E172: SBF gets 25 years, Trump's meme stock, RFK Jr picks VP, Biden's 2025 budget & more

28:27They might send this thing to 80 billion dollars, you know And who knows what is possible with the short float and a motivated, you know, a million, two million people. You guys are bringing up something else as well, which is we've shifted from fundamental based stock trading being the overwhelming driver to there's a lot of like very speculative day -over -day activity that you can't control anymore. And I think it's part and parcel of what's happening in other markets in America as well. Also, when you look at sort of like, what happened in 2016, where the Supreme Court said each state can regulate sports gambling?

29:05All forms of like online gamesmanship and betting just started to skyrocket. It could be casinos, lottery, sports betting. It didn't matter, but everything just caught a massive ginormous bid. And when you look at the products that serve as the retail market, they've also become increasingly gamified. Robin Hood is probably the best example of having built an incredibly good business by making things more like a game. And then recently adding fuel to the fire are things like zero -day options, which are just like, and there was a big article in the Wall Street Journal where like one of the reporters, she became addicted to it.

29:42And like, the Wall Street Journal gave her, I want to say like a few thousand bucks, but she had to discord the profits. and she got like a 2 ,000 % return or something, speccing zero -day options via Robinhood. So the point is that on top of the whole movement to sort of allow individuals to monetize their own name and likeness via the stock market, which we just talked about, the second movement is that a lot of these things are becoming less financialized and more gamified. And so you just have many more participants. And so to your point, you can have a GameStop moment in any of these things.

30:21You can have these zero -day options run the stock to the moon. I would tread very lightly. Yeah. And just another warning. The stock market bases things ultimately on earnings and profits. And so when we look at this as a proxy, and Mr. Beast would have the same issue or Martha Stewart, you have a key man. key individual risk here, i .e. this person goes to jail, they die, whatever, which Martha Stewart always had in her businesses. And then what is included in this is key. So if he does another TV show and it becomes a hit again, is that included in this? No. If he has another building or his buildings included in this, no.

31:07The golf courses include is no. What's including in this included in this deal when you buy DJT is apparently just a really crazy social network that nobody uses. Just be clear what you're buying. No, you're right. The more sophisticated version of this trading card analogy would be if Donald Trump contributed his brand licensing revenue in perpetuity to the asset. And then it really is a longitudinal forward bet on the Trump name. Yeah. And that's sort of more like if Richard Branson took the Virgin Hold Co -Public. Yes. That's effectively what that is as well. Like, you know, Branson over 40 or 50 years has built an incredible business.

31:54I think the staff that I heard when I got to know him was he's created 20 businesses worth at least a billion dollars or more over his life. with the Virgin brand, with the Virgin brand, and the Virgin brand is a licensing model where he holds that right and he will license it to you for a share of the revenue. That's independent of anything else that he may do with these businesses. And so if he took that Virgin hold co -public, then what you're buying is a longitudinal discount of cashflow on the value of Virgin. And to your point, if Trump contributed that name and likeness licensing capability into this, by the way, he could also still do that.

32:34So to the extent that this business saw a contraction and maybe the truth social thing didn't end up being that valuable, but the other aspects of the media business he could create by basically saying, okay, look, this will get a share of my licensing revenue for my name would effectively be a proxy to do that. So he's got a lot of outs here to maintain this market value. And then on top of that to your point, there's 70 million odd people who would want to support him in one way, shape or form. I would not go anywhere in your shorting it, given his fan base is incredibly likely to keep buying these shares.

33:08And if you want to know the actual value of this business today, I'm an expert at this. It's $100 million. It's $200 million. It's not any more close to this. Put your money where you'll mount this. No, no, no, we just explained it. When you have a small float like this and a rabbi group of people who are gambling, you will get your face ripped off. It's absolutely is stupidest. What's that? You'll get plonkinned. Yeah. I mean, it's it's disastrous. I mean, what did they say we can be stupid? Longer than you can be solving. Yeah. The red. It is such a great line. I mean, but you can gamble like this on stocks.

33:48Yet you cannot invest in private companies. I don't get the legal system in America. Be careful out there folks. You will lose a large portion of money is my prediction if you buy this stock. But feel free if you want to gamble. Look, I think I think this is all part of the ongoing backlash to law fair. Yeah. Joe Biden instructed his justice department to prosecute Trump. It's in my view, it's utterly unprecedented American history for one president to try and prosecute in prison and bankrupt his main opponent in the political election. And there are millions of Americans who are absolutely disgusted by this.

34:22I think it's a new low and American politics. And God bless all the people buying these shares to support Trump. This is a protest vote. I don't know whether they're going to make money or lose money. Like I said, I don't think you can justify the valuation based on fundamentals, but you can sure as hell justify it based on payback. Yeah, I mean, if you want to give your money to a billionaire, buy the stock. Absolutely. Feel free. I think, I agree with you, like maybe two of those six lawsuits are a bit weak. I think the three or four other ones, you know, he committed the crimes and he's just paying the price, but we're going to agree to disagree on this pot.

34:58Television people do. Speaking of intelligent people, RFK June, you just picked up his running meat. This is a little bit crazy, and I'm really interested in hearing your thoughts on it. He chose a 38 -year -old Bay Area lawyer Nicole Shanahan, as his VP, RFK explained why he chose her. She knows Big Tech very well. How they use AI to exploit the public, how they censor in Seville, Americans, push certain agendas. She understands the health consequences of toxins in our air, soil, and food. And he wanted a younger person to represent millennials and Gen Z. He says younger generations feel like nobody represents them in Washington.

35:37He also wanted an athlete in good shape to inspire Americans to live healthier lives in Shanahan donated 4 million in support of RFC Jr's Super Bowl ad that ran earlier this year. sex, what do you think of this? Heck.

