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Speaker 1: If you want to support the show and get the

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episodes early and ad free, head on over to Freeman

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Beyond the Wall dot com, forward slash Support. There's a

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few ways you can support me there. One there's a

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direct link to my website. Two, there's a subscribe star.

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Three there's Patreon. Four there's substack. And now I've introduced

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gum Road because I know that a lot of our

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guys who are on gum road and they are again censorship.

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So if you head over to gum road and you

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subscribe through there, you'll get the episodes early and ad free,

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and you'll get an invite into the Telegram group. So

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I really appreciate all the support everyone's giving me, and

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I hope to expand the show even more than it

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already has. Thank you so much.

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Speaker 2: I can't bet you believe it that starlink has a

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zero internet problems and land Basin is the one that's

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actually causing the issues.

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Speaker 1: Let's see, I'm on starlink right now. There is a

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storm moving in same and let me check my speed

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right now because I already have cloud cover. We haven't

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had any sun all day today.

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Speaker 2: I've I've had like maybe two or three hours spaced

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out in like you know, fifteen twenty minutes like increments

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of like intense sun and then just you know, no

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rain and now we have no raining crazy like that

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really awesome lightning that goes through the clouds but never

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comes down. Yeah. So it's it's it's it's interesting the

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the summers have been very different than they normally are

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the past. You know, three or four years, we've get

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like progressively weirder. But like you live in the South Oolver, right,

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oh yeah, all throughout the summer, every single day in

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the afternoon it rains, you know, monsoon intense for a

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period of about you know, twenty thirty minutes and that's

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it's done.

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Speaker 1: Yep.

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Speaker 2: We haven't had rain all summer.

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Speaker 1: Really, yeah, like.

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Speaker 2: Maybe I'm thinking like maybe eight days in three months.

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And when it does come, like you know, you've probably

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heard some of the stories out of like Fort Lauderdale,

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like the massive flooding and stuff, it just it monsoons

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for like two days. So I don't know whether the

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jet stream has shifted or what, but it's very unusual.

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Speaker 1: When I used to live in when I used to

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live in Hollywood, and I lived about half mile off

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the beach, and there was like a week every year

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in July where it would just rain all week. I

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mean it would and it would just pour for seven

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days in a row. And yeah, that's what I got

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used to.

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Speaker 2: So we have that exists. It's just we don't have

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a mid day rain anymore. It's fucking weird.

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Speaker 1: Yeah, my I mean, my starlink isn't as fast as

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it normally is, but it's way it's it's five times

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as fast as I need for live streaming, so you know,

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and I need more powerful live streaming than just recording

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like this, I should find.

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Speaker 2: That's that amazes me a lot more than like most people,

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because most people like never thought of satellite internet in

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that way until Startling came around. But like being being

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in tech, like I've watched three or four of these

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just absolute failures, and the fact that Elon Musk was

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able to knock it out at first shot into a

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usable product, right like for first off, like anything in

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hardware is a nightmare, right, This is this is actually

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why you know how Peter THEO is always talking about why

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we don't like, hey, we were promised flying cars and shit,

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why don't we have them instead? We have, you know,

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just software, Yeah, tons and tons of software, and people

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try and argue with me about like, oh, no, tech

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has been advancing like crazy, Like how can you say

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that I get a lot of heat for it, especially

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doing what I do right, Because what I'm basically saying

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is my industry is bullshit. And what it will eventually

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come down to is, I'll say, okay, well, let's say

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if we got rid of your you know, your flat

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screens at home and your laptop and maybe like the

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little whatever touch screen thing in your car and your cellphone,

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what exists in your life to convince you that you're

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not in nineteen seventy And the answer is nothing.

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Speaker 1: Well, I mean technologically, yeah, the culture, the culture that

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would be the.

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Speaker 2: Yes, yeah, okay yeah, but like in your house, Like,

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how do you if I got rid of all your screens? Like,

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are you in the seventies the sixties?

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Speaker 1: Yeah?

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Speaker 2: Everything exists online and it's because a risk.

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Speaker 1: I fought against getting a smart TV for like the longest, longest,

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longest time, and I probably might not even have one now,

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but it came with the house. And it's just like

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like my my monitor is a forty inch smart TV,

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but I mean I have everything disconnected from it. I don't.

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It's not connected to the to the internet and everything

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so the other so it's all it is is just

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a monitor.

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Speaker 2: I actually used I have a forty two inch monitor.

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Like I think anybody that would think the multiple screen

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setup is just causing that set themselves unnecessary stream.

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Speaker 1: But the only good thing for the multi screen monitor

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is like for live streaming, if you're live streaming to

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different platforms, to be able to have each platform open

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so that you can like read comments in real time.

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Because what I do is, you know, I have to

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open them, I have to switch tabs and things like that.

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But you know, when you're if you have multiple that's

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the only reason I could think about it thinking.

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Speaker 2: That is I mean there is what that or maybe trading.

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Speaker 1: Yeah, oh yeah, yeah definitely.

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Speaker 2: But the reason why I wonder to like why Starlink

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made me think about that is because the reason why

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we have so much just innovation in software is because

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we watched the Defense Department take a big old step

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backwards and private capital was supposed to kind of fill

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in the gap, right VC exploded at the same time,

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as like you said, Star Wars was winding down, and

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Star Wars brought us things like the internet. Star Wars

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brought us well, the satellite Internet as well, all the

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cool hardware stuff that we have, and all VC got

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us was software. Right, So like, if you know, the

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Internet went away, a majority of our technology wouldn't really

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exist because it would exist only on our machine, and

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maybe I guess it would exist on multiple machines if

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we all got together and had a land party. But

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from an investment standpoint, right, software is much much easier

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to invest in because all right, let's say like you

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get halfway, you're two years into the project, a year

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in the project, and you find out like, fuck, we

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did this wrong. We have to go back to like

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we have to go back a year and re engineer.

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I got to go back to where we were a

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year ago and then re engineer from there into this

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new direction because of this problem that we found with software,

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that's not going to cost me any additional money that

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I was going to already lay out. Just you know

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that money is being spent backtracking a little bit, encoding

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in a different you know, a different tree then you

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know I was on already. But with hardware, like let's

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say the company has got like forty million sunk into

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it and you have to change the product. Right, something

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doesn't work, there is a very good chance that you

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are going to burn another forty million to fix it, right,

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because there is no quick fix there. Because like a

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coder is going to be sitting there in front of

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his computer scream coding, whether if he's coding this other

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thing that he was supposed to be building that you

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have to change directions on, or whether he's coding you know,

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the new thing. It's the same guy earning the same

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salary in front of the same computer. Right. But with hardware,

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we're talking about like suppliers need to retool, engineering shops

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need to prototype you know what the new you know,

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modification is like it can cost, it can burn basically,

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you know, all of the money that you have up

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to that point is just wasting. And there's a very

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high likelihood of that. So from a VC standpoint, like

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all right, I have a hardware play and I have

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a software play. Both of them could have huge returns.

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They could be you know, I could have two Unicorns,

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I could have a star Link and I could have

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a Google. I am going to choose the Google every

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single time because of that risk.

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Speaker 3: So Stormy, this is something, this is a great way

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to get into this. So I've been thinking of it

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in terms of the resource curse or Dutch disease. I

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was very interested to discover that jd Vance has been

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looking at this as well. That basically dollar in my

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industry have.

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Speaker 2: Oh sorry, go ahead, I said, a lot of guys

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in my industry.

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Speaker 3: Have okay, yeah, because because that seems to be the issue.

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And this is very similar to So the problem I've

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raised is especially publicly traded securities, is basically that asset

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bubbles out out capex, which is what you're describing, because

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everybody just wants that quick shot in the arm of

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getting their you know, stock line go up. They're not

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willing to take the long term you know, uh, low

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time preference, slow growth to do real r and get

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real growth. And basically we've run out of quick things,

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which is also mark the things when in dow of capital.

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Speaker 2: You can see this in pharmaceuticals more than anywhere else.

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Speaker 3: Yeah, blockbuster drugs ended in like the eighties.

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Speaker 2: Yep, exactly, all the easy, all the low hanging fruit

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is already picked. I was explaining this to Dark enlightenment.

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The other day, one of the smarts guys I think

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I've talked to in a very long time, and we

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were talking about like he was like I had like

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kind of like a roadmap, or not like a roadmap,

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but like some bullet points that if Trump were to

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be able to do, we could dodge a lot of

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what's coming our way. Because I one hundred percent agree

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with you as far as liquidity crisis, except for I

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see them compartmentalized. I mean, we can hammer that out, right.

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So from a regulatory standpoint, everyone thinks like, oh, you know,

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just changing corporate tax law is just you know, like

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basically that is only going to lead to like GDP increase,

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because if we lower their taxes by ten percent, that

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just means they're going to make ten percent more money

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and then the stock's going to go up ten percent

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or whatever. It is generally linear thinking, right, not orthogonal.

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And the answer to that is actually worthogonal. It goes

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completely perpendicular. Right. The reason why big corporations publicly traded

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ones is a big difference. I'm sure as you know, Sean,

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the reason they do what they do is largely because

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of tax policy, right, tax policy or environmental regulation. Right.

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And so let's say I have like what the US

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has rather perscutory corporate text structures. Right for me, if

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I end the year with any money, that's money you

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get to tax. Right. So if I spend that money

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in R and D, that takes a while, right, So,

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like you know, a roadmap style approach, like we're going

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to hit several milestones of capital outlaying right, and a

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good chunk of that R and D money is going

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to be spent next fiscal year. Fuck that means I

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get text on that money, and then I'll have less

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money to spend on R and D. But I can

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if I don't spend money in R and D like

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Maderna is not doing now in paying the stock price. Honestly,

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that company should go to zero. It has been a

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very painful short for me. The last two years have sucked,

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But that company's eventually going to go to zero. But

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they reduce their R and D budget and the stock

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got hammered immediately. And the reason for that is you

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can relatively assume like, fuck, well, if you're spending money

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in your company, you know, and trying to invent new shit,

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then I can pretty much assume that your numbers now

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are going to be your numbers in the future. And

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if your numbers suck now, well then you know it's

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going to suck in the future, but just suck more. Right,

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So I'm gonna get the fuck out of that stock

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and go buy somebody that is that. So what they

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do instead is they do stock buybacks.

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Speaker 3: I'm just about to say, yeah.

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Speaker 2: Stock buybacks are a short term bribe to for investors,

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like please don't leave, please, please, please don't leave. I

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know we can't come up with new shit, but that's

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because we really can't end the fiscal year with any

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money on our balance sheet or the irs comes and

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fox us in the ass. So we're kind of you're

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kind of you're putting CEOs. You're forcing CEOs to do

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very short term thinking. And I think CEOs get a

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lot of shit because they're systems thinkers. You don't get

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to be a CEO, all right. Your brain isn't built

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for it unless you are one. And these are the

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type of guys that generally have the dynamism to where

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they would like to build shit if you would let them.

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And because the regulatory regime, you're forcing these guys to

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think one quarter at a.

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Speaker 3: Time, So you don't think it's the principal agent problem.

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I've been looking at it more that you know, or

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kind of like selectorate theory that they have to defend

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a position from the board.

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Speaker 2: Out of binary. It's a spectrum. Okay, there's guys like

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let's say Jamie Diamond, Right, Jamie Diamond is the CEO

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and chairman because he owns that many shares. Right, he

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worked BEP, literally took all the dollars that he's ever

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made a Wall Street and something coming to J P.

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Morton j Stock that company is as much a part

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of his. See, Sean, you probably have run into this

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a little bit. I don't know, like if you're dealing

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with like family offices or whatever. But rich people don't

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talk about money.

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Speaker 3: Yeah, the whole deep dive on Thoristein Veblin and kind

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of the issue with the leisure class. And this is

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also I think why they're because they're more focused on

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status than money, it often means that they're not they're

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not focused on creating resources. There's kind of this pervasive

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myth that we're in like a post scarcity society and

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so and because reputation or fame is a zero sum game,

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whereas wealth as a growth of the pie game. You know,

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once they've hit that that satiation level of money or resources, Uh,

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now they want to get cutthroat in the zero sum

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game of reputation and social status.

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Speaker 2: Well like so like there you have all Like Jamie

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Diamond already has all the social status in the world,

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he's got the money in the world. But his identity

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and this Elon Musk is very similar. And I want

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to draw a distinction between CEOs that are board employees

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and CEOs that are CEOs because they are also the chairman.

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You see a very distinct difference in how these type

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of men act. Right, So like an Elon Musk, he's

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CEO of Tesla because he owns that many shares, right,

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his skin is very much in the game, right, and

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his identity, right Elon if Tesla goes to shit, Right,

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if Tesla goes to zero, that means Elon Musk has

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gone to zero. Right.

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Speaker 3: But I mean he's founder and co founder, right, so

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he has that that identity of you know, this is

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his baby, as opposed to as a manager, where it's

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a temporary gig. You know, like a nomenclatro where I'm

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going to abuse the office that I have because i

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know I'm only going to be here for ten years

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and then I'm out and getting my golden parachute. So

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they don't really care about the long term of that business.

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It's just you know, a vehicle for them.

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Speaker 2: So you could you could summarize this between internal and

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external CEO promotion, right, So like if you've worked your

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ass off to get like your whole life and now

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you're in the C suite or like just next to

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the C suite, if I promote you to CEO, then

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you have a tremendous muskin in the game because not

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everybody's going to be able to do what Jamie Diamond

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or Elon must did. Elon Musk bought Tesla and it

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was very young. It was like a Series D right,

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So that means it had you know, five funding grounds

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plus you know, including the seed, and was just starting

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to get a product out of the door. Right. I

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think they maybe shipped you know, fifty sixty cars at

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the time they want it, and he transformed it. But

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the reason he probably did so was because that was

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really all his money at the time that he bought it.

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He didn't have any other choice but to make that work.

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And if CEOs were promoted internally right from guys that

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worked their way up to it, I think it would

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solve some of that. Because the parachute CEO is the

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CEO you're describing, right, This is a professional CEO that

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as a fagot yep.

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Speaker 3: Yeah, well, I mean that's the whole managerial revolution thing

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is that you know, they take over institutions, but just temporarily.

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Speaker 2: Yeah, one hundred percent, they're they're they're very short term players.

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But if you think about like who are the real

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who are the CEOs? You think of? Like, so, who

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were like? Because back in the before the CEO is

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a modern term, a relic of the manager of revolution.

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I guess you said before that they were tycoons, right,

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all right? You know Elon Musk has probably got about

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as much money as you know, Andrew Carnegie, and there's

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some other guys like Soros that he's got a fuck

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ton of money, but they act completely differently, all right.

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So I find that these owner CEOs are the great

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man types, are the tycoon types, and the professional CEOs

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like I I personally I do not believe that somebody

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should be allowed to be a CEO unless they own

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enough stock. Right, if you own enough stock where you're

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famer of the board, right, you get to be CEO.

334
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You don't get to pick somebody else that you can

335
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hire and fire, because then you're just going to be disinterested.

336
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You're only going to show up when there's a fucking problem.

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But anyways, we're getting tudtracted too well.

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Speaker 3: So I think this is why you know, uh, Elon

339
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took Twitter or now x private through a leverage buyout.

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I mean, I think that's the life raptor or the

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you know, the escape for a lot of these publicly

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traded companies is before they go a liquid it's going

343
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to take that kind of you know, that kind of

344
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mentality or that kind of person to have that like

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private stake in the game where it's you know, it's

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equivalent to their identity.

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Speaker 2: As you're saying, basically, yeah, and well, I see we're

348
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going into a place where I think corporate debt is

349
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going to So I think publicly traded companies will continue. Unfortunately,

350
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I would prefer they all die just after I've gotten liquidity, first,

351
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after I've sold my public stairs and things. I hope

352
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they die because I think they're a disaster. And every

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one of these tycoons has bought the exact same thing. Like,

354
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I don't know, Pete, I can't remember if you did

355
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you did you do something on Henry Ford.

356
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Speaker 1: I've never done any a deep dive on Henry Ford,

357
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for you know, obvious reasons of wanting wanting to do

358
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that carefully.

359
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Speaker 2: Yeah, maybe it was a myth of the twentieth century guys.

360
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And I didn't know this.

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Speaker 1: They definitely, they definitely did Henry Ford.

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Speaker 2: Yeah, yeah, I didn't know this. I knew about it

363
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for JP Morgan, and I knew about it for both

364
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Rockefeller and Carnegie, but I didn't know Ford was the

365
00:22:02,319 --> 00:22:07,200
same thing. Right, Like so, Ford put in his will

366
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and literally came back to the company at ninety something

367
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years old when he found out that, you know, people

368
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in his absence were trying to take the company public,

369
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like he would have burned every single factory to the ground.

