Andrew Schulz's Flagrant with Akaash Singh - Trump's Tariff Gamble EXPLAINED with Chamath

Episode Date: April 11, 2025

YERRR BONUS EP - the guys needed to get a breakdown of what was going on in the financial world so they brought in Chamath Palihapitiya from the All-In Podcast to explain to us what's going on with the tariffs, the economy, Trump and much much more. INDULGE 00:00 Rant! 00:43 What are the tariffs? 5:32 Other countries use of tariffs 9:39 The United States is the truly global leader 14:09 Reliance on others + Tariff helping self-sufficiency 16:55 Was the formula haphazard? 18:28 What is a trade deficit? 21:26 Using other countries as loopholes 23:54 Can China step in and exploit? Trading NATO 29:33 Job creation through tariffs? 34:23 Being world's consumer + Political Cronyism 39:29 Understanding America's debt 49:36 Trump is truly MAGA + Tariff shocked the market 53:08 Stock Market slumping's impact + What is inflation? 1:01:21 America needs growth + Elon's record 1:06:18 What is the downside to tariffs? Trump willing to talk 1:13:58 Being prepared this time around 1:16:58 How Chamath uses his capital 1:20:12 Chamath doesn't own public stocks + Recession incoming? 1:23:36 Are Recessions Republican led? 1:25:44 Views on the outcome? Waiting this out Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello everybody. The stock market is nose diving faster than Conor McGregor at a Colombian cookout. People are concerned, anxious, terrified. So we've asked someone to come on the podcast to calm your nerves, put you at ease. No, not her. We've asked our richest friend Chamath Pineapple Porta Potty Platypus, the former owner of the Warriors, one of the earliest hires at Facebook, a legit billionaire and the host of the biggest business podcast in the world all in. If you would take some time away from surfing on the top of a train to explain why the stock market looks like Saxon Rat Lift the morning after a sibling stroke off, we're going to find out the real end game for Trump's tariffs, what happens if they don't work, and why we

might already be in a recession. Indulge in this bonus flagrant episode. Why don't we just start at the tariffs in general? What exactly is Trump doing? What is best case scenario? What is worst case scenario? And then what are your personal thoughts? Let's let's look at your Air Force ones or your dunks that you guys are wearing there, or your Converse. Those things are made or Jordan's, those things are made outside of the United States, even though the company that makes them is an American company. And what happens is they're made over there. And then they're shipped to the United States. And

then they're sold to you guys somehow, right? And you would think that that's all fine and good because you're like, well, hold on, I'm, you know, this is an American company, I'm supporting an American company. And it turns out that the details are a little bit more complicated than that. So starting in about the year 2000, what happened was there was this everybody thought that the right thing to do was to push every country in the world to this form of capitalism. And they looked at countries like China and they were like, how do we make China more capitalist? And you would say, well, why would we do that? How do we make China more capitalist? And you would say, well, why would we do that? And the governing logic at the time was,

if they're more capitalist, they'll also become more democratic. If they are more democratic, they are more predictable the way that we normally think about countries. So let's not repeat a Cold War. Let's not repeat maybe some other political regime in the 40s or 50s or 60s. And so what happened was we let China into the WTO, the World Trade Organization. And what that allowed corporations to do is basically an enormous form of arbitrage.

So let's say that those Jordans were made in the United States and you were paying a worker 25 bucks an hour to work on a line to make that shoe. And then you would send it to Footlocker and sell it. I'm just being very simple just to kind of explain this example. But now instead of having to pay sort of any typical form of taxes, Nike, after the

year 2000, was able to ask the question, where else could I make this Jordan? And the Chinese raised their hand and they said, hey guys, we have these really great factories, we have extremely good workers, and we can do it for much cheaper than 25 bucks an hour. And so what does Nike do? They send the job over there. Take that one narrow example and apply it across every industry you can imagine from shoes to iPhones and everything in between.

And what has essentially happened over the last 25 years is we have hollowed out an enormous part of the middle class economy in the United States. And we've explained it away by saying, Hey, we don't want to do that kind of work. Instead, we're gonna, you know, like all of us, like we'll do a podcast or, you know, somebody will be a consultant. Like you'll, you'll just go up the stack, right? They'll say up the stack. And so over the last 25 years, that's been happening. And all of these other countries have benefited from America's largesse.

And the reason you can say that is we are the big buyer of record for everything, right? We have the largest economy. The way our economy works is we are all buying shit, all kinds of shit, all manner of it, from that water bottle to that shirt to that hat. 80% of our economy is just consumers buying stuff. And the rest of the world makes an enormous amount of money by feeding that beast. And so you would say, Okay, well, what's wrong with that? Now the cost of Jordans is much cheaper, the cost of that, you know, those jeans are cheaper, life is good. Except it's not, it's more complicated than that, which is then when we turn around, and we try to sell our product into those same countries, instead of it being allowed to just come in, so that you know, I'll make an example,

let's say that hat is made in the United States. And we want to sell it to somebody in Cambodia or Vietnam. The same way that those dunks enter the United States with no tax, we would expect that that hat can go into Cambodia or Vietnam, the same way that those dunks enter the United States with no tax, we would expect that that hat can go into Cambodia and Vietnam with no tax. But that turns out to not be the case. And why is that? Are they trying to protect local businesses? It's a great question. I think that for every country, the answer to that question is different. But it typically starts with, is different, but it typically starts with how can we generate revenue for ourselves? I don't think they have a competitive, you know, New York Yankees hat manufacturer in Vietnam for the record.

But it's just a policy that allows them to make money off of the United States in two ways, right? They make money by making stuff there, sending it here where we all buy it, and the dollars go back. And then they make money in a different way, which is whenever we try to sell our products there, they can tax it on the way in. And then why would we tolerate that? I think what the logic was, was back to what I said earlier, there was there was this thought that America is doing really well. We can allow a little bit of this leakage because of the quote unquote greater good, the greater good being, let's get these countries out of poverty, let's

get them, you know, embracing capitalism, democracy. I was benevolence. I mean- I think it's a combination of benevolence as well as there was some strategic rationale. You know, like sometimes you could make a claim that allowing these countries to profit was like a national security thing, right? Like, hey, they'll be there for us if, you know, we ever get into a spat with XYZ other countries. So there was a whole host of complex reasons, but the net result, Andrew, was that this dynamic was happening. But it had been happening for a long time. Question, question.

And then we can move on. Is it possible that the countries were trying to protect the things that were made there? In other words, like we have all these cool products that are made in America. Obviously, it's very sexy in a bunch of these third world countries. They're like, listen, we can't let the mom and pop businesses or even the corporations that are thriving in this country be out competed, if you will, by the American businesses. Possibly. But then, you know, I would say, well, what's good for the goose is good for the gander. It can't be a one way ratchet on globalism and free trade where it's like, you know, you're gonna take our stuff, but we're not gonna take your stuff.

I agree with you. I'm just trying to find the justification for the country. Like I imagine if I- I think to be honest with you, it's probably driven a lot by revenue. It's like it was tolerated. Nobody pushed back. Nobody pushed back. Nobody pushed back. Right. Because again, we would say, yes, it's happening, but, and some

politician would insert this statement about democracy and capitalism and long-term national security or what have you as the justification. And then Americans, we don't want, we don't want any tariffs because it affects our businesses, right? Like Apple doesn't want any tariffs. I'm sure Uniqlo doesn't want any tariffs. I'm sure Levi's doesn't want anything because it affects the amount of money that they can make. So they're essentially... Of course, nobody would want any tariff in an ideal scenario. But now you have to think about like, what is the government of the United States' responsibility?

I'm just saying like, why the private sector hasn't pushed back and the reason they haven't pushed back and because they would be the ones losing money. They well, I think they are pretty violently pushing back. Everybody that hasn't been exempted, I think, is pushing back. So, and what they're trying to point out is like, hey, listen, like, these tariffs have a real price. Now, I meant, I meant why they wouldn't push back about the unfairness that had happened over the last 25 years. Like, for example, Apple that wasn't tariffed at all, wasn't going, hey, you know what? China's tariffing us, maybe we should tariff them

because it would hurt their bottom line. Well, let's be honest, how many Chinese can afford to buy a $3,000 iPhone versus how many Americans can buy a $3,000 iPhone? And the reality is that when you factor in, again, this goes back to what I said before, do not underestimate the absolute gargantuan, largesse and kick acidness of America. Like

it's easy to slag it, but this is a first among equals country on every dimension, culturally, artistically, economically, militarily. And we take it for granted. And so when you think about Apple, for their bottom line and their P&L, would they love to have maybe an easier time to sell phones all around the world? Sure. But it's much more valuable for Apple to make the phones in China for as little as possible and get them to the United States, where they can sell 50 million of them every year. That's right. You sell 50 million phones here, you're not worried about selling 10,000 in El Salvador.