35:56Well, this big does not excite me. I'll be frank. But since I'm going to say something critical, I want to, let me start by saying something positive because I really, you know, I love Bobby Kennedy. I mean, I think that he represents a number of really great issues that I agree with. I mean, first of all, he's been the most articulate critic of the Ukraine war, understands it deeply, and has explained it extremely well. He stood up for sealing the border. He went down there, showed that it's out of control, completely agree. He was a vocal critic of Fauci and lockdowns, was completely right about COVID.

36:32He supports civil liberties and free speech. So, you know, I wanna say like, Bobby Kennedy is great. The issue I have with this pick is that she doesn't represent any of those issues. She has a completely different issue matrix and I watched her speech. And just to say something positive about her, I mean, I like her enthusiasm. I think she's 38 and it's nice to have someone running for political office who's not in their 70s or 80s. And I think she's genuine. I actually think she's saying what she really believes. And that's really nice and refreshing. But again, if you go back to the issues themselves, she brought up three issues.

37:09Number one is she says she wants to make Americans healthy again. It's the focus on chronic disease. I'm not saying she's wrong about that. that's not my issue. Number two, she brought up criminal justice reform. This one concerns me. I apparently she donated to Gascone, who's a Soros DA, who helped destroy San Francisco and then failed upward to LA. So apparently she's a Gascone supporter that does not fill me with confidence. That is a quite frankly luxury liberal belief and this decarceration idea. So I'm not excited about that. Her third issue was climate and environment related, but in a very specific way she went after big agriculture.

37:51She said, we can no longer support extractive corporate agriculture. I'm going to let Freeberg speak to that one. I can't really say whether she's right or wrong, but that's not one of my issues. So listen, at the end of the day, I feel like this pick accentuates and underlines the issues in Bobby's platform that appeal to the left, frankly, to liberals. And I think Bobby's candidacy is a complex candidacy that brings together people from both left and right. But again, this pick does not speak to me. It speaks to the more liberal parts of his coalition. Does it increase his chances and who would have been the person who would have increased his chances most?

38:36Well, the person who would have been amazing would have been Tulsi Gabbard. Okay. If he had chosen Tulsi, what have blown the doors off? Slam don't. Yeah. I mean, Tulsi's been saying, Chimoff, publicly that she would be proud to serve with Trump and it's seeming likely that she's got a shot at that, yeah? Be in the VP for Trump. I'm not gonna comment on that. Okay, let me just say something else. I think Tulsi Gabbard is really impressive. I think she's independent and I think she really stands firmly on her own two feet in a way that I find inspiring. I, like, Saks, have many, many positive thoughts about Bobby Kennedy.

39:22I think he is, he was really a breath of fresh air. Jason, this in this election cycle because he was able to say the unsayable things and made those things more easy to be said by others. And I think that there's a really important role in that and I think he deserves a lot of credit for that. And then the fact that he set things that were so unconventional and not mainstream that are now mainstream views, I think says a lot to the fact that he was pretty grounded in first principles thinking on those topics. And I think that having those kinds of people in office are really good for America.

40:02All of that said, I do agree with David that I think the pick was meant to be more about covering his left flank. And I found that an odd calculation. And I wonder whether it wouldn't have been easier to cover the right flank. And there are different folks that could have been in the mix to do that. And so I think that it was a calculation though. And I think it's about he has a core set of issues. It's about whether he appeals more to this side or to this side in order to get the totality of the votes that he think is possible. Second, he was under a little bit of a time constraint because some of these states need the VP candidate named and he's under a shot clock that the other two are not.

40:52So, I mean, I wish Bobby the best because I think some combination of Bobby doing well

41:02and some upheaval between the Democrats and the Republicans is really the only chance we have of having a credible third party. Well, let's see now what happens. By the way, we should just say like, you know, Joe Lieberman passed away, which is really unfortunate, you know, he was a really independent thinker as well. Let's see what no labels really does here. There's a little bit of chaos over at no labels, I think, but so there's a lot of moving parts. So it was clearly calculus. I don't totally understand what that formula was though. Just to build us make Jamass said, there's a report by Colin Rugg that But the DNC realizes what Juma said about this covering Bobby's left flank rather than his right flank and apparently they're in somewhat of a panic about this.

41:49And I think what you're going to see is that lawyers in the DNC and the Biden campaign are going to fight tooth and nail to keep this ticket off the ballot, at least in the major contested states, like the five or six states where the presidency will be decided in 2024. for. And of course, they'll be saying they're doing this to save democracy. But you're going to see, I think, a full -core press by DNC lawyers to keep the Kennedy shenanhand ticket off the ballot. Yeah, this seems really like it's going to damage Biden, which was my original prediction. And that, I'll reason why a lot of the right wing were supporting RFK was because they wanted, they saw this as a clear path to take away a couple of points from Biden.

42:31I think the first part of what's happening, you know, First part of what you said is 100 % right? I'm not sure that a bunch of Republicans are going to get organized, Jake Haltovote for RFK in that way. Oh no, I don't think they're going to do that. I think they support it publicly in order to build him up as a centrist candidate knowing that it would take away from Biden. So I just think on a strategic political basis, all these Republicans will do that for for Mary and Williamson. Why not? Yeah, no she's not electable. Yeah, no, no, it's because she's not electable. I mean, she's like, by the way, like, you know, and not like a viable candidate.

43:06It's pretty clear she's not well. But why can't you just accept that people on the right like the issues that Bobby spoke to? Isn't that the simple explanation for her? Yeah, no, I don't think that they're partisans and they just want to win. So I don't think it has anything to do with what you're saying, which would be like authentically liking and connecting with what he's saying. I don't think it was that. I think it's a strategic plan to try to pull Biden votes. And I think Republicans are smart to win. You think Bobby's a plant. You think he's a plant. I think their support for him is for various reasons.

43:32They're supporting him to take votes away from Biden. And here it is, we're all agreeing that this is going to take votes away from Biden. So I think it's a very clever strategy on the geopie's part. Well, I just just to add one point to that. Remember that when Bobby entered the race, he did so as a Democrat. He did so. Yeah. Challenging Joe Biden for the nomination of the Democratic Party. How did the Democratic Party react? They kept him off the ballot. They wouldn't give him a fair shot. Yeah. That's why he went independent. So he did not have to be this, you know, sort of like what you're kind of implying like a flying the ointment type third party candidate.