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And he said so on numerous occasions right before that

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company was taken public. And that's why they only got

372
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to do it after he died, because it allows you know,

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this is why I think the difference between private and

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public capital is such a big distinction, and why you

375
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see private equity on one side of the dividing line

376
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and public capital on the other side, except in the

377
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term of like CEOs that are also chairman, so like

378
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David Solomon, JP Morgan, Right, those are the only guys

379
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really from Wall Street that are really pushing back against

380
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what's trying to be implemented. The rest of them are

381
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all from the private equity side because their capital is

382
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being deployed for decades at a time. Right, If I'm

383
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investing a bunch of money inside the United States, then

384
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I need to say, well, fuck, I guess this place

385
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can't go to shit now ken it because my money

386
00:23:26,880 --> 00:23:29,680
is stuck here, right, My money is stuck in these

387
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companies and I can't just go sell it. Like you know,

388
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any any one of these you know finance, any one

389
00:23:36,799 --> 00:23:40,640
of these hedge fund types, right, those you know buy

390
00:23:40,680 --> 00:23:43,400
a stock, sell the next day, right if it's quant fund,

391
00:23:44,279 --> 00:23:46,799
right or high frequency fund. They'll sell and buy the

392
00:23:46,839 --> 00:23:49,799
same stock thousands of times in a minute. Like they

393
00:23:49,920 --> 00:23:52,519
have zero attachment to that company. To them, it's literally

394
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just an abstract number, and they have no long term

395
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commitment to the company and place that the company operates.

396
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The company may have like attachment to the town where

397
00:24:04,880 --> 00:24:08,119
it derives its labor force from. But the guy who

398
00:24:08,920 --> 00:24:12,200
who you know, by a perversion of our society, gets

399
00:24:12,279 --> 00:24:15,799
to vote and what that company does, he doesn't give

400
00:24:15,799 --> 00:24:16,359
a fuck about it.

401
00:24:18,400 --> 00:24:21,079
Speaker 3: So that's also something I've been thinking about in terms of,

402
00:24:21,720 --> 00:24:25,400
you know, the focus on market cap as opposed to

403
00:24:25,559 --> 00:24:29,559
cash flow. Gentleman and I talked to once. You have

404
00:24:29,640 --> 00:24:34,480
a great example of you know, mister Darcy in uh,

405
00:24:35,039 --> 00:24:38,480
you know, what's the famous novel. But wealth used to

406
00:24:38,480 --> 00:24:40,799
be measured in terms of how much like yeah, as

407
00:24:40,839 --> 00:24:44,440
a landed gentleman you it generated in a year. You know,

408
00:24:44,519 --> 00:24:47,640
there was no market for you know, real estate in

409
00:24:47,759 --> 00:24:51,359
the seventeenth century or whatever it was. You know, these

410
00:24:51,680 --> 00:24:54,519
depths of market. Is a new phenomenon to to make

411
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that the the measure of the value of a company.

412
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And I think that's going to be one of the

413
00:25:00,079 --> 00:25:02,720
your point that that's the benefit of an ill liquid

414
00:25:02,799 --> 00:25:05,200
asset where you have to have a ten year or

415
00:25:05,279 --> 00:25:08,440
longer time horizon is now you actually have to be

416
00:25:08,480 --> 00:25:11,799
focused on profits as opposed to just you know, how

417
00:25:11,839 --> 00:25:14,839
can we juice up the earnings per share, not by

418
00:25:14,920 --> 00:25:17,680
increasing earnings, but by reducing the number of outstanding shares.

419
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Speaker 2: So running through what you think patronage network would look like.

420
00:25:25,319 --> 00:25:32,480
Speaker 3: Okay, so on. So, because kapex is risky and it's

421
00:25:32,599 --> 00:25:36,279
long term, how this is historically been done. You know,

422
00:25:36,319 --> 00:25:39,039
Imperial Japan is actually very interesting in this regard.

423
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Speaker 4: Uh.

424
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Speaker 3: Germany, Uh, you know, for the last century has been

425
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interesting this way as well.

426
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Speaker 2: Frederick List economies.

427
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Speaker 3: Yeah, you need banking support where they're willing to make

428
00:25:51,559 --> 00:25:53,559
those kinds of long term loans that they're going to

429
00:25:53,599 --> 00:25:56,480
stick it out. That that's really the key that we

430
00:25:56,759 --> 00:25:59,240
don't have so patronage for our guys. You know, we

431
00:25:59,440 --> 00:26:00,880
we've got that talent.

432
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Speaker 2: Uh.

433
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Speaker 3: You know, we've got a huge, a glut of weaponized

434
00:26:06,160 --> 00:26:09,279
autists who if somebody could just figure out how to

435
00:26:09,319 --> 00:26:12,559
get them income in order to afford a home, get married,

436
00:26:12,839 --> 00:26:15,519
start families. You know, they will put in the eight

437
00:26:15,640 --> 00:26:20,480
hour work weeks, but that's not what's rewarded when just

438
00:26:20,519 --> 00:26:24,440
trying to you know, I po or gin up. The

439
00:26:24,519 --> 00:26:28,559
outstanding share price is focused basically in short term gains

440
00:26:28,599 --> 00:26:31,160
through marketing, as opposed to that R and D, which

441
00:26:31,200 --> 00:26:34,440
is risky and to your point it. It's opportunity cost

442
00:26:34,559 --> 00:26:37,839
right this. Richard Werner is very good on this as well.

443
00:26:38,559 --> 00:26:42,039
Anytime you create an additional line of credit or create

444
00:26:42,079 --> 00:26:44,000
more money in the economy, it's going to go to

445
00:26:44,039 --> 00:26:45,960
one to three places. It's going to go into an

446
00:26:46,000 --> 00:26:49,200
asset bubble, it's going to go into capex, or it's

447
00:26:49,240 --> 00:26:52,079
going to go into consumption. When it goes into consumption,

448
00:26:52,200 --> 00:26:54,519
that's a very obvious problem. You get the inflation like

449
00:26:54,559 --> 00:26:56,799
we've been seeing the past few years. Uh, the price

450
00:26:56,880 --> 00:26:59,200
of everything goes up because there's just more money chasing this.

451
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Speaker 2: Basically, the same.

452
00:27:00,160 --> 00:27:05,240
Speaker 3: Number of goods going into capex is ideal, especially because

453
00:27:05,240 --> 00:27:09,000
then the increased efficiency from that improved capital structure is

454
00:27:09,079 --> 00:27:12,599
going to offset that inflation with deflation and balance out,

455
00:27:12,680 --> 00:27:15,119
which is what real growth in an economy would be.

456
00:27:15,680 --> 00:27:19,440
But that entails entrepreneurial risk. You have a longer time horizon,

457
00:27:20,279 --> 00:27:23,279
there's just a lot more unknowns with that. So what

458
00:27:23,519 --> 00:27:26,119
tends to get favored is investing in an asset bubble.

459
00:27:26,519 --> 00:27:29,039
It's the you know, you're you're dealing with bigger companies,

460
00:27:29,079 --> 00:27:32,359
you can write bigger checks. The results are basically instantaneous,

461
00:27:32,359 --> 00:27:35,000
and they're basically guaranteed whether you investing in stock or

462
00:27:35,079 --> 00:27:39,839
real estate, the same thing as inflation in consumption goods,

463
00:27:40,279 --> 00:27:41,920
except because it's in an asset bubble.

464
00:27:42,079 --> 00:27:43,279
Speaker 1: Well, you see that.

465
00:27:43,480 --> 00:27:46,400
Speaker 3: Hit right away, and and you don't have to be

466
00:27:46,480 --> 00:27:48,599
any kind of like creative or confidence to do that.

467
00:27:48,759 --> 00:27:52,480
You know, it's all just uh, you know spreadsheets and uh,

468
00:27:52,880 --> 00:27:54,119
you know fictional goods.

469
00:27:54,519 --> 00:27:56,759
Speaker 2: You're literally right. There's not a single hedge fund manager

470
00:27:57,160 --> 00:27:59,599
in the history of the industry that has been in

471
00:27:59,640 --> 00:28:01,960
the SI for more than fifteen years.

472
00:28:03,640 --> 00:28:06,920
Speaker 3: Well, and even then came out with paper recently that

473
00:28:07,599 --> 00:28:09,759
basically all stock market growth has been because of the

474
00:28:09,799 --> 00:28:13,960
Great Moderation. Basically, it's just because the government is issuing

475
00:28:14,000 --> 00:28:16,599
a bunch of treasuries getting the bank you know that

476
00:28:16,759 --> 00:28:19,200
that was it thirteen banks or whatever that are obligated

477
00:28:19,279 --> 00:28:22,759
through open market operations to buy them, and then that

478
00:28:23,079 --> 00:28:27,480
credit goes immediately into S and P five hundred. Especially

479
00:28:27,559 --> 00:28:29,759
now that index funds are more than fifty percent of

480
00:28:29,839 --> 00:28:34,440
the market, you basically you know a portion of it

481
00:28:34,920 --> 00:28:36,319
just because you're on the index.

482
00:28:36,400 --> 00:28:39,160
Speaker 2: Yew, a portion of it does, right, those treasuries go

483
00:28:39,279 --> 00:28:45,079
out there to be levered up. So this is my

484
00:28:45,200 --> 00:28:48,240
theory on COVID. Let me know what you think what

485
00:28:48,400 --> 00:28:51,240
happened in August of twenty nineteen.

486
00:28:52,039 --> 00:28:54,640
Speaker 3: Yeah, it's an overnight repo rate spike, which is very

487
00:28:54,720 --> 00:28:57,000
interesting that that came out right afterwards.

488
00:28:57,519 --> 00:29:01,799
Speaker 2: Yes, exactly, so if you a and I've been kind

489
00:29:01,799 --> 00:29:05,039
of bad in this around like with friends. So this

490
00:29:05,160 --> 00:29:07,200
is this is the first time anybody has heard it publicly.

491
00:29:09,759 --> 00:29:15,640
So I think that Tom Luongo is right about his

492
00:29:15,759 --> 00:29:19,160
zero dollar thesis is so much so I dug very

493
00:29:19,240 --> 00:29:25,960
deeply into its origins, which he describes how it exists now, right,

494
00:29:26,200 --> 00:29:28,680
And I went and dug up how it came to

495
00:29:28,799 --> 00:29:38,160
be because I've had conversations like side Pete sat in

496
00:29:38,359 --> 00:29:43,160
on one of one of a conference series of conference

497
00:29:43,200 --> 00:29:48,200
calls I host, right, well, we take turns hosting, right,

498
00:29:48,799 --> 00:29:51,440
and one of those actually with one of the one

499
00:29:51,480 --> 00:29:54,359
of the two women that were on the call. She

500
00:29:54,799 --> 00:29:58,559
was a former Fed governor and she was on the

501
00:29:58,640 --> 00:30:04,079
Liboard committee. This woman is probably in her seventies, and

502
00:30:05,559 --> 00:30:09,000
you know, this woman should know more about global capital

503
00:30:09,039 --> 00:30:12,240
markets than anyone in the world. And I asked her

504
00:30:12,279 --> 00:30:19,240
one day and I said, X y Z, it's true

505
00:30:19,319 --> 00:30:24,160
that nine out of every ten dollars is is printed

506
00:30:24,200 --> 00:30:25,240
by offshore banks?

507
00:30:26,359 --> 00:30:29,000
Speaker 3: Yeah, the course find says yes, yes it is.

508
00:30:29,359 --> 00:30:33,039
Speaker 2: And I was like, okay, and all those offshore dollars

509
00:30:33,599 --> 00:30:37,000
they're index to libor right, and she goes, yeah, of

510
00:30:37,079 --> 00:30:38,599
course of course they are. Like what else would they

511
00:30:38,599 --> 00:30:41,160
be wouldn't know what else they'd be indexed on. And

512
00:30:41,240 --> 00:30:45,880
I was like, okay, so the FED doesn't control you

513
00:30:46,279 --> 00:30:50,519
the dollar and she's like, no, no, of course not,

514
00:30:50,680 --> 00:30:53,720
Like what do you mean, like that's not the case.

515
00:30:53,720 --> 00:30:57,640
I'm like, okay, Well, if nine tenths of the dollars

516
00:30:58,359 --> 00:31:03,680
are printed offshore by overseas banks, and those those dollar

517
00:31:04,000 --> 00:31:10,440
denominated debts are index to an interest rate that is

518
00:31:10,559 --> 00:31:14,960
set by twenty banks in London, not one of them

519
00:31:15,160 --> 00:31:19,839
being a US bank, then that means the FED only

520
00:31:20,000 --> 00:31:24,160
has control over ten percent of that. So if I

521
00:31:24,279 --> 00:31:28,000
own ninety percent of your company, right, I own ninety

522
00:31:28,000 --> 00:31:31,119
percent of the shares and I can vote those shares,

523
00:31:32,640 --> 00:31:35,279
then that makes that my company and not your company.

524
00:31:36,759 --> 00:31:40,839
And this woman was fucking speechless. Right gee, it is

525
00:31:40,920 --> 00:31:43,400
like I have to come back to you. I have

526
00:31:43,519 --> 00:31:47,920
to think about that. I'm thinking myself, Mike, bitch.

527
00:31:47,799 --> 00:31:53,880
Speaker 4: You do the like you're lost, right, Like you were

528
00:31:53,960 --> 00:31:56,559
in charge of a fucking portion of a goddamn global

529
00:31:56,599 --> 00:31:58,640
economy and this never occurred to.

530
00:31:58,720 --> 00:32:02,200
Speaker 2: You, and it bothered me, and it bothered me, and

531
00:32:02,279 --> 00:32:04,759
it bothered me. And I just run into this again

532
00:32:04,880 --> 00:32:09,279
and again and again. One a similar type conversation with

533
00:32:09,680 --> 00:32:16,000
a famous dukunyist, and this guy couldn't understand. He's like,

534
00:32:16,079 --> 00:32:18,240
I couldn't even this is a this is an economist

535
00:32:18,279 --> 00:32:23,279
that Goloblin Sachs contracts right often, right, This guy goes

536
00:32:23,319 --> 00:32:26,119
on like speaking tours, and investment banks stop what they're doing,

537
00:32:26,200 --> 00:32:28,240
and everybody gets out of class for an afternoon to

538
00:32:28,319 --> 00:32:31,920
go listen to this fucking asshole speak. And I asked him, like, well,

539
00:32:32,079 --> 00:32:35,200
what happens if there is a sovereign debt default in

540
00:32:35,319 --> 00:32:39,920
a G seven country? And he looked and looked, he

541
00:32:40,000 --> 00:32:43,000
was wearing the face and said, I don't. I don't

542
00:32:43,000 --> 00:32:45,519
even know what that would fit into my worldview, Like

543
00:32:45,519 --> 00:32:47,119
I wouldn't even know how to model that, Like I

544
00:32:47,160 --> 00:32:49,400
don't even I don't even know where to start with that.

545
00:32:50,000 --> 00:32:54,240
I'm like, really really, like you're a fucking global economist

546
00:32:54,720 --> 00:32:58,480
and you can't you know, at least hypothesize, right, like

547
00:32:58,720 --> 00:33:02,200
fucking just spitball what a sovereign debt default would be

548
00:33:02,319 --> 00:33:05,119
like in one of these like who are you people?

549
00:33:05,920 --> 00:33:08,200
And I've just run into it again and again and again,

550
00:33:09,119 --> 00:33:12,799
And the only conclusion that I can come to is

551
00:33:12,880 --> 00:33:16,880
that all of the people that set up this infrastructure,

552
00:33:17,039 --> 00:33:21,119
right the plumbing. Like if I bought your house, right

553
00:33:21,200 --> 00:33:25,720
and you built it yourself, and you know, you moved

554
00:33:26,039 --> 00:33:28,480
to some foreign, some far away country, and I can't

555
00:33:28,480 --> 00:33:31,440
get a hold of you, and I have a plumbing leak,

556
00:33:32,720 --> 00:33:36,000
I'm going to have to fucking tear that house down

557
00:33:36,039 --> 00:33:38,000
to the studs because I don't know where the pipes are.

558
00:33:39,880 --> 00:33:44,559
Speaker 3: Yeah, you plumbing find the movie cube of You know,

559
00:33:44,640 --> 00:33:48,240
there is no master plan. It's a headless blunder operating

560
00:33:48,319 --> 00:33:50,279
under the illusion of a master plan. You know, I

561
00:33:50,319 --> 00:33:52,920
think they inherited the things exactly. They don't know how

562
00:33:53,000 --> 00:33:55,640
it works, and they're just trying to keep it going

563
00:33:55,960 --> 00:33:57,039
and keep it from exploding.

564
00:33:57,279 --> 00:33:59,160
Speaker 2: Well, yeah, because they don't know, and that is they

565
00:33:59,200 --> 00:34:02,640
don't know how to stop it from exploding. Right. So

566
00:34:02,880 --> 00:34:05,799
like if everybody that's set up the current, you know,

567
00:34:05,920 --> 00:34:09,119
we'll call it the euro dollar system, everyone that put

568
00:34:09,159 --> 00:34:12,119
that into place, all of the boomers that are in

569
00:34:12,199 --> 00:34:16,440
charge of shit that won't retire. Right, what these guys

570
00:34:16,599 --> 00:34:21,199
came into whatever firm that they're at, right in the eighties,

571
00:34:21,280 --> 00:34:23,400
the mid eighties. That's like when they you know, just

572
00:34:23,519 --> 00:34:27,679
got on the trading floor. Whatever that means everybody, all

573
00:34:27,719 --> 00:34:31,400
the men that set up the Bretonwood system were not

574
00:34:31,519 --> 00:34:36,199
only retired, but we're dead by the time any of

575
00:34:36,239 --> 00:34:39,519
the people currently in charge got anywhere near the steering wheel.

576
00:34:40,440 --> 00:34:43,719
So none of these fucking people, I would say, more

577
00:34:43,880 --> 00:34:47,559
knowledge of how the global financial system actually works exists

578
00:34:47,599 --> 00:34:51,840
in our spheres. Then does the institutions, then does the elites.

