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So if you head over to gum road and you
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I really appreciate all the support everyone's giving me, and
I hope to expand the show even more than it
already has. Thank you so much.
Speaker 2: I can't bet you believe it that starlink has a
zero internet problems and land Basin is the one that's
actually causing the issues.
Speaker 1: Let's see, I'm on starlink right now. There is a
storm moving in same and let me check my speed
right now because I already have cloud cover. We haven't
had any sun all day today.
Speaker 2: I've I've had like maybe two or three hours spaced
out in like you know, fifteen twenty minutes like increments
of like intense sun and then just you know, no
rain and now we have no raining crazy like that
really awesome lightning that goes through the clouds but never
comes down. Yeah. So it's it's it's it's interesting the
the summers have been very different than they normally are
the past. You know, three or four years, we've get
like progressively weirder. But like you live in the South Oolver, right,
oh yeah, all throughout the summer, every single day in
the afternoon it rains, you know, monsoon intense for a
period of about you know, twenty thirty minutes and that's
it's done.
Speaker 1: Yep.
Speaker 2: We haven't had rain all summer.
Speaker 1: Really, yeah, like.
Speaker 2: Maybe I'm thinking like maybe eight days in three months.
And when it does come, like you know, you've probably
heard some of the stories out of like Fort Lauderdale,
like the massive flooding and stuff, it just it monsoons
for like two days. So I don't know whether the
jet stream has shifted or what, but it's very unusual.
Speaker 1: When I used to live in when I used to
live in Hollywood, and I lived about half mile off
the beach, and there was like a week every year
in July where it would just rain all week. I
mean it would and it would just pour for seven
days in a row. And yeah, that's what I got
used to.
Speaker 2: So we have that exists. It's just we don't have
a mid day rain anymore. It's fucking weird.
Speaker 1: Yeah, my I mean, my starlink isn't as fast as
it normally is, but it's way it's it's five times
as fast as I need for live streaming, so you know,
and I need more powerful live streaming than just recording
like this, I should find.
Speaker 2: That's that amazes me a lot more than like most people,
because most people like never thought of satellite internet in
that way until Startling came around. But like being being
in tech, like I've watched three or four of these
just absolute failures, and the fact that Elon Musk was
able to knock it out at first shot into a
usable product, right like for first off, like anything in
hardware is a nightmare, right, This is this is actually
why you know how Peter THEO is always talking about why
we don't like, hey, we were promised flying cars and shit,
why don't we have them instead? We have, you know,
just software, Yeah, tons and tons of software, and people
try and argue with me about like, oh, no, tech
has been advancing like crazy, Like how can you say
that I get a lot of heat for it, especially
doing what I do right, Because what I'm basically saying
is my industry is bullshit. And what it will eventually
come down to is, I'll say, okay, well, let's say
if we got rid of your you know, your flat
screens at home and your laptop and maybe like the
little whatever touch screen thing in your car and your cellphone,
what exists in your life to convince you that you're
not in nineteen seventy And the answer is nothing.
Speaker 1: Well, I mean technologically, yeah, the culture, the culture that
would be the.
Speaker 2: Yes, yeah, okay yeah, but like in your house, Like,
how do you if I got rid of all your screens? Like,
are you in the seventies the sixties?
Speaker 1: Yeah?
Speaker 2: Everything exists online and it's because a risk.
Speaker 1: I fought against getting a smart TV for like the longest, longest,
longest time, and I probably might not even have one now,
but it came with the house. And it's just like
like my my monitor is a forty inch smart TV,
but I mean I have everything disconnected from it. I don't.
It's not connected to the to the internet and everything
so the other so it's all it is is just
a monitor.
Speaker 2: I actually used I have a forty two inch monitor.
Like I think anybody that would think the multiple screen
setup is just causing that set themselves unnecessary stream.
Speaker 1: But the only good thing for the multi screen monitor
is like for live streaming, if you're live streaming to
different platforms, to be able to have each platform open
so that you can like read comments in real time.
Because what I do is, you know, I have to
open them, I have to switch tabs and things like that.
But you know, when you're if you have multiple that's
the only reason I could think about it thinking.
Speaker 2: That is I mean there is what that or maybe trading.
Speaker 1: Yeah, oh yeah, yeah definitely.
Speaker 2: But the reason why I wonder to like why Starlink
made me think about that is because the reason why
we have so much just innovation in software is because
we watched the Defense Department take a big old step
backwards and private capital was supposed to kind of fill
in the gap, right VC exploded at the same time,
as like you said, Star Wars was winding down, and
Star Wars brought us things like the internet. Star Wars
brought us well, the satellite Internet as well, all the
cool hardware stuff that we have, and all VC got
us was software. Right, So like, if you know, the
Internet went away, a majority of our technology wouldn't really
exist because it would exist only on our machine, and
maybe I guess it would exist on multiple machines if
we all got together and had a land party. But
from an investment standpoint, right, software is much much easier
to invest in because all right, let's say like you
get halfway, you're two years into the project, a year
in the project, and you find out like, fuck, we
did this wrong. We have to go back to like
we have to go back a year and re engineer.
I got to go back to where we were a
year ago and then re engineer from there into this
new direction because of this problem that we found with software,
that's not going to cost me any additional money that
I was going to already lay out. Just you know
that money is being spent backtracking a little bit, encoding
in a different you know, a different tree then you
know I was on already. But with hardware, like let's
say the company has got like forty million sunk into
it and you have to change the product. Right, something
doesn't work, there is a very good chance that you
are going to burn another forty million to fix it, right,
because there is no quick fix there. Because like a
coder is going to be sitting there in front of
his computer scream coding, whether if he's coding this other
thing that he was supposed to be building that you
have to change directions on, or whether he's coding you know,
the new thing. It's the same guy earning the same
salary in front of the same computer. Right. But with hardware,
we're talking about like suppliers need to retool, engineering shops
need to prototype you know what the new you know,
modification is like it can cost, it can burn basically,
you know, all of the money that you have up
to that point is just wasting. And there's a very
high likelihood of that. So from a VC standpoint, like
all right, I have a hardware play and I have
a software play. Both of them could have huge returns.
They could be you know, I could have two Unicorns,
I could have a star Link and I could have
a Google. I am going to choose the Google every
single time because of that risk.
Speaker 3: So Stormy, this is something, this is a great way
to get into this. So I've been thinking of it
in terms of the resource curse or Dutch disease. I
was very interested to discover that jd Vance has been
looking at this as well. That basically dollar in my
industry have.
Speaker 2: Oh sorry, go ahead, I said, a lot of guys
in my industry.
Speaker 3: Have okay, yeah, because because that seems to be the issue.
And this is very similar to So the problem I've
raised is especially publicly traded securities, is basically that asset
bubbles out out capex, which is what you're describing, because
everybody just wants that quick shot in the arm of
getting their you know, stock line go up. They're not
willing to take the long term you know, uh, low
time preference, slow growth to do real r and get
real growth. And basically we've run out of quick things,
which is also mark the things when in dow of capital.
Speaker 2: You can see this in pharmaceuticals more than anywhere else.
Speaker 3: Yeah, blockbuster drugs ended in like the eighties.
Speaker 2: Yep, exactly, all the easy, all the low hanging fruit
is already picked. I was explaining this to Dark enlightenment.
The other day, one of the smarts guys I think
I've talked to in a very long time, and we
were talking about like he was like I had like
kind of like a roadmap, or not like a roadmap,
but like some bullet points that if Trump were to
be able to do, we could dodge a lot of
what's coming our way. Because I one hundred percent agree
with you as far as liquidity crisis, except for I
see them compartmentalized. I mean, we can hammer that out, right.
So from a regulatory standpoint, everyone thinks like, oh, you know,
just changing corporate tax law is just you know, like
basically that is only going to lead to like GDP increase,
because if we lower their taxes by ten percent, that
just means they're going to make ten percent more money
and then the stock's going to go up ten percent
or whatever. It is generally linear thinking, right, not orthogonal.
And the answer to that is actually worthogonal. It goes
completely perpendicular. Right. The reason why big corporations publicly traded
ones is a big difference. I'm sure as you know, Sean,
the reason they do what they do is largely because
of tax policy, right, tax policy or environmental regulation. Right.
And so let's say I have like what the US
has rather perscutory corporate text structures. Right for me, if
I end the year with any money, that's money you
get to tax. Right. So if I spend that money
in R and D, that takes a while, right, So,
like you know, a roadmap style approach, like we're going
to hit several milestones of capital outlaying right, and a
good chunk of that R and D money is going
to be spent next fiscal year. Fuck that means I
get text on that money, and then I'll have less
money to spend on R and D. But I can
if I don't spend money in R and D like
Maderna is not doing now in paying the stock price. Honestly,
that company should go to zero. It has been a
very painful short for me. The last two years have sucked,
But that company's eventually going to go to zero. But
they reduce their R and D budget and the stock
got hammered immediately. And the reason for that is you
can relatively assume like, fuck, well, if you're spending money
in your company, you know, and trying to invent new shit,
then I can pretty much assume that your numbers now
are going to be your numbers in the future. And
if your numbers suck now, well then you know it's
going to suck in the future, but just suck more. Right,
So I'm gonna get the fuck out of that stock
and go buy somebody that is that. So what they
do instead is they do stock buybacks.
Speaker 3: I'm just about to say, yeah.
Speaker 2: Stock buybacks are a short term bribe to for investors,
like please don't leave, please, please, please don't leave. I
know we can't come up with new shit, but that's
because we really can't end the fiscal year with any
money on our balance sheet or the irs comes and
fox us in the ass. So we're kind of you're
kind of you're putting CEOs. You're forcing CEOs to do
very short term thinking. And I think CEOs get a
lot of shit because they're systems thinkers. You don't get
to be a CEO, all right. Your brain isn't built
for it unless you are one. And these are the
type of guys that generally have the dynamism to where
they would like to build shit if you would let them.
And because the regulatory regime, you're forcing these guys to
think one quarter at a.
Speaker 3: Time, So you don't think it's the principal agent problem.
I've been looking at it more that you know, or
kind of like selectorate theory that they have to defend
a position from the board.
