Oh, look at that.

>> Sorry, guys. I got a little visitor. The

>> moose.

>> Hey, buddy. The moose has landed.

Oh, he's up on my desk. Oh, where's your

uncle Jason? Huh?

>> Let's see that handsome face. There he

is.

>> There's the moose. The moose is loose.

Let's see. So, want to do a sidebyside?

>> What a handsome visage.

>> There it is. There's no good stuff.

>> That's a stately animal.

>> Here, buddy. You ready for branch time?

All right. Get him out of here. Get him

out of here. We got to show the

position.

[Music]

We'll let your winners ride.

[Music]

>> We open source it to the fans and

they've just gone crazy with it. Love

you.

>> All right, everybody. Welcome back to

the number one podcast in the world, the

All-In podcast. We're back. We're back.

It's the original crew. You got your

classic. You got your classic. And

speaking of a classic, Freeberg's been

tearing it up. What an amazing

event we're going to have. September 8th

and 9th in Los Angeles, the fourth

annual Allin Summit, allin.com/events.

And uh now comes the incredibly awkward

moment in the program, David Saxs, where

we see Freeberg attempt to do an ad

read. I'm going to let him just try to

do the first one, and then I'll

interrupt him and say, "Let let a

professional handle it." But let's give

it a shot here. Let's see how Friedberg

does with his uncomfortable promo.

These are not your typical event

sponsorships.

Every Summit partner is building an

insane activation.

>> All right, stop. It's It's terrible.

Three, two. All right, Oracle's coming

and they've done an amazing job. They're

going to build out this amazing bar in

the expo hall. Drinks on our friends at

Oracle. Yes. And they're going to be

sponsoring the PE and VC dinner as well

as the AI infrastructure dinner. have

all these bird of a feather dinners

where you can meet people in your tribe.

Our friend Jeremy at Circle, he's also

supporting it. He's building out a huge

tech out networking lounge right in the

heart of the event. and Circle and BVNK

are also partnering to sponsor the

stable coin dinner. Jimoth loves his

stable coins. He'll be there. And Iron,

they operate data centers powered by my

favorite renewable energy and they're

putting on

you're going to be at that. Yeah,

>> absolutely. Me and my pal Chris Wright

are going to go there and uh we're going

to be in the solar tent

>> and it's going to heat up.

>> Yeah.

>> And we also have how crazy is this?

BVNK. It's not enough. They're doing the

stable coin dinner with Circle. They're

going to build out an arcade in the expo

hall so you can get some.

>> We have to have a competition. Do you

want to do a Donkey Kong? What do you

want to do? You want to play Stargate?

Tempest. What are you going to

>> Whatever they have. What's your game?

Tell me your game.

>> You and I. We'll see. Street Fighter 2,

maybe championship edition. We'll do a

1v one 10K, you know, two out of three.

>> I feel like I'm getting angle shot here.

Did you like Did you write the code in

that? Did you write it later?

>> We rented the arcade for my bar mitzvah.

So

>> I played a lot.

>> Yeah.

>> And uh all seven people showed up for

your bar mitzvah. No.

>> What was your bar mitzvah like?

>> We was in the backyard. We had

>> Street Fighter 2 was the arcade. That

was kind of the highlight. It was in the

backyard. I didn't have a fancy thing.

That was the big deal. We got to rent an

arcade.

>> Your mom rented an arcade game.

>> That's like a big deal. And you didn't

have to deal. And then but you know but

then we had it in the the backyard and

that was it. It was pretty chill.

>> Very nice. Very nice. Uh all right. Uh

well David Sax is with us again.

>> Where do you have your uh bar mitzvah?

Jac

>> I'm from Brooklyn. We didn't have any of

this stuff man. You know what we had for

our birthday parties? You had a choice.

Pizza bowling or both. And basically we

to rent a bowling alley. Get a couple of

lanes. You get a couple of pizzas and

yeah you're can invite a dozen of your

friends. And that was fun. It was fun.

>> There you go.

>> There you go. And after that we we

robbed uh some stores and tagged some

tagged the arch train did some petty

crime. So very basic. Yeah. How about

you Sax? Did you have a bar mitzvah

Sachs? What was your theme on your bar

mitzvah? Was it Reagan?

>> Was it Reagan Bush was your theme? What

did you have as your theme then?

>> The Reagan bar mitzvah.

>> No, I mean when would this have been?

This been 1985 I guess.

>> Yes. Is it a tribute to Richard Nixon or

was it uh

>> I wasn't involved in politics back then.

>> You weren't into politics yet? I was

not. No, I didn't know anything about

it.

>> When did you get the political bug? Was

it in Stanford when you

>> probably Stanford? Yeah. When they tried

to shove political correctness down our

throat, then

>> I had a negative reaction to that.

>> They created a reactionary

>> kind of like this whole Gen Z. I mean,

if you look at the polling, this

generation of kids are like super

conservative because it's a big reaction

to wokeness being shoved down their

throats

>> and they're total squares. They do not

like to do anything that is on the

margin in any way unethical or a hack. I

have my daughters. I I I pieced off the

uh matraee to skip the line. My

daughters wouldn't they wouldn't let me

hear the end of it and I said, "What do

you think the matron is there for? What

do you think $50 bills are for?" They

they designed the 50 to get a table

before everybody else.

>> They felt like it was inequality that it

was unfair. They literally gave it, you

know, everybody else is waiting online

and then you went to the front of the

line. You gave the woman $50 and she sat

you immediately. That's not right.

There's other people who can't afford to

do that. And I said, "Yeah, that's their

problem. Work harder."

Important lesson for what I told.

How are you doing, Chimoth? You're back.

Chimoth, you're back on American soil. I

can tell you're back. How's How's your

um

>> How's your decompression? You did a

decompression stop in Vegas or

something. How did you decompress? Did

you stop at like or a piana and do a

decompression stop or what did you do?

>> No, Nat and I went to this island last

week which is between Sicily and Tunisia

called Pantelleria. It's an incredibly

beautiful island, but she got really

sick. So, we didn't have much of a

vacation last week actually when I was

posting from there. She was she was not

well at all and we were going to

consider flying home early, but then

>> she got better. Then we went to Milan

and decompressed for a few days and

packed her bags and came home on Monday.

So,

>> do a little shopping Milan. Good

shopping in Milan. No, your your old

gear.

>> By the way, by the way, let me say

something. N and I bought a pair of Ons.

Do you guys have a pair of Ons? I've

I've resisted. You're talking about the

fun on running shoes. Yeah,

>> we bought the walking shoes. I And I

walked all summer. These shoes kick ass.

>> They're really good. I'm ditching all my

Nikes.

>> Ditching your Nikes for on running.

Yeah,

>> on cloud is actually technically

>> Yeah, I think I bought like the cloud

monster, I think, or something like

that.

>> Very nice. and uh use fantastic

comfortable use the promo code Jumath

and you'll get 15% off on your

>> if my friend Roger Federer is listening

which I know he does from time to time I

would love to help on

>> Oh my god hold on a second you dropped

off here's the name back

>> this guy name dropping on the pod

>> you know he did a great deal with Han he

got like a bunch of equity and he helped

build that business he deserves all the

success in the world he's a he's a

phenomenal human being a

>> lot of brand extensions going on my

friend uh Ben Stiller. I was talking

with him this week. Sorry, I dropped a

Sorry, I dropped another name here. Let

me get that back on the table. I was

talking to my friend Ben Stiller. He's

doing You're going to love this. David

Stiller's Sodas.