44:04He tried to be the Democratic candidate. Yeah. They wouldn't let him compete. If they let him compete in a fair way, maybe he would have stayed a Democrat. I would have loved to have a massive competitive field of Democrats. I think the Democrats are screwing this up. Bit time. I think this could be the the most this could I think they could peel off a couple of percentage points. Yeah. In those I think it's more than that. I mean, I think it's more than that. So we all agree that's what's happening here, then we're just disagreeing on tactics. I think this is where we're going. We agree it's taking points away.

44:34I think we agree about that. But what I'm saying is that this is where we've ended up. I don't think it was constructed to be this way. Ah, interesting. Free burger thoughts on this candidate, specifically around her love of organic food and wanting to take on the pesticides, toxic food, you know, and the industrial food complex. I mean, instead fast in my commitment to there being only one major issue facing this country, and that is the federal debt and the deficit. We are increasing the federal debt by a trillion dollars every hundred days. That number is not slowing down. The current budget proposal from Biden administration calls for over $7 .2 trillion to be spent next year.

45:20That makes the U .S. federal government roughly one -third of our country's GDP, the outrageousness of the condition that the U .S. is in right now, makes it so insane to me that we are talking about any other topic like big agriculture or whatever other nonsense was being spattered about as important topics to this particular person, if every voting citizen of the United States does not recognize the severity of the deficit and debt problem that the federal government faces, you are wasting your vote. And no candidate is speaking to what is clearly the biggest issue of our time. And we need to address this issue headlong.

46:00So I don't care about this person or anyone else who's running for office that is talking about stuff that we cannot actually address and problems we cannot actually solve if we don't get our fiscal affairs in order. That's my point of view. Got it. And respect for that. Can anybody win the presidency on a, hey, we're gonna balance the budget, we're gonna cut spending. No, platinum? Nope. So they can't win, and it's an existential issue. That's why I look, I mean, I'll keep shouting it to the abyss. I hope that a few people hear it, and that at some point it becomes a topic that folks do begin to focus on.

46:39And I think that the necessity of raising tax rates, the necessity ultimately of cutting entitlement programs, the necessary inflation that will arise because of the condition of the federal government's debt level because we're going to have to keep printing money. These are the sorts of things that are like a boiling pot that one day folks will wake up and say, well, what the heck happened? Everything got mismanaged. and it's not a Democrat problem, it's not a Republican problem. It's a fundamental problem of people voting themselves all the money and people getting voted into office by saying, I'm going to do more than is being done today.

47:17And that costs money and no one actually addresses the rampant misuse of funds, the lack of accountability and spending and the fact that we have an incredible amount of negative ROI spending and the fact that we've effectively created an economy that's fundamentally dependent on federal spending. And I'll go through some statistics when we talked about Biden's budget later in the show, but I think that the significance is just overlooked by all of these candidates and we're not really talking about the thing that matters. So, all right. So, let's write down Biden's proposed budget of 2025. Post budget was $7 .3 trillion for fiscal 2025.

47:54That starts in October of 2024. It's up 18 % from 2023. projected deficit 1 .78 trillion, which is similar to the deficits we ran in 23 and 24. The budget projects an average deficit of 1 .6 trillion per year over the next decade. National debt as Freeberg was alluding to is insane. It's a 34 .5 trillion. But we made some charts here to go through all of this. Let's pull up the first chart. And this is comparing Biden's proposed budget in 2025 with budgets from 2005 and 2015. Defense spending has actually grown pretty modestly during that time, but entitlements, interest payments, and non -defense spending have jumped significantly.

48:38US will owe $965 billion in interest on its debt next year. That's $65 billion more than the pro's defense budget. And in 2026, the US will surpass one trillion on interest owed on its debt. And we'll talk about that more in a minute. But let's start here with this first chart. And then jump out to you, Chimoff here. That's notable and worth discussing. All the areas that we need to cut, we can't even have a conversation about. So they'll never get cut and they'll keep growing. So I think that we probably need to figure out what the alternatives are. So if you can't have a conversation about expenses, the only logical place is to have a conversation about revenues and what that means for the government is in taxation.

49:31And so I don't know Jason what we do here. There could be a couple of saving graces. So there are some things happening, for example, on the Medicare side that could be profoundly disruptive. They are... Now, again, I'm just going to put this out there as it's happening. I don't know if it's good or bad, but they are looking at reimbursing things like wagovie and ozampic and whatnot. not. If you look at the underlying costs of those kinds of chronic diseases, diabetes, heart disease, etc. And you put a large swath of the American population on those drugs, the reimbursement value of those drugs versus the cost of actually the chronic care management would save you many hundreds of billions of dollars a year.

50:15So that's something. Second is on the defense side, there's a large portion of that budget that's migrating away from traditional tactical warfare to things that are unmanned vehicles and cyber and whatnot, that could save two or three hundred billion dollars there. So there are places where you could save 500 billion to a trillion dollars, but I think it's going to be almost impossible conversation and it'll happen by accident. So then the only forced conversation that I think we are going to have as a society is around taxation. And that's really bad for a lot of people that don't believe that's the path to generating growth.

50:56One of the challenges is that there are, and we should reference these in the show notes, Nick, but there are well researched economic studies that show that when a government tries to increase the taxation level, north of 20 % of GDP of that economy that you actually see GDP growth go negative. that there's a certain natural equilibrium on which you can tax the system. Beyond that level, investment dollars go down and growth begins to shrink. And that's what triggers the spiraling problem. Because then the government spending needs to go up to continue to grow and support growth in the economy and it creates this inevitable spiraling.

