Epstein Files Fallout, Nvidia Risks, Burry's Bad Bet, Google's Breakthrough, Tether's Boom

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0:00

All right, everybody. Welcome back to

0:01

the number one podcast in the world. We

0:02

are together in person. Yes, the besties

0:05

are together in Vegas. It's going to be

0:07

a great time. We're here for F1 and

0:09

>> This is a test. This is a test. our

0:11

friends at the Venetian have been

0:14

amazing, gracious hosts. They gave us

0:16

their beautiful studio here. We're going

0:18

to play some cards. We're going to have

0:19

Phil Hellmuth, Jason Koon, all of our

0:22

besties are coming. And I have I've

0:24

never stayed at the Venetian before.

0:26

It's amazing. Wonderful suites they gave

0:29

us. It's beautiful. Uh they VIP'd us out

0:31

and this is the place you want to play

0:33

cards. They've got a beautiful, brand

0:35

new poker room. They've got a high

0:36

stakes room. We'll be playing here

0:38

later. We'll be playing the secret game.

0:41

>> and yes, trackside for Formula 1. And

0:44

we're here for F1. We're going to be

0:46

releasing

0:46

>> dealer with me.

0:48

Wait. You brought a car dealer with you?

0:50

>> You know Matthew?

0:52

Oh, your car dealer from your home game

0:53

is here.

0:53

>> Yeah, Matthew car dealer.

0:54

>> Is that Is he dead money? What's the

0:55

story here? Is that his if Sadly. No?

0:58

Okay.

0:59

I haven't been in the home game for a

1:00

little bit and it looks like people got

1:02

out of line. But anyway, thank you so

1:03

much to our friends at the Venetian.

1:06

Uh they're doing a ton of poker content

1:07

here, so you can look at that on their

1:08

YouTube. All right, everybody. You've

1:10

wanted us to talk about the Epstein

1:12

files and we're going to talk about it

1:13

today. In a stunning turn of events, the

1:15

House and Senate voted nearly

1:17

unanimously to release the Epstein

1:19

files. The vote was 427 to one, Chamath,

1:23

uh for the Epstein files Who abstained

1:25

from the act? Uh no, the uh person who

1:27

abstained, well played, uh was a

1:30

Republican Clay Higgins from uh

1:32

Louisiana. Thanks for asking. He said it

1:34

reveals and injures thousands of

1:36

innocent people, witnesses, people who

1:37

provided alibis, family members. He

1:39

makes a great point, but AG Pambondi, of

1:41

course, has addressed that already that

1:43

they're not going to release any open

1:44

investigations and they're going to uh

1:46

remove names if it would harm anybody.

1:49

Uh the Senate passed it by unanimous

1:50

consent,

1:52

which requires a sign off from every

1:53

senator and Trump, in a reversal, signed

1:56

the bill last night saying, "Give them

1:59

everything." We did see some emails come

2:01

out from the Epstein files last week.

2:04

Friend of the pod, Larry Summers, was a

2:05

main character in them

2:08

and he was communicating with Epstein up

2:10

until 2019 asking him

2:13

for advice uh on dating. He's since

2:17

stepped down from OpenAI and several

2:18

other public-facing roles and was just,

2:21

I think, put on leave from Harvard.

2:24

I mean,

2:25

what do you guys think's going to be the

2:27

fallout from this, I guess, is what The

2:29

release of the files? Is that the

2:31

question?

2:31

>> mean, I guess we'll put on our tin foil

2:33

hats on.

2:34

>> let's break this down. So, I think the

2:35

first question is, what is the relation

2:37

between the Epstein files and Donald

2:39

Trump? And I think the answer is it's

2:42

flimsy. And the reason is because this

2:44

is the most investigated, most litigated

2:47

human being on Earth.

2:48

And I think that if you had something

2:50

that was incredibly salacious and

2:52

accusatory of Trump, it would have been

2:55

released during the Biden administration

2:56

because it would have made a lot of

2:58

sense politically to try to damage his

3:00

candidacy. Hm. So, the fact that we

3:02

haven't seen much of anything other than

3:04

some photos means that there's nothing

3:06

there related

3:09

to Trump. So, then

3:11

release more of the files when they had

3:13

them for 4 years and it's probably

3:15

because there are a non-trivial number

3:18

of Democratic operatives that are

3:19

touched by these things.

3:20

>> Well, also, they did have I think the

3:22

reason they didn't release them was

3:23

because there was an open Ghislaine

3:25

Maxwell case as well and she was

3:27

appealing it, so they couldn't release

3:28

it.

3:28

>> there's probably two of them, but but

3:29

you know how this works. There's

3:30

innumerable number ways to leak stuff,

3:32

right?