>> He's doing his own soda brand. So, we

did a little pow-wow. Little pow.

>> Ben Stiller,

>> the comedian.

>> The comedian. The actor. The genius.

>> The Jewish Tom Cruz.

>> Wait, was it that guy? I haven't heard

that name in a long time. Is he still

relevant?

Shots fired.

>> Shots fired.

>> Oh, Jason, you had an announcement this

week you wanted to make.

>> I did. We just sort of soft launched

that we're going to be bringing Foundry

University. It's one of the things I do,

my day job is invest in startups. So, we

created this founder university. We do

it here in the United States. But we had

a lot of interest to bring this course

on how to build companies uh around the

world. And we decided our first city

would be Riad. So we will be bringing

our founder university along with

which is the leading venture firm in the

region there in November. So I'm going

to be spending a week there and I'm

really excited about it. If uh anybody's

starting a company and you want to come,

just go to Mina.co

and you can apply. But uh yeah, I'm

really excited and then we're going to

launch it in Asia next. So we'll have it

in three cities

starting next year.

>> Do you take equity in the startups that

they start? This is like YC.

>> It's um kind of a pre-acelerator. So

what we do is we most of the teams are

not incorporated yet. Some are some

aren't. And we teach them how to do

that. And then some of them like tax GPT

went on to Y Combinator or they'll go on

to our accelerator or another one. And

when we watch them work for 12 weeks, we

will invest in maybe 10% of them. So we

don't have a fund in these yet. We don't

we're not obligated, but

>> No, they're not obligated. Like

>> we're not obligated. We just do it to

help the community and get more startups

built in. Uh

>> but that must be good. So it sounds like

it's deal flow for you too, right? So

you get to see the companies.

>> Yeah. What happens is a couple thousand

people apply

>> and we meet with half of them on a Zoom

call and then we accept the best and

then we invest in the best after that.

So it goes from like 5,000 people

applying to 50 people going to 10 of

them we invest in. So yeah, it's a

filtering mechanism. Okay. So, lots of

stuff going on here. And I think the

number one story remains that Trump is

still fighting with the Fed. They say he

can't fight the Fed sacks, but

apparently

President Trump is fighting the Fed. You

remember he was threatening to replace

J. Pal and he did the site visit and all

that drama. Well, Trump recently fired

one of the members of the Fed, Governor

Lisa Cook. And you remember he called

Powell too late, stupid, numbum skull,

all these great uh adjectives here. But

breaking as we're taping this on

Thursday, Lisa Cook has officially sued

the president, arguing that the White

House has no authority to fire her. And

to just give a little background before

we get everybody's opinions, uh she's

one of seven Fed governors. The

governor's vote obviously on the rate

cuts we've talked about here. Maybe they

were too late to raise rates. Maybe

they're too late to cut rates now. Big

debate going on. She was nominated by

Joe Biden in 2022. And two weeks ago,

the Federal Housing Finance Agency

director accused Cook of mortgage fraud,

claiming she had two different homes

listed as her primary residence. You're

obviously only allowed to have one. This

is allegedly. And she did this long

before she was fed governor. But they

have sent a criminal referral to the

DOJ. And Cook has not been charged in

any crime yet. So that's important to

put out there. And this is all important

because Fed governors can only be fired

for cause. You need to have cause.

And so Trump has asked Cook to resign.

She declined on Monday. He said he was

firing Cook for cause for deceitful and

potentially criminal conduct. The first

time in US history that a president has

fired a Fed governor. This has brought

up Chimath a lot of issues around the

independence of the Fed, which it's

supposed to be

in its best iteration. We can debate

that as well. And uh important note,

there is an emergency hearing set for

10:00 a.m. Friday morning in DC. So by

the time we publish, there might be a

decision of whether she can continue

serving or not. ABC News reported this

will likely go to the Supreme Court.

Here's your poly market, folks. Shout

out to my guy Shane. Congratulations on

the investment from Donald Trump Jr.

also joining the board. There's a 25%

chance that Lisa Cook will be out by the

end of the year. So, it's not huge, but

it's not a long shot. Let's stop there.

There's more to discuss about the Fed

mechanically. Chimath, well, start with

you from the markets perspective. The

Fed's supposed to be independent. So, do

you have concerns about it being

independent? And then does this feel

like lawfare or tickytacky or they're

weaponizing the justice department to

you to you know get what they want which

is rate cuts faster and more of them.

>> I think that the fed is no different

than any other appointee to a part of

the government which is that they are

partisan. Meaning, if I said to you, is

the Supreme Court viewed as partisan or

nonpartisan? I think that most people at

this point would say that the president

that appointed them did so because they

aligned with his ideology. If I asked

you the political appointees to any

department of the United States federal

government, are they political or

non-political? And the answer is that

they're political.

And the idea that we still can't admit

that the Federal Reserve is political is

part of the problem. The reality is that

the people that appointed these

governors

did so because the people that were

appointed were aligned with their

philosophy. And so we should stop

pretending that they're independent

because they're not. And in as much as

they are closer to a regular civil

servant than the Supreme Court

appointee, which is to say a lifetime

appointment, which it's not, then I

think it's very reasonable to say that

any sitting president should be allowed

to remove a Fed governor if he believes

it's not aligned with the wishes of the

electorate and the voters and the plan

that was voted in. I think that that's a

reasonable thing. It's true for the rest

of government. it should be true here.

That's the narrow issue. But the bigger

issue, I think, is asking from first

principles,

what does the Fed actually do in 2025?

So, we have an extremely vibrant and

complicated and interconnected

130 trillion dollar global economy. It's

moving at the speed of light. The Fed

gets together once a month,

tries to divine what monetary policy,

what the money supply should look like

based on data that is often incorrect.

We see that in the BLS data. We see that

in the GDP prints. We see it in all of

the inputs.

And so we've turned over responsibility

to a handful of humans using bad inputs.

So I think the real question is there

are certain parts of what the Fed does

that they can continue to do and I think

everybody would probably say it's an

okay thing. So just to be very specific

here so I get this right. Could they be

a lender last resort? Personally, in my

opinion, no. I think that Treasury does

a better job. I think we saw Treasury do

that during GFC and I think that

Treasury has a better mechanism to get

the American taxpayer a win than the Fed

does.

Do they actually create monetary policy

and price stability? I would say that

the capital markets and the free markets

actually do a better job of that. They

define much more what the spread is. I

think sofur is a much better rate

mechanism than the Fed funds rate at

this point. Do they do banking

supervision and regulation? Yeah, they

probably do a reasonably good job of

that. That is probably something that

most people would say they could

continue to do. Do they do a good job as

a payment system and a clearing house?

Again, probably something that's pretty

uncontroversial that they could continue

to do. So, I guess my point is Jason,

the bigger picture is the two things

that are the most

dynamic,

they are the worst at doing. And so I

would actually question whether that

responsibility should sit with a handful

of humans looking at faulty month old

data. So for example, today the commerce

department did something that was pretty

exceptional. They said we're going to

start publishing data to the blockchain.

All the GDP data is now going into a

blockchain. So can you imagine what this

starts? I think and we've talked about

this before. I think employment data

from all these employment companies and

payroll companies should get published

this way. GDP data can get published

this way. All kinds of economic measures

scrubbed for anonymity should get

published so that you can have pricing

oracles that actually tell you what's

happening in real time. And the markets

will then react and set rates in real

time. Those are the two most sensitive

things that I think the Fed does that

creates controversy that they shouldn't

be doing anymore. Freeberg. Uh, I guess

the question that Chimat didn't get to

there when he zoomed up was, do you have

concerns about

the independence of the Fed? It's

designed to be a very rigorously

independent group.