Yeah. Or if you look at the amount of iPhones sold in India, that's 1.2 billion people. You would think to yourself, hey, hold on a second, let's just go and focus. India can't drive the consumption to support a $3 trillion economy like the United States can. So this is the key insight. America is the country. American consumers, the five of us, okay, the 330 million of us, we create more downstream value for all these companies in all of these countries, in all of these stock markets. And then the question is, well, what is fair if you actually look at it that way?

And I think what Trump has wanted to do for a very long time is just make things more fair. And his perspective is, why don't we just make things more fair. And his perspective is, why don't we just make things more proportional? Now he uses the word, or not he, but I think like the chart and all of this stuff, they use the word like reciprocal, you know, like you tax me, X, I tax you, I think that that's that was actually the wrong word. I think the right word is more

proportional, meaning if you're a country that's taxing our ability to do business in your country, we should have a proportional tax that tries to level that to a reasonable point. But the reality is that it's much more important for them. And I think that what Trump has started is a process of getting like the 80 or 90 most, you know, vibrant trading countries to realize this, that they've had the best of it for 25 years. I think he's also trying to realize that there's a small sliver of people that have

over benefited, meaning like, you know, like these globalist corporations, the people that own those corporations at the sake of a lot of Americans. So let's just say, you know, five or 10 million Americans absolutely crushed it over the last 25 years with globalism and trade. But that still leaves 325 million Americans that haven't. And so you have to right this shit. That's one. The second thing though is you saw this in COVID. America is totally unprepared to fend for herself if push came to shove.

We can't make things here anymore, right? We have kids that can make TikToks, but we don't have scientists that can make drugs. That's not sustainable. That's not a secure country. Like if you look at our military programs, right, we spend, I think, $700 billion a year. Those five American companies that make all of our weapons systems are American, great. One step removed, most of the companies that they work with to make those weapons systems are also American. And you say, great. But one step removed, if you look at where all

of the key inputs to all of this stuff that we use to keep ourselves safe and to protect our allies and to have influence in the world. All of that stuff can be shut off by China in a snap of a finger. Can you give an example of what that would be? You're talking about like the screws that go into the plane. Like how derivative. Much more important than that.

It's like, let's just say that I'll use an example that that, that I think we could all relate to. We need to electrify as much of the United States as possible. Okay, meaning we need more electricity, not less. We barely have enough electricity for all of the needs that we have. Okay, fair? There's brownouts, there's all these, it's all nuts, okay? We need more energy. Okay. One of the things that we need more energy for is electric cars. I'll just use that as an example. Electric cars need an electric motor. So far, so good. All of that stuff can be American. But inside the electric motor, the way that the

electric motor works is that it's there's a magnet that spins really quickly. That magnet is made from something called rare earths. There is nobody right now that can really secure a meaningful pipeline to those rare earths, except through the Chinese. They're incredibly good at it. They're incredibly sophisticated. And they have a top-down way of organizing that market. That's an example.

Let's say that you need batteries, not like the simple Duracell that you buy at Target, but like the big batteries that can store energy when it's made or whatever. There are two companies that know how to do this at scale. They're both Chinese. And you can go on and on down the line in every critical market where America needs to be able to take care of itself, right, under all weather conditions.

We have become very fragile. So tariffs have this dual pronged impact. Prong number one is it starts to realign the world order. But prong number two is that it allows us to start taking back control of a lot of these markets so that we do the hard work so that we can rely on ourselves. Otherwise, if something bad were to happen, there's like a lot of really bad outcomes here

where we cannot fend for ourselves. We can't make the vaccines we need, okay? We can't make the technological equipment we need. We can't make the computers we need. We can't make the chips we need. So- Sorry, follow up question of the tariffs. I actually agree in theory with everything you're saying

and have for a while. How do you feel about the system? I'm seeing a lot of things about the calculations they came up with and like, it seems kind of haphazardly thrown, like thrown together. Can you explain that? Is that true? What do you think?

I think the way they did it was very clever. They made one mistake, which is in language, which is they put the word reciprocal and they should have put the word proportional. So, you know, Akash, if I send, if I sell you a dollar, and you send to me five dollars, the right way to think about what a, you know, a tax would be, would be, well, there's a $4 differential. So let's make it proportional to how much I'm giving you and you're giving me. The formulas that they used were proportional formulas.

It got caught up in all of this like English language, semantic nonsense. Got it. And then people who wanted to run with that tried to exploit the word and try to create confusion. But the simple way to think about it is, if I'm here and you're here, the whole goal of the tariff is to just do this. Make it proportionate. Make these things proportional. That's the math. That math does work. They were saying in some of the, I

heard, I saw an article that was quite critical and they said it was haphazardly done because they were just matching trade deficits. No, and so here's another thing that let's debunk that as well. So yeah, please explain the trade deficit between two countries and how that works. So how does a trade deficit work? So for example, like let's just say between the United States and China, they send us $10 of goods, we send them $1 of goods. That's a $9 deficit, right? We're bringing in more than we send out.

There's an entire economy of Chinese companies that get supported with the $10 of money that we give them. There's only $1 that benefits American companies. That's a trade imbalance. It creates a deficit. Now, by the way, it's not that a deficit is bad. Sometimes you want a deficit. Sometimes you want a surplus. But you wanna be able to pick and choose where you wanna be at any time with any country. That would make sense.

That's like, hey man, I'm not gonna just take this at face value. I'm gonna evaluate the conditions and I'm just I'm not going to just take this at face value. I'm going to evaluate the conditions and I'm just going to tweak the knobs every now and then to make sure that I know where I'm at. Some countries may be so strategically important. We're like, you know what? We're going to run deficits with you. That's cool.

You guys build up some stuff. But on the back end, let's talk about some other deals we could do. Give us some critical things that we need. And we're cool running a deficit. Some other countries where maybe we don't get as much from them as we have historically or should, we should run a surplus. But let me just make sure that you guys also know one other thing about these last couple days. A lot of people started to try to make a meme out of like, oh, look, this country's only got penguins, you know, and that country only, you know,

is in the middle of nowhere. Here's a really important thing to understand, what has happened over the last 25 years. Every single time, anybody has tried to fix these imbalances. What companies were able to do was just to go to a different country that wasn't affected and basically mule their way into America.

So if you levy these taxes on every single country, they won't be able to do that. You close all the loopholes. Got it. So it's like an imbalance when you throw it on Lesotho, but you're really doing it as a preemptive measure so that all the manufacturing doesn't go from Cambodia to Lesotho overnight. And the thing with that is like, it's not like they're going to build the factory there. They may just use it as a way station, you know, the plane lands,

yeah, hop, skip and a jump. Now you get a form that goes, boom, made in Lesotho, boom, to the United States. So you make it in China, send it to Lesotho, we buy it from Lesotho, there's no tariff on Lesotho because yeah, wow. The specific thing that really happened that exposed this was again in COVID, you know, and just a little bit before Mexico became like an enormous way to kind of work around a bunch of the Chinese tariffs. You would just basically send the goods to Mexico. They would do what's called self attestation, which is basically saying, yeah, it's made Mexico and now you get under a totally different regime,

you avoid a lot of taxes and other stuff. And so, you know, I think what they were trying to do is basically say, all right, folks, hit the pause button, we saw what you did the last time, we're just going to make sure that there are no loopholes. And look, like, so maybe the question is like, what do you do from here? You know, like in Godfather, there was like that scene where like all the families come together, and they're basically trying to like negotiate like, all right, what's the what's the detente and like, Michael Corleone runs that. runs that. It's not a perfect analogy. But I think what's going to happen now is there is an opportunity for all of these world leaders to have a very different conversation. And here's what I mean. We pay a ton of money into all of these like globalist organizations. WHO, World Health Organization, supposed to do some healthcare stuff. NATO, supposed to do a bunch of defense stuff. The United Nations, supposed to do a bunch of governance stuff. IMF, supposed to do a bunch of money stuff. World Bank,

supposed to do a bunch of other money stuff, right? We pay into these organizations massively. And it's not clear that any of this shit works. Okay, just to be honest. And so there is an opportunity to sort of say, hey, guys, if we were just starting this club in 2025, what are the rules of membership? What would the what would the expectations be? What are you going to do? What am I going to do? What are you going to pay? What am I going to pay? You know, but right now, again, it's kind of like you go to dinner, you know, Andrew pays, we're like, well, Venmo you tomorrow, money doesn't show up.

