A (2:51)

It was crazy. It was crazy. I'm obviously being coy for a reason. Just in case, every now and then I'll get somebody and this means actually a lot to me. I'll get somebody who's like, hey man, I'm 12, I found your content. I'm you know, taking this or that on board and it's very cool. And I feel a huge sense of responsibility to be a positive impact, I won't even say influence, but a positive impact on people's lives when they're young. I think that's incredibly meaningful. So I'll be a little bit coy so the parents don't feel too bad though. I know that I can be unhinged later in the show for sure. But that one was wild. The Brian Johnson thing was wild.

B (3:27)

That it's hilarious. But okay, we got to start it King balance the budget. Right now we have a devastating stat that the US has officially has more debt than their gdp. I know we always talk about US debt, but this one's a little bit different. So give us the clarification on what actually this hundred percent thing means.

A (3:44)

All right. For the first time since the year we won World War II, America now owes more in debt than it produces in a year. For anybody that's not sure about the difference, I talk oftentimes about US being at 120% debt to GDP. The number that we're talking about today is just the debt owed to the public. So you've got intra departmental debt that gives you the higher number. And this lower number which we're going to talk more about is just the debt that's owed to the public. So our debt now really does exceed our gdp. And this time we can't blame it on needing to save the world from the Nazis. The current debt held by the public hit 31.27% trillion against a GDP of just 31.22 trillion. So we're now at 100.2%. The all time record was 106% which we hit back in 1946. Now you guys will be excited to know that we're set to break that record by 2030, and we're expected to hit 120% by 2036, which would be catastrophic, by the way. And if we keep going in that range, you will have long passed the 130% as you broaden out to that bigger number that I was just expl. Uh, so yeah, if we don't write course, you can expect something very bad to happen to be measured in human casualty and blood. Now, when you're spending the money like that to beat the axis of evil, you can kind of justify the cost. But when you're doing it to support fraud, an absolutely staggeringly large government bureaucracy, and we'll call it an optional war, it gets a lot harder to justify and it will eventually break the US economy. Now, I know I beat this drum a lot, but the world really, really isn't getting it. So by way of arming all of us with the things that we need to be able to repeat ad nauseam so that people actually understand what's going on. The economy works on physics. So if we are exceeding our gdp, which you can think of as our ability to pay it back, so our debt has, is now so far outpacing what we're actually going to be able to pay back, we won't be able to pay it back. And so there's a very specific way that this is going to play out, which is exactly, by the way, what happened after World War II. The way that you have to pay your debt back when it starts getting that big is something called financial repression. I actually have a deep dive coming out on Kevin Warsh's approach, which I think is going to be financial repression. So more coming now without an AI productivity miracle that creates excessively high paying jobs. If we try to use the financial repression that we used at the end of World War II to dig our way out of this, we are only going to further eviscerate the middle class. If you want to understand the political violence that is on the rise, it is because the middle class has been abused. So to take this path, which is the only real path before us, the other is what's known as an honest default that has its own problems. But this is a soft default of creating the financial repression which we can get into the specifics of. If Drew asked follow up questions, I certainly have the answers for you. But as of today, there's nothing that's being proposed other than that what Kevin Warsh is talking about is more financial repression. He's not saying that, but that if you just read between the lines, it's very obvious that that's what he's actually going to do. Now he's also counting on the AI productivity miracle, but I think at this point that's best understood as hopium. Look, I'm a huge believer in AI, a huge believer in AI. However, until you actually see that coming through in the actual economic data, counting on that before it happens, I think is extraordinarily high risk. And the unambiguously horrifying debt number that we're all being strangled to death by is due to what the Committee for Responsible Federal Budget has rightly called a total bipartisan abdication of making hard choices. Which I think is a brilliant way to sum up what is actually going on. We have all got to snap out of our stupor and realize that the interest alone is going to eat us alive. Meaning, because that's. It's a hyperbolic statement that abstracts what's really going to happen, it's going to make it impossible for the government to function at the level that it is now. The credit markets will seize. The Eurodollar market, which basically allows the global economy to run, will falter. You get inflation, I'll stop shy of calling it hyperinflation. But you're going to continue to get the kind of inflation that is so destructive to savers that you create real long term problems for yourself. Now the federal government right now is going to be spending roughly a trillion dollars in net interest in fiscal year 2026 alone. Making it, I think it's the second biggest line item on the budget right now. That is insane. A full 14% of every dollar that Washington spends goes to just servicing the debt, not paying it off, just paying the interest. More than one in seven federal dollars is going to service the debt. That is ba nanas. And the number gets worse every month because trillions were issued at near zero rates back when we were at essentially zero interest. But all of that is going to be rolled over at 4 and 5%, which is going to be absolutely crippling. That's a kill box that we've essentially navigated our way into. And the Fed cannot hold rates high without bankrupting the Treasury. So they are going to find a way to cut. They will print, they will use financial repression. The inflation cycle is already eating all of our purchasing power, but it's affecting the middle class and the working class the most. It is the thing that is driving the populist division, as it always does. And the only real way to begin digging Ourselves out of this is an absolutely horrifying strategy. And by the way, if we really want to solve the problem, this is where I imagine myself holding the mic out to you guys to sing along. We have to balance the budget. We have to balance the budget. If you don't see people balancing the budget, just know that the problem is there. You don't even have to understand the way the economy works. You just have to know, is the budget balanced? Because if the budget isn't balanced, you have an ongoing problem. And there are growing voices on X that are coming after me because they think I don't understand the economy, which is hilarious. It is impossible to say something that details every element of the economy in any single tweet, boys and girls. But yeah, I'm not sure where they think this goes, so. Oh, Jesus.

B (10:28)

Yeah, Beef, you should have pulled up that tweet, man.

A (10:30)

Here's the thing I did. I actually fed a troll yesterday and I was like, why am I doing this? So anyway, it is exactly like the thing where people are pushing the meme of me saying, if you aren't going to have kids, you better have a damn good reason without any context and explaining why I said that. Uh, yeah, it's the same thing. Doesn't matter. It doesn't matter. You just have to keep messaging what is true.

B (10:53)

No, Got you. Okay, so let's just do some checkpoints real quick. So, U.S. debt, more than 100% of GDP, the equivalent of everybody in my household. Our total credit card debt is more than what we all make in a year.

A (11:05)

Yeah, nice, easy.

B (11:06)

Yeah, sure, sure. Okay, cool. And then from that perspective, when this debt gets higher, is it that one? Bailouts happen, which means deficit print spending, or would it be individual bankruptcies? It won't necessarily get pushed up to the federal level.

A (11:22)

No, no. So the. You're thinking about private debt. So private debt is where. If you start looking at the total debt, dude, it is psychotic. I'm not even asking people to take that on because you've got all of the responsibilities that we have to, like pensioners, for instance. That's a staggering number that nobody talks about. You've got what we're all holding in private credit card debt. That's a totally separate number. You've got corporate debt. These are all separate numbers. So we're just talking about the. What does the. The US Government has sold a bunch of treasuries to raise debt to deficit spend. Yes, that's a simplification, I'm well aware. But to get people the ability to wrap their head around this and understand what's going on. They've sold a bunch of treasuries to people, not just Americans, but largely Americans to people and governments and central banks all around the world. And that is the only part of the debt that we're talking about that has now exceeded gdp.

B (12:26)

Got you. Okay. And then I pulled, I looked up Kalshee real quick because you kept saying like, would the Fed artificially hold rates? Would they cut? Right now it's a 94% chance that it remains the same.

A (12:38)

I listen over what period of time

B (12:39)

though, this is it for the next decision that will be happening.

A (12:42)

Got it?

B (12:42)

Yeah. Yeah. Listening to Jerome Powell do his last address. He was leaving on the neutral side. We're not trying to keep rates high or push them up. We're just trying to wait and see what happens.