51:35Would you call this the Atlas shrug? The Atlas shrug effect. His investment goes down. There's a Fred Chart showing percent of GDP that's federal tax receipts and then percent of GDP that's spending. And the gap is your deficit. Okay. And Freeberg's right that I think in the absolute best economy, or best years of the best economy, so it's like, you know, the best year of the Reagan boom and the best year of the Clinton boom when we had the government surplus, I think the government was extracting just shy of 20 % of GDP. And in the 70s when marginal tax rates were at 70%, so before the Reagan tax cuts, we were actually extracting a lower percentage of GDP.

52:19So there's only so much blood you can get from a stone. If you raise tax rates on a marginal basis high enough, the economy performs worse and you actually end up collecting less, or people spend a lot more money on lawyers and accountants to basically figure out more structuring schemes to avoid paying taxes. So the years in which we've got the highest percentage of revenue out of the economy are in good economic years where we've had reasonable levels of taxation as opposed to the highest levels of taxation. And so the problem is with the spending. I mean, we used to be able to keep spending to somewhere between I would say in the best years of the years that Clinton surplus.

53:04plus I think spending as a percent of GDP was like 18 .8%. It's around 20 % of GDP goes to federal spending. That was normal. But then the spending got out of control during COVID and it went up to like 25 -30 % of GDP went to federal spending. It's starting to come down but it's still way too big a number. Anyway, my point is that a starting point for dealing with next year's budget is free spending. Just free spending. The 18 % increase is not a good idea. If we want to get this problem under control, freeze the spending, we can talk about taxation, but you're only going to get so much blood from the stone.

53:43And increased spending is stimulatory, and so it works well in an election year. I would say we took two major crises, and we had crisis level spending, and then we normalize that spending and allowed it to carry forward. Starting with the O8 financial crisis, with our monetary policy and then being accelerated with COVID and our fiscal policy. I'll give you guys, I did some back of the envelope map. I'm sure there are economists who have done a better job of this than I. There are directly three million Americans that are directly employed by the federal government. There's 167 million workers in the US, so three million are directly employed by the federal government.

54:21If you take the rest of the federal spending that flows into the economy, It's about three and a half trillion a year and assume 30 % of that capital goes to equity holders in businesses That own businesses that benefit from that spending and the rest flows through the labor That's about 13 % of GDP flowing through the labor and assuming average annual income That's another roughly 45 50 million people that are directly benefiting that are directly earning income because of federal spending There's another 50 million people in the US that rely on social security and here's another important statistic There's somewhere between 12 and 20 million people in the US that pay more than 50 % tax rate today.

55:00So those people are effectively working for the federal government because half of their income goes back to the government. So when you add this all up, there's over 120 million people in the US that are directly working for or getting paid by the federal government in the US. That is such a significant percentage of our economy that is such a significant dependency on individual income on a federal government. I don't want to use the term socialism, but the ability for U .S. labor to earn is so largely dependent and largely driven by federal spending at this point. And it becomes this critical linchpin to enabling progression economically to enabling the labor force to continue to participate that the federal government is now the primary customer or employer of most of the labor force in the United States today.

55:55That is a deeply and profoundly different circumstance than what I think the founding father's envisioned. When the federal government was supposed to be this lightweight Overseeing organization of a federated republic of states and unfortunately I think we find ourselves in a condition as Jamal points out that's very hard to get out of this is gonna require a Dedicated multi -decade effort to create a slow unwinding from this deep dependency that our labor force has on federal spending And I'm just like so shocked that this isn't the The critical problem of our day that we're not all spending time on folks have pointed out that this only goes one way at this point Hey, Nick, can you bring up that first Fred chart?

56:34This is federal receipts as percent of GDP, and it goes all the way back to World War II. To Freeberg's point, we've never gone above 20%. Look at that. And we've had tax rates as high as 90%. I'm saying top marginal tax rates as high as 90%. I think after World War II, because we're trying to get out of the deficit that was created by the war spending. You can't get above 20. Yeah, exactly. The economy shrinks. No, but hold on. I gave you this OECD report. It says that since 2000, we've been in the mid -20s. And the OECD average is 34 in terms of tax to GDP. Tax to GDP is this includes state and local then, right?

57:20Probably yeah. Yeah, I just showed federal. I think this probably includes state and local. Yeah. And if it's a whole nother Bollywood, because I didn't include those numbers in my employment statistics. The US Bureau of Labor Statistics estimates that about 20 .2 million Americans are employed by local and state governments, directly employed by local and state governments. So, again, when you add this all up, the majority of the US labor force is employed by the government or is a beneficiary of the government as the primary customer or is supported by government and title and programs. If you go back to that Fred Chark for a second, I mean, if you basically acknowledge the point that 20 % is the ceiling on how much we can extract from an economy based on 80 years of data, okay, with all sorts of differing tax schemes.

58:09Then I think what we should say is that federal spending will be capped at 20 % GDP. We should, you know what I'm saying? Like if we can't, about 20 % will always receive capped federal spending at 20%. That should be a constitutional amendment. Right. And then on the revenue side, we should say what is the best tax code to achieve that 18, 19, 20 percent? Because what we do right now is we just say we'll just tax the rich. But what we've seen is we've been taxing the rich as high as 90 percent in the past and you didn't get more revenue. So we should be much more scientific about saying, well given that our target is let's say 20 percent, what's the best way to do that?

58:50And no one really has that conversation. No, none of the conversations have to do with data or building a bulletproof system. The same thing we could say about immigration, where we try to talk about the numbers here of what's a reasonable number of people and tying that to an actual number. And it's pretty obvious we should have one immigration policy when we have 5 % unemployment and a different one if we had got for a bit 15 or 20 % unemployment. We just have a couple of seconds. It could be tied to the unemployment rate. The fundamental structural problem I'm highlighting is that we've created an economy that is so deeply dependent on federal spending.

