AI Overlords Are Engineering a Broke Society ft. Ed Zitron | The 1600 11583961 https://youtu.be/RKwK7qrBz8g

27 Feb 2026 · 58 min · 26 chapters

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In short

Podcast Summary: The 1600 - Episode: AI Overlords Are Engineering a Broke Society ft. Ed Zitron

Introduction

  • Podcast Title: The 1600
  • Episode Title: AI Overlords Are Engineering a Broke Society
  • Host: Carlo Versano
  • Guest: Ed Zitron, a noted AI skeptic
  • Description: The episode delves into the current state of AI, its implications for society, and an exploration of recent viral essays analyzing these technologies.

Main Themes and Discussions

AI Skepticism

  • Skepticism Around AI: Ed Zitron positions himself as a strong critic of the AI hype, questioning the validity of claims made by tech companies and commentators.
  • Contrasting Opinions: Carlo Versano expresses ambivalence about AI, oscillating between seeing it as a transformative technology and viewing it as overhyped.

Viral Essays and AI Predictions

  • Cetrini Research's Viral Essay: Discussed a viral post titled "2028 Global Intelligence Crisis," which predicts AI's capability to replace a large portion of white-collar jobs, leading to economic collapse.
  • Zitron refers to this essay as "nonsensical hog slop," criticizing its lack of substantive argumentation or evidence.
  • Key Critiques:
  • The essay claims that AI will replace jobs but fails to provide concrete mechanisms or evidence of this.
  • Specific references to financial forecasts and technological advancements that Zitron deems unrealistic, including AI’s alleged ability to trade on cryptocurrency platforms.

Economic Implications of AI

  • AI as a Factor in Employment: Zitron questions the notion that AI will lead to increased productivity followed by massive job displacement.
  • Market Reactions: Concerns about how AI predictions are affecting stock markets and public sentiment, particularly around layoffs and economic downturns.

Data Centers and Infrastructure

  • Skepticism of Data Centers: Significant focus on data centers' role in the AI economy and their questionable economic viability.
  • High Costs: Discussed the financial burdens of building and operating AI data centers, often backed by high levels of debt.
  • Customer Viability: Zitron emphasizes the reliance on unprofitable AI startups as customers for these data centers, raising concerns about their sustainability.

Social and Political Dimensions

  • Lack of Political Constituency for AI: Zitron argues that there isn't a strong public or political backing for AI technologies. Regular citizens are skeptical, as many fear job loss due to automation.
  • Shift in Political Discourse: Some politicians (including figures like Bernie Sanders) are beginning to advocate caution around AI and data center expansion, reflecting changing public sentiment.

The Future of AI and Society

  • Long-Term Concerns: Zitron warns of potential societal upheaval should AI technologies be capable of replacing substantial segments of the workforce without adequate economic or political responses.
  • Public Sentiment: Regular people are not clamoring for AI; they are more concerned about economic stability and job security.

Key Takeaways

  • The hype around AI is often based on speculative and unfounded claims.
  • Major technological advancements must be critically analyzed rather than accepted at face value.
  • The economic models supporting the AI bubble, particularly regarding data centers, are precarious and unsustainable.
  • There is a growing skepticism among the public and politicians about the implications of AI on jobs and the economy.

Conclusion Ed Zitron remains a strong voice of skepticism regarding the transformative promises of AI and the economic structures surrounding it. The conversation highlights a need for critical analysis, realistic expectations, and societal readiness for the changes that AI could bring.

Written by AI. May contain mistakes. Listen to the episode to check what was said.

Chapters

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Exploring AI Skepticism

0:45 to 2:28

Discussion on the hype and skepticism surrounding AI advancements.

“I think that I kind of want to start with, and I should preface this by saying, I'm all over the place with this stuff.”

Analyzing Viral AI Essays

2:28 to 4:05

Critical examination of a viral essay about AI's impact on society.

“Most of the, in fact, all of the technological framework is, yeah, AI gets cheaper and then it gets better.”

Debunking AI Predictions

4:05 to 5:48

Challenge to claims about AI's capabilities and economic impact.

“The only thing that has algorithms, it has like a strong AI thing, and he just, nah, just stocks are traded the same way.”

The Economic Paradox of AI

5:48 to 7:40

Discussion on the paradox of AI-driven productivity leading to layoffs.

“And based on my own data center model, I worked out, there isn't tens, hundreds of millions of dollars a year because of the onerous debt they've gone into.”

Political Implications of AI

7:40 to 10:07

Exploration of how the shift in workforce due to AI could influence politics.

“You get the Wall Street Journal, CNBC, Bloomberg.”

The Data Center Dilemma

10:07 to 13:32

Analysis of the economic viability and political scrutiny of data centers.

“$178.5 billion data center credit deals done in 2025.”

The Economic Viability of AI Data Centers

14:00 to 16:49

Explore the financial challenges and risks associated with AI data centers.

“Yeah, and then you get the other pro so that's your first problem So now you have this massive up front cost So this means that no one building these data centers is doing so without debt.”

Potential Collapse of AI Infrastructure

16:49 to 19:34

Analyze the factors that could lead to the downfall of AI infrastructure.

“All it's going to take for this to fall apart is one or two of those to collapse.”

The Illusion of Claude Code

19:34 to 23:14

Discuss the sustainability and economic reality of Claude Code in AI.

“A huge investment from from corporations and governments, which would imply a huge amount of labor displacement.”

The High Cost of AI Subscription Services

23:14 to 28:00

Examine the implications of the costs associated with AI service subscriptions.

“Yes, but with Uber, the cost difference was still within the realm of what you would pay for a cab ride.”
Show all 26 chapters

Claude AI: A Mixed Bag of Results

28:00 to 29:05

Exploring the capabilities and limitations of Claude AI through personal anecdotes.

“I mean, so I, and again, I'm not a hardcore user of these models.”

The Value Proposition of AI

29:05 to 30:25

Discussing the practical applications and limitations of AI in personal finance management.

“I have a friend who told me that he, and again, I wouldn't do this personally, but he fed all of his, like the last year of his bank statements in there.”

AI Coding: Is It Really Improving Software?

30:25 to 31:45

Questioning whether AI-generated code improves software development efficiency.

“So already their cost of doing business is completely subsidized.”

The Reality of Software Development and AI

31:45 to 34:48

Investigating the complexities of software engineering beyond just coding.

“And who knows how true this is, but the idea is there are all these people out there who have great business ideas or app ideas or whatever, and they haven't been able to...”

The Challenges of Vibe Coding

34:48 to 36:04

Critiquing the concept of 'vibe coding' and its implications for software quality.

“SAP down about 10 % I think in the last month.”

LLMs and Code: The Atrophy of Skills

36:04 to 37:56

Discussing the potential skill atrophy among developers relying on LLMs for coding.

“I hope that you have a law firm because you're going to need a law firm for this ERP system, especially if you have your customers touch it.”

Anthropic and the Military: A Controversial Contract

37:56 to 40:14

Examining Anthropic's relationship with the Pentagon and implications of their contract.

“And the thing is, LLMs also, they need to be constantly updated on the model provider's end so they don't experience model drift, which is when it's not even anything wrong with the model necessarily.”

