Speaker 1: I can't actually believe it that the starlink has you know,
zero internet problems and land Basin is the one that's
actually causing the issues.
Speaker 2: Let's see, I'm on starlink right now. There is a
storm moving in same and let me check my speed
right now? Does I already have cloud cover? We haven't
had any sun all day today.
Speaker 1: I've I've had like maybe two or three hours based
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 rain. Crazy like that really
awesome lightning that goes through the clouds but never comes down.
M yeah. So it's it's it's it's interesting. The uh,
the summers have been very different than they normally are
the past you know, three or four years, we get
like progressively weirder. But like you live in the south Folk, 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.
Speaker 3: Stune.
Speaker 1: Yep, we haven't had rain all summer, really, yeah, Like
maybe I'm thinking like maybe eight days in three months.
And when it does come, like you know, you probably
heard some of the stories out of like Fort Lauderdale
with 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 2: When I used to live 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 you know, that's what I got used to.
Speaker 1: So we have that exists. It's just we don't have
a mid day rain anymore. And it's fucking weird. Yeah.
Speaker 2: 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 and
I need more power for live streaming than just recording
like this, I should be fine.
Speaker 1: That's that amazes me a lot more than like most people,
because most people, like you, never thought of satellite internet
in that way until sartainly came around. But like being
being intact like I've I've watched three or four of these,
just absolute failure 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, 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?
And 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 will eventually come
down to is I'll say, okay, well, let's say if
we got rid of your you know, your flat screen's
at home and your laptop and maybe like the little
whatever touch screen thing in your or in your cell phone,
what exists in your life to convince you that you're
not in nineteen seventy And the answer is nothing.
Speaker 2: Well, I mean technologically, yeah, the culture, the culture, it
would be.
Speaker 1: The 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 in the sixties. Yeah,
everything exists online and it's I mean because a risk.
Speaker 2: 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
my my monitor is a forty inch smart TV, but
I mean I have everything disconnected from it. I don't.
It's not acted to the to the Internet and everything,
so so it's all it is is just a monitor.
Speaker 1: I actually used I have a forty two inch monitor.
Like I think anybody that would like the multiple screen
setup is just causing that set themselves unnecessary screen.
Speaker 2: 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, think that is, I.
Speaker 1: Mean, there's what that or maybe trading.
Speaker 2: Yeah, oh yeah, yeah, definitely.
Speaker 1: But the reason why I wonder, like why Starlink made
me think about that is because the reason why we
have so much 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.
Speaker 4: Right.
Speaker 1: VC exploded at the same time as you say, Star
Wars was winding down, and Star Wars brought us things
like the Internet. Star Wars brought us well, right, 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 invent 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. You have 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 then 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 than 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 screen 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.
Speaker 4: Right.
Speaker 1: 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 wasted. 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 list.
Speaker 5: So Stormy, this is something, Uh, 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 Jade Bank has
been looking at this as well, that basically dollar industry have.
Speaker 1: Oh sorry, go ahead, I said, a lot of guys
in my industry.
Speaker 5: Have okay, yeah, because because that seems to be the issue. Uh,
and this is very similar to So the problem I've
raised is especially publicly.
Speaker 4: Traded securities, is basically that asset bubbles.
Speaker 5: Crowd 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.
Speaker 4: They're not willing to take the long.
Speaker 5: 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 which is also a mark point
in dow of capital.
Speaker 1: You can see this in pharmaceuticals more than anywhere else.
Speaker 4: Yeah, Blockbuster drugs ended in like the eighties.
Speaker 1: Yep, exactly, all the ease, all the low hanging fruit
is already picked. I was explaining this to Dark Enlightenment
the other day.
Speaker 6: 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 a kind of
like a.
Speaker 1: 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 the liquidity crisis, except I see them compartmentalized. I mean,
we can hammer that out.
Speaker 4: Right.