Speaker 2: Out of binary. It's a spectrum. Okay, there's guys like
let's say Jamie Diamond, Right, Jamie Diamond is the CEO
and chairman because he owns that many shares. Right, he
worked BEP, literally took all the dollars that he's ever
made a Wall Street and something coming to J P.
Morton j Stock that company is as much a part
of his. See, Sean, you probably have run into this
a little bit. I don't know, like if you're dealing
with like family offices or whatever. But rich people don't
talk about money.
Speaker 3: Yeah, the whole deep dive on Thoristein Veblin and kind
of the issue with the leisure class. And this is
also I think why they're because they're more focused on
status than money, it often means that they're not they're
not focused on creating resources. There's kind of this pervasive
myth that we're in like a post scarcity society and
so and because reputation or fame is a zero sum game,
whereas wealth as a growth of the pie game. You know,
once they've hit that that satiation level of money or resources, Uh,
now they want to get cutthroat in the zero sum
game of reputation and social status.
Speaker 2: Well like so like there you have all Like Jamie
Diamond already has all the social status in the world,
he's got the money in the world. But his identity
and this Elon Musk is very similar. And I want
to draw a distinction between CEOs that are board employees
and CEOs that are CEOs because they are also the chairman.
You see a very distinct difference in how these type
of men act. Right, So like an Elon Musk, he's
CEO of Tesla because he owns that many shares, right,
his skin is very much in the game, right, and
his identity, right Elon if Tesla goes to shit, Right,
if Tesla goes to zero, that means Elon Musk has
gone to zero. Right.
Speaker 3: But I mean he's founder and co founder, right, so
he has that that identity of you know, this is
his baby, as opposed to as a manager, where it's
a temporary gig. You know, like a nomenclatro where I'm
going to abuse the office that I have because i
know I'm only going to be here for ten years
and then I'm out and getting my golden parachute. So
they don't really care about the long term of that business.
It's just you know, a vehicle for them.
Speaker 2: So you could you could summarize this between internal and
external CEO promotion, right, So like if you've worked your
ass off to get like your whole life and now
you're in the C suite or like just next to
the C suite, if I promote you to CEO, then
you have a tremendous muskin in the game because not
everybody's going to be able to do what Jamie Diamond
or Elon must did. Elon Musk bought Tesla and it
was very young. It was like a Series D right,
So that means it had you know, five funding grounds
plus you know, including the seed, and was just starting
to get a product out of the door. Right. I
think they maybe shipped you know, fifty sixty cars at
the time they want it, and he transformed it. But
the reason he probably did so was because that was
really all his money at the time that he bought it.
He didn't have any other choice but to make that work.
And if CEOs were promoted internally right from guys that
worked their way up to it, I think it would
solve some of that. Because the parachute CEO is the
CEO you're describing, right, This is a professional CEO that
as a fagot yep.
Speaker 3: Yeah, well, I mean that's the whole managerial revolution thing
is that you know, they take over institutions, but just temporarily.
Speaker 2: Yeah, one hundred percent, they're they're they're very short term players.
But if you think about like who are the real
who are the CEOs? You think of? Like, so, who
were like? Because back in the before the CEO is
a modern term, a relic of the manager of revolution.
I guess you said before that they were tycoons, right,
all right? You know Elon Musk has probably got about
as much money as you know, Andrew Carnegie, and there's
some other guys like Soros that he's got a fuck
ton of money, but they act completely differently, all right.
So I find that these owner CEOs are the great
man types, are the tycoon types, and the professional CEOs
like I I personally I do not believe that somebody
should be allowed to be a CEO unless they own
enough stock. Right, if you own enough stock where you're
famer of the board, right, you get to be CEO.
You don't get to pick somebody else that you can
hire and fire, because then you're just going to be disinterested.
You're only going to show up when there's a fucking problem.
But anyways, we're getting tudtracted too well.
Speaker 3: So I think this is why you know, uh, Elon
took Twitter or now x private through a leverage buyout.
I mean, I think that's the life raptor or the
you know, the escape for a lot of these publicly
traded companies is before they go a liquid it's going
to take that kind of you know, that kind of
mentality or that kind of person to have that like
private stake in the game where it's you know, it's
equivalent to their identity.
Speaker 2: As you're saying, basically, yeah, and well, I see we're
going into a place where I think corporate debt is
going to So I think publicly traded companies will continue. Unfortunately,
I would prefer they all die just after I've gotten liquidity, first,
after I've sold my public stairs and things. I hope
they die because I think they're a disaster. And every
one of these tycoons has bought the exact same thing. Like,
I don't know, Pete, I can't remember if you did
you did you do something on Henry Ford.
Speaker 1: I've never done any a deep dive on Henry Ford,
for you know, obvious reasons of wanting wanting to do
that carefully.
Speaker 2: Yeah, maybe it was a myth of the twentieth century guys.
And I didn't know this.
Speaker 1: They definitely, they definitely did Henry Ford.
Speaker 2: Yeah, yeah, I didn't know this. I knew about it
for JP Morgan, and I knew about it for both
Rockefeller and Carnegie, but I didn't know Ford was the
same thing. Right, Like so, Ford put in his will
and literally came back to the company at ninety something
years old when he found out that, you know, people
in his absence were trying to take the company public,
like he would have burned every single factory to the ground.
And he said so on numerous occasions right before that
company was taken public. And that's why they only got
to do it after he died, because it allows you know,
this is why I think the difference between private and
public capital is such a big distinction, and why you
see private equity on one side of the dividing line
and public capital on the other side, except in the
term of like CEOs that are also chairman, so like
David Solomon, JP Morgan, Right, those are the only guys
really from Wall Street that are really pushing back against
what's trying to be implemented. The rest of them are
all from the private equity side because their capital is
being deployed for decades at a time. Right, If I'm
investing a bunch of money inside the United States, then
I need to say, well, fuck, I guess this place
can't go to shit now ken it because my money
is stuck here, right, My money is stuck in these
companies and I can't just go sell it. Like you know,
any any one of these you know finance, any one
of these hedge fund types, right, those you know buy
a stock, sell the next day, right if it's quant fund,
right or high frequency fund. They'll sell and buy the
same stock thousands of times in a minute. Like they
have zero attachment to that company. To them, it's literally
just an abstract number, and they have no long term
commitment to the company and place that the company operates.
The company may have like attachment to the town where
it derives its labor force from. But the guy who
who you know, by a perversion of our society, gets
to vote and what that company does, he doesn't give
a fuck about it.
Speaker 3: So that's also something I've been thinking about in terms of,
you know, the focus on market cap as opposed to
cash flow. Gentleman and I talked to once. You have
a great example of you know, mister Darcy in uh,
you know, what's the famous novel. But wealth used to
be measured in terms of how much like yeah, as
a landed gentleman you it generated in a year. You know,
there was no market for you know, real estate in
the seventeenth century or whatever it was. You know, these
depths of market. Is a new phenomenon to to make
that the the measure of the value of a company.
And I think that's going to be one of the
your point that that's the benefit of an ill liquid
asset where you have to have a ten year or
longer time horizon is now you actually have to be
focused on profits as opposed to just you know, how
can we juice up the earnings per share, not by
increasing earnings, but by reducing the number of outstanding shares.
Speaker 2: So running through what you think patronage network would look like.
Speaker 3: Okay, so on. So, because kapex is risky and it's
long term, how this is historically been done. You know,
Imperial Japan is actually very interesting in this regard.
Speaker 4: Uh.
Speaker 3: Germany, Uh, you know, for the last century has been
interesting this way as well.
Speaker 2: Frederick List economies.
Speaker 3: Yeah, you need banking support where they're willing to make
those kinds of long term loans that they're going to
stick it out. That that's really the key that we
don't have so patronage for our guys. You know, we
we've got that talent.
Speaker 2: Uh.
Speaker 3: You know, we've got a huge, a glut of weaponized
autists who if somebody could just figure out how to
get them income in order to afford a home, get married,
start families. You know, they will put in the eight
hour work weeks, but that's not what's rewarded when just
trying to you know, I po or gin up. The
outstanding share price is focused basically in short term gains
through marketing, as opposed to that R and D, which
is risky and to your point it. It's opportunity cost
right this. Richard Werner is very good on this as well.
Anytime you create an additional line of credit or create
more money in the economy, it's going to go to
one to three places. It's going to go into an
asset bubble, it's going to go into capex, or it's
going to go into consumption. When it goes into consumption,
that's a very obvious problem. You get the inflation like
we've been seeing the past few years. Uh, the price
of everything goes up because there's just more money chasing this.
Speaker 2: Basically, the same.
Speaker 3: Number of goods going into capex is ideal, especially because
then the increased efficiency from that improved capital structure is
going to offset that inflation with deflation and balance out,
which is what real growth in an economy would be.
But that entails entrepreneurial risk. You have a longer time horizon,
there's just a lot more unknowns with that. So what
tends to get favored is investing in an asset bubble.
It's the you know, you're you're dealing with bigger companies,
you can write bigger checks. The results are basically instantaneous,
and they're basically guaranteed whether you investing in stock or
real estate, the same thing as inflation in consumption goods,
except because it's in an asset bubble.
Speaker 1: Well, you see that.
Speaker 3: Hit right away, and and you don't have to be
any kind of like creative or confidence to do that.
You know, it's all just uh, you know spreadsheets and uh,
you know fictional goods.
Speaker 2: You're literally right. There's not a single hedge fund manager
in the history of the industry that has been in
the SI for more than fifteen years.
Speaker 3: Well, and even then came out with paper recently that
basically all stock market growth has been because of the
Great Moderation. Basically, it's just because the government is issuing
a bunch of treasuries getting the bank you know that
that was it thirteen banks or whatever that are obligated
through open market operations to buy them, and then that
credit goes immediately into S and P five hundred. Especially
now that index funds are more than fifty percent of
the market, you basically you know a portion of it
just because you're on the index.
Speaker 2: Yew, a portion of it does, right, those treasuries go
out there to be levered up. So this is my
theory on COVID. Let me know what you think what
happened in August of twenty nineteen.
Speaker 3: Yeah, it's an overnight repo rate spike, which is very
interesting that that came out right afterwards.
Speaker 2: Yes, exactly, so if you a and I've been kind
of bad in this around like with friends. So this
is this is the first time anybody has heard it publicly.
