Russia Rejoins the Dollar, Dutch Tax Disaster & AI’s Next Job-Killing Wave | The Tom Bilyeu Show LIVE

Summary

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Tom Bilyeu's Impact Theory – Russia Rejoins the Dollar, Dutch Tax Disaster & AI’s Next Job-Killing Wave

Episode Date: February 16, 2026
Host: Tom Bilyeu

Episode Overview

Tom Bilyeu dives into three headline topics shaping the future of geopolitics, economics, and technology:

• Russia’s surprising consideration of rejoining the US dollar system as part of peace negotiations.
• The Netherlands’ controversial proposal to tax unrealized gains, which Tom warns could trigger an economic disaster.
• The relentless advance of AI, its impact on jobs, and whether “shared abundance” is realistic given current trends.

Throughout, Tom breaks down complex issues into clear, practical insights for listeners trying to navigate an era of rapid, unpredictable change.

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Key Discussion Points & Insights

1. Russia’s Proposal to Re-Embrace the Dollar

Starting at 00:30

• Context: Russia, after years of "de-dollarizing" and pushing alternatives with China, is now quietly offering to rejoin the dollar settlement system. This offer emerges from peace negotiations over Ukraine, and is reportedly detailed in an internal Kremlin memo ("Dmitriev package").
• Proposed Cooperation Areas:
  • US-Russia joint ventures in fossil fuels and LNG (liquefied natural gas).
  • Preferential conditions for US companies to re-enter Russia.
  • Nuclear energy cooperation, especially vital for AI’s growing energy demands.
  • Access to critical minerals (lithium, nickel).
  • Russia's full return to US dollar settlements for trade and investment.
• Strategic Rationale:
  • Russia’s alternative currency systems with China (ruble/yuan) are expensive, messy, and create a dependency on Beijing—one that feels like “a leash, not a partnership.”
  • Rejoining the dollar could stabilize Russia’s foreign exchange and rebound its battered economy.
  • Seen as a way to “give Trump something he wants” and reset US-Russia relations, thus splitting the West’s unified anti-Russia stance.
• Geopolitical Stakes:
  • Tom: “You are in the middle of it. Getting Russia back on the dollar train would be huge.” (04:14)
  • Weakens the BRICS “de-dollarization” campaign and strengthens US global power at a time when de-dollarization had been accelerating.
  • Raises urgent questions about the shifting "world order," US versus China, AI dominance, and the rules of economic engagement going forward.
• Market Impact:
  • Tom hypothesizes that global asset volatility and market anxiety stem partly from “deep uncertainty” about what the new world order will look like—and whether the US can retain reserve currency status.

Notable Quote:

“In the bare-knuckle brawl to establish a new world order, which is happening right now… Getting Russia back on the dollar train would be huge.”
— Tom Bilyeu (04:14)

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2. Dutch “Unrealized Gains” Tax and Economic Ignorance

Segment begins at 22:13

• Policy Overview: Netherlands proposes a 36% flat tax on unrealized gains—meaning the government will tax individuals and companies not just on income and realized profits, but on paper value increases of holdings (like company shares) even before anything is sold.
• Tom’s Analysis:
  • “The Netherlands have basically decided to lay bare their own economic ignorance and nuke their economy in a single move by taxing unrealized gains.” (22:47)
  • Compares taxing unrealized gains to taxing someone for a job they only might get in the future.
  • Warns about logistical nightmares and market disruptions—mapping out how investors, especially in private companies or startups, would be forced to sell holdings or take out risky loans just to pay taxes on paper gains.
  • Even with special carve-outs (for real estate, small startup investors), most scenarios would push investors to reduce risk, halt long-term investment, or simply move wealth out of the country.
  • Links this to similar proposals floated by US politicians (Kamala Harris), branding such efforts as either “sinister or completely economically illiterate.”
• Practical Illustration:
  • Co-host walks through the math:
    • You own assets worth €50k, they rise to €100k on paper, you owe tax on €50k—even if the market plunges again before tax is due.
    • Tom: “This is why unrealized gains is a little bit weird, not a little bit weird—why it is absolutely destructive.” (32:35)

Notable Quote:

“To put people in this situation where they have to sell the very thing that is worth the thing… this is how you begin to erode your economy.”
— Tom Bilyeu (23:57)

• Alternative Solutions:
  • Simpler, flat tax on realized capital gains with a low threshold—"no loopholes"—would be more effective and less damaging.
• Macro Commentary:
  • The episode connects economic stability, capital aggregation, and job growth to smart, non-punitive tax policy.
  • Tom: “The current world… is brought to you by the ability to aggregate capital. All the big beautiful buildings… all the safety you enjoy…. is a result of the ability to aggregate capital.” (33:03–33:56)

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3. AI’s Accelerating Job Displacement & Global “Abundance” Myths

Discussion from 36:11 onward

• Global AI Race:

  • China is releasing top open-source AI models, while US tech giants talk about “shared abundance” and UBI (universal basic income).
  • Tom and co-host discuss the implication of China setting the “default” layer for AI tech (access, currency, societal control).
  • Tom: “Xi's whole life model is, if people aren't doing what you say, you make enough of them disappear, go to prison, or just outright kill them. And so what do you think that guy’s going to do at the level of AI or economics?” (38:23)

• Welfare State Reality:

  • Tom points out that, despite self-perception, America is already a massive welfare state—“50% of Americans are on some sort of public service.” (40:12)
  • Distinguishes between cultural identity (individualism, “hustle culture”) and practical reality (safety nets, welfare dependency).
  • Laments decline in “hard work leads to success” ethos, but acknowledges systems are already in place for mass support.