A (12:52)

Hang tight. We'll be back in just a moment. Let's talk about money you're leaving on the table. Every time you pay full price for a health product and out of pocket, you could be missing out on 30% savings. There are over 40 million HSA accounts in the US holding $159 billion in pre tax dollars. That's where Trumed comes in. True Med helps qualified customers use pre tax HSA dollars on health products that can qualify as medical expenses under IRS guidelines. You complete a health survey, Trumed handles the documentation and the purchase and you can save an average of 30% on products like 8 Sleep Peloton, AG1 and others that studies show can treat or reverse many common chronic conditions. Stop paying full price for products your HSA was billed for. Go to trumed.com impact and check out what things you want that may qualify. It takes just a couple of minutes. Trumed is for qualified customers only. HSAFSA tax savings vary. Let's talk about the most powerful force in wealth building. Compounding. There is a reason that people have talked about this forever. You put an asset to work, it generates more of itself. Over time, the curve bends way in your favor. Every serious wealth builder knows how compounding works. Most gold owners though, have completely opted out of it. Monetary metals changes that equation. They've built a way for your gold to earn yield paid not in dollars, but in more physical gold. Up to 4% per year. More ounces stacking every single month. Compounding in one of the only assets that can't be printed, inflated or debased. And storage and insurance are included by the way. So hidden fees don't eat your Yield. The average person is passively absorbing inflation. This is how you compound your way out of it. Click the link in the show notes or visit monetary-metals.comimpact to learn more. This is a paid advertisement. Let's talk about the worst investment most guys make on repeat cheap clothes. You buy them, they look fine, but six months later they're pilling, shrinking or just falling apart. So you replace them. You do it again and again. You're spending more over time and you never actually have anything worth keeping or wearing for that matter. That's the whole model behind Quince. I've got one of their 100% Pima Cotton Tees and the quality is immediately obvious from the second you pick them up. They're soft, well constructed, the kind of thing that holds up over time. And that is the point. Refresh your everyday with luxury you'll actually use. Head to quint.comimpact pod for free shipping on your order and 365 day returns. Now available in Canada too. That's Quince Q U I n c e.com impact pod for free shipping and 365 day returns quince.com quince/impact pod thanks for staying tuned. Now let's get back to it. Okay, just keep in mind every word out of Jerome Powell's mouth is just like, okay, what do I need to say to keep everybody nice and calm? Like that's it. He's not trying to indicate what he actually believes to be true. I'm not even sure that's his job when it comes to messaging. His job really is to keep people calm. So one of the things Kevin Warsh is talking about doing away with is that this like whole weird messaging thing that we do to try to soothe everybody. And so I man chat, please correct me if I'm wrong here, but I think he wants to get rid of the dot plot. And so the dot plot is all the different people on the Fed committee saying, well, this is where I think it's going. This is where I think it's going. That way you can sort of get, okay, this is where they as a collective think it's going. So you can have outliers opens up discussion. I think he wants to get rid of all that and just really start. I haven't thought a lot about this, but my initial instinct is part of what he wants to do is stop being beholden to managing people's expectations and just like go heads down and manipulate the economy. And then it's like what happens happens. I don't there's not a way around it. Like speculators are going to speculate and that speculation is going to have a tremendous impact on the economy. There's no way that that is the nature of markets. So, yeah, I don't see a way around that. So anyway, I have not thought a lot about that. Full disclosure, that one inspection, I may say, oh, there's actually something brilliant here. But my initial reaction is not that.

B (17:46)

Okay then, with. Based on the research that you did for the deep dive and kind of what you just told us now about it, are you optimistic that we'll be able to control inflation? I know there might be some deficit spending. I know things. But are you at least confident in the Fed that they'll be able to not drive us completely off the cliff right now? We still have some time to maneuver.

A (18:06)

I think financial repression is best understood as chemotherapy. And will we get extraordinarily sick as we go through this? Yes, a hundred percent. By quick explanation of what financial repression is. Financial repression is where the interest rates that are being paid out are in real terms, they're negative, meaning the interest rate being paid out is lower than inflation. So if you buy Treasuries, you're going to get a negative real return. So they do it on purpose. They know they're doing it. This is not. Obviously they want the general public to think this is all just a law of nature. But they're, they're actively doing it through policy. And so right now they've built up this captive demand for Treasuries through a couple different policy things. One of them being the genius act, another one being these regulations that were, from where I'm sitting, are kind of obscure. People that are like deep, deep, deep in the economy will be like, you think that's obscure, that's like really mainstream stuff. But the average person is not going to know what it is. But they've made some changes to that. It's banking regulations about the ratio of assets that banks have to, or, sorry, cash on hands versus assets that they hold that they have to keep for emergencies, AKA bank runs. And so they've allowed now banks to take bigger risk. Now by allowing banks to take bigger risk, that frees up tens if not hundreds of billions of dollars. I can't remember the exact number, but I think it's in the neighbor of like 150 billion immediately freed up. Now there are regulations though that dictate how banks, what kind of assets banks can hold to still be in good standing. Those assets are basically US Treasuries So they're like, okay, we're going to let you take more risk. It essentially is going to force you into buying Treasuries. And then when you're in Treasuries, we're going to financially repress you and you're going to be losing money. You just won't lose money as rapidly as you would if you just held cash. So it's one of those things where. Think of it as chemotherapy. It's gonna make us all very sick. Cause it's going to inflate the currency, which is going to hurt the working and middle class. And it'll be a race, just like chemotherapy is. Does the chemo kill the patient or does it kill the cancer? Just enough that you end up living longer than you would have lived from the cancer, but the chemo's really gonna hurt you. So the. In this case, the cancer is the inflation. The chemotherapy is pushing us more towards revolution. So which is going to kill you first? Just the absolute default. Because your interest rates are getting so out of hand. Your inflation is getting so out of hand. So it's. You're going to be hurt by one or both of them. And I just don't know which is going to kill us first. Will people be so unable to buy Taco Bell that they revolt? Or will we get to the point where we've just done so much damage to the currency that as a government, we just. We are forced into austerity and. Or hyperinflation. Either one is going to be a death knell.

B (21:14)

That would be hilarious. A bunch of people in Massachusetts just dumping chalupas in the. In the Bay. Give me liberty or give me.

A (21:22)

Somebody ran a number on the. What they. What they call it. It wasn't the Taco Bell inflation, but it was something like that. And that inflation number over the last 25 years is like over 300%. And that's 6% annualized. So he's like, listen, over the last 25 years, the real inflation, what he calls the only inflation that matters, what it costs you to eat a Taco Bell, has run at 6%, which is exponential. And people don't talk about that. When you do something where the percentage repeats year over year, that is exponential. That is so like, every business in the world is trying to grow exponentially. And it's like the exciting buzzword exponential growth is wild. Even at 6%, that number stacks because it's 6% on the higher number every year. So when you're doing 6% on a number that's already 6% higher on a number that's already 6 percent higher on a number going back 25 years. That's. That last 6% is a staggering number compared to year one. And so that's where it gets into this 300 and, you know, whatever range. So when people tell you that inflation is 2 or 3%, that's bullshit. And it really is bullshit. Like, they shuck and jive and pick different baskets of goods to look at. Whatever keeps that number low. And then as a reminder, every year, costs should be going down and quality should be going up for your products. Cost should be going down, quality should be going up every year via innovation. And that is being stolen from you through inflation.

B (22:53)

It's a perfect segue. Because speaking of stolen innovation, there's been a lot of buzz in the US about these Chinese BYD vehicles and how China has vehicles that can transform and fight crime. And they're $16.

A (23:06)

Have you heard of the Autobots? They're being made in China.

B (23:09)

Exactly. Like, they got a whole Transformers lineup. But lawmakers are passing regulations in order to continue the ban on Chinese vehicles. A lot of people are saying, hey, what happened to the free market? Hey, you guys love capitalism so much? What's happening now?

