight seem really silly. So I'm not sure that economic interdependence can prevent. It certainly doesn't prevent security competitions from arising and therefore I don't think it can necessarily prevent a war. Although, you know, having business ties can lead to positive interactions.

• 1:06:37Jason Calacanis?

  Yeah.

• 1:06:38David Sacks?

  So I'm just saying the jury's still out on that theory. But I think that, like I said, I think once you're in a security competition, the way that we are with China, I think geopolitics rather than economics is in the driver's seat. And that's what's happening right now.

• 1:06:51Jason Calacanis?

  Friedberg intellectually way, I think, to process this. You would never invest in a North Korean AI company, a Russian AI company, or an Iranian AI company. How do you think about China? And then just generally this topic of when to engage? When venture capitalists, when startups, you know, and trade partners should engage with various countries? How do you think about a free bird?

• 1:07:17David Friedberg?

  In what role as an investor?

• 1:07:19Jason Calacanis?

  Well, we could, we could take multiple roles here. Founder investor would be the top two for this program, I think. Or taking money from any of those three possibilities.

• 1:07:29David Friedberg?

  Very few portfolio companies that don't benefit some way from the trade relationship with China. So, you know, to Sax's point, I'm not sure you can really say China is a true and complete adversary in the sense that we're on opposite sides. There's obviously deep interinterdependency. So, you know, it's, it's hard to kind of say, I draw the line at this kind of technology investing there, but I benefit from their technology investing that's going on there in other ways with some of my other businesses. Right? I think that that's really where you kind of run into a, a bit of a conundrum that we do have a deep interdependency.

• 1:08:12David Friedberg?

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

• 1:08:54Jason Calacanis?

  What do you think of Saks's framework? If we're partners, you know, fair game. If not partners, not a good idea to put your neck out.

• 1:09:02David Friedberg?

  But we're part, sorry, are you asking, are you saying like we're not partners with China?

• 1:09:06Jason Calacanis?

  Well, it seems like the US government has said we're adversaries now and that we're in a, in a pretty dogged competition.

• 1:09:15David Sacks?

  Well, Jake, I'll just be specific. I'm talking about a situation in which you're taking money from them.

• 1:09:19Jason Calacanis?

  Yes, in a situation where you're taking money.

• 1:09:21David Sacks?

  I do think that selling them products that are, you know, not like super strategic, like I think selling them our most advanced chips is dangerous. But, you know, look, I think if you're selling them products that help restore the trade deficit and correct that.

• 1:09:37Jason Calacanis?

  Movies.

• 1:09:38David Sacks?

  I don't have a problem with that. Yeah, I don't have a problem with us selling movies or cars or something like that to China. The question is though, I think if you're a venture capital firm, do you take their money? That's what I'm specifically talking about. And I think whether you're allowed to or not, we don't because we just don't want to have to think about what complications that could cause down the road.

• 1:09:57Jason Calacanis?

  Also getting your money out of China, also a difficult task it seems these days. Cash App creator Bob Lee, AKA Crazy Bob on Twitter, that was his Twitter handle, was stabbed to death tragically in San Francisco earlier this week. He was Square's first CTO. He worked at Google on Android. He was the chief product officer at Mobile Coin, also an angel investor in a ton of companies, Figma Space, X, Clubhouse, well-known in the industry. Officers responded at about 2:35 AM to a report of a stabbing on the 300 block.

• 1:10:31Jason Calacanis?

  Of Main Street and arrived to find Lee, who had been taken to a hospital and succumbed to his injuries there. No arrest has been made. A lot of San Francisco politicians are sending their thoughts and prayers, but obviously, San Francisco is still a very dangerous place, it seems. Any thoughts on this and how it might act as some sort of crossroads or not? And thoughts and prayers, obviously, to his family and friends.

• 1:11:00David Friedberg?

  Look, I think this was a pretty tragic event. There's a lot of people who I knew that were pretty close with him. I got several messages on his passing. He was, I didn't know him personally. I think we met maybe once or twice. He worked on Android at Google and obviously had a key role at Square in the early days and was a pretty impactful and important person, but also supposedly, I didn't know him very well, again, but everyone says just such an incredibly kind and generous person. So tragic loss. I used to live two blocks from where the event happened. I'll zoom out.

• 1:11:36Jason Calacanis?