Speaker 1: So from a regulatory standpoint, everyone thinks like, oh, you know,
just changing corporate tax law is just you know, I
was like, basically that is only going 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 this not's going to go up ten percent,
right 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 persecutory corporate tax structures. Right for me, if
I end the year with any money, that's money you
get to tax.
Speaker 4: Right.
Speaker 1: 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 the
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 and 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
reduced 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, 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 4: I'm just about to say, yeah, stock.
Speaker 1: 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 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 time.
Speaker 5: So you don't think it's the principal agent problem. I've
been looking at it more than you know, or kind
of like selectric theory that they have to defend a
position from.
Speaker 1: The board a binary 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,
he literally took all the dollars that he's ever made
a Wall Street and something into JP 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 5: Yeah, I was a whole deep dive on Thorstein 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.
Speaker 4: There's kind of this pervasive myth that we're in like
a post scarcity society.
Speaker 5: And so and because reputation or fame is a zero
sum game, whereas wealth as a grow of the pie game.
You know, once they've hit that that satiation level of
money or resources, now they want to get cutthroat in
the zero sum game of reputation and social status.
Speaker 1: Well like so like there you have all like Jamie
Diamond already has a social status in the world. He's
got all 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. If
Tesla goes to zero, that means Elon Musk has gone
to zero, right.
Speaker 5: 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 coming 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 1: So you could you could summarize this between internal and
external CEO promotion, all 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 musket 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 ground
plus you know, including the seed, and was just starting
to get a product out of the door, right. I
think 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 we 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 guy's a fagot yep.
Speaker 4: Yeah. Well, I mean that's the whole managerial revolution thing
is that you know, they take over institutions, but just temporarily.
Speaker 1: 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, 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 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 to where you're tramer 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 tout tracked too well.
Speaker 5: So I think this is why you know, 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 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,
as you're saying basically.
Speaker 1: 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 being public shairs of 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 2: I've never done any a deep dive on Henry Ford
for you know, obvious reasons of wanting wanting to do
that carefully.
Speaker 1: Yeah, maybe it was a myth of the twentieth century guys.
And I didn't know this.
Speaker 2: They definitely, they definitely did Henry Ford.
Speaker 1: 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 out. And he said so on numerous occasions 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 oney of these you know, finance.
Any one of these hedge fund types, right, th'll you know,
buy a stock, sell the next day, right if it's
a 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 the 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 on what that company does,
he doesn't give a fuck about it.
Speaker 5: So that's also something I've been thinking about in terms
of the focus on market cap as opposed to cash flow.
Gentleman I talked to once. You have a great example
of you know, mister Darcy in uh, you know, what's
the same aus novel. But wealth used to be measured
in terms of how much like yeah, as a landed
gentleman you it generated in a year.
Speaker 4: You know, there was no market for.
Speaker 5: 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 them. To 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 1: So running through what you think a patron network would
look like. Okay, So, so.
Speaker 5: Because kapex is risky and it's long term, how this
has historically been done in Imperial Japan is actually very
interesting in this regard.
Speaker 1: Uh.
Speaker 5: Germany, uh, you know, for the last century has been
interesting this.
Speaker 4: Way as well.
Speaker 1: Frederick List economies.
Speaker 5: 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. Uh, 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 would put in the eight hour work weeks, but
that's not what's rewarded when just trying to you know,
I p O or uh 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 costs right. Richard
Werner is very good on this as well. Anytime you
create an 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. The prices everything goes up
because there's just more money chasing. Basically the same 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're investing in stock or
real estate, the same thing as inflation in consumption goods,
except because it's in an asset bubble. Well, you see
that hit right away, and you don't have to be
any kind of like creative or confidence to do that.
You know, it's all just you know spreadsheets and you
know fictional goods.
Speaker 1: You're literally right. There's no a single hedge fund manager
in the history of the industry that has been in
the s and P. Five hundred for more than fifteen years.
Speaker 5: 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're basically, you know, a portion of it
because you're on the index, a portion of.