579
00:34:52,960 --> 00:34:58,079
So Tom Lamongo is effectively correct. Right, this euro dollar system,

580
00:34:58,320 --> 00:35:02,000
there's nine tents of all these offshort they're going to

581
00:35:02,119 --> 00:35:07,760
blow up, right, they are hypothecated dollars. And I don't

582
00:35:07,760 --> 00:35:13,119
know how familiar you are with his thesis, but I

583
00:35:13,639 --> 00:35:17,239
use JP Morgan Private Banking, and I got a letter

584
00:35:17,400 --> 00:35:23,320
in December of twenty twenty three, it was twenty twenty

585
00:35:23,360 --> 00:35:25,800
three or twenty twenty two, remember it was December tipt

586
00:35:25,800 --> 00:35:31,440
four years and it said you cannot deposit any liboard

587
00:35:31,519 --> 00:35:36,039
denominated securities like you're not allowed, right, A we won't

588
00:35:36,039 --> 00:35:39,320
allow you. Right, And then I get another letter like

589
00:35:39,440 --> 00:35:42,639
a week later that said, if you have any liboard

590
00:35:42,719 --> 00:35:46,360
denominated securities, you must sell them by January. And I

591
00:35:46,400 --> 00:35:48,400
don't get like, this isn't the type of you know,

592
00:35:49,079 --> 00:35:52,519
bank that tells you you have to must do anything. Right.

593
00:35:52,559 --> 00:35:55,039
They're generally very nice and cordialine you know, beat around

594
00:35:55,039 --> 00:35:58,400
the bush for a while, but they were. It was

595
00:35:58,559 --> 00:36:01,159
very clear. It was like a five or six sentence

596
00:36:01,239 --> 00:36:03,760
letter that was like, you have to do this. You

597
00:36:03,880 --> 00:36:06,800
can't have any live board denominated securities or instruments in

598
00:36:06,880 --> 00:36:07,800
your account at all.

599
00:36:09,840 --> 00:36:14,360
Speaker 3: Everyone to come back to the patronage question though, Okay,

600
00:36:14,440 --> 00:36:17,679
so a historic example of a blow up would.

601
00:36:17,480 --> 00:36:20,880
Speaker 2: Be all those all those dollars and all those traits,

602
00:36:20,920 --> 00:36:25,400
all those people buying stock overseas aren't allowed to play, right.

603
00:36:25,519 --> 00:36:27,639
So I'm saying, like, there's a very good change in

604
00:36:27,679 --> 00:36:30,239
the future that we may exist in a vacuum. I

605
00:36:30,280 --> 00:36:31,920
guess was the point I was trying to get at

606
00:36:31,960 --> 00:36:34,840
without sounding like a crazy person, right, the US dollars

607
00:36:35,119 --> 00:36:36,800
being put to work in US markets.

608
00:36:37,679 --> 00:36:41,239
Speaker 3: So a historic example of you know, right after the

609
00:36:41,280 --> 00:36:43,599
Great Depression, once it hit Germany, is that the middle

610
00:36:43,639 --> 00:36:46,639
class who owned stocks in Germany got wiped out, and

611
00:36:46,760 --> 00:36:50,840
that was a big part for you know, the revolutionary

612
00:36:50,920 --> 00:36:54,760
movements that occurred soon after to stabilize things. But the

613
00:36:54,840 --> 00:36:57,360
people who actually had physical control of the factories and

614
00:36:57,440 --> 00:37:01,159
farms did very well. They did better fact uh in

615
00:37:01,239 --> 00:37:04,960
the midst So as far as patronage, I guess the

616
00:37:05,079 --> 00:37:06,800
question why you use kind of Germany and Japan as

617
00:37:07,199 --> 00:37:12,639
historic examples is, you know, getting people to invest directly

618
00:37:12,800 --> 00:37:17,320
in the things that are real capex, that create real

619
00:37:17,480 --> 00:37:21,280
tangible value that they know their savings is safe in

620
00:37:21,599 --> 00:37:24,159
an industry that actually makes things. You know, if you

621
00:37:24,639 --> 00:37:27,719
if you work at Mitsubishi and your savings account is

622
00:37:27,760 --> 00:37:30,960
with Mitsubishi Bank, and you know Mitsubishi is making you know,

623
00:37:31,159 --> 00:37:34,199
generators and fighter planes and you know cars and air

624
00:37:34,239 --> 00:37:38,559
conditioners and whatnot. You know, they have the economic capacity

625
00:37:38,760 --> 00:37:42,920
of selling things that are valuable to other people and

626
00:37:43,320 --> 00:37:46,519
getting well for that. That there's some security there, right

627
00:37:46,639 --> 00:37:49,239
as opposed to these accounting fictions that we're talking about,

628
00:37:49,280 --> 00:37:51,320
which is, yeah, when they blow up, you have an

629
00:37:51,360 --> 00:37:53,920
IOU for what I mean. I think ETFs are a

630
00:37:53,960 --> 00:37:57,159
whole other version of that as well. Uh, nobody's really

631
00:37:57,199 --> 00:37:59,719
looking at the at the divergence risk or slippage between

632
00:38:00,599 --> 00:38:05,039
you know, ETFs of what they claim to represent. So

633
00:38:05,800 --> 00:38:08,719
for our guys though, who actually are focused on real

634
00:38:08,800 --> 00:38:14,360
productivity in creating that parallel infrastructure, I guess you know,

635
00:38:14,760 --> 00:38:16,760
to get one or two steps of head ahead of this,

636
00:38:16,960 --> 00:38:19,719
right that you're not left holding the bag finding out

637
00:38:19,760 --> 00:38:21,760
that it's a cat and not a pig in the pope.

638
00:38:22,159 --> 00:38:26,039
Speaker 2: All right, Well, so a majority of the boomer's capital

639
00:38:26,280 --> 00:38:29,920
is tied up in public markets, right, So we're talking

640
00:38:29,960 --> 00:38:33,559
about a complete destruction of capital markets in your hypothesis, right,

641
00:38:33,639 --> 00:38:36,800
we're talking about the destruction of boomer capital, which.

642
00:38:36,679 --> 00:38:39,079
Speaker 3: I mean, I'm betting what's going to happen is similar

643
00:38:39,119 --> 00:38:41,840
to Maiden Lane with the mortgage backed securities, is that they'll,

644
00:38:42,199 --> 00:38:44,559
you know, sovereign as you decides the state of exception.

645
00:38:44,679 --> 00:38:46,880
So they'll say, well, it's okay for FED to own

646
00:38:46,920 --> 00:38:50,199
special purpose vehicles. It's an economic emergency. We're not really

647
00:38:50,239 --> 00:38:53,320
going to prosecute ourselves. And basically they'll create a special

648
00:38:53,360 --> 00:38:56,239
purpose vehicle to take these index funds onto the FED

649
00:38:56,320 --> 00:38:58,960
balance sheet, and then they'll do gated redemption so that

650
00:38:59,000 --> 00:39:02,920
boomers still get their hirement income it'll be uncomfortable, they'll

651
00:39:02,960 --> 00:39:06,480
lose their liquidity, but they'll maintain the notional value of

652
00:39:06,519 --> 00:39:08,960
those securities. And then they're just going to use financial repression,

653
00:39:08,960 --> 00:39:12,079
which is a fancy way of saying inflation. Instead of

654
00:39:12,159 --> 00:39:15,880
the stocks dropping in notional value to what they're actually worth,

655
00:39:16,199 --> 00:39:18,719
they're going to use inflation to debase the currency until

656
00:39:18,760 --> 00:39:22,199
it reaches that artificially high water mark. And then the

657
00:39:22,199 --> 00:39:24,239
boomers will be dead by the time that happens, and

658
00:39:24,280 --> 00:39:27,199
their retirement income won't be a political question anymore.

659
00:39:27,519 --> 00:39:29,800
Speaker 2: Well, what time are you What time are you thinking?

660
00:39:31,760 --> 00:39:33,920
Speaker 3: So I'm not saying it's going to happen soon. It

661
00:39:34,000 --> 00:39:35,679
may not even happen in my lifetime. I'm in my

662
00:39:35,800 --> 00:39:39,280
forties now, so let's say between ten to thirty years.

663
00:39:39,840 --> 00:39:43,719
Speaker 2: Okay, Well, so the boomers population is a very interesting thing.

664
00:39:45,440 --> 00:39:51,519
So that Jewish guy in what you call it, Peterston,

665
00:39:52,079 --> 00:39:55,440
this a little bit at dinner, right. So chaos theories

666
00:39:55,599 --> 00:40:00,840
is terribly named, all right, extraal nonlinear systems dynamics, right,

667
00:40:00,880 --> 00:40:03,840
And it was discovered when they tried to model two

668
00:40:03,960 --> 00:40:06,599
things that on the surface seemed like very simple systems.

669
00:40:07,760 --> 00:40:10,400
One was the weather. It's like eight or nine different

670
00:40:10,679 --> 00:40:12,920
you know inputs like very much pressure wins me whatever.

671
00:40:13,800 --> 00:40:17,440
The other one was population, right, it was a deer population,

672
00:40:18,639 --> 00:40:23,679
and they found that even though the whole system operated

673
00:40:23,719 --> 00:40:27,039
on five variables, Right, does that means there should be

674
00:40:27,079 --> 00:40:32,320
a total of twenty five possible outcomes? Right, every thousand

675
00:40:32,440 --> 00:40:37,800
or so iterations? It would give them some insane number

676
00:40:38,239 --> 00:40:42,960
and they couldn't make this go away. So the boomers

677
00:40:43,079 --> 00:40:47,280
are that, right. So, like the story that you're told

678
00:40:47,400 --> 00:40:49,480
is that like, okay, after World War Two, everybody came

679
00:40:49,519 --> 00:40:52,480
home to foot blah, Like, okay, well, how come South

680
00:40:52,519 --> 00:40:55,679
America has a baby boomer generation? How come India's got

681
00:40:55,719 --> 00:40:58,119
a fucking baby boomer generation? Did they come home from

682
00:40:58,119 --> 00:41:02,360
World War two? Can fuck a lot? No, that's not

683
00:41:02,440 --> 00:41:05,760
what happened. So the boomer generation is a global phenomenon

684
00:41:06,519 --> 00:41:12,039
and COVID. So basically, the you know, our population decreasing

685
00:41:12,159 --> 00:41:16,800
five x would actually be a return to the mean. Right.

686
00:41:16,960 --> 00:41:20,800
It is the boomer generation that is the anomaly. It's

687
00:41:20,840 --> 00:41:25,280
the boomer generation. It's the outlider. So right now we're

688
00:41:25,280 --> 00:41:28,280
already down to thirty percent on our boomer count, and

689
00:41:28,400 --> 00:41:32,320
we lose roughly ten to thirteen percent every year, all right,

690
00:41:32,320 --> 00:41:36,039
So that means in three years, right, we're already passed,

691
00:41:36,159 --> 00:41:41,599
we're inching up on fifty percent. Right, and then after

692
00:41:41,719 --> 00:41:47,559
that point, they they're no longer the dominant economic factor.

693
00:41:48,559 --> 00:41:48,719
Speaker 1: Right.

694
00:41:48,840 --> 00:41:51,800
Speaker 2: And this is why everyone, this is why they are

695
00:41:51,880 --> 00:41:55,280
freaking out. This is why nothing they do works, right,

696
00:41:55,360 --> 00:41:57,760
This is why the market doesn't work, This is why

697
00:41:58,199 --> 00:42:01,840
none of the debt works. Right, this leverage bubble that

698
00:42:01,960 --> 00:42:02,519
they've made.

699
00:42:03,280 --> 00:42:07,400
Speaker 3: Yeah, Mike Green famously the analogy of uh, you know,

700
00:42:07,440 --> 00:42:09,320
if your breaks don't work in a car, but you're

701
00:42:09,360 --> 00:42:12,000
driving up a hill, you don't really notice it. But

702
00:42:12,039 --> 00:42:14,840
then once you cross the peak and are driving downhill

703
00:42:15,039 --> 00:42:17,199
and your breaks don't work, then then you're in for

704
00:42:17,280 --> 00:42:17,880
a big problem.

705
00:42:18,000 --> 00:42:18,760
Speaker 2: And yet.

706
00:42:20,119 --> 00:42:24,440
Speaker 3: In these securities as a way of sucking inflation out

707
00:42:24,480 --> 00:42:27,559
of the system, well, now that they're selling to redeem

708
00:42:27,639 --> 00:42:30,400
that in order to generate their retirement income, it's all

709
00:42:30,440 --> 00:42:33,800
getting pipe back in. So yeah, the the demographic crisis

710
00:42:34,159 --> 00:42:38,519
mixed with you know, with that band aid solution.

711
00:42:38,760 --> 00:42:41,400
Speaker 2: Now demographic crisis is in a crisis at all. I

712
00:42:41,440 --> 00:42:43,480
think it's a blessing, right, I think it's the best

713
00:42:43,519 --> 00:42:46,280
thing that will ever happen to the country. Right, So

714
00:42:46,559 --> 00:42:51,239
check this out. You have a pyramid, right, So our

715
00:42:51,280 --> 00:42:55,519
whole society is a pyramid scheme, right, where a whole

716
00:42:55,559 --> 00:42:58,000
bunch of people at the top or on the bottom

717
00:42:58,119 --> 00:43:00,800
working their ass off, right, and that you filters up

718
00:43:01,039 --> 00:43:03,000
and it gets taken out a little bit of time

719
00:43:03,039 --> 00:43:05,679
to support the people at the top, the old people's right,

720
00:43:06,440 --> 00:43:08,159
and what we have right now, right, So you can

721
00:43:08,199 --> 00:43:09,960
add up the baby you can add up the Zoomers

722
00:43:10,239 --> 00:43:15,639
and the millennials together, and there's five times as many

723
00:43:15,679 --> 00:43:18,440
Boomers as those, right. So actually I think you could

724
00:43:18,480 --> 00:43:21,039
probably throw in the gen xers too, but I'm not

725
00:43:21,159 --> 00:43:23,480
going to it, right, So just the just the GENA,

726
00:43:23,760 --> 00:43:26,599
there's the gen z Ers and the millennials. Put those together,

727
00:43:26,800 --> 00:43:29,239
there's five times as many baby boomers, right, So what

728
00:43:29,360 --> 00:43:31,639
we have is the pyramid scheme has flipped upside down.

729
00:43:32,519 --> 00:43:34,480
Small amount of people at the bottom working and a

730
00:43:34,559 --> 00:43:36,960
large amount of people at the top taking all the resources.

731
00:43:38,480 --> 00:43:41,519
What happens when they're gone, right, So the baby boomers

732
00:43:41,519 --> 00:43:44,119
also own all the houses, they own, all the small businesses,

733
00:43:44,599 --> 00:43:48,000
they own, all the medium sized businesses, right, all of

734
00:43:48,039 --> 00:43:52,119
the infrastructure that you're talking about, right, let's just use

735
00:43:52,159 --> 00:43:54,320
it in tern let's just put well, we'll just call

736
00:43:54,400 --> 00:43:57,880
infrastructure and you know small and mid sized businesses as

737
00:43:58,280 --> 00:44:01,960
we'll just use houses. Ver we understand, how do you

738
00:44:02,119 --> 00:44:05,599
sell if the baby boomer is all the houses, right,

739
00:44:05,639 --> 00:44:07,679
and there's five times as many of them as there

740
00:44:07,719 --> 00:44:10,760
are of us, how do you sell five houses to

741
00:44:10,840 --> 00:44:11,400
one person?

742
00:44:14,039 --> 00:44:15,280
Speaker 1: You don't, right?

743
00:44:15,480 --> 00:44:19,199
Speaker 3: And also, you know the issue is they're not selling

744
00:44:19,719 --> 00:44:23,960
or as of dying, the people at that bottom of

745
00:44:24,000 --> 00:44:26,639
the inverted pyramid do not have the capital to buy

746
00:44:26,800 --> 00:44:27,199
them out.

747
00:44:27,440 --> 00:44:27,559
Speaker 1: Right.

748
00:44:28,800 --> 00:44:30,599
Speaker 2: But the problem is going to sort itself out because

749
00:44:30,679 --> 00:44:32,840
you can't sell five houses to one person.

750
00:44:33,039 --> 00:44:36,639
Speaker 3: Well, yeah, there'll be some massive when they die, or

751
00:44:36,679 --> 00:44:39,000
they'll give it all the way to charities and foundations

752
00:44:39,039 --> 00:44:41,880
for political purposes. You know, they'll give it to Haitians

753
00:44:41,920 --> 00:44:43,719
because they hate their white kids that much.

754
00:44:44,159 --> 00:44:50,599
Speaker 2: Maybe, But whether they give it away to Haitians or not,

755
00:44:51,639 --> 00:44:54,360
a large portion of them are not going to Right,

756
00:44:54,440 --> 00:44:57,239
There's no way that you have that type of disparity

757
00:44:58,159 --> 00:45:01,880
without a correction and price. So I think the housing

758
00:45:01,960 --> 00:45:07,760
affordability problem is going to sort itself out. And in

759
00:45:08,039 --> 00:45:10,079
the way that that is going to be sorted out,

760
00:45:11,199 --> 00:45:17,920
we are guys, if they are ready and prepared are

761
00:45:18,000 --> 00:45:20,559
going to face a once in a one hundred year

762
00:45:20,639 --> 00:45:25,400
buying opportunity, right, And I mean like, okay, you can't

763
00:45:25,400 --> 00:45:28,880
afford a house. Person that is listening to this right, Well,

764
00:45:29,599 --> 00:45:31,679
in the future that I'm talking about, you're probably not

765
00:45:31,719 --> 00:45:34,039
gonna be able to get a fucking mortgage either, So

766
00:45:34,159 --> 00:45:38,199
that sucks. But could you buy a house it was

767
00:45:38,280 --> 00:45:43,239
ninety percent off? I bet you could, especially when even

768
00:45:43,280 --> 00:45:45,800
if it's ninety percent off, there's still four of them

769
00:45:45,920 --> 00:45:49,199
that aren't going to get bought, So obviously it's going

770
00:45:49,239 --> 00:45:50,880
to get a little bit worse than ninety percent off.