  Where is it, Freebrook? Is it a bad place?

• 1:11:37David Friedberg?

  It's in Soma, at Rincon Center, right by the big condo towers there and it's right where the Salesforce offices used to be. And, you know, blocked from the waterfront, blocked from the market area.

• 1:11:49Jason Calacanis?

  Is it part of all that drug craziness?

• 1:11:53David Friedberg?

  Not necessarily, no. It's not in the heart of the camping district. It's just a nice area in Soma, a quiet area, right? So at night, there's no one there. I went to San Francisco a few weeks ago. I told you guys, I pulled up to a restaurant on the Embarcadero and I joked with my buddy in the car. I'm like, oh, my car's going to get broken into while we're at dinner because I'm parking on the street. We went to dinner, 90 minutes later, came out. Of course, my car had been broken into, the trunk had been popped up and it's just like, you know, 100% certain.

• 1:12:16Jason Calacanis?

  This is the fancy area of Soma, very fancy area of Soma.

• 1:12:19David Friedberg?

  Look, here's the thing. If you park at a parking meter in San Francisco for eight minutes too long, you get a $60 to $100 parking ticket. And San Francisco has become an upside downtown. What I mean by that is I think that like so much of the response that we've had in the last couple of years to power dynamics and concerns about the powerful having too much influence over those who are less powerful, who have less influence and who suffer as a result of their demeaned influence. The response has been to turn things upside down, which is to give those who were lacking in the power structure everything and to try and take everything away from those who are at the top of the power structure. So if you want to deal drugs in the open air,

• 1:13:02David Friedberg?

  if you want to walk into Walgreens and steal thousands of dollars of goods and walk out, nothing will happen to you because you were embedded with this powerless kind of position in life. But if you have a car and you park at a parking meter and you stay at the parking meter for more than 10 minutes, you get a ticket. And the consequences of responding to power dynamics by flipping the power structure upside down is obviously can be more negative as we're kind of experiencing, I think, acutely in San Francisco, but also around the nation. And by the way, I think that this applies in a lot of other ways in terms of how we're doing college admissions, in terms of how we're selecting people for jobs, in terms of, you know, recent applications for pilots, for doctors, where the assessment is less about

• 1:13:47David Friedberg?

  did the person who was disadvantaged at the beginning of their life or career or trajectory or educational path be given greater opportunity and greater resources to catch up and to get there? Or did we just flip the power dynamic upside down and just give them the endpoint? And as a result, there's a massive kind of detriment that I think can arise. And it's not necessarily always the case that it will arise. It is not necessarily the case that selecting someone based on some demographic profiling to be an airline pilot necessarily means that that airline is more likely to have airplane crashes. But in certain cases, when you don't prosecute certain crimes, like robberies or people walking into stores or breaking windows or dealing drugs in the middle of the street

• 1:14:32David Friedberg?

  or camping on the street, and you fast forward a couple of years, that power dynamic, the flip of that power dynamic, causes the whole town to go upside down. And everyone who's sitting on the bottom ends up becoming a victim themselves. And I think we're starting to see inklings of this in San Francisco. We certainly have for years. Sacks has ranted on about this with respect to some of the non-prosecution that's happened historically, and I totally agree with him. On those points, and I think that it's come to a breaking point in San Francisco, but that's really a beacon for what else is going on. And, you know, some people call it woke-ism. I think maybe this notion of woke-ism is one small element or segment of the broader issue with how we are tackling with and dealing with embedded power structure issues in this world today. And the flipping of those power structures upside down doesn't

• 1:15:16David Friedberg?

  necessarily yield the outcome we all want. And I think we're starting to see reasons why. Sacks, any thoughts here? That's my rant. I can't disagree with you.

• 1:15:24David Sacks?

  Yeah, so similar to Friedberg, I didn't know Bob Lee, but I know many people who knew him, and I was getting texts. And obviously, we feel really bad for him, his whole family, his kids, his father, his coworkers, friends. We don't know exactly what happened yet, but I think we suspect, and I would bet dollars to dimes, that the story is very similar to a case we had in LA recently, the Breanna Cupford case, where a young woman was basically stabbed for no reason by a psychotic homeless person who had been through the revolving door of the jail and criminal justice system, who could have been locked up, who was arrested multiple times, but was not kept locked up because of this push for decarceration. And you can argue that maybe it'd be better for that person to be in mandatory treatment,

• 1:16:09David Sacks?