Speaker 1: It does, right, Those treasuries go out there to be
levered up. Right, So this is my theory on COVID.
Let me know what you think what happened in August
of twenty nineteen.
Speaker 5: Yeah, it's an overnight repo rate spike, which is very
interesting that that came out right afterwards.
Speaker 1: Yes, exactly, so if you had a rep And I've
been kind of bad in this around with friends, so
this is the first time anybody's heard it publicly. So
I think that tam 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 that. 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 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. Yeah,
the course find says yes, yes it is. And I
was like, okay, and all those offshore dollars they're indexed
to libor right, And then she goes, yeah, of course of
course they are. 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 the U the dollar and
she's like no, no, of course not, Like okay, 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 dollar denominated debts right are index
to an interest rate that is set by twenty banks
in London, not a 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 owned ninety percent of the shares
and I can vote those shares, then that makes that
my company, not your company. And this woman was fucking speechless,
All right, Geela, it is like, I have to come
back to you. I have to think about that. I'm
thinking myself. I'm like, bitch, you do the like playing
the law right, like you were in charge of a
fucking portion of a guy damn global economy, and this
never occurred to you, and it bothered me, and it
bothered me and it bothered me. And I just run
into this again and again and again. Wanted a similar
type conversation with a famous duconynist. And this guy couldn't understand.
He's like, I couldn't even this is a this is
an economist that Goldman 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 at me, He's wearing the
face and said, I don't I don't even know where
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 league,
I'm going to have to fucking tear that house down
to the studs because I don't know where the pipes are.
Speaker 5: Yeah, you plumb 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.
Speaker 4: You know, I think they inherited the exactly.
Speaker 5: They don't know how it works, and they're just trying
to keep it going and keep it from exploding.
Speaker 1: Well yeah, because they don't know, and that means 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 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,
this nine tenths of all these offshore dollars, 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, twenty three or
twenty twenty two, remember it was December tide 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,
there's not a 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 you know, five or six sentence
letter that was like you have to do this. You
can't have any liboard denominated securities or instruments in your
account at all.
Speaker 5: Everyone to come back to the patronage question, though, okay, okay,
So a historic example of a blow up would be all.
Speaker 1: Those all those dollars in all those trade, all those
people buying stock over 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 5: 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 in fact, in
the midst of that. So as far as patronage, I
guess the question why I 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.
Speaker 4: Are a whole other version of that as well.
Speaker 5: Uh, nobody's really looking at at the divergence risk or
slippage between you know, ETFs and 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 1: All right, Well, so 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 5: 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 hwe 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 retirement 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 and
then the boomers will be dead by the time that happens,
and their retirement income won't be a political question anymore.
Speaker 1: Well, what time are you What time are you thinking?
Speaker 5: 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 1: Okay, Well, so the boomers population is a very interesting thing.
So that Jewish guy in what you can call it
a Peterston this a little bit at dinner, right. So
chaos theory is terribly named, right, It's actually 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 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 mean this should be a total of twenty
five possible outcomes?
Speaker 5: Right?
Speaker 1: 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 foot blood, Like, okay, well, how come
South America has a baby boomer generation? How come India
has got a fucking baby boomer generation? Did they come
home from World War two? And 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, if the outlier. So
right now, we're already down 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. Right, And this is why everyone's 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, right,
this leverage bubble that they've made.
Speaker 5: Yeah, Mike Green famously the analogy of you know, if
your brakes 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. And yeah, the way of 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 1: No, I think the demographic crisis is and the 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 you
have a whole bunch of people at the top or
on the bottom working their ass off, right, and that
money filter's up and it gets taken out a little
bit of time to support the people at the top
of 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 any 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 flipp
upside down, a 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?
Speaker 4: Right?
Speaker 1: So the baby boomers also own all the houses, they
own all the small businesses they don't want, 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 part we'll just call infrastructure and you know small
and mid sized businesses as we'll just use houses. It's easy, Furtal,
we understand, how do you sell if the baby boomer
is on 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? You don't?