771
00:45:51,239 --> 00:45:53,719
But just hypothetically, could you afford a house at ninety

772
00:45:53,760 --> 00:45:56,480
percent off? I bet you could? Right? Or what about

773
00:45:56,480 --> 00:46:02,039
a small business? What about a machine shop? Right? What

774
00:46:02,159 --> 00:46:04,920
about a small engineering company with five or six C

775
00:46:05,079 --> 00:46:09,639
and C machines. Because at the same time this is happening,

776
00:46:11,519 --> 00:46:15,920
we have this other thing happening, which is the strategic

777
00:46:16,000 --> 00:46:21,760
defense initiative for onshore in production. Right, and big mega

778
00:46:21,800 --> 00:46:26,119
corporations like the ones that currently dominate everything, well it's

779
00:46:26,159 --> 00:46:31,000
called dominate production. They're like cruise ships or battleships or

780
00:46:31,199 --> 00:46:34,039
the biggest whatever, the biggest fucking ship you can think

781
00:46:34,079 --> 00:46:37,400
of is they take a really long time to turn around.

782
00:46:39,159 --> 00:46:44,159
So this is just a hypothetical or a hunch, but

783
00:46:44,480 --> 00:46:49,599
I think the demographic reality is going to set in

784
00:46:51,039 --> 00:46:55,800
right as we're going into peak on shoring, right and

785
00:46:55,920 --> 00:46:59,760
there's no way that you onshore without shortages. There's no

786
00:47:01,639 --> 00:47:05,840
which is going to create an artificial demand scenario. Right now,

787
00:47:06,000 --> 00:47:08,519
anything you want to buy is made by fucking Globo

788
00:47:08,599 --> 00:47:11,960
Fagot Corp. And it's made in China and shipped to

789
00:47:12,039 --> 00:47:14,719
you and you can go to your Walmart and get it,

790
00:47:15,599 --> 00:47:19,760
right But if Globo Corp. Has to move all of

791
00:47:19,800 --> 00:47:23,320
its production over here, that takes time, right, Like they

792
00:47:23,360 --> 00:47:28,000
can't even build a fucking semiconductor facility in Arizona, right,

793
00:47:28,119 --> 00:47:31,199
This is going to take a while. So that means

794
00:47:32,079 --> 00:47:34,360
that there is going to be a demand opportunity that

795
00:47:34,519 --> 00:47:36,800
won't exist any other time in history. I don't think

796
00:47:36,840 --> 00:47:38,679
all not in history. That's a particular statement, but let's

797
00:47:38,679 --> 00:47:42,800
just say in the next eighty years whatever, that someone

798
00:47:42,960 --> 00:47:46,280
is going to have to fill the gap. Right So,

799
00:47:46,440 --> 00:47:49,800
right now, small and medium sized businesses can't compete because

800
00:47:49,840 --> 00:47:54,000
you're competing against literally the entire Third world making things

801
00:47:54,079 --> 00:48:00,599
for peanuts and whatever. Right, but if we're on shoringfacturing,

802
00:48:00,679 --> 00:48:03,760
there is going to be at least a three or

803
00:48:03,800 --> 00:48:08,599
four year maybe even longer period until their manufacturing facilities

804
00:48:09,760 --> 00:48:12,159
are constructed in the places that they're on shorting too.

805
00:48:13,039 --> 00:48:16,280
So who is going to step in and fill the gap? Right?

806
00:48:16,400 --> 00:48:20,880
Shortages mean price increases, Yes, that sucks, but what that

807
00:48:21,000 --> 00:48:25,519
also means is opportunity that was previously taken away. So

808
00:48:25,639 --> 00:48:29,960
small and medium sized businesses, the engineering shops, they have

809
00:48:30,119 --> 00:48:33,519
to make fancy stuff that's EAR compliant. Right, So like

810
00:48:33,559 --> 00:48:36,679
if you have ten C and C machines, the only

811
00:48:36,760 --> 00:48:39,559
way you could even make any money at all is

812
00:48:39,599 --> 00:48:44,280
if you're doing aerospace or defense because the regulatory compliance

813
00:48:44,599 --> 00:48:49,239
structure called EAR is so burdensome that it can only

814
00:48:49,360 --> 00:48:52,639
be done by US companies and can only be done

815
00:48:52,719 --> 00:48:56,840
by these small engineering shops because at a large scale,

816
00:48:57,440 --> 00:49:01,000
the regulatory burden becomes too much. So like Lockheed Martin

817
00:49:01,119 --> 00:49:04,159
isn't actually a defense contractor, right, It doesn't build shit.

818
00:49:05,199 --> 00:49:09,840
It just buys a whole bunch of pieces from tiny companies,

819
00:49:10,360 --> 00:49:13,280
mid sized companies, mountain pop sized companies and assembles them

820
00:49:13,519 --> 00:49:16,599
and then sells it to the government for much more, right,

821
00:49:17,079 --> 00:49:22,159
But if I can make a bunch more money, right

822
00:49:22,360 --> 00:49:26,840
making something much simpler, right, Like I don't know, think

823
00:49:26,920 --> 00:49:30,280
of what's a you know, a small metal object like

824
00:49:30,360 --> 00:49:35,840
a kitchen appliances? Right, My C and C machines could

825
00:49:35,880 --> 00:49:38,679
make way more because Global Corp fucked up and there

826
00:49:39,239 --> 00:49:44,159
you know, their blender factory is not here yet, right,

827
00:49:44,480 --> 00:49:48,400
there is now a market opportunity where one previously did

828
00:49:48,480 --> 00:49:52,880
not exist for me to stop making bullshit eyetar compliance

829
00:49:52,880 --> 00:49:57,079
stuff and crank the fuck out a bunch of blenders.

830
00:49:59,559 --> 00:50:04,320
Speaker 3: So typically though you know that it still requires bank

831
00:50:04,440 --> 00:50:07,960
capital in a medium term in order to do you know,

832
00:50:08,079 --> 00:50:10,880
expansion or retool or whatever it.

833
00:50:11,000 --> 00:50:11,519
Speaker 2: Is to do that.

834
00:50:11,679 --> 00:50:16,760
Speaker 3: It's not a fire sale, right, so even that too,

835
00:50:16,920 --> 00:50:19,159
Like because you mentioned the boomer selling their businesses, but

836
00:50:19,199 --> 00:50:21,039
they're not going to sell working businesses. I think that's

837
00:50:21,079 --> 00:50:23,239
going to be very rough transition. It'll be an asset

838
00:50:23,360 --> 00:50:26,320
sale and then you know, whoever does buy it is

839
00:50:26,360 --> 00:50:27,760
going to have to figure out how to apply it

840
00:50:27,880 --> 00:50:34,000
for future team. But so you know, in terms of

841
00:50:34,119 --> 00:50:38,039
answering this patronage question of how do you have that

842
00:50:38,480 --> 00:50:41,639
capital network? And maybe you have some insight on this

843
00:50:41,760 --> 00:50:45,960
from working in VC in order to you know, sponsor

844
00:50:46,079 --> 00:50:49,119
something like that. Right that you're identifying talent people who

845
00:50:49,199 --> 00:50:52,000
could make that happen to do that retooling of that

846
00:50:52,119 --> 00:50:54,639
C and C equipment, and you're gonna invest in them

847
00:50:54,679 --> 00:50:57,679
and have that tenure time horizon because it's not going

848
00:50:57,760 --> 00:51:02,280
to be you know, the man Durill States banking system, right,

849
00:51:02,360 --> 00:51:04,440
this is going to be private money that has to

850
00:51:04,519 --> 00:51:04,719
do this.

851
00:51:05,480 --> 00:51:08,880
Speaker 2: Yes, I see an explosion of private lending in the future,

852
00:51:13,159 --> 00:51:15,760
and also it doesn't have to just be private lending.

853
00:51:16,480 --> 00:51:19,320
And honestly, I don't think that may I don't think

854
00:51:19,320 --> 00:51:22,039
that's actually the way that it should be done. Right,

855
00:51:22,159 --> 00:51:26,760
So I think this do you know VC structure came about?

856
00:51:29,119 --> 00:51:32,800
Speaker 3: Yeah, so yeah, feel free to explain from the beginning,

857
00:51:32,880 --> 00:51:35,159
because yeah, I think the smartest people in finance and

858
00:51:35,199 --> 00:51:38,880
economics are usually of that financial historian mindset. So yeah,

859
00:51:38,960 --> 00:51:40,559
beginning at the beginning is usually best.

860
00:51:40,679 --> 00:51:44,440
Speaker 2: It's it's from an in a nutshell, it came from

861
00:51:44,519 --> 00:51:48,960
whaling because whaling was so risky, right, you had the

862
00:51:49,280 --> 00:51:55,000
general partner and the limited partner. The general partner is

863
00:51:55,079 --> 00:51:58,280
going to put up let's say, ten percent of the money, right,

864
00:51:58,400 --> 00:52:01,639
so in our fund we do a bit more than

865
00:52:01,679 --> 00:52:04,960
ten percent, but ten percent is pretty standard, right. So

866
00:52:05,119 --> 00:52:08,440
ten percent of the money in the total pot of well,

867
00:52:08,480 --> 00:52:10,800
let's call a fund to big pot, right, which it

868
00:52:10,840 --> 00:52:15,880
effectively is ten percent of the money in the pot

869
00:52:16,480 --> 00:52:21,199
is mine, right. And I am very skilled at picking

870
00:52:22,400 --> 00:52:27,960
whaling locations or startups, whichever one, right, And you would

871
00:52:28,239 --> 00:52:33,480
like to capture some of you know, my location picking

872
00:52:33,559 --> 00:52:39,760
startup picking prowess. So you're going to take a passive seat,

873
00:52:40,039 --> 00:52:45,039
which means I will invest your money as I see fit, right,

874
00:52:45,239 --> 00:52:49,480
but I will split the returns with you. Is in like,

875
00:52:50,440 --> 00:52:53,320
I will only take ten percent or twenty percent of

876
00:52:53,360 --> 00:52:57,840
the money I make you, So you know it's a

877
00:52:57,880 --> 00:53:02,639
pretty good deal. And ninety percent of that pod is

878
00:53:02,719 --> 00:53:07,599
going to be filled with outside investors, right, and they

879
00:53:07,760 --> 00:53:10,800
just get to sit at home, you know, in Nantucket

880
00:53:10,960 --> 00:53:14,440
or whatever fishing place while I actually go out and

881
00:53:14,519 --> 00:53:18,079
I find the whales and find the startups. I think

882
00:53:18,159 --> 00:53:22,920
that exact same structure would be very very good. It

883
00:53:23,119 --> 00:53:29,039
lends itself to joint venture very easily, right, because if

884
00:53:29,159 --> 00:53:32,679
I have the capital, you know who's not going to

885
00:53:32,719 --> 00:53:38,039
be retooling those machines? Me? You know who's not going

886
00:53:38,119 --> 00:53:40,960
to be trying to take those products to market? Me,

887
00:53:42,639 --> 00:53:45,719
who's not going to be working twelve hour days, seven

888
00:53:45,800 --> 00:53:50,519
days a week. Me, So I want a passive ride.

889
00:53:54,559 --> 00:53:58,960
Joint venture is probably the best way to do it

890
00:53:59,039 --> 00:54:03,400
because it binds me my interest. Right, if I'd lend

891
00:54:03,440 --> 00:54:09,400
you money, my interest is only in the interest being paid.

892
00:54:10,079 --> 00:54:15,000
Whether it's you or I boot you out and somebody

893
00:54:15,039 --> 00:54:18,400
else wants to assume your loan or whatever, I only

894
00:54:18,480 --> 00:54:21,119
care about the interest. But if it's a joint venture,

895
00:54:22,880 --> 00:54:26,840
I care about the actual underlying business and your ability

896
00:54:26,920 --> 00:54:31,679
to manage it. It's that skin and the game type thing, right.

897
00:54:31,760 --> 00:54:35,400
So I think whichever way you're going to do, you

898
00:54:35,480 --> 00:54:37,559
would want right.

899
00:54:37,639 --> 00:54:40,880
Speaker 3: So, so do we have that for our guys?

900
00:54:40,920 --> 00:54:41,079
Speaker 2: Though?

901
00:54:41,280 --> 00:54:44,440
Speaker 3: Like, where is the based fund that is putting that

902
00:54:44,639 --> 00:54:45,320
money into?

903
00:54:45,760 --> 00:54:49,719
Speaker 2: Show me the basic companies. I've had this conversation with

904
00:54:49,840 --> 00:54:53,480
a dozen people. Uh, I think I've ranted to you

905
00:54:53,559 --> 00:54:54,559
about this for a little bit.

906
00:54:54,599 --> 00:54:57,519
Speaker 1: But it's probably the thing about he maan, about how

907
00:54:57,639 --> 00:55:00,079
people just he maan, about how people just say you

908
00:55:00,119 --> 00:55:01,719
got to be building, you got to be building, and

909
00:55:01,800 --> 00:55:04,280
then but they don't tell you what to build that

910
00:55:04,559 --> 00:55:10,719
and the publish, Yeah, that everybody. We need more distant publishers.

911
00:55:10,920 --> 00:55:12,519
We do, Yeah, we don't.

912
00:55:13,719 --> 00:55:15,480
Speaker 3: That took me. That actually took me by surprise that

913
00:55:15,599 --> 00:55:17,280
somebody point out it is like, you know, really, the

914
00:55:18,400 --> 00:55:20,159
isn't it right? It's just a bunch of artists, And

915
00:55:20,280 --> 00:55:22,199
I'm like, oh, I never really thought of it that way.

916
00:55:23,119 --> 00:55:25,360
And it was also pretty disappointed to think of it

917
00:55:25,480 --> 00:55:31,199
that way because I think there are a lot of engineers, builders,

918
00:55:31,760 --> 00:55:37,480
design like people who make concrete things who you know,

919
00:55:37,639 --> 00:55:40,239
can't get a living that would give them a home,

920
00:55:40,400 --> 00:55:43,559
a wife and kids. Yeah, there's to be a way

921
00:55:43,639 --> 00:55:46,440
to make that a discount rate where they would happily

922
00:55:46,719 --> 00:55:49,280
work their asses off to make things that are actually

923
00:55:49,400 --> 00:55:51,599
valuable if they knew they had some kind of like

924
00:55:51,760 --> 00:55:54,960
underwritten guarantee of decent quality of life.

925
00:55:55,000 --> 00:55:57,599
Speaker 2: In that sense, artists deserve to be poor.

926
00:55:58,719 --> 00:56:01,800
Speaker 3: Sure, right, Yeah, but but there's there have to be

927
00:56:02,079 --> 00:56:04,719
our guys who are engineers who would make things if

928
00:56:04,800 --> 00:56:07,159
somebody believed in them to make that kind of long

929
00:56:07,239 --> 00:56:07,679
term bet.

930
00:56:08,079 --> 00:56:10,159
Speaker 2: Yeah. So the answer to why there is no based

931
00:56:10,320 --> 00:56:15,280
VC fund is because no one has been able to show.

932
00:56:16,039 --> 00:56:19,239
I don't care whether it's based or not based I'm

933
00:56:19,280 --> 00:56:27,639
an investor, right, you know what doesn't pay bills? Moral platitudes, right, Right,

934
00:56:28,039 --> 00:56:32,320
like you being more based than the fucking I don't

935
00:56:32,440 --> 00:56:36,360
know training with a unicorn company. I'll go be based

936
00:56:36,400 --> 00:56:40,000
by myself with my unicorn bucks, thank you very much.

937
00:56:40,239 --> 00:56:44,840
Like it's my money. It proved to me that you

938
00:56:45,360 --> 00:56:50,840
have got a company that will deliver me outsize returns

939
00:56:50,920 --> 00:56:55,400
to justify the insane risk. Right. What our guys don't

940
00:56:55,519 --> 00:57:00,199
understand is that if you want money for things, right,

941
00:57:00,280 --> 00:57:05,599
you want guys to invest in your thing, Well, you're

942
00:57:06,039 --> 00:57:10,199
in a competition. You just don't know it. Right. I

943
00:57:10,440 --> 00:57:14,000
have literally thousands of things that I can do with

944
00:57:14,119 --> 00:57:18,599
my money. I can make five percent on my money

945
00:57:18,679 --> 00:57:22,320
guaranteed by the government. I could do that, and I

946
00:57:22,360 --> 00:57:27,360
could take zero risk. Right. I can take some risk

947
00:57:27,760 --> 00:57:31,039
and invest in a stock that's publicly traded, and if

948
00:57:31,039 --> 00:57:33,880
I don't like it, or if it starts to look sketchy,

949
00:57:34,880 --> 00:57:37,880
I can bail out whenever the fuck I want to. Right.