A (23:24)

Whoa, whoa, whoa. Hey, hey, hold on.

B (23:26)

We. We have to draw a couple of people in the back. Understand what's going.

A (23:29)

Yeah, yeah. So, first of all, we have to draw a line between free markets and globalism. If you really are fine with regionally, I don't care about you at all. So I'm perfectly happy for China to spend the next 50, 100 years getting wealthier and wealthier and wealthier than globalism is awesome, but it is really, really terrible for localized workers. And because right now, geographical boundaries still matter so much for your quality of life. This is what they talk about when they're talking about ppp. So purchasing parity. So it's like, okay, they might make less money in China, but if they can buy more stuff, does it really matter? And so that's where looking at the things through that lens is very important. So when we globalized, we made things much less expensive. A lot of incredible things came out of globalization. However, it also left a huge contingent of people. And I'll just speak from an American context. It left a huge contingent of Americans just completely. So they were unable to get the factory jobs because the factory jobs were geographically located elsewhere in the world. So if it was as easy as just you go work for a Chinese manufacturing, and suddenly you live in, you Know, Beijing or whatever, and you're not bothered by the Foxconn need for nets to stop you from committing suicide, because that's how a dictatorship rolls is like, nope, you're going to serve your purpose. And that really is just that. Then, yeah, you could have gone to China and dealt with that and you would have been quote, unquote, a okay, but obviously it doesn't work like that. So what we're learning now is they're just geographic and cultural realities to be faced. And globalizing, you end up hurting and, or helping very different geographical pockets that causes a ton of unrest. And this is a big part of what's going on with the populism and all the anger. So it's like, as a free market capitalist guy, I really get it. But we run into a geographical reality that has to be dealt with. And so that's where you've got to tease these two things out. Because we still want to be as close to free market as we can in our geographical boundaries. Call it the US Call it North America. Think about, you know, however large you want to make that pool. But you've got to start thinking about, okay, now, within this, just what system works the best. It's not like I like capitalism for the sake of capitalism. And if somebody comes up with a system that is better, which, by the way, if AI does the things that we all hope it will do over the next 30 years, on the other side of that, capitalism will be largely nonsensical. So this isn't something where I need to fight for capitalism. I fight for, I, I round it to a thriving middle class. I just mean the majority of the average people in the world. The system needs to work for them. And if it's only working for elites, that's just nonsensical. So that's what we need to be looking at. So right now, as we separate those two things out, capitalism, geographically constrained, is still the only system we see that actually we works in terms of spreading goodwill and cheer. I don't know how to say it. To the broadest number of people.

B (26:41)

I guess what I'm really trying to, like, wrap my head around is I think a lot of times when we see these numbers, we relate them to ourselves. We look at our own bank accounts, we see like, there's both macro and micro things happening, like both at once. So when this number is ticking, it seems like it's more of a macro versus something that's a bit more micro.

A (27:02)

Yeah, in the sense that, okay, so one of the cool Things about the post World War II thing is anybody that's paying attention should be asking, okay, Tom, financial repression is so bad. But you just said that we used it at the end of World War II. And everybody knows that America absolutely boomed post World War II. All the baby boomers who've just had this so easy, they grew up under financial repression. If that's the case, give me financial repression. This sounds awesome. And the reality is that what ended up happening was Post World War II, we had that productivity boom that was miracle. Like, that is unprecedented in history. That was a confluence of a whole bunch of weird events. The US Ends up basically the strongest economic force in the world. Were completely untouched by World War II. We now become the. The, like, center of everybody else's debt. So everybody owes us money, and we're in charge of helping them rebuild. And we have a young population. So it's just like everything. We were the. The manufacturing powerhouse the world over. So it was just like, man, we were poised to be able to financially repress the out of people, which is absolutely terrible. And yet everything was so good economically that we still grew faster than the financial repression. And so even though people were being stolen from, it was a rad exchange where it was like, okay, cool. Thank you, America, for fighting this battle. Yes, you secretly taxed us tremendously, but things are going so well that all is well. And that's where I'm like, yeah, if you told me that you want to tax me more, but there's going to be this outcome that's absolutely extraordinary, I would literally be a fool not to be like, cool, sign me up. It is when you want to keep taxing people for a worse and worse outcome, where people start going, what the fuck are you talking about?

B (28:57)

What am I paying for?

A (28:58)

Yeah. So, like, this is just nonsensical. So right now, the economic structure of America is so different that as you try to use financial repression, you accelerate the movement towards revolution. So that's where I'm like, okay, hold on. Like, we're going to need a different strategy here. Hang tight. We'll be back in just a moment. Study and play Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the unreal college deal. Everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft

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Thanks for staying tuned. Now let's get back to it.

B (31:27)

To me, the policy seemed a bit protectionist because I feel like we want to protect our auto industry. We want to make sure like we have at least some things locally that are homegrown that we can't completely outsource to China.

A (31:38)

Yes. And by the way, we have to decide, okay, are we going to be so philosophically dogmatic that it's like capitalism no matter what I would advise, that's not the right move. To me it's like capitalism has an aim. Ask yourself what that aim is. The aim is like what China showed is to pull people out of poverty, create broad spectrum economic opportunities for people because when people are progressing economically they have a tremendous sense of well being. But the well being is largely what we're aimed at that that's why anybody that dismisses the Chinese model and is just like, it's all bad. It's like, no, it's high risk, but there are times where it's extraordinarily good. When China started adopting free market capitalism with absolutely draconian we will murder people dictatorship, they still went through an extraordinary period of growth where it was like, yep, that was a winning formula. And for like, 30 years globally, it was the best strategy ever. Now, that's cold comfort for the guy that got run over by the tank in Tiananmen Square and all the people that got shot in the face or for the Uyghurs and concentration camps. But we would be lying if we said, hey, that shit didn't, like, really yield some extraordinary results. But what I think we're about to see is the flip side of that coin. When you're not letting the market come in and say, listen, like, this is where things are going. AI being a great example. And instead China now trying to repress what you can and can't do with that.

B (33:09)

Yeah.

A (33:10)

You start getting back into that danger zone where now they're trying to do things from the top down, which causes people to push back harder, which then causes them to have to repress you harder. And so you get into this loop where you end up with Mao's China, where 45 million people are starving to death. So it's like ultra high risk. But free market capitalism also has its own risks. And so it becomes a question of, do you value freedom, which America's racing away from. So people that criticize America and say, look at these evil capitalists, look at the outcomes. I'm like, I wish we were capitalist.

B (33:41)

Yeah.

A (33:42)

Like, at least that I could stand on the merits and be like, yeah, it's rough. There is a guy literally dying on the streets because nobody's helping him. That sucks. And I wish his family would rally around him. But Tommy doesn't have a family. Brutal. I wish the church would rally around him. He doesn't belong to a denomination or he refuses to step into a house of God, whatever. And it's like, those things are hard to watch. And I totally get that, but so is watching people be put in a concentration camp. So it's like, which China is doing today. So it's choose your heart. Yeah. Choose your heart. Thank you. What a fucking brilliant way to sum that up. So anyway, I err on the side of freedom. I would much rather be in the camp of it is the individual that is the spark of divinity, and therefore it's the individual that needs to be protected anyway. We've, we can have that debate if we want, but not to fractal too hard. So you're going to pick your hard. All of this stuff is trade offs capitalism. America's not running the capitalism I'm referring to, just to be very clear. But capitalism is the only thing that has proven over time that it can create this broad spectrum well being.

B (34:52)

No, I want to break down the AI China regulation now that we talked about. We covered it. So a court in China has ruled it illegal to replace human workers with AI purely to cut costs. They have put responsibility back on corporations they can't automate just to boost margins while workers are pushed out. China has decided that wages, fairness and employment are optional and that's a big shift. While the west replaces to replace labor as fast as possible. Viewing AI as a free for all, China has set a precedent that profit alone isn't enough and corporations must answer to society. Yeah, what's your initial reaction, bro?