Speaker 4: Right?
Speaker 5: And also you know the issue is they're not selling
or as a dying up at that bottom of the
inverted pyramid, do not have the capital to buy them out.
Speaker 1: Right. But the problem is going to sort itself out
because you can't sell five houses to one person.
Speaker 5: Well, 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 1: 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 the 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 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 nine 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 and small
engineering company with five or six C and C machines Right,
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 on shore without shortages. There's no way,
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, They can't even
build a fucking semiconduct their facility in Arizona. It's just
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 a not
in history. That's a ridiculus statement. But let's just say
in the next eighty years or whatever that someone is
going to have to fill the gap. 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. But if we're on shore in manufacturing again,
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 shoring 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 e TAR is still 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, mom and 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 eye TAR
compliance stuff and crank the fuck out a bunch of blenders.
Speaker 5: 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 1: Is to do that not a fire sale, right.
Speaker 5: 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 a very rough transition.
It'll be an ass at sale and then you know,
whoever does buy it is going to have to figure
out how to apply it for future team.
Speaker 4: But so you know, in terms of answering this patronage.
Speaker 5: 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 going to invest in them and have that
tenure time horizon because it's not going to be you know,
the managerial states banking system, right, this is going to
be private money that has.
Speaker 1: To do this. 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 think this, do
you know VC structure came about.
Speaker 5: 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 beginning
at the beginning is usually best.
Speaker 1: 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. Right, 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 what we'll just called the fund a 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 pot 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 my interest.
Speaker 4: Right.
Speaker 1: 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
in the game type thing, right. So I think whichever
way you're going to do, you would want, right, So.
Speaker 4: So so do we have that for our guys though, Like,
where is the based fund that is putting that money into?
Speaker 1: Show me the basic companies. I've had this conversation with
a dozen people. Uh, Pete, I think I've ranted to
you about this for a little bit.
Speaker 2: But it's probably he made about he made about how
people just he maane, about how people just say you
got to be building, you got to be building, and
then but then I'll tell you.
Speaker 1: What to build that and the dissident published.
Speaker 2: Yeah that everybody, we need more distant publishers. We do, Yeah,
we don't.
Speaker 4: That took me.
Speaker 5: That actually took me by surprise. With some my point
out it is like, you know, really, the don't it right?
It's just a bunch of artists, And I'm like, 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.
Speaker 4: Yeah, there's to be a way to make that a.
Speaker 5: 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 1: In that sense, this is what artists deserve to be poor.
Speaker 5: Sure, right, yeah, 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 bed.
Speaker 1: Yeah. So the answer to why there is no base
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. Right. 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 signed 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 5: So you know 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 1: That's as different you asked me where where the base
V sees 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. Invent
your 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 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 4: So how don't want to put this?
Speaker 5: I think there's a question of you know, to bring
it back to you know that you know it's being
based in that 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 dictat 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.
Speaker 4: And so on.
Speaker 5: There's no reason we can't do that. Also, 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 going to
screw this up or take advantage. You know, it's not
going to be uh you know PPP money for fake
inner city businesses.
Speaker 1: But they get the state though, right, So like, let's
say you sucked 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, sorry or right?
Speaker 5: Or it gets spread out, it's inflation that's never recovered
through because the capital structure did not become more efficient.
Speaker 4: It's just you.
Speaker 1: Yeah, but if you're going to ask the private person,
who is going to cover Like, there's no incentive mechanism
for me to 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 4: So I guess I'm thinking of it in terms of that, for.
Speaker 5: 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 1: See, I've been urging, 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 DMS or whatever, and they ask me like, I
am in X Y and Z situation, what do I
do if I have X y Z amount of capital?
Or I do if I have you know, no capital,
what do I do? 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 4: Like, because lending that was basically asset based.