And you're just like, guys, this is like, after years of this, you're just like, okay, come on, stop the madness here. Is there a concern that in a time of trade hostility, China could come in and basically, you know, broker more friendly trade deals with other countries and America could lose its global position. Yeah, I think that that is a risk. The question is, what does that deal look like? It's basically there are two main superpowers for the next 100 years, us and China.

And I think we, on the margins, have a more compelling deal to do than China does. And the reason is because we have these 330 million Americans who are absolute kingmakers. And I think you have to take advantage of that. The Chinese are incredibly strong, they're incredibly bright, but they have headwinds too, man. You know, like nothing's perfect. Like their population is cratering.

That population is going to have in the next like 50 years. So China has to figure out some very complicated things for itself. So it's not like China has like some perfect deal that it can offer the world. So there's there's give and takes on both sides. But yeah, they're going to try to do it. And they're going to try to do the best job of getting countries convinced. That's why we have to have some amount of bargaining chips, right? Like if you show up to Europe and you're like, let's do a deal. Is a better deal done when Europe feels like you're serious?

Or if Europe feels like, well, I mean, you know, they've, they've paid our way for the last 50 years. Well, yeah, why would they stop? Yeah. So you got to, you have to like, you know, it's, it's almost like, like, it's, it's tough, but like, you have to like, you have to have some reasonable expectations here, that you know, that there's like a decorum. So I think that it'll, but it comes down to the quality of these deals to your point, like what is the actual deal? And I think

the thing to remember is there is no country in the world that can buy stuff the way Americans buy shit. I'm serious. I mean, like truly. So a lot of people can make shit, but you need, you need an economy that is going to consume and you can't really grow that overnight. You can't. It's true. We have had, you know, a lot of practice in making money as a country, but also spending, spending money. Yeah. And I don't think we should forget that. To piggyback on Mark's though, the way that Trump is implementing these tariffs across the board, are there any guardrails that can prevent China from just going to everybody and be like, hey, they're applying at least a 10% tariff on you. I'll either give you 5% or free trade.

Okay, so really good question. So now you go to the tactics of it. Whoever it is, let's say it's us or it's China. And let's just say that we're going to pitch Europe on why you should go one way or the other. At the end of the day, when you're doing deals like this, you have to show a PNL, right, a profit and loss statement, meaning once all the fancy words are done, and all the you know, cameras go out of

the room, this gets to the brass tacks of a spreadsheet that says, here's how much money you will make by working with us. that says, here's how much money you will make by working with us. And this is where there is a very clever deal, I think, for Trump to get done, which is the following, which is to essentially say that there is sort of like this new global trading alliance. And you know, according to a set of rules, in joining the club, pay your proportional share, right? Pay your membership dues on time.

And there's a way that you can have access to this incredible market that would be. So when you do that, P&O, right, and you get a bunch of Western countries that align with that, because you have to remember on an economic basis, look, we're 8 billion people in the world, we're all equal. But economically, there is a hierarchy. Okay. And so it's America at the top, then you know, you have the G eight countries, G seven countries, the rest of them, right? And then it goes down there and you can just rank this.

And so the more of these countries you have in this new alliance, the companies that work through that lens will just make more money. Like a trading NATO, so to speak. I think that's a really good way of thinking about it. It's like exactly like, like in the modern, like, look, like in the, in the, for the next hundred years, do we really think the solution for protection is like a tank? You know what I mean? Like, like a tank is like 70 years old. It's like a hundred.

It's like, it's, it just doesn't make sense. The real protection is what you said, which is like economic cooperation. Yeah, aligned interests. Aligned interests. And a bunch of drones, you know what I mean? Like that's it. Do you feel like the tariffs actually address the root problem of bringing jobs,

like specifically middle-class jobs have been lost to China, like shoe manufacturing back to the United States, or is it mostly a political tool to get these rates to be more, you know, have more parity? I think step one is the the rates. And step two is what kind of jobs come back to the United States, I think is still unclear. But there are a lot of really good trade type jobs. I'll give you an example. really good trade type jobs. I'll give you an example. And in the United States,

from 2017 to like 2022, a quarter of all of the people that work for power utilities is eligible to retire. Take their full pension. What do you think that happened? So what do you think has happened since 2022? I'll tell you. Our infrastructure is crumbling. Power lines, transformers. There's more wildfires because of utilities. The average experience of these folks have gone down. The amount of brownouts and outages have gone up. Those

are jobs that can pay 80, 90, 100, 120, $130,000 a year. These are good jobs. There's just no people to do them. I'll give you a different example. We are trying to build nuclear submarines. We need 100,000 people to build those submarines, all kinds of stuff, electronics to metalwork to whatever. They can barely find a thousand. And there's like all kinds of stuff. So your question is the right one, which is what kind of jobs will come back or what kind of industries could we have that we don't have enough of? And this

is where, look, now you're starting to talk about like a lot of complicated social policy as well, because part of why we don't have people is like, a bunch of us were tricked to like, go to university and get 200k in debt to take a degree in art history, which was stupid. You know, instead, you should have just gone to a trade school and made 150k a year and had a good life. But then in order to have a good life, you should have just gone to a trade school and made 150k a year and had a good life. But then in order to have a good life, you needed to live in a reasonable city that had like not stupid housing policy.

Right. So like there's a cascade of all of these issues. So it's probably a little too early to say that exact job that's in China is going to be here, but we don't need that job. But there are different kinds of jobs necessarily. I'm slow. If it had a 10 tariffs help the examples you gave of infrastructure, it would seem infrastructure is irrespective of a tariff. We could build up power lines. We could build up any of these things without a tariff on England. All of the things that we need. Again, it goes back to sort of what I said before, like all of the things that we need.

we need, again, it goes back to sort of what I said before, like all of the things that we need, we don't have a really great way of making them here. And so it just, we're like in this very circular argument all the time. So we need to have some internal resiliency. You know what I mean? Like we need to have like a rainy day fund. We just need to have some money in the savings account

in case, you know, shit hits the fan. We don't have that right now. Was there? So I'll give you an example. Like in energy, okay? Like very, very, very reductively, the world is going to be decided. Like meaning like if this was like the NBA regular season, okay, we're entering the playoffs, who wins the championship is very simple, the person that controls AI, and the person that has the best military, that's it. And when you say it that way, you're like, okay, there's all these things that we need

to do for AI, as an example, okay, you're like, well, we need like infinite power for AI. Okay, well, how do you get power? Oh, well, let's just do Nat gas. Okay. Great. And immediately you realize, Oh, hold on Nat gas turbines. It takes a turbine, right? To make energy out of Nat gas is so backlogged because none of it comes from America. Okay. There we go. We cannot turn it on until 2030. Okay. So now Akash, tell me how, how are we supposed to win the NBA finals against China? Yeah. When they have everything. Yeah. They can make everything. Yeah. And we can't yet.

Yeah. So we're kind of, are we going to, are we just going to wait five years and hope it solves itself? Are we forcing our own hand to develop these industries? I think so. Got it. So part of it, part of it is forcing our own hand to develop these industries, making it too expensive to consume from other places and also making it too expensive for them to sell to us. So we create an incentive to, to create these industries here.

Um, also real quick, I just want to go back to that trade deficit thing. If we are the world's consumer, doesn't it make sense that we do run a trade deficit with most countries? And isn't that a healthy thing if that's the position we want to be in? If that's where we feel like the leverage exists? I think that there's a very philosophical answer to this. I think the technocratic answer is you want to have the ability to change it as you see fit because it changes the incentives for countries to cooperate with America. Okay, so just so I can understand that. America, I'm not sure exactly where we were before World

War II, but we have enough manufacturing that on a dime, the entire country can turn into a military operation. Ford is rolling out tanks. Like we have the ability to engineer and manufacture everything that we need to win a war. Right now, we are too dependent on outside factors. So we actually can't flip that switch if we need to. So it's like putting ourselves in a position where we can flip the switch. And that gives us way more bargaining power and leverage in the real world. Because we are not 100% reliant on these other countries. Exactly right. And there's just a lot of hard work.