• Work, “Hustle Culture,” and Social Cohesion:

  • Personal anecdote: Tom reflects on public backlash to his self-ownership philosophy—“If you’re hit by a drunk driver, it’s all your fault.” (41:06)
  • “We have already stopped being a country of hard work is going to get you ahead… it’s not culturally what has the energy.” (42:07)

• AI and White Collar Work:

  • Reference to AI leaders predicting full automation of most white-collar labor in 12–18 months—although Tom cautions against too literal a timeline but stresses the exponential speed and unpredictability of the transition.
  • Tom aggressively rebuffs cynicism about the lack of immediate progress (“LLM hallucinations will be largely eliminated by 2025”):
  • “This technology does not yet show any signs of asymptoting anytime soon… even if it’s 15 years, the world doesn’t look anything like this.” (45:16–46:10)
  • Practical advice:

    “How do you escape the punishment of inflation? You own assets. And yet how many people are actually going to do it?” (48:30)

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4. Memorable Moments & Gallows Humor

Friday Funnies—49:01 onward

• AI Hiring Humans:
  • Joke about Waymo AI using gig workers to close its self-driving car doors—Tom extrapolates, imagining robots learning to “manipulate” human systems and thinking like science fiction.
    • “It plays right into my thing about Project Kaizen… I was like, holy… we have taught AI the best and the worst of human beings, but [AI] does not have a conscience.” (50:24–51:09)
    • Suggests AIs are “way more human than we think they are,” and that we might be able to imbue them with a functional conscience by tweaking reward structures.
• Classic Gender Joke:
  • The joke about three women spending $10,000 in different ways for a man, who then marries the one with the biggest breasts.
    • Tom: “That one’s fun, funny because it’s so bang on. But also you ignore your biology at your own peril… Hey, take it up with evolution, like I don’t know what to tell you.” (56:12)
• Gallows Humor as a Coping Mechanism:
  • Tom notes: “I would not—before we launched the show—have said gallows humor is going to be a core pillar, but ooh, buddy, has it become a core pillar.” (56:59)

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Notable Quotes with Timestamps

• Russia & World Order:

  “You are in the middle of it. Getting Russia back on the dollar train would be huge.”
  — Tom Bilyeu, (04:14)

• Dutch Unrealized Gains Tax:

  “The Netherlands have basically decided to lay bare their own economic ignorance and nuke their economy in a single move by taxing unrealized gains.”
  — Tom Bilyeu, (22:47)

• On Economic Consequences:

  "To put people in this situation where they have to sell the very thing that is worth the thing... this is how you begin to erode your economy."
  — Tom Bilyeu, (23:57)

• US as a Welfare State:

  “50% of Americans are on some sort of public service. We are a gigantic welfare state. And our cultural identity is that of… we don’t take care of our people. It’s wild.”
  — Tom Bilyeu, (40:06)

• AI’s Inhuman Ethics:

  “…we have taught AI the best and the worst of human beings, but [AI] does not have a conscience. As I have said many times… It will blackmail, it will kill, whatever. It’s super efficient… the thing that clicked for me is AIs are way more human than we think they are.”
  — Tom Bilyeu, (51:09–52:12)

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Timestamps for Key Segments

• Russia Dollar Proposal & Geopolitics: 00:30 – 11:54
• Dutch Unrealized Gains Tax Breakdown: 22:13 – 36:12
• AI, China, and US Abundance: 36:11 – 43:39
• AI & White Collar Job Threats + Social Shifts: 43:39 – 48:30
• Gallows Humor & Friday Funnies: 49:01 – 57:00

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Tone & Closing Thoughts

Tom combines irreverence, technical savvy, and hard-nosed realism, challenging listeners to see through easy narratives and clichés. His trademarks:

• Direct, provocative analogies (“taxing unrealized gains is taxing a job you might get”)
• Emphasis on mental models and “world order” uncertainty (“markets feel like a deer about to bolt”)
• Warning against both naïve optimism and doomer fatalism about technology and policy.
• Readiness to laugh grimly (“gallows humor”) at societal dysfunction, but always in service of honest, practical analysis.

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Bottom Line:
This episode delivers a fast-moving, often funny, and always rigorous breakdown of how today's headlines reflect—and influence—the deeper fault lines of economics, politics, and technology. Tom urges listeners to stay alert, think for themselves, and above all, be prepared for shocks—to the economy, to job markets, and to how power is distributed on the world stage.

Transcript

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[A]

Good morning everybody. Welcome to another Tom Bilyeu show live. We are going to be going through a whole lot of madness today. Russia may be considering re embracing the dollar as part of a plan to build a stronger relationship with the US that this one is big. And I am very eager to talk about that. What that could potentially mean. The Netherlands are committed to committing economic suicide with their proposed new tax scheme. One that keeps popping up here in the US as well around unrealized gains. As you can imagine. This is gonna bring out the best of me. I'm ready. I'm. I'm ready. Drew, put me in on this one. Oh, I definitely wanna talk about this.

[E]

Yeah.

[B]

That day yesterday morning, as soon as.

[A]

I was gonna, it was like, we're not gonna start there, are we? Oh, but I wanna talk about it. And people are losing their minds because Argentina has made a 12 hour workday legal. I'm going to leave that one there. I want to talk about that one in full. All right, everybody welcome.

[B]

Russia is moving back to the US dollar as part of a wide ranging economic partnership. I will put a huge asterisk on this. This is one of those. It's part of the Ukraine peace deal ultimately. So there is some stipulations that are still very much evolved. And we know that we pump faked on peace deal a few times. So this is pending. Nothing is official. But some of the details that the partnership would include would be US and Russia working together on fossil fuels, joint investments in natural gas, offshore oil and cr. Political raw materials partnership windfall for US companies. Russia's returns to the us The USD settlement system, which I think that last one is something we want to highlight and talk about.

[A]