So I think that Tom Luongo is right about his
zero dollar thesis is so much so I dug very
deeply into its origins, which he describes how it exists now, right,
And I went and dug up how it came to
be because I've had conversations like side Pete sat in
on one of one of a conference series of conference
calls I host, right, well, we take turns hosting, right,
and one of those actually with one of the one
of the two women that were on the call. She
was a former Fed governor and she was on the
Liboard committee. This woman is probably in her seventies, and
you know, this woman should know more about global capital
markets than anyone in the world. And I asked her
one day and I said, X y Z, it's true
that nine out of every ten dollars is is printed
by offshore banks?
Speaker 3: Yeah, the course find says yes, yes it is.
Speaker 2: And I was like, okay, and all those offshore dollars
they're index to libor right, and she goes, yeah, of
course of course they are. Like what else would they
be wouldn't know what else they'd be indexed on. And
I was like, okay, so the FED doesn't control you
the dollar and she's like, no, no, of course not,
Like what do you mean, like that's not the case.
I'm like, okay, Well, if nine tenths of the dollars
are printed offshore by overseas banks, and those those dollar
denominated debts are index to an interest rate that is
set by twenty banks in London, not one of them
being a US bank, then that means the FED only
has control over ten percent of that. So if I
own ninety percent of your company, right, I own ninety
percent of the shares and I can vote those shares,
then that makes that my company and not your company.
And this woman was fucking speechless. Right gee, it is
like I have to come back to you. I have
to think about that. I'm thinking myself, Mike, bitch.
Speaker 4: You do the like you're lost, right, Like you were
in charge of a fucking portion of a goddamn global
economy and this never occurred to.
Speaker 2: You, and it bothered me, and it bothered me, and
it bothered me. And I just run into this again
and again and again. One a similar type conversation with
a famous dukunyist, and this guy couldn't understand. He's like,
I couldn't even this is a this is an economist
that Goloblin Sachs contracts right often, right, This guy goes
on like speaking tours, and investment banks stop what they're doing,
and everybody gets out of class for an afternoon to
go listen to this fucking asshole speak. And I asked him, like, well,
what happens if there is a sovereign debt default in
a G seven country? And he looked and looked, he
was wearing the face and said, I don't. I don't
even know what that would fit into my worldview, Like
I wouldn't even know how to model that, Like I
don't even I don't even know where to start with that.
I'm like, really really, like you're a fucking global economist
and you can't you know, at least hypothesize, right, like
fucking just spitball what a sovereign debt default would be
like in one of these like who are you people?
And I've just run into it again and again and again,
And the only conclusion that I can come to is
that all of the people that set up this infrastructure,
right the plumbing. Like if I bought your house, right
and you built it yourself, and you know, you moved
to some foreign, some far away country, and I can't
get a hold of you, and I have a plumbing leak,
I'm going to have to fucking tear that house down
to the studs because I don't know where the pipes are.
Speaker 3: Yeah, you plumbing find the movie cube of You know,
there is no master plan. It's a headless blunder operating
under the illusion of a master plan. You know, I
think they inherited the things exactly. They don't know how
it works, and they're just trying to keep it going
and keep it from exploding.
Speaker 2: Well, yeah, because they don't know, and that is they
don't know how to stop it from exploding. Right. So
like if everybody that's set up the current, you know,
we'll call it the euro dollar system, everyone that put
that into place, all of the boomers that are in
charge of shit that won't retire. Right, what these guys
came into whatever firm that they're at, right in the eighties,
the mid eighties. That's like when they you know, just
got on the trading floor. Whatever that means everybody, all
the men that set up the Bretonwood system were not
only retired, but we're dead by the time any of
the people currently in charge got anywhere near the steering wheel.
So none of these fucking people, I would say, more
knowledge of how the global financial system actually works exists
in our spheres. Then does the institutions, then does the elites.
So Tom Lamongo is effectively correct. Right, this euro dollar system,
there's nine tents of all these offshort they're going to
blow up, right, they are hypothecated dollars. And I don't
know how familiar you are with his thesis, but I
use JP Morgan Private Banking, and I got a letter
in December of twenty twenty three, it was twenty twenty
three or twenty twenty two, remember it was December tipt
four years and it said you cannot deposit any liboard
denominated securities like you're not allowed, right, A we won't
allow you. Right, And then I get another letter like
a week later that said, if you have any liboard
denominated securities, you must sell them by January. And I
don't get like, this isn't the type of you know,
bank that tells you you have to must do anything. Right.
They're generally very nice and cordialine you know, beat around
the bush for a while, but they were. It was
very clear. It was like a five or six sentence
letter that was like, you have to do this. You
can't have any live board denominated securities or instruments in
your account at all.
Speaker 3: Everyone to come back to the patronage question though, Okay,
so a historic example of a blow up would.
Speaker 2: Be all those all those dollars and all those traits,
all those people buying stock overseas aren't allowed to play, right.
So I'm saying, like, there's a very good change in
the future that we may exist in a vacuum. I
guess was the point I was trying to get at
without sounding like a crazy person, right, the US dollars
being put to work in US markets.
Speaker 3: So a historic example of you know, right after the
Great Depression, once it hit Germany, is that the middle
class who owned stocks in Germany got wiped out, and
that was a big part for you know, the revolutionary
movements that occurred soon after to stabilize things. But the
people who actually had physical control of the factories and
farms did very well. They did better fact uh in
the midst So as far as patronage, I guess the
question why you use kind of Germany and Japan as
historic examples is, you know, getting people to invest directly
in the things that are real capex, that create real
tangible value that they know their savings is safe in
an industry that actually makes things. You know, if you
if you work at Mitsubishi and your savings account is
with Mitsubishi Bank, and you know Mitsubishi is making you know,
generators and fighter planes and you know cars and air
conditioners and whatnot. You know, they have the economic capacity
of selling things that are valuable to other people and
getting well for that. That there's some security there, right
as opposed to these accounting fictions that we're talking about,
which is, yeah, when they blow up, you have an
IOU for what I mean. I think ETFs are a
whole other version of that as well. Uh, nobody's really
looking at the at the divergence risk or slippage between
you know, ETFs of what they claim to represent. So
for our guys though, who actually are focused on real
productivity in creating that parallel infrastructure, I guess you know,
to get one or two steps of head ahead of this,
right that you're not left holding the bag finding out
that it's a cat and not a pig in the pope.
Speaker 2: All right, Well, so a majority of the boomer's capital
is tied up in public markets, right, So we're talking
about a complete destruction of capital markets in your hypothesis, right,
we're talking about the destruction of boomer capital, which.
Speaker 3: I mean, I'm betting what's going to happen is similar
to Maiden Lane with the mortgage backed securities, is that they'll,
you know, sovereign as you decides the state of exception.
So they'll say, well, it's okay for FED to own
special purpose vehicles. It's an economic emergency. We're not really
going to prosecute ourselves. And basically they'll create a special
purpose vehicle to take these index funds onto the FED
balance sheet, and then they'll do gated redemption so that
boomers still get their hirement income it'll be uncomfortable, they'll
lose their liquidity, but they'll maintain the notional value of
those securities. And then they're just going to use financial repression,
which is a fancy way of saying inflation. Instead of
the stocks dropping in notional value to what they're actually worth,
they're going to use inflation to debase the currency until
it reaches that artificially high water mark. And then the
boomers will be dead by the time that happens, and
their retirement income won't be a political question anymore.
Speaker 2: Well, what time are you What time are you thinking?
Speaker 3: So I'm not saying it's going to happen soon. It
may not even happen in my lifetime. I'm in my
forties now, so let's say between ten to thirty years.
Speaker 2: Okay, Well, so the boomers population is a very interesting thing.
So that Jewish guy in what you call it, Peterston,
this a little bit at dinner, right. So chaos theories
is terribly named, all right, extraal nonlinear systems dynamics, right,
And it was discovered when they tried to model two
things that on the surface seemed like very simple systems.
One was the weather. It's like eight or nine different
you know inputs like very much pressure wins me whatever.
The other one was population, right, it was a deer population,
and they found that even though the whole system operated
on five variables, Right, does that means there should be
a total of twenty five possible outcomes? Right, every thousand
or so iterations? It would give them some insane number
and they couldn't make this go away. So the boomers
are that, right. So, like the story that you're told
is that like, okay, after World War Two, everybody came
home to foot blah, Like, okay, well, how come South
America has a baby boomer generation? How come India's got
a fucking baby boomer generation? Did they come home from
World War two? Can fuck a lot? No, that's not
what happened. So the boomer generation is a global phenomenon
and COVID. So basically, the you know, our population decreasing
five x would actually be a return to the mean. Right.
It is the boomer generation that is the anomaly. It's
the boomer generation. It's the outlider. So right now we're
already down to thirty percent on our boomer count, and
we lose roughly ten to thirteen percent every year, all right,
So that means in three years, right, we're already passed,
we're inching up on fifty percent. Right, and then after
that point, they they're no longer the dominant economic factor.
Speaker 1: Right.
Speaker 2: And this is why everyone, this is why they are
freaking out. This is why nothing they do works, right,
This is why the market doesn't work, This is why
none of the debt works. Right, this leverage bubble that
they've made.
Speaker 3: Yeah, Mike Green famously the analogy of uh, you know,
if your breaks don't work in a car, but you're
driving up a hill, you don't really notice it. But
then once you cross the peak and are driving downhill
and your breaks don't work, then then you're in for
a big problem.
Speaker 2: And yet.
Speaker 3: In these securities as a way of sucking inflation out
of the system, well, now that they're selling to redeem
that in order to generate their retirement income, it's all
getting pipe back in. So yeah, the the demographic crisis
mixed with you know, with that band aid solution.
Speaker 2: Now demographic crisis is in a crisis at all. I
think it's a blessing, right, I think it's the best
thing that will ever happen to the country. Right, So
check this out. You have a pyramid, right, So our
whole society is a pyramid scheme, right, where a whole
bunch of people at the top or on the bottom
working their ass off, right, and that you filters up
and it gets taken out a little bit of time
to support the people at the top, the old people's right,
and what we have right now, right, So you can
add up the baby you can add up the Zoomers
and the millennials together, and there's five times as many
Boomers as those, right. So actually I think you could
probably throw in the gen xers too, but I'm not
going to it, right, So just the just the GENA,
there's the gen z Ers and the millennials. Put those together,
there's five times as many baby boomers, right, So what
we have is the pyramid scheme has flipped upside down.