A (35:25)

This, this one is wild. A Chinese court just ruled that firing a worker because AI can do their job better is illegal. Now many here in the west are cheering this one on, which gives me the creeps. But this kind of law is going to backfire. Not only will it do little to nothing to stop people from being replaced by AI, it just gives governments more control, which is extremely dangerous. And given the insane historical like writ large reality that governments kill their own citizens, okay, not just China. The numbers in the 20th century alone are so staggering, people just are either ignorant to it or they think somehow human nature has changed. I don't know. Governments kill people like for real. On a long enough timeline, governments are extraordinarily good at that. Now the lead case tied to the Chinese ruling here involves an AI quality assurance supervisor who made roughly 25,000 yuan a month. And he his job is to verify AI output. Now you can imagine that an AI is going to be better at verifying a lot of this stuff than a human is, or certainly a human augmented with AI is going to be better. And so you're going to need fewer and fewer of these humans. When his company tried to demote him to a 15,000 yuan role because the AI was outperforming him, he refused and then was fired. Now the court ruled that the AI adoption is a voluntary business strategy, which is already wild, that they're saying that, hey, you've got to have force majeure, which this was not if you want to fire somebody. So under Chinese labor laws being worse at your job than AI doesn't legally justify moving you to a different role. Now I know right now that there is a large number of people that are hearing this that think I am just some capitalist asshole who cannot understand the plight of people. I get that. That's the read and I really want to talk about that because that is not the place that I'm coming from. Even though I know that that is my general frame of reference. I understand that. And I'm willing to get as nitty gritty as people want on the hard reality because this has to be dealt with. That if we just leave people to suffer out in the streets, there will be a revolt and it will end horrifically. That is not the outcome that I want, so bear with me. Now remember, in the beginning they did not try to fire this guy, okay? They just tried to move him to a less expensive role. Keeping a company alive is brutally difficult. 94, 94% of all companies fail. So when you've got a government trying to tell you from the top down, something that's going to make that even harder now you run into the madness of top down control. The reason top down control doesn't work is you're not close to the reality. This is why I want parents to raise their children. Even though I know that there are some parents that are absolutely God awful. But that is far better than the state, which is way removed from the day to day realities of what raising your child is like. And so them trying to have these blanket policies is just always going to be a disaster. You want to push the responsibility down to the people that are closest to the problem. And in this case, people running the business are the closest. It doesn't mean that there won't be terrible people in these decision making positions. There will be. It doesn't mean that people won't abuse this to fire somebody that they just don't like. It will happen for sure. But the reality of why China is doing this isn't just about altruism. This is largely related to Xi and the CCP needing to remain in power. Right now, China has a massive demographic problem and there's growing reports of unrest at the margins. I'm not saying that there are revolts in China, but you're going to start seeing this more and more people talking about like there's a level of unhappiness that is reaching higher and higher levels, which is why Xi has been doing his purges, which by the way, nobody denies is happening. Xi is ousting people left, right and center because he's having to put a tighter and tighter grip on his control because the economy is in a worse and worse place place. Youth unemployment in China hit 16.9% in March. And with all numbers coming out of China, that's the cleaned up number. It excludes students, by the way. And it's going to be the number that the CCP believes is fit for international consumption. They know who reads these numbers now. The old methodology that they were using showed that it was higher than 21%. And I'm sure those were already cleaned up numbers. That was back in 2023, Beijing, when they started getting those numbers, they just straight up stopped publishing the data for six months. They're just like, nope, sorry, no more data for you.

B (40:05)

There is no data.

A (40:06)

Correct. This is not the data you're looking for. And they go in, they make changes, and now they start presenting this new number which has dropped significantly. And this is all BS numbers. Current youth unemployment in China isn't even just like a sheer numbers problem. It's a mismatch problem because China is an aging demographic. China doesn't have enough young people. So this isn't an aggregate demand problem. China has about 12 million college graduates entering the workforce each year. They should want more, by the way, a lot more. They're going to need more. But the white collar pipeline that was supposed to absorb them has been gutted. The property crash, the tech crackdown, the shutdown of the private tutoring industry, the slowdown in foreign investment, it's all hitting at once. Meanwhile, factories and delivery jobs go unfilled because educated urban grads won't take them. So now you have to ask, do you want the government here in the US for all the people clapping so hard for this? Do you want the government to tell you what job you're going to take? Okay, because this is where this stuff goes. So it's not that China has too many people and too few jobs in aggregate, it's too many people with degrees. This is known as the over production of elites. We have the same problem here in the US So you've got too many people with degrees, too few jobs that match those degrees. And that's putting serious strain on an economy that's already in trouble. Now, when you layer in the reality, everything is going to transition to AI if it's better that that just is the reality because we're all competing on a global market. So this is a huge problem for China because the entire legitimacy of the Chinese Communist Party rests on a single bargain. They say to the People, hey, we're going to deliver economic stability in exchange, you guys are not going to revolt. That's the deal with AI. China is in a damned if you do, damned if you don't scenario because they also have a demographic time bomb that is ticking away. They have very few young people like staggering, scary low number, and a rapidly aging population that will either need young people or AI and robotics to take care of them. Given that young people take 18 years to mature and AI is instant, AI is inevitably going to play a major role in solving the problem. No matter what legislation China tries to push down en masse from the top. As the working age population shrinks, AI producer productivity becomes absolutely critical to China. They will need AI to compensate for the workforce that is just disappearing. So telling companies that they can't fire workers or even demote them to keep a business more efficient, when you're Talking about a 94% failure rate of companies, that just means that new companies will get started that use AI from the jump so that they're not having to fire anybody. They just don't hire them in the first place. And then if China insists that they do hire employees instead of using AI, they're not going to be competitive on a global scale. So all of these new efficient companies that are going to come up will just replace the old ones that have underperforming humans. That's just a reality. We have been through these kinds of technological transitions before and they are rough, there's no doubt. But in the end, they create more jobs than they take. The only alternative for China is a completely draconian government that just keeps trying to gain tighter and tighter control over the populace, which is what we're seeing, and then control everything from the top down. Now you guys have heard me talk about a million times. China has a long and bloody history of doing that. And in the 20th century alone, that method killed a staggering number of people. The low, the low estimates are 45 million. Okay. It is a terrible strategy. This is why I absolutely despise the reaction that I'm seeing from people here in the US and across the West. Way too many people on both sides of the aisle are clapping for this. Acting like this is the model that we should be copying here, which is insane. Giving the government veto power over hiring and firing decisions is the exact road to hell that is paved with good intentions as the road to hell is always paved. So yeah, man, this one is going to go somewhere very dark, very fast. And I expect the people in the chat are going to hate my take on this. I want to fight about this one.

B (44:40)

Oh, this, this one. We're going for this one. We're going for it. Is it Because I know we hear, we usually, I don't want to say dumb it down. We usually end up getting to populism. I'm feeling it. So that's why I'm like running into the arms of this other system. Is it just because I'm feeling it, that's why I'm running. Is that like the I'm talking about part of it.