I'll give you, you want to hear a crazy story? Yes. In 2020, I had this kid pinging me constantly on Twitter. And he had worked for Elon building up the battery supply chain for Tesla. And he had left for Elon building up the battery supply chain for Tesla and he had left Tesla to go to business school. He was at Stanford. The kid was just like, constantly just like, at replying me, whatever. So I'm like, right, just come to my office and we'll talk. And he's like, I think we need to build a domestic battery business in the United States to compete with the two Chinese national

champions. And I was like, okay. So I started to learn about this problem. And it's like shockingly crazy. So we start the company, him and myself, a professor from Stanford and this other guy who worked at Toyota. So you know, four reasonable people. Okay. And we start this business in 2020. We're like, we're going to make domestic

batteries. We get a deal with General Motors, they invest, they go on the board, things are going well. And then we get to this place where, and this was under the Biden administration, we needed the approval of the DOE and the signaling from the DOE, the Department of Energy that yeah, this American company is not bullshit. We take a year, we go through, we stand in line, we play it exactly down the middle. We file this like 600 page report, the consultants that they told us to pay, we paid, we did everything. Got rejected. I was like, okay, this makes no sense. You tell us like we need to like have this resilience, but instead this is not resilient at all. Fine. We keep moving forward and we decide last year to reapply, do the same thing.

We get through the end of all of this and we get picked. A hundred and twenty-five companies apply, gets down to like twenty-five finalists. These guys give an incredible, they do an incredible job, by the way, the DOE employees, like of the diligence and stuff like this. This was like, I've never seen anything like this. We go through proctology exam, like you wouldn't believe. We get it. Federal government gives us a hundred million dollars, Michigan gives us 50 to build this factory in the United States. And we're like, wow, we declared victory. We're like, that was the right thing to do. That was worth all the hard work. You know, now other people

can pay attention, we can raise money. This is a hard problem to solve. It takes billions of dollars. Okay. And, you know, it's like money is an infinite. So I need other people to be beside me. And I needed the government. And then, you know, when Elon goes into Doge, I find like, you know, Stacey Abrams, you know, spins out of like Biden and in 30 days got a $2 billion

grant to like buy appliances for like 25,000 people in Georgia. So you know, we have a lot of like cell phones here as well to blame for this. Like that is an insane story. How did she get 20 times more than we did? We have a 50 person team that makes batteries to compete with the Chinese at the same quality. We got a hundred million dollars by a two year process. She started an application on June 1, June 30, you got two billion.

How does that work in America? Is that right? That is not right. How does that work? Well, it's not working anymore, thank God to Doge, but that's not right. What is that process? Is that some cronyism? Yeah, I mean, I think I think it's kind of like there's a come-along pay-along You know play along element

That again the Trump is shutting down like this is look look you have to give the guy credit. He's been consistent and The one thing that he's doing is he is closing these loopholes. That takes a lot of balls. Okay, question. I've heard, I've seen a lot on on Twitter about, you know, everybody has their own opinion on like what he's actually trying to do. Right. Some people are like, they're tanking the market on purpose to get the debt yield down. Can you speak on this theory? I think Besant has been in a few interviews talking about it.

Yeah. What is this? Okay, so what are they talking about? So here's the thing. America owes people a lot of money, okay? We owe, oh my gosh, I wanna say, maybe $35 trillion to other people. Now it's important to understand who are those other people and why did that happen?

So let's just say the five of us are running America. We all go off into our own separate rooms. And, you know, we come back with a plan. And Andrew, you're like, I want to spend a billion dollars on defense. And then, you know, Marcus, I want to spend a billion dollars on health care. And I say, I want to spend, you know, two billion dollars on social security or whatever. And we tally it all up, right. And we're like, okay, to run America is going to cost $10 billion. How are we going to get that money? And, you know, ever since like 1913, it's a go fund me. The answer is we're going to go to all the individuals in the United States to pay for it. By the way, just so you guys know, before 1913,

to pay for it. By the way, just so you guys know, before 1913, okay, we had 120 odd years where all of that money, that $10 billion, whatever that number was at the time, it was all generated via tariffs, okay? It was outside folks paying in to have the right to be in the United States, then we would take that money

and we would pay for healthcare, we would pay for social security, we would pay for military, we'd do all that stuff. So anyways, fine. So here we are. But you add up all the amount of taxes we raise and it only is 8 billion. So what do you do? You go and you borrow from somebody who's willing to lend you 2 billion.

Just to clarify, that borrowing doesn't necessarily mean a bank. People can buy bonds, they can buy these treasury bonds and similar thing. So what happens is, okay, we're like, okay, shit, we need to come up with $2 billion. Where do we get it? So what happens is that United States Treasury is allowed by law to then go into the market. Okay, I'll explain what that means in a second. And sell an IOU. Hey, this IOU is backed by the United States government.

Full faith and fidelity of all of the assets that we own. Give me $2 billion. I'm going to take it. I'm going to fund this deficit and I'm going to spend my $10 billion this year. We've been doing that basically forever. Add it all up now, we're at 30 some odd trillion dollars. Okay. Now, what is the problem with that?

Well, that is a colossal interest rate payment. Imagine that you take out now a credit card every year, max it out. At some point, you know, you're going to have an enormous interest payment, right? And that is dictated by the interest rate that is tied to the credit card that you have. It's the exact same thing for the United States government. We have 30 some odd trillion of debt and we have a really high APR.

Yeah, the APR is what right now? Well, I think the blended is I want to say like, five, six percent, let's say. So, you know, you're talking trillions of dollars in interest, okay, which is a problem. So, on top of that, these credit cards, assuming you have this credit card, it expires, and you got to go and apply for a new one. Every year, so right now in this year, America has $6 trillion of credit that is expiring that we don't have the money to pay for. So what do we need to do?

We need to re-borrow that money. So issue more bonds. So we have to sell bonds. So who are the buyers? The buyers are all these people around the world, central banks, pension plans. Also us. Yeah. So you know, so here's so yes, but asterisks. The thing that America is America, again, I go back to like, we are the star of the show. Okay. Everybody is levered to the United States, everybody, what does that mean? If you go to Japan, Japan is way deeper in

debt than we are. They have two times as much debt as we do relative to our GDP relative to the amount of revenue that we make. And you would say, well, how's that possible? When Japan finances their debt, the overwhelming majority of the people that are supporting Japan are the Japanese. Japanese companies, Japanese pension funds, Japanese individuals, your mom, your dad, you know,

buying the Japanese bonds. In America, it's not that. It's about a third are Americans, but two thirds are everywhere. Okay, it's like the Saudi Aramco, it's Shell, it's Novartis, it's the Central Bank of Lesotho, it's China, China owns almost a trillion dollars of our debt. So, the whole point is,

if you can bring the cost of borrowing down, we save ourselves a lot of money. We make the headache much smaller. Now here's a huge problem that happened at the end of Biden. Real quick, before you say that. So essentially if we can lower the APR, if we can lower the interest payment, then at the end of every year, the money that we owe is much less,

and then we can start chipping away at the principal instead of just paying the interest. Another important thing to understand is the more people buy treasuries, the lower the interest payment is on those treasuries. The less people that are buying treasuries, the higher it goes, right? Exactly. This is like this. So if you can, some people will say if you can scare people in the equities market, meaning that just the stocks, right?

If you can scare them about stocks, if you can create uncertainty in the stock market, then they go buy treasuries. People go, I just need some security. I need something backed with the full, what is it, support and fidelity of the US government. I need treasuries. They start dumping all that money into treasuries. You can reduce that yield, which is that interest payment. Now before you move on, I just want to ask one question. We initially, when this was mentioned, I guess a couple days ago by Trump, you saw that yield go down almost like a point, right? Or at least it clipped. It was enormous. We went from like 450. Like I was worried that it could go to five. Instead, you know, when Trump said, guys,

I'm doing this, I'm serious, it went from 450 to like 420. And then it went under four. And then it went to like 390 something. And now it's right around back at four. Now, somebody, when it started to go back up again, some people thought that a big holder of US treasuries, i.e. like a China or one of the other countries or companies they were talking about, purposely sold treasuries. To flood the treasury market? To flood the treasury market and then increase that yield, that

interest payment again. Remember, the more that they sell, the more we got to pay out. So it's a form of like eco terrorism. Is that bullshit or true? I think it's bullshit and I'll tell you why. There is no amount of money that you could spend that a country has in US treasuries to sustain that kind of price manipulation in a market that big. Got it.