3:33

>> Mhm. My point is now what you're

3:34

starting to see

3:36

in these documents is that it seems to

3:38

be tainting

3:40

the Democratic establishment elite more

3:43

than the Republicans. It explains why

3:46

there was so few leaks in the last 4

3:49

years. The point is, Jeffrey Epstein was

3:51

a total creep, right? That island should

3:54

be covered in cement and drowned. The

3:56

house should be burned to the ground and

3:57

replaced with something nice. And you

3:59

have to make sure that these I You're

4:01

the one that said this, it's a thousand

4:02

women?

4:03

That's what I saw a report that there

4:05

>> saying a thousand women.

4:06

>> Okay, someone said a thousand women in

4:07

in the apparently in there there's

4:09

claims that it's Oh, it was one of the

4:10

victims who said there's a thousand of

4:12

us.

4:13

Okay, I mean, you have to be incredibly

4:15

careful and thoughtful to protect their

4:18

rights and just to respect what they've

4:19

gone through, but I think now we need to

4:21

just release these files in an orderly

4:23

manner and put this episode behind us,

4:25

learn what we need to learn from it, get

4:27

better, be better.

4:29

Treat these people with respect and move

4:30

on. Yeah. I think

4:32

>> you think the release of the files is

4:33

meant to help the the victims or do you

4:36

think it's meant to identify fodder to

4:39

go after political enemies?

4:40

>> Neither of those two things. The

4:41

releasing of the files at this point is

4:43

one of these things

4:45

that is about a compact

4:47

between those that have power and those

4:50

that ask for something. This is an issue

4:52

that is animated

4:54

millions of Americans.

4:57

So, when they constantly keep asking for

5:01

these things to be put out there,

5:04

I think it's a good signal for the

5:06

government to listen to folks and

5:08

release them. Again, in a respectful

5:09

way. Similarly, there are other things

5:12

that I think fall into this.

5:14

We've heard about the JFK files, right?

5:16

The killing of Martin Luther King, the

5:18

Amelia Earhart files. And so all the UFO

5:21

files. All the UFO files.

5:23

I think what it does is it shows a

5:25

pattern of being responsive to the

5:28

voting public. And I think that that's a

5:29

good So, Higgins, who by the way was a

5:32

sheriff, he was an army staff sergeant

5:34

and he's been in Congress for I think 9

5:36

years. In addition to talking about the

5:38

victims, he said, you know, this

5:40

abandons 250 years of criminal justice

5:42

precedent procedure in America. And um

5:46

releasing broad reveal of criminal

5:47

investigative files released to a rabid

5:50

media will absolutely result in innocent

5:52

people being hurt. Do you think this is

5:54

like a singular situation with Epstein

5:55

because it's so extraordinary and

5:57

there's so many people tied up in it or

5:59

does this set a precedent where anytime

6:01

people and the media start to say, "Hey,

6:03

we want to know what's going on in the

6:04

middle of an active investigation or

6:06

former investigation" that these files

6:08

kind of get released and this becomes a

6:10

new standard where we're just going to

6:11

start to open up investigative files

6:13

like this?

6:14

Do you think it's like a singular thing?

6:15

Cuz this is his whole point.

6:17

>> like a singular thing. Like And also,

6:19

it'll bake for A lot of these issues

6:21

have to bake for a decade or two before

6:23

people want them to come out. This has

6:24

been going on for now for how many

6:26

decades?

6:26

>> Well, it's like a 20-year story.

6:28

20-year story. I feel like the

6:29

investigative piece that's missing is

6:30

how did he get away scot-free in

6:32

Florida?

6:33

>> I actually When there was he was

6:35

criminally charged, he was convicted and

6:37

plead out and he was basically let go. I

6:40

I can actually say I know a little bit

6:41

about it because I met Epstein a half

6:42

dozen times at the TED conference.

6:47

Oh, you did. Yes. So interesting.

6:49

>> about it on my Twitter incessantly

6:51

um because I'm in

6:52

>> you you are in his book.

6:54

>> I I am amongst the thousands of people

6:56

in his black book. I met him at the TED

6:57

conference. My

6:58

>> You know who you know who else Jeffrey

6:59

Epstein David and I. Okay,

7:01

congratulations. You guys weren't in New

7:03

York. Um I went to the TED conference. I

7:05

just avoided that room. Well, there was

7:08

a billionaire's dinner at the TED

7:09

conference. I didn't actually go to the

7:11

TED conference. My book agent would host

7:13

the billionaire's dinner. If you type in

7:15

billionaire's

7:15

>> used to go to the TED conference. Of

7:16

course.

7:17

>> You used to go to the TED conference. It

7:18

was like I was never invited to the

7:19

billionaire's dinner.

7:20

>> This is in the 1990s. Like this is how

7:22

old this is. He was there giving

7:25

donations to scientists. Marvin Minsky,

7:28

7:29

MIT, all that stuff.

7:31

And when he went away and he got busted

7:35

in Miami, the way it was framed in the

7:38

TED community was that he was set up and

7:41

this was just like an underage girl.

7:43

They had checked her ID and it was like

7:45

some sort of set up and that he had been

7:46

given a work-from-home

7:49

Yes, that's right.