>> They're not independent. They're

partisan.

>> I I know that. But the the the question

I had also for you, do you have concerns

about you know whether it's President

AOC in four years or 8 years or

President Shapiro moving these things

around and firing people like this and

the weaponization

of the government against government

workers as some people are claiming that

that was the sort of other

>> why do you have to use the word

weaponization like when you appoint

somebody to the commerce department or

to treasury is that weaponizing that?

No. political appointee.

>> Yeah. No, no. The concern people have is

that this um that the head of FHFA

is the one who is researching, you know,

her mortgages and that that felt like

lawfare to people. You know, the same

way people accuse Lawfair of you know,

first of all, Leticia James against

Trump, right?

>> First of all, Bill Pi is an exceptional

American. He's a brilliant businessman.

He's actually probably better served

sitting at the Fed in some role quite

honestly because he has been in the rate

markets and the mortgage markets his

whole entire life. So

if Bill Py was able to get this in a in

a reasonable, fair, and transparent way,

which I have no doubt that he would have

done anything other than that, the data

is what the data is. And I don't know,

I'll let somebody else litigate whether

that's important.

The more important issue for me is just

acknowledging these people are political

appointees. These are partisan

employees. And this idea that the Fed is

independent is maybe something that we

should revisit because most of the

things that they do can be done by

Treasury and other people better.

>> Okay. Freeberg, what are your thoughts?

>> The members of the board of governors at

the Fed, they're appointed to 14-year

terms specifically to try and insulate

them from the political cycles that

occur. I think that that system has

meant to kind of create a bit more

resiliency to the institution

and so it can operate without

necessarily being affected by the you

know intellection kind of whims of of

politics. It seems like there's a lot of

declarations to basically reduce the

overnight rates the short end of the

curve. So the short-term rates come down

interest rates come down. The problem

is, as a lot of economists have talked

about and as we've seen in the bond

market, is that that could really push

up the long end of the curve because if

you suddenly start to flood the market

with capital in the short term by

dropping rates today, so everyone will

borrow, everyone will buy, it'll

stimulate the economy, it'll stimulate

growth, but it'll also stimulate

inflation and it'll stimulate government

spending. then the ability for the

government to make its debt payments and

the cost of the inflation bears out in

the long range. So you end up having

30-year rates spike up. So there's a

sensitivity that's like worth noting

here that it's not just hey the Fed is

in control of the money supply, but

there's a consequence to the effect the

money supply will have ultimately on the

cost of borrowing over the long term and

the US ability to service its debt. And

so I do think it's very important to

have an independent board of economists

that makes those trade-off assessments

that looks at short-term inflation, uh,

short-term money supply, short-term

demand for capital, elasticity of

pricing in the market, and also has

considerations for the long-term cost of

capital. So this independence notion, I

think, is very critical. The the 14-year

appointment term to me solves this

problem. We have the same issue in the

Supreme Court where they serve till the

end of their life. And so I do think

that the consideration here isn't just

about taking action to fire a member of

the board, but perhaps we should go back

and relitigate whether the 14-year term

is appropriate and whether it be much

more specific about the rights that we

want to impart on the executive branch

of the government to be in charge of the

money supply.

>> Any concerns about the Yeah, we'll go to

you next, Sax. you'll you'll you'll back

clean up. But any concerns, Freeberg, on

how this is going down that you have

another governing agency looking into

the feds, governors, and then looking

for ways to remove them if they're in

the other political party. Do you have

concerns about that at all?

>> And this is, by the way, a concern that

Republicans have also said, "Hey, this

feels like lawfare. This feels like

weaponization." Yeah, I mean obviously I

I just think that once people are

appointed, if there's reasons that

they're breaking the law, then they

should be investigated. Everyone in

government should be all the time. So

there should be ethics and there should

be rules and they should be

investigated. But I don't think that we

should use that as a mechanism to get

around the 14-year term. 14-year term is

the term and if we want to affect that,

we should change the 14-year term and

actually get Congress to do its job,

which both sides may agree on to reduce

the term.

>> Okay, Saxs,

what's your take on what we're seeing

here? You were obviously quite animated

about lawfare in the previous

administration against Trump. What do

you think about what's going down here?

>> Well, this isn't lawfare. This is the

president pushing back on I think a Fed

that's been overly political. And just

to agree with Chimath on something, I

have to kind of push back on this shibth

that the Fed is strictly apolitical. All

the Fed governors are politically savvy

and connected people and they understand

the politics of this. And the best

example is Pal himself. So let's just go

back through the history. So in the

summer of 2021, we got that 5% shock

inflation print and it was PAL who

played along with Biden and Yellen that

this was transitory and that transitory

narrative they used to basically avoid

any interest rate cuts or any change of

policy for 6 months. Now what was the

importance of that timing? Well, Pal was

renominated for a second term by Biden

on November 22nd, 2021. So in other

words, he went along with this whole

transitory narrative to get renominated

by Biden. And then a week later on

November 30th, he said it was time to

retire the word transitory. And he then

essentially announced that there'd be a

policy shift and then they didn't raise

interest rates for another several

months.

>> And it was a historic tightening cycle,

meaning the shock to the economy was

incredible because the rate and the

velocity of which he raised rates was

unprecedented. So the real question is

had he been truthful going into a

nomination process and done it much

sooner, would the economy have been

better off? And the answer is probably.

>> Yeah, for sure. Because in that second

half of 2021, we had a bubble. We had an

asset bubble. We saw it in startups. We

saw it in real estate. And that bubble

was caused not just by artificially low

rates, but also by the continued QE

buying. I think Stan Duckeniller has

noted that the Fed I think they bought

something like 180 billion of government

bonds and add them to the Fed's balance

sheet. So, not only were they resisting

rate increases during that roughly

six-month period, they were continuing a

QE policy designed to stimulate the

economy even though we were clearly in a

new type of inflationary.

>> But do you think that was incompetence

or do you think that was political sex?

>> It was obviously political because think

about it. If pal had stood up and said,

"No, I think Biden and Yellen are wrong

and this isn't transitory." Or even if

it might be transitory, it's still a 5%

inflation print. We got to raise rates

or at least we got to stop QE. That's

what he should have done. But he didn't

do that because it would hold on. It

would have been contradicting the Biden

administration and it probably would

have cost him getting renominated for a

second term. So that was intensely

political behavior by Pal and it's the

only reason he's in the job right now

and it caused an asset bubble in 2021.

It caused the 9% inflation that we had

the following year and it caused the

crash that we saw in 2022 and 2023

>> and it's causing what we'll talk about

later all these bankruptcies now. So,

just to give the counter here,

>> think about all those real estate deals

that got done in late 2021 because rates

were artificially low and they were able

to finance them and the valuations were

artificially high and now, you know,

that wall of debt needs to be

refinanced.

>> Jason, what should the Fed do that is

valuable today? Meaning, when it was

created, I could understand how the

government moved faster than industry. I

could I I think I can give that claim.

>> Well, it was about providing liquidity

too.

>> But 50 60 70 years later where all of

private industry is operating literally

at nancond scale using infinite data

using a financial motive to price risk.

How is it possible that a handful of

humans looking at data that's a month

old has any sense of what's really

happening? How is it even

>> possible?