So it might be initial, but eventually it would start to... Could you puke it out? Meaning the thing is, these markets are extremely efficient. Like in betting, like sports betting, I used to be a big sports bettor. Like it's all, these guys are all sharps, okay? Yeah. They know the line. Yeah, yeah, yeah.

They know the edge. You're not getting an advantage here. You're not getting an advantage over one day, over five hours, like that's. Got it, so it would be China literally unloading the trillion dollars in bonds that they have. They wouldn't do that. And they wouldn't do it.

Of course, there's probably some sort of like competitive advantage they have owning that type of debt. Guys, we're gonna take a break for a second because I want to tell you one thing that tariffs do not affect. Freedom of speech, okay? Now speaking can make you quite tired. I know that. Akash knows that.

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Okay, and you're gonna do that at 30% off when you use that promo code flagrant. So go to blackriflecoffee.com right now, get the coffee, get the energy drinks, get your energy up. Now let's get back to this show. One, two, three, four, five. Yeah! Riding a bike in the Ride to Conquer cancer is like being part of humanity's greatest.

The money you raise, the time you spend, the energy that you give is helping people live, is giving people hope. And that's just so beautiful. Care of the fire for cancer research. Join the ride at ride to conquer.ca. The thing with Biden, just so you guys know is, you know, this is a misnomer that, you know, Trump is, you know, for the wealthy. I don't think that that's true. You know, Trump is much more about MAGA, which is like working class, middle class.

He's not about the mag seven. That's what Besant said too. You know, the stock market is a mag seven, magnificent seven problem, not a MAGA problem. What does he mean by that? What he means is like 50% of Americans have zero equity exposure, zero. This is what we talked about when I did your pot. Exactly. And this was huge.

Yeah. And so, you know, and 44% of it owned like 12%. So for the most part, the American individual investor is not necessarily super exposed to equities. And so the thing that Biden did though, is he had an incredibly aggressive program of keeping the stock market afloat. How do you do that? Okay, so like if you guys and I wanted to manipulate the stock market at the president of the United States, what could we do? Keep money cheap. You would keep money cheap.

You would, which means just for everybody, like making sure the cost of taking out money, like interest rates are low. Yeah. You could, interest rates were high during, but they were high. But what Janet Yellen did was as the interest rates came due in that period, they massively just refinance the debt. And this is getting a little technical, but in very short periods of time. So when you go and refinance yourself, right, like if you go and refinance your home, you could do a 10-year mortgage, you could do a 30-year mortgage.

She did a 30-day to one-year mortgage, okay? Why would you do that? If it was cheaper, and you basically had more flexibility to just keep money in the system, if you had all these $2 billion loans going out to all of your friends who would just spend in all kinds of crazy ways, everything looks like it's working. GDP looks like it's working. The stock market goes up because the earnings of these companies looks like it's working. GDP looks like it's working. The stock market goes up because the earnings of these companies looks like it's working. And what's incredible is that problem is now coming home to roost now. So Besson has to refinance $6 trillion in the next nine months. Okay, so this is like a not a small number, right? So all this debt that basically Yellen and Biden just kind of

put on the front end, it's called the front end of the curve, like these one year maturities or whatever, they got to figure out how to push it out 10 years, 12 years, as far as possible. And so that's going to be a very complicated task. And so they benefit from the lower interest rate. And to your point, what tariffs did was it shocked the stock market. And when that happened, it told the bond market, hey, man, there's a lot of volatility and uncertainty here. It's like, let's go to the sidelines for a little bit and just chill and observe what happens.

When that happens, the interest rates go down. And that allows us Americans, all of us collectively, we will save hundreds and hundreds of billions of dollars because of what has happened in the last five days. So yeah, now maybe this will correct itself quickly, but if you can give me a steel man, I largely agree anecdotally with what you're saying. Again, we travel the country, we see,

I see middle America and I see why they're angry. I see like a lot of decay. And you can tell me the stock market is high, but I'm like, I don't think ordinary Americans feel this. So give me the steel man argument for why a stock market dip that doesn't scare me for regular Americans would be a big problem and whatever. It is a big problem for people that are about to retire.

It's a big problem for people that have a large percentage of their net worth there. It's also a big problem for the companies themselves because if shareholders have a bunch of uncertainty, they may not give them more money. These companies may not be able to invest as aggressively in the future. So it's not like it's not without pain. I want to be clear, like you're right, like there's no free lunch anymore. You know what I mean? Like this is like big boy pants time. So we all put on our fucking big boy pants. And the reality is there is going to be these trade offs. The question is, how can you judge the trade-offs

and make a very difficult set of decisions for the greater good? And I think that's gonna see where we're at. So yeah, there will be pain for some of these companies. Is it right? I'm not gonna call that ball and strike. It's unfortunate. And the reason we're here is not necessarily anybody's fault that's in this room. But you gotta fix it.

Sorry, go ahead. If the majority of Americans are living check to check, isn't this going to hurt them way more than it hurts everyone else? Right. It's inflationary is what you'd say, right? So I so this is also another misnomer. Okay. And I think this is important. What is inflation? Okay. Inflation means if you said inflation is a pick a number, 3%, what does that mean? That means that if you and I bought those Jordans, and they were 100 bucks, next year, let's just use that for the purposes of this

math or 103, right? they go up by 3% Actually, let's use 10% cuz I'm bad at 3% math here. So it's a hundred bucks. It goes 110. Okay The next year it goes up by another 10% if inflation stays where it is, right now You add an eleven dollars, right? So now the shoes are are 121 so in two years the price has gone from 100 to 121 for those Jordans right that's inflation the next year it'll go up by another 10 the next year it'll go up by 10 that's what inflation is this is a price shock and that's different. What do I mean? So if that Jordan has a 10% tariff on it, it goes from 100 to 110 one time. And if inflation is otherwise zero, or close to zero, it doesn't go up the next year by another 10 bucks, and then another 10 bucks,

and another 10 bucks. That's not how tariffs work. It is how inflation works. So I think it's important to just make sure like are tariffs inflationary? They can be, but not necessarily. But if we import most of our products and we're applying tariffs to almost all the product we import, then that's going to be a huge price increase for pretty much all the goods that we buy. But it's not correlated to the cost of the actual goods sold. The reason inflation happens is, oh, the price of oil goes up, so it's more expensive to run the factory. So then the goods become...

Nothing changed to make your shoe. Nothing. It's just that when it landed in the port of LA, there used to be a piece of paper that you would stamp that said 0%. Now the thing is stamped and it says 10%. The actual cost of making this thing has not gone up. Yeah, but Nike's going to apply that to, yeah,

pass the cost to the consumer. He's not saying that the cost doesn't get passed on. So in, let's say the first- But it's a one-time pass through. So let's say in the first year, nobody's saying it won't hurt, but why it's different than inflation. So in the first year, it would feel identical to inflation. In the second year, it would stay the same. Whereas in the second year with inflation, it would continue at that rate.

And I guess what I'm saying is I'm just concerned about the people who are barely getting by and now food is going to be more expensive. One thousand percent. But here's what they said, which is, I think you want to see this happen. What they said is there's going to be these price shocks. You're right. So year one is difficult, okay? But it could raise upwards of $750 billion a year, okay?

You're saying tariffs. Tariffs. What they said that they would do is they would then turn around and cut the federal income tax for anybody making $150,000 or less to zero. So what they're doing is using the tariffs to offset the price shock. I didn't know that.

Yeah, I didn't. And this is the math, and that hasn't been 100% established yet. But instead of like putting the burden on the American consumer, we put the burden on the foreign country to pay that delta. And then effectively subsidize the consumer through an income tax. To be fair, the $750 billion, I assume, that's assuming everybody pays the tariff fully. Okay, so this is an important point. I would say right now it's a moving target, meaning the Sharps, before Liberation Day, the smart money line was at like 250 billion. That's Wall Street.