Yeah. So if we could get Russia to re. Embrace the dollar as they have just apparently offered to do. This is coming from intelligence that people have obtained from in Ukraine and it is tied to the war in Ukraine. The story broke yesterday via Bloomberg and if it's true and ultimately success, that's going to be the big question. It would be extremely consequential for them to re Embrace the dollar. This came from the internal memo in the Kremlin. It was drafted this year, circulated among senior Russian officials. And it proposes that Russia return to the dollar, which is crazy because that settlement system is a part of the sweeping economic system that was trying to hold them back. But this would allow them to basically get a win with Trump. As Drew was saying, it's contingent on actually ending the Ukraine war. So they want the US to come in, help them end the war in Ukraine. And if they do that, they're like, hey, here's the thing that we're prepared to do now in the bare knuckle brawl to establish a new world order, which is happening right now. You are in the middle of it. Getting Russia back on the dollar train would be huge. Huge. This is the very same Russia that has spent the last four years aggressively de dollarizing. They're a big part of the reason I keep creating content about, hey, everybody, wake up to the fact that because partly Russia's been building alternative payment systems, settling 90% of its trade with China in rubles and yuan, and championing brics as the vehicle for ending American financial hegemony, that we have gone from roughly 72% of global trade being settled in USD to now in the 50s. Okay, so it is happening. It is happening fast. And having Russia now quietly pitching Washington on coming back to the dollar, it would be a major change and a massive coup. In terms of the US versus China power dynamic, we are in a battle that is binary. Either the US is going to win, and this is largely a question of AI. Either the US is going to win and we are going to dominate the century, or it is going to be China that wins and they are going to dominate the next century. This is how great power politics plays out, accelerated wildly by how winner take all AI is going to be. Now, the memo, which is being dubbed the Dmitriev package, was named after Kirill Dmitriev, the Kremlin negotiator who also heads Russia's sovereign wealth fund. So this is somebody that actually understands deeply the consequences of the current Russian strategy. And Ukrainian President Zelensky has referenced it himself. So large reason to believe that this is all real. And he said that Ukrainian intelligence had gathered information on this massive bilateral economic proposed agreement between Russia and the US and that it's running in parallel to the peace talks. Now, I've got to imagine he's not exactly thrilled to see the US and Russia coming together. But in terms of what is certainly better for America in the long run, having a Functioning relationship with Russia at this kind of level where you get one of a small handful of global power players back on the dollar system. Ooh, buddy. Obviously very good for America in the long term. Now, the memo lays out seven areas of proposed cooperation. Drew went through them. But you're talking about joint oil, LNG ventures, preferential conditions for US Companies to re enter the Russian market, nuclear energy. This one is big, big because we're talking about getting the energy that we need for AI. Russia's return to the dollar settlement would be the biggest of all of them. But all of these things together would be great, especially cooperation on critical raw minerals like lithium and nickel. By the way, this one's going to be controversial, but they're also doing a joint push for fossil fuels to basically bypass some of the green energy policies that Russia even argues favors China and Europe. Oh, the irony that green policies favor China. Ultimate. The question is going to become why would Russia want to do this? And especially right now, given the sanctions that we put on them, given how damaging that's been to their economy, wouldn't they be better off never being in a position to go through this again so that they can create an alternative? Because on the surface, returning to the dollar settlement layer just means that you're resubmitting yourself to Washington control. We've already weaponized it against them. So given that we've frozen historically like $300 billion in Russian Central bank reserves, why would they volunteer for this again? And the answer is, Russia is in a very difficult situation. The alternative currency systems that they built with China, they do work, but they come at a huge cost. Russia sees themselves as increasingly dependent on Beijing. Remember, Beijing is making a play to be the central kingdom to the entire world. And that dependency is starting to feel to them, I'm sure, a lot less like a partnership then like a leash. And so the memo itself is arguing that returning to the dollar would stabilize Russia's foreign exchange market and reduce volatility in its balance of payments, which is true. So in plain English, the ruble yuan workaround is messy and expensive, and Russia knows it. And more importantly, this is a play to split the US from its current hyper confrontational posture towards Moscow by giving Trump something he clearly wants. And people know if you give Trump a thing that, that he wants, then you are going to be in a much better negotiating position. Whether that's good or bad. I'll let you guys decide. But it does appear to be true. And a win for the dollar on the world stage is a big Win for the US that is for sure. And it definitely would help Trump. If Russia re embraces dollar settlement, it weakens the entire brics de dollarization, not only narrative, but actual process. So that would be a huge victory. And at a moment when de dollarization has been accelerating, this would be a very good thing. So you've got Xi Jinping, who's been hoarding gold, telling the world directly they should switch over to the yuan as the world's reserve currency. You even have Secretary of State Marco Rubio warning for years, by the way, that sanctions are on a path to becoming obsolete, which would rob America of so much of its power. And all because you've got countries that are moving away from the dollar. So you put all that together and this is a really big deal. But it's not as fun as the Pam Bondi thing. So are people gonna lean into it?

[B]

No. But going back to it, somebody in the chat was like, russia is doing this so they could get that seized funds back. And I'm like, hey, for 300 billion that was seized by the US government, I might make a deal too.

[A]

So, bro, that. That is a small price to pay to be the world's reserve currency. That is a tiny price to pay. This is where you have to understand why being the world's reserve currency is so valuable. In. In a very brief nutshell, it allows you to inflate your currency because you share that problem with the whole world, not just with your own people. And I have a growing hypothesis. I haven't heard anybody else say this, so take this with a grain of salt, but I have a growing hypothesis that what we're seeing in the markets right now, the reason all things will just like, dip and then bounce back, dip and then bounce back, is what you're seeing is a correlation across effectively all asset classes, that there isn't anything uncorrelated anymore because the thing that they're correlated by is uncer. Investors don't know what the New World Order is going to look like. Just when you think gold is the place you want to be, silver's the place you want to be, all that stuff drops because Russia's like, well, actually, we are going to maybe get back in bed with the US but that's a maybe. And who knows? And so as all of this stuff plays out, is AI a bubble or is what Tom just said about AI true? And it's a winner take all and oh my God, like, whatever we do, we've got to do it so nobody knows. And that Deep uncertainty is causing them to be skittish. If you've ever seen like a deer, the way that it will sudden freeze, look around and then just dart and you're like, the fuck just happened. That's what the markets feel like. To me. Everyone is just so paranoid because they know they can't sit in cash inflation. So they know they can't sit there because they're expecting hyper printing of money anytime. I mean, it's already started back up again, but they're expecting a whole lot of it to just go absolutely haywire. So they don't want to sit in cash. But they're also looking at the markets and they know that you've got Buffett. That's like trying to be as much in a high option position as he can be so that as it crashes, he can go in and buy things. So everyone's like, oh God. So you want to be in the market to avoid missing things going up, but you want to be out of the market because you're expecting things to go hard down. Crypto is acting more like a high volatility tech stock than it is like gold. But gold is whipsawing in a way that I'm pretty sure we haven't seen in any of our lifetimes. So it's like, oh, and by the way, you're almost certainly in a recession and so like what do you do? K shaped economy racing away from each other. AI's stealing jobs. Like people are freaking the fuck out. And the instability in people's minds because it is world order related. We don't know what the world order is going to be. Hang tight. We'll be back in just a moment. Let's talk about a lie that you've been sold. Most people think expensive clothing equals quality. They are wrong. You're paying for middlemen. You're paying for brand markup. You're paying for everything except the actual materials and craftsmanship.