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

• 1:16:50David Sacks?

  Let's see if they really would take that test. Because it seems to me that these elected leaders and these nonprofits who are pushing for these outcomes, they are setting loose on us a predatory, criminal, or psychotic element that jeopardizes our safety and makes these cities unlivable. And we should not tolerate that. And quite frankly, the responsibility goes beyond those elected leaders. It goes to all the voters as well, because we keep putting up with this. And where was our governor when this happened? He was in Florida doing some sing-along at some high school where he was trolling Ron DeSantis, because DeSantis has taken on DEI at that school. So that's where Newsom was, and he's extremely popular in California.

• 1:17:34Jason Calacanis?

  Fighting culture wars instead of saving people.

• 1:17:36David Sacks?

  Fighting culture wars in a distant state. Instead of basically fixing the criminal justice system in California, that's even worse than that, because he's actually shut down two prisons and released lots of people. So where is the push for criminal justice reform in California and protecting the citizenry? And until the voters in San Francisco and California start demanding this, there's never going to be a change.

• 1:17:58Jason Calacanis?

  And at the same time, Chamath-

• 1:17:59David Sacks?

  So start listening to Gary Tan. You know? Just vote for who the [bleep] Gary Tan tells you to vote for, okay?

• 1:18:05Jason Calacanis?

  I think it's probably a good... I can't disagree, and the supervisors seem to control a lot of this. And Chamath chaired, just this week, Mayor Francis Suarez, is talking about on his Twitter the reduction in homicide, shootings, and they have literally counted the, if you want to say, drug-addicted, mentally ill, homeless. There's obviously three or four different things going on here when you look at the population that's living on the street. Some number of them down on their luck, some number mentally ill, some number addicted to drugs, and some number a combination of those things. He seems to be getting it done in Miami. And, you know, other states seem to, and other cities seem to have gotten this under control.

• 1:18:49Jason Calacanis?

  Is there any hope for San Francisco, Chamath? Or is this just going to take five or 10 years to bottom out?

• 1:18:54Chamath Palihapitiya?

  I mean, it takes regime change.

• 1:18:57Chamath Palihapitiya?

  I think New York had a long period of lawlessness where people were afraid to walk down the streets. It took a handful of mayors to draw a hard line in the sand to increase policing, sometimes to introduce some pretty controversial concepts at the time, where at the time that were supported, which now seem controversial.

• 1:19:16Jason Calacanis?

  You're talking about stop, ask and frisk.

• 1:19:17Chamath Palihapitiya?

  I think it was called the broken windows theory of policing.

• 1:19:20Jason Calacanis?

  Yep, take care of the little things.

• 1:19:22Chamath Palihapitiya?

  Take care of the little things so that the little things don't compound into the big things. But whatever you believe needs to get done, I think it's pretty clear that what is being done isn't working. And so the real question is, can people see through the naked partisanship to agree that this is not working? And sadly, what I would tell you, guys, is that I don't think they're there yet. And the reason is because America is the most divided it's ever been, especially on issues of race and social justice and social norms.

• 1:20:03Chamath Palihapitiya?

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

• 1:20:48Chamath Palihapitiya?

  The example in Chicago that David brought up earlier is really interesting because it was essentially a social justice candidate versus a law and order candidate through their democratic ranks, and the social justice candidate won. The progressive candidate won, and the person that wanted to tax businesses and individuals won, and the person that wanted to sort of focus on law and order, lost.

• 1:21:13Chamath Palihapitiya?

  So what does that say? It says that we are still in a moment where we can't agree on what is important.

• 1:21:18Jason Calacanis?

  Yep.

• 1:21:19Chamath Palihapitiya?

  That's really scary. And so I think you kind of have to unfortunately vote with your feet if you are lucky enough to do so.

• 1:21:26Jason Calacanis?

  I think that's the key.

• 1:21:27Chamath Palihapitiya?

  Yeah. Who's left over are a lot of people who are not in a position to just up and leave. And then they are unfortunately left behind.

• 1:21:37Jason Calacanis?

  Tragic situation all around. And I will never host a conference or any event in San Francisco until this is solved.

• 1:21:46Chamath Palihapitiya?

  I um.

• 1:21:47Jason Calacanis?