Small amount of people at the bottom working and a
large amount of people at the top taking all the resources.
What happens when they're gone, right, So the baby boomers
also own all the houses, they own, all the small businesses,
they own, all the medium sized businesses, right, all of
the infrastructure that you're talking about, right, let's just use
it in tern let's just put well, we'll just call
infrastructure and you know small and mid sized businesses as
we'll just use houses. Ver we understand, how do you
sell if the baby boomer is all the houses, right,
and there's five times as many of them as there
are of us, how do you sell five houses to
one person?
Speaker 1: You don't, right?
Speaker 3: And also, you know the issue is they're not selling
or as of dying, the people at that bottom of
the inverted pyramid do not have the capital to buy
them out.
Speaker 1: Right.
Speaker 2: But the problem is going to sort itself out because
you can't sell five houses to one person.
Speaker 3: Well, yeah, there'll be some massive when they die, or
they'll give it all the way to charities and foundations
for political purposes. You know, they'll give it to Haitians
because they hate their white kids that much.
Speaker 2: Maybe, But whether they give it away to Haitians or not,
a large portion of them are not going to Right,
There's no way that you have that type of disparity
without a correction and price. So I think the housing
affordability problem is going to sort itself out. And in
the way that that is going to be sorted out,
we are guys, if they are ready and prepared are
going to face a once in a one hundred year
buying opportunity, right, And I mean like, okay, you can't
afford a house. Person that is listening to this right, Well,
in the future that I'm talking about, you're probably not
gonna be able to get a fucking mortgage either, So
that sucks. But could you buy a house it was
ninety percent off? I bet you could, especially when even
if it's ninety percent off, there's still four of them
that aren't going to get bought, So obviously it's going
to get a little bit worse than ninety percent off.
But just hypothetically, could you afford a house at ninety
percent off? I bet you could? Right? Or what about
a small business? What about a machine shop? Right? What
about a small engineering company with five or six C
and C machines. Because at the same time this is happening,
we have this other thing happening, which is the strategic
defense initiative for onshore in production. Right, and big mega
corporations like the ones that currently dominate everything, well it's
called dominate production. They're like cruise ships or battleships or
the biggest whatever, the biggest fucking ship you can think
of is they take a really long time to turn around.
So this is just a hypothetical or a hunch, but
I think the demographic reality is going to set in
right as we're going into peak on shoring, right and
there's no way that you onshore without shortages. There's no
which is going to create an artificial demand scenario. Right now,
anything you want to buy is made by fucking Globo
Fagot Corp. And it's made in China and shipped to
you and you can go to your Walmart and get it,
right But if Globo Corp. Has to move all of
its production over here, that takes time, right, Like they
can't even build a fucking semiconductor facility in Arizona, right,
This is going to take a while. So that means
that there is going to be a demand opportunity that
won't exist any other time in history. I don't think
all not in history. That's a particular statement, but let's
just say in the next eighty years whatever, that someone
is going to have to fill the gap. Right So,
right now, small and medium sized businesses can't compete because
you're competing against literally the entire Third world making things
for peanuts and whatever. Right, but if we're on shoringfacturing,
there is going to be at least a three or
four year maybe even longer period until their manufacturing facilities
are constructed in the places that they're on shorting too.
So who is going to step in and fill the gap? Right?
Shortages mean price increases, Yes, that sucks, but what that
also means is opportunity that was previously taken away. So
small and medium sized businesses, the engineering shops, they have
to make fancy stuff that's EAR compliant. Right, So like
if you have ten C and C machines, the only
way you could even make any money at all is
if you're doing aerospace or defense because the regulatory compliance
structure called EAR is so burdensome that it can only
be done by US companies and can only be done
by these small engineering shops because at a large scale,
the regulatory burden becomes too much. So like Lockheed Martin
isn't actually a defense contractor, right, It doesn't build shit.
It just buys a whole bunch of pieces from tiny companies,
mid sized companies, mountain pop sized companies and assembles them
and then sells it to the government for much more, right,
But if I can make a bunch more money, right
making something much simpler, right, Like I don't know, think
of what's a you know, a small metal object like
a kitchen appliances? Right, My C and C machines could
make way more because Global Corp fucked up and there
you know, their blender factory is not here yet, right,
there is now a market opportunity where one previously did
not exist for me to stop making bullshit eyetar compliance
stuff and crank the fuck out a bunch of blenders.
Speaker 3: So typically though you know that it still requires bank
capital in a medium term in order to do you know,
expansion or retool or whatever it.
Speaker 2: Is to do that.
Speaker 3: It's not a fire sale, right, so even that too,
Like because you mentioned the boomer selling their businesses, but
they're not going to sell working businesses. I think that's
going to be very rough transition. It'll be an asset
sale and then you know, whoever does buy it is
going to have to figure out how to apply it
for future team. But so you know, in terms of
answering this patronage question of how do you have that
capital network? And maybe you have some insight on this
from working in VC in order to you know, sponsor
something like that. Right that you're identifying talent people who
could make that happen to do that retooling of that
C and C equipment, and you're gonna invest in them
and have that tenure time horizon because it's not going
to be you know, the man Durill States banking system, right,
this is going to be private money that has to
do this.
Speaker 2: Yes, I see an explosion of private lending in the future,
and also it doesn't have to just be private lending.
And honestly, I don't think that may I don't think
that's actually the way that it should be done. Right,
So I think this do you know VC structure came about?
Speaker 3: Yeah, so yeah, feel free to explain from the beginning,
because yeah, I think the smartest people in finance and
economics are usually of that financial historian mindset. So yeah,
beginning at the beginning is usually best.
Speaker 2: It's it's from an in a nutshell, it came from
whaling because whaling was so risky, right, you had the
general partner and the limited partner. The general partner is
going to put up let's say, ten percent of the money, right,
so in our fund we do a bit more than
ten percent, but ten percent is pretty standard, right. So
ten percent of the money in the total pot of well,
let's call a fund to big pot, right, which it
effectively is ten percent of the money in the pot
is mine, right. And I am very skilled at picking
whaling locations or startups, whichever one, right, And you would
like to capture some of you know, my location picking
startup picking prowess. So you're going to take a passive seat,
which means I will invest your money as I see fit, right,
but I will split the returns with you. Is in like,
I will only take ten percent or twenty percent of
the money I make you, So you know it's a
pretty good deal. And ninety percent of that pod is
going to be filled with outside investors, right, and they
just get to sit at home, you know, in Nantucket
or whatever fishing place while I actually go out and
I find the whales and find the startups. I think
that exact same structure would be very very good. It
lends itself to joint venture very easily, right, because if
I have the capital, you know who's not going to
be retooling those machines? Me? You know who's not going
to be trying to take those products to market? Me,
who's not going to be working twelve hour days, seven
days a week. Me, So I want a passive ride.
Joint venture is probably the best way to do it
because it binds me my interest. Right, if I'd lend
you money, my interest is only in the interest being paid.
Whether it's you or I boot you out and somebody
else wants to assume your loan or whatever, I only
care about the interest. But if it's a joint venture,
I care about the actual underlying business and your ability
to manage it. It's that skin and the game type thing, right.
So I think whichever way you're going to do, you
would want right.
Speaker 3: So, so do we have that for our guys?
Speaker 2: Though?
Speaker 3: Like, where is the based fund that is putting that
money into?
Speaker 2: Show me the basic companies. I've had this conversation with
a dozen people. Uh, I think I've ranted to you
about this for a little bit.
Speaker 1: But it's probably the thing about he maan, about how
people just he maan, about how people just say you
got to be building, you got to be building, and
then but they don't tell you what to build that
and the publish, Yeah, that everybody. We need more distant publishers.
We do, Yeah, we don't.
Speaker 3: That took me. That actually took me by surprise that
somebody point out it is like, you know, really, the
isn't it right? It's just a bunch of artists, And
I'm like, oh, I never really thought of it that way.
And it was also pretty disappointed to think of it
that way because I think there are a lot of engineers, builders,
design like people who make concrete things who you know,
can't get a living that would give them a home,
a wife and kids. Yeah, there's to be a way
to make that a discount rate where they would happily
work their asses off to make things that are actually
valuable if they knew they had some kind of like
underwritten guarantee of decent quality of life.
Speaker 2: In that sense, artists deserve to be poor.
Speaker 3: Sure, right, Yeah, but but there's there have to be
our guys who are engineers who would make things if
somebody believed in them to make that kind of long
term bet.
Speaker 2: Yeah. So the answer to why there is no based
VC fund is because no one has been able to show.
I don't care whether it's based or not based I'm
an investor, right, you know what doesn't pay bills? Moral platitudes, right, Right,
like you being more based than the fucking I don't
know training with a unicorn company. I'll go be based
by myself with my unicorn bucks, thank you very much.
Like it's my money. It proved to me that you
have got a company that will deliver me outsize returns
to justify the insane risk. Right. What our guys don't
understand is that if you want money for things, right,
you want guys to invest in your thing, Well, you're
in a competition. You just don't know it. Right. I
have literally thousands of things that I can do with
my money. I can make five percent on my money
guaranteed by the government. I could do that, and I
could take zero risk. Right. I can take some risk
and invest in a stock that's publicly traded, and if
I don't like it, or if it starts to look sketchy,
I can bail out whenever the fuck I want to. Right.
But what you're asking me to do is to tie
myself to the hip to you basically be signing these
twins with my money right to where if you turn
out to be a fucking idiot that doesn't know what
they're doing. I am stuck with you. My money is
going to ride all the way down to zero right
where if it was if you were a stock, I
could just sell you the second I got the first
whiff or retardation, I'd be out the door, right.
Speaker 3: So who doesn't have this? Like qualmbo is, if you
own a bank and you're creating a credit basically out
of thin air, you can afford to you know, take losses.
Speaker 2: That's that's different. You asked me where the where the
base vcs come from? If we're talking about venture lending,
you know, if I'm unsure of your ability to run
a machine shop, I could give it to you inventure
debt at twelve percent interest, and if you do not succeed,
I will sell your building and I will sell all
your machines and hopefully that will pay the difference. So
like investing in a company is asking me to take
a ride with you, and lending you money is significantly
less risk and infinitely more protections. But the rate of
return is generally capped at something like twelve percent. I'm
not I'm not making any multiples. There's going to be
zero x's in my return. So I think, and this
is why different businesses lend themselves to different style of
capital formation.