Marketing vs. Reality: Anthropic's Position

40:14 to 42:00

Analyzing Anthropic's self-presentation as a moral AI company amidst military contracts.

“Okay, so let's keep talking about Anthropic.”

Anthropic's Marketing Strategies

42:00 to 43:19

Discussion on how Anthropic positions itself in the AI market and its implications.

“And they had to discontinue use in Ukraine because it wasn't particularly useful.”

The AI Landscape and Competition

43:20 to 45:00

Exploration of similarities and differences among various AI models and companies.

“It would be really funny if he was just like a hot, he like subscribes to semi-analysis.”

Cynicism in AI Safety and Ethics

45:01 to 46:40

Critique of the AI safety narrative and its disconnect from real-world issues.

“And I did the haters go to Anthropic last week.”

Public Perception of AI and Its Dangers

46:41 to 48:50

Analysis of how the public views AI technologies and their societal impacts.

“does not do any of the things I'm scared of.”

Comparing Human and AI Energy Consumption

48:51 to 51:20

Debate on the energy efficiency of AI models versus human training.

“I genuinely think the Colossus project may actually destroy Elon Musk.”

The Financial Implications of AI Development

51:21 to 56:00

Discussion on the funding of AI projects and their economic repercussions.

“He looks like he was generated in an Xbox One game.”

Skepticism on AI and Cultural Commentary

56:00 to 56:30

Discussing skepticism around AI advancements and cultural implications.

“They're the most beautiful company we've ever seen.”

Ed Zitron's Upcoming Projects

56:30 to 57:20

Ed shares his current work and future projects.

“You remain as skeptical, if not more skeptical than you were last time.”
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Transcript

Automatic transcript. May contain errors.

0:00The man, the myth, the legend, Ed Zitron makes his triumphant return to help us burst the AI bubble.

0:06Ed Zitron:This country was stonefold dead. Good day again from Newsweek headquarters at the top of the World Trade Center in New York City. I am Carlo Versano and this is The 1600. So yes, as you no doubt are aware, we have Ed Zitron back with us in the cut today. Ed, good to see you, my man. So Ed is the guest of our most viewed episode on this podcast. That's right. We knew we had to have you back. We want to talk AI. There's been a lot of developments in the AI space, or perhaps not, but there's certainly been a lot of hype. Stuff has happened. Stuff has happened in the AI space. And, Ed, you are one of America's great AI skeptics.

0:43Yes. I think that that's fair. That's fair, right? So there's a lot to get into. There's a lot to talk about. I think that I kind of want to start with, and I should preface this by saying, I'm all over the place with this stuff. Some days I'm like, this technology is going to change the world and I'm going to be shoveling coal soon because I'm going to be of no use to my profession. Some days I'm like, this is totally vaporware crap that they're just hyping. Nobody actually wants this. So I don't know where I am. I'm generally a skeptic like you. Probably not as hardcore of a skeptic, but that's where you come in.

1:26And part of the reason why I keep changing is because I'm influenced by, there's so many of these sort of like viral sub stack essays and X posts, right? So we had one, the one that I actually wanted to bring you on originally to talk about was this post that went viral a couple of weeks ago. I think it was on X and it was titled, Something Big is Coming. Yeah, from the scam artist, from the guy who lied about his open source model reflection 70B. Yeah. Okay. Well, so I asked you, I said, I was like, can you come on and talk about this? You referred to it as Abominable Nonsensical Hog Slop. Yep.

1:58And you actually helpfully annotated it for your subscribers. So I wanted to talk about that one. But since then, there's actually been a new, another one of these sort of like viral essays or I don't even know what you would call them. It's not really like an op-ed. It's not really like an essay necessarily. It's almost like science fiction. It's a ghost story. So this is the one I'm referring to by Citrini Research. It was published on Substack this week. It was titled the, quote, 2028 Global Intelligence Crisis. So this article, by the way, moved the stock market on Monday. It fills me full of worry that it did so because having read the 7 ,000 plus words, and I know I can't judge anyone for writing that much, several times in annotating it myself, I think the best part of it is this whole thing is about ostensibly AI replacing a large chunk of white collar workers.

2:48So you'd expect two things from that. One, what the AI does to do that. and of course to what it replaces. It is not obvious in the piece. Most of the, in fact, all of the technological framework is, yeah, AI gets cheaper and then it gets better. How much better? What does it do? That isn't really clear. At one point, he suggests that MasterCard and I think Amex, their shares crash because agentic commerce just becomes agents. Just to be clear, none of this is real, complete fanciful science fiction bullshit. But then he says that the The reason that they'll eliminate them is because they will do transactions on the Solana and Ethereum blockchain.

3:27What year is this? What year is it when we are like, yeah, AI agents are going to use crypto. F*** you. God damn. Do a real job. But he doesn't actually explain much at all. And that which he does, he lies about. He says at the end of 2025 that Claude Code can basically clone any software as a service company. This is just factually incorrect. He's not the only one to say this. tons of CNBC said this numerous times. It's complete nonsense. They're saying the cloud code can essentially get, it can now self-iterate. That's the hype. By the way, AI cannot self-iterate. It does not learn from itself.

4:04Recursive self-learning is a concept. It is not a real thing. It doesn't have intelligence. It does not learn. It doesn't have thoughts. It's not conscious. but the big thing in there they were saying is it just ai gets cheaper and better and it can do anything interesting point though about that piece that want all listeners to really think about is you'll notice that two jobs never disappear in this piece one analysts two stock traders the stock market the one thing that they talk about in there that is actually algorithmically traded that actually has ai in it night capital back in 2012 i think lost the shit ton of money on with that.

4:42The only thing that has algorithms, it has like a strong AI thing, and he just, nah, just stocks are traded the same way. Insane. Also, he starts it just before the midterms or just after the midterms. Nothing about politics. What's crazy though, takes three quarters the way to mention OpenAI and Anthropic. It's not clear what anyone's doing. It's just ghost stories. There's one bit that I keep seeing quoted as well. God, this balls my blood. It's like, Like, really, we should have known that 10 ,000 GPUs in a data center in North Dakota, a GPU cluster in North Dakota would be able to do 10 ,000 white-collar workers' jobs.

5:20We should have seen that as an economic pandemic, not a panacea. What's great about that is two things. Number one, it's meant to make you think that that's what's happening, that a GPU cluster in North Dakota is doing that. It's replacing white-collar workers. It isn't really. None of these productivity studies that have come out have actually proven that AI can do that. Number two, there is actually a data center in North Dakota, Ellendale, just to be specific, Applied Digital's data center that they rent to CoreWeave. I've heard tell they're losing a crap ton of money. And based on my own data center model, I worked out, there isn't tens, hundreds of millions of dollars a year because of the onerous debt they've gone into.

5:56Now, you would think that Citrini Research,$999 a year, would have, I don't know, looked at any of the data center clusters or the cluster that is in North Dakota and, I don't know, maybe extrapolated from that. No, he doesn't extrapolate anything other than from his own a**hole. Okay. All right. Back up for a second here. So if you haven't, I know you have a lot of thoughts on this. I have so many thoughts. And that's great. That's why we brought you on. But so if you haven't, if you're not familiar with this piece that we're talking about by Cetrini Research, the thesis is essentially this, right?