A (44:59)

So I think though that you really have your finger on something. I feel a level anxiety. So if I'm looking at AI and I'm like, ooh, and I'm super wealthy, I understand investing. I'm one of the people in the 10% that own 93% of the assets, all of that. If I'm like, oh, this one makes me uneasy, then I can only imagine somebody who's already like, fuck, if my car breaks down, I can't replace it, the parts. So like, I get it, but this is where it's like you have to eject out of your emotions and go, okay, I've got my finger on the right problem, but do I have my finger on the solution? This is my whole beef with Gary's economics. He understands the problem and he's absolutely moronic when it comes to the solution. And so it's like, okay, hold on, we, this is a problem we're going to have to address. How do we address it? What is the way in which we're going to make this work for people? I don't think there are going to be easy solutions there. I think this is all going to be trade offs. We all have to understand, understand, okay, let's put the solutions on the table, let's look at the trade offs that history tells us those are going to have and let's decide what trade offs we're willing to make. Now the populace obviously is going to stay in their feels, so this is going to be largely emotional. This is the iron law of oligarchy. This decision really is going to be made by a small group of people, but it's going to be a battle between essentially the DSA and conservatives. And so we'll see what ends up being the solution. But coming in and trying to have top down control over this won't play out well. Because if, if I can get people to use a historical analogy, this is literally like the knocker uppers or the lamp lighters going, bro, you can't replace this with alarm clocks. Or if people know the story of Paul Bunyan, obviously it's just mythology, but it was meant to explain what was happening to logging, which is exactly like what's happening now. So Paul Bunyan, mythological story about, like, the ultimate log lumberjack. And he was just so good with an axe, he could cut down at a faster rate than anybody else. But eventually the chainsaw gets invented. And despite him being this extraordinary guy that everybody revered and being this real hero in the Disney retelling of this, the chainsaw really is the villain. It's painted as the villain all the way through to the end. You love Paul Bunyan. You were sad to see him fall. But the reality is, isn't he, like,

B (47:20)

when he outcuts, cuts the chainsaw and then he dies or something?

A (47:23)

I don't remember, like, the final, final punchline? You would have to look it up. But any kid watching the story of Paul Bunyan goes, my dad uses a chainsaw, not an ax. So you know what ends up being the real winner in all of this? And this is always the case, like, the technology is going to advance. Technology is a promise of a better tomorrow. As long as we are wired the way that we're wired, we're always going to back the thing that gives us a better tomorrow. But technological advancements in innovation do not care about the people that get mowed over. And so when you have these big technological revolutions, there's a generation, sometimes two, that they struggle at a level that is truly profound. But then the world makes up for it and we move on, and it just is what it is. And so it's like, it is an unstoppable force. And so wasting our time trying to stop it. It. Without answering the question, how many people are you willing to kill to stop it? Because you will have to kill them. That really is the thing. Because remember, like, take just so random to pick on Estonia, but take Estonia. They're tiny and they look around and go, how are we going to differentiate ourselves from the rest of the world? And so they become hyper technological. So you can imagine that a country like that or El Salvador, some of the things that they're doing, people go, I've got to compete with the big boys. How am I going to do it? Argentina is doing this now. Argentina just got Peter Thiel, one of the richest people in the world, to buy a home and start planting roots there. And they put out a public message that was like, hey, you think you're being taxed too much by Your country come here. And so anybody that's like, oh, were you just crushed? Was your company just crushed by your government because you were trying to use AI in your company, come to us. We're the safe haven for AI which then will cause capital to flood over there. So the people that try to, like, crush this stuff down by killing their people want to be very clear about what has to happen to make that stop. People just leave.

B (49:28)

Yeah.

A (49:29)

And so you might. You admittedly, you might extend the timeline with enough human suffering, you might kill enough people that instead of this happening in 20 years, it happens in 50 years, but it does happen. And so do we really want to kill a lot of people rather than try to find a logical solution? To me, it's like, the story of Paul Bunyan is rough. It's sad, and we're all going to either be or know a Paul Bunyan in this scenario. But, man, like, you just have to find ways to adapt better rather than murder your way to a solution.

B (50:04)

I feel like you've seen many moons. You've been through a couple of decades, so you've seen.

A (50:08)

Who's calling me old?

B (50:08)

No, that's nice.

A (50:10)

Nice way to say I'm old.

B (50:11)

Sophisticated in your wife. Is this the moment where you turn into the kid, then you become the cooler uncle, like cousin, older cousin, and then you become the old guy on the lawn, like, shaking his fist?

A (50:23)

Yes. Dude, that's so great. So what is his name? Shane Gillis has a hilarious bit on this where he's like, nobody intends to be a Republican. He's like, you don't wake up being like, I want to be the asshole yelling at kids to get off my lawn. It's. So this is about cause and effect. And there's a real harsh reality to be faced when raising kids. For instance, part of why I don't have kids is I did not trust myself to, like, enforce the level of discipline that I knew would be good for them in the long run, but is really brutal in the short term. Like, I'm still haunted. I have a dog that is very stubborn, and she was stealing her sister's food and I had to go interrupt it. And as a longtime viewer of the Dog Whisperer, I put her on her side and do that, like, three finger, like, neck pressure thing. It's supposed to be like a dog bite. And she bit me. And so now I've got to hold her on the ground in the. This is where my wife starts crying, by the way, because when she gets bit, she takes it like, so personally. And I'm like, this is what dogs do. She wants the food. I'm stopping her from eating the food. And so she bites me. So I, like, pin her down. In fact, that's why I pinned her down, was because she bit me when I pulled her away from the food. And I put her down, and I'm just, you know, being calm, holding her there. But she, since then, just isn't as affectionate with me. And, like, this was. This is a while ago. This is like, maybe a month ago.

B (51:52)

She walks past you in the hallway, like, looks you up and down.

A (51:54)

So literally, Lisa carried her towards me this morning, and I reached out to her and she just turned her head. And literally, it's since I stopped her from eating her sister's food.

B (52:05)

That's crazy.

A (52:06)

But now if I don't do that, I've got a dog that runs a house that you cannot have. So there. There are cause and effect things that have to do with the way economies function. There are cause and effect things that have to do with the way the human mind function. This is why I think having some government is good, because you will get abused by humans. Humans are tyrannical if they're not checked. So government's good. It's amazing. It's weak. People coming together and saying, I want to be protected from somebody that's strong enough whatever the fuck they want. Like we're doing in Iran, right? We're the bully that nobody can check. And so as hopefully people can see, this can have pretty gnarly consequences. So anyway, it's like you get older and you just start realizing, like, oh, shit, there are things that work and there are things that don't work. And being an entrepreneur certainly has painted my view of the world, because you have a gun to your head if you can either make payroll or you can't. And so it really forces you or it forced me. I'm shocked how many entrepreneurs don't do this, but it's really forced me to look at my life through a cause and effect window that can be mapped in a spreadsheet. So when something's going wrong, I can identify the cell on the spreadsheet that's broken. And it does make you sound like an asshole, though.

B (53:17)

You know, it's the cost of doing business, right?

A (53:19)

It's the cost of being effective. How about that?

B (53:22)

Yeah, I'll take it. All right, let's jump into a new bill that was just passed. This is FISA702, and it just passed the house. This Bill lets the government search Americans private communications without a warrant. Indirect violation of the Fourth Amendment. But don't blame the GOP alone. 42 Democrats betrayed the American people to help Mike Johnson pass it.

A (53:44)