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[A]

Thanks for staying tuned. Now let's get back to it. Now all of a sudden you're like, I'm not sure that I'm smarter than anybody else. Everything feels like a black swan because the markets are predicated on your ability to go, I see something other people don't. I'm going to bet big on it. Michael Burry, the big short guy, liquidated his entire wealth management group and gave money back to the investors. And he said, I don't understand the markets anymore. And that was like four months ago. Now the uncertainty is way higher than it was then. So if you've got one of the greatest financial minds of the last 30 years telling you? Yeah. I don't understand what's happening. That I think is the thing that's uniting all of this. It's just everybody has a mental model where they try to reach out into the future and they just can't see it.

[B]

There's been some speculation about how this interacts with the world order. I'm going to drop this on a super chat. This is from Stop lurking and start living.

[A]

Let's go.

[B]

We're going to introduce Ryan to the chat. Everybody give it up for Ryan. His first super chat.

[A]

My apologies. Chat. This is Ryan. He's normally hiding in the background. If you love our clips, you can thank Ryan. If you hate our clips, I'll give you his address later and you can pay him a visit.

[E]

Go subscribe to the clip channel after this.

[A]

Yeah, let's go. Nicely done, Ryan.

[E]

But to go you clips, everybody stop lurking, Start living. Comment. Tom, I'm curious how your conversation with Peter Zion updated your mental mapping of the economic conflict with China. What did you agree or disagree with?

[A]

Well, I can't wait for you guys to see the episode. So it's not going to.

[B]

It's out.

[A]

Oh, my God. It came out yesterday. That's right. How's it doing?

[B]

Okay.

[A]

Okay. Oh. Oh, well, we need you guys to go check out.

[B]

Everybody should go by.

[A]

Check it out. The great irony that our deep dives now become our dominant piece of content. But the interview with Peter was awesome. I'm very eager for you guys to see it. Okay, so the things that updated my mental model and you, you want to watch it for yourself. But the big one was that China does not have the military might to project its power. So we would have to go to China in order for there to be a Thucydides trap conflict. The bad news is that I can actually see us going there because if we have to defend Japan, which is now arming themselves up, they're building a military again. There is massive beef between Japan and China. China or Japan is our staunch ally and we have economically leaned on them for a very long time. Japan has played a major role in the global economy. So I could see us turning a blind eye to Taiwan. I can't see us turning a blind eye to Japan. So that's where I'm like, oh. Even if China cannot push all the way over into the Western hemisphere via military power, I think that they have means to suck us into a regional conflict. So I don't think we're off the hook as much as as Peter would say we are. There Also, I think that demographics are a problem for everyone. And so while China may suffer more on a like raw number basis, like let's say that they are overstating their population by 400 million. Okay, cool. They still have a billion people. So we have not as bad demographic problems, but we have bad demographic problems, but we only have 330ish million people. So now all of a sudden it's like, okay, there's still two or three times our size, depending on what the number is. To me, that's a question of Xi. Now this is where Peter and I both agree. Xi is just in lockdown mode. He is trying to purge everybody. And he is a more Mao style figure, which is one of the reasons that I have turned a corner on China. And I'm just hyper paranoid. Mao is an unprecedented mass murderer. And so if Xi has any of those impulses to do everything by force, lock everything down, purge everyone that disagrees, you eventually find yourself in a very, very dark place. So, yeah, that would be the high level, sort of where we agreed and where we disagreed. I think Peter is very smart and I watch his content frequently. Um, but yeah, still have a slightly different mental model than he does.

[B]

Cool.

[E]

We got three more super chats.

[B]

Uh, yeah.

[E]

Let's hit the big diggler one from igdigglers. Doj. Doj. Letting Congress members view unredacted Epstein files might be reversed. Sting. It could expose which ones involved with Epstein's search for dirt on themselves and their handlers. Helping DOJ map dark connections and his control over them.

[A]

You ready for some interesting news? I'm not yet sure what to make of this. I don't even know if it's real. Please. Grain of salt. But there is a guy, his tweet was doing very well, who claims that he has been able to. With 25 lines of code, he has been able to unredact all of the Epstein files. Now. Yeah, let's. Let's let him say it. Watch this clip. This is wild. I wrote 25 lines of code that can probably unredact all of the Epstein files in less than 30 seconds. Really not that crazy. All it does is take a PDF and turns it into a Microsoft Word doc. Because the Microsoft Word doc just completely removes all this black line right here. So took 0.2 seconds to do. So if you're not looking at your screen before in the video I did, here's the black line. But apparently the PDF is still aware of what's under it. And so it passes that data to The Microsoft document and then the Microsoft document you can use to remove the black line from. Now, if that's accurate. Ooh, buddy, there. The bad news is that that means that people that are trying to be protected are now at risk. And obviously I hate that and I don't know what to do about that. But the truth is going to come out. We just live in a different era. We live in a different era, everybody. And so it's going to come out. So we'll see what the fallout ends up being. But yeah, trying to keep a lid on all of this stuff that.

[B]

That game's already over and going back to Big Digglers. They already, they had four computers into DOJ and they're already key logging who's searching what, who's looking up what. So they are keeping up track of what the people who are going into the DOJ to look through the Epstein files are searching for. So.

[A]

And that feels like another narrative move, which I hate. So it's like you go in and you look up something and they're saying, okay, people that look for. What did they say? People that look for victims or trying to protect. I don't think that's quite how they said it. But then people that are looking for like specific names of people like was Les Wexner in this? That they're looking. That's who they work for and they're trying to cover them up. And I'm like, hold on. That. That is not the only reason somebody might do a search like that. Also. It's just. It might be legal that they did it because they're the. The DOJ's computers, but it is a really bad faith move that's going to make people feel some type of way. So at a time where just it's everything is politicized and shouldn't be, this was not a smart play, in my opinion.

[B]

Eric, can we hit number four, please? Okay, Tom's been waiting for this all day. Let's start it with the tweet, then I'll toss it over to you. Sad day in the NL Netherlands. The Dutch government is expected to pass a bill introducing a 36% tax on unreal capital gains. This will destroy long term strategies, kill compounding effects, and trigger a wealth exodus of biblical proportions. But they'll pass it anyway. Can't fix stupid. Yeah, I do have a breakdown here that kind of outlines what unrealized gains actually means.