6:27Their argument is that we are heading towards this sort of like economic calamity where, you know, you're going to get these sharp increases in productivity thanks to the AI. That is going to lead to sort of this big, sharp demand for human labor. That, of course, is going to lead to elevated unemployment. And then it begets this sort of like cascade of defaults in the credit market and then in the mortgage market. And then you have this sort of like negative feedback loop that once you start it, you can't stop it, right? So there's going to be layoffs. Layoffs are going to lead to weaker consumption.

6:58Weaker consumption is going to lead to more automation, which is going to lead to more layoffs. But the point that they're making is basically that we're going to get this positive productivity shock. Yeah. But that's somehow going to lead to economic collapse. I guess that's where all these people are out of jobs. That's the thing that I don't understand. So here's the thing. Also, another great part of it is when he talks about how AI agents will be buying and selling houses now. Yeah. just there's so much in there when you look at you're like man you don't know how any jobs work you just you don't know any you only know other people on substack mate you gotta go out and talk to someone else the problem with all of these things these these articles that go viral is it they're just it's basically just vibes well it's just vibes but the problem is is that they're written in this serious tone yeah from a respectable quote unquote person and thus you get the media writing about it.

7:47You get the Wall Street Journal, CNBC, Bloomberg. And I saw someone, a CNBC person, I respect them, so I won't name them. They said like, well, it's thought provoking. What the f*** does that mean? It's just lies. It's just making stuff up. Now, to be clear, if AI existed that could actually do all the stuff they said it would, it can't, maybe this would be a worthwhile conversation to have. And it's a thought exercise I imagine people have had before. What if automation replaced white-collar labor? And their big thing is, oh, that white-collar labor, the credit markets stop really functioning because credit is based on how likely someone is to pay, which is based on salary.

8:26Salary's no longer. The most interesting parts of it are the flimsiest. He also kind of talks about private equity and overvalued assets. I think that's valuable, but that's not what this was about. That was just the chum to get you to the scary parts. Right. There's a lot of scaremongering, no question. It is only scaremongering. He begins it by saying, this isn't doomerous. Yes, it is, you attention-seeking little goblin. Okay. So, okay, let's pretend for a moment that this argument, that we're going to basically be in this, we're going to get this productivity shock that's going to crater the economy is accurate.

9:01Just bear with me. what all these people seem to to miss price in these you know in these arguments is an underestimation of the societal upheaval upheaval that you would see in a in a place where you're going to have entire sectors of the white collar workforce disappearing if not overnight then then inside people aren't just going to be okay with that right upper middle class people who have spent their lives in jobs like we have, writing, using your brain, in the so-called knowledge economy. These are people that have political power, for one thing. They have economic power. They're not just going to sit back and take a UBI check from Elon Musk or whatever and let their entire careers go down the toilet without a fight.

9:48But here's the other thing. I mentioned earlier, it doesn't acknowledge the fact that the midterms exist. That's going to be a significant thing, no matter what happens. Probably going to be a blah, blah. It's going to be pretty bad. It would look that way for the Republicans.

10:00Ed Zitron:Clammy, Sammy. But the other thing it does is it does not talk about data center financing. And I know that this sounds like a very me thing. It's like, hey, you missed out on it. $178.5 billion data center credit deals done in 2025. Meaningful part of private credit. Meaningful part. And also, I assume the major part of the AI bubble. And boom, sorry. It doesn't mention them at all, doesn't mention the economics, doesn't talk about that. Because I'm serious. I have calculated, I've talked to a ton of experts, infrastructural people, financiers. No one can actually square the math on the data centers.

10:37The data centers do not make sense. In Oracle's estimate, in their best case scenario, they get like 35, 40 % gross margins, which doesn't include marketing costs or many staffing things. The point I'm making is this economic analysis, what have you, scenario, what have you, doesn't include the major economic factors that will matter. Your own thing about, yeah, if white-collar labor was replaced, that would cause political upheaval in a way that would outweigh the stock market. I don't know. I think white-collar labor invests in the stock market. Right. I think that there's a thing called a retail investor.

11:10Just leave that off. Nope. Nope. Too much work. I'm just going to say a bunch of vague b****. And why would you bother? Why would you actually try to write something that's thoughtful when you know your only point of this is to go viral and take advantage of a media industry that does not know what they are talking about and does not do the bloody reading to just understand the basic facts. And it's just, it's exploiting a weakness. Okay, so let's talk about data centers for a minute. This has become sort of an interesting political story. You've got two parties. Basically, neither of them are up to the task of legislating around anything, let alone cutting-edge technology.

11:50But when it comes to data centers, you're starting to actually now see a backlash among Democrats, even some Republicans. Santis has been out there. This guy Spencer Cox in Utah has been sort of vocal about it. Bernie Sanders yesterday, I think, just said for the first time he's demanding – he actually may have said this before, but demanding a moratorium on data center buildouts nationwide. You had Democratic governors who were potential 2028 candidates like Westmore and Pritzker who were giving tax breaks to these data centers just a couple years ago, and now they're saying no. So they see where the public perception is turning here.

12:25And I guess the point I'm trying to make is, are data centers, are they the battle, the right battle? I think they're the next great financial crisis. I think that the political side is doing the right thing. I think we need to stop these things because, putting aside my own views, they are yet to demonstrate the economic value that they claim to. They're getting billions in tax breaks. Where is the economic value? Well, there's no labor. Exactly. They're not job-creating machines. They're just warehouses. It's the West looting the South. It really is. They're building in Louisiana, Mississippi, Texas.

12:57And what they're doing is they're flying in specialized talent. So these data centers aren't creating local jobs. They might create an economy of the new people who now have to live there to build a horrible, loud data center. But when they leave, gone. It's why Oracle's having to tweet out that they love the residents of Abilene and Port Washington, Wisconsin so much, because they know that they're creating no economic value. But there is a much bigger problem, which is that the math on data centers, which is actually pretty simple, doesn't make sense. So to build an AI data center, it's about 30 million in critical IT, so servers, GPUs, mostly GPUs, networking and all that gump.

13:40About$30 million per megawatt and about$14 plus million for construction, labor and all that. And actually getting more increasing because it's becoming more expensive to get the stuff. It's becoming harder to find the labor so you have to pay more for it Electricity is actually quite expensive to lead to a place because it's not about the power existing It's about the power physically getting there and working so you've got all these massive costs So about 44 million dollars a megawatt and how many megawatts per data center a couple hundred sometimes a thousand We're talking about billions of dollars.

14:14Yeah, and then you get the other pro so that's your first problem So now you have this massive up front cost So this means that no one building these data centers is doing so without debt. And because these AI data centers are relatively new, they're mostly getting low-rated debt, junk grade in some cases. You've got cases where they get around that. Crusoe building OpenAI's data centers out in Stargate, Abilene. They were able to get better terms because they were able to use Oracle's credit rating. Okay. So currently CoreWeave's raising money. They can use Meta's credit rating. Point is, all these data centers require all this massive upfront debt.