Speaker 5: I mean that that's the vicious cycle of you know,
lending is based on what do you have assets as
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 there
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 1: So I've I've gotten And you said you caught that
that show I did with the adjacent from the two
good podcasts, Yes 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 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, theyn't want to hear his stories. Right,
they just cared about their credit card. They'll be 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, we
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 shit or
that 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 5: So is what you did replicable? Like that's the question
I had. My first question is, well, where do you
meet these boomers? You know, 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 1: This is what this is what I was trying to
get up before when I was talking about the machine
jumps capitalformation. 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, rural Appalachia, 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 a good friend of mine was in
and this is going to ruff a lot of feathers
because I know, like, oh, we can't teach your guys
to beat plumbers or whatever like I had.
Speaker 5: And I've seen a lot of boomers where they're not
interested in teaching or place. They're like, oh, I don't
get paid for that, that's not my job.
Speaker 1: You know.
Speaker 5: 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 he.
Speaker 1: Was autonomy to them, right, And what I'll say is,
is this all of the guys that should be working
for them, right, they can they cannot give a shit
about legacy. That's fine, but that's not the problem that
they are facing. Right. So my friend is mother died
and he had to go to New York and basically
handle her estate and her a 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
to 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 5: Yeah, they don't want to get dirty and twenty and
most product.
Speaker 1: 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 ship for free. Yeah, here's the type
of people that do that ship.
Speaker 5: I work in finance and that's like my leisure activity
is exactly so.
Speaker 1: We are those guys and we will dance or do
it for almost one hundred dollars an hour.
Speaker 5: So there, because 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 in. That's
exactly what I'd be looking for. Like another example is
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.
Speaker 4: There's no like.
Speaker 5: 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 1: Like there's like three engineering shops that I've been taking
extra capital and socking it away and see and 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 deeply acquired CNC 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
no 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, CE and C job for a year while
they learned the actual C and C job and no CAD.
Speaker 5: So, if this is such a massive market this location,
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 uh, 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 1: Right. Well, so if the answer if the question is
where's the VC to come and and you know, fund
to university the technical he won't, right, 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 umps, 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, this
person's 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 decks that 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 out and now we want communism, Well where's the VC.
Just 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 and over.
Speaker 4: What time frame? Though, because I think you know, the
problem I've seen with a lot of.
Speaker 5: 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 price and they want to make
the quick flip.
Speaker 4: You know.
Speaker 5: They want to buy the business, juice it up, and
then sell it three years 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.
Speaker 4: Whole time like a buy and hold strategy. You know,
it must be a market cap.
Speaker 1: That's quote, that's growth, that's growth. Private equity, right, they
buy businesses and flip them and 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
his best case scenario of seven years best case. So
if I'm investing in a startup, unless you get unless
you're super super successful and within a within a couple
of years, grow so fast that you're already like causing
the major companies sucking 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 5: So what's your expected exit in this scenario? Is it
something other than buyout or IPO.
Speaker 1: Usually purchased by a larger company, Because I'm investing in
early stage 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, funnel, here's your giant cartoon check.
Speaker 5: Right, But that but that's also how they get nerved, right,
is you know if meta you're.
Speaker 1: Asking me me, you're asking me to solve both We
just have to fix the world and 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 get them to buy
early stage companies if I cause them enough headache. And enough,
you know, few response.
Speaker 4: And how do we at our own Google?
Speaker 5: I That's where I'm going with this, right, And it's
the parallel infrastructure thing of you know, if what is
really going to count?
Speaker 4: Especially you know when.
Speaker 1: It's like this is the problem with parallel infrastructure conversation,
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 5: You know, human capital, so that that's contingent on the
managerial States bank. Then you know, that's like why you
know Ricardian 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 1: No, like with big companies. Right, Google's abount 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. Right, I'm not gonna be the Fed
did it. It's going to be its bigness. Right. When
something becomes big, big and bureaucratized, 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, one
day they took up their costumes and charge across the
border with Achas, 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 sources 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 to his regional director or
whatever asshole titles they have or like change agent or
whatever faggety 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 nihon ineffectual.