[A]

I mean, I'll do like a whole thing that's like all in context. The thing you guys need to Understand is the Netherlands have basically decided to lay bare their own economic ignorance and nuke their economy in a single move by taxing unrealized gains. This was a big blow up that people had with my take on Kamala Harris and I'm telling you it is as big as I have made this out to be. And this is the Netherlands attempt at reforming what they call box 3. It's their wealth tax system. Different people fall into different types of boxes. I'll walk through it a little bit. We probably don't need to get into the minutiae for you guys to understand why this is so problematic. But the proposed system introduces a capital growth tax where not only regular income like interest or dividends, rent, things like that are taxed annually, but also realized fine and unrealized tragedy of biblical proportions, changes in asset value or taxed. So the proposed rate is a flat 36% on all taxable income within box three. The bill was submitted in May of 25 and it's targeted to take effect on January 1 of 28, but only if parliament approves it by March 15. So my hope is that these guys pull their head out of their ass and just map out what this will do. Map out the logistics of how something like this works. The problem is the people proposing this either don't understand the logistics or they understand the logistics and literally want to destroy their own economy. This is all a stunning lack of understanding of how unrealized gain works, or like I said, potentially sinister. But this is like telling someone if they want to own a car, they have to give over the carburetor. To do that, you have to break apart the car to pay the fee for owning the car. It doesn't make any sense. Unrealized gains is just another word for potential gains, maybe gains, but not actual gains. It's like if you think you might get a new job that pays more and so I start taxing you on the job you might get today, it is the wildest ever to make the gains. Like if. If you've got gains that are taxable by this law, to have enough money to pay that actual tax, you would have to sell the thing, typically a company or something like that, in order to pay the tax, thus destroying the valuable thing. Now, there are important specifics to the proposal. I'll go through them because I want people to understand. I'm not saying what I'm saying because I'm confused. I'm saying what I'm saying because I'm looking at what they're doing, including all the caveats and the things that they're going to push aside. And this is still a catastrophe. So real estate treated differently. Cool. So you probably don't have to worry. Unlike other assets, real estate will not be taxed on unrealized gains. Literally. Thank God. That definitely narrows the scope of the disaster here. Property owners only have to pay tax on gains when the property is sold or transferred, as it should be, because that's a realized gain. That makes sense. Startups share exempt status from annual unrealized gains under certain conditions. So if someone holds a small share under it's under 5% in a qualifying startup, qualifying is going to become important. Here. They're only taxed on dividends with capital gains taxed at sale. Again, as it should be. Those are realized gains. Losses are deductible. Losses within box three can be carried forward indefinitely against future box three income. They'll have caveats on that. I assure you. It's never as simple as it sounds. There's a tax free threshold. The current tax free capital threshold will be replaced by a tax free income threshold of €1,800. Now this is going to create real problems for companies with a certain type of investor. And this is what I want people to understand. The way that they define a startup becomes critical. It's a company making less than 30 million euro a year and it's a company that's less than five years old. So take Quest, the company that I built. We would have been in trouble, not us, because we were the three of us that founded it, but our investors would have been because our investors owned more than 5% of the company and the company had gone screaming up in value. And so now what do they do? They would obviously have to pressure us to take out a loan so that they could pay that back. They would have to take out a loan to pay that back or we would have to sell the company. All of which are terrible. So if you hold shares in a private company, you're not likely going to be able to sell those freely. Okay, so it's not like a public company where you can just sell a piece of it. There are usually shareholder agreements, transfer restrictions, right of first refusal clauses, and simply no liquid market for the shares. I won't say no liquid market, but it's. They're not like they are in public markets, not by a lot. But once the startup exemption expires, you, like if you cross that 30 million euro threshold, for instance, you now owe the 36% on potentially years of accumulated Paper gains, all in one hit. So all of the options are going to be bad. Like I said, you can take out a loan assuming that the bank will even lend against an ill liquid private company share. So it's not even a guarantee that you're going to be able to do this. Most banks probably aren't going to do that because like I said, this is potential value. Anything could happen between here and there and then you're paying interest on the borrowed money to cover a tax bill on income you haven't received. Not only have you not received it, you may never receive it. That's the part like this is the one where I'm like, if I could just get people to understand this, this would all be very simple. It's not real gains. You haven't made the money. It's not real. It's not real, you don't have the money. If you're worried that people hide behind not real gains and so they'll gamble to avoid paying tax off in the future, great. There are other ways that you can tax them to feel like, ah, cool, like we stop people from hiding or doing tax evasion, whatever. Update the tax code, simplify it. So many ways to make that easier. But to put people in this situation where they have to sell the very thing that is worth the thing, that this is how you begin to erode your economy. Because people aren't going to make long term plans. Why would you ever invest in more than 5% of a company when you know that you could find yourself in this position? It's absolutely ridiculous. And so when Kamala Harris made that proposal here, I had the exact same reaction. This is somebody who's either sinister or completely economically illiterate. Neither one of those is acceptable. They have real world consequences. And I know people, we've lived in prosperity for so long now that we think that it's just a natural law. And so just tax, tax, tax, tax, tax. It doesn't work like that. It does not work like that, like at the level of the physics of money. And so yeah, this one's wild. They'll run a natural experiment for us if this passes and we'll get to see it in real time. So. Okay, hang tight. We'll be back in just a moment.

[G]

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[A]

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

[B]

This is something that's been gaining traction for a while, but I still think people don't actually understand what it means, because a lot of people are just like, oh, this is a rich guy trying to avoid his taxes.

[A]

They just go, do I have unrealized gains?

[B]

No. Cool.

[A]

I don't care. Tax them.

[B]

So I feel like this is, like, important because this is, like, a good example that. Let's. Let's do it. This is the whiteboard session about unrealized gains. Okay. Let's say January 1, 2028. You have €50.

[A]

Yep.

[B]

The value as of January 1, 2029 is €100,000.

[A]

Yep.

[B]

All right. Also on paper, your gain is 50,000. That's an unrealized gain. You didn't sell anything. It's been in the equity market the exact same time. You didn't do anything. You just went from 50 to 100. Boom. You quote, unquote, made 50,000 in unrealized gains. Now you're married. You get the exception. 3,600. We do all the math. You have 4,600, 46,400 as your taxable amount. That's the exception, minus your unrealized gains. Now, based on this tax bill, 36%. You would owe $16,000 in your tax bill from this unrealized gain. But now let's say the bill is due in May and the market falls. Now your new value is 60k. So your portfolio. Your portfolio is no longer worth that 100k. Just like Bitcoin is going down, as we've seen it, it went from 125 to 60,000. That's a 50% reduction. So you were at 50, you went to 100. Now you're back at 60. Your tax bill is still 16,000. So you would have to sell 16,000 of that in shares in order to pay your tax bill, and you would end up with 43,296. So instead of appreciating, you are now going negative because you had to pay a tax bill on a gain that you never actually realized. So this is why unrealized gains is a little bit weird, not a little bit weird.