14:50tons of it and then they have to buy all these servers full of gpus that depreciate at best in six years and also they're obsolete in like one and then the data centers take a year or two to build so you have stuff that when it turns on the tech insights are already obsolete and then you've got i don't know hundreds of billions of dollars of these things so you've just got this massive commodity of these very expensive data centers full of expensive stuff that you haven't really started paying off because you haven't got the money in right so you've got this massive up front costs requiring all this debt.

15:20Everyone has to get that. That's quite expensive because it's brand new. Then you have the problem of who are the customers? Where's the demand? I mentioned it on the show before. It was like 60, 65 billion dollars of total AI revenue last year. Maybe if you remove all the hyperscalers, less than a billion dollars of AI compute revenue. Let's just say the revenue even exists though. All of your customers are unprofitable AI startups. So you, the debt holder, who has lots of debt that you need to pay off, your revenue source is another company that cannot pay its bills and must take on equity. So the great news is that you have gross margins of maybe 20 % to 30 % if you have constant customers.

16:02You lose millions of dollars. Put aside depreciation, spread the cost out. I just mean the cost of debt and the cost of leaving the servers idle. You can lose millions of dollars a day waiting for that customer to spin up. The customer could be ready, but perhaps they need to set up the servers. And so you're in this situation where that's every AI data center. Every single one is built on these very shaky economics. And we're building tons of the f***. And on top of that, a lot of them just don't have the power to them. And even when they do, great. Have you ever heard of a construction project that finishes on time and on budget?

16:35No, of course not. So all of these companies have raised all this money to build these data centers that require their customers, which are unprofitable, to pay them on debt raised for construction timelines that they'll likely miss and need more money for. All it's going to take for this to fall apart is one or two of those to collapse. One or two of them. It will be one that never gets started because the debt falls through. Lancaster, Pennsylvania with CoreWeave. It will be one that's in progress that's not fully built yet. Don't know what that one will be. and it will be one that's finished that goes out of business because the customers aren't there.

17:09You're saying that'll be sort of agitation. Those will be your three pale horsemen of the data center apocalypse. And the thing is, there is no real argument against me. People will say, well, the economics are better than that. And I'll say, prove it, and they can't. Or they'll say, well, there's going to be insatiable demand for compute. In my example, the one where they collapse, that's when there is demand. If there isn't demand, they'll collapse even faster. Right now, the largest user of compute is OpenAI. I think that they just estimated they're going to spend$600 billion on compute by 2030.

17:41Where's the money coming from, Sam? Who's got the money? Where's the money going? They owe Oracle$300 billion. How are they going to start paying that? They have to start paying that next year. Don't worry, though. Oracle hasn't finished the data centers. OpenAI says they're going to do ads now. It's going to come from ads in chat GPT. Yeah, FT estimates, low billions of revenue from that. Now, OpenAI, Sam Altman, October 31st, Halloween last year, he said on the B2Gen podcast, I believe, he said, we're making way more than$13 billion. And that was in October. Turns out CNBC reported down he made$13.1 billion of revenue.

18:15That's not way more, Sam. It's almost like you're making up your numbers on the spot. Also, my own reporting says numbers are different. Point is, this makes sense. The money doesn't exist. It's all coming out of someone's pocket. It's all reliant on debt and equity. And who's issuing that? Private equity, who is having trouble exiting. Venture capital, and I think since 2018, the return from venture capital has been on average 0.8 to 1.2 per dollar invested. Like real dog numbers. Everything is relying on a system that doesn't exist anymore. so Derek Thompson who I know you have thoughts about uh the right I guess he's not at the Atlantic anymore he's independent but he he writes a lot on AI he's he's more of a he's less of a doomer I guess you could say right but he has this thesis that basically to your point one of two things is happening right either we are in the world's biggest private sector spending bubble in history and the bottom is going to fall out because as you say there's where's the money Where's the revenue?

19:21Where are the customers? Right. So that's that's option one. Option two is that the revenue does come along. Right. Which at the scale that it would have to to justify these investments would imply. A huge investment from from corporations and governments, which would imply a huge amount of labor displacement. And this is actually a fascinating point. I was thinking about on the way here. So Claude Code, which we'll get to it, I imagine. Claude Code, the most, no one will shut up about Claude Code. Claude Code everywhere. You've got The Atlantic writing these spurious pieces. You've got The Verge, CNBC.

19:54Everyone's saying Claude Code this. Biggest thing ever. Everyone is supposedly replacing coders. Don't believe it, but the point is it's doing this. 2.5 billion in annualized revenue. So about$208 million in revenue. That's it. That's anthropic. In a month. Yeah. $208 million. That is a lot of money to you and me. But for the product that's allegedly the most important thing that everyone uses that's changing everything. That's it. And that's the thing. That's with them subsidizing it. Claude Code, so there's a researcher called Chillac, who did a great, they mathematically worked out. Claude Code allows you, depending on your subscription, so$20,$100, or$200 a month, they allow you to spend$8 to$13.5 per dollar of your subscription.

20:38So on a, I think on the$20 subscription is over$140. At$200 a month, you can spend over$2 ,700. Everyone using Claude Code right now is in an illusory environment. They are using a product that will not last long-term that they cannot afford to serve. This is the point you were making last time you were here, which is that the thing with these LLM companies is their power users cost them more money, right? As opposed to a Facebook situation where like your power users have these network effects where you're making money from Instagram, it's feeding into Facebook. It's also just not that expensive to serve an Instagram or a Facebook user, unless you attach an LLM to it, which they did.

21:23But the other thing is just what people consider clawed code, what they have been impressed by, which we'll get into, is running at an egregious subsidy. At a subsidy that if they had to pay the real API rates, I think every single person flipping their proverbial about this would walk away. I think that it's funny money is what you're saying. It is, but it's also manipulative. So think about it like this. If you did not pay the cost of gas and you drove a Humvee, you'd just be like, yeah, I'm just going to drive a Humvee wherever I want. Drive 300, 400 miles. Who gives a crap? I pay him 100 bucks a month for my gas.

22:02Detonating 500 to$1 ,000 a week in gas doesn't really matter to you. You wouldn't think about it. You wouldn't get anxious about that. Similarly, you're around with Claude Code. You're going to forgive it for a lot of its problems. When it takes longer, when it messes something up, when it gives you something useless, when it doesn't understand something you've done, you'll be like, eh, eh. What if it was costing you 50 cents each time? What if it blew 10 bucks, which it does, just going in circles? Because these are large language models, and the more they reason, the more they have a chance to hallucinate.

22:31When you're coding and it hallucinates, it might set up a service wrong. It might ignore a very crucial security document that means that it will just leave a door open on something. It just won't set up the security sayings. And it may tell you it did. These things you might forgive if you know what you're doing. You go and fix it. Fine. But what if it was actually costing you money every time? What if that dinky little website you made that you think cost you part of your$20 a month subscription actually cost you$15 or$10 or even$5? bucks what if every amendment you made to it was 50 cents to a dollar these are the real economics and that's based on the api costs of what anthropic charges we have no proof that they're profitable in on inference i don't think they are but nevertheless even if they are they are allowing their subscribers to burn eight to thirteen and a half times every dollar they're making on claw code that is not a real business well so this reminds me of uber right so it's so much different okay so tell me so uber so you know uber famously makes a ton you know it does all of this customer acquisition by offering rides that are highly subsidized right so you get used to taking in new york city you're used to taking an uber versus taking yellow cab because it's much cheaper then once you're in the system they jack the prices up now now it's way more expensive isn't that what's going to happen with like Cloud Code, which is$20 a month?