Also, I think this has gone unchallenged by multiple administrations. That's the bad news. But listen, Republicans got to hold the L like this is they're in control right now. So sure, you've got Democrats that are voting for this as well, but this really can be laid at the feet right now of the Republicans. So to all of you out there, bad news. The US Government has decided to continue spying on you. The Constitution, apparently it's merely a suggestion, which makes me very sad. Section 702 of the Foreign Intelligence Surveillance act has been extended. Now, on paper, 702 only permits surveillance of non US persons located outside of the United States. So you're going to hear a lot of people saying, what's the problem? This is about foreign people and of course we need to keep an eye on them. And we're not targeting American citizens, and we're not targeting anyone here in the United States. But the word targeting is going to be doing a lot of heavy lifting. So the problem is that downstream, even if US citizens and people inside the US aren't expressly targeted, when the NSA collects communications from the roughly 350,000 foreign targets that they spy on annually, many of those foreign targets are speaking to, you guessed it, Americans. So Americans, emails, texts, calls, all of it all ends up in 702 database. Even though Americans weren't actually targeted, the FBI, CIA, NSA, National Counterterrorism center, all of it, they can and do run thousands of warrantless searches against that database expressly using American names. Okay? Their numbers, their email addresses. They do it on purpose. So how it ended up in the database becomes of little concern if you know that you're still using it without a warrant to do all these searches. They're known as backdoor searches. And the government does them routinely, again without warrants. The abuse record is freakishly well documented. FBI queries have hit protesters, journalists, donors, members of Congress, political campaigns. In August of 2024, the DOJ found FBI agents had been using a tool that bypassed even the weak ass procedural reforms that Congress had put in place. Okay, these guys are getting around this stuff on purpose. They want this so they can spy on everybody. This is unlawful. And the program was supposed to sunset April 20th of 2026, but the house just passed a 45 day extension. The Senate signed off as well. And there are reforms on the table that add written justifications and attorney approval needs for these queries, but still they don't require a warrant, which is what you should be getting if you want to be constitutionally accurate. And that's what privacy hawks on both sides are asking for, by the way. But they're not getting. Now, my hope is that the reason that they're doing the 45 day extension is because they could not get everybody on board. There are more conservative people that are like, nope, we're not doing this. They tried to throw them the CBDC thing, which I do want, by the way, that bans that, but they didn't. They. I think they went for it in the Senate, but not in the House. So, yeah, anyway, they pivoted to this version, which at least is only 45 days. But man, it's hard for people to maintain a level of outrage long enough to stop these guys from doing this kind of stuff. So while I have no evidence, I imagine it goes something like this bias. 45 days, people won't get as worked up about it the second time around and we'll be able to get this thing through. It's wild. It's really frustrating. It is really frustrating, man. We at some point just abandoned the idea of keep government small.

B (57:38)

Yeah. And speaking of sprawling government, they are officially wrapping up the shutdown. Senate and the House have agreed to a funding deal that would partially fund dhs, but all of the shutdown stuff might be finally done.

A (57:53)

So, yeah, I think it officially is right. Didn't he already sign this? I think it was signed yesterday. So, yeah. The good news is that we at least now have a funded dhs, but the battle continues in terms of border enforcement. So if you get down with strong borders, you're going to be maybe less keen on this. But they're. What the Republicans are saying is we're going to do all of this through budget reconciliation, so it is going to be funded. You don't have to worry about that. So we'll see the battle continues. But it does look like that the Republicans just finally realized we don't have the leverage here. We're not going to be able to get this done. So capitulate, Capitulate. Which is fine. I mean, listen, ultimately politics has to get done. There is always going to be compromises everywhere. And as long as the enforcement actions that we need to keep Americans safer in place. Yeah, great. You're gonna have to do something to get this stuff across because, man, it, it has been, I think, unnecessarily risky. At a time where we're at war with Iran and the odds that there are, like, sleeper cells and stuff is distressingly high, for that to be unfunded is a bad idea. So I'm not super freaked out about this one.

B (59:06)

Gotcha. Gotcha. All right, now, staying in Congress, Rand Paul is going after Fauci. This is what he tweeted yesterday. I've said it from the beginning. Lying to Congress is a felony. Destroying federal records is a felony. Advising others to destroy federal records is a felony. Fauci did all three. His divider was just indicted. Fauci is next. The pressure to prosecute Fauci. The deadline to Prosecute Fauci is May 11th. The DOJ must act now. I'm gonna give you a yes or no, then I'll let you cook. But should Fauci be prosecuted?

A (59:36)

Here's the bad news. I don't know. I'm not super close to this one. So I have a feeling as this heats up, I'll probably do more and more research on it. So the easy one is to say that if he was lying about things, if he was telling people to destroy records. Yes. So this is one where I'm like, hey, don't do political prosecution unless there's, like, it's a real slam dunk case. You cannot allow people to do this if he is doing the things that he was accused of. Yeah. You cannot have people do that. Dude, the way that we handle Covid to me, was patently insane. And forcing people to get inoculated is absolutely crazy. Like, to me, oh, God, this is not going to be a popular position, but to me, people need to have bodily autonomy. And I want to live in a world where if the public want to shun somebody because, like, I, I, I'm not going to let you be around me because you haven't gotten vaccinated. Cool. But the government's going to stay the fuck out of it. And the fact that we were all like, yeah, cool, like, people are losing their jobs, like government jobs, because they refuse to get vaccinated is insane. And I'm saying, like, let's say that you're like, it's, it's empirically proven. If you don't get the vaccination that you put me at greater risk, I still shouldn't have the right to force you to get the vaccination at the government level. That is insane. Now, if I want to say I refuse to be around you, absolutely, you, a thousand fold. Like, personally, just as me saying you're Doing a bad thing. I think you're a bad person. Stay the fuck away from me. You're not going to be near my kids at hard pass. Like, whatever. I'm going to check public spaces if you're going to be there. I'm not going to be there. Cool, do your thing. But, oh, man, you should not be allowed to say you lose your job at the government. If a private company wants to take a stance, fine. But if a government job that's being funded by the public says that, for me, that is a way hard pass. And then the thing that I was the most outraged. I'm not asking people to join me, but this is the thing that really lit me up, was them saying that true thing that you just said that hurts our ability to get compliance and therefore, like, you can't be allowed to say it. It's called mal information. Something that we all agree is true, but it's inconvenient and therefore you can't say it. You and the horseshoe rid on that. That is a level of tyranny, bro. That one for me is psychotic. So, yeah, that's that. It's psychotic because it's so dangerous. Like, once people can't say what they think is true, we can't try and triangulate on the truth. We can an actual sensible path forward. But I know some people are just like, safety over everything. And if you could put me in danger. Yeah, them, chain them down, jab them. I'm just not there.

B (62:27)

Yeah, it's, it's interesting to see how, how things actually play out with it. Because on one side I get where they're trying to go and I get direction. I always try to leave an empathy of like, okay, I get why you thought that was a good idea at the time with the information you had.

A (62:41)

Yeah, sure.

B (62:42)

You know what I mean? So I'm trying to give him grace. There's. But there has been a lack of accountability of like. And just a, hey, my bad. We were trying our best and walking away. I feel like something else needs to be done.

A (62:53)

Well, also, I, I, from the little bit I have seen on Fauci, it doesn't look like that's the case. He is straight telling people, destroy this email once you've read it. Um, other people have said, oh, he's told me privately that you can like bring a document to his house but don't send him email. This is a guy who's like, I don't want FOIA request that. I don't know if it was him. But other people have, like, inserted other words or they'll intentionally misspell something. So when an A. FOIA request is put forward and you do the search, it doesn't show up, bro. You can't do that. So that. That is wild.

B (63:28)

Working in the gray area.

A (63:30)

I mean, go Rand Paul. It'll be interesting to see if he's effective at this. But he's got people in his sights.

B (63:37)

That. That's the thing. Him, Ron Thomas, Massie. I love them to death. They're trying their best. But. But there is something to populism. There is something to rallying the troops together. And I think their posture, as we're the adults in room, we'll tell you what to do, isn't necessarily hitting in this moment.

A (63:54)

Well, also, if you're into the nanny state, then you're like, yeah, of course the government should be able to tell you what to do. Like, I don't even understand. Like, this is wild. Like, they will point to me and say, this is crazy. He's saying that. That you can put other people in danger. Like, the absurdity of that argument is, at its face value, just ridiculous. This guy should not be allowed in polite society. And I don't. I listen. I think they understand the consequences. I think they just think they'll be the ones in control that are making all the wise decisions. They think they see the future clearly. And so, yeah, you can lead me to make a decision. I'll always make the right one. That's so crazy. Life has not taught me that. Life has taught me that, yeah, over time, I can usually correct course and, like, get pointed in a better direction, but that I make mistakes all the time, that I read the situation wrong and I have to adjust. And so for me, focusing on that, like, constantly identifying the right answer instead of focusing on being right, I, yeah, I am. I get the heebie jeebies from anybody that is like, no, no, no, I'm right. You'll listen.