I think it's probably unfair to say

they're looking at only data that's one

year old. And it's also unfair to say

that they're a partisan group because if

you just look they meet monthly.

>> Yeah, that's true. But I don't think

that they take the other 29 days off

obviously. And if you look just

statistically, two of them were

nominated by Trump and one was made

chairman by Trump and then three were

nominated by Biden. There's one vacant

seat. So right now when you look at it,

it doesn't make sense that it would be

political and they have been acting with

very little dissent in their decisions.

So just I hate to bring the facts to the

table here, gentlemen, but it doesn't

seem like they're doing this in a

partisan way. It seems like they're

doing it, you could argue maybe they're

too slow to react or they're not

perfect, but it's certainly not

partisan. If

>> maybe they don't want to publicly

contradict the Fed chairman, by the way,

you didn't let me do Hold on before you

say that. They they have dissented.

There's been disscent. There's been one

or two people who will descent and say,

"I think we should have a rate cut now."

And they vote and pal, it's not like Pal

has like five of the votes. They each

vote. It's not a god king kind of

situation. So just factually and

statistically, it's an even balanced

unlike say the Supreme Court at the

moment. And there's one seat open and

there might be two seats open. Now

>> is the leader of the Fed. He needs to

get renominated. This is why we had a

six-month delay in stopping QE and not

recognizing the fact that we had this

big inflation spike. And that lines up

perfectly. Look at the timing. He was

renominated.

>> Was political. You just glossed over

what I just explained that it's that

Trump placed him.

>> Okay, maybe it's just a huge

coincidence, Jay Cal. But Biden

nominates Pal for a second term on

November 22nd, 2021. And then on

November 30th, Pal finally acknowledges

that transitory is wrong.

a week later.

>> Okay, you don't think that's a big

coincidence? Let me give you another

one. I didn't get to present the second

part of my argument here, which is that

Pal started the rate cutting cycle last

fall with a 50 basis point cut right

before the election shortly after

Elizabeth Warren sent him a letter

demanding a cut. And let me just read

you, let me just hold I want to bring up

this letter for a second. I want to read

this because there's so much hypocrisy

here on this issue. By the way, it was

expected to be a 25 basis point cut and

he ripped in a 50 going into the

election.

>> But everybody was saying, by the way,

what's going on saying at that time, not

just Elizabeth Warren, we were all

saying,

"Hold on, let me finish my sentence,

please."

>> We were all saying on this very podcast

that there should be rate cuts because

we had seen that 6 7% inflation come

down and that you were arguing at that

time, Shimoff, that it was time for a

rate cut. It wasn't just Elizabeth

Warren. was consensus that they were

slow to cut rates during that time

period. So again, I don't political

because we all we could we could all

read it and realize what was happening

to the economy which was like okay it's

time to find a glide path. But meaning a

glide path means 25

25 weight 25 not 50 then zero.

>> Okay,

>> that's not a plan.

>> This is from Elizabeth Warren to PAL on

September 16th, 2024. So a few months

before the election. She says that we're

writing to urge the Fed to cut the Fed

funds rate.

And she says for months we've been

calling on you to cut the Fed funds

rate. And it says, "In fact, it may be

too late. Your delays have threatened

the economy and left the Fed behind the

curve. Inflation has fallen to 2.5%.

Well below the mid22 peak of 7%." And

then, you know, goes on to basically say

that employment numbers adjust slowly,

so the Fed should frontload rate cuts to

avoid sliding towards a potential

crisis. So, the bottom line here is that

Elizabeth Warren was saying that Pal

needed to cut dramatically when

inflation was at 2.5%. Now, Elizabeth

Warren is saying that Pal needs to stand

up to Trump and not cut rates. So, you

can see the hypocrisy here. You've got

Democrats like Elizabeth Warren were

browbeating Pal to cut rates before the

election. He apparently gave into that

pressure, cut rates 50 basis points and

then once Trump won instead of Kamla,

then he stopped the rate cutting cycle.

>> Just a little correction there. The It

wasn't You keep saying that Pal makes

his decision. He is but one vote. when

they had that September 50 basis point

cut, which we were all a little bit

shocked about. People thought it was

going to be 25. So, it was double. There

was one dissenting vote from one of

Trump's appointees.

>> So, basically, the Trump appointees were

opposed to it.

>> One was, the other two weren't. And

you'll remember that at the last um I

think it was July, two people voted out

of step with POW. So, they do have

disscent there sometimes. So, this idea

that it's just nakedly political just

doesn't add up. He's putting together

the majorities.

>> You're cherrypicking the Elizabeth

Warren because Elizabeth Warren is about

one person.

>> You just think all these things are

coincidences.

>> This argument that it was political just

can't be true if there's other

Republicans on there who also voted for

it.

>> Well, they're establishment Republicans.

>> Okay. Sure. They don't like Trump. I

know. I Well, okay. I I mean, I know

there's some conflict within the uh

within both parties, actually. So he

does a 50 basis point cut a few months

before the election which can only help

the incumbent administration Kamla. That

didn't work. And then when Trump gets

elected, he pauses the rate cutting

cycle.

>> That is factually true. Well, what what

is also factually true is that inflation

started to tick up a bit. Additionally,

that what the Fed said, not just pal,

the entire Fed said, we don't know the

impact of Trump's tariff policy. And

since they didn't understand that and it

was unprecedented as well and we all

admit it was unprecedented and we all

admit that it was kind of shocking which

is why the stock market took a nose dive

when he started you know making really

like intense tariff demands they said

hey when the tariff stuff when the data

comes in for tariffs which came in in

May June and they were good when that

when that tariff data came in then they

said we are going to work towards a cut

in September. So, we're talking about a

fivemon period here.

>> Hold on a second. You're saying

something really important. Okay. Can I

just want to pause on this? Let's

>> You talked about this and what you said

was the markets reacted and they went

down. You're absolutely right.

>> But you know what they did? They also

repriced that risk well before the Fed

got back together. It was within a few

weeks that the market had completely

repriced what was happening with

tariffs. This is why I'm telling you

that we are better off imparting the

rate setting mechanism to the free

market because when you have places like

commerce and treasury increasingly

publish all this real-time data into a

blockchain you can have pricing oracles

Jason that make these decisions in real

time and repric this just like the stock

market does every day

>> oracle explain to the audience what you

mean by that you mean an AI would tell

us what the rate should be.

>> No, every bank will have oracles that

divine what they believe the risk-free

rate would be. Then what happens is when

you have a treasury auction

in an auction, you submit a bid. And

when people submit bids, what happens is

you converge on a market clearing rate

that happens independent of the Fed. And

so what I'm saying is that if you

actually inspect the ability to finance

the United States government, the two

critical things that happen can be done

and are done well today by Treasury plus

the free market.

>> So you want to abolish the Fed?

>> No.

>> For for this purpose for for setting the

rates.

>> Listen to me. They have four major

responsibilities. I think that if you

revisit what's happening, you can find

two of those responsibilities that

probably they can continue to do with a

lot of usefulness. But it is clear that

the free market does a much better job

of setting the actual rate. It's called

sofur. We all use it. We use fed funds

as a guide. But fed funds isn't even

specific anymore. It's now a range. They

don't give a specific rate. They give a

range because they don't know. And it's

okay to not know. But we should just

acknowledge that that's where we are

today, which is we have precise data in

the free markets, imprecise data in a

group of people. So there are 12 people

that vote in these meetings. Seven are

the Fed governors that we've talked

about and then five are the Fed bank

presidents who also get a votes and it's

very simply the majority wins and

there's a vacant slot now. So there's 11

votes now.