950
00:57:38,719 --> 00:57:42,000
But what you're asking me to do is to tie

951
00:57:42,079 --> 00:57:45,679
myself to the hip to you basically be signing these

952
00:57:45,719 --> 00:57:51,480
twins with my money right to where if you turn

953
00:57:51,559 --> 00:57:54,760
out to be a fucking idiot that doesn't know what

954
00:57:54,840 --> 00:57:58,280
they're doing. I am stuck with you. My money is

955
00:57:58,360 --> 00:58:01,480
going to ride all the way down to zero right

956
00:58:01,559 --> 00:58:03,599
where if it was if you were a stock, I

957
00:58:03,639 --> 00:58:06,159
could just sell you the second I got the first

958
00:58:06,199 --> 00:58:10,039
whiff or retardation, I'd be out the door, right.

959
00:58:10,119 --> 00:58:15,159
Speaker 3: So who doesn't have this? Like qualmbo is, if you

960
00:58:15,400 --> 00:58:18,719
own a bank and you're creating a credit basically out

961
00:58:18,760 --> 00:58:22,559
of thin air, you can afford to you know, take losses.

962
00:58:22,800 --> 00:58:26,239
Speaker 2: That's that's different. You asked me where the where the

963
00:58:26,280 --> 00:58:29,840
base vcs come from? If we're talking about venture lending,

964
00:58:31,119 --> 00:58:34,039
you know, if I'm unsure of your ability to run

965
00:58:34,079 --> 00:58:38,119
a machine shop, I could give it to you inventure

966
00:58:38,239 --> 00:58:43,840
debt at twelve percent interest, and if you do not succeed,

967
00:58:44,920 --> 00:58:47,119
I will sell your building and I will sell all

968
00:58:47,159 --> 00:58:51,239
your machines and hopefully that will pay the difference. So

969
00:58:51,440 --> 00:58:54,360
like investing in a company is asking me to take

970
00:58:54,400 --> 00:58:59,719
a ride with you, and lending you money is significantly

971
00:58:59,800 --> 00:59:03,360
less risk and infinitely more protections. But the rate of

972
00:59:03,480 --> 00:59:06,679
return is generally capped at something like twelve percent. I'm

973
00:59:06,719 --> 00:59:08,599
not I'm not making any multiples. There's going to be

974
00:59:08,719 --> 00:59:13,559
zero x's in my return. So I think, and this

975
00:59:13,719 --> 00:59:17,760
is why different businesses lend themselves to different style of

976
00:59:17,840 --> 00:59:18,639
capital formation.

977
00:59:21,159 --> 00:59:24,760
Speaker 3: So I don't want to put this. I think there's

978
00:59:24,800 --> 00:59:27,159
a question of you know, to bring it back to

979
00:59:27,679 --> 00:59:30,199
you know that you know it's being based in there's

980
00:59:30,239 --> 00:59:33,519
a question of political will, right like China, as a

981
00:59:33,880 --> 00:59:37,199
communist government said we are just going to dominate manufacturing,

982
00:59:37,960 --> 00:59:42,280
and as a you know, a political dic TOD dumped

983
00:59:42,280 --> 00:59:45,480
a ton of money to make that happen and it worked, right,

984
00:59:45,599 --> 00:59:48,360
And now people complained about overproduction, which I don't think

985
00:59:48,480 --> 00:59:51,880
is a real thing, but they you know, they completely

986
00:59:51,920 --> 00:59:55,639
dominate manufacturing a lot of you know, electronics manufacturing and

987
00:59:55,719 --> 00:59:59,960
so on. There's no reason we can't do that also,

988
01:00:00,000 --> 01:00:01,760
so I think it's just a question of having the

989
01:00:02,480 --> 01:00:06,440
will to make it happen. You know again, Imperial Japan

990
01:00:06,559 --> 01:00:10,000
did the same thing. They they lent to people and said,

991
01:00:10,320 --> 01:00:12,679
you know, we've got faith in you. Yes, you have

992
01:00:12,760 --> 01:00:16,559
no track record, but because we share a common culture

993
01:00:16,760 --> 01:00:19,400
and we want the same goals, we think you're not

994
01:00:19,559 --> 01:00:23,400
just gonna screw this up or take advantage. You know,

995
01:00:23,599 --> 01:00:26,000
it's not going to be uh, you know, PvP money

996
01:00:26,239 --> 01:00:28,480
for fake inner city businesses.

997
01:00:28,519 --> 01:00:31,440
Speaker 2: But they get the state though, right, So like, let's

998
01:00:31,440 --> 01:00:35,280
say you suck at your business, right, I can be like,

999
01:00:35,360 --> 01:00:39,360
oh shit, now I have a huge deficit and I

1000
01:00:39,639 --> 01:00:43,880
need to make that up. So everyone guess what we're

1001
01:00:43,920 --> 01:00:45,000
doing an income tax race?

1002
01:00:45,880 --> 01:00:49,599
Speaker 3: Sorry or right? Or it gets spread out, right, it's

1003
01:00:49,599 --> 01:00:53,639
inflation that's never recovered through because the capital structure did

1004
01:00:53,719 --> 01:00:54,760
not become more efficient.

1005
01:00:54,880 --> 01:00:57,079
Speaker 2: It's just h But if you're going to ask a

1006
01:00:57,159 --> 01:01:02,079
private person, who is going who cover like, there's no

1007
01:01:02,199 --> 01:01:06,559
incentive mechanism for me for me to take that bet.

1008
01:01:07,000 --> 01:01:10,599
Right if it comes down to like state mandated investing

1009
01:01:10,679 --> 01:01:17,039
in the twenty thousandth right wing dissident book publisher, I'm

1010
01:01:17,079 --> 01:01:19,719
going to bury my money in the backyard and pretend

1011
01:01:19,760 --> 01:01:21,559
to be poor until you go away.

1012
01:01:21,920 --> 01:01:25,360
Speaker 3: So I guess I'm thinking in terms of that for

1013
01:01:27,320 --> 01:01:31,760
you know, a people, a culture who values actual productivity.

1014
01:01:33,239 --> 01:01:38,280
You know, it make those high trust relationships at a

1015
01:01:38,400 --> 01:01:42,280
discount before people who are actually competent become so rare

1016
01:01:42,880 --> 01:01:46,199
and such a necessity that they're going to set their

1017
01:01:46,239 --> 01:01:49,159
own price. You know, I think there is an opportunity

1018
01:01:49,239 --> 01:01:51,559
to buy them keep now because people don't realize what

1019
01:01:51,679 --> 01:01:52,079
time it is.

1020
01:01:52,760 --> 01:01:55,159
Speaker 2: See I've been urged, and let me know what you

1021
01:01:55,199 --> 01:01:58,920
think about this. I've been urging every person. So I

1022
01:01:59,360 --> 01:02:04,239
basically my little spiel about you know, whether it's economics

1023
01:02:04,320 --> 01:02:10,519
stuff or whatever. Usually it ends in like an inundation

1024
01:02:10,880 --> 01:02:13,679
of d MS or whatever. And they asked me like,

1025
01:02:13,760 --> 01:02:16,000
I am in x y z situation. What do I

1026
01:02:16,079 --> 01:02:19,679
do if I have X y z amount of capital?

1027
01:02:19,719 --> 01:02:23,880
What do I do if I have you know, no capital?

1028
01:02:24,000 --> 01:02:24,480
Speaker 1: What do I do?

1029
01:02:25,119 --> 01:02:28,079
Speaker 2: I've gotten like a wide range of these, and it's

1030
01:02:28,079 --> 01:02:30,000
the younger guys obviously they tell them like, hey, I

1031
01:02:30,039 --> 01:02:31,880
don't have any capital right.

1032
01:02:31,840 --> 01:02:35,719
Speaker 3: Like, because lending that is basically asset based. I mean

1033
01:02:35,719 --> 01:02:38,880
that that's the vicious cycle of you know, lending is

1034
01:02:38,920 --> 01:02:41,159
based on what do you have? Assets? Is collateral in

1035
01:02:41,280 --> 01:02:43,840
order to get future loans. And unless you're a boomer

1036
01:02:43,920 --> 01:02:46,719
that owns a house and a large sock portfolio, you

1037
01:02:46,840 --> 01:02:49,400
don't have the collateral to get that loan. But under

1038
01:02:49,639 --> 01:02:52,719
you know, the New Deal for example, uh, you know

1039
01:02:52,800 --> 01:02:55,519
they did red landing, redlining and say, oh, you're the

1040
01:02:55,599 --> 01:02:57,559
kind of person that lives in this neighborhood and you're

1041
01:02:57,599 --> 01:02:59,880
probably responsible and you're probably going to pay back this

1042
01:03:00,280 --> 01:03:02,599
thirty year mortgage that they invented out of nowhere. The

1043
01:03:02,639 --> 01:03:05,480
idea of thirty year mortgage was crazy to bankers until

1044
01:03:05,519 --> 01:03:07,920
that got pushed through, and turns out actually most of

1045
01:03:07,960 --> 01:03:10,239
them did pay their mortgage and it worked.

1046
01:03:11,639 --> 01:03:16,599
Speaker 2: So I've I've gotten And you said you caught that

1047
01:03:18,400 --> 01:03:21,239
that show I did with the ad Jason from the

1048
01:03:21,280 --> 01:03:25,320
two good podcasts, Yes you have ended. I believe, if

1049
01:03:25,440 --> 01:03:34,239
memory serves, is how I got to where I am

1050
01:03:34,880 --> 01:03:39,320
through childless boomers, which there are a lot of that

1051
01:03:39,440 --> 01:03:45,480
are very successful, and also through boomers who've been insanely

1052
01:03:45,960 --> 01:03:49,920
very successful whose kids don't give a fuck what they

1053
01:03:50,239 --> 01:03:52,079
what dad does. They don't don't give a shit. They

1054
01:03:52,119 --> 01:03:54,960
only hear his stories, right, They just cared about their

1055
01:03:55,000 --> 01:03:59,599
credit card, they're being paid. And I basically was the

1056
01:03:59,679 --> 01:04:02,920
guy that would listen to those stories, right. I wanted

1057
01:04:02,920 --> 01:04:06,639
to hear all the stories. And we give the boomers

1058
01:04:06,760 --> 01:04:10,480
a lot of shit, you really do, and a lot

1059
01:04:10,559 --> 01:04:12,559
of it is deserved and a lot of it isn't

1060
01:04:13,480 --> 01:04:21,760
right because they don't everything in their tautology, you know,

1061
01:04:23,559 --> 01:04:27,559
as basically their paradigm, everything that they've because your paradigm

1062
01:04:27,679 --> 01:04:30,440
is also your it's not just like what you believe.

1063
01:04:31,440 --> 01:04:34,599
It's the information you build your reality with. It's like

1064
01:04:34,880 --> 01:04:37,039
your sense of making the world the options that you

1065
01:04:37,119 --> 01:04:40,800
think are available to you. So when they're unhappy, right

1066
01:04:41,480 --> 01:04:44,239
like let's say the boomers without you know, whose kids

1067
01:04:44,280 --> 01:04:47,320
don't give a ship, or that they've done everything in

1068
01:04:47,440 --> 01:04:50,400
their life right, they've achieved tremendous amounts of financial success,

1069
01:04:51,440 --> 01:04:54,519
they don't know the options that we know about, you know,

1070
01:04:54,760 --> 01:04:59,280
spiritual success. They don't know these other things are available

1071
01:04:59,360 --> 01:05:02,480
to them that we know. So I don't I don't

1072
01:05:02,519 --> 01:05:06,400
blame them as much as everybody else does. So with

1073
01:05:06,559 --> 01:05:10,480
these guys that I'm talking about, like I was that guy.

1074
01:05:10,719 --> 01:05:12,679
I was the surrogate kid that cared.

1075
01:05:13,000 --> 01:05:16,280
Speaker 3: So is what you did replicable? Like that's the question

1076
01:05:16,280 --> 01:05:19,000
I had. My first question is, well, where do you

1077
01:05:19,079 --> 01:05:20,280
meet these boomers?

1078
01:05:20,400 --> 01:05:20,559
Speaker 2: You know?

1079
01:05:20,599 --> 01:05:22,480
Speaker 3: I would love to have those kinds of conversations with

1080
01:05:22,559 --> 01:05:25,920
them as well. Finding them and getting them to be

1081
01:05:26,039 --> 01:05:29,639
willing to have that conversation is a whole other thing.

1082
01:05:30,639 --> 01:05:31,760
Speaker 2: This is what this is what I was trying to

1083
01:05:31,800 --> 01:05:33,679
get up before when I was talking about the machine

1084
01:05:33,760 --> 01:05:39,440
jumps capital formation. I see the solution not as like

1085
01:05:39,639 --> 01:05:46,079
private lending necessarily. I see it as apprenticeships. I see

1086
01:05:46,079 --> 01:05:51,360
apprenticeships solving a lot of what we are talking about,

1087
01:05:52,400 --> 01:05:56,039
because I bet you every like if you live in

1088
01:05:56,639 --> 01:06:01,760
you know, let's say I don't know you know Le Appalacha, right,

1089
01:06:03,039 --> 01:06:05,960
I can't. You know, there's not a lot of multi

1090
01:06:06,079 --> 01:06:10,079
millionaire boomers around you. There's probably two or three and

1091
01:06:10,239 --> 01:06:14,320
you they own businesses that operate in those communities, right.

1092
01:06:14,679 --> 01:06:18,239
And I've had just a good friend of mine was

1093
01:06:18,360 --> 01:06:22,159
in and this is going to ruffle a lot of

1094
01:06:22,199 --> 01:06:24,119
feathers because I know, like, oh, we can't teach your

1095
01:06:24,119 --> 01:06:26,360
guys to be plumbers or whatever like I had.

1096
01:06:26,679 --> 01:06:28,559
Speaker 3: And I've seen a lot of boomers where they're not

1097
01:06:28,760 --> 01:06:32,119
interested in teaching or play. They're like, oh, I don't

1098
01:06:32,159 --> 01:06:33,679
get paid for that, that's not my job.

1099
01:06:33,960 --> 01:06:34,079
Speaker 1: You know.

1100
01:06:34,119 --> 01:06:36,000
Speaker 3: They're they're part of that paradigm you talk about, is

1101
01:06:36,079 --> 01:06:39,199
that they lack a sense of legacy, you know, and

1102
01:06:39,280 --> 01:06:40,840
often they think, well, I'm just going to do this

1103
01:06:40,960 --> 01:06:42,679
until I'm gone, and then I don't care what happens

1104
01:06:42,719 --> 01:06:45,519
in my plumbing business afterwards, because I'll be in the

1105
01:06:45,559 --> 01:06:48,239
ground that. You know, they have no sense of like, well,

1106
01:06:48,239 --> 01:06:51,880
why should I take on extra work and extra responsibility.

1107
01:06:51,880 --> 01:06:54,679
I'm already in a mindless routine that i could just

1108
01:06:54,840 --> 01:06:57,280
keep doing what I'm doing until.

1109
01:06:57,280 --> 01:07:01,639
Speaker 2: Here's autonomy to them. And what I'll say is, is

1110
01:07:01,800 --> 01:07:08,760
this all of the guys that should be working for them, right,

1111
01:07:08,800 --> 01:07:10,639
they can not give a shit about it, Like I sy,

1112
01:07:10,760 --> 01:07:15,280
that's fine, but that's not the problem that they're facing. Right.

1113
01:07:15,400 --> 01:07:18,599
So my friend, his mother died and he had to

1114
01:07:18,639 --> 01:07:21,519
go to New York and basically handle her estate and

1115
01:07:21,920 --> 01:07:26,559
her her refrigerator was broken, and it was an old

1116
01:07:26,599 --> 01:07:31,119
refrigerator that he wanted to keep, right, and there was

1117
01:07:31,920 --> 01:07:35,840
one refrigerator repair person for like all of like you know,

1118
01:07:37,519 --> 01:07:41,360
northern New York. And it took him two months to

1119
01:07:41,440 --> 01:07:45,320
get this guy to show up. And the guy was

1120
01:07:45,360 --> 01:07:49,320
a single boomer, right, he'd been in business for thirty years,

1121
01:07:50,400 --> 01:07:57,440
and he is trying to find employees that he will

1122
01:07:57,559 --> 01:08:01,000
happily pay ninety dollars an hour, eighty dollars an hour

1123
01:08:01,039 --> 01:08:03,400
because he charges one hundred and fifty an hour, and

1124
01:08:03,480 --> 01:08:05,880
he can't find a single fucking person to come work

1125
01:08:05,920 --> 01:08:12,440
for him. Because we were just as signumed as they were, right,

1126
01:08:12,920 --> 01:08:18,319
every single person that we see in our age group, Yes, kat,

1127
01:08:18,439 --> 01:08:22,520
I will let you in. You're not the boss. They

1128
01:08:22,600 --> 01:08:26,640
all went and got college degrees, even college degrees they

1129
01:08:26,920 --> 01:08:30,279
can't even fucking use. It don't matter. And a job

1130
01:08:30,520 --> 01:08:34,199
like that is beneath them in some capacity.

1131
01:08:34,399 --> 01:08:37,439
Speaker 3: Yeah, they don't want to get dirty and twenty and.