59:29That the federal spending levels are what support so many employed and so many companies in the US. You're answering your own question. That's why I can't stop. Right. I don't think the real economy that creates all the innovation and all the value and all the good paying jobs. I think that is separate. That's the deflationary economy. That's the true market -based deflationary economy. The problem is, once we've layered in all of these layers of dependency from federal dollars flowing into businesses or into people's pockets, it's very difficult to back out of that. I don't call that dependency.

1:00:03I call that special interest. I think there's a lot of special interests who are basically looting the federal government and taking all this money and then they turn around and use some of it to donate back the politicians and lobby for more spending. So what you're calling dependency is really more special interest, meaning that I don't think we need to have this level of spending in order to have a successful economy. I think it makes our economy less successful. Yep. It's still stimulatory because, Zach, remember Mitch McConnell, when they were talking about supporting Ukraine, his primary argument, as you remember, was that all of these dollars are going to go into defense contractors pockets, which is going to go to employees pockets, which is going to stimulate our economy.

1:00:43That's the fundamental thinking behind all. That doesn't mean value. I know, but that's the thinking behind it, right? I mean, that's the political system. Okay, let me just walk through this real quick. If the government prints a bunch of money and hands it to people with Stimich X, we all understand that creates no economic value and just creates inflation. Okay, now, if the government does the same thing, but instead of a Stimich X pays people to dig holes and fill them back up, that's the exact same thing. No economic value, just inflation. Now, let's say the government pays people to create bombs that create holes in other countries.

1:01:16Exact same thing. No economic value for the country. It just creates inflation here. Why is that? Because the only thing that creates economic value in the United States is the production of goods and services that people can actually consume and use and that they want. And so federal spending on basically make -work projects or things that people don't really want or they don't use or even worse, bombs that get dropped on poor people in other countries, none of that creates any value. But I don't think it's a real economic dependency. I think it is just a special interest that keeps lobbying for all the staff.

1:01:51But what about housing and health care and education? Because those are the three biggest line items and it's been inflationary across all three of those line items in the US economy. The federal government has stepped in to provide broader access to housing, broader access to healthcare and broader access to education. And in the process, that's why the price goes up. Yeah, you know, there's that famous charge showing inflation by a category and all the categories where the federal government provides subsidies, the prices have gone up and all the categories and housing and housing. And the more the government tries to subsidize it, the more the providers realize we're right second.

1:02:23We can charge whatever we want. Correct. Correct. There's warm customer and they'll always pay. Yeah. That's got to be completely reformed.

1:02:35this Fred Chart includes all employees in government, which would include state and local. And as you can see, where... Yeah, that's right. It's 20 million local and state, 3 million federal. And then the math I was highlighting was just my backup, the envelope math, where there's 50 million people that are on social security in the US. Plus, if you do the math on how government spending flows into employees' pockets, it's about another 45, 50 million people that benefit from federal spending in the US. We're already kind of at a point of maximal dependency, if you will. Yeah, I mean, if you look at this chart, we have had 20 ,000 people working in government since the late 90s.

1:03:19Yeah, 20 million since the late 90s. It's now hitting a peak. And the question is, you know, how far up does it go from here? It's 23. Obviously the country is growing as well each year. So as a percentage, we don't have the percentage, but as a percentage of Americans, it hasn't grown that dramatically, but it certainly feels like this could keep going in the wrong direction. The one thing to keep in mind from all the doomsdaying, I would just offer you two data points. The first is that our debt to GDP either historically, but also in relation to other countries is still relatively reasonable.

1:03:58And what that basically shows is we have a lot more debt that we can issue, which means that there's a lot more deficits to run. Not saying that it's right. Yeah. Before the great financial crisis, it was running at 50, 60 % are debt as a percentage of GDP and to your point, Shemaaf, it's now at 1 .2. So 120 % other countries have much higher. So we have a lot more to run. Yeah, so Nick, if you want to just throw that up and so it means that the countries on the right haven't failed. They haven't done great necessarily, but they haven't failed in the way that we would define failure. And it's not as if the countries on the left are crushing it, the way that we would define crushing it.

1:04:35And so it's not clear that there's a real correlation between debt to GDP and the performance over large longitudinal periods of times as a country. That's the first thing I'll say. The second thing is if you actually look at all of these countries, the thing to keep in mind is where are populations growing and shrinking because at a very basic level, Jay, Kyle, you mentioned this earlier, but when countries are shrinking, there's no fundamental ability to grow GDP. And you're just debating how much it shrinks. And the interesting thing about the United States is we are the only Western country that is forecasted to grow at reasonable rates above our replacement population.

1:05:15And so, you know, by the end of this century will be around 400, 400 odd million individuals and other countries will have been cut in half. And so again, there's some positive news as well. Now, to your earlier point, the problem is politicians will use this as a reason to continue spending because they won't be forced to. And that's not a great thing, but this is probably why the status quo will go on for a very long time.

1:05:45So grab the bag. Get your bag. Figure out what your thing is. I don't know. And I just want people like voters to people to just not go into yeah, they're not going to get your bag like everybody I have is if okay Nick can you pull the the Fred spending chart we've talked about this a few times Well, okay, so if you look there there's a huge spike because of COVID because of all that COVID stimulus That was air drop to the economy. I think we're now down to about 22 % for 2023 But that's a big number. You know, we talked about how the absolute max you can extract is 20%. So what they should do is just free spending until the federal net outlases of percentage GDP is down to 20%.

1:06:31That would be the simple. Such an easy solution. What's great about it is it takes out the politicians making this partisan. Hey, there is a logical amount of taxation we can do before we freeze. up the productivity of the country, which if you talk to anybody when taxes get high, people just start getting, protecting their wealth. I think you alluded to that, which strategies as opposed to investing. The hard part of it is that, I mean, look, I think we should do it, you know, 20 % cap and free spending until we get there. The hard part is that our interest expense keeps growing because as our debt rolls onto more expensive higher interest bonds than our interest expenses increasing.