>> We've all been in large board meetings

and we all know that the dynamics of

these meetings there's a leader. that

person's either the CEO and chairman or

just the chairman of the board and

they're the ones who lead the discussion

and they put together the majorities and

they set the agenda and it takes a

revolt by the rest of the group to

basically stop their decisions. So

you're trying to diffuse accountability

for Pal's decisions here when he's the

leader of the Fed and he ultimately has

responsibility for their decisions. And

by the way, I don't think you'd be

seeking to diffuse accountability that

way if Pal had made a bunch of good

decisions, right? Why would you be

trying to diffuse that accountability if

it's

>> I don't have I don't have a horse in

this race. I don't I have zero horse in

>> clearly you're trying to defend you're

trying to defend the Fed here.

>> I'm just trying to correct the facts.

There are 12 Well, there's 11 people.

>> He's the leader of the institution. He's

the leader.

>> He gets one vote. He gets one vote and

just in the last

>> he's putting together the majorities.

>> Just again I hate to bring facts into

the discussion but there were two

dissenting votes. Bowman and Waller they

preferred a 25% rate cut in July. So

there is dissent in this organization.

They're going to cut 25 obviously in

September. Some of them wanted to do it

in July and then August they said yeah

it's time to do it and so we that's why

the market popped and poly market is

showing that's going to happen

September. So we're talking about 60

period you know here here's here's the

well me just just have the last word. Go

ahead Sax you get the last one.

>> Look here's the bottom line is I think

Trump is right to be frustrated. Pal has

been intensely political. He went along

with the transitory narrative on

inflation to get renominated for six

months. That created a horrible

misallocation of capital and then a few

months before the election he went along

with the 50 basis point rate cut. There

was no outrage about Elizabeth Warren

jawboning him then like there is now

about Trump and then he stopped the rate

cutting cycle when Trump won.

>> When Elizabeth Warren said that we

actually said she shouldn't be doing

that. So, you know, that wasn't like

Elizabeth Warren speaks for the country.

She's totally irrelevant. Sachs. We all

know she's irrelevant and we all agreed

that they were behind in the rate cuts.

We all agreed she's behind the rate

cuts.

>> Okay, let's go to the next story. Okay,

we're not going to agree on this one.

And um there's going to be a rate cut in

September. So, it's all good. The US

government just took a 10% stake in

Intel. Last Friday, Trump announced that

the US government would acquire 10% of

the chip maker. As we all know, there

was this chips act to try to onshore

chip manufacturing. There's a lot of

chip companies that are US, but they

don't actually make the chips here in

the United States. Most of the chips in

the world are made in Taiwan, obviously,

by TSMC.

And so these grants were created. 9

billion of them were grants. There were

also tens of billions in loans and that

was the CHIPS act. We talked about it

here many times two years ago. These

grants have been allocated. They were

not paid out. So Trump and um Lutnik

came in and said, "Hey, instead of

giving this money for free, we would

like to get something for it." And they

are going to get non- voting shares.

There's no golden share like in China

where you know you get uh border

representation and you can kind of

control the board. Uh this will be

passive. Uh no board seats, no

governance rights. Let was very clear

about that on CNBC. This all happened 3

weeks after Trump called uh Intel's CEO

or called for Intel's CEO to resign over

his ties to China. President Trump said,

quote, "The CEO of Intel is highly

conflicted and must resign immediately.

There is no other solution to this

problem." But they found a solution,

which was to take 10% of the company.

Let's stop there. This has been pretty

controversial,

I think, Chimoth, in terms of people

wondering if this is going to become a

playbook. Do you have any concerns with

swapping the grant to getting equity?

And do you think this should become a

playbook where the US government starts

to own percentages of companies in

exchange for loans and grants as opposed

to giving loans and grants?

>> Yeah, I think some historical context is

important. In 2006,

Hujenta gave this speech and in that

speech he talked about, you know, six or

seven boxes and the way that he

described these boxes was that these are

the critical parts of the Chinese

economy that they must persevere and win

over the next 20 or 30 years to ensure

safety, security, and prosperity for the

Chinese people. And in those boxes were

things like semiconductors, were things

like rare earths, were things like

pharmaceutical APIs.

And what it described was a willingness

by state governments in China as well as

the federal government in China to use

the balance sheet to support those

companies

incrementally. Jason, as you said

correctly, they would also ask for a

golden vote. In return, what did they

do? I can talk to you about rare earths

as one very specific example through my

involvement with MP and and now with

Intel.

The Chinese have an extremely

sophisticated market driven approach to

how they help when they are on the cap

table. They'll price shape, they'll

price dump, they will change the spot

markets, they'll perturb the ability for

other people to compete. And what that

does is it locks the capital markets

because it says we can't compete with

these companies, so we're not going to

finance an alternative.

>> That has long-term strategic negative

consequences for everybody that isn't

those Chinese companies.

>> So, let me just pause there. Now, look

at the United States. What the United

States has always done is we have been

the lender of last resort, but we've

never participated in the upside that

being that lender of last resort has

given us as the American taxpayer. So,

for example, in 2008, you know, we

created TARP where we bailed out all

kinds of toxic assets. What did we get

in return for that? Nothing. We barely

got our money back. When Warren Buffett

stepped in to backs stop Goldman Sachs,

he was able to get the United States

government to help him backs stop that.

Who got all the gains? Buffett and

shareholders of Berkshire Hathway. Who

put up more money? The United States

taxpayer. Those are but two examples. I

think that this approach is the much

better approach, which is to say we can

do exactly what China did with a couple

of tweaks. It's way better, as you said,

Jason, to just put in the equity, own

something on the balance sheet of the

United States, not have a golden vote,

have complete transparency, allow the

capital markets to finance these

businesses, but give them a chance to

compete all around the world, and then

the US taxpayer gets some of the upside.

That is awesome. What we have done up

until now, until what Lutnik has done

and what the president has done is the

opposite, which is we have given money

away in times of duress with absolutely

no upside and I think it has to change.

Saxs, what are your thoughts here on

this model?

It uh is something to think about when

it comes to, as Chimath correctly points

out, China will subsidize their

champions. It's happening right now with

BYD,

the car company. Allegedly, all these

car companies are dumping cars all

around the world. And supposedly they're

being underwritten by the Chinese

government explicitly to do this to take

away American, German, European auto

manufacturers ability to compete. So

what are your thoughts on this? Do you

want to see it continue or do you think

this is kind of a one-off specialized

situation?

Well, I agree with Jamoth that if you're

going to give large amounts of money to

chip manufacturers, it's better to get

equity for that than for it to be a

freebie. And I think there's two reasons

for it. One is it's a better deal for

taxpayers. We might be able to recoup

the money and even make a return on it.

But the other is the incentive for

companies, right? We don't really want

our companies going to the federal

government to try and get bailed out.

and at least if they have to give up

equity or warrants, things like that,

there's a cost to it. We would rather

that these companies get financed

privately. But that didn't happen here.