23:53Yes, but with Uber, the cost difference was still within the realm of what you would pay for a cab ride. It would be much more easy. No one's getting those$5 15-minute drives anymore. That's like$10,$15. That cost multiple is still within the realm of the psychology of what a cab ride should cost. I'm not talking about Cloud Code costing$200 anymore. A month at least. I'm talking$1 ,500 to$3 ,500 to$5 ,500. I'm talking about the people using the$20 a month one who are probably spending more like$150. And these aren't overestimates. These are real numbers. Even if Anthropic is making a 50 % gross margin on the cost of running these tokens, I don't think they are.

24:38There's no proof. Dario Amadei said in a toy example, gross margins would be 50%. He's just doing it so people take that and run with him. Point is, even if you cut the cost in half, they're still blowing several hundred percent each this isn't something where for example with uber it would be like instead of you paying a flat rate for a for a ride that you know on the spot right it would be that you're charged a metered fare and that metered fare was four or five times what you were paying and jumped arbitrarily if the cab driver I don't know he was on his phone maybe yeah he didn't really understand he misread his GPS he was thinking of something else.

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25:17He went down a weird road. Yeah, that little trip just cost you another tenner. Why? Because that's what it costs, baby. I don't think people realize how different Claude Code would feel. And this is even before we get to efficacy, if they had to pay for every mistake. Right now, they do not. And people will argue, well, Anthropical, they'll just jack up the prices, right? Five, ten. You think any of these people are going to actually, do you think that people are going to go from paying$200 a month to$2 ,000 a month and be like, I love this, This is good. I'm going to do exactly the same thing.

25:49And you've got the situation where people are getting used to their workflows using the subscription. They're not ready to pay API costs. Now, the tempting thing to say there is, ah, it's the drug dealer model. It's the drug dealer model. Yeah, but you're not going to have coders selling the strip of the copper from the walls and, like, stealing from their grandmother to pay for clawed code. They're just not going to use it. Or they'll use whatever the next subsidized model is. The moment the subsidy stops with one, they move over to another. Then they move over to another. All of them have multiple accounts and multiple things, so they can run their limits hard.

26:21OpenAI Codex is doing the exact same thing. I just don't know exactly how bad Shellac's working on it. It's just an illusion. But isn't the idea that if you're going to use something like Cloud Code to automate all of these different parts of your life, then you're in their ecosystem, so you will pay? Am I, though? because seriously, what actually differentiates Anthropix models from any of the others, people really can't tell you. Now, people like clawed models for coding, but they also kind of like codecs for coding. And there's also Moonshawk, there's Kimi K2, I think it is, if you're not remembering the Chinese models.

27:00People like all sorts of crap. Clawed code as an interface can be run with different models if you use the API. The API, by the way, is just how you pay for the tokens directly. Okay. So like if you're a company, sorry, I really should have led with this. If you're a software company and you add an AI feature, you would pay Anthropic or OpenAI per million tokens. And I think Claude Sonnet 4.6 is$3 per million input, so stuff you feed into it. $15 per million output, so stuff it spits out. So with code, you're burning a lot of tokens. And those little mistakes, very expensive little mistakes. also anthropic doesn't chart they don't count there's also cache reads which is when you know how RAM works no so it's actually pretty simple so if there is a file your system needs to use regularly instead of reading it off the hard drive every time every time it has random access memory so it just puts it in there so we can quickly reference it so the cache is kind of like that it's kind of a dilutive thing someone in the comments is gonna say I it's not perfect you do an interview but it's just what is the claud ecosystem what is it what like claude co-work it does claude co-work they said it was written 100 in claude code yeah it shows it deleted a guy a guy's wife's photos all of them because he tried to clean up her desktop like it's like yeah it sucks and it doesn't really and that was one of the examples from the website yeah i would believe that that was written 100 in claude code and that it appears to be crap and no one can really tell me what it does.

28:30I mean, so I, and again, I'm not a hardcore user of these models. I find Claude to be the better one. Right. You know, I fed a bunch of blood results into it the other day, and it was, you know, it saved me from having to go to the doctor to get those results, although the results are probably that, you know, completely wrong. I've got to say, mate, if I got a blood test, I'd probably want a doctor to read it. Sure. Just in case. Yeah, I think you're probably right. But it was notable that I was able to put it in. It spit out to me in English what the results were showing me. And again, maybe it's wrong and I probably should have a doctor look at it.

29:06But here's another example. I have a friend who told me that he, and again, I wouldn't do this personally, but he fed all of his, like the last year of his bank statements in there. And he asked it to create a program that tells him where he's doing recurring money that he's not using, right? subscriptions that he's paying for that he forgot about. And he said that it was able to flag a few things, some streaming subscription he forgot about. I'm not saying this is world-changing stuff, right? But it at least strikes me as having some sort of value prop that is more than just it being the plagiarism and slot machine that it has been.

29:48What is the value prop, though? He was able to do rocket money. i'm pretty sure like there's i get there's other ways to get like 18 ads for the subscription thing a day or instagram i don't know i'm just kind of like and also anthropic just raised 30 billion dollars you're gonna like it that's the thing it's like what is the thing i'm looking at here what is the thing you are doing what is the thing you are changing because spotify for example spotify said uh in december i think it was the their best coders so very vague bucket basically don't write code anymore. So I spoke to someone at Spotify, actually went and found out.

30:23Fun fact, from what I understand, they pay for Claude Code subscriptions. So already their cost of doing business is completely subsidized. The way I worked it out is they've got 2 ,700 engineers. If they spend half of the limit of the$200 a month subscription, it would be about$40 million a year in API calls. So that's like 10 % more than that. I think they spend like 400 something million dollars on salaries a year for those engineers. It's like you're just increasing your employment costs by 10%. But then there's the other thing, which is, okay, I don't know if this is true. I actually don't believe it.

30:59I think there are some people who are doing it, maybe, but I don't know how many of them. Let's say 100 % of code is written. They're writing it in AI. So what? Are you shipping more software? Is the software better? Are you rapidly iterating? How is this changing your team? What is it doing? And I don't mean this in a dismissive way. I mean, if the situation is that instead of writing all the code, again, don't know if this is happening, just saying, instead of writing all the code, a machine's writing it, and the output is basically the same, if the productivity is basically the same, haven't we just changed the modality a bit?

31:38Haven't we just moved one thing here and there? And they'll say, well, it solved 11 bugs. were all of those like huge bugs as one of them just like a best standards thing yeah it's just if 100 of code was written by claude for example in this scenario what is the actual reason we should be impressed that it can do it which is i guess cool but like like okay that it can do it how good is that code how do they know it's good because if you're writing all your code with with claude aren't you eventually going to stop learning how to write code and solve problems with code because... But isn't that sort of the point?