1:07:15Just a few years ago, our interest expense was only $300 billion a year, and now it's over a trillion a year. And that's just going to keep growing and growing. And then the other thing is going to grow is all the entitlements related to demographics. So the country's demographics are getting worse, and so the entitlement expenses are going to go up. So even holding it to 20%, if we could get there, is going to take some work. The other guy that we read, Larry Fink's letter from BlackRock, it was really good. You talked about it. You mean his 2030 business plan, Jekyll? Basically, yeah. It's his way of extracting value from it.

1:07:51But he did make some salient points in it as opposed to just him talking his book of why you should do his retirement savings with BlackRock. It's a fair point. But just getting the, what age do people retire at? That discussion we need to have and we're not having that as a country. And then what percentage of benefits do people get at different? How do we incentivize people to stay in the workforce? Well, I think minimum, don't you agree? We should just allow people to opt out of social security and in a simple way of saying, I don't need it. And I'll take care of myself, use these proceeds for somebody else that could use it that who has a better need for it.

1:08:27Yeah, I mean, and then getting people to participate in the 401Ks, you know at an earlier age and defaulting those to on as if defaulting them to off There's a lot of small behavioral things we could do in this country to get people saving earlier Well, I Saw that Robin Hood was running a scheme where if you moved your Roth IRA They gave you three percent cash back and I thought is there an upper bound limit on what on how much you could move over because I wonder if I think you have to keep your money in there for five years Yeah, but that's okay. I'm just wondering like will they really write like a hundred million down checking you Robin Hood just sent me something so we had a portfolio company called x1 which was making and you like credit card and credit card app It was like awesome.

1:09:13I don't know if you guys used it Anyway, they got acquired by Robin Hood and so the guys here just sent me their new Robin Hood Gold card card. Yeah, this thing is the heaviest card here. Just listen to it drop hold on Yeah, don't cut yourself don't cut your toe off Apparently it's got $1 ,100 worth of gold in it I'm coming myself and I'm proud to say I've sold no shares of my Robinhood. I keep all my Robin shares If I move my Roth IRA, they'll have to give me the whole building You give your gold plenty of building actually they sent it to me in a Louie Vuitton with a Louie Vuitton wallet. This is like Whoa, yes, it's got I look they got a fifty thousand dollar and then a fifty thousand dollar ad on the Christmas.

1:09:59You're like a little LV wallet there. Oh, I like there you have it folks send a movie with all my get a free fifty thousand dollar ad on the pod sign up now for your Robin Hood go. Yeah, but what is it a credit card? Yes, a credit card. Yeah, they're their whole plan was always to provide the full suite of services. Do you guys carry credit cards and money? Do you have anything for any of them? Does any of them have wallet? But I always carry money. You have money? I always carry it. You know, like to tip people or something? Always have some cashish. Never. You always gotta have a couple of Hyundai.

1:10:33Just in case. This is a really bad habit. You gotta keep a couple of Hyundai in the bag. You put the 100 on the outside, Jake Helms, a bunch of ones. You're so... No, it's good to do that. You can't do that in Brooklyn. You get your ass on. That's the Brazil on the outside. No, no, no, no. What we do is we get rid of the ones, the fives and the pen. So you just get rid of those. You don't even keep them in circulation. That's the best line. I get cash when I go to Vegas. But that's the best line ever was. Woman comes up to Sammy Davis Jr. And she says, hey, can you break this whatever amount of money and he just pulls out a hundred and gives her a hundred?

1:11:14And she says, no, no, can you make change? He says, that is change, baby. That is strange. That's when he considered change was the hunting. There was a story out of Jeju. So, you know, Triton poker. Yes. Okay, I'm not gonna say who it is, but there's a guy that was playing the high stakes cash game. And apparently, so he lost like eight million bucks. Okay. He tipped out 450K and 25K chips to like the staff and like the person giving him a massage and stuff. So apparently became a free for all, trying to get into this game where everybody was like, are we pooling tips? Are we pooling tips? And they were like, no, we're not pooling tips.

1:11:52Just flags. He was tipping off flags. Wow. That is incredibly, incredibly generous. All right. Science corner, rapid fire. You wanted to get to Coco. Here we are. We're at Coco. Freeberg. You have. You guys asked about Coco. You want to pull up the commodity price chart on Coco? Look at that. Okay. This is not cocaine. This is cocoa. This is chocolate. Pre -cursor to chocolate. Not cocoa. This is chocolate. As you guys can see from this chart, cocoa has moved and priced from about $2 ,000 a ton, which is where it normally trades at to $10 ,000 a ton. 70 % of cocoa is grown in West Africa, in Ghana, and Ivory Coast.

1:12:37And in that area, they've been severely hit by this El Nino weather near that we're just kind of coming out of. So here's all the cocoa production, 73 % of it's in Africa, mostly in Ghana and Ivory Coast. That's where most of the world's cocoa beans are produced. Coco is grown from the cacao tree, which is about 10 feet tall. These bean pods can take them down, you roast the beans, crush it, you make cocoa. When you eat a Hershey's bar, for example, 11 % of that bar is ground up cocoa powder. So cocoa is like the critical ingredient, all the chocolate the product we consume. So we had this massive El Nino event last year.

1:13:13So here you can see sea surface temperatures. So in Q4 of last year, El Nino spiked like crazy. And that caused a lot of rainfall to hit the west coast of Africa. And as a result, this fungus was spread in cocoa trees. There's a fungus called Black Pod Disease. And this fungus spreads when rainfall hits the ground and it splashes up, gets in the tree. And then the tree has really bad yield and the cocoa production goes down. So now if you look at the cocoa production out of Ghana, you can see that we've seen like 50 % rough decline in cocoa production on the final bar chart. So that's the effect.

1:13:48So when that happened, basically everyone started to corner the market. So all the buyers of cocoa went in and started buying cocoa like crazy. And then all the short sellers got squeezed because there's typically a pretty good balance on the short and long side in the market. So the short seller's got squeezed and it causes big parabolic jump in price. And that's where we're at today. The chocolate companies, again, 11 % of chocolate that you're buying at the store is made from this cocoa powder. They're talking about cutting the size of their chocolate bars, raising prices, and starting to use other ingredients.