7:50

>> sentence. He could go to work every day

7:52

and then he had to report to jail and

7:54

that it was all just like a

7:55

misunderstanding is how they framed it.

7:58

I think, looking back on it, I think

8:00

he's a spy. I think he worked for

8:02

intelligence agencies. Now, I I am not

8:04

the conspiracy theorist of this podcast,

8:07

but

8:07

>> shared intel with?

8:09

>> Okay, sure. I I it could be any in that

8:12

spectrum.

8:12

>> all know people in the intelligence

8:14

community and there's easy ways to pass

8:15

intel without it being Sure. Like

8:17

working for Then I think the question

8:19

becomes, was he an asset? Was he sharing

8:23

information? To what extent? And the

8:25

reason I think this is because why would

8:27

he have an interest in the top

8:29

scientists in the top universities to

8:32

get close to them and then who did he

8:34

want to pass that information on to? Who

8:36

would want top intelligence from

8:38

scientists? Russia, Israel, the CIA. And

8:42

then the compromat thing does seem also

8:45

likely because he had cameras everywhere

8:47

and they've talked about this. So, He

8:50

had cameras

8:51

and you're saying he recorded famous

8:53

people and then used that to get things.

8:57

I think there is a non-zero chance that

9:00

that part of the story is true.

9:02

>> The part of the story that's unanswered

9:04

>> But I don't know that it's like a 90%

9:06

chance that happened. And I think that

9:07

when we go back and we look at this,

9:09

there's a bunch of people who have

9:10

embarrassing interactions with this

9:11

person who spread money everywhere.

9:13

Everybody wanted his money. That's why

9:15

they were lining up. All of the

9:17

scientists, Joey Ito, Reid Hoffman, all

9:19

of these folks were trying to get his

9:20

money.

9:21

Which is peculiar. And he was also

9:23

giving tax advice to the Microsoft

9:25

people, to Peter Thiel. So, he was

9:27

always trying to integrate himself into

9:29

powerful people with money and

9:31

scientists. Why? Was it to make money or

9:34

was it for some other purpose? I think

9:36

it was not to make money. I think it

9:38

there was some other purpose here. Now,

9:40

I am not a conspiracy theorist, but

9:42

because this thing has gone on so long

9:44

and it has not been released, I think

9:46

there's

9:47

There's mechanisms that are keeping it

9:49

at at bay.

9:50

>> That's what That's to me like the

9:52

Occam's razor version of this. I think

9:54

there's going to be very embarrassing or

9:56

compromising things for intelligence

9:58

agencies, which is I think the same

9:59

thing behind If I could have one thing

10:01

JFK's assassination.

10:02

>> could have one question answered for me

10:04

out of the Epstein files, if I could

10:05

just have the question answered, I'd

10:06

want to know where did all his money

10:08

come from? Because it is not very clear

10:10

how a guy who was managing money for a

10:12

billionaire Wexler

10:14

Wexler. We all know like if you're a

10:16

money manager, maybe you're making half

10:17

a percent a year No, that that was

10:19

documented. How he got all the money?

10:21

Leon Black, who's the founder of Apollo

10:23

in one year

10:25

paid Epstein $168 million for tax

10:28

advice.

10:29

That came out in the lawsuit that

10:32

ultimately led to Leon Black resigning

10:35

from Apollo. Right. And But did What did

10:38

the tax advice like? That's what he said

10:40

it was. Now look I'm not trying to high

10:42

roll anybody, but I've had all the tax

10:44

advisers come and

10:46

give me their advice.

10:47

>> cost you 168 million. It cost you 1,200

10:49

an hour. No, it's cost me millions.

10:52

Okay.

10:53

But it's never

10:55

I'm I'm hard-pressed to understand what

10:58

advice could have been given to me Yeah.

11:01

that where I would have paid $168

11:03

million. Now that's just my

11:04

>> news, here's your accountant, they just

11:05

sent the bill, it's $172 million. No,

11:08

no, no, it's crazy. Right, you're right.

11:10

And and look, if you go to the best

11:12

estate lawyers in the United States

11:14

Okay. it will cost you 5 to 10 million

11:16

dollars.

11:17

>> What do you think he was getting paid

11:18

for?

11:19

I mean, it was he getting a portion of

11:21

the savings for doing tax loopholes?

11:24

Maybe he was charging on some sort of a

11:25

commission, but he had he was a money

11:27

manager for many of these like Microsoft

11:30

executives, etc. And when Peter Thiel

11:32

said, "Why did you meet with him?" He

11:32

said, "Tax advice." Which makes total

11:34

That's a total Peter Thiel like

11:36

legitimate

11:38

That totally tracks. Peter Thiel was

11:39

known for his Roth, right? And he's

11:41

known for like studying these kind of

11:43

things. Makes total sense to me.