32:16Isn't the idea here that there are... And who knows how true this is, but the idea is there are all these people out there who have great business ideas or app ideas or whatever, and they haven't been able to... They don't know code, so they haven't been able to actually build these products. If the coding can be done, and you can just say into the model, build me this app with these parameters and then run tests and iterate it, But isn't that going to open up some new level of innovation amongst the plebs out there? So I think, well, one, it isn't happening. Right. Like we have, where is the Vibe Coded company that's so amazing?

32:54Where is the Vibe Coded feature? Vibe Coding is a scam. Right. Vibe Coding is just what we're talking about. Just the idea that you can just build software without code. But there's two things. So with the Vibe Coding thing. So I think every single article I've read about a non-coder, which I know I am, building software with cloud code and being amazed is just it's key jingling I'm sorry it's not that impressive when they build a website you'll notice that a lot of these websites are purple it's really weird it's the constant use of purple that's because a lot of these models are trained on openly available open-source software and on website templates like tailwind CSS tailwind CSS I think in the mid 2010s they had a lot of purple you had a lot of startups at the time they use that purple stripe for example when you look it's always the same kind of boxy thing it would be like animation behind big text little text little text box box box box box box this is the coding version of what it what these LLMs are doing with text exactly they're spitting out these these cliches and you know it's not this it's this you have that's how you can tell exactly and it's you can kind of see it with vibe coding software all of the web apps look the same all of the mobile apps look the same and also software engineering is much more than just code to get something functional stable that works in every region that is operable when you change things that can be changed in the future to grow because you're going to be any software company is constantly maintaining and changing bits what happens in five years do you remember what you told the model because you didn't build this with any intention.

34:27And then there's the other thing of this whole software being like the companies will be able to vibe code their own Salesforce or SAP. SAP is a great choice. So I set SAP down like 10 % I think last month. I forgive you. Remind me what SAP does. I know there's one of the... No, no, I'm going to because basically no one knows because they're so monolithic. Nevertheless, SAP down about 10 % I think in the last month. So SAP is enterprise resource planning. It is software for everything it is hr procurement it is accountancy it is compliance which is a big one if you're a giant company or if you're in anything like trans anything related to transit or shipping or anything like that i've used these sb and it's i mean they're horrible they suck they suck absolute donkey it's so bad however those systems are not just code they are interlinking pieces of information that are and they are massive databases there is actual server hardware they need to run on and that server hardware needs to be specific to the database different coding languages have different requirements of memory and require different things when you set them up depending on when you build a software you may have to update it if a currency changes does your vibe coded software know that the french stopped using the frank do they know that that's different to the swiss frank that does exist today these may and those are the things that ai gets wrong all the time.

35:50Or maybe it gets one of them wrong. Maybe it gets something wrong. But even then, you have to, when you build something that's SOC 2 compliance, an accountancy thing, you have to call in an accountancy team to verify it. You can't do that on your own. And then when you've done all of this, great. I hope that you have a law firm because you're going to need a law firm for this ERP system, especially if you have your customers touch it. And woe betide you if you have your customers' money touch it, because then you've got a whole nother legal thing. And man, if you have one there one little up there um who do you sue yourself so i assume you're gonna buy just an entire new engineering team to run your internal sap to your internal salesforce your internal i don't know net suite uh your internal microsoft 365 your slack your canva canva i guess wouldn't be a great example of a big sas company pardon me but adobe adobe well even then yep no one's no one's building their own Photoshop they've I mean there are there's the open source one Gimp that's a real one I'm serious but this is the thing people seem to think you just go okay cloud code build me Salesforce you hit enter and Salesforce just erupts onto something because that thing's gonna have to run on on like a cloud service and that's gonna have to connect to all your other systems you think there's all of this plumbing this takes years and years and skills to build and that's before you get to the fact that not everything's written in the same code and even those things that are.

37:14And now there are software engineers who barely understand some code. I'm not saying all of them. They may love this. But the truth is that there are practical concerns that LLMs cannot fix. LLMs can write some code. They are able to write functional code even sometimes. The problem is it doesn't always work. It isn't always perfect. So your vibe coding thing is just a mess. But even then, let's say you have a team of software engineers who really know their code. They're sharp. They're using LLMs. That team's skill is going to atrophy. And this isn't an insult to them. But think of it. If you are used to doing a manual action and you have a machine start doing it, the muscle's going to break down.

37:56You're not going to learn it. And the thing is, LLMs also, they need to be constantly updated on the model provider's end so they don't experience model drift, which is when it's not even anything wrong with the model necessarily. it happens with all machine learning it's the world changes so they need to change so coding standards might change or it may just be the things you feed into it are new problems it's never seen the everything the coding models and sas itself is this massive infrastructural plumbing effort that is not just code it's and it's very frustrating because you read all over the business press saying this thing about there's anxiety is over ai replacing things because anthropic launched a plug-in.

38:37Charles Schwab got dumped because of an accountancy tool. It's just... IBM had its worst day in 20 years because of that... Cobol. So Cobol runs on mainframes. You familiar with mainframes? There are specialist computers that basically never go down. They run on Cobol. IBM sells them. Cobol also is not just a programming language. Because it does so many different things, it has different compilers and plugins that work with different things. I sure hope Anthropic, no wait, they didn't train on anything. It was a single blog post because Anthropic's biggest business model is lying. They did, this is a somewhat subject change, but it's relevant.

39:16They put out a thing sometime last year where they said it coded for 30 hours without losing focus and it built a Microsoft Teams, Microsoft Teams or Slack competitor. Now you may think, can I see it? No, you can't. Can I see the code? No, you can't. What did it do for 30 hours? We're not going to tell you. If only we had a tech or business media to ask these questions. One or two of them limply put, yeah, and they didn't show us it. These people are just saying. Also, 30 hours. Man, how many tokens do you burn? No, we don't need to tell you that. Truth is that if the AI companies actually cared about telling people the truth, they would go out of their way to correct these things.

39:56They would push to make, OpenAI and Anthropic would both push to make it less frothy because they would want to sell the product they actually have. But they sell on deceit. They sell on hype. And Anthropic, for all of this importance, only made$4.5 billion last year, and they lost$5.2 billion. Dog shit company. Terrible economics. Okay, so let's keep talking about Anthropic. So there's a big story in the news right now related to Anthropic's contract with the Pentagon, our boy, Pete Hegseth, our secretary of war. So they have a contract to use Claude with the military to basically embed Claude into the military.

40:33It's the only LLM that they say can actually do this, can actually work with classified material. Do what, though? They never say that. That's the thing. They never say that. Well, so here's the thing, right? So essentially the story here is that Hegseth has given Anthropic, which is a customer of the Pentagon, a deadline of Friday. So today, if you're watching this. So the Pentagon's a customer of Anthropic. Correct. Right. Right. So they've given them a Friday deadline to open their model, to open Claude for unrestricted military use, or else the Pentagon says they're going to kill the contract, or worse.