Speaker 5: So stock 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 the need for profit motive
basically goes out the window because you've got you know,
the banking system.
Speaker 1: Aren't 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.
If company like let's say TikTok, if I wanted to
make a 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 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 for Google to acquire. Well, but so infinity
customers had to acquire. So that's growth and capital is
going to go with.
Speaker 5: 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. I think I
think the problem with indexing and 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 4: Need more of it?
Speaker 1: 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 stock linebacks 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 the street 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 here got at.
Speaker 5: 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 1: So are we talking about the company or are we
talking about the shared buyer that runs the industy?
Speaker 5: Because right, so let's say, you know it's running some
you know S and P five What is with the
S and P five hundred?
Speaker 4: It's you know, big tech is like.
Speaker 5: The seven firms on that and uh, 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 1: Would you say that in Nvidia is in everyone's index?
Speaker 5: 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 1: So Nvidia should be around here for like, let's say
three years from now.
Speaker 5: 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, because you're.
Speaker 1: Kind of telling me gravity doesn't exist. So is it
absolute or big influence or absolute influence enough to.
Speaker 5: Be I think it's because of so Mike Green explains
this better than maybe I am right now. But indexing
is running the market, and it's not the fundamentals of
revenue and you know, future profitability the way that people
traditionally think of stocks as value. It's it's on all
it's an algorithmic trade. It's on autopilot.
Speaker 1: Even what drives that algorithm. What algorithm is it? Is
it a momentum algorithm? Okah, right?
Speaker 4: So right, So basically it's a momentum trade.
Speaker 1: Right.
Speaker 5: You know, when when given money by when.
Speaker 1: So 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 algoes
are gonna do. They they're not even gonna care about
the Haitian. They're going to assume that something catastrophic has
happened in Nvidia, right, and they're 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
fund's 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.
Speaker 4: Right.
Speaker 1: 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 gonna 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 cap that was the most retarded
thing ever and was roundly shouted down by the entire
financial market, but the Biden administration was really intent on.
They literally fucking shell uts around the world brought it
to COP twenty six or whatever the fucking retarded one. Anyways,
that seemed to miraculously happen. We have effect had an
eighty dollars oil price cap the last two years, but
the level 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 all 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 you've been 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 one, so these the
power that you are attributing to ETFs and these index
funds exists, but is not omnipotent.
Speaker 5: 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 risk
or career risk that you know, they need to be
close at least to the index or they're going to
get fired.
Speaker 1: So many things are going down rapidly. Do you think
that everyone at Blackrock is going to like stare at
it like, oh shit, well we better not do anything.
We better not go find some other assets to put
this in.
Speaker 5: 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.
Speaker 4: You know, the millennials and Gen z are not going
to be able to buy them out.
Speaker 1: We'll have to disagree, and it will have to agree
to disagree. Okay, all right, So let's.
Speaker 2: Move to want to 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 patronage 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 to we're going to have to
agree to disagree.
Speaker 1: Yeah, 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 fagots 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 and 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 approached to, like, hey,
do you want to invest in this 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 that I'm used to, right, Like,
what it actually takes, who you're up against.
Speaker 5: Yeah, that was kind of take away 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 gonna 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.
Speaker 3: So look, 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 some having this conversation
with dimes.
Speaker 1: 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 Deal
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 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 pergotten 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 now legacy and interest, 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 a thousands
the thousands people guys in our sphere are so fucking
in their own end zone. They want to do.
Speaker 4: The machines. And I got a lot of money, okay,
And nobody with the business plan to say, here's what
those CNC machines could make domestically worthwhile company.
Speaker 1: 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 weird.
Speaker 5: So to figure with this too, it's the Chick fil
A model. You know, 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, you know.
Speaker 1: Feel it's beneath them, like, oh fucking Norman, the losers.
My ideas are too esoteric and cool for that.
Speaker 5: 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 eyes and giving it to our enemies.
Speaker 4: It's backwards. You know.
Speaker 5: 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.