Intel received something like, you know,

over $8 billion under the chips act

because we let the free market do its

thing and it resulted in chip

manufacturing being offshored and it all

ended up on the island of Taiwan. And

that's a huge national security issue

for the United States because now our

whole supply chain for this critical

resource is singlethreaded on Taiwan. So

we made the decision as a country to

onshore chip manufacturing. That's what

the chip act was about. It had large

bipartisan support. So there's this

priority to bring chip manufacturing

back on shore. And the question is how

you do it. And I think that if you are

going to hand out billions of dollars to

these companies, you're better off at

least again getting something for it,

having the taxpayers have some upside in

it, allowing the government to recoup

and creating the right incentive for

these companies so they're not

constantly seeking bailouts. So I think

this is a big improvement over where the

chips act started. But to answer your

question, I mean, would I be looking for

lots more opportunities to do this? I

think there has to be a national

security interest or something of that

kind. And I think it has to be a

situation where for whatever reason the

free market has failed to deliver on

that priority.

>> Freeberg

looks like we're going to have consensus

here that we all agree it's better to

get some upside or equity for the

American taxpayers as opposed to giving

free money.

There are have been some push back as to

the style in which this was done the uh

bullying of the CEO and then 3 weeks

later a deal. So thoughts on that

criticism of the administration?

>> Well, just taking a step back, I think

um it is an indication that the free

market has failed in some way. If the

government is stepping in to either

provide unique regulatory unlock or the

government is providing capital or the

government is basically stepping in to

be the biggest or primary buyer of a

private company's products or services.

Those are the three kind of reasons why

I think these scenarios are emerging. So

regulatory unlock that's unique

providing capital

or being a buyer. All three I think

indicate that the free market has failed

and the government is playing too big a

role in our economy. So I think that

that's just the unfortunate circumstance

that we find ourselves in and we can

recount as we have many times here

before why the government has become so

big, why it is too big and why it is

having such an outsized influence on job

creation, on economic growth, on

stimulus, on market strategy etc. And I

and I hear Sax's point that there are

very specific circumstances where we

have to fix free market action and I

totally get that. But I think there's

these bigger broader kind of things that

are happening which is the government's

also the biggest buyer of products for a

lot of companies and the government's

providing capital either through

contracts or procurement or some

structure that is stimulating a very

large percentage of the economy. So I do

think there is a notion that some have

shared which I don't fully disagree with

which is that there is some degree of

socialism underway that the government

is providing such a large role in the

economy and replacing so much of the

free market and we can argue why that is

and have different points of view on why

that is but that de facto state is an

unfortunate state. Now I think the

question is under these circumstances

should the government be getting equity?

I think the answer is yes. I agree with

that. And if the government is getting

equity, the key question I want to ask

is where does it go? There's three

places that equity could land. It could

just sit on the balance sheet of the

federal government, in which case

there's no real goals or oversight of

the investments. There's no overarching

strategy on what to do with that equity

over time. How do we how does the

American taxpayer benefit the most? When

does the government sell? How does the

government choose to sell? Who makes

that decision?

So the second is then you form a new

sovereign wealth fund to hold all these

equity assets. You form a new sovereign

wealth fund. Then you have a whole group

of people that are going to be hired to

oversee those investments. They're going

to make good decisions. Hopefully,

they're going to be good investors, good

fiduciaries on behalf of the American

taxpayer. But I would argue that what we

should be doing instead, and as I've

mentioned in the past, is use what we

already have, which is the OASI, the Old

Agent Survivors Insurance Fund, which is

the trust fund behind Social Security.

That's actually where Social Security's

assets lie. Today, the only thing in

that trust fund is US treasuries, and

they're actually a special form of

treasuries. So, if you've paid into

Social Security, you're effectively

loaning the federal government your

money, and then they are supposed to pay

you back your retirement benefits in the

future rather than just loan the federal

government money. Those assets should be

held and will become the largest

sovereign wealth fund to make strategic

investments and grow those assets over

time on behalf of those American

taxpayers as retirees. So I would argue

that the right solution of the three

options form a sovereign wealth fund sit

on the balance sheet with no strategy

instead would be to have that sovereign

wealth fund sit within OASI that would

require statutory changes because the uh

social security trust funds were set up

in the 1930s and Congress passed an act

that said you know you kind of got to

hold only treasuries. So we would have

to get Congress to kind of revisit that

concept. But I do think that if we are

going to be in the state where the

federal government is playing this

outsized role in the market, we should

take equity, but we should be very

strategic about where that equity goes.

And I think the best place to put it is

in the social security trust funds. And

it can kill two birds with one stone. So

rather than create new holes in the

government, meaning new spending, new

debt, creation of of new vehicles for us

to spend capital, I think we should fill

holes. And one of the holes we need to

fill is social security, which is going

to go bankrupt sometime between 2030 and

2033. I would encourage us to kind of

strategically think about evolving this

system. I think it's a major moment, by

the way, because as I've mentioned in

the past, in addition to setting up a

equity vehicle based on these deals, the

social security trust fund could also be

buying public equities on behalf of the

the retirees, which would have a

significant compounding effect for them.

Jacob, what do you think?

>> So, the I love the substance of it. We

talked about it actually back in the day

here. There were a series of loans that

Obama set up for uh Tesla, Celindra, and

um Fisker. A bunch of those companies

blew out, didn't pay back their loans.

Elon paid back his ahead of time,

>> but the government had no upset to use

with interest, of course. Yes. And um

imagine if they just owned but warrants

for 1% of Tesla or something. It could

have been incredible. And I'm sure Tesla

would have still taken that deal. It

wouldn't have been crazy. The thing I

don't like about this is the bullying of

the CEO of Intel. This is giving a lot

of, you know, this is a lot of my

challenge with Trump is or sorry,

President Trump is sometimes the style

in which he does something detracts from

the actual substance of it. The

substance of this is great, but we are

now getting into a situation where it

feels like a narco capitalism. like this

is crazy that the president goes and

bullies the CEO of a company and then

says they're going to be deported and

then settles a deal like this. The

optics look terrible and it would have

just been much better to say instead of

giving you a grant, we'd like the option

to have equity. What would you prefer?

And then have a decent negotiation where

you don't have to threaten to kick the

guy out of the country.

>> Do you think maybe that happened, Jal,

and it just wasn't public and this was

like a lot of things a public

negotiating strategy? Yeah. I mean, I

think probably that is what Trump does.

He beats somebody up and then says

they're incredible. I just think it

detracts from the substance and the good

work when you do those techniques

because it's now very Yeah. Do you think

we should have a sovereign wealth fund?

>> Not when we're in debt.

>> The president addressed what happened.

Tom Cotton, you know, a senator, wrote a

letter attacking Intel and questioning

the CEO Lieboot Tan's past and the

president posted a truth in response to

that, but he hadn't met Leebu before.

And so the CEO of Intel went in there,

got an audience, and told his side of

the story, which was that yes, he

invested in China, but when everybody

was doing it, it wasn't controversial at

the time. And I don't I think he hasn't

been involved in China for like six

years or something like that.

>> So he cleared up the situation and

that's how the conversation happened.

>> Fire a fire aim ready is like the thing

I I don't like about when Trump does

these things. So yes.

>> Well, I think the American people like

when Trump gets results and

>> you got to you got to break some eggs to

make an omelette. And the question is is

he getting good results? And I think the

American people are happier

>> getting something in exchange for

billions of dollars as opposed to just

being handed out.

>> Also, exactly my point. I just wish you

would do it in a more thoughtful way,

but it wouldn't work. You

>> would have worked absolutely would work.

Yeah.

>> You you mentioned that you don't think

that there should be a sovereign wealth

fund until we're out of debt.