11:45

I think that we're going to have a bunch

11:47

of Larry Summers like embarrassing

11:48

things. There could be embarrassing

11:50

things there for Democrats, Republicans,

11:52

everybody in between, the scientists

11:54

obviously who went to the island and all

11:55

that stuff. It's going to be all

11:56

embarrassing. And I think we're going to

11:58

get to the end of the day, we're going

11:59

to find out that some intelligence

12:02

agency was somehow involved in this and

12:04

that's why it's being covered up and

12:05

that's why it's so toxic.

12:06

>> That's your prediction. That's That's my

12:08

prediction. Yes. Nostra Kenneth has

12:10

spoken. Which intelligence agency will

12:11

you pick? Yeah. Oh good, sir.

12:14

Look into your crystal ball.

12:16

>> I mean,

12:17

CIA I mean, it would be one of the big

12:20

three.

12:22

The CIA, which he was talking to I think

12:24

in this latest volume of emails, he was

12:25

talking to people from Israel, from the

12:27

CIA, and he was talking to Russians. He

12:30

was talking to all three in the emails

12:32

that have been leaked. So you could

12:34

>> talking to Russian intelligence? He was

12:36

talking to Russians. Oh my god. Um So,

12:38

yes. Russians I think is just generally

12:41

he was very involved with Russians.

12:43

>> Could you imagine how much anxiety we we

12:44

would have if that was our job? Could

12:46

you imagine? I can't even imagine. I

12:48

just want to go to my office, build some

12:51

stuff, make a few investments,

12:53

play with my kids.

12:54

>> people. You know? Like mess around. It

12:56

just seems like what what? Oh my god.

12:59

>> I just

12:59

>> when they make the movie, are you going

13:01

to play yourself or I mean, if you look

13:03

online, if you go to the edge.org site

13:05

and you look at those billionaire

13:07

dinners, you'll see me

13:08

in a couple of pictures with Larry,

13:11

Sergey, Zuck, Ev Williams when we were

13:14

all 29, 30 years old.

13:16

>> Jesse Eisenberg to play you? I know his

13:18

hair is curly and yours is straight.

13:20

>> more like Leo probably now or people

13:24

might say Ethan Hawke. I get a lot of

13:26

those, but I digress.

13:28

>> play a Ghislaine?

13:29

Quick I mean Who plays Which young

13:31

Ghislaine?

13:32

>> Reid Hoffman?

13:33

Reid Hoffman, who would play Reid

13:35

Hoffman, huh?

13:37

Yeah, I I just don't see a world in

13:39

which Reid was involved in shenanigans.

13:40

I'll be totally honest. I think he was

13:42

just trying to raise money. I think it's

13:43

like unfair that everybody is like um

13:47

who met him is being dragged into like,

13:50

"Oh, they were somehow a ped- a

13:52

pedophile." Like that's just crazy. Um I

13:54

think they were all trying to get

13:56

>> guy was a consummate networker,

13:58

obviously doing a bunch of stuff. He

14:00

funded all of those dinners. He was

14:03

funding all of these dinners. He was

14:04

hosting dinners in New York. In New

14:06

York, he was known for having these

14:08

dinner parties with

14:10

you know all kinds of famous people. You

14:12

can look online. He was constantly

14:14

>> business pretty much. His business was

14:16

to meet with people and he was To throw

14:18

dinners? To throw dinners, Chamath.

14:20

>> That seems calorically taxing. You know

14:22

what I mean? Like dinner parties, like

14:24

you overeat at a dinner party. Imagine

14:26

having like three of those a week. I

14:27

don't I don't know.

14:28

>> Jason, do you know anybody who's having

14:30

three dinner parties a week? It's a lot.

14:32

>> All right, um Jason and I went to

14:33

Carbone last night. Well, we'll talk

14:35

about it when Keating gets here.

14:36

That got a little heated. I mean,

14:38

speaking of

14:39

I'll talk about it when he gets here.

14:40

Somebody got out of line.

14:42

All right, thanks again to our friends

14:43

at the Venetian. Um

14:45

I had dinner last night with Paolo

14:47

Ardoino, CEO founder of Tether. Can't

14:49

wait to meet him. Amazing amazing guy.

14:53

That is an incredible business. But

14:55

don't they have $150 billion in

14:57

treasuries now? It is It is an

14:58

incredible Here's why that business is

15:00

incredible. This is what I learned.

15:02

>> about Tether, the stable coin.

15:03

>> Tether the stable coin. Yes. There are

15:06

500

15:07

million people

15:09

using US dollar back stable coins from

15:12

Tether all around the world. All over

15:14

Africa, all over Central America, all

15:16

over Asia. Number one. Number two

15:18

his user base is growing by 30 million

15:21

users a quarter.

15:24

It's the financial inclusion that then

15:26

ties back to US dollar hegemony is

15:30

unbelievable. So if you think about

15:32

Circle

15:32

>> Explain it to me like I'm an idiot who's

15:34

never bought a stable

15:35

>> Yeah. So it's like Here's like every

15:37

week, which is the one I have. Here's

15:38

like every other week.

15:40

So let's look at these businesses as

15:41

roughly the same. There's Circle,

15:43

there's Tether, there's World Liberty

15:45

Financial. They all have a stable coin.