41:06They're going to mark them a supply chain risk. A supply chain risk, which that would be a big deal. I mean, that's effectively nationalizing one of our frontier AI labs. I think it basically says that no military-adjacent contractor would be able to use them. I'd need to look into it. I've heard from military experts who say it's not a big deal, and some who say it's the worst thing in the world. So Anthropic is basically saying, we're not going to let the U.S. government, the Defense Department, get into the source code and use it for specific things like the automated killing of people or mass surveillance of Americans.

41:43So I've got to be honest. First of all, it's not even the source code. They're just changing the system prompt. It's just the thing that it loads in with. And also, what do you mean, Anthropic? Your LLMs don't do autonomous robotics. They can't. That's not how autonomous robotics works. Right. Also, no one seems to have really cracked that within Silicon Valley. Andrew loses money, doesn't it? And they had to discontinue use in Ukraine because it wasn't particularly useful. Putting all that aside. I think the funniest part about this is Anthropic. Anthropic is doing this for marketing. I don't think.

42:14So that was going to be my question. Because Anthropic. Sorry. No, no. They market themselves as the moral AI company, right? So it's in their interest to get these headlines, I think, that they're standing up to the Trump administration saying that you're not going to use our technology to surveil Americans. But you're saying that's BS. I mean, what do you mean surveil? What do you mean autonomous robots? And the answer is Anthropics LLMs do basically the same thing as everyone else. They use a lot of the same training data now that they have post-training, which is when you correct the outputs and you feed more specialist data into it.

42:51they don't have a special thing like grok is going to work with them i i assume say generate something illegal but it's just like what is the difference between anthropics lm and grok and gpt well presumably hexath would be giving them a deadline if he didn't if he didn't think that they needed that technology they're no offense to the secretary of war or whatever he is I don't think Pete Hesgeth is an LLM expert or indeed user. I would be shocked. It would be really funny if he was just like a hot, he like subscribes to semi-analysis. He's like reading a den nicely, like bringing about Taiwanese ODMs.

43:32Yeah, I don't think so. Oh my God, I can't believe Williams. Anyway, that's a bit for later. No, I just think it's, they're just trying to make all of them do it. They're just like, we want to be able to use you for whatever. And Wario Amadeus is just like, yeah, well, you couldn't possibly use it for war. Mass surveillance. Okay, what does that mean, though? Because if the answer is feed a bunch of data in and look at it, you can do that already. That's Palantir's whole business model, isn't it? That's, I mean, Palantir is just evil. They're evil. They're evil Accenture. Right. They have four deployment engineers that go in and customize the service.

44:06It's like the natural outgrowth of the 1980s, the Inslaw Promise software. And you know who ran that? Robert Maxwell. No, we're not getting into Webster and stuff. It all comes back to Epstein. No, this is weirdly separated from Epstein. This AI bubble stuff. But other than like Eliezer Yudkowsky, who was in the emails, we've got to stop. But back to Hezgeth. Here's the thing. All these LLMs basically do the same thing. Now, they have different features. They have different strengths. But I don't know. Google's worked with CBP before. Do you hear anything about Gemini? I'm sure they'll just use Gemini.

44:39But also, what are they doing with it? What are they doing with it? What's the thing they're doing? Oh, control robots. Screw you. That's not real. You're not controlling robots with this thing. You generate and kill this. They do that already. Oh, well, Anthropic will be better at it. How? No. They're just, honest to God, I think they're just f***ing with them. I think that they're just... No, I think that Hezgett. Hezgett, yeah. I think he just doesn't like him. Yeah. I mean, if you've heard Dario Amadeus. And I did the haters go to Anthropic last week. I can't stand any of these guys. No, but Dario is the most annoying of them.

45:12You think he's more sanctimonious than Altman? A hundred times. He sounds like Elizabeth Holmes' voice that she did in front of investors. He sounds like it's really weird. When you hear it, you can't unhear it. No, I think Anthropiki is milking this opportunity to make themselves seem special and different. I think that they know that there's no real value. If they did it, it wouldn't cause any more damage than that's already being done. I don't know. By the way, I also agree that you shouldn't use these things for these things, obviously. I don't think that's a good idea. I also don't think Dario Amadei cares.

45:44He said he wouldn't take money from the South. What did he do? $30 billion round, 37 different companies. Very strange. They changed all their AI safety pillars. They don't give a s***. None of them give a s***. AI safety is being used as a marketing thing. That's for sure. Notice that AI safety never talks about the economic problems, the bubble, the stealing, the ecological damage. It always talks about this theoretical future AI. that's gonna, I don't know, make you leave you. Skynet. Skynet or I don't know. None of them have watched like Upgrade. That was more of an, that was a device that movie rocks.

46:19But these people aren't really thinking about anything at all. People are just like, well that confirms my biases or it says the thing that my investors wanna hear so I'm gonna go along with it. It's just very cynical. It's very, it me off when I see someone be like, I wanna keep you safe. And this involves you buying something from me and my friends. It involves me taking, you taking me very seriously and buying my product. Oh, by the way, this product I'm talking about today does not do any of the things I'm scared of. None of them. Right. None of them. But it might in one day. But what if it does that?

46:47Even my favorite anthropic thing is the thing they did. I forget if I brought this up last time. They do this thing when they're like, yeah, it tried to blackmail us. Tried to blackmail us and then take advantage of the system. When you actually read the paper, they prompt it to do that. Right. And it's like, it used an email tool. No, it didn't. It generated an email. Well, you see these sorts of, so here's a headline from just today. we were looking at a minute ago. This is a new scientist. AI can't stop recommending nuclear strikes in war game simulations. Leading AIs from OpenAI, Anthropic, and Google opted to use nuclear weapons in simulated war games in 95 % of cases.

47:22Okay, well, that strikes me as bad, but you don't have any idea. Like, what's the, is the prompt, like, do a nuclear strike? We can probably find the prompt, but also it's trained on the internet. It's trained on social media posts. It's trained on whatever crap they can get. it's going to be the summation of human human consideration online so yeah i think most idiots online would be like yeah yeah hell yeah just because the chump and also if let's take this to its logical end point so this is a war game scenario where do you think they got them from the various war game forums do you think the people on there are like i can't possibly can impossibly yet no i swear to god if they it's like there's this one game that i really should remember the name of where it's a very realistic tank simulator like very very realistic and they constantly i think it's is it war i forget it's war something and they constantly have problems where people will post classified information because they'll be in an internet argument someone will be like i think that tank truck they'll be like no based on this document i have and it will be a classified document and it will be something minor but that it's just like it happens all the time might be war fury but anyway that's the kind of the training off of it's like yeah the model the and i wouldn't be surprised if they deliberately let that slide because they've definitely tried because they were like it this will create a headline one day yeah and it's just so much of this is kayfabe it's just everyone freaking out but not really believing anything not really having the proof for the stuff that they're freaked out about but being freaked out about it allows them to claim they're ahead of the game well just seems like nobody really knows anything so that because that it creates these these opportunities for for doom and gloom or for you know these utopian you know elon musk talking about how the you know tesla robots are going to come and save us all from having to go to our lowly jobs and whatever it's what's going to save elon musk from the billions of dollars he's going to have to pay what's vista equity partners for the giant Colossus 2 data center he's built in.