>> I didn't finish my thought on that. So,

that's an interesting question. If we

had a sovereign wealth fund and we're 36

37 trillion dollars in debt, I'm with

Lutnik's position that like maybe we pay

down that debt and then we can think

about that. But sovereign wealth funds

usually come from some natural resource.

Norway's, you know, UAE, uh, you know,

uh, Saudis, we don't have some natural

resource that is throwing off all this

money and and yeah, so I don't know how

we get one.

>> I'll do the other side. I think that we

should start a sovereign wealth fund

right now. And who should fund it? Well,

the great news is that these Trump

tariff deals come with huge amounts of

capital that these other countries have

committed to spending inside the United

States. For example, there is 600

billion dollars now that Japan has to

spend inside the United States. There's

300 billion that Korea has to spend.

There's another several hundred billion

that Europe has to spend. If you add

that all up, we've exceeded a trillion

dollars of inbound capital on the

investment side. And in those things, we

get 90% of the upside if you remember.

So I think that a lot of that capital

should be the seed capital for a

sovereign wealth fund. You're right,

Jason, that we can then choose to direct

some of those gains to things like debt

reduction. Freeberg is right. We could

direct some of those gains to fund

social security. I think we should set

that up right now and it can be

additive. So for example, there's the

trillion dollars that these countries

are investing in the US 9010 carry. It's

unbelievable. All of that should go into

a balance sheet that the American

taxpayer can benefit from. Number one.

Two, when we do these programs like we

did with MP and we've done with Intel,

they're really smart. We need it anyways

for strategic reasons, but now we get

the backend participation of the equity.

That should go into a sovereign wealth

fund. All these things make a ton of

sense. I think

>> of them is what I would say. The concern

I have is anytime we create a new income

stream at the federal government or we

have some sort of growing asset that you

mark up on the book, someone tends to

invest ahead of the curve on that.

Meaning someone takes that and they're

like, "Oh, great. I can spend more now."

I mean, we even saw this in California.

You know, Gavin Newsome and the budget

skyrocketed as the income went up and

rather than take the surplus and book it

for a rainy day, they went and spent

ahead of it and then all of a sudden

they had a huge deficit. And I do worry

that the tendency in the federal

government, which is what happened with

social security, is it's like, okay, all

these people are providing this income

every year to the federal government,

which they're they're supposed to be

paying into their social security trust

fund. But then what happened is we

raided the coffers. We took all that

money and we started spending it on

random new programs. And the problem is

by giving the government more assets, by

giving the government more income, we

set ourselves up for a circumstance

where the federal government, the

Congress says, "Great, we got more money

to spend. let's do X Y and Z program and

let's do this great let's build a

highspeed train let's do this these are

all good for American people and all of

a sudden you know you don't actually

solve any real problems and this is why

my my argument is like we should use it

to fill the hole that we have for

example in social security and that

needs to become an asset that's strictly

used as an offset on social security

because if you don't put it in that box

it just becomes another spending

mechanism

>> I don't like the sound of taking

people's social security savings or the

money that's earmarked for social

security and having the government act

as a venture capitalist and start

investing willy-nilly trying to get us

out of this hole. I mean, I don't think

that's going to go very well. But what I

think makes sense is that

>> maybe it's just it's an offset sax. I

mean, maybe it's just, you know, it's

just incremental where it goes liquid.

It can be used to pay down the social

security treasury obligations is my

point.

>> Yeah. Look, I think we should just be

selective about this. I think it makes

sense in situations where the government

was going to do a bailout anyway because

there's a national security priority or

some other kind of priority that the

government's determined we have to do.

You want to get equity for it. It

doesn't make sense to you know give I

mean frankly even celindra where equity

go where does that equity go is is the

key I think that would be help keep

everyone and how do you keep everyone's

grubby hands off of it right so like how

do we use it for as an asset rather than

have it be another

>> mechanism of he wants to be a

civilization

>> I like I like the idea of putting I like

the idea of putting that equity in the

sovereign wealth fund and yeah it could

go to social security I think that makes

a lot of sense

>> I just want sachs on record saying he

agrees that it should go into social

security and then

>> well I like I like that idea I don't

like the idea of taking people's social

security funs

I definitely it's not those funds don't

exist. Those funds were already taken by

the government and spent and there's an

IOU sitting in a account.

>> It's like literally a piece of paper. We

owe you your retirement.

>> We're talking about situations. We're

talking about situations like TARP where

you had all these Wall Street firms

bailed out and yes and then some of them

paid back. But the government should

have had equity%

equity in those firms. I want I want to

make sure that equity goes somewhere

>> because people book it as income and

then they take a lower deficit year and

they're like great the deficit was lower

we can spend more. That's how this gets

booked. So if it's not if it's not

accounted for separately it gets blown

out. That's what I hate.

>> That's a perfect segue. Uh Grover

Norquist wrote an oped in the Dallas

News. You can pull it up Nick and show

it there

>> about the discussion we had here on the

podcast a month ago. I had talked about

this. you know, he has his taxpayer

protection pledge that Republicans made

back in the 80s where, you know, people

signed on to agree not to increase

taxes. Well, we had talked here and I

had proposed something similar for

spending because we all have concerns

about the debt. And he uh pointed out

that this is very difficult to do, but

he had a really interesting piece of

information that I hadn't heard. In

Colorado, a Democrat state, they have

limited the size of the budget to be

based upon the population

and inflation. So, they have been

returning money to taxpayers and

lowering their state interest rate. And

he says this model uh pioneered in um

Colorado, but other states are now

getting on to this that this could be

the model that saves America and that we

could have a situation where the

population plus a little bit of

inflation equals what you're allowed to

spend. Gentlemen, your thoughts on

Grover Norquest uh responding to our

pitch on the allen pond or my pitch on

the pond, I guess.

>> What?

>> Okay. crickets. Somebody's got to have

an opinion.

>> This is so uncontroversial. I don't know

what there is to talk about.

>> What's the analysis we're gonna do?

Yeah.

>> It'd be a good thing if every politician

pledged to not increase spending. But

>> let me ask this. Were you guys aware of

Colorado doing this that they had this

device uh set up?

Yeah. Nobody was aware of it. Yeah, it's

pretty interesting. So, Groven

Northwest, come on the pod anytime. I

actually told Elon and I I tweeted as

well, this is what the America Party

should do. This should be the entire

America Party platform. Just get

senators, House of Representatives who

believe in this and just work on that

one issue, balancing the budget. That's

the thing that neither party will take

on. All right, let's talk about

corporate bankruptcies. According to N

S&P Global Report, so far in 2025, we've

seen the most corporate bankruptcy

filings since 2010. That was after the

great financial crisis. You remember or

some of you might have been too young.

So, uh, corporate bankruptcies,

according to the S&P, are public

companies with debt of at least 2

million and private companies with

assets or liabilities of at least 10

million. I'm not sure why the public

companies is less than the private. It

didn't make sense to me, but there must

be a reason. Uh, these are also called

large bankruptcies. Here's a chart

showing you corporate bankruptcies since

2008. The blue bar is through July. Gray

bar is the full year. So, uh, we're

looking at a partial year here.

Obviously, in 2025, we're at 446 large

bankruptcies 7 months into 2025, which

would put us on track for the most since

2010. And um yeah, nothing close to GFC

numbers, but uh you know, it's not

trending well. And if you look at

corporate bankruptcies broken down by

month since 2020, you can see uh that

bankruptcies are increasing after the

massive rate hike cycle in 2022 and

2023. So obviously rates have something

to do with this. What are your thoughts,

Chimath, on what we're seeing here? It's

not like super dramatic, but it's

definitely uh notable.