We'll put smart in quotes, but that was in there. And part of why the stock market went berserk was they just got it totally wrong. And the back of the envelope math that I did, and that a couple of my friends did, and you know, I would say they're much smarter than I am, they got to 750. I got to 750 as well. Howard Lutnick, who's a commerce secretary, said like, anywhere approaching 750, we have a line of sight to be able to cut income taxes to zero for anybody making 150 or less. Yeah, be great. So we're in the magic zone here, guys.

You know what I mean? So there's a perfect example. There's all this conversation about the midterms right now. Trump tanks the stock market. People get screwed over by what some people call inflation, but like the price shock. But if you announce at the end of the year, there's a $750 billion surplus because of taxes and we're eradicating income tax for people making under $150,000. Midterms are going red. I mean, bro, forget midterms. They want Trump for the third term. Would there be a surplus if we're in so much debt? Isn't it just chipping away at the debt? It

won't be a surplus. So I guess it's you use the debt to. Yeah, you're to date. It's up to you how you use that 750 billion. And I assume in the first year to deal with the price shock, I don't wanna speak future month, but it would be like, okay, this year, that goes back to y'all, we'll figure that out. Deal with the price shock.

Now that everything is normalized and inflation is down, we'll start using that 750 billion toward the debt. I assume. No, but if you get rid of federal taxes, then you have to keep applying that money to offset. Yes, yes you would. 100%. But would it not sway voters? Oh yeah, but that's not... Let's say you have to income tax.

Right now we're talking about none. But let's say you have to. Hey, your income tax is gonna be 50% What if your what if your tax guy came to you and was like, yo I got a way to get your income tax down to like 50% of what you normally would pay what he already does now Long-term Sustainable so what does actually chip away at the debt long term is what Al's asking. Yeah, how can tariffs chip away at the debt?

I think Al, the longer term, we need growth in America. How do you really chip away at this problem? You need to make more money. So I think saving money is good, but you need to make more money. How do you make more money in America? We need to have more money. How do you make more money in America? We need to have more people working and getting paid more money. And the way to do that is we need the kinds of industries

that create enough value where you're willing to pay these folks more money. So like it like you know, if you could go to a trade school and work for a utility and make you know 80 90 100 whatever 110k a year and again this goes back to the domestic policy that they have to get right and be able to buy a house and send your kid to a school where they're not going to get, you know, fucked up in the head. They can get like a good decent education. I think like that's how that's how you generate way more value in the United States so that you can really start to chip away at it.

Now the other way that we will chip away at this is what Elon is doing with Doge because that is just rampant money going out the door. That is our American hard earned tax dollars that were taken from our pockets to siphon it into all kinds of places that you didn't know were going there. And what they're doing is just shining a light on it and saying, is this what we really want? Do we want 50 billion here and 10 billion there? And it all adds up, you know, billion here, billion there turns out a little suspect if like he's chipping away at that stuff, but then he's still getting government grants for Tesla and SpaceX and all this stuff. Can I, can I just set the record? Okay. He's a friend of mine. So whatever I'm biased, but let me just set the record straight.

But let me just set the record straight. He got a $500 million support for Tesla during Obama. He paid that back early. He paid it with interest. And he paid it with an early prepayment penalty. Okay, so I just want you to know that that is the facts. Yes, he got $500 million. But the other fact is, this is the only person I've ever heard of in my life, who's actually gotten some form of subsidy from the government, paid it back on time, actually ahead of schedule

with interest with a prepayment penalty. So whatever you think of the guy, I just want you guys to know that that is the actual facts of what happened in the early 2010s. And what did it do? It revolutionized our even awareness of all this stuff, meaning if Elon had not created these electric cars, and all of that technology, we would have, we would be even further behind today. Like you gotta, you gotta see, you gotta appreciate what this guy does. You can go to Gigafactory.

I remember we had the opening party of the Gigafactory and it's like outside of Reno somewhere or whatever, like, I don't know, it was in Nevada. We drove there. I have this video of me driving thing. It's like 50, 60, 70 seconds, man, of just like, maybe even longer. The factory literally takes raw material, like shit that comes in on like train conveyor belts, and out pops a Model Y. On the other end of it, you're like, how does somebody... So, and in a moment where the whole world was going berserk and Obama felt like, which, you know, I give him a real solid for this, Obama did the right thing, but then Elon did way more to, you know, just to pay it back to get to settle it with the

government and the people to make it right. And then all this technology that he's created, I cannot tell you guys, we would be so behind. I think that I don't know if anybody here is critical of the technological advancements or the investment in, you know, the future of America's manufacturing and like engineering programs, like keeping us competitive a hundred percent I do think it's fine to like look at certain things and be critical of Elon in the way that maybe Doge could potentially Benefit him or not, but I think it's okay to look at that the the question There here is though if Doge finds a way to create savings much of the chagrin of many people

but if it do find a way to make savings and those savings offset that money that the tariffs we're going to pay, then the savings can go to the debt, right? And then you have tariffs offsetting the income tax. And now you have no income tax and you are chipping away at debt. Yeah. I mean, look, this is- We're all in agreement of the- This is a very optimistic view. Theoretically, it's great. Yeah. Theoretically, it's great. Now, could you also give us the pessimistic view

on all of this? Yeah. Yeah, so let's take the other side. Okay, so let's start with, this has the risk of creating economic malaise, meaning like what I said before, Alty, your question is we got to grow, right? But growth requires investment, meaning I got to go and build a factory or I got to go and buy some chips or I got to go and want to make cars.

That requires money. Who gives me money? Wall Street gives us money, right? Like, I mean, you know, we don't just pop out of Silicon Valley with people handing us billions of dollars. We have to go and, you know, frankly, ask and beg Wall Street for the money.

They could say no. Now, why could they say no? They could say, too much uncertainty, I'm in bonds, back to what we said before. Right. And a lot of people say that. They go super risk-off in this moment. And, you know, then we have to, like, make these, like, really brutal decisions about how to fund these companies and keep going. I'll give you an example. You go to a hospital, not you guys, but if your wife or your sister or your mom went

to hospital and she had breast cancer, there's a 30% chance that they don't get the cancer out the first time they do a surgery. The next time she goes back, there's a 30% chance. What that means is for every 10 women that get breast cancer surgery, there's 14 surgeries. Takes 11 days for them to take the pathology. Okay, this is in the United States of America. I was like, there has to be a better way. Okay, find a company, invest a ton of money. And I'm like, we're going to go solve this problem. We're going to make it impossible. We're going to use AI. You take the tumor out, you put it in a special machine. The machine will tell you 100%, there is no more cancer.

Close her up. We do it. But you have to go to the FDA and get it approved. And the FDA doesn't necessarily say, yes, go ahead, Chmoth, this is a great idea. You should do that. The FDA says, here's all the things, and in fairness to them, they're doing the right thing. Here's all the things that you have to do

before I'm even willing to consider that you'll do this for us. I say, okay. I went and tried to get money raised for that. Hey guys, does anyone wanna help me eradicate, make breast cancer surgery error free? I thought stupidly that that's that idea just sells itself. You know what I got on the other end of that fucking crickets. Crickets. Oh, you know, interest rates, this that inflation,

this that whatever. Okay, fine. I pointed up the money and I did it myself. But that's not infinite. You know what I mean? Like if that next problem comes up, I don't know that I can fund it. You know, eventually you run out of economic insecurity creates a investment risk and then people get tied with their pockets and we need liquidity to keep the machine moving. You want people feeling like it's like it's like generally going in the right. So the pessimistic view is it creates uncertainty because it feels scary. The stock market's going down. There's volatility.

And so let's go risk off. Let's just chill, be on the sideline and wait this out. And what that would do is it could exacerbate a recession, economic growth kind of slows, companies like that company could go out of business, I don't know. And I don't know what I would do because then I have like 50 companies malds I have to feed.

You know what I mean? I don't have the money to do that. So it could create that and then that would create negative growth. So how do you prevent it? This is one thing I'll tell you about the Trump administration, which is totally different. Okay, I was a lifelong Democrat. Okay. I was a mega donor to the Democrats. You know, like, dinner with Obama

level donor, okay? I couldn't get a fucking phone call return from the White House to save my life. The only thing that happened to me was I made an off-caller comment about like something in China. And I had the Biden administration, like, basically say something like essentially put out a press release, basically saying I was like, you know, mean. That's all I got for millions of dollars that you know what I mean? Like, for being honest. I mean, I was just like, I was like, man, there's like a lot of problems in America. Like, you know, talk to me about the fentanyl crisis before we talk about everything else. Anyways, the Trump administration is totally different.