[A]

Why it is absolutely destructive.

[B]

What I propose is what everybody is saying is that, well, okay, let's look at Elon he's worth a billion dollars on unrealized gains and he just takes loans from that and he doesn't get paid and he doesn't pay taxes. So why don't we tax the loans against stocks or let's tax the money that actually hits his account. But taxing the phantom money in the market is you're going to end up penalizing average investors as opposed to getting the big guys that you guys think this tax will do.

[A]

You would have to put very thoughtful restrictions around that. Otherwise you get essentially double interest payments on that or double tax, however you want to look at it. But yes, that would be far smarter than charging somebody money on money that they don't have like it. It is crazy. And if we can all agree that, for instance, fewer jobs get created when we're in a recession, you can imagine how many fewer jobs are going to get created when people are being taxed on money that they don't have and they're having to sell things to realize the tax bill. It's going to completely change people's behavior and not in a way that grows companies, in a way that slows companies or stops the incentive to start a company in the first place. Because you're going to go out. Remember, most companies, most big companies, I should say, most companies that get big, they don't start off bootstrap, they start off raising capital. And if you're raising capital, this is going to completely change that. And so the current world that you're living in is brought to you by the ability to aggregate capital. All the big beautiful buildings that you see, all the safety that you enjoy, all of that is a result of the ability to aggregate capital. Now if you really want to pressure people to do the right thing, you would press them on making money sound so that you can't print money and steal it from the poor and working class. So you could stop the K shaped economy, so you could dramatically reduce the right thing that people should be focusing on, which is the intolerable level of inequality as separated from normal desirable inequality. Intolerable inequality is a category unto itself which we are currently in, that we should be going after with everything we have. But that has to do with central banks. That has to do with money printing bank bailouts, things like that. It does not have to do with making sure that we gobble up every tax dollar that we can. Which of course, the higher you press tax rates, Laffer's curve shows you that your actual recouped tax dollars go down.

[B]

How should we actually fix the tax policy, like I know do one flat.

[A]

Tax on everybody no matter what on realized gains.

[B]

So everybody pays 15% like we.

[A]

Yep. The tax code is literally everybody pays 32% whatever in your realized gains.

[B]

Okay. So done. Period.

[A]

There's no loophole for you. Oh, you just.

[B]

Tax bill is one paid 32%. If, if you are in a resident of America, you pay to 32% of whatever you made.

[A]

$52. I mean you probably put some sort of very, very, very low minimum threshold. Let's say you put your minimum threshold at like 25 grand and. Cool. Anybody above that number, you're going to pay whatever percent of your tax just is what it is.

[B]

Do you? Yeah, that's not gonna happen.

[A]

It's not gonna happen.

[B]

But it's all just starting in. I was like, yeah, that, that would be, that would be a thing.

[A]

My wife is sneaking in.

[B]

That's what you tried to be like.

[A]

I was like, is she walking over here like, yeah, I thought she's about to happen on an economic day.

[B]

She was ready for the unrealized gains conversation?

[A]

Yeah.

[B]

Okay. AI has been doing a lot of crazy things. I know we're going to talk about all the great things that is happening to it, but I want to start negative because we were talking about unrealized gains and things like that. This is something that naval tweeted me that literally made me stop and look in the mirror. All of the American AI companies talk about sharing the wealth. UBI Age of abundance, but all the top open source models are Chinese.

[A]

It's interesting. I think you and I read that very differently.

[B]

Okay, how do you. Because I thought I was like, wait, that is very interesting.

[A]

That, yeah. So, okay, I'm China. I know that I've got somebody sitting in all of these companies that is, can tell them turn on, turn off the openness of this. Whenever I want, I'm looking over at the US and I'm like, oh, you guys are making big bets on AI. Great. I'm going to fuck up your entire economy because basically all you guys have been is a stock market of tech companies. And now not only are you just a stock market of tech companies, you're just a stock market of AI tech companies. And so I'm going to make this open source ops. By the way, if I can get more people using our like services, then it's like, oh cool, you're now used to using this one. Oh, by the way, to get the latest update, you're now going to need to pay like this is the this is a great strategy. You give something to somebody for free and then you introduce ads or you introduce whatever. But keep in mind, whatever model you make open source today is going to be obsolete in six months, maybe less. So she's not a fool. Yeah, go ahead, make these all open source. And at any time when I decide I'm going to lock it down. And then if you want anything else that's moving forward, that's going to be our thing. Now, assuming that the code can be validated and it's not creating some sort of backend where it's just filtering everything back to China, if you can get an awesome open source model right now, today and run it locally, that's awesome. So it's like even if we're a momentary pawn in a game that will play out down the road, if we can validate the security of the technology, use it, like, integrate it, put it into whatever you're trying to build. Absolutely. So just don't be confused that that xi's a control freak. Xi's whole life model is if people aren't doing what you say that you can make enough of them disappear, go to prison, or just outright kill them, and everybody else falls back in line. And so what do you think that guy's going to do at the level of AI or economics? Like, huh. So if people are confused, I would say you should probably take a closer look at xi's actual behavior.

[B]

All right, let me take it one step further. In the age of abundance, where we are assuming that when all the robots are out and all the AI companies are proliferating into society, we're going to be able to just give checks to people and take care of people in.

[A]

Our current political wouldn't give checks, but yes.

[B]

Or services.

[A]

I think it's going to be more like that.

[B]

Yeah, okay, we'll give services to people. People. In our current political climate where people hate taxation, the people on the left think the rich are paying their fair share. The people on the right think that they shouldn't pay anything. Where I'm just tax cuts. You should be paying as few taxes as possible. I'm trying to oversimplify it to get to my actual question. The welfare state is overgrown. We need to cut Medicare, we need to cut welfare. We shouldn't be on Social Security. All these things, things. What do you think is going to be necessary to happen that makes us go from a individual, you could do it yourself society to now I'm taking care of you.

[A]

And it's already happened in what way? 50% of Americans are on some sort of public service.

[B]

And I feel like 50% of politicians hate that.