>> Yeah, it's notable, but I think it's

notable not for the reasons that the

mainstream media tries to describe it

in. I read these articles and I was a

little bit caught off guard because

initially what it said was the tariffs

were causing this and I was like

large companies don't go bankrupt 30 60

days

>> yeah because of the tariff this makes no

sense but the narrative was very strong

basically trying to paint the Trump

administration as having caused this. So

I just started to look into this and

couple of interesting things to note

that I the conclusions that I came to. I

think the most interesting is that there

were a lot fewer bankruptcies over the

last four or five years

than there should have been. And I think

that there are two reasons. The first

reason is that you had rates

artificially suppressed at zero for an

incredibly long amount of time.

And so you had all kinds of companies

able to raise enormous enormous amounts

of capital that they probably shouldn't

have been able to or at a minimum should

have done at much higher rates which

weren't really there because the poor

rate was at zero. So what that means is

that many companies were able to fill

the reservoir of money and then when the

core structural business started to

fail, they had a lot more oxygen in the

tank to survive a lot longer. So I think

a lot of what you're seeing and if you

look Jason at some of these companies

like Joann's Fabrics and Party City,

these were businesses that were upside

down for years.

>> Yep. And a number of these right were PE

buyouts that you know their strategy is

to saddle them up with a bunch of debt

too. So that that speaks to what you're

saying.

>> So I think I think the reason why

bankruptcies are up right now is because

the reservoir of free money the money

printer that printed frankly since 2010

up until about 2021 because you know we

still gave an enormous amount of money

in co is finally starting to run out.

That's number one. But the second is

that we actually haven't had a process

of creative destruction in American

company formation for a while.

>> Yeah. Probably since GFC GFC, right?

>> A similar a similar thing happened at

that time too, Jamal, right? We had all

these backed up companies that probably

should have died and it kind of

>> Well, what I think I I think what

happened was like, you know, startups

ran out of money. There was certain

parts of of industries that had some

trouble, but by and large there was no

transformational or catalyzing M&A that

could have actually happened and that in

part was a structural issue because of

the way the federal bureaucracy reacted

to it. Not just in the United States to

be fair, but around the world. And I

think when you relax those constraints,

what you can start to see are companies

identify assets that they want inside of

other businesses, be much more

aggressive in getting them. Businesses

that are floundering being able to see

that they're about to run out of money

and have the confidence to try to do an

M&A deal to survive. You need all of

these things to work in lock step for a

market to be efficient. The market was

incredibly inefficient since 2010.

artificially suppressed rates, a

regulatory regime that, you know,

disallowed any form of M&A and

consolidation. Now that those

constraints are lifted, you're going to

see a lot of this creative destruction

work its way through the economy. That's

one big trend. The other big trend, and

I think we saw this in Nick, can you

please find the tweet from Delion where

he talked about the Chipotle competitor

that TK launched? I just want to point

to this because I think this is another

wave of competition that's going to put

a bunch of categories of business under

duress which is you know our friend

Travis Kalanick who's the founder of

city is what is it called city logistics

is that what it's called

>> yeah cloud kitchens is how

>> cloud kitchens okay

>> he launched a Chipotle competitor and

it's apparently totally kick-ass and way

better than Chipotle and it just starts

to show that there is an a wave of

competition that's also coming from

completely different companies you never

would have expected going after a bunch

of these businesses. So if you put these

two things together, I think you're

going to see more, not less,

bankruptcies. But I think the outcome is

probably positive in that you clean out

a bunch of businesses that were taking

up time and resources. You should

allocate a lot of the human capital that

are in those companies to different

businesses and I think we'd be better

off.

>> Uh man, it's a long list of companies,

but I just want to know which one hit

you harder, Forever 21 or Hooters. Which

one of those bankruptcies hit harder for

you trying to game it out here? Um I

think that we should buy we should buy

Hooters Chim.

>> If you have a teenage daughter, what

I'll tell you is Forever 21 was

That was going to go to zero anyways.

Like you need to be long Brandy

Melville. You need to be long. Oh god,

what is this other one that's like the

the clothes are so

>> like yoga pass aloe?

>> Kids wear a lot of those. They're into

the athletic wear.

>> Wonder what's the name of that clothing

store where you know where Sloan like

always wants the you know the the skirts

and stuff. Not Brandy Melville but the

other one.

>> Oh um

Uh

>> anyways there's all these brands. Yeah.

Forever 21 was not it.

>> Yeah. What do you guys think? Should we

do a should we buy out Hooters and put

Sydney Sweeney as CEO? This could be a

great brand extension. I don't know. The

chicken wings are amazing.

>> Saxs, any thoughts here on the creative

destruction and what we're seeing?

Obviously, it can't have to do with

tariffs because they're only 3 months

old and it seems largely the companies.

>> Well, every company you've mentioned,

every company you've mentioned is a

retail business. They have physical

locations that people have to go to do

stuff or get stuff. And I think that the

demand 23 and me you had Wag,

>> you had a Yeah. But yeah, I think

>> but I think the retail channel getting

flushed out makes sense given the age of

Amazon and Sheen and Target. Yeah.

>> Well, the retail channel like others is

highly levered because in order to have

a retail store, you have to pay a

monthly fee to the physical real estate

owner. And so it's unlike other

businesses that are services or are more

nimble and can relocate. you actually,

it's the equivalent of having debt. When

you sign a lease, you're stuck in a

10-year debt cycle. You have to pay

every month a fixed amount of money and

you can't get out of it. So, the

retailers make a lot of sense. They were

basically levered businesses in addition

to all of the kind of macro trends of

people not going to physical locations

and co. But I think Chimath has it

right, which is this is all kind of zer

era, you know, indigestion

that's being washed out. And to the

point like some percentage of overfunded

negative unit economic type businesses

are also getting cleaned up in the kind

of call it tech space which involves

typically a lot of companies that are

not tech but math just tech.

>> So um that definitely makes sense to me.

>> Sax any insights here?

>> Well just to pick up on this. So you

know when you showed those charts on the

bankruptcies I didn't see a huge trend

there. I mean, I can see that there's

some pick up since the Zerp era, but it

doesn't look like a huge trend to me. We

just had a 3.3% GDP print for Q2. I

think it

>> that was restated, right? That's what

happened today is they restated it.

>> Well, no, there was an estimate.

Remember the Atlanta Fed had this 3.3%

estimate, then they reduced it to 3.0,

but now the actual number is in 3.3%.

>> So, the economy seems pretty hot and

it's doing well. But I would say that

there is some softness in the economy in

those sectors that are exposed to high

interest rates. And the best example of

this is real estate. I remember on this

program a year and a half ago, we talked

about the wall of debt on commercial

real estate that was coming due and had

to be refinanced. And there's 2.2

trillion of debt, CR debt that's

maturing before 2028. And what we talked

about back then was the banks don't

really want to foreclose on these

buildings because then it hits their

balance sheet. So everyone has a

incentive to restructure this debt. And

there were a lot of these blend and

extend type deals where they would

extend the debt and work out a a lower

interest rate. Some people call these

deals pretend and extend because you're

pretending that the real estate sponsor

still has equity in these buildings and

they might have

>> have these started to come back.

>> What I'm seeing is that some real estate

developers are starting to lose

buildings. Now, the reason for that is

that the debt is coming to you and it

has to be refinanced. And there's two