B (64:59)

Well, Tom, I am right. And you will listen because I said we need to lower the prices of houses and we need to build more houses. Dallas has done this. This is like the 6th, like Texas City. They're just stutting on us at this point. First it was Houston. Shout out to Ryan.

A (65:13)

He moved. He got suckered in. Like, we've got him here in la.

B (65:18)

But, yeah, first it was Houston. Lowest housing rate, biggest market out of everything. Phoenix is another one that's declining. Austin was declining. And now we have this. That's saying Dallas is declining.

A (65:29)

Dude, look at I wish people were looking at their phone right now or their screen, because hot damn, that didn't come down a little. That came down a lot. And if you're wondering why it went up so high, that was the flood of everybody leaving California. So they went in, it caused a temporary, like, decrease in the availability of housing compared to the demand. And then the free market does what the free market does. People get greedy and they think, oh, I can make money. They start building, building, building, and the cost just comes racing back down.

B (65:57)

It's perfect and it balances out. So I think it was our Scott Galloway interview when we talked about it, where it's like, we're seeing these, these models, we're seeing these success stories. Why don't we duplicate them? Why don't we just copy and paste across all 50 states?

A (66:11)

Because governments want to be in control. People want regulation. They think they know better than everybody else. They think the landlords are greedy. They are absolute morons. And they don't understand the reason that the free market works is because the only thing that you can trust humans to do at all times is be selfish. And that doesn't. So, yes, I'm saying things like loving your kids more than the next person, that's selfish act. I get people gonna squabble over that. I'm just saying people live life in their perspective. They're seeing things from where they're at. They're more worried about whether their kids eat their next meal than the kid down the street or the kid in the next town. And so instead of fighting against that and expecting everybody to be altruistic at scale, like they would be inside of their own family, which is idiotic. People will act one way towards their family, and it's completely different to the outside world. And that's as we are wired. I won't ask you to believe that's as it should be, but it is as we are wired. So when you build policies that take that into consideration, you get something great. Because the reality is, it's exciting that an entrepreneur will look at all these people from California coming in. They go, whoa, there's like a real need in the market for these houses. I'm going to take the big risk to build this out. I'm going to build these houses because I want to make more money. I want to, like, you know, build my business, make my family wealthy, all of that stuff. It's a very selfish but beautiful impulse from where I'm sitting, and it creates this incredible cascade where the cost just comes back down and it will hit an equilibrium point where now people go, that's not a good risk anymore. And by the way, people will have gone too far. They'll probably overbuild a bunch of those builders will lose their ass and that's how the market works. And it's like, yeah, some people win because they figure it out, other people lose because they don't. And that is as it should be. It is a risk reward game. And we spend so much time trying to remove risk that we end up bailing out banks so that nobody gets hurt. And then we kill the middle and working class. It's just so wild. So yeah, we don't copy and paste it because people are so convinced that they are right. They are so convinced that corporations are evil, that landlords are bad and that they see everything clearly, that they are the morally right and that people just need to do what they think. It's so infuriating.

B (68:17)

It's one sided, short sighted. But we all think we know everything, man.

A (68:22)

I will go on record, I do not know everything thing for sure and I am hyper aware of that in myself. So yeah, it is the thing that has made me wealthy is my unending paranoia that I'm missing something.

B (68:36)

Well, LA voters will think they got the person that they're missing right now because Natia Ramen dubbed the next mom Donnie, which I haven't really seen anything to back it up. I'm gonna have to look at Hassan's.

A (68:48)

Yeah, there's actually a better candidate in the mix that has. Has like just a straight DSA take. She's less. Look, I'm early in my research, but she's less terrifying. And so this will be one where people will find out whether I just blanket people and everything she says is bad because she's related to the DSA or if I pull things out because there are some things that she's at the headline level that she's putting forward that I'm like, yep, that makes sense. And then there are other things where it's like, nope, you're. That's lunatic. So we'll see. But I'll take it policy by policy. I've got no, just, just general beef.

B (69:21)

Got it. Because we are right now in the middle of two big elections for la. First the governor for the entire city or the entire state. And then we have of course the Los Angeles mayor election for the biggest city in the state. So it's one of those things where it's like we see what's happening in New York he had some wins where there's a snow removal in two days and all these other things, but then he had some losses where we having these budget shortfalls and these things are happening. I know California historically has done bad with fraud, historically has done bad with managing our finances.

A (69:49)

It's also done historically bad with managing our fire problem. And so that's really what's got people up in arms now. And then all the bullshit about we're going to help people build back and cut the red tape, which they have not done. And so it's like they still can't build the railway, all of it. It's just absolutely ridiculous. These problems are so solvable and it is only incompetence that has stopped them from being solved. Now whether she's our girl or not, that I don't know. Like I said, she's got some policies that make sense. Like she really does seem interested in reducing housing prices. Uh, so you know, I'm going to clap for that every time. I don't care who says it. You fucking Karl Marx could roll up and say, you know, we need to do we need to build more housing. I'll be like, fuck yes we do, Carl. Now if in the next sentence he says something moronic, then I'm going to say the next thing is dumb. The first thing makes sense. This is all about cause and effect. So anyway, I'm early with her but there's some things that she's saying that I was actually into.

B (70:44)

But it does echo to your earlier point that there is this malaise around people and they are leaning into these alternative forms of, of political parties and that's why that's even on the mayor ballots.

A (70:56)

Yeah, and it makes me weep because here's the thing, they want good things. They I, I'll just blanket assume these are good intentioned people that are struggling and somebody's telling them that they're going to make that struggle go away. I can't remember if I pulled the link, but there was a really brilliant image that summed up the difference between capitalism and socialism. And it showed two vending machines. And the one on the left was capitalism stock full. And the one on the right is a big sign. So the one on the left, big sign that says capitalism. One on the right big sign that says free and there's no further explanation. And so you're like, oh damn, like capitalism, you gotta pay for shit. And then the other one's just free. And then you look closer at the image and you realize, oh, the capitalism vending machines actually stocked. The free vending machine is empty.

B (71:44)

Yeah.

A (71:45)

And that's what socialism and communism are known for are the bread lines not being able to get things because there's no incentive to make it. And there's no way. People talk about the pricing mechanism, and that really is true. People don't know how to. How much to charge for things. But the more important thing is what happens when you don't know what to charge for things? They end up being too cheap. Everybody floods in, they hoard, they grab as much as they can. You start putting restrictions. You say you can only have this amount, but how do they know, again, your needs are going to be different? So now everybody's appealing. Now you don't understand. I've got nine like kids that I'm trying to help or whatever, and it's like, nope, sorry, everybody gets one. And so it just ends up being so lunatic. So instead, what we have found is the free market is the best way to find all those price signals. So you find the point at which you are making enough money that you can run this thing profitably and that you're able to keep things in stock, that there's enough incentive to get people to build, that there's enough incentive to get people to innovate, so on and so forth. And without that, it just all falls apart.

B (72:46)

Which of you won't like NIMBYism? Are you okay if there was like a high density apartment down the block? Are you?

A (72:51)

I'm. I'm a Yimby guy.

B (72:52)

Yes.

A (72:53)

Yes. In my backyard. So here's the reality. Why would I do that? Okay. That kind of thing would hurt my property values. Drew, I'm telling you, I don't expect people to believe it. Maybe other than you. And the people that know me, like, look me in the eye. I care deeply about a thriving middle class. I care deeply about people's ability to move up and down on the economic ladder. And I, because I, I have at this stage of my life, won the game of capitalism. Hopefully I will live for an extended period of time, which means that maybe there are times where I'm up and times where I'm down, but I really just want the game to be fair at the starting line. After that, I expect the people who build the best skill set to win more than the other people. And so I am willing to eat my own dog food. So if I put forward a policy that is good for the masses and it's bad for me, it is what it is. Like, I want a policy that's good for the masses. So yes, in my backyard build that shit. Like let's go now that doesn't mean that I don't go. So look at the Pacific Palisades for instance. The Pacific Palisades is one of the most beautiful areas in the world. Which means if you just let the free market decide, the people with the most money are going to go in and they're going to buy, they're going to do big beautiful single homes and all that. And you and I, one of our earlier arguments was about yes, some places are going to be too expensive for people. But if there's a developer that's like, no, I'm going to build these beautiful apartments, it's going to be high density housing. Cool. Love it. Now I would expect those apartments per square foot to be way more expensive than that same apartment in a different area. But if you've got somebody that believes that they can pull that off off, go for it.