1:14:17So you'll start to see that happen in the shelves in the next couple of months. But this is the big news in the commodity markets right now. Is this this parabolic spike in cocoa prices? And you know, consumers will get hit with high prices and smaller chocolate bars. Isn't there a scene in trading places? Yeah, the OJ features. Yeah, that's right. They squeezed the orange market. That's right. That's basically what's happening, Coco. So there was a bad weather event, yields dropped by 50%. So we got half the production. And then all the traders came in and they squeezed the short side of the market and price spike.

1:14:49So that's kind of what's going on. If I had a dollar for the number of times a fungus is ruined a good time, man. Well, you know, it's interesting. I was looking at this and I was worried about chocolate prices. I was worried about chocolate prices. Specifically, I'm not having this right now in these edible anus. Uranus prices have gone up somehow. So these chocolate Uranus prices are skyrocketing. I just typed in Uranus. I took your freebergs Uranus and chocolate and this came up was the number one result. So we know what it means. There it is Uranus. This is chocolate prices are going up. I know what I'm getting you guys for Christmas.

1:15:38You know, it was priced in euros, not dollars. Yeah, it's not a valid one. It was coming from Belgium. I guess they got some serious kink going on over there. That's if you want to chocolate Uranus, it's there for you. Oh, I mean, I just was like Google search chocolate Uranus and yeah, I don't recommend you make that search if you're listening to the pod. Well, when I heard there was a spiking cook price, is it made me think of this?

1:16:13I went to last time, when's the last time you watched Squarface beginning to end, not like just quadcopter. You're a coven, I watched it. It holds up, yeah? Yeah. I mean, man, it is, by the way, I saw you in two. Jamal, have you seen it? No, don't say anything. I need to wait till it comes to stream. Okay, I loved it. Sounds great to see it. I'm going back to see it again. I'm going to see it. I'm actually so you're with me. I didn't hate it. I just think it's I'm rated like Spielberg said it was like one of the greatest moments It is one of the greatest movies I've ever seen. No, that's completely overrated I'm not saying it's bad.

1:16:47It's just not that scale a one to ten give it a number I will do anything to have this guy do do you and three he's talking about whether or not he should do it He's like I'm only gonna do it if it's gonna be better than you and two you know He's can do the internet. It's called a Canadian guy. Yeah, he did secario secario and the arrival like he's honestly one of the top three directors of our film. No, Denis Villenez. Villenez. Villenez. Villenez. I don't know. The hero in that movie is like the soy boy type. I mean, I don't really believe that he's leading an army. That's not credible. You know the story, I read a lot about, you know, these were all like short stories published in magazines by Frank Herbert.

1:17:30and he was recognized. They were serialized. And he was really into drugs. He was really into mushrooms. And so the spice came around from the mushrooms. Makes sense. It was written in 1965. There was this idea that we needed to move towards zero population growth, because the population spike on Earth was going to cause resource constraints. And we were all going to die if you guys remember this. And so there was this big movement. It's what launched the hippie movement. Did they not have math back in 1965? Yeah, they really did think this and that there wasn't going to be improvements in productivity.

1:18:01So there were limited resources. The world was going to run out of land. And the ecology or the environmentalist movement kind of sprung out of this effort. So a lot of what he wrote about was the ecology and the connection between the fungus and taking mushrooms and better understanding the world around you. So so much of this was rooted in a hippie movement sacs to your point when he wrote these original short stories. what the spice is in Dune. No. And it was tied to mushrooms. They never explained why he was in one spice. When Frank Kerberg was interviewed later, he talked about how it was meant to be about.

1:18:34Fungus is the greater of life and this greater of life. And he wanted spice to be representative of mushrooms of fungus. Got it. So aside then. And it was like, it opens your mind and you get more connected with nature and all this stuff. So it was rooted in that, but they never really get into details on it in the book. So this film to you, Freyberg, is a 10 out of 10. I did it like, okay, I was gonna give it an eight and a half out of 10. I think the first half was slower. I'd say like the second, I mean, like, I'm not ruining anything. I really like Zendaya. I think she's super cool. I agree with you, Sox.

1:19:08I'm not a huge Timoface, Shalamet fan. I think he's too skinny for me. Is it his name? Is it the name or is it the whole pack? No, no, I grew up in Canada with a lot of French people. So I'm cool with that. I don't like, he's just too skinny. like do a couple pushups or something. It's the vibes, the general. What do you give it, Saks? And yeah. Give it an eight and a half. I won't give it a nine. I'll give it a nine and a half. What do you give it, Saks? Give it a nine. I'll give it a six and a half. Six and a half. Now, if it had a proper lead who was more than 120 pounds, who is a good lead for you, Saks, where you would have given it a nine.

1:19:42Exactly the same. Everything is the same. With out a soy boy. Oh, Jake Jillinhal. Is that it? Is that more of a Saks nine? like old women fighting, Bonnie Jake Gyllenhaal. He's, yes, I mean, who Tom Cruise? Ryan Dozling. Ryan Dozling. Seven things. What do you think? What do you think? I don't know. You think you're a young Russell Crowe or something. Right. Don't you? But have you seen the original Dune? That guy, if you think that this guy was... Tom McLaughlin. Oh my god, that guy. And David Lynch movie. Yeah, that was good, actually. Yeah, it was a little, I mean, it was similarly. It was like a soft protagonist.

1:20:20What is it? What is it? What is it? Yeah, what's it? 10 out of 10 free sex. Gladiator. Goodfellas. Casino. Sakari. It was incredible. Sakari was incredible. All those are good. Oh, I know. Those are all great. I'm like if this is seven. I mean, I gotta see it again. May all revise up to seven, but it's not more than a seven in my book. Isn't there like a Sakari or three coming out? I hope so. Sakari, one and two. Sakari was great. you watchable. Oh, it's ultimately watchable. Sikario one was unbelievable. Unbelievable. Sikario two does it for me. That's the end of the one at the border where you hear the noise of like what are those locusts?