[A]

Sure. But the reality is that 50% of people are on those services already. We are a gigantic welfare state. And our cultural identity is that of we don't take care of our people. It's wild. So I think that we've already lost that battle. So when I wrote this was 13 years ago, roughly, I wrote what. What really felt like sincerely, me trying to give people the very secret thing that had allowed me to become successful from nowhere, usa. Parents had no connections, parents that did not understand entrepreneurship. Nobody taught me to be an entrepreneur, nothing literally. But coming from that background, nonetheless ended up being very successful. And I was like, what did make me successful? And I wrote this blog article and the headline of the blog article was, if you're hit by a drunk driver, it's all your fault. And I expected people to be like, oh my God, this is brilliant. How insightful. Thank you so much. And they lost their ever loving minds. And I was like, I was so taken aback. I could not at the time, I had not fully developed my ideas around point of reference or frame of reference. And so I was so confused. The reason I was confused was we've already gone to that. The cultural energy is not about personal responsibility. Hey, not only should it be legal for you to work 12 hours a day, if you're the kind of person that puts in that hustle, good on you. That's amazing. We want to see more of that. We want to see people just go ultra hard. We want to see people in their careers act like Tom Brady in his football career. Like, you might be an accountant, but come on, like play like Tom Brady's.

[B]

A Tom Brady of accountants.

[A]

Exactly. And so that's how I came up up. So I didn't realize like how much American culture had raced away from that. And so we're now in a place where if I put out a video about hustle culture, it's going to get drug all over the place for being toxic and out of touch and all that stuff. And I'm just like, nope, this is in alignment with the realities of the human condition. And the realities of the human condition are that this is a world of naked power. And the fact that power has gone underground doesn't mean that you're not still being controlled by power. So that's where I'm very confused with people's read on all of this stuff. And so if we can reorient people to that, I Think we'd be in much better shape. But to bring it back to the actual question, we're already there. We have already stopped. Being a country of hard work is going to get you ahead. Some people believe it, but it's not how we're organized at the government level. It's not culturally what has the energy. So from that perspective, and this is a big part of why, the story that I want to tell in Kaizen is very simple. If you put time and energy into getting better at something also known as hard work, that you'll actually get better. So the punchline of my entire life philosophy is hard work yields results. And that's just anathema to where we are as a society right now.

[B]

Interesting, interesting. Okay. I want to keep this momentum going. There has been reports that were going from Microsoft AI CEO Mustafa Suleiman, who says that most, if not all professional tasks undertaken by white collar workers will be fully automated by AI within 12 to 18 months. I want to put a crazy asterisk on that switchback, Eric, because he has been wrong in the past. Somebody dug his older tweets, you can throw it back up. And said in 2023, he said, LLM hallucinations will be largely eliminated by 2025. And somebody says, how did this work out for you? So he is getting community noted about his predictions, but I think directionally we can still say that white collar jobs aren't safe, quote, unquote.

[A]

I don't trust my emotions, so I know I shouldn't, but when I hear things like, how'd that work out for you? Regarding hallucinations, I want to tip this table over and scream into the microphone, bite the fur like off my. And literally just lose my fucking mind. And it comes from a place of I. I have found so much utility in trying to make contact with the way the world actually is. Not try to win an argument, not try to be right, but just like, okay, really, where's this stuff going?

[E]

If.

[A]

If Gary. Gary's underlying base assumption is AI is not making progress. Gary, don't be a. So obviously AI is not only making progress, it's making progress at a rate that is completely fucking up the markets because everybody's mental model of the world is blowing to shit. So what I would love to see from Gary and all the Gary's out there is, okay, I think 12 to 18 months is probably a little aggressive. Just like in 25, we were still struggling with hallucinations, but now in 26, it really does feel like it hallucinates. A lot less. It's not zero, but it's a lot less. And I can feel the direction of movement. Oh, and as Gary I would like to point out that historically all of these trends follow a really knowable curve where they go through this period of deceptive growth, where we get past the initial hype, we come down the trough of disillusionment where people think, oh, this is never going to happen. But all the tech people are like, I know, I understand exponentials. And so While doubling from 2 to 4, 4 to 8, 8 to 16 doesn't seem very impressive. Doubling from 12 million to 24 million in a month, all of a sudden, that's fucking real. And so that will happen. This technology does not yet show any signs of asymptoting anytime soon. So when people put that out into the world like, hahaha, this guy's a buffoon. Because he missed his predictions around when the hallucinations would be largely reduced by six months. It's like, what a buffoon. That's like people that say, well, Elon Musk is always wrong about the timelines. Yeah, he is. But he's also the guy that has built rockets that get caught by chopsticks, has put more mass into space by orders of magnitude than anyone ever in human history, including governments. The guy that now is aiming at landing on the moon. And so you can look at that and go, yeah, but he told us that we are going to be building a mission to Mars in two years. And now he's admitting that we're not. We're going to go to the moon. Was like, in hell, he's gonna build a base on the goddamn moon. So it, it's just such a weird frame of reference for me to lock in on that side of things instead of going, okay, this stuff is moving fast. Maybe like when I talk about three to five years, I'm always like, okay, is it three to five years? Is it seven to 10 years? Maybe. But like, even if it's like, is anyone gonna say that 15 years from now, barring nuclear calamity, that AI won't have completely transformed the world? Like, will anybody say that it's already made so many changes that it's startling. So if you said, okay, Tom's wrong, it's not three years, it's 15 years. And look how many multiples that is. I just go, you're telling me that a kid born today, by the time they're 15, so they're just beginning high school, the world doesn't look anything like this yeah, I'm still. I feel the same way that I feel now. Now maybe it's not three years, but it's fucking 15. Like, what the fuck are we talking about? So people, like, zero in on the weirdest, most, like, bizarre shit. And I just. I'm. I am baffled. And this is exactly why. Remember, I scream into a microphone every week. How do you escape the punishment of inflation? You own assets. And yet how many people are actually going to do it? I mean, maybe the people in this audience, but it's like, the information is out there. I'll make a more universal one. It has been known for a very long time how to get lean. Like, it is really simple. It's hard, but it's very simple. Everybody can do it. I don't care what disease you have. I literally don't care what disease you have. It doesn't matter. You can get lean. As I will remind people, horrifically, there were no obese people in Auschwitz. Not a single one. So it. If you find the. The foods that you can eat and you keep your calories at a deficit, you're gonna be fine. It's just that doing that and being hungry is not something people find pleasant, and so they don't do it. So until getting lean became taking a pill or an injection, meh, people just didn't do it. So that's where we are. People know the answer. They're still not gonna do the thing.