Speaker 3: So I don't want to put this. I think there's
a question of you know, to bring it back to
you know that you know it's being based in there's
a question of political will, right like China, as a
communist government said we are just going to dominate manufacturing,
and as a you know, a political dic TOD dumped
a ton of money to make that happen and it worked, right,
And now people complained about overproduction, which I don't think
is a real thing, but they you know, they completely
dominate manufacturing a lot of you know, electronics manufacturing and
so on. There's no reason we can't do that also,
so I think it's just a question of having the
will to make it happen. You know again, Imperial Japan
did the same thing. They they lent to people and said,
you know, we've got faith in you. Yes, you have
no track record, but because we share a common culture
and we want the same goals, we think you're not
just gonna screw this up or take advantage. You know,
it's not going to be uh, you know, PvP money
for fake inner city businesses.
Speaker 2: But they get the state though, right, So like, let's
say you suck at your business, right, I can be like,
oh shit, now I have a huge deficit and I
need to make that up. So everyone guess what we're
doing an income tax race?
Speaker 3: Sorry or right? Or it gets spread out, right, it's
inflation that's never recovered through because the capital structure did
not become more efficient.
Speaker 2: It's just h But if you're going to ask a
private person, who is going who cover like, there's no
incentive mechanism for me for me to take that bet.
Right if it comes down to like state mandated investing
in the twenty thousandth right wing dissident book publisher, I'm
going to bury my money in the backyard and pretend
to be poor until you go away.
Speaker 3: So I guess I'm thinking in terms of that for
you know, a people, a culture who values actual productivity.
You know, it make those high trust relationships at a
discount before people who are actually competent become so rare
and such a necessity that they're going to set their
own price. You know, I think there is an opportunity
to buy them keep now because people don't realize what
time it is.
Speaker 2: See I've been urged, and let me know what you
think about this. I've been urging every person. So I
basically my little spiel about you know, whether it's economics
stuff or whatever. Usually it ends in like an inundation
of d MS or whatever. And they asked me like,
I am in x y z situation. What do I
do if I have X y z amount of capital?
What do I do if I have you know, no capital?
Speaker 1: What do I do?
Speaker 2: I've gotten like a wide range of these, and it's
the younger guys obviously they tell them like, hey, I
don't have any capital right.
Speaker 3: Like, because lending that is basically asset based. I mean
that that's the vicious cycle of you know, lending is
based on what do you have? Assets? Is collateral in
order to get future loans. And unless you're a boomer
that owns a house and a large sock portfolio, you
don't have the collateral to get that loan. But under
you know, the New Deal for example, uh, you know
they did red landing, redlining and say, oh, you're the
kind of person that lives in this neighborhood and you're
probably responsible and you're probably going to pay back this
thirty year mortgage that they invented out of nowhere. The
idea of thirty year mortgage was crazy to bankers until
that got pushed through, and turns out actually most of
them did pay their mortgage and it worked.
Speaker 2: So I've I've gotten And you said you caught that
that show I did with the ad Jason from the
two good podcasts, Yes you have ended. I believe, if
memory serves, is how I got to where I am
through childless boomers, which there are a lot of that
are very successful, and also through boomers who've been insanely
very successful whose kids don't give a fuck what they
what dad does. They don't don't give a shit. They
only hear his stories, right, They just cared about their
credit card, they're being paid. And I basically was the
guy that would listen to those stories, right. I wanted
to hear all the stories. And we give the boomers
a lot of shit, you really do, and a lot
of it is deserved and a lot of it isn't
right because they don't everything in their tautology, you know,
as basically their paradigm, everything that they've because your paradigm
is also your it's not just like what you believe.
It's the information you build your reality with. It's like
your sense of making the world the options that you
think are available to you. So when they're unhappy, right
like let's say the boomers without you know, whose kids
don't give a ship, or that they've done everything in
their life right, they've achieved tremendous amounts of financial success,
they don't know the options that we know about, you know,
spiritual success. They don't know these other things are available
to them that we know. So I don't I don't
blame them as much as everybody else does. So with
these guys that I'm talking about, like I was that guy.
I was the surrogate kid that cared.
Speaker 3: So is what you did replicable? Like that's the question
I had. My first question is, well, where do you
meet these boomers?
Speaker 2: You know?
Speaker 3: I would love to have those kinds of conversations with
them as well. Finding them and getting them to be
willing to have that conversation is a whole other thing.
Speaker 2: This is what this is what I was trying to
get up before when I was talking about the machine
jumps capital formation. I see the solution not as like
private lending necessarily. I see it as apprenticeships. I see
apprenticeships solving a lot of what we are talking about,
because I bet you every like if you live in
you know, let's say I don't know you know Le Appalacha, right,
I can't. You know, there's not a lot of multi
millionaire boomers around you. There's probably two or three and
you they own businesses that operate in those communities, right.
And I've had just a good friend of mine was
in and this is going to ruffle a lot of
feathers because I know, like, oh, we can't teach your
guys to be plumbers or whatever like I had.
Speaker 3: And I've seen a lot of boomers where they're not
interested in teaching or play. They're like, oh, I don't
get paid for that, that's not my job.
Speaker 1: You know.
Speaker 3: They're they're part of that paradigm you talk about, is
that they lack a sense of legacy, you know, and
often they think, well, I'm just going to do this
until I'm gone, and then I don't care what happens
in my plumbing business afterwards, because I'll be in the
ground that. You know, they have no sense of like, well,
why should I take on extra work and extra responsibility.
I'm already in a mindless routine that i could just
keep doing what I'm doing until.
Speaker 2: Here's autonomy to them. And what I'll say is, is
this all of the guys that should be working for them, right,
they can not give a shit about it, Like I sy,
that's fine, but that's not the problem that they're facing. Right.
So my friend, his mother died and he had to
go to New York and basically handle her estate and
her her refrigerator was broken, and it was an old
refrigerator that he wanted to keep, right, and there was
one refrigerator repair person for like all of like you know,
northern New York. And it took him two months to
get this guy to show up. And the guy was
a single boomer, right, he'd been in business for thirty years,
and he is trying to find employees that he will
happily pay ninety dollars an hour, eighty dollars an hour
because he charges one hundred and fifty an hour, and
he can't find a single fucking person to come work
for him. Because we were just as signumed as they were, right,
every single person that we see in our age group, Yes, kat,
I will let you in. You're not the boss. They
all went and got college degrees, even college degrees they
can't even fucking use. It don't matter. And a job
like that is beneath them in some capacity.
Speaker 3: Yeah, they don't want to get dirty and twenty and.
Speaker 2: Here some fucking faggot place when they if they were
willing to get even slightly dirty, which is another thing
that our guys do. Right leftists don't like getting their
hands dirty. Right leftists and they're intellectuals, and that, you know,
manual labors beneath them. You know, it's not beneath like
we do that shit for free. Yeah, here's the type
of people that do that shit.
Speaker 3: Yeah, I work on finance and that's like my leisure
activity is exactly.
Speaker 2: So we are those guys, and we will damn sure
do it for almost one hundred dollars an hour.
Speaker 5: So these openings there though, and maybe this just means
there's a market to be the matchmaker between these two,
because I mean, that's great to hear that there are
the ones who want to hire the apprentices and bring
people and that's exactly what I'd be looking for.
Speaker 3: Like another example of PLC programmer for industrial machines, and
it tends to be those old boomers who have all
the wisdom and you know, forty years of experience. But
there's no openings to get a twenty year old who
does want to get dirty and wants to make that
ninety dollars an hour to start working in that field.
There's no like until they pass away, that opening doesn't exist.
And because I think there's a lot of our guys
who do want those kinds of jobs and they can't
find them.
Speaker 2: Like there's like three engineering shops that I'm I know,
I've been taking extra capital and socking it away and
seeing see machines nice. Yeah, I don't plan on putting
them to use myself. I'm not opening up a machine shop, right,
I have friends that own machine shops, and I'm going
to use the cheaply acquired CE ANDC machines I got
at a discount because you know, businesses in Chicago are
going bust, and I am going to use those machine
shops because they're already acting there. They cannot meet the
demand that they have and it's a huge problem. Their
biggest problem is CAD engineers. Right, there's not enough young
guys that know CAD and are willing to learn, you know,
at a slightly discounted great for a year all of
the you know, changing the machine, changing the the dies
and bits or whatever, and doing you know, the less
exciting you know, C and C job for a year
while they learned the actual C and C job, and
no can.
Speaker 3: So if this is such a massive market dislocation, where
is the VC for you know, the right wing trades university?
You know, maybe they can't afford to do that. So,
you know, what's that coding college where it's like they
get subsidized on the classes and then part of their
salary for the first three years that they're working gets
clawed back in order to pay for the education that
made that job possible. Like again, it seems like there's
an economic opportunity or business opportunity to close that gap too,
you know, to make those ends meet where currently now
they're not.
Speaker 2: Right. Well, so if the answer, if the question is
where's the VC to come and and fun to university
the technical he won't because that's not going to make
him money. But like a what you're what you're kind
of what we're kind of circling around is, let's say
a a staffing agency, Okay, sure, all right, And if
somebody put a very compelling staffing agency right and was
able to draw comps, right, this is the other thing, right,
it's comps. Right. So whenever he's like, well where are
the vcs, how come no one's funding? Like I've had
people try and get like like, oh oh this persus,
I've got a great you know, YouTube channel, or do
you want to help me fund my song? I'm a
great musician, right, Like, that's not going to make me
like it showed me a business model, right, show me
a business plan? Right. Nobody's putting the work in to
think or to learn what somebody like me is expecting
to see. And your competition looks like right, you know
all the non based normy pitch deckson I get, and
the very valuable businesses that exist underneath them. You need
to be like that but better and my money is
going to go right. So we're all about meritocracy until
it's like, oh, how come nobody's investing in our space? Now?
Now we want communism, Well, where's the VC who's come
in and give me my money? Like, no, motherfucker, give
me a business and I will invest in it if
it is a business that looks like I can generate
a reasonable rate of return.