Speaker 4: Is our guys.
Speaker 1: Pe How did you like zero to one?
Speaker 2: Well? 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 are billionaires
that that I listened to their 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 1: 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'm 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, 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 read. 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 baked in, right, I know
nobody else is doing it this way because I had,
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 bought 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.
Speaker 5: There's thoughts 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 1: The amount of drama like that happened because right before that,
right right before that, there was a massive like George
Floyd level I want to call it a riot, he's
called protest whatever at Google. It's shut down the campus
for like a week because Google employees, fucking Chinese communists
that work 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 that, 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 Peter theal was all founder's
fund and it was founder's fund first, and Mark indreason
shortly after, I think within a day or two, 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 going to 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, no, 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 going to 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. Yeah. Yes, So basically, the barrier to entry,
the amount of skills that it was required to start
a 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 4: Just that AI to the end of the company's name.
Speaker 1: That'll get your next round. The hardware stuff, the stuff
that depending on actually wanted to do, nobody was doing.
And Peter feels like, but the Defense Department pays his shipload,
and that whole system's fucking broken. And he had a
rockstar success with Palanteer, and he's like, I guess I
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, Like.
Speaker 4: Everyone reminds me.
Speaker 5: 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 1: Maybe for cryptoshit, but also FTX. There'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 phentoyl money
for time, so they would definitely do 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 but for the military. Okay, Well, how
come no one's doing that? Well I don't know, because
who else was like lackeyed and a Pregniort drone that
cost 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 House and drones? We don't
have any?
Speaker 5: Well, and that I think, you know, because software was
so cheap to make and people got habituated to that.
That again, the idea of investing real cafex in making
real physical hardware things was intimidating. People did not want
to take the opportunity. Cost 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 1: 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. This time we got the Internet. I
remember Pete, you and I 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 4: This is kind of right where, you know, where we began.
Speaker 1: Though.
Speaker 5: 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 Abishu was
making air conditioners and they were also making zeros.
Speaker 2: Well that was That's a point that I've been making
for a while now, too, is the whole Samuel Kunk
and ag thing about building 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'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.
Speaker 4: Which is where I brought banking into it, right, Only
a bank really, you know, spends money that they don't have,
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 1: Well, So the way that the good to Pete's quest
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 basically 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 Pete, I said,
I said this to you, I think the other day
about a mutual friend that was thek about getting a
job in infrastructure, right a manufacturing plant or something, and
I was very excited about it, and I told him, like,
I think you should do this because you have a
shot at being management at the same time as so like,
right now, 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 ninety percent
of production of X, Y and 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 hires, 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 The a Q stuff is bunk. So
we're like the straight white guys, the smartest, hid we
have the highest 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.
They can't raise money instantaneously, right. Private companies have to
go to big funds like you know, Larry Fink's Got
Get Shot 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 write black Rock.
They have much more leverage because a publicly traded company
like oh Black Red don't want to give me the money.
Black Rocks got five percent of my shares and is
being a count on my board. Okay, 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 split 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 Fink's shares and I wanted
my company more. 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 office cap table.
Speaker 5: But this is where Michael Milkin creating the junk bond
market is.
Speaker 1: 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 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 a 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 let's keep using nuclear power plants. Let's just say
you're the guy that builds the reactor, right. 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.
Speaker 4: Learn that.
Speaker 1: 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 4: Well, So yeah.
Speaker 5: 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 1: I think that capital exists, they just need to be
allowed to hire them.
Speaker 2: Again, we're running up on close. It's 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 1: No, we didn't fix everything.
Speaker 4: It's still more to do, but it's a good start.
Speaker 2: 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?
Speaker 4: Yeah?
Speaker 2: Sure, absolutely, all right, we'll do that because you've been
having some banger threads lately. I mean some ones that
you know, someone's putting out a good thread when like
people either love it or hate it. 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 1: You take care of no substack to shill or anything else.
Speaker 2: All Right, y'all take care of a good night.