15:48

What is it? Okay, so let's just say that

15:49

Jason

15:50

is a cash worker

15:53

in India. Let's just use that as an

15:55

example.

15:55

>> Sure. He gets paid 100 rupees.

15:58

And he's like, "You know, the rupee is

16:00

constantly getting devalued. I have I'm

16:02

constantly losing purchasing power. I

16:05

want to swap that into a US dollar."

16:07

So he would create a crypto wallet.

16:11

And what Tether will say is, "Great.

16:12

Give me your INR, your 100 euros uh

16:15

sorry, your 100 rupees."

16:17

They immediately swap it to a US dollar.

16:19

So now there's a US dollar and there's a

16:21

token for that dollar.

16:23

>> Right. I give Jason the token for that

16:25

dollar.

16:26

Now I have this dollar. What do I do

16:28

with it? If when I accumulate enough of

16:30

these dollars 50 billion, 100 billion I

16:34

can take that and I would invest it in

16:36

treasuries so that it's completely safe.

16:38

US treasuries.

16:39

>> US treasuries.

16:41

Now if Jason decides to send it to you

16:43

and then you redeem, I can sell a little

16:44

bit, $1 of those treasuries that I own

16:47

and undo the chain. And does Tether earn

16:49

all the interest on the treasuries? So

16:51

I'm getting to this. So So now

16:53

Tether and Circle and World Liberty,

16:55

they earn interest on that. And so now

16:58

when the number gets big enough, this

16:59

number gets ginormous. Then what they do

17:01

in Tether's case is they then reinvest

17:04

this capital into all kinds of

17:05

distributed assets. Bitcoin, gold, real

17:09

estate. But what they also do is they

17:11

now invest in things like financial

17:12

inclusion in Africa. So they He walked

17:14

me through kind of a bunch of things

17:16

that he's doing yesterday. It is

17:19

an incredible business.

17:20

>> And so as a holder of the stable coin in

17:22

my wallet, I'm not earning any of that

17:23

treasury yield. I just have a flat

17:26

dollar denominated or dollar protected

17:28

stable

17:28

>> a pegged to the dollar. You have a

17:30

dollar pegged stable coin. Right. And

17:32

that is sufficient risk management and

17:35

risk mitigation for half a billion

17:37

people

17:38

>> Right, they're not they're not trying to

17:39

get a 4% or 3% interest yield.

17:41

>> No, so now In fact, you're bringing up

17:43

the big point which is

17:44

In fact you're bringing up the big

17:45

point, which is in the United States,

17:47

what is what is the big fight now?

17:49

The big fight in the United States in

17:51

this thing called the Clarity Bill that

17:52

is meandering through the House and the

17:54

Senate

17:55

17:56

what should happen in the market

17:58

structure. So meaning

18:00

if you, David Friedberg is the one that

18:02

gave me the dollar and I am let's for

18:04

say for example say Coinbase and I issue

18:06

you a stable coin

18:08

do I share that revenue with you? Do you

18:11

earn all of it? Obviously the banks

18:14

like the JP Morgans of the world, the

18:15

City Banks

18:17

they don't want that, right? Because

18:18

that's their net interest margin. That's

18:20

what that's what happens today. You

18:22

deposit money in the bank

18:23

>> said this on the program. They The bank

18:25

goes off to the best in the stable coin

18:27

legislation, they weren't able to give

18:30

the stable coin providers the ability to

18:32

pay interest to consumers. They did that

18:33

concession, but that will change over

18:35

time. But the banks were able to fight

18:37

for that concession.

18:38

>> were able to fight for it. But then you

18:39

have the the emergent crypto companies

18:41

who say, "Hey, this is like let's find a

18:43

way where we can do a a sharing

18:45

mechanism." How they hack around it is

18:47

they do kind of sharing, but this via

18:49

this

18:50

kludgy way called rewards. Yes. So like

18:53

you earn rewards and you earn reward

18:55

points, but it's not really what it

18:56

should be. It should be that if you earn

18:58

that interest margin, you should be able

19:00

to share that. And and by the way, you

19:01

should be able to have different rules

19:03

in different markets because again, if

19:04

you're in Kenya, the last thing you're

19:06

probably thinking is do I get the 4%?

19:08

What you're more worried about is the

19:10

Kenyan currency, whatever it's called,

19:12

is about to depreciate another 60% this

19:14

year.

19:14

>> Right. Right. Let me just hedge that.

19:16

That's more than enough value. Anyways,

19:18

I thought Paolo was incredibly

19:20

impressive. Well, I will say this.

19:21

>> business is really impressive. I have

19:23

been super critical of Tether publicly

19:26

uh and they had a lot of challenges as a

19:29

business. They were banned in many

19:30

markets. They didn't do any audits.

19:32

People didn't know what was in there.