Speaker 3: And over what time frame? Though, because I think, you know,
the problem I seen with a lot of VC and
even some of the VC firms that are private equity
firms that are trying to be based is because of
that opportunity cost that you mentioned. They have a very
short time prize and they want to make the quick flip.
You know, they want to buy the business, juice it up,
and then sell it three for you know, ten x.
They're not looking to say, Okay, I'm going to invest
in this business for the next twenty years because they're
going to have amazing cash flow and we're going to
get a percentage of you know those profits that whole time.
Like a buy and hold strategy. You know, a market cap.
Speaker 2: That's quote, that's growth, that's growth. Private equity, right, they
buy businesses and flip them, lever them up and flip
them all right, So long term private equity is a
different animal, right, So, like Carlisle Group is, they're buying
businesses that are already large caps so to say, like
one hundred million plus. In fact, like much larger, usually
several billion dollars that have been in business for a
very long time and they see you know, distributions as
their primary methodology of generating returns. And VC is the
person that takes the risk in the beginning, right, So
my exit horizon right from the time I invest is
best case scenario seven years. Best case. So if I'm
investing in a startup, unless you get unless you're super
super successful and within within a couple of years grow
so fast that you're already like causing the major companies
fucking you know, heartburn and sleepless nights, so they have
to buy you out of anxiety of what you could become.
Then maybe five years, but best case scenario on average,
I'm looking at a seven year investment. I am stuck
with that, right, So you and I are Siamese twins,
my money and your business idea for seven years.
Speaker 3: So what's your expected exit in this scenario? Is it
something other than buyout or IPO.
Speaker 2: Usually purchased by a larger company Because I'm investing in
early age companies, so an early stage company is going
to basically try and become a thorn in the side
of the major companies by doing their business in a
different way much better, to the point where my business
model is superior to your business model. And if you
allow me to continue, I will kill you. So you
can either buy me now or be killed by me later.
What do you want to do? And every big business
is going to say, well, here's your giant cartoon check.
Speaker 3: Right, But that's also how they get nerved, right, is
you know it's meta.
Speaker 2: You're asking me me, You're asking me to solve both.
We just have to fix the world then mega mega
company problems. What Google does with your tech that they
buy is whatever they want to do because they own it.
I can't fix Google, but I can at them to
buy early stage companies if I cause them enough headache
and enough you know, few response.
Speaker 3: And how do we get our own Google? I guess
that is where I'm going with this, right. It's the
parallel infrastructure thing of you know, if what is really
going to count? Especially you know when it's like.
Speaker 2: This is the problem with parallel infrastructure conversations, they're always
parallel infrastructure and not superior infrastructure. People go where the
superior infrastructure is, right, just like capital, right, my investor
dollar is going to go in the best investment opportunity my.
Speaker 3: You know, human capital, so that that's contingent on the
managerial states bank. Then you know, that's like why you
know Ricardi and comparative advantage and global Homo doesn't work
out in real life is because it's the banks that
are you know, putting the FED put in that system
and to go out, you know, to fight the Fed
usually ends in disaster.
Speaker 2: No, like with big companies. Right, Google's abound to die,
I would say within five years, right, and not a
lot of people don't see it coming, but a few
of us are. I'm not gonna be the FED that
did it. It's going to be its bigness. Right. When
something becomes big, big, and bureaucratize to a point, it
cannot rapidly defend itself, very similar to like a nation state,
the more bureaucratic layers. And that's what this way. If
all of a sudden, let's say like fifty percent of
the Mexicans in Mexico weren't actually Mexicans at all, and
were actually Chinese people pretending to be Mexicans, like in
costumes that they took off when they were at home
in their house, and then all of a sudden day
they took up their costumes and charge across the border
with Akas, we'd be fucked, and we'd be fucked because
our bureaucratic structure is so large and burdensome, it is
incapable of rapidly pivoting, directing its resources and defending itself.
A corporation is no different. Google can't defend itself from
competitors because it has to do everything by committee, and
there's ninety different layers of bullshit. Right, So basically, somebody
inside Google may have a brilliant idea on how to
defend Google from this upstart attacker, right, But that guy's
idea is just that guy's idea. He has to get
it past his manager, right, and that manager has to
see the same opportunity that he does. Unlikely, and then
that guy has to go his regional director or whatever
asshole titles they have, or like change agent or whatever
faggty bullshit that they put on their LinkedIn, Right, it
has to go through a whole lot of LinkedIn faggety titles,
and it probably won't, and even if it does the
best case, it is so watered down it is nighon ineffectual.
Speaker 3: So sock is how they really at risk if they
could just do stock buybacks, though, I mean, I think
that's the big problem with this, the bigness and the
managerial revolution in general, is uh, the need for profit
motive basically goes out the window because you've got, you know,
the banking system that aren't.
Speaker 2: Going to help you. If this other company is growing
faster than you, investor dollars are going to go there.
You can only buy back so much stock without fucking revenue. Right, company,
like let's say TikTok, if I wanted to make a
long long term play intact, let's say like by long term,
I mean three years, right, if I were to go
back or let's just say and go forward three years,
TikTok's growth is parabolic, and Google's growth has been relatively
flat and stayed the same maybe up and down three
or four percent for the last decade. Right, there is
no more market share. Like, I don't care, I'm not
going to make any money on the company. It's already
big already. How do you make your money? You make
your money on the ride up? Right, you make your
money on a little.
Speaker 6: Company becoming a big company, right, But a big company
like a mega company has gotten nowhere else to go, right,
There's not another billion customers that exist.
Speaker 2: For Google to acquire, well, let's say infinity customers had
to acquire. So for that's growth and capital is going
to go.
Speaker 3: Their share price is driven not by revenue and growth
in that sense, but because they're you know, on the
S and P five hundred index, and the higher the
share price, the more that the index funds the black
rocks and the vanguards have to buy them. Uh, you know,
the bigness becomes its own feedback loop. The problem with
indexing in general is that you know, all that decision
making about being profitable in future revenue and buying at
a discount is evaporated and it's just you know, oh,
the share price goes up.
Speaker 2: Need more of it. Polaroid, man, you're talking to me
about Polaroid. Polaroid was the biggest company in the world
that didn't see the digital camera coming. It literally was
like one of the big I think it was with
one of the top three biggest companies ever at the time, right,
it was the biggest of big and it thought the
digital camera was stupid. And now Polaroid is a tiny,
little slipper in some holding company. Amongst there's thousands of
other brands that nobody gives a shit about, right, or
a good example of it in more modern time and
a more distorted time would be BlackBerry or Erickson. Right,
these are these were I think I don't think people
remember how big these companies were. Literally just five years ago,
eight years ago. These were behemoths, and they didn't defend themselves.
They could have done all the stop flybacks they wanted,
and they could they did, and they could have went
down to you know, Joe's inne in accounting and told
her to write up X amount of bond issuances and
take it across streak to the broker and go raise
me twenty billion dollars. But eventually you get bumped down
to junk bonds. Right, you go from double A or
triple A to double A. Still no revenue. Now we're
going to go from double A to single A. Well,
revenue get better. No, but our debt services you're got
a fuck a lot worse.
Speaker 3: But again, but the company, the ones who are buying
those shares are predominantly running indices, and on top of that,
they're doing it levered because it's through the futures market.
Speaker 2: So are we talking about the company or are we
talking about the share buyer that runs the indusicy?
Speaker 3: Because right, so let's say you know is running some
you know S and P five What is with the
S and P five hundred? It's you know, big tech
is like the seven firms on that and you know
if it wasn't for them, it'd be negative. And it's
highly concentrated in those seven. You know, the fact that
indexing is what is determining.
Speaker 2: Would you say that in Vidia is in everyone's index?
Speaker 3: Yeah, and that's I think why they're so big now.
It's not because the AI or GPU sales. I think
it's you know, just being on the index gives them
a boost that now they have to get blought because
that's the definition of what the index is.
Speaker 2: So Nvidia should be around here for like, let's say
three years from now.
Speaker 3: I think now that indexing is more than half of
the market, I think you're going to see indexing having
a bigger influence over share price than fundamentals.
Speaker 2: Because you're kind of telling me gravity doesn't exist. So
is it absolute or big influence or absolute influence enough
to be.
Speaker 3: I think it's because of so Mike Green explains this
better than maybe I am right now. But index thing
is running the market, and it's not the fundamentals of
of revenue and you know, future profitability, the way that
people traditionally think of stocks as value. It's it's on
it's an algorithmic trade. It's on autopilot.
Speaker 2: Even what drives that algorithm? What algorithm is it? Is
it a momentum trade algorithm? Yeah?
Speaker 3: Right, so right, so basically it's a momentum trade.
Speaker 2: Right.
Speaker 3: Uh, you know when when given money by when.
Speaker 2: CFO of Nvidia walks in on his wife fucking some
Haitian that she found in the garden and he shoots
her and then shoots himself, and then on the news
the next day it will be in Vidia's CFO kills himself.
You want to know what those momentum algos are going
to do. They know, they're not even going to care
about the They're going to assume that something catastrophic has
happened in a VideA, right, and they are going to
dump in video. So momentum trading is just momentum, right,
It follows other momentum. So if the hedge funds who
are paying attention all start dumping, then the momentum algorithms
are chasing the hedge funds momentum. Right, hedge funds start buying,
then the momentum algorithms are chasing that momentum. Right. The
market is impossible to manipulate in totality because it is
hundreds of trillions of individual transactions that have into relationships
to every other thing that they're not even transacting with. Right.
So like by my a stock of X, that market
for that information is now going to affect some fucking
bond in China, right, because it's a fractal relationship, right,
It is self similar at all scales. So a good
example of it is like the Treasury. You know how
the Treasury was batting around this eighty dollars oil price
cap and everyone's like, no, that's not going to work.
That's terrible. But yet for some reason, every time oil
looks like it's about to break eighty dollars, either some
crazy news that ends up getting found out to be
incorrect three or four days later after the fact, but
at that point it's like our jobs report, the revision
doesn't matter, or some mysterious selling comes and hammers the market.
So this eighty dollars price gap, that was the most
retarded thing ever and it was roundly shouted down by
the entire financial market. But the Biden administration was really
intent on. They literally fucking shelled nuts around the world,
brought it to you know, COP twenty six or whatever
the fucking retard about. Anyways, that seemed to miraculously happen.