49:30Good luck with that. I genuinely think the Colossus project may actually destroy Elon Musk. That's a good topic for another time. It's so much money. Okay, so before I let you go, this is theoretically a political show, although it seems like a tech show today. That's all right. It seems to me like the biggest problem that these AI companies have, one of their many problems, this stuff has no natural constituency, right? People don't want this. Yeah. I think, right? I mean, I think people are interested in, oh, yeah, maybe using Cloud Code to get my blood results better or whatever. There's some of that.

50:08But I don't know anybody who's like, I see the future and this is going to, other than the people who are actually in the, who stand to make a lot of money. Regular people don't want this s**t. They don't want their jobs to be displaced. So they're obviously very skeptical based on a lot of these people being the same people that sold them a line of bullshit about social media being, you know, going to connect us all. So I think everybody knows that they're being hoodwinked from some of these guys. And, you know, talking about Altman, Mickey, can we bring this up? Oh, I know the one. One of the things that is always unfair in this comparison is people talk about how much energy it takes to train an AI model relative to how much it costs a human to do one inference query.

50:51But it also takes a lot of energy to train a human. It takes like 20 years of life and all of the food you eat during that time before you get smart. So the fair comparison is if you ask ChatGPT a question, how much energy does it take once its model is trained to answer that question versus a human? and probably AI has already caught up on an energy efficiency basis measured that way. God, he's a f***ing guy. I can't stand this guy. What a f***ing f***ing guy. First of all, anybody who talks like human beings that way should be nowhere near this technology at all. He looks like he was generated in an Xbox One game.

51:24He's a very strange looking fellow. He is. But what a moronic thing. But it's just like, yeah, I've consumed a lot of energy in my 41 years of life and it hasn't all gone to economic productivity, right? It's also, I don't know. It's been expended in unquantifiable ways and how I love my family and help my friends. It's just not how energy works. It's just the kind of thing that you say if everyone's told you you're smart your whole life. I think that also people would want this if it did what they said it did, which it doesn't. I think people right now would like everything to stop being bought by private equity.

52:05They would like groceries to be cheaper. They would like health insurance that the government paid for versus them paying a company that then screws them. I think people would like their jobs to be easier. And this doesn't even do that. And also, they'd like to stop reading a headline every day that's like, rich guy excited to make you bankrupt. Because that really is what it is. And also, rich guy who has not worked in a long time. truly does not do work, who has more money than you'll ever collect. If you've got hundreds of people together, they would never touch their wealth. They want those people, well, they probably want some violent actions to happen to them, but in reality, they want those people, for all of this talk, to actually have something at the other end.

52:47And I think that the regular people I talk to, they're just like, yeah, it's kind of like a search engine. Most people have that reaction. Regular people I meet who are vibe-coded are like, they get to a point when they're like, oh, right. there's all this messy infrastructure. Oh, right. My app looks like everything else. And it doesn't, the toy software that they build isn't practical. I think also the data centers are obnoxious. They are obnoxious. They are demanding. And the output isn't interesting. The output isn't really inspiring. The only people that it's inspiring are deeply craven and cynical people who frame themselves as optimists, who claim that they're excited about the future.

53:29Meta is running a commercial right now. I don't know if you've seen it or not, but it's about, I forget, it's like, the thesis of the commercial is this data center is coming in and it's going to like revive the economy. It's like, what are you, nobody works at these things. Lion sack of s**t. What are you talking about? It's just a big, it's a big room with servers in it. But regular people hear that and they go, wow, my groceries are like 20, 30 % more expensive. Wow. My energy costs. My housing, my energy costs have gone up. Oh, well, how much is Meta putting into a Louisiana-based Hyperion data center that they've deliberately used accounting to keep off of their balance sheet?

54:04$30 billion. How much do Anthropic raise? $30 billion. How much is OpenAI raising? $100 billion. We are told the money does not exist for basic social services, yet these f*** nuts can raise$30 to$100 billion just because they f***ing feel like it. And then they put out something to CNBC or the Information or the Wall Street Journal, are we going to spend another$600 billion? Oh, and by the way, the reason we're doing this is so you won't have a job. No wonder people hate these people. Well, they need a better spokesperson, that's for sure. They need a better product. They need to stop burning cash.

54:38They need to build a real business because what they are doing now is guaranteeing that nobody's going to be there for them. And David Sachs has made the point. David Sachs, but he said there's not going to be any bailouts. I think the only company that could get bailed out is Oracle. because they're there well ellison's trump's boy but even then i genuinely think an oracle bailout will not fix up what oracle stock price will be when it can't pay its debts i think the collapse of oracle could change the world for the better but i'm deadly serious that's the only bailout target because these distressed data centers i don't think people understand how top worked it was meant to be 700 something billion they only did a troubled asset relief yeah sorry 2008 a great financial crisis we're not going to get those for data centers or if we do it'll be quite small well there'll also be pitchforks in the streets yeah that's the thing companies that's the thing if they think people hated bankers yeah people hate data center banks at least provide some sort of service also banks invested in the data centers private equity it's like hey we need to bail out the people you love the most tech people private equity people right and banks You love those, right?

55:47It's just like the worst possible. And this is what? I think this could pop this year. I think it's going to be a very, I think there's going to be potentially months, if not years, of data center collapses. So, yeah, going into the midterms, do you think Donald Trump's going to be like, I've got to save the day. I'm going to save a black diddle. They're the most beautiful company we've ever seen. We need to save Corweave. We love Michael and Trader. No, that's not going to happen. You do a great Trump. I've been. It's very, it's really, it's very strong. Weird Dario. Sorry. My boy Dario. You seen him?

56:21You seen Claude? I don't trust Claude. It's a French name. So, okay. So, bottom line, Ed, you remain, this is what I wanted to get out of this conversation. Yeah. You remain as skeptical, if not more skeptical than you were last time. You still believe the bubble will pop. now I say all this but have you seen this video of Trump how he would look as an Asian man I will leave you with that just insane we're just doing racism with it and people are like yeah look look we're doing something kind of racist like an early 90's level of racism and this is the first AI video that I actually stopped and enjoyed you had to feed the equivalent of 13 grams of Alsatian meat into it to generate that and now we're doing 90's level racism.

57:09It's Adam Carolla, LLM. Okay, Ed, tell us before we go, first of all, where people can find your work and if you're working on anything new coming up. So, working on the Hater's Guide to Private Equity. Ooh, that's going to be a good one. It's a banger. It's already a banger. I'm going to start doing more regular pieces at wheresyoured.at and betteroffline.com B-E-T-T-E-R-O-F-F-L-I-N-E dot com. That's the podcast. That's the podcast. And yeah, check me out on one of those various vehicles. and also on Blue Sky. Not Twitter, though. I am. Twitter is just, it's like a PvP video game. It's just, you go in there if you want to fight and I don't really have much fighting in it.

57:47Yeah, it's gotten so bad. Okay, let's leave it there. Ed Zitron, appreciate you, brother. Thanks for having me.

From the publisher

Does anyone want what big tech is selling? Ed Zitron is back to talk AI and its lack of political constituency. Plus: Ed's impeccable Trump impression.


Watch this episode: https://youtu.be/RKwK7qrBz8g


Follow Ed: wheresyoured.at | betteroffline.com


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