  When people ask us to do events, I'm like, hey, people don't want to come to San Francisco. They're afraid. So I do my events in Napa or in San Mateo.

• 1:21:54Chamath Palihapitiya?

  Nat started a bilingual school, Italian, English, that is on the IB system, International Black Glory System. And it's a sister school to a school in the city. We had a fundraiser, which was literally right downtown in that encampment area. And when I pulled up, I was like, is this for real? It's an open air drug market where folks are doing drugs, selling drugs right in front of you. They're passed out completely incapacitated. About a third of the guys are wearing balaclavas, so you can't identify them. You have no idea what they look like.

• 1:22:29Jason Calacanis?

  I grew up in Brooklyn in the seventies and eighties when it was legit dangerous. And when I walk in San Francisco, it feels much more dangerous than that crazy era.

• 1:22:43Chamath Palihapitiya?

  It feels random. It doesn't feel like there's organized crime, gang crime. Like I grew up in a pretty crappy neighborhood and you knew who the gangs were. You knew who the tough guys were. You knew how to avoid trouble. It didn't come and randomly come and stab you to death. Right? And so, yeah, Jason, you become street smart growing up in a culture like that because you know how to avoid it. You know how to be alert. This doesn't feel like that. This is just like a bad roll of the dice and you could get stabbed to death just walking down the street. That does not. Where are the politicians to stop this?

• 1:23:16Jason Calacanis?

  I mean, they don't care. There's a, the level of corruption in San Francisco is unbelievable. The incompetence amongst those supervisors, the mayor, the DAs, everybody. It's just incompetence and nobody has the chutzpah, the wherewithal to say enough. And I think the other group to blame are all the rich people and powerful people who just haven't been active in politics. And I know some of us have. In different ways, but I think it's going to take a coordinated effort by people who really care to vote out all these supervisors and bring in, it's gotta be regime change. And I just don't know if there's the wherewithal to do it because every time as a person who has some means or is successful in some way that you stick your neck out there like you

• 1:23:59Jason Calacanis?

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

• 1:24:40David Sacks?

  Yeah. I mean, the, the issue is that it takes, it takes more than one election. So listen, I think we made a positive change by removing Chesa Boudin. I think Brooke Jenkins has the right attitude. She cares about victims. I think she wants to prosecute. The issue is that you've got a police department that's 50% of the number of officers that they want because they flirted with this whole defund the police movement. You've got the board of supervisors and you've got like an oversight board on the police that basically make their jobs harder. And it's not, it's not one election because even the mayor doesn't control it because the board of supervisors really has all the power in San Francisco. So they take a job that really should be one or two people's jobs, like

• 1:25:19David Sacks?

  the DA, like the mayor, and they break it up into this like board of supervisors where you've now got to be familiar with a dozen different races in order to effectuate a change. Well, the machine knows how to do that, but the average citizen doesn't. So they make it really hard to effectuate change, but there are groups that are springing up in San Francisco like Grow SF and you know, people like Gary who are on top of it. And that's why just follow them and, and vote for their recommendations because they're actually tracking how to make a difference.

• 1:25:53Jason Calacanis?

  All right. I think on that we will wrap for the dictator Chamath Palihapitiya, the Rayman David Sacks and the Sultan of Science, David Friedberg.

• 1:26:07Jason Calacanis?

  I am the world's greatest moderator. We'll see you at the All In Summit 2023.

• 1:26:10Chamath Palihapitiya?

  Love you, boys.

• 1:26:11Jason Calacanis?

  Bye, bye.

• 1:26:12Chamath Palihapitiya?

  Bye, bye. Bye, bye.

• 1:26:15Speaker 04

  We'll let your winners ride. Rain Man David Sack.

• 1:26:22Speaker 04

  And instead, we open source it to the fans and they've just gone crazy with it. Love you, Wes. I'm the queen of Kewah.

• 1:26:35Speaker 04

  Besties are gone. That is funny, a dog taking a notice in your driveway. Thanks. We're gonna have to. Oh, man. My Abidasher will meet me at.

• 1:26:46Chamath Palihapitiya?

  We should all just get a room and just have one big, huge orgy because they're all just. It's like this like sexual tension that we just need to release somehow.

• 1:26:54Speaker 04

  What your. Be. What your. What your feet. Be. What? We need to get merch. Besties are back.