We have effect had an eighty dollars oil price camp
in the last two years. But the level an effort
of market intervention has both increased in magnitude and increased
in frequency. So if I'm trying to suppress something down
and the force of my interventions each time require more
and more and more force at the same time as
I have to do it more and more and more
and more often. What that's showing you above above the surface,
what's happening below the surface is a nonlinear system happening, right,
so a feedback loop. So even all the momentum, even
on the Treasury intervention, eventually you can only do it
so much because the cost of each intervention becomes exponential rapidly,
and the frequency in which you have to intervene is
going to increase exponentially, and eventually all that effort and
all that time and force that even putting down all
explodes at once. By the way, that's that's what's going
to happen in the energy. But anyways, besides the poet
so that these the power that you are attributing to
ETFs and these index funds exists but is not omnipotent.
Speaker 3: And do you know indexes are more than fifty percent
of the market. And then because indexes are also the
benchmark used by active fund managers, you have a lot
of closet indexers as well because they have professional risks,
career risk that you know, they need to be close
at least to the index or they're going to get fired.
Speaker 2: Are going down rapidly. Do you think that everyone at
Blackrock is going to like stare at it and like,
oh shit, well we better not do anything, We better
not go find some other assets to put this in in.
Speaker 3: Well, if it's an index by definition, they can't right now.
If it's active that that is supposed to be part
of their mandate. But that's being crowded out by the
rise of indexing. And because it is a feedback loop,
you know, So yeah, until you hit that top of
the hill and you realize your breaks don't work. It
keeps working until it doesn't. So I think that is
more the that you know rubber band effect of you know,
acid prices rise because acid prices rise, and that's just
going to keep turning up and up and up until
that meets the demographic crisis of boomers needing to sell
and market makers aren't going to be able to make
money on making a market in them because there's nobody
on the other side of that trade. You know, the
millennials and gen z are not going to be able
to buy them out.
Speaker 2: We'll have to disagree, and it will have to agree
to disagree. Okay, all right, so let's.
Speaker 1: Move want to you want to get back to back
on point with what we got together to talk about.
We've been going for a while, so if you wanted
to wrap it up as far as basically here, here's
what I'm hearing is we want to have patronation networks.
People who have money want to make money. Yet there
are people who are like, there may be some people
out there who are like, well, if you really believe
in the if you really believe in the cause, and
you believe in the person, Maybe that should be secondary,
and maybe loyalty should be Loyalty to your people should
be It seems like to me listening to the listening
to the conversation, that's where the stressor is happening. That's
how this conversation got too We're gonna have to agree
to disagree.
Speaker 2: Yeah, Like with It's like the green investing, right, they
couldn't get anybody to buy into the green shit until
they gave them enough incentive mechanism to do it. Everybody,
all those all those faggots that are going to going
to Davos or whatever. They all want to feel good
about themselves right to where they will take a lower return.
But there needs to be some return, right, So you're
not going to You're not going to. My relationship to
my people does not supersede my relationship to my family.
It is an extension of it, right, So I will
want to help you. But what I see is people wanting,
at least from what I've been approach to, like, hey,
do you want to invest in this? It is like
for me to do it for you, right, Like, I
guess what would be very helpful is to describe what
I'm like the type of founders I'm used to, right,
Like what it actually takes who you're up against.
Speaker 3: Yeah, that's kind of takeaway I got from this as
well as maybe the first step is, uh, we got
to teach people how to write pitch decks and just
get like, yeah, here here's a base version of you know,
if you're going to make a value proposition, this is
how you're going to attract people. And then you know
that we do give them access to the people have
money and that they get at least five minutes, you know,
so like.
Speaker 2: If it's not even get if you've got the idea, man,
money will find you, right, this is what this is
what I mean having this conversations with Diames. Right, if
you're going to have a couple of vcs that are
floating around the space because they're here for the ideas.
That's why. That's why I'm here, right, That's why Mark
Andriesen is here, right, That's why Peter Thiel is here
because it's an intellectually interesting space right nowhere else has that.
So it's the ideas that brought us here. Right now,
it's up to like so we came and found you, right,
like so like the you know, the spurg on Twitter
that you know has been reading esoteric you know, he's
he's actually one of these public He's actually one of
these like eight customers that exist for the thousandth right
wing book publisher of you know, long progouted texts. Right,
he's one of those guys, and he's been, you know,
diligently putting out ideas and I heard them and they
excited me, and I came. So now you have my attention, right,
pitch me something right and actually put the amount of
work right. So like you, your autism and your beliefs right,
the the ideological drivers right, all the reasons why I
should pay attention to you right, because of people, because
of you know, legacy and interests. That's what got me here.
But I don't manage all my money. I have a
fiduciary relationship. I am responsible for the money of others, right.
So but if I see a good investment, I'm going
to take it. So yeah, I see is the thousands,
the thousands people guys in our sphere are so fucking
in their own end zone. They want to do the machines.
Speaker 3: And then we've got a lot of money and nobody
with the business plan to say, here's what those CNC
machines could make domestically worthwhile.
Speaker 2: Company with a fucking CNC machine idea, Right, It's all
they don't understand what they are interested in. A very
small group of people are interested in, right, And unless
you're going to sell that very small group of people
things that cost millions of dollars, which you can't because
they don't have millions of dollars, you need to come
up with an idea that everybody and not just niche weirdo.
Speaker 3: So I figure with this too. It's the Chick fil
A model.
Speaker 2: You know.
Speaker 3: The people that they hire and the people that they
franchise for Chick fil A are generally based, but they
sell chicken sandwiches to everybody and they make money from that,
whereas uh.
Speaker 2: You know, feel it's beneath them, like oh fucking normany
the losers. My ideas are too esoteric and cool.
Speaker 3: For that well, whereas the other I'm gonna throw Glenn
Beck under the bus here, you know, running ads for
Patriot gold and dehydrated food buckets made in China is
taking money from our guys and giving it to our enemies.
It's backwards you know, the way this has to work
is to your point that you have to sell to everybody.
But then the ones who you bring into the fold
where you pay them salary, you hire them, you promote them,
you let them be owners. Is our guys, p.
Speaker 2: How did you like zero to one?
Speaker 1: I liked it because it changed the way I thought
the idea how monopoly is described in that and the
benefit of monopoly. And I know that there's a lot
of guys out there. I mean, there arellionaires that that
I listened to our podcasts and stuff. They disagree with
the idea of monopoly. They think that monopoly causes people
to be stagnant, causes innovation to be stagnant. But that's
not the way I saw it. I understood exactly what
they were. I understood the points that he was making
in that. So yeah, I mean I liked it because
it caused me to think. It caused me to think differently,
and it basically broke some of the old, stale libertarian
kind of thought that was in my head.
Speaker 2: Yeah, it's it's the blue ocean idea, right that I
don't see. I The one difference, I would say, in
the type of companies and stuff that I have to
look at, and the type of ideas that I get
pitched on Twitter or stuff like that, they're all like
the based version of this thing that already exists, right,
and I can't stand it. I want somebody to show
me something that I've never fucking seen before, never thought
of before, right, And you know who you how you
know when you've encountered a good idea that's a company,
or like a good idea that's like a pitch deck.
I want to get angry when I read your deck.
I want to be so fucking angry I can't see
straight because I want to read your deck and I
want to think, why the fuck didn't I think of that?
God damn it, this makes so much sense. It's like,
how did I not? Like the best ideas are the
ones that anybody like. When you see them and somebody
else has them, they get you angry because you're like
this was sitting right in front, like this was in
front of people the whole time, Like why of course
this makes a total sense. And when an investor sees that,
it triggers like I'm gonna I'm cutting a check because
that means I know that whoever else sees this company,
it's going to get it immediately. It's going to get
why it's important, and they're gonna it's gonna get why.
Like right wingers describe businesses like fucking leftists meme, right,
I don't want a fucking like. I want to look
at it and I want to get it, because that
means if I can look at it and I can
get it, that means anybody right wing not right wing right,
everybody that looks at it is going to get it,
and they're going to look at the way they were
doing it before and go why the fuck was I
doing this before? Like this is so much easier, right,
And when that happens, all of the things like blue
ocean stuff, that's all that's bigd in, right. I know
nobody else is doing it this way because I out
of you know, a violent reaction when I saw this deck,
because you know, it was right there in front of
my face, And how did how has no one done
this before? Like how how are you the asshole that
that brought this up? Like how come I'm not that guy?
That's what we want to see? Like I've seen enough bookstores,
I've seen enough publishers I've seen enough magazines. I've seen
enough ship that's for our own guys. There's thoughts on.
Speaker 3: H On paulmar Lucky and andrel going after the military market,
kind of doing the Elon Muss thing, except it's uh,
you know, rockets to kill enemies as opposed to rockets
to mars.
Speaker 2: The amount of drama like that happened because right before that,
right right before that, there was a massive like George
Floyd level I don't want to call it a riot,
I call it her protest whatever at Google shut down
the campus for like a week because Google employees, Chinese
communists that worked there and black people that shouldn't work there,
found out that the A division of Google was working
on something called Dragonfly for the Pentagon. And this is
a company that at the time was working on three
different things for the Chinese military, by the way, but
the fact that we were working on Google was working
on something for the US military. I mean, like if
you had said, what Peter theal Palmer Lucky and really
because it's not just Petter deal was all founder's fund
and it was founder's fund first, and Mark Indreason shortly
after I think within a date too, like I can't
describe to you how much of a social taboo that was. Right, So,
after this thing happened, right like, oh, we're gonna shut
down Google because we're gonna protest you work for the
fucking Defense Department, like you're in America and we're gonna
like basically hold a fucking sit in at Google because
you don't like the idea of like Google doing something
for the defense department, but we'll do stuff for the
Chinese military. And Peter Thiel stepped up and goes like,
now founder's fund will invest in defense. We're only going
to invest in defense in space. That's it. And it
was a brilliant strategy because at that point in time,
all of tech was doing the fucking right wing publisher
bullshit right like I'm gonna be the uber of X.
Like basically it had gotten so easy to do a
software based startup, right like, Oh, I'll just grab my
hosting infrastructure from AWS. That will take ten seconds. Oh
I'll just grab this mapping engine from It's just a
bunch of APIs stacked together like Legos fast thing.