19:34

They've done an incredible job cleaning

19:36

all that up. Now they are starting to do

19:39

going from attestations to audits and

19:42

they desperately want to be legal in

19:44

America. In that legislation, they have

19:46

3 years to do it and they have to then

19:49

unwind being banned in New York, banned

19:50

in Canada, all these places they got

19:52

banned.

19:52

>> offer for you. Okay. I just want to say

19:54

what

19:56

I just want to give credit to David

19:57

Sachs. What we saw under Biden, and what

19:59

we saw with the anti-crypto

20:02

approach that they took, and and Trump

20:05

in his first presidency was anti-crypto

20:06

as well. That decade of anti-crypto led

20:09

to a lot of people doing offshore stuff

20:11

like Tether, a lot of shenanigans. And

20:14

actually Sachs, who can't make it this

20:16

weekend, he has now created a framework

20:19

which is helping people do it the right

20:21

way and taking out all of these

20:23

questions.

20:24

>> Yeah. And and Tether is example one.

20:26

They were involved in human Tethers have

20:29

been the default for all kinds of

20:31

>> know that for sure? The This has been in

20:35

our commercial hearings. They have

20:37

documented very clearly. Let's Let's not

20:39

make the accusation if we don't know.

20:41

What What I saw yesterday was a very

20:43

very very credible and thoughtful

20:46

entrepreneur and a great business. The

20:48

other thing, sorry, that I'll say is I

20:50

would like to invite you

20:52

to come with me

20:53

to the Tether conference at the end of

20:55

January.

20:56

>> Okay. We are going to go. He's never

20:57

turned down an invitation. Well, here's

20:59

what we're going to do. Here's what

21:00

we're going to do. We're going to fly

21:01

together to El Salvador.

21:03

We're going to do

21:04

>> We're going to do a tour of the prisons?

21:05

No, no, we're we're going to we're going

21:07

to do a we're going to do an interview

21:08

with Bukele. Okay. And then we're going

21:10

to do an interview with Paolo, and then

21:12

we'll fly home. Can I Will you come with

21:14

me?

21:15

Uh if I can ask him any question I want

21:17

and

21:18

>> You have to go check out the prison. No,

21:20

I've been told I've been told you you

21:22

cannot go to Urcot the first trip.

21:25

I don't want to go anywhere near that

21:26

prison, but if I can ask him any

21:28

question and he'll be fine with it.

21:30

>> He's great, dude. Yeah, I'm happy I'm

21:31

happy to go. Yeah, of course. In any

21:33

other world, he would have been in

21:33

Silicon Valley doing the same thing,

21:35

building a trillion-dollar The The other

21:37

challenge they're going to have is when

21:39

interest rates go down, these businesses

21:41

are going to have to figure that out as

21:42

well. But $183 billion in circulating

21:45

USDT, that's a ticker symbol right now.

21:49

135 billion of that's in Treasuries, and

21:52

then another like 10 billion in Bitcoin

21:54

and gold. And land. And well, and that

21:58

means they're throwing off whatever 5%.

22:00

They were making 7 8 billion dollars a

22:02

year just on the holdings.

22:05

Tell you what the details are, but I've

22:07

never seen a business in

22:07

>> No, they said it's a 500 The word on the

22:09

street is a 500 billion-dollar market

22:11

cap, which would be roughly 50 times

22:13

their

22:15

price-to-sales ratio.

22:16

They're making 10 billion. What's more,

22:18

it's

22:19

What do you What do you think their

22:21

profit margins are? Forget the growth

22:23

quantum. So, you only need 100 people to

22:25

run the business. Yeah, if the interest

22:27

is the revenue, it's probably 60 70%

22:30

margin business. Upwards of more than

22:32

95%. It makes total sense because you I

22:35

mean, how many people do you need?

22:36

>> thought last night at dinner? Here we

22:38

are grinding We try to get to 30 40 50%.

22:41

It's so many of our businesses.

22:43

And I And he's like, "Yeah, yeah." It's

22:45

incredible. It's incredible. The the

22:47

>> Good for him. Congratulations.

22:48

>> Congratulations. The good thing about

22:49

that is There's There's a There's a

22:51

financial theory though that high-margin

22:53

businesses like that invite competition

22:55

more.

22:55

>> Well, that's literally where I was

22:56

going. This is where competition gets

22:57

ground down.

22:58

>> Stripe bought the like a stablecoin

23:01

provider. It's pretty well known.

23:03

Stripe, Visa, everybody's going to have

23:05

their own stablecoin. So, Tether will

23:07

not have the market all to themselves,

23:09

and obviously Jeremy Allaire in Circle

23:11

is a very viable

23:12

>> Unfortunately, margin like that's only

23:13

got one direction to go, so. Correct.

23:15

And if the

23:16

>> All right, let's talk about Nvidia.

23:17

Yeah, and if the margin if the interest

23:19

rates go down, which is We'll talk about

23:20

that as well.

23:21

That's going to be headwinds for that

23:23

whole space. All right,

23:25

we've been talking a bit about the about

23:27

Brad Gerstner personally deciding to

23:29

blow up the AI bubble and then

23:31

destroying the stock market. I'm joking.