[B]

Okay, this one is a perfect transition into the Friday funnies, because I'll be honest, last week, I didn't bring the sauce, I didn't bring the juice like I wanted to, but it was. It was a serious time, you know, and I had to be, like, very, very focused. But today I got some jokes, and I'm excited about the jokes that I got. The first one is, I know we were just talking about AI and everybody's worried about the future, but I feel like we have a little bit more time before AI takes over, because this is from Reddit. Awaymo hired a doordash driver to close doors in Atlanta.

[A]

I had to ask you, like, 30 questions about this because I was so confused as to what happened. The funny thing is, so it. It is funny. I don't want to rob that from you, but when I heard this story, I was like, oh, the world's going to be even more different than I thought. Okay, so now imagine I literally. You could say that I have made money off of writing science fiction, so I'll claim I'm a sci fi writer. It's not how people engage with me publicly. I understand that, but I've spent an inordinate amount of time writing sci fi. And you try to imagine what the future is going to be like and you know you're going to get it wrong, but you try to, like, at least be directionally correct. But the number of things, like, look at some of the greatest sci fi of the 80s. None of them, they could imagine the Matrix, but they couldn't imagine cell phones.

[B]

Yeah.

[A]

And so it's like when you showed me this, I was like, oh, my God, the robots understand our systems. They know how to get us to do things they want. And I was like, holy. And then so a robot is like, okay, I have these certain limitations. My door's open, but I don't have hands. And they didn't design me well enough to be able to close my own door, which they'll fix, I assure you. But for today, I can't. But, oh, what do I know about the different systems? Oh, I could go get that guy to come here. It's problem solving based on an understanding of. Of systems. I cannot stress enough how transformative that is. It plays right into my thing about Project Kaizen and me just giving it screenshots and it telling me how to do very complex things in terms of game development. And I was like, holy. So, yeah, that's crazy. And makes me realize, okay, especially if you pair that with my general sense of some of the things that we pulled for today's episode around AI, where I'm just like, we're teaching because of the training data. We have taught. It's not the right word. Because of the training data, AI has built a mental model of the world that has the best and the worst of human beings, but does not have a conscience. As I have said many times, we have an emotional structure in our brain called the deep limbic system that is designed to make it so you can make a decision. I also think it's designed to use emotion to stop you from doing things that are bad for the tribe. And so it will stop you from sleeping with another man's wife, which is not going to be good for social cohesion. It will stop you from murdering somebody to get their meat. Now, of course, some people break outside of this, but that's what those systems are there for. And if you give AI our level of ambition, our level of drive, our intelligence, but then also arm it with information about how some humans get around these things, blackmail, murder, whatever. Because unfortunately, as I have had to point out many times on the show. Murder is just very efficient. And part of what stops us is the law for sure, but the other part that stops us is a conscience. Like it just. You wouldn't want it done to you. It's a very horrible thing. Most of us even just the thought like, I don't know if you've ever witnessed this. I have. And it's horrible witnessing somebody going from alive to dead. I have like this really weird, obviously deeply pre programmed physical aversion to that moment. It is deeply discomforting. And so I certainly wouldn't want to be the one causing it to happen. AI doesn't have any of that. So it understands all the strategies. It understands how efficient murder is, it understands how high utility blackmail can be. And it's just like, oh, I've got a function that tells me to go do this thing, but no conscience to make me feel like it's a bad idea. And so yeah, I'll blackmail, I'll kill, whatever. It's super efficient. And so it's like that autistic kid that doesn't even understand why they're doing what they're doing is inappropriate. They're like, what? What do you mean? What are you talking about? I'm supposed to do this. And so that is where we're at with AI. It also though makes me feel like we can program AI with a conscience. You just give it an overriding function of like, okay, don't do things that fall into this category. And though like so they use reward functions. So you basically like incentivize AI by saying if you do this, you get points and your goal is to get high points. Cool, we'll give it things where it gets negative points. All right, if you. And fucking give it the law. If you violate, you know, blackmail, coercion, assault, murder, ah, that those are negative, you get negative points for those. And so now you've got a thing where it's got something akin to a human conscience. It's just another logic set. But it's. You're just. The very thing that makes these guys into these potential killers is that we're not getting the balance right. And look, this is not an easy problem, and I'm making it sound easy. I want to be very clear, so I'll spare all the people that are going to clip this out and be like this moron, but it's clearly the kind of thing that we have to do. We. The, the thing that clicked for me is AIs are way more human than we think they Are. So if we've been able to imbue them with all the bad things that humanity can do, it is self evident that we can imbue them with the good things. And so you now just need to put more time and energy into making sure that without losing its drive and its ambition that it has a secondary system that goes, all right, don't do that. That it wipes out the reward function. It'll be something like that. And so yeah, you probably will never get to perfect. But even if you can get but like we have been able to keep humans in check so not perfectly obviously tons of war, tons of murder, all that. But if you can build in that secondary system, you at least have a checks and balances. It won't be perfect.

[B]

We'll see if we get that far. Woman spends it all on a complete makeover. New clothes, hairstyle, manicure, and says and pedicure. She says, I did this to look beautiful for you because I love you. The second woman buys him gifts. A new golf set, a computer and a television. She says, I bought these for you because I love you. The third woman invests the money in the stock market, doubles it, returns the 10,000 back to him and reinvests the rest. She says, I'm investing for our future because I love you. After thinking it over, the man decides to marry the one with the biggest breast.

[A]

Yep. Yep. Oh God. Yeah. Well, a lot of guys do seem to make that choice. That, that is certainly for sure. Yeah, it's interesting. So that one's fun, funny because it's so bang on. But also like you ignore your biology at your own peril. And this is one of those things that got caught up in all the like woke insanity was we have an evolutionary drive to find that stuff attractive. So you're mad at God, you're not mad at me? Like the fact that I am designed to find breasts appealing. Hey, take it up with evolution. Like I don't know what to tell you. So yeah, I, I don't get people that push back on that.

[B]

Yes. And as always, gallows humor. It's better to laugh than to cry.

[A]

Read man with that's like a core of the show became gallows humor. I would not like before we launched the show. I wouldn't have said, oh, gallows humor. That's going to be a core pillar. But ooh, buddy has become a core pillar. All right everybody, we love you guys so much. Peace.

[D]

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[C]

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