There's not a single person there you can't get on the phone and talk to. I'll give you an example of this. A friend of mine's company was really impacted with these tariffs in a bad way. Okay, this is like a really amazing, legitimate American business, 150 year old business, family owned all this stuff. And I was able to call the deputy chief of staff and I said, Hey, can you talk to the CEO and just say here on the ground? He's like instantly put me on the phone. You know, my wife runs a pharmaceutical business. And you know, we wanted to make sure that the administration understood, like, all the implications for rare diseases and orphan drugs. What happens if these

tariffs, like, cripple the R&D budgets? Because for, there's 30 million Americans with rare diseases. Rare diseases means it's not like diabetes or cancer. It's like 200,000 people or less. But there's 30 million of these Americans, two thirds are kids. And the only companies that work on such small markets are these small biotech companies. And the tariffs create a lot of uncertainty. We were able to talk to all of them. They were like, explain the issue, I wanna understand it. So this is what's also totally different, which I really give them a lot of respect. They are willing to debate it with you. You can pick up the phone and talk to these people.

I've never had that experience, guys. I mean, look, I was like a senior person at Facebook, could never get a meeting. I only met Obama once when he came to the thing. Then when I was running an investment fund successful, I had dinner with Obama, but it was under the purposes of should I donate to the foundation? I've donated millions of dollars to Democrats. I've never been to the Oval. This is old.

Okay. But the minute it's like here, it's like, hey, come to the White House, explain these issues now. You get on a plane, you get over there and and they're like, explain it, and then they'll debate it. That's like, it's totally different. Sorry, devil's advocate, should being a mega donor, I mean, I guess, I get your point of view, but couldn't it also just be like, no, we're not gonna be biased just because a person donated money,

we're not gonna just answer the phone whenever he calls. You think I was like, you know, stupid five years ago, and all of a sudden tried to start to build national champions like now? Dude, man, I've been in the grind for fucking 25 years here, paying my taxes. I fucking paid more than most people. Yeah, so irrespective of the donation.

I've been trying to do the right thing. I wasn't trying to favor myself. It's like even just to explain, here's what's happening on the ground. Do you want to know? I'm curious in 21, 22, you said you lost like almost $4 billion. But you said this time around you were more prepared. What did you do that you're not hurting the way that all of us here are hurting stock market wise? No, I'm still hurting. Like I think my are, some of them are in real trouble. And there's going to be pain. But this time around, I was able to take my ego out of it,

not try to be the smartest guy in the room. And I was able to understand how to just basically protect myself a little bit. How? Did you buy short positions? No. But you can have protection. You can, you know, like that spread trade

that I talked about, the mag seven to the S&P, you know, you could take risk off by just selling stuff. You know, it's not perfect by any means, but the level of confusion and pain that I went through in 2022. Now, look, everything could change. I don't know, it could change tomorrow. I could just get run over tomorrow.

But I tried to basically take the long view so that I this because what happened in 2022 was I had a year and a half where I was constantly being forced to sell stuff. a year and a half where I was constantly being forced to sell stuff at prices that I hated for things that I really cared about to fund other things that I really cared about. It is fucking devastating. Like I don't look, just so you know, like I'm not running around with fucking 19 houses and all this other stuff. Like jokes aside about the sweaters and stuff, I live in one house, I have one car, you know what I mean?

I own one home, that's it. Like everything that I have, I direct to my businesses. Because I feel that these businesses can do good useful things. And I just like the adventure of it. So this time around, I wanted to not be crippled if this stuff was going to happen. And my point is that people knew these scenarios, they just refused to like act on them.

And I was just like risk off like I'm in this group chat with a bunch of my friends, a bunch of hoity toity folks, super brilliant guys. Man, it was just like risk on go. And I just kind of stay quiet and in the cut every time I had the chance to kind of like You know even take the other side of it. I wouldn't I just kept my head down and just kind of like try to You know not Not get run over this time. So you just sold a lot Like I want to know exactly what you did. I just I had a lie

The the capital that I had I did not put into the market. Got it. So you stayed liquid. Yeah. So, so you and Warren Buffett are sitting on collectively 300 plus billion dollars waiting for a nice old market collapse. What do you? Let's be honest.

He's sitting on 325. Well, I said, I said300 plus. You're the plus. Yeah, yeah, yeah. Yeah, I'm the plus. So, so, so what do you guys do with your $300 plus billion dollars once or even now, like the, you know, the markets in disarray, do you start edging in? Like what do you guys, how do you deploy that capital? I don't, Warren and I are at complete opposite ends of the spectrum.

Although we're theoretically doing the same thing, although he does it much better than me, but we both own businesses. And we're both trying to own things that we understand. The difference is, is that he acts in the public markets at mega scale. I act in private markets at what starts off at very minor scale. They can grow to be crazy big, but they start off small. So what I'm doing is trying to make sure. So I'll give you a couple of examples.

I'm trying to build a national champion in the United States for batteries. I'm trying to build a national champion for rare earths amongst the United States and its allies. I'm trying to finish this thing on breast cancer. I started an AI business that helps companies kind of just like run their businesses more efficiently. You know, I am the largest investor in the largest distributed solar company in the United States, residential solar. So I just am trying to be there for my businesses when I can feed them a little bit of capital. I try to do the best that I can keep these companies going, introduce them to other folks,

even if they're scared, try to help convince them why they should be supporting these private companies. You know, so my game is very different than his. You know, time will tell. I mean, you know, and then there are other businesses that will just, you know, we'll see like, like in 2020, the craziest deal I did 2021. I had this kid, he was a kid at the time, he's still young, but DM me. Again, another example of like X.

And I didn't know who he was and I looked at it and his name was Mr. Beast. And I was like, who is this guy? So I was like, he was like, hey, you wanna talk? And I was like, sure. So I did a Zoom with him. And I just remember still to this day, my kids walking by the Zoom screen,

cause we were sheltering in place during COVID. And they saw Jimmy on screen and they just like, Oh my god, they ran into my little cabana that I use for meetings during COVID. And they were like, Oh my god, do you know that's Mr. Beast? And I was like, yeah. So I ended up working with Jimmy and I, and I basically helped him create this business called Beast Industries, which is like the, the kind of the organizing principle of all things beast, everything that he does. But there are parts of Jimmy's business now that we're going to have to be very judicious about.

We have to make sure we can support the stuff that he does in the food side, that food stuff could get more expensive. Sometimes a lot of the way that we make money and pay for stuff is through advertising, right? Advertising could slow down a little bit if there's like a bit of a recession or like negative growth. I want to be in a position to support Jimmy if he needs some extra money. So that's the game that I play.

Like it's very tactical and in the weeds. What about stocks? I mean, if you're asking me honestly, I'll give you the honest answer. I do not own a single public stock and have not since the end of 2023. Will you buy in? Do you see this as an opportune time?

No. Wow. Oh shit. So you, oh, this is now opportune time? No. Wow. Oh, shit. So you, oh, this is now we're getting somewhere good. So does that include like ETFs, funds, like? I don't own a single, I have zero exposure to the public equity markets. Are you not bullish on the equity market? I am very bullish private equity business, meaning like, you know,

private companies, I have enormous exposure. But my point is, the stock market for me is not where I make money or create value. Is that a function of a lack of confidence in it or just you want to put your time and energy towards the private sector? It's 80 it's 80% the latter 90% the latter and the 10% of it where I probably should have some exposure, I've just chosen not to. Got it. Okay. Okay. You mentioned recession, do you think we're headed towards one? I thought that we were sneakily in one for a while. So this is

the other thing that is important. We have a very brittle way of reporting data. Our perception of where we are is constantly changing. So every Friday, the first Friday of every month, the financial markets get this thing called non farm payrolls, which means tell me all the jobs that were created in America everywhere except on a farm. And they use it to judge how healthy the economy is. That number has been basically unreliable for years. It'll come out with a number, then it gets revised the next month, then it gets revised. It's the same with GDP. So what is GDP? It's just economic activity, the total sum of economic activity in America. What is that number? That's constantly being revised. So when I saw that, I was like, wow, this is like really weird. Why are these numbers so fragile? And it turns out the way that

we measure this stuff is very bad. Now, one consequence is that there is an emerging realization that a bunch of GDP was just the government spending a ton of cash in the economy, hiring people, contracts, this and that. And it's not that those things are bad, but they could be, you know, a lot of waste there, right? Like what, you know, you and I do for a dollar sometimes, you know, you've seen these funny articles like the $700 waste paper bin and like the $900 umbrellas. How does the government end up buying these things? I don't know exactly, but all of that artificially props up the economy. If you take that out and reset it to a more normal level, there is a belief that we were actually sneakily in a low key recession like a year ago or two quarters ago. I think that there's a reasonable chance that those people could be right.