1132
01:08:39,960 --> 01:08:43,920
Speaker 2: Here some fucking faggot place when they if they were

1133
01:08:43,960 --> 01:08:46,920
willing to get even slightly dirty, which is another thing

1134
01:08:46,960 --> 01:08:49,880
that our guys do. Right leftists don't like getting their

1135
01:08:49,920 --> 01:08:53,600
hands dirty. Right leftists and they're intellectuals, and that, you know,

1136
01:08:53,920 --> 01:08:57,279
manual labors beneath them. You know, it's not beneath like

1137
01:08:57,479 --> 01:09:00,600
we do that shit for free. Yeah, here's the type

1138
01:09:00,600 --> 01:09:01,600
of people that do that shit.

1139
01:09:01,920 --> 01:09:04,560
Speaker 3: Yeah, I work on finance and that's like my leisure

1140
01:09:04,640 --> 01:09:07,640
activity is exactly.

1141
01:09:07,840 --> 01:09:12,079
Speaker 2: So we are those guys, and we will damn sure

1142
01:09:12,199 --> 01:09:14,359
do it for almost one hundred dollars an hour.

1143
01:09:15,640 --> 01:09:19,920
Speaker 5: So these openings there though, and maybe this just means

1144
01:09:19,920 --> 01:09:22,439
there's a market to be the matchmaker between these two,

1145
01:09:22,479 --> 01:09:25,039
because I mean, that's great to hear that there are

1146
01:09:25,079 --> 01:09:27,319
the ones who want to hire the apprentices and bring

1147
01:09:27,399 --> 01:09:29,960
people and that's exactly what I'd be looking for.

1148
01:09:31,600 --> 01:09:35,640
Speaker 3: Like another example of PLC programmer for industrial machines, and

1149
01:09:35,760 --> 01:09:38,439
it tends to be those old boomers who have all

1150
01:09:38,520 --> 01:09:42,800
the wisdom and you know, forty years of experience. But

1151
01:09:43,000 --> 01:09:46,680
there's no openings to get a twenty year old who

1152
01:09:46,800 --> 01:09:48,920
does want to get dirty and wants to make that

1153
01:09:49,159 --> 01:09:52,439
ninety dollars an hour to start working in that field.

1154
01:09:52,720 --> 01:09:59,520
There's no like until they pass away, that opening doesn't exist.

1155
01:10:00,279 --> 01:10:02,199
And because I think there's a lot of our guys

1156
01:10:02,239 --> 01:10:03,840
who do want those kinds of jobs and they can't

1157
01:10:03,880 --> 01:10:04,239
find them.

1158
01:10:04,840 --> 01:10:07,720
Speaker 2: Like there's like three engineering shops that I'm I know,

1159
01:10:07,920 --> 01:10:10,600
I've been taking extra capital and socking it away and

1160
01:10:10,680 --> 01:10:15,199
seeing see machines nice. Yeah, I don't plan on putting

1161
01:10:15,239 --> 01:10:18,319
them to use myself. I'm not opening up a machine shop, right,

1162
01:10:18,800 --> 01:10:21,760
I have friends that own machine shops, and I'm going

1163
01:10:21,880 --> 01:10:25,880
to use the cheaply acquired CE ANDC machines I got

1164
01:10:25,920 --> 01:10:30,840
at a discount because you know, businesses in Chicago are

1165
01:10:30,880 --> 01:10:34,920
going bust, and I am going to use those machine

1166
01:10:34,960 --> 01:10:38,840
shops because they're already acting there. They cannot meet the

1167
01:10:38,960 --> 01:10:42,119
demand that they have and it's a huge problem. Their

1168
01:10:42,159 --> 01:10:46,800
biggest problem is CAD engineers. Right, there's not enough young

1169
01:10:46,880 --> 01:10:51,840
guys that know CAD and are willing to learn, you know,

1170
01:10:52,039 --> 01:10:54,920
at a slightly discounted great for a year all of

1171
01:10:55,000 --> 01:10:59,319
the you know, changing the machine, changing the the dies

1172
01:10:59,359 --> 01:11:02,000
and bits or whatever, and doing you know, the less

1173
01:11:02,760 --> 01:11:06,359
exciting you know, C and C job for a year

1174
01:11:06,439 --> 01:11:08,600
while they learned the actual C and C job, and

1175
01:11:08,920 --> 01:11:09,600
no can.

1176
01:11:09,960 --> 01:11:12,960
Speaker 3: So if this is such a massive market dislocation, where

1177
01:11:13,279 --> 01:11:18,000
is the VC for you know, the right wing trades university?

1178
01:11:19,640 --> 01:11:22,560
You know, maybe they can't afford to do that. So,

1179
01:11:22,840 --> 01:11:25,159
you know, what's that coding college where it's like they

1180
01:11:25,199 --> 01:11:28,760
get subsidized on the classes and then part of their

1181
01:11:28,840 --> 01:11:31,680
salary for the first three years that they're working gets

1182
01:11:31,760 --> 01:11:34,239
clawed back in order to pay for the education that

1183
01:11:34,359 --> 01:11:37,159
made that job possible. Like again, it seems like there's

1184
01:11:37,319 --> 01:11:41,359
an economic opportunity or business opportunity to close that gap too,

1185
01:11:42,640 --> 01:11:46,119
you know, to make those ends meet where currently now

1186
01:11:46,199 --> 01:11:46,479
they're not.

1187
01:11:46,840 --> 01:11:50,439
Speaker 2: Right. Well, so if the answer, if the question is

1188
01:11:50,479 --> 01:11:55,840
where's the VC to come and and fun to university

1189
01:11:56,319 --> 01:11:59,199
the technical he won't because that's not going to make

1190
01:11:59,239 --> 01:12:05,800
him money. But like a what you're what you're kind

1191
01:12:05,800 --> 01:12:08,119
of what we're kind of circling around is, let's say

1192
01:12:08,239 --> 01:12:16,199
a a staffing agency, Okay, sure, all right, And if

1193
01:12:16,319 --> 01:12:21,399
somebody put a very compelling staffing agency right and was

1194
01:12:21,479 --> 01:12:25,720
able to draw comps, right, this is the other thing, right,

1195
01:12:25,800 --> 01:12:28,840
it's comps. Right. So whenever he's like, well where are

1196
01:12:28,840 --> 01:12:30,880
the vcs, how come no one's funding? Like I've had

1197
01:12:30,920 --> 01:12:33,279
people try and get like like, oh oh this persus,

1198
01:12:33,600 --> 01:12:37,439
I've got a great you know, YouTube channel, or do

1199
01:12:37,479 --> 01:12:40,640
you want to help me fund my song? I'm a

1200
01:12:40,760 --> 01:12:44,880
great musician, right, Like, that's not going to make me

1201
01:12:45,159 --> 01:12:48,159
like it showed me a business model, right, show me

1202
01:12:48,239 --> 01:12:52,560
a business plan? Right. Nobody's putting the work in to

1203
01:12:53,239 --> 01:12:57,039
think or to learn what somebody like me is expecting

1204
01:12:57,159 --> 01:13:01,680
to see. And your competition looks like right, you know

1205
01:13:01,800 --> 01:13:05,000
all the non based normy pitch deckson I get, and

1206
01:13:05,159 --> 01:13:10,920
the very valuable businesses that exist underneath them. You need

1207
01:13:11,000 --> 01:13:15,239
to be like that but better and my money is

1208
01:13:15,359 --> 01:13:20,359
going to go right. So we're all about meritocracy until

1209
01:13:20,439 --> 01:13:23,079
it's like, oh, how come nobody's investing in our space? Now?

1210
01:13:23,279 --> 01:13:26,479
Now we want communism, Well, where's the VC who's come

1211
01:13:26,520 --> 01:13:29,239
in and give me my money? Like, no, motherfucker, give

1212
01:13:29,279 --> 01:13:32,520
me a business and I will invest in it if

1213
01:13:32,600 --> 01:13:34,560
it is a business that looks like I can generate

1214
01:13:34,640 --> 01:13:36,239
a reasonable rate of return.

1215
01:13:37,279 --> 01:13:39,560
Speaker 3: And over what time frame? Though, because I think, you know,

1216
01:13:39,680 --> 01:13:41,640
the problem I seen with a lot of VC and

1217
01:13:41,680 --> 01:13:44,560
even some of the VC firms that are private equity

1218
01:13:44,600 --> 01:13:49,279
firms that are trying to be based is because of

1219
01:13:49,359 --> 01:13:52,760
that opportunity cost that you mentioned. They have a very

1220
01:13:52,840 --> 01:13:55,000
short time prize and they want to make the quick flip.

1221
01:13:55,359 --> 01:13:58,560
You know, they want to buy the business, juice it up,

1222
01:13:58,720 --> 01:14:01,439
and then sell it three for you know, ten x.

1223
01:14:01,800 --> 01:14:04,119
They're not looking to say, Okay, I'm going to invest

1224
01:14:04,159 --> 01:14:07,399
in this business for the next twenty years because they're

1225
01:14:07,399 --> 01:14:09,720
going to have amazing cash flow and we're going to

1226
01:14:09,760 --> 01:14:13,239
get a percentage of you know those profits that whole time.

1227
01:14:13,640 --> 01:14:17,319
Like a buy and hold strategy. You know, a market cap.

1228
01:14:18,640 --> 01:14:21,960
Speaker 2: That's quote, that's growth, that's growth. Private equity, right, they

1229
01:14:22,039 --> 01:14:24,520
buy businesses and flip them, lever them up and flip

1230
01:14:24,600 --> 01:14:27,279
them all right, So long term private equity is a

1231
01:14:27,279 --> 01:14:31,319
different animal, right, So, like Carlisle Group is, they're buying

1232
01:14:32,119 --> 01:14:35,319
businesses that are already large caps so to say, like

1233
01:14:35,319 --> 01:14:39,239
one hundred million plus. In fact, like much larger, usually

1234
01:14:39,359 --> 01:14:42,039
several billion dollars that have been in business for a

1235
01:14:42,199 --> 01:14:46,920
very long time and they see you know, distributions as

1236
01:14:46,960 --> 01:14:54,479
their primary methodology of generating returns. And VC is the

1237
01:14:54,520 --> 01:14:57,159
person that takes the risk in the beginning, right, So

1238
01:14:57,720 --> 01:15:02,520
my exit horizon right from the time I invest is

1239
01:15:02,840 --> 01:15:07,760
best case scenario seven years. Best case. So if I'm

1240
01:15:07,760 --> 01:15:12,079
investing in a startup, unless you get unless you're super

1241
01:15:12,239 --> 01:15:16,600
super successful and within within a couple of years grow

1242
01:15:16,760 --> 01:15:22,159
so fast that you're already like causing the major companies

1243
01:15:22,960 --> 01:15:26,840
fucking you know, heartburn and sleepless nights, so they have

1244
01:15:26,960 --> 01:15:29,680
to buy you out of anxiety of what you could become.

1245
01:15:30,239 --> 01:15:35,000
Then maybe five years, but best case scenario on average,

1246
01:15:35,520 --> 01:15:38,920
I'm looking at a seven year investment. I am stuck

1247
01:15:39,000 --> 01:15:43,319
with that, right, So you and I are Siamese twins,

1248
01:15:43,600 --> 01:15:47,159
my money and your business idea for seven years.

1249
01:15:48,640 --> 01:15:51,239
Speaker 3: So what's your expected exit in this scenario? Is it

1250
01:15:51,319 --> 01:15:55,119
something other than buyout or IPO.

1251
01:15:56,640 --> 01:15:59,319
Speaker 2: Usually purchased by a larger company Because I'm investing in

1252
01:15:59,439 --> 01:16:04,479
early age companies, so an early stage company is going

1253
01:16:04,600 --> 01:16:09,479
to basically try and become a thorn in the side

1254
01:16:09,720 --> 01:16:12,560
of the major companies by doing their business in a

1255
01:16:12,600 --> 01:16:16,439
different way much better, to the point where my business

1256
01:16:16,520 --> 01:16:20,720
model is superior to your business model. And if you

1257
01:16:20,880 --> 01:16:26,119
allow me to continue, I will kill you. So you

1258
01:16:26,239 --> 01:16:30,439
can either buy me now or be killed by me later.

1259
01:16:31,439 --> 01:16:34,279
What do you want to do? And every big business

1260
01:16:34,479 --> 01:16:39,520
is going to say, well, here's your giant cartoon check.

1261
01:16:40,079 --> 01:16:43,159
Speaker 3: Right, But that's also how they get nerved, right, is

1262
01:16:43,720 --> 01:16:44,760
you know it's meta.

1263
01:16:45,520 --> 01:16:48,079
Speaker 2: You're asking me me, You're asking me to solve both.

1264
01:16:50,079 --> 01:16:52,399
We just have to fix the world then mega mega

1265
01:16:52,439 --> 01:16:54,840
company problems. What Google does with your tech that they

1266
01:16:54,920 --> 01:16:56,840
buy is whatever they want to do because they own it.

1267
01:16:57,239 --> 01:17:00,399
I can't fix Google, but I can at them to

1268
01:17:00,439 --> 01:17:03,600
buy early stage companies if I cause them enough headache

1269
01:17:05,119 --> 01:17:07,520
and enough you know, few response.

1270
01:17:09,720 --> 01:17:12,039
Speaker 3: And how do we get our own Google? I guess

1271
01:17:12,079 --> 01:17:13,680
that is where I'm going with this, right. It's the

1272
01:17:13,800 --> 01:17:16,520
parallel infrastructure thing of you know, if what is really

1273
01:17:16,560 --> 01:17:18,680
going to count? Especially you know when it's like.

1274
01:17:20,239 --> 01:17:24,439
Speaker 2: This is the problem with parallel infrastructure conversations, they're always

1275
01:17:24,640 --> 01:17:30,399
parallel infrastructure and not superior infrastructure. People go where the

1276
01:17:30,479 --> 01:17:35,279
superior infrastructure is, right, just like capital, right, my investor

1277
01:17:35,359 --> 01:17:41,800
dollar is going to go in the best investment opportunity my.

1278
01:17:43,439 --> 01:17:47,279
Speaker 3: You know, human capital, so that that's contingent on the

1279
01:17:47,399 --> 01:17:51,760
managerial states bank. Then you know, that's like why you

1280
01:17:51,840 --> 01:17:56,039
know Ricardi and comparative advantage and global Homo doesn't work

1281
01:17:56,079 --> 01:17:59,119
out in real life is because it's the banks that

1282
01:17:59,279 --> 01:18:03,039
are you know, putting the FED put in that system

1283
01:18:03,239 --> 01:18:04,840
and to go out, you know, to fight the Fed

1284
01:18:05,319 --> 01:18:06,439
usually ends in disaster.

1285
01:18:07,760 --> 01:18:12,359
Speaker 2: No, like with big companies. Right, Google's abound to die,

1286
01:18:14,600 --> 01:18:18,359
I would say within five years, right, and not a

1287
01:18:18,399 --> 01:18:20,319
lot of people don't see it coming, but a few

1288
01:18:20,359 --> 01:18:23,039
of us are. I'm not gonna be the FED that

1289
01:18:23,159 --> 01:18:27,760
did it. It's going to be its bigness. Right. When

1290
01:18:27,800 --> 01:18:33,039
something becomes big, big, and bureaucratize to a point, it

1291
01:18:33,159 --> 01:18:39,720
cannot rapidly defend itself, very similar to like a nation state,

1292
01:18:41,560 --> 01:18:44,920
the more bureaucratic layers. And that's what this way. If

1293
01:18:44,920 --> 01:18:48,359
all of a sudden, let's say like fifty percent of

1294
01:18:48,399 --> 01:18:51,960
the Mexicans in Mexico weren't actually Mexicans at all, and

1295
01:18:52,039 --> 01:18:54,520
were actually Chinese people pretending to be Mexicans, like in

1296
01:18:54,600 --> 01:18:56,760
costumes that they took off when they were at home

1297
01:18:56,800 --> 01:19:00,319
in their house, and then all of a sudden day

1298
01:19:00,840 --> 01:19:03,199
they took up their costumes and charge across the border

1299
01:19:04,800 --> 01:19:11,159
with Akas, we'd be fucked, and we'd be fucked because

1300
01:19:12,720 --> 01:19:17,520
our bureaucratic structure is so large and burdensome, it is

1301
01:19:17,720 --> 01:19:25,159
incapable of rapidly pivoting, directing its resources and defending itself.

1302
01:19:25,880 --> 01:19:30,199
A corporation is no different. Google can't defend itself from

1303
01:19:30,279 --> 01:19:34,760
competitors because it has to do everything by committee, and

1304
01:19:34,840 --> 01:19:39,000
there's ninety different layers of bullshit. Right, So basically, somebody

1305
01:19:39,119 --> 01:19:42,600
inside Google may have a brilliant idea on how to

1306
01:19:42,800 --> 01:19:47,000
defend Google from this upstart attacker, right, But that guy's

1307
01:19:47,079 --> 01:19:51,399
idea is just that guy's idea. He has to get

1308
01:19:51,439 --> 01:19:54,720
it past his manager, right, and that manager has to

1309
01:19:54,800 --> 01:19:58,760
see the same opportunity that he does. Unlikely, and then

1310
01:19:58,800 --> 01:20:02,680
that guy has to go his regional director or whatever

1311
01:20:03,000 --> 01:20:06,239
asshole titles they have, or like change agent or whatever

1312
01:20:06,319 --> 01:20:09,199
faggty bullshit that they put on their LinkedIn, Right, it

1313
01:20:09,279 --> 01:20:11,880
has to go through a whole lot of LinkedIn faggety titles,

1314
01:20:13,319 --> 01:20:16,479
and it probably won't, and even if it does the

1315
01:20:16,600 --> 01:20:22,199
best case, it is so watered down it is nighon ineffectual.