1:20:59Totally. You know, oh my God. No, no, no, no. Is there a traffic and the cars are parked? Yeah, that's what I mean. Yeah, yeah. Yeah, it's like, oh my God. It's like the bane scene in dark night. Yeah. And also when he's at the dinner table of the drug lord. Yeah. Oh my God, that's intense. Intense. Intense. I think that film has probably the best cadence of any modern film. Like the way he kept pacing that film did not turn off for one second. You were hooked from beginning to end and you could walk the lane. But you could walk the lane. It's like Godfather was also like that. The pacing in Dune 2 is terrible.

1:21:34I mean, he spends all this time in the wilderness and the - I want to eat your face! No, no, no, no, no, no, no, no, no, no, no, no, no, no. Are you ever seen it? Yeah. The one we talk to. No, man. I'm ready for it to come to see me. I had this whole conversation last though. Does anyone else think that the arrival is like one of the best films of our generation? No. I mean, it's good, but it's not. I think it's good. Great. It's like such a mind blowing film. Oh, sax, you know, maybe maybe like a young buff Matt Damon. No? Uh, Matt Damon now. I don't really see him in rule. Okay, how about, what's that guy's name?

1:22:11Adam Driver. Yeah. Yeah. Yeah, yeah, yeah. Yeah, yeah. Yeah, he could do it. He could do it. He would, yeah, he's kind of like a comic lockling type. You know, he's a little old. Yeah, exactly. A little he -a -me. Yeah. Yeah, but not so skinny. Yeah, I mean, the idea that he's going to win all these fights and he weighs 120 pounds wet out of the showers makes no sense. Like, the only difference is us. Zendaya does? Does it she kick his ass? Basically, yeah, I mean let's not give it up here now. Now that scene with best opening scene of a film, what do you got, sax? What's your best most intense scene?

1:22:51Of any film, any opening scene. Most intense. I mean the Joker, bank -high scene is incredible. That's good. That's incredible. I was in the shaft of, there will be blood. Absolutely climbing out of there with the broken leg. Oh my god. That sets the tone. That's who he is as a person That's everything that's your spirit animal. That's it. You're bitter and angry And they you have a competition competition in me. I don't like to see others succeed I'm David Friedberg. I'd like to see the world right strike Right Actually, it's true. It's accurate. It's your favorite movie. It's just a whole reason.

1:23:34You admit it. I just own it. I drink your milkshake, keep the lie lies. I do have a competition in me. It's funny, the only opening scene of a movie that I really remember is Reservoir Dogs. When you talk about an opening scene that's memorable. Pulp fiction? Well, what was the opening? Oh yeah, the opening scene Pulp Fiction's pretty good to where the robbing the diner. Yeah, the diner. It's like you're hooked on the dialogue right at the beginning. Yeah. Yeah, probably some Tarantino movie. There was nothing like that right when that came out. You're like, what is this? And then you're just actually the opening scene of good fellows is really good where The guy's kicking the trunk from the inside.

1:24:13They think he's dead. Yeah. Yeah.

1:24:19Saving private Ryan also I'd say he's pretty good. Jim. Oh, if you want to go see it at I'm X You have to be on that list, Jacob. He's amazing. Yeah. I mean, he is definitely top 10. They're coming out with heat too, by the way. They wrote a book and then it's coming out of Kent. Wait for heat too and gladiator too. Where do you go to see the IMAX? Oh, they have a good one in the city in San Francisco. The Mechrayon is a 70 millimetre IMAX. That's a hundred million dollars. It's like IMAX. It's ginormous. And they're doing the full print at that theater of D &T. So it's like the act. He shot the thing in 70 millimetre IMAX.

1:24:52I started which is like extremely expensive Observedly expensive. He's been like a hundred ninety million dollars on this phone Fantastic everybody goes to do two sex what films do you have coming out anything interesting producing anything? What's in the production line you bought the rights right something? We released Dollyland earlier this year with banking sleep playing Dolly Yeah, and actually Elon just posted a long long reminiscence about how we made Thank You for Smoking, which was kind of cool. Did you guys see that? Nice. No, I didn't see it. He tweeted it or? Someone tweeted like, Hey, did you know that like Elon Musk and Peter Teal and Max Love Chin and David Taxi Produced this movie?

1:25:30Thank You for Smoking because it's been like almost 20 years and so... I remember. People don't know about it. So anyway, that someone tweeted it and Elon responded. There's like a really crazy story behind it and they were like, Oh, tell us. He wrote up a long tweet explaining how we got the rights and he has memory. was actually really good. I was like impressed that you remembered all of these details 20 years ago. Yeah. I tweeted back like, look, if Jason Wrightman's up for the sequel, let's do it. Wrightman's doing pretty good. He's doing okay. All right, everybody. For the Rainman, David Sacks, Chimoff, Pauli Hoppati, the Chairman, Dictator, the Sultan of Science, and the world's greatest moderator, blah, blah, blah.

1:26:10We'll see you. Oh, and by the way, If you're listening to this go ahead and check out all in podcast on YouTube and subscribe When we hit a million subscribers, which were well on our way to help way there I think we're gonna throw a million subscriber party and so yeah subscribe and you might get an invite Then we're gonna try to have as many people at the million subscriber party as possible when we hit I think 600 ,000 we're gonna do a live Q &A on the channel so really cool milestones coming up for the pod and we'll see you all next time bye bye bye love you guys That's my dog, can you give it a wish?

1:27:11You're driving away, so... Wait, I know! Oh, man, my ham is the actual meaty, I'm a police officer. We should all just get a room and just have one big hug, George, because they're all just like this sexual tension that we just need to release our house. What, you're the beef? What, you're the beer of beef? Beef, what? We need to get my cheese already. I'm going all in!