23:33

Shout out to Brad Gerstner. My gosh, the

23:36

short Bitcoin thing has been a bonanza.

23:38

Crazy. And then

23:40

Is it below 90? It is, right? It's like

23:42

87. I I know it hit 88 or something, but

23:44

I mean Watch out below.

23:47

Let's see the price. Watch out below.

23:48

Okay, let's talk about Nvidia. So,

23:51

Nvidia had a blowout

23:53

quarter. Revenue up

23:55

62%

23:57

year over year, 22% quarter over

23:59

quarter, net income 31.9 billion, that's

24:02

up 65% year over year.

24:05

Expect 65 billion this quarter.

24:07

Jensen, friend of the pod, has said that

24:10

they can't keep

24:12

their product on the shelves. It's sold

24:15

out everywhere. And then at the same

24:17

time,

24:18

Michael Burry, who has got the short on

24:20

it, he's been mixing it up. He is

24:22

posting in response, I think, to you,

24:25

Freeberg, last week making it in defense

24:26

24:28

the the reasonable life of an H100, of

24:30

these new chipsets,

24:33

you know, that Nvidia sells. Is it 4

24:35

years, 5 years, 6 years, 7 years? When

24:37

do they get replaced? When do they have

24:38

a useful life and GAAP accounting? He

24:41

believes, just to make it easy for the

24:43

audience to understand, that

24:46

major tech companies, big tech, are

24:48

cooking the books in order to spike

24:49

their earnings, that this is a house of

24:51

cards, and that he's going to short

24:54

Palantir because it's a 100-to-1 sales

24:56

price-to-sales ratio, but he's going to

24:58

also,

24:59

you know, short Nvidia, etc. because of

25:01

the depreciation. What are your

25:02

thoughts? I know you've seen his

25:05

comments, Freeberg. I downloaded the

25:07

GAAP depreciation rules. I was going to

25:09

play accounting corner jingle, which a

25:11

fan, by the way, sent me over the week.

25:13

Oh, great. But I can't I got the

25:15

internet working and oh, here it is.

25:16

>> We'll put it in post. I want to hear it

25:17

then.

25:30

Very nicely done, by the Thank you.

25:31

Thank you for joining me here at

25:33

accounting corner, and thank you to

25:36

Roxana Martinez for that incredible

25:37

jingle.

25:38

I think we should adopt it. Love it.

25:40

Love it.

25:41

>> Send in your jingles, folks.

25:42

Jason@eallin.com.

25:43

>> rules, accounting standards 360.

25:46

Here we go. Depreciation must reflect

25:48

the assets' estimated useful life, not

25:51

market innovation.

25:54

The specific language

25:57

Can you call us at 11:30 tonight and put

25:59

us to bed?

26:00

OKAY. THIS IS EVEN YOU FOUND YOU FOUND A

26:03

CORNER even more boring than science

26:05

corner.

26:05

>> People love accounting corner.

26:07

>> No, no, explain it cuz Okay, yes, it is

26:08

actually important. Under the GAAP

26:10

standards, the generally accepted

26:12

accounting principle standards. So, you

26:14

set a useful life, and you reset that

26:17

useful life as you do a reassessment on

26:19

when you're actually using that asset,

26:21

not necessarily if there's a better

26:23

asset that makes more value. So, let's

26:25

just explain this again. You make a big

26:27

investment in

26:28

property, plant, equipment.

26:30

PP&E.

26:32

And that investment you write down over

26:35

a period of time that you as an

26:37

accountant estimate to be the useful

26:38

life of that asset. So, if you're going

26:40

to use a building for 20 years, every

26:42

year you write down the cost of that

26:43

building by 1/20. You don't get to write

26:46

it all down in the first year.

26:47

In fact,

26:49

what Burry is arguing is that if you

26:51

wrote it all down in the first year,

26:52

your profit would go down and your

26:53

business would look worse.

26:55

So, when you make an investment that you

26:57

can use over a period of time, unlike

26:58

salary. When you pay someone a salary,

27:00

you're paying them for the hours they're

27:01

working that quarter, that year. And so,

27:04

that money is an expense. It gets

27:05

recognized as paid out that that period.

27:08

But when you make an investment in a

27:09

building or a piece of equipment that

27:11

you're going to use over time, you

27:12

depreciate it. Just to go through that

27:14

principle again. And so, there's

27:15

standards in GAAP on how do you

27:18

recognize the depreciation schedule?

27:20

What's the useful life? And the useful

27:22

life is when you're actually realizing

27:24

return value from that asset. Burry's

27:27

point is incorrect. On Twitter, he said,

27:30

"The idea of a useful life for

27:31

depreciation being longer because chips

27:34

from more than 3 to 4 years ago are

27:36

fully booked confuses physical

27:38

utilization with value creation. That is

27:40

incorrect. There is value creation

27:43

because they are generating revenue from

27:45

those chips this year, 6 years later.