Is there a reason or is it just coincidence that like the last 10 out of 11 recessions were Republican administrations? I don't think presidents, any president, who sits on top of one is necessarily the person that created one. And that's for everybody. So the next time a Democrat is in charge and there is a recession, you have to look back at the cumulative sum of the economic policy. So I think that the idea of giving credit to a president for a stock market is just

as dumb. So I would say the right thing to do is don't put the blame on the recession on the president. Don't also give them credit for the stock market. Neither of those things are things that they can actually control. What they do is they add to the sum of all of the decisions that then get compounded in the future. Right? So, you know, like, so meaning like the great financial crisis is it was it Obama's fault?

No. The great financial crisis, was it Obama's fault? No, the great financial crisis was the sum of a bunch of decisions and you could allocate a smaller amount of the responsibility all the way back to Reagan. But the majority of the responsibility was probably in Bush. And some even in Clinton, right? Well, I would say the plurality of the responsibility was in Bush because there was

a bunch of changes in the law that allowed people to just go ham in the financial market. So my point is, it's not Obama's fault. So I just think it's important to just keep that in mind. Okay, before we get out of here, obviously, if you guys have any more questions, definitely want you to ask, but could you give us a potential outcome that is like, what is your hopeful outcome for this scenario with the tariff plan and the debt yield and American manufacturing in the future? It can be optimistic, it can be based on whatever you feel. And then how does China's economy play into that now? There was a lot of

talk about China's economy faltering, not only because of the age of the citizens, but also because of, oh, fuck, I wrote some notes on this, but that they were in some sort of like economic disarray. Well, China has, first of all, the Chinese are incredibly smart. They're incredibly well organized. They're incredibly prepared and they're incredibly top down. The problem that China has though is after the last few years, the amount of foreigners investing money into China has fallen off a cliff. So in global economics, there's this thing called FDI, which is foreign direct investment.

We have it, China has it, Europe has it. It's when somebody that's outside of the border comes in with cash and says, I'm going to invest it here. So GM is like, I'm going to build a plant in Shenzhen, China. That's FDI. And for a whole host of reasons, I'm not smart enough to know them all, it fell off a cliff in these last few years. So I think when some people think about what problems China has, the long term, it's demographic.

The one China policy, the one child policy was very problematic. The birth rate is very constrained. So that's really problematic for them. But in the short term, the real problem is around FDI. There's just not enough cash from foreigners who feel like the market is stable and predictable and offer a great return. So they're not putting the money into China. So back to the United States. I think that everybody wants to get a deal done.

I think that everybody wants to get a deal done. And I think it's an opportunity for Trump to rewrite these global rules and just say, guys, here's the new association. It'll probably be called like the Mar-a-Lago Accords. I bet dollars to doughnuts. That's great. 100%. I heard that mentioned and that was going to be my next question.

What is Mar-a-Lago Accords? What I've been saying is like, that's the new framing document for how the world should work. And by the way, don't you want somebody who just like, basically does that on behalf of America? Like, what, what is the downside of that? You know what the status quo is. If you're happy with the status quo, I get it, you can debate it. But if the status quo isn't working for you, maybe there's like, it's time to try something different and let it play out. So my thought is, and

by the way, like the status quo I benefited from. But I just don't think it's right. I don't think this dog hunts anymore. And I think you got to get America into a better place. So you wait it out for six weeks. And you start to do deals one by one, or you get them all in a room and say, guys, here's the term sheet. Here's my vision for the world. You know, you pay your share, I pay my share, you guys get access to America. We have 330 million incredible Americans ready to buy everything that you make. You'll be prosperous, we'll be prosperous. But here are the terms.

You'll be prosperous, we'll be prosperous, but here are the terms. I just think like we should hope that that works. Let that play out. And if that plays out, your taxes get cut to zero. That sounds pretty good. Interest rate payments. I was going to ask, is it possible Trump doesn't immediately start making deals? Does he just keep the tariffs on for longer windows of time? I think it makes a lot of sense for him to wait.

Now that's just me talking. That is straight up game theory. I think it's like if so in game theory, there's this concept called regret minimization. It's just like what it means like, like, when you're going into a high stakes negotiation, right? Like, how do you create the right psychological parameters in your opponent? Right. And I think that waiting just gives him enormous leverage. I just think it's like a bank account that compounds every day. Is it complicated for America? Yes. Is it complicated for the stock market? Yes.

Is it more complicated for everybody else? Double yes. And so again, you can't wait a year. But if you wait two, three, four weeks, I mean, look, I'll tell one story. So a friend of mine called me representing the president of a country. And he's like, I need your help. I need some advice. I need to know what to do. And I was like, well, what's what are your tariffs for American products? And it was a non-trivally large number. And I said, bro, you got to cut that shit to zero.

You should just proactively just cut it to zero. Don't ask. Just do it. And then it turned out that they were going to buy an enormous number of planes from Airbus. I was like, well, on the margins, you should just buy them from Boeing. That's an American company, you know, it's like 2% of all of our exports. And then he's like, well, and we also, you know, buy a lot of energy. And I was like, well, I don't know, maybe there's a concession to, you know, an American energy company to help you deliver that.

And I got off the phone and I looked at my wife and I was like, that was surreal. But I was like, if there are 30 of those deals out of 80 to be done, I'm telling you guys, it's a winning strategy. Hmm. Hmm. That's really interesting. My assumption is that all of these foreign countries and their governments are already operating at high efficiency and already trying to get these deals. I'm surprised to hear that they're not thinking entrepreneurially in that way.

I mean, I'm not going to, I'm not going to slag world leaders. You know, winning an election is different than, you know, developing policy. Yeah, that's interesting. But I was, I was, this is crazy. And I was like, all right, if these guys do that, and I was like, look, if you guys want to write like some letter, I'm happy to, again, it's not like, you know, Trump or Stephen Miller, Susie Wiles or Taylor Budowich, they're not hiding Kevin Kevin Hassett, they're not hiding, Howard Lutnick, they'll take the call. But if they go, I just thought if this country shows up

with that and said, this is what we wanna do, it's an incredible insight into the game theory, right? Regret minimization, they wanna minimize their regret. Right, they just wanna get things back into like a reasonable place where they can get back to focusing on the things that they are prioritizing. That makes sense.

So I just think this could actually work. Now, is that what's going to happen with China? No, I'm not saying that. That's way more complex and above my pay grade. But I'm just saying if you get 30 of these, 40 of these countries, man, this is a big deal. Do you think China comes to the table at all? I don't know. I'm not smart enough to know. I don't know. I think so. I mean,

it's just too... Look, we're like frenemies. We just got to... We have to make it work. The getting's too good. Right. They need us to buy shit. Yeah. They need us. We buy shit. And right now we need them for some stuff too. So, you know, it's the honest truth. Like we need them as well.

Listen Chamath, we appreciate you so much, man. Thank you very much for taking the time. We hope you are right. Yeah. Okay. I also want to point out that you are so much taller in pictures than you are on Zoom. I think it's the headroom.

We need to do something with this camera angle. I thought you were five two and I saw you in a picture. I'm 6'2". Yeah, you're a whole foot taller in real life than on Zoom. So whoever is sabotaging this, I think it's Jason, by making your camera be this much higher than you. Wait, is this a bad... This camera should be lower? Yeah, you look like you're in a booster seat.

We need to... Look at... Oh, go ahead. And then point it up. I also slouched, so I have... Get the camera pointing up at you. Yeah, we need a completely reset. Yeah I think his wife set it up this way She's trying to keep you married. He's rich handsome smart. I got me short I'm not a short gig

We appreciate you so much man. Thank you guys You guys