1316
01:20:23,840 --> 01:20:27,680
Speaker 3: So sock is how they really at risk if they

1317
01:20:27,760 --> 01:20:30,159
could just do stock buybacks, though, I mean, I think

1318
01:20:30,199 --> 01:20:32,640
that's the big problem with this, the bigness and the

1319
01:20:32,680 --> 01:20:36,479
managerial revolution in general, is uh, the need for profit

1320
01:20:36,600 --> 01:20:40,239
motive basically goes out the window because you've got, you know,

1321
01:20:40,359 --> 01:20:43,319
the banking system that aren't.

1322
01:20:43,079 --> 01:20:45,199
Speaker 2: Going to help you. If this other company is growing

1323
01:20:45,279 --> 01:20:47,760
faster than you, investor dollars are going to go there.

1324
01:20:47,840 --> 01:20:56,600
You can only buy back so much stock without fucking revenue. Right, company,

1325
01:20:56,680 --> 01:20:59,720
like let's say TikTok, if I wanted to make a

1326
01:20:59,840 --> 01:21:03,600
long long term play intact, let's say like by long term,

1327
01:21:03,640 --> 01:21:08,039
I mean three years, right, if I were to go

1328
01:21:08,159 --> 01:21:10,479
back or let's just say and go forward three years,

1329
01:21:12,439 --> 01:21:18,680
TikTok's growth is parabolic, and Google's growth has been relatively

1330
01:21:18,800 --> 01:21:21,800
flat and stayed the same maybe up and down three

1331
01:21:21,880 --> 01:21:25,840
or four percent for the last decade. Right, there is

1332
01:21:26,079 --> 01:21:29,479
no more market share. Like, I don't care, I'm not

1333
01:21:29,520 --> 01:21:31,439
going to make any money on the company. It's already

1334
01:21:31,479 --> 01:21:33,760
big already. How do you make your money? You make

1335
01:21:33,800 --> 01:21:36,119
your money on the ride up? Right, you make your

1336
01:21:36,159 --> 01:21:37,880
money on a little.

1337
01:21:37,720 --> 01:21:42,279
Speaker 6: Company becoming a big company, right, But a big company

1338
01:21:43,199 --> 01:21:46,680
like a mega company has gotten nowhere else to go, right,

1339
01:21:47,399 --> 01:21:50,239
There's not another billion customers that exist.

1340
01:21:50,039 --> 01:21:54,159
Speaker 2: For Google to acquire, well, let's say infinity customers had

1341
01:21:54,199 --> 01:21:56,840
to acquire. So for that's growth and capital is going

1342
01:21:56,880 --> 01:21:57,000
to go.

1343
01:21:57,439 --> 01:22:02,119
Speaker 3: Their share price is driven not by revenue and growth

1344
01:22:02,279 --> 01:22:06,119
in that sense, but because they're you know, on the

1345
01:22:06,279 --> 01:22:08,680
S and P five hundred index, and the higher the

1346
01:22:08,760 --> 01:22:12,560
share price, the more that the index funds the black

1347
01:22:12,680 --> 01:22:16,720
rocks and the vanguards have to buy them. Uh, you know,

1348
01:22:16,840 --> 01:22:22,319
the bigness becomes its own feedback loop. The problem with

1349
01:22:22,439 --> 01:22:25,199
indexing in general is that you know, all that decision

1350
01:22:25,239 --> 01:22:28,399
making about being profitable in future revenue and buying at

1351
01:22:28,399 --> 01:22:32,720
a discount is evaporated and it's just you know, oh,

1352
01:22:32,800 --> 01:22:34,079
the share price goes up.

1353
01:22:34,239 --> 01:22:39,840
Speaker 2: Need more of it. Polaroid, man, you're talking to me

1354
01:22:39,920 --> 01:22:44,359
about Polaroid. Polaroid was the biggest company in the world

1355
01:22:47,079 --> 01:22:49,520
that didn't see the digital camera coming. It literally was

1356
01:22:49,680 --> 01:22:50,800
like one of the big I think it was with

1357
01:22:50,920 --> 01:22:55,560
one of the top three biggest companies ever at the time, right,

1358
01:22:55,680 --> 01:22:59,000
it was the biggest of big and it thought the

1359
01:22:59,079 --> 01:23:05,119
digital camera was stupid. And now Polaroid is a tiny,

1360
01:23:05,199 --> 01:23:09,199
little slipper in some holding company. Amongst there's thousands of

1361
01:23:09,279 --> 01:23:13,439
other brands that nobody gives a shit about, right, or

1362
01:23:13,960 --> 01:23:15,920
a good example of it in more modern time and

1363
01:23:15,960 --> 01:23:25,399
a more distorted time would be BlackBerry or Erickson. Right,

1364
01:23:25,640 --> 01:23:29,000
these are these were I think I don't think people

1365
01:23:29,119 --> 01:23:33,760
remember how big these companies were. Literally just five years ago,

1366
01:23:33,920 --> 01:23:41,960
eight years ago. These were behemoths, and they didn't defend themselves.

1367
01:23:42,359 --> 01:23:44,680
They could have done all the stop flybacks they wanted,

1368
01:23:44,720 --> 01:23:50,359
and they could they did, and they could have went

1369
01:23:50,520 --> 01:23:54,800
down to you know, Joe's inne in accounting and told

1370
01:23:54,840 --> 01:23:58,239
her to write up X amount of bond issuances and

1371
01:23:59,119 --> 01:24:02,359
take it across streak to the broker and go raise

1372
01:24:02,439 --> 01:24:07,279
me twenty billion dollars. But eventually you get bumped down

1373
01:24:07,279 --> 01:24:11,239
to junk bonds. Right, you go from double A or

1374
01:24:11,279 --> 01:24:15,560
triple A to double A. Still no revenue. Now we're

1375
01:24:15,600 --> 01:24:18,359
going to go from double A to single A. Well,

1376
01:24:19,119 --> 01:24:22,840
revenue get better. No, but our debt services you're got

1377
01:24:22,960 --> 01:24:23,680
a fuck a lot worse.

1378
01:24:24,079 --> 01:24:28,880
Speaker 3: But again, but the company, the ones who are buying

1379
01:24:28,960 --> 01:24:35,000
those shares are predominantly running indices, and on top of that,

1380
01:24:35,039 --> 01:24:37,319
they're doing it levered because it's through the futures market.

1381
01:24:37,560 --> 01:24:39,399
Speaker 2: So are we talking about the company or are we

1382
01:24:39,479 --> 01:24:41,920
talking about the share buyer that runs the indusicy?

1383
01:24:42,199 --> 01:24:45,600
Speaker 3: Because right, so let's say you know is running some

1384
01:24:46,039 --> 01:24:47,720
you know S and P five What is with the

1385
01:24:47,800 --> 01:24:49,359
S and P five hundred? It's you know, big tech

1386
01:24:49,520 --> 01:24:54,199
is like the seven firms on that and you know

1387
01:24:54,319 --> 01:24:57,159
if it wasn't for them, it'd be negative. And it's

1388
01:24:57,279 --> 01:25:01,640
highly concentrated in those seven. You know, the fact that

1389
01:25:02,000 --> 01:25:04,279
indexing is what is determining.

1390
01:25:04,600 --> 01:25:07,319
Speaker 2: Would you say that in Vidia is in everyone's index?

1391
01:25:08,800 --> 01:25:12,000
Speaker 3: Yeah, and that's I think why they're so big now.

1392
01:25:12,279 --> 01:25:15,640
It's not because the AI or GPU sales. I think

1393
01:25:15,720 --> 01:25:18,119
it's you know, just being on the index gives them

1394
01:25:18,800 --> 01:25:21,479
a boost that now they have to get blought because

1395
01:25:21,479 --> 01:25:23,079
that's the definition of what the index is.

1396
01:25:24,600 --> 01:25:28,399
Speaker 2: So Nvidia should be around here for like, let's say

1397
01:25:28,439 --> 01:25:29,159
three years from now.

1398
01:25:32,800 --> 01:25:35,359
Speaker 3: I think now that indexing is more than half of

1399
01:25:35,399 --> 01:25:37,720
the market, I think you're going to see indexing having

1400
01:25:37,760 --> 01:25:44,119
a bigger influence over share price than fundamentals.

1401
01:25:45,399 --> 01:25:48,039
Speaker 2: Because you're kind of telling me gravity doesn't exist. So

1402
01:25:48,199 --> 01:25:52,039
is it absolute or big influence or absolute influence enough

1403
01:25:52,079 --> 01:25:52,199
to be.

1404
01:25:52,600 --> 01:25:57,279
Speaker 3: I think it's because of so Mike Green explains this

1405
01:25:57,359 --> 01:26:00,720
better than maybe I am right now. But index thing

1406
01:26:00,840 --> 01:26:03,960
is running the market, and it's not the fundamentals of

1407
01:26:05,279 --> 01:26:09,359
of revenue and you know, future profitability, the way that

1408
01:26:09,439 --> 01:26:14,479
people traditionally think of stocks as value. It's it's on

1409
01:26:14,840 --> 01:26:17,640
it's an algorithmic trade. It's on autopilot.

1410
01:26:20,000 --> 01:26:24,640
Speaker 2: Even what drives that algorithm? What algorithm is it? Is

1411
01:26:24,720 --> 01:26:26,520
it a momentum trade algorithm? Yeah?

1412
01:26:26,600 --> 01:26:28,479
Speaker 3: Right, so right, so basically it's a momentum trade.

1413
01:26:28,560 --> 01:26:28,640
Speaker 2: Right.

1414
01:26:28,880 --> 01:26:32,960
Speaker 3: Uh, you know when when given money by when.

1415
01:26:34,640 --> 01:26:39,279
Speaker 2: CFO of Nvidia walks in on his wife fucking some

1416
01:26:39,600 --> 01:26:47,079
Haitian that she found in the garden and he shoots

1417
01:26:47,119 --> 01:26:51,159
her and then shoots himself, and then on the news

1418
01:26:51,239 --> 01:26:54,640
the next day it will be in Vidia's CFO kills himself.

1419
01:26:55,800 --> 01:26:57,560
You want to know what those momentum algos are going

1420
01:26:57,640 --> 01:26:59,520
to do. They know, they're not even going to care

1421
01:26:59,520 --> 01:27:05,000
about the They're going to assume that something catastrophic has

1422
01:27:05,079 --> 01:27:10,039
happened in a VideA, right, and they are going to

1423
01:27:11,439 --> 01:27:18,520
dump in video. So momentum trading is just momentum, right,

1424
01:27:18,720 --> 01:27:22,960
It follows other momentum. So if the hedge funds who

1425
01:27:23,079 --> 01:27:28,000
are paying attention all start dumping, then the momentum algorithms

1426
01:27:28,039 --> 01:27:32,399
are chasing the hedge funds momentum. Right, hedge funds start buying,

1427
01:27:33,439 --> 01:27:40,800
then the momentum algorithms are chasing that momentum. Right. The

1428
01:27:40,960 --> 01:27:45,479
market is impossible to manipulate in totality because it is

1429
01:27:46,479 --> 01:27:53,319
hundreds of trillions of individual transactions that have into relationships

1430
01:27:53,399 --> 01:27:57,760
to every other thing that they're not even transacting with. Right.

1431
01:27:57,840 --> 01:28:02,319
So like by my a stock of X, that market

1432
01:28:02,560 --> 01:28:06,119
for that information is now going to affect some fucking

1433
01:28:06,239 --> 01:28:12,199
bond in China, right, because it's a fractal relationship, right,

1434
01:28:12,239 --> 01:28:17,279
It is self similar at all scales. So a good

1435
01:28:17,359 --> 01:28:22,079
example of it is like the Treasury. You know how

1436
01:28:22,159 --> 01:28:25,960
the Treasury was batting around this eighty dollars oil price

1437
01:28:26,039 --> 01:28:27,640
cap and everyone's like, no, that's not going to work.

1438
01:28:27,720 --> 01:28:33,880
That's terrible. But yet for some reason, every time oil

1439
01:28:33,960 --> 01:28:38,720
looks like it's about to break eighty dollars, either some

1440
01:28:38,960 --> 01:28:42,319
crazy news that ends up getting found out to be

1441
01:28:42,399 --> 01:28:46,319
incorrect three or four days later after the fact, but

1442
01:28:46,600 --> 01:28:50,039
at that point it's like our jobs report, the revision

1443
01:28:50,119 --> 01:28:55,399
doesn't matter, or some mysterious selling comes and hammers the market.

1444
01:28:56,000 --> 01:28:59,159
So this eighty dollars price gap, that was the most

1445
01:28:59,239 --> 01:29:01,560
retarded thing ever and it was roundly shouted down by

1446
01:29:01,600 --> 01:29:04,720
the entire financial market. But the Biden administration was really

1447
01:29:04,800 --> 01:29:08,119
intent on. They literally fucking shelled nuts around the world,

1448
01:29:09,199 --> 01:29:11,800
brought it to you know, COP twenty six or whatever

1449
01:29:11,840 --> 01:29:15,039
the fucking retard about. Anyways, that seemed to miraculously happen.

1450
01:29:15,720 --> 01:29:18,039
We have effect had an eighty dollars oil price camp

1451
01:29:18,119 --> 01:29:23,279
in the last two years. But the level an effort

1452
01:29:23,720 --> 01:29:29,439
of market intervention has both increased in magnitude and increased

1453
01:29:29,479 --> 01:29:33,279
in frequency. So if I'm trying to suppress something down

1454
01:29:33,439 --> 01:29:38,039
and the force of my interventions each time require more

1455
01:29:38,079 --> 01:29:40,680
and more and more force at the same time as

1456
01:29:40,800 --> 01:29:42,239
I have to do it more and more and more

1457
01:29:42,279 --> 01:29:46,279
and more often. What that's showing you above above the surface,

1458
01:29:46,319 --> 01:29:52,560
what's happening below the surface is a nonlinear system happening, right,

1459
01:29:54,199 --> 01:30:00,199
so a feedback loop. So even all the momentum, even

1460
01:30:00,239 --> 01:30:05,520
on the Treasury intervention, eventually you can only do it

1461
01:30:05,680 --> 01:30:13,720
so much because the cost of each intervention becomes exponential rapidly,

1462
01:30:14,760 --> 01:30:18,239
and the frequency in which you have to intervene is

1463
01:30:18,359 --> 01:30:24,920
going to increase exponentially, and eventually all that effort and

1464
01:30:25,000 --> 01:30:28,800
all that time and force that even putting down all

1465
01:30:28,960 --> 01:30:33,119
explodes at once. By the way, that's that's what's going

1466
01:30:33,159 --> 01:30:35,920
to happen in the energy. But anyways, besides the poet

1467
01:30:36,479 --> 01:30:41,760
so that these the power that you are attributing to

1468
01:30:42,039 --> 01:30:47,800
ETFs and these index funds exists but is not omnipotent.

1469
01:30:48,319 --> 01:30:51,199
Speaker 3: And do you know indexes are more than fifty percent

1470
01:30:51,239 --> 01:30:54,039
of the market. And then because indexes are also the

1471
01:30:54,159 --> 01:30:56,920
benchmark used by active fund managers, you have a lot

1472
01:30:56,960 --> 01:31:00,000
of closet indexers as well because they have professional risks,

1473
01:31:00,199 --> 01:31:03,800
career risk that you know, they need to be close

1474
01:31:03,960 --> 01:31:06,199
at least to the index or they're going to get fired.

1475
01:31:07,319 --> 01:31:10,119
Speaker 2: Are going down rapidly. Do you think that everyone at

1476
01:31:10,159 --> 01:31:12,159
Blackrock is going to like stare at it and like,

1477
01:31:12,239 --> 01:31:16,520
oh shit, well we better not do anything, We better

1478
01:31:16,560 --> 01:31:18,319
not go find some other assets to put this in in.

1479
01:31:19,840 --> 01:31:23,399
Speaker 3: Well, if it's an index by definition, they can't right now.

1480
01:31:23,439 --> 01:31:25,680
If it's active that that is supposed to be part

1481
01:31:25,680 --> 01:31:29,159
of their mandate. But that's being crowded out by the

1482
01:31:29,359 --> 01:31:33,720
rise of indexing. And because it is a feedback loop,

1483
01:31:35,560 --> 01:31:38,039
you know, So yeah, until you hit that top of

1484
01:31:38,079 --> 01:31:41,159
the hill and you realize your breaks don't work. It

1485
01:31:41,319 --> 01:31:43,720
keeps working until it doesn't. So I think that is

1486
01:31:43,800 --> 01:31:50,479
more the that you know rubber band effect of you know,

1487
01:31:50,600 --> 01:31:53,720
acid prices rise because acid prices rise, and that's just

1488
01:31:53,800 --> 01:31:55,600
going to keep turning up and up and up until

1489
01:31:56,439 --> 01:31:59,520
that meets the demographic crisis of boomers needing to sell

1490
01:32:00,319 --> 01:32:01,920
and market makers aren't going to be able to make

1491
01:32:02,000 --> 01:32:06,159
money on making a market in them because there's nobody

1492
01:32:06,199 --> 01:32:07,600
on the other side of that trade. You know, the

1493
01:32:07,680 --> 01:32:09,279
millennials and gen z are not going to be able

1494
01:32:09,279 --> 01:32:09,840
to buy them out.