27:48

So, there is in fact a useful life for

27:50

that chip that has extended into year

27:52

six. Now, let me ask you And so, it

27:53

doesn't matter, and this is a part of

27:54

the GAAP point that I wanted to bring

27:56

up.

27:56

So, what he's arguing is you should

27:58

depreciate it over, say, 3 years, which

27:59

means you're doubling the cost every

28:01

year, and then it's all written off in 3

28:03

years. But if you did that, to give you

28:05

a point of example, in Google's case,

28:07

their total net profit would come down

28:10

by roughly 10 to 12%. So, it's not like

28:12

they're cooking the books and

28:14

recognizing some massive delta in their

28:17

profit by doing this. The difference

28:18

between 3 and 6 years is roughly 12% of

28:21

their profit. And they're still using

28:23

these chips. And what GAAP says is that

28:26

only if the new asset, meaning the new

28:28

chips, replaces the old one,

28:30

then the old assets' remaining useful

28:32

life has to be marked down, and you take

28:33

accelerated depreciation that year. So,

28:35

Or if the maintenance costs spike, which

28:37

means you have to spend money to fix the

28:39

asset, which is not the case with chips.

28:40

The third is if the throughput

28:42

requirements exceed the old equipment

28:44

capabilities, forcing early retirement.

28:47

They're not retiring. They're still

28:48

making revenue off the old chips. Or if

28:50

technological obsolescence means that

28:52

you're putting it up for sale, then you

28:54

can meaning you stop using it after a

28:55

period of time. Yeah, and if you put it

28:56

up for sale, you would actually know the

28:57

market value of it. You could take that

28:59

from the depreciation.

29:00

>> textbook GAAP, which is that if you're

29:03

still using the asset after 6 years, you

29:05

can depreciate it over 6 years or

29:07

whatever. I conversation lacks technical

29:09

literacy.

29:10

So, let's assume you are Google,

29:13

and let's just say that the equivalent

29:15

of an output token was the equivalent of

29:17

a link. Right. The first thing you would

29:20

tell me is H not Not all links are made

29:22

equal.

29:23

Right? So, for example, if you generate

29:25

a link for a pharmaceutical drug, Google

29:28

charges a price per click that's way

29:30

different than the link that they

29:32

generate that goes to Amazon to buy

29:35

toothpaste. Right?

29:37

Now, for Amazon, it actually costs the

29:39

same amount of money to generate that

29:40

link. For Google, sorry. Right? I think

29:43

the thing that he needs to understand is

29:45

he's equating this to energy, but the

29:47

reality is that in AI models, the thing

29:49

that we care about is what is that

29:51

output token? What is the revenue that's

29:53

being generated?

29:54

>> That's right. What is the revenue that's

29:55

being generated by the output token? And

29:57

ultimately, what he doesn't appreciate

29:59

is that obviously Google and Facebook

30:01

and Microsoft and OpenAI

30:04

and X are not going to be in the

30:05

business of generating negative revenue

30:09

output tokens just for the sake of it.

30:11

How do you know that? My wife got to the

30:13

end of the internet this week.

30:15

She launched X, put it on voice mode.

30:18

She was stuck in traffic going from our

30:20

house all the way to San Mateo and back.

30:21

That's like 10 minutes. And she No, no,

30:23

it's 25 minutes up, 25 minutes back. And

30:26

she said, "Hey, you know what? I ran out

30:28

of tokens." Like it said, you can't use

30:30

it anymore in the store.

30:31

>> you mean? On Grok. Yeah, yeah.

30:33

Why do they do that? It's because they

30:35

are very conscious of there's a certain

30:37

energy output, there's a certain revenue

30:38

potential, and then beyond this, they

30:40

start to gate it.

30:41

>> Yeah, yeah. You do it on OpenAI, you do

30:42

it on all these things. So, they are

30:44

already keenly aware of the value of

30:45

these output tokens. They know the

30:47

revenue it's generating. Sorry, just one

30:48

thing.

30:48

>> Yeah. And then the second thing is in

30:50

the bowels of these organizations,

30:53

everybody has completely rebuilt all of

30:57

the decoder infrastructure. What does

30:58

that mean?

30:59

Before something gets to you, the user,

31:02

there's all kinds of different

31:03

manipulations that people are doing in

31:05

the models, after the models, before the

31:07

models.

31:08

And all of that stuff has been rebuilt.

31:11

So, I think what he needs to understand

31:13

and look, in fairness to him, what I

31:14

would say what GAAP needs to appreciate

31:16

is when when those laws were written,

31:18

it's for a factory.

31:19

It's for a turbine. And it's a static

31:22

thing. It probably doesn't do a very

31:25

good job of understanding the world of

31:27

chips.

31:29

But could he take a little bit of effort

31:31

to call somebody and actually learn how

31:33

this works? Yes. Is he doing it? No. So,

31:36

Yeah, I I I I I I I I I I I I I I I I I

31:37