Speaker 4: Yeah.
Speaker 2: Yes, So basically the barrier to entry the amount of
skills that it was required to start a fucking app
got dropped so low that every fucking retard had an app.
So they were diving down narrower and narrower and smaller
and smaller niches, right like, this is the app that's
kind of like Uber, but it's only for Indians that
only eat Chinese food. Like, okay, well what about all Indians? No,
that's this other guy's app. Okay, right, like they were
it was. It had become nonsensical because it was so
easy to do startups.
Speaker 3: Just that AI to the end of the company's name.
That'll get your next round.
Speaker 2: The hardware stuff, the stuff that depending on actually wanted
to do. Nobody was doing. And Peter Deal's like, but
the Defense Department pays a shitload, and that whole system's
fucking broken. And he had a rockstar success with Palenteer,
and he's like, I guess I'm imagining what his thought
process was be like if I like, Peter Deal is
like the Jamie Diamond of the West Coast, right Like,
whatever Peter Deal says he's doing, everybody else is just
going to do because they can't afford to bet that
Peter Deal is wrong, So you just do it right,
Peter with this way, like everyone reminds me.
Speaker 3: You know, the thing I feel all the time is
that nobody wants to do their due diligence. That's how
these scams like FTX happened. Is oh, well, so and
so invested in them, so they must have done their
due diligence, so we don't have time to think. Let's
just ride on their coattails, and then it's turtles all
the way down until they realize that, like nobody's actually
done the research.
Speaker 2: Maybe for crypto shit, but also FTX. The's a there's
a backstory to FTX that's a lot more covered in spooks.
But then that was the real reason that exploded because
maybe it got caught washing a bunch of fentanyl money
for Channel, so they were definitely't do that. That must
not have come up in the due diligence. But it
wasn't because they weren't smart that they were. But they
were also criminals for a foreign nation, so hey, and
that's why I think it's very funny that the other
criminals for a foreign nation, Silicon Valley Bank, also got
assassinated by Peter Diel. But yeah, what Palmer Lucky is
doing something anybody could have done, right, Like, wait, we're
just gonna make drones for the military. Okay, Well, how
come no one's doing that? Well I don't know, because
who else was like lockeed and a Pregnor drone that
costs like twenty million. But the drones were seen on
the battlefield cost like ten bucks. So who's making those
for the Pentagon? Well nobody. We don't have it, right,
Like everybody should have thought of that, right, Like the
drones we see on the battlefield cost ten dollars and
will fly right in your face and kill themselves, the drones,
not the operators. But we don't have drones to do that.
Where are where are comic cozy drones? We don't have any?
Speaker 3: Well, and that I think you know. Because software was
so cheap to make, then people got habituated to that.
That again, the idea of investing real capex in making
real physical hardware things was intimidating. People did not want
to take the opportunity. Costs to take on that much
entrepreneurial risk did not seem worthwhile until somebody did the
math and said, well, yeah, but the Pentagon pays crazy money,
so the risk is justified. But when you're used to
a low risk entrepreneurial environment. It's very easy to get
stuck in that valley.
Speaker 2: Yeah, kind of, it's kind of like that. Also, the
Pentagon provided a very safe place to incubate these technologies, right,
and that I think was the differentiator, because Palmer Lucky
isn't just throwing a bunch of shit on the wall,
going maybe the Defense Department wants this, Maybe they want this,
Maybe they want this. What he's doing is collaborating, right,
So what we've basically got all the way back to
is Star Wars, how we got the Internet. I remember
Pete you and were talking about, like they don't like
the government. The military has the ability to look thirty
years down the road when it invests, right, and it
has the ability to take much greater risks with their
capital and make really long term investments that may or
may not pan out. So it looks like VC is
doing it, but it's not. It's collaborating.
Speaker 3: This is kind of right where you know where we began, though.
Is that kind of incubation where they're willing to take
that kind of risk over a thirty year time horizon
historically has been proven to pan out. I mean, maybe
it's just that the right needs to have its own state,
and that's what will satisfy that level of risk taking.
But that's what I was trying to get at with
the patronage thing, is that clearly that model does work,
but it tends to be state actors who make it work,
and especially for military purposes. You know, it's Ubisue is
making air conditioners and they were also making zeros.
Speaker 1: Well, that was That's a point that I've been making
for a while now too, is the whole Samuel Konkin
Agoris thing about building, you know, building a parallel society.
It's like, well, how do you do that with heavy industry?
And I guess the way I look at it is
in nineteen ninety one, when a lot of these guys
could have been working for the government, they decided to
do it on their own, but use the government's money
to do it, use money that they took from the
government in order to build their parallel society. And that's
what they're they've done now, and that's really that's the
only way you're going to do it. You're not going
to get away with the biggest problem with agorism was
always heavy industry. Well, how are you going to have
parallel heavy industry when you have regulation and YadA YadA. Well,
they found their way around it. Work with the government
until it's the time to try to destroy the government
so that you can take their place, which is.
Speaker 3: Where I brought banking into it, right, Only a bank really,
you know, spends money that they don't have, which is
why they don't feel the risk. The way that if
you had to earn your money in order to invest it,
you'd be much more cautious with it.
Speaker 2: Well, so the way that the good to peace question
to Pete statement, the way that the government is doing
it now is the government before you had like bell
labs and ship and now you have incubators which are
basically the little baby bell labs. Right, So the same
thing is happening, right, It's just happening in a more
distributed sense. Because well, so if we're gonna talk about
if you're gonna talk about a state, I said, I
said this to you, I think the other day about
a mutual friend that was thinking about getting a job
in infrastructure, right, a manufacturing plant or something, and I
was very excited about it, and I told him I
think you should do this because right, you have a
shot at being management at the same time as so
like right now, well, let's just say, I don't know.
X y Z production company isn't very exciting. Okay, why
isn't it very exciting? It's exciting. It's not exciting because
nine of production of x y Z happens in China
and we're just a small guy. Well what happens if
all that production in China stops? Then you're not a
small guy anymore, and you're going to be a very
big guy. And now you're very close to the top
of a very big thing. The more guys that we
can get working at power companies. See, I don't believe
in the competency crisis. I don't. I think it's bullshit
and it's cope. And before everybody like pillaries me if
Fortune five hundred companies have only been making two percent
of their hires less than two percent of their highers, right,
I get you know, more than one percent. I guess
straight white guys the most talented, highest propensity, like the
highest number of geniuses. Sorry Jews, that's not you know
that you're not that a Q. Stuff is bunk. So
we're like the straight white guy is the smartest guy.
We have the high number of geniuses. So you're telling
me that all of the major publicly traded companies won't
hire straight white guys like you know, the genius demographic. Okay,
well what about private companies. Well, private companies they don't
get to just issue bombs. They can't just you know,
borrow money from themselves and sell it to the market
instant They can't raise money instantaneously, right, Private companies have
to go to big funds like you know, Larry Finks,
Faggot Shop or any of these other you know, Fidelity
or whatever. Right, And because they can't sell their own
bonds to the market, these institutions like Fidelity, like black Rock,
they have much more leverage because a publicly traded company
like oh, black Rod don't want to give you the money.
Black Rock's got five percent of my shares and is
being a count on my board. Well, how much is
five percent of our shares worth? Susan? Okay, all right,
Well write that number down and go take that to
accounting and have them spit up that many bonds to
equal that amount, and let me know when you're done.
And tomorrow. First thing I'm gonna take that bond money.
I'm gonna buy all Larry Fings shares and I don't
want my company more. All right, that's a possibility, But
a private company doesn't get to do that because he
can't just go tell Susan to go spit some bombs
out to the market and raise money to get Larry
Fink the fuck off his count table.
Speaker 3: But this is where Michael Milkin creating the junk bond market.
Speaker 2: Is. It's much worse. If we think that two percent
of white guys being hired in public companies is bad,
it is probably worse in large private companies, and there
are five times as many of them as there are
publicly traded companies. So I would wager that the amount
of high value human capital that has been deliberately sidelined
right is way more than anyone's factoring, because the only
other stat is that fucking Fortune five hundred company one.
All those companies are public traded. But like Pete, like,
let's just say like two or three of the mutual
friends that we talk about, right, I bet you I
could take any one of those kids right mid twenties,
and I don't care whether you're a fucking engineer at
a nuclear power plant, right, or you make you know
X y Z. You know, I don't know. I'm trying
to think the most high you know, risk type infrastructure things.
So I let's keep using nuclear power plants. Let's just
say you're the guy that builds the reactor.
Speaker 3: Right.
Speaker 2: There is not a fucking job in that nuclear power plant, right,
or the manufacturing of the pieces that went into that
plant that I couldn't teach one of our mutual friends
in a year, right, Like, hey, go sit underneath this guy,
whatever his job is. Learn that. Every single one of
those guys can learn whatever that fucking job is in
a year. So I don't see a competency crisis. I
see a misallocation of human capital crisis. Right. But they're
not dead. They exist.
Speaker 3: Well, so yeah, I mean this is what I've been
saying too, is that somebody has to act as matchmaker
between there's a glut of weaponized autists who don't know
what to do with themselves and can't make any money,
and then the capital that wants to invest in those
kinds of people but can't find them.
Speaker 2: I think that capital exists, they just need to be
allowed to hire them.
Speaker 1: Again, We're running up on close to been going for
about two hours so and I mean we could pick
this up at a later date and I'm sure we'll
have a lot to talk about. So yeah, you guys,
happy with a happy with the conversation we've had so far.
Speaker 3: No, we didn't fix everything, there's still more to do,
but it's a good start.
Speaker 1: Yeah, yeah, bastards, both of you. All Right, I'll I'll
make sure to promote your your Twitter account, Sean like
I did last time. And do you want me to
point people to your Twitter account Stormy? Yeah, sure, absolutely,
all right, we'll do that because you've been having some
banger threads lately. I mean some ones that, uh, you know,
someone's putting out a good thread when like people either
love it or hate it m hm. And yeah, I
think you're seeing a lot of that lately. So I'm
gonna sign off. Thank you. We'll pick this up at
a later date, all right.
Speaker 2: You can take care of no substack to shill or
anything else.
Speaker 1: All right, y'all, take care of a good night.