B (74:40)

Nice. Yeah, we'll see. Because it seems to your point, the most predictable problem. Like we know how to get there, we know it's a supply to paying thing, but yet we haven't been building more houses. So we'll see how the most unaffordable housing market in history reacts over the next couple months years through the end of this administration. Yeah, we've seen a similar story like this in New York a couple weeks ago where it came out that, that in the. I think the homeless charities were paying homeless people more than the medium income of a working person in New York.

A (75:16)

Seems like that's so crazy. We can't run by that one. That's so wild.

B (75:20)

We seem like we have a similar problem in France.

A (75:22)

Corruption. Yeah, this, this is aggravating. This might be a slightly different problem unless you just blanket assume that the government is corrupt. But so this is is crazy. The cost to a French employer of like if you want to get $39,000 in your employees pocket, the cost of the employer is over $90,000. It's wow, that is insane. The employee should be outraged. They're not. Because French. I can say that because I am French. But the French bro, like dude, what happened to you guys? That is wild. So they should be up in arms, but they're not. They want more nanny state, not less. Which means more dollars are going to be taken out of your pocket it and then somehow some way they can't see how disincentivized entrepreneurs are where it's like if I have to pay $90,000, I think it's more. It's like 95,000 or something. If I have to pay $90,000 plus to put $39,000 in employee's pocket, I'm just gonna be like, this doesn't make sense. I'm gonna go somewhere else, man. For sure. I'm gonna go somewhere else.

B (76:23)

That's wild. And the caveat there is all this is before taxes, too. So it's.

A (76:27)

No, no, no. The 39K is because you're getting taxed. Yeah, that's. So if you look at the breakdown, see those three bars? It shows like, okay, this is what the employee is going to get. This is how much goes to taxes. And then there's one that's too small for me to read from here. But there's one other thing. It's like pensions, net salary.

B (76:44)

Yeah. Employee deductions, taxes and Social Security. Employer contributions. Employer pays.

A (76:49)

There you go. So you. It does include taxes that the employee's paying, but it also includes the additional that the employer has to pay pay.

B (76:58)

Sheesh.

A (76:59)

Brutal, man. It is brutal. That is legitimately France. You should be ashamed of yourselves. This is crazy. Crazy.

B (77:08)

And so this kind of sets this tone for all the backlash that the billionaire tax got, because people are like, hey, this started off as just billionaires, and then as time goes on, it's going to get to hit more and more people. Yeah, but you're through a long enough thing. This is going to be what happens to the average person. We're going to start seeing more and more of our paycheck dwindle away.

A (77:26)

Yes, but you're. You're too educated. And so, because most people are totally for the billionaire tax, and it is going to take a lot of convincing to get people to understand they're calling it the billionaire tax. It won't be a tax on billionaires. It will be a tax on everybody. And they have specifically put into the bill that without requiring a vote of the people, they can make it apply to anybody and make it recurring. So, dude, that is the craziest Trojan horse wars ever. So the majority of people don't understand what you understand. So I. I don't think that there is pushback on the billionaire tax at this point, other than from people that either are wealthy and know that, like, they're in the next tranche.

B (78:12)

Yeah.

A (78:13)

Or people that are educated that are like, oh, yeah, this will eventually make its way to me.

B (78:17)

And it's crazy, too, because I do think that the sentiment is starting to change a bit. But I think because it's Coming from those that have have, it's just going to be like, oh, you're just a billionaire trying to get out of the bill, and nobody's going to actually look at the nuance of the other side of that argument. So very, very interesting. Okay, there's been a couple funny stories. This is not Friday funnies just yet, but I don't know if you've been following this JP Morgan fiasco, but it's been like, hilarious, dude, this thing.

A (78:48)

The memes on this are legendary parents. If you have kids in the room, now is the time to eject them. This was terrible. This is terrible. To be very clear, if this is real, it is terrible. And there was a like, AI movie made, like really showing sort of like a. A more grounded take. And I was like, yeah, if that's what's happening, this is really terrible. Now, at a high level, it does not appear that that's actually what happened. Well, we, in the fullness of time, we need to let all this stuff come out.

B (79:21)

That's the thing. I've seen a couple posts. They got community noted, so they're not. It's seeing like, he made it up and none of this is true.

A (79:27)

That is correct.

B (79:28)

Yeah.

A (79:28)

So seems like allegedly unknown at this

B (79:32)

stage of his time, but.

A (79:33)

Yeah, but this one is wild. The memes. The memes are worth the price of entry.

B (79:38)

Catching those up. A JP Morgan executive allegedly used her power to sexually harass and abuse a junior male employee, drugging him, submitting him to racial abuse, and threatening his career. Some of the highlights of highlights from

A (79:50)

them are again, exit the kids, kids.

B (79:55)

With his boss saying, I bet your little Asian fish head wife doesn't have cannons. Doesn't have these cannons.

A (80:01)

Yeah. So supposedly she was saying that as she was presenting her endowments in an aggressive fashion.

B (80:10)

That's the best way to motor, to say motorboat I ever heard in my life. You really think management wants some brown boy Indian leading origination? By the way, you don't fuck my brains out tonight, I'm going to sabotage your promotion.

A (80:23)

The 1. Do you really think they want some brown boy Indian leading. It says originations there. Other places have just said organizations, so I don't know which is the actual real quote, but like, yes. Do you know how many Indians from India run the biggest country companies in America? It is fucking staggering. So that's like the lamest, dumbest threat of all time. If I were him, I'd be like, yeah, Yes. I think, I think they do. The evidence backs that up.

B (80:52)

If you, if you can check your screen real quick. I thought this was hilarious. Did you see the shadow of the cannons pov? You're a junior Baker at JP Morgan and your empty what's ever performance Chat.

A (81:02)

That is fucking hysterical. That is goated in the extreme. Okay, super chat.

B (81:08)

All right, that's all I got.

A (81:09)

There it is. All right, everybody, happy Friday. As Drew said, have a wonderful weekend. And for any of you guys out there that want to build a business using AI, remember we've got a ZTF0 to founder AI masterclass on Thursday, May 7th. So it's this coming Thursday at 1pm Pacific. It is free and I will show you how to build a company using AI. This is an awesome class. It is super free and you will get a ton of value out of it. So I hope to see you this Thursday, May 7th at 1pm Pacific. All right everybody, have a wonderful weekend. End Peace. Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do? You need consistent nutrition. We all do. You need vitamins, probiotics, greens. We all know that we should be doing more of it. When your morning gets chaotic, you skip it. When you travel, you skip it. When your routine breaks, everything tends to break and that inconsistency compounds against you every single day. AG1 is designed to solve the execution problem. One scoop 8 ounces of water and you're done. You're getting 75 plus ingredients, vitamins and minerals, pre and probiotics, nutrient dense superfoods. Everything that used to require six seven different supplements and perfect planning now happens in one drink that takes about 30 seconds to make. Right now, AG1 is giving you $87 worth of free gifts with your first subscription. You get a welcome kit, travel pass, vitamin D3 plus K2 and flavor samples. Click the link in the show notes or visit drinkag1.comimpact to claim this offer. Some Follow the Noise Bloomberg Follows the Money Whether it's the funds fueling AI or crypto's trillion dollar swings, there's a money side to every story. Get the money side of the story. Subscribe now@bloomberg.com.