1495
01:32:11,520 --> 01:32:13,680
Speaker 2: We'll have to disagree, and it will have to agree

1496
01:32:13,680 --> 01:32:17,960
to disagree. Okay, all right, so let's.

1497
01:32:17,800 --> 01:32:22,840
Speaker 1: Move want to you want to get back to back

1498
01:32:22,920 --> 01:32:25,640
on point with what we got together to talk about.

1499
01:32:26,439 --> 01:32:28,880
We've been going for a while, so if you wanted

1500
01:32:28,920 --> 01:32:35,199
to wrap it up as far as basically here, here's

1501
01:32:35,199 --> 01:32:39,239
what I'm hearing is we want to have patronation networks.

1502
01:32:40,439 --> 01:32:44,520
People who have money want to make money. Yet there

1503
01:32:44,600 --> 01:32:47,600
are people who are like, there may be some people

1504
01:32:47,760 --> 01:32:50,720
out there who are like, well, if you really believe

1505
01:32:50,800 --> 01:32:53,359
in the if you really believe in the cause, and

1506
01:32:53,439 --> 01:32:56,520
you believe in the person, Maybe that should be secondary,

1507
01:32:56,600 --> 01:32:59,760
and maybe loyalty should be Loyalty to your people should

1508
01:32:59,760 --> 01:33:03,840
be It seems like to me listening to the listening

1509
01:33:03,880 --> 01:33:08,159
to the conversation, that's where the stressor is happening. That's

1510
01:33:08,239 --> 01:33:11,039
how this conversation got too We're gonna have to agree

1511
01:33:11,079 --> 01:33:11,760
to disagree.

1512
01:33:12,880 --> 01:33:15,479
Speaker 2: Yeah, Like with It's like the green investing, right, they

1513
01:33:15,520 --> 01:33:18,439
couldn't get anybody to buy into the green shit until

1514
01:33:18,479 --> 01:33:21,600
they gave them enough incentive mechanism to do it. Everybody,

1515
01:33:21,880 --> 01:33:26,560
all those all those faggots that are going to going

1516
01:33:26,600 --> 01:33:30,399
to Davos or whatever. They all want to feel good

1517
01:33:30,439 --> 01:33:34,800
about themselves right to where they will take a lower return.

1518
01:33:36,039 --> 01:33:39,760
But there needs to be some return, right, So you're

1519
01:33:39,840 --> 01:33:47,039
not going to You're not going to. My relationship to

1520
01:33:47,119 --> 01:33:51,600
my people does not supersede my relationship to my family.

1521
01:33:51,680 --> 01:33:55,720
It is an extension of it, right, So I will

1522
01:33:55,800 --> 01:34:02,520
want to help you. But what I see is people wanting,

1523
01:34:03,119 --> 01:34:06,800
at least from what I've been approach to, like, hey,

1524
01:34:06,920 --> 01:34:09,560
do you want to invest in this? It is like

1525
01:34:09,640 --> 01:34:13,920
for me to do it for you, right, Like, I

1526
01:34:13,960 --> 01:34:18,159
guess what would be very helpful is to describe what

1527
01:34:18,279 --> 01:34:21,640
I'm like the type of founders I'm used to, right,

1528
01:34:21,720 --> 01:34:24,720
Like what it actually takes who you're up against.

1529
01:34:25,239 --> 01:34:27,359
Speaker 3: Yeah, that's kind of takeaway I got from this as

1530
01:34:27,399 --> 01:34:29,920
well as maybe the first step is, uh, we got

1531
01:34:30,000 --> 01:34:32,359
to teach people how to write pitch decks and just

1532
01:34:32,439 --> 01:34:35,520
get like, yeah, here here's a base version of you know,

1533
01:34:35,600 --> 01:34:38,279
if you're going to make a value proposition, this is

1534
01:34:38,359 --> 01:34:42,159
how you're going to attract people. And then you know

1535
01:34:42,319 --> 01:34:44,399
that we do give them access to the people have

1536
01:34:44,560 --> 01:34:47,079
money and that they get at least five minutes, you know,

1537
01:34:47,239 --> 01:34:47,520
so like.

1538
01:34:47,640 --> 01:34:51,079
Speaker 2: If it's not even get if you've got the idea, man,

1539
01:34:52,399 --> 01:34:56,840
money will find you, right, this is what this is

1540
01:34:56,840 --> 01:35:00,199
what I mean having this conversations with Diames. Right, if

1541
01:35:00,199 --> 01:35:02,840
you're going to have a couple of vcs that are

1542
01:35:02,880 --> 01:35:05,159
floating around the space because they're here for the ideas.

1543
01:35:05,199 --> 01:35:07,720
That's why. That's why I'm here, right, That's why Mark

1544
01:35:07,720 --> 01:35:10,800
Andriesen is here, right, That's why Peter Thiel is here

1545
01:35:11,279 --> 01:35:17,479
because it's an intellectually interesting space right nowhere else has that.

1546
01:35:18,239 --> 01:35:23,359
So it's the ideas that brought us here. Right now,

1547
01:35:24,800 --> 01:35:28,800
it's up to like so we came and found you, right,

1548
01:35:29,000 --> 01:35:31,239
like so like the you know, the spurg on Twitter

1549
01:35:31,399 --> 01:35:34,239
that you know has been reading esoteric you know, he's

1550
01:35:34,359 --> 01:35:36,119
he's actually one of these public He's actually one of

1551
01:35:36,159 --> 01:35:39,800
these like eight customers that exist for the thousandth right

1552
01:35:39,840 --> 01:35:44,279
wing book publisher of you know, long progouted texts. Right,

1553
01:35:44,359 --> 01:35:49,199
he's one of those guys, and he's been, you know,

1554
01:35:49,359 --> 01:35:54,640
diligently putting out ideas and I heard them and they

1555
01:35:54,680 --> 01:36:00,159
excited me, and I came. So now you have my attention, right,

1556
01:36:01,600 --> 01:36:06,039
pitch me something right and actually put the amount of

1557
01:36:06,319 --> 01:36:11,600
work right. So like you, your autism and your beliefs right,

1558
01:36:11,880 --> 01:36:18,039
the the ideological drivers right, all the reasons why I

1559
01:36:18,159 --> 01:36:22,119
should pay attention to you right, because of people, because

1560
01:36:22,159 --> 01:36:26,560
of you know, legacy and interests. That's what got me here.

1561
01:36:28,159 --> 01:36:33,800
But I don't manage all my money. I have a

1562
01:36:33,880 --> 01:36:40,560
fiduciary relationship. I am responsible for the money of others, right.

1563
01:36:40,640 --> 01:36:45,319
So but if I see a good investment, I'm going

1564
01:36:45,439 --> 01:36:50,760
to take it. So yeah, I see is the thousands,

1565
01:36:50,840 --> 01:36:54,600
the thousands people guys in our sphere are so fucking

1566
01:36:54,720 --> 01:37:02,479
in their own end zone. They want to do the machines.

1567
01:37:02,600 --> 01:37:05,560
Speaker 3: And then we've got a lot of money and nobody

1568
01:37:05,640 --> 01:37:07,640
with the business plan to say, here's what those CNC

1569
01:37:07,800 --> 01:37:11,479
machines could make domestically worthwhile.

1570
01:37:11,560 --> 01:37:15,319
Speaker 2: Company with a fucking CNC machine idea, Right, It's all

1571
01:37:17,560 --> 01:37:23,920
they don't understand what they are interested in. A very

1572
01:37:24,039 --> 01:37:27,720
small group of people are interested in, right, And unless

1573
01:37:27,840 --> 01:37:30,960
you're going to sell that very small group of people

1574
01:37:31,479 --> 01:37:34,640
things that cost millions of dollars, which you can't because

1575
01:37:34,640 --> 01:37:37,720
they don't have millions of dollars, you need to come

1576
01:37:37,840 --> 01:37:43,479
up with an idea that everybody and not just niche weirdo.

1577
01:37:44,159 --> 01:37:46,640
Speaker 3: So I figure with this too. It's the Chick fil

1578
01:37:46,680 --> 01:37:47,159
A model.

1579
01:37:48,000 --> 01:37:48,159
Speaker 2: You know.

1580
01:37:48,239 --> 01:37:50,319
Speaker 3: The people that they hire and the people that they

1581
01:37:50,479 --> 01:37:54,399
franchise for Chick fil A are generally based, but they

1582
01:37:54,520 --> 01:37:58,079
sell chicken sandwiches to everybody and they make money from that,

1583
01:37:59,479 --> 01:38:00,560
whereas uh.

1584
01:38:00,880 --> 01:38:05,720
Speaker 2: You know, feel it's beneath them, like oh fucking normany

1585
01:38:06,039 --> 01:38:09,680
the losers. My ideas are too esoteric and cool.

1586
01:38:09,479 --> 01:38:12,680
Speaker 3: For that well, whereas the other I'm gonna throw Glenn

1587
01:38:12,800 --> 01:38:16,039
Beck under the bus here, you know, running ads for

1588
01:38:16,680 --> 01:38:21,800
Patriot gold and dehydrated food buckets made in China is

1589
01:38:22,039 --> 01:38:25,039
taking money from our guys and giving it to our enemies.

1590
01:38:26,159 --> 01:38:29,079
It's backwards you know, the way this has to work

1591
01:38:29,199 --> 01:38:31,680
is to your point that you have to sell to everybody.

1592
01:38:31,800 --> 01:38:33,760
But then the ones who you bring into the fold

1593
01:38:33,800 --> 01:38:37,359
where you pay them salary, you hire them, you promote them,

1594
01:38:37,479 --> 01:38:42,640
you let them be owners. Is our guys, p.

1595
01:38:44,239 --> 01:38:45,560
Speaker 2: How did you like zero to one?

1596
01:38:47,079 --> 01:38:50,760
Speaker 1: I liked it because it changed the way I thought

1597
01:38:52,159 --> 01:38:55,520
the idea how monopoly is described in that and the

1598
01:38:55,920 --> 01:38:58,479
benefit of monopoly. And I know that there's a lot

1599
01:38:58,560 --> 01:39:01,399
of guys out there. I mean, there arellionaires that that

1600
01:39:01,520 --> 01:39:04,600
I listened to our podcasts and stuff. They disagree with

1601
01:39:05,439 --> 01:39:09,079
the idea of monopoly. They think that monopoly causes people

1602
01:39:09,119 --> 01:39:13,439
to be stagnant, causes innovation to be stagnant. But that's

1603
01:39:13,479 --> 01:39:15,600
not the way I saw it. I understood exactly what

1604
01:39:15,680 --> 01:39:19,039
they were. I understood the points that he was making

1605
01:39:19,159 --> 01:39:21,600
in that. So yeah, I mean I liked it because

1606
01:39:22,239 --> 01:39:24,720
it caused me to think. It caused me to think differently,

1607
01:39:24,760 --> 01:39:30,560
and it basically broke some of the old, stale libertarian

1608
01:39:30,680 --> 01:39:32,600
kind of thought that was in my head.

1609
01:39:33,119 --> 01:39:41,640
Speaker 2: Yeah, it's it's the blue ocean idea, right that I

1610
01:39:41,800 --> 01:39:48,239
don't see. I The one difference, I would say, in

1611
01:39:49,520 --> 01:39:53,359
the type of companies and stuff that I have to

1612
01:39:53,399 --> 01:39:56,720
look at, and the type of ideas that I get

1613
01:39:56,760 --> 01:39:59,560
pitched on Twitter or stuff like that, they're all like

1614
01:40:00,079 --> 01:40:04,199
the based version of this thing that already exists, right,

1615
01:40:04,479 --> 01:40:07,640
and I can't stand it. I want somebody to show

1616
01:40:07,720 --> 01:40:10,560
me something that I've never fucking seen before, never thought

1617
01:40:10,600 --> 01:40:15,119
of before, right, And you know who you how you

1618
01:40:15,279 --> 01:40:19,560
know when you've encountered a good idea that's a company,

1619
01:40:20,000 --> 01:40:21,520
or like a good idea that's like a pitch deck.

1620
01:40:22,039 --> 01:40:24,800
I want to get angry when I read your deck.

1621
01:40:25,720 --> 01:40:28,880
I want to be so fucking angry I can't see

1622
01:40:28,920 --> 01:40:32,159
straight because I want to read your deck and I

1623
01:40:32,279 --> 01:40:34,479
want to think, why the fuck didn't I think of that?

1624
01:40:35,560 --> 01:40:40,640
God damn it, this makes so much sense. It's like,

1625
01:40:41,000 --> 01:40:43,920
how did I not? Like the best ideas are the

1626
01:40:44,000 --> 01:40:49,640
ones that anybody like. When you see them and somebody

1627
01:40:49,680 --> 01:40:52,199
else has them, they get you angry because you're like

1628
01:40:53,159 --> 01:40:54,680
this was sitting right in front, like this was in

1629
01:40:54,720 --> 01:40:57,239
front of people the whole time, Like why of course

1630
01:40:57,640 --> 01:41:01,199
this makes a total sense. And when an investor sees that,

1631
01:41:02,479 --> 01:41:08,319
it triggers like I'm gonna I'm cutting a check because

1632
01:41:08,359 --> 01:41:11,159
that means I know that whoever else sees this company,

1633
01:41:12,439 --> 01:41:15,840
it's going to get it immediately. It's going to get

1634
01:41:15,880 --> 01:41:18,680
why it's important, and they're gonna it's gonna get why.

1635
01:41:18,960 --> 01:41:27,640
Like right wingers describe businesses like fucking leftists meme, right,

1636
01:41:27,840 --> 01:41:30,319
I don't want a fucking like. I want to look

1637
01:41:30,359 --> 01:41:32,119
at it and I want to get it, because that

1638
01:41:32,319 --> 01:41:33,720
means if I can look at it and I can

1639
01:41:33,800 --> 01:41:38,399
get it, that means anybody right wing not right wing right,

1640
01:41:38,720 --> 01:41:40,439
everybody that looks at it is going to get it,

1641
01:41:42,039 --> 01:41:43,560
and they're going to look at the way they were

1642
01:41:43,640 --> 01:41:46,079
doing it before and go why the fuck was I

1643
01:41:46,239 --> 01:41:49,600
doing this before? Like this is so much easier, right,

1644
01:41:49,760 --> 01:41:53,680
And when that happens, all of the things like blue

1645
01:41:53,720 --> 01:41:56,840
ocean stuff, that's all that's bigd in, right. I know

1646
01:41:57,000 --> 01:42:00,199
nobody else is doing it this way because I out

1647
01:42:00,199 --> 01:42:03,760
of you know, a violent reaction when I saw this deck,

1648
01:42:03,880 --> 01:42:07,760
because you know, it was right there in front of

1649
01:42:07,800 --> 01:42:09,960
my face, And how did how has no one done

1650
01:42:10,000 --> 01:42:13,319
this before? Like how how are you the asshole that

1651
01:42:13,560 --> 01:42:16,000
that brought this up? Like how come I'm not that guy?

1652
01:42:17,000 --> 01:42:21,239
That's what we want to see? Like I've seen enough bookstores,

1653
01:42:21,279 --> 01:42:24,600
I've seen enough publishers I've seen enough magazines. I've seen

1654
01:42:24,720 --> 01:42:29,600
enough ship that's for our own guys. There's thoughts on.

1655
01:42:29,800 --> 01:42:34,560
Speaker 3: H On paulmar Lucky and andrel going after the military market,

1656
01:42:35,039 --> 01:42:37,159
kind of doing the Elon Muss thing, except it's uh,

1657
01:42:38,079 --> 01:42:40,840
you know, rockets to kill enemies as opposed to rockets

1658
01:42:40,880 --> 01:42:41,239
to mars.

1659
01:42:43,760 --> 01:42:50,279
Speaker 2: The amount of drama like that happened because right before that,

1660
01:42:51,319 --> 01:42:59,359
right right before that, there was a massive like George

1661
01:42:59,479 --> 01:43:03,399
Floyd level I don't want to call it a riot,

1662
01:43:03,439 --> 01:43:06,640
I call it her protest whatever at Google shut down

1663
01:43:06,680 --> 01:43:13,920
the campus for like a week because Google employees, Chinese

1664
01:43:13,960 --> 01:43:20,800
communists that worked there and black people that shouldn't work there,

1665
01:43:23,079 --> 01:43:28,880
found out that the A division of Google was working

1666
01:43:28,960 --> 01:43:34,359
on something called Dragonfly for the Pentagon. And this is

1667
01:43:34,399 --> 01:43:36,920
a company that at the time was working on three

1668
01:43:37,039 --> 01:43:41,520
different things for the Chinese military, by the way, but

1669
01:43:41,840 --> 01:43:45,039
the fact that we were working on Google was working

1670
01:43:45,119 --> 01:43:48,880
on something for the US military. I mean, like if

1671
01:43:48,920 --> 01:43:53,560
you had said, what Peter theal Palmer Lucky and really

1672
01:43:53,600 --> 01:43:55,520
because it's not just Petter deal was all founder's fund

1673
01:43:56,239 --> 01:43:58,960
and it was founder's fund first, and Mark Indreason shortly

1674
01:43:59,000 --> 01:44:03,079
after I think within a date too, like I can't

1675
01:44:03,159 --> 01:44:07,800
describe to you how much of a social taboo that was. Right, So,

1676
01:44:08,039 --> 01:44:10,640
after this thing happened, right like, oh, we're gonna shut

1677
01:44:10,680 --> 01:44:13,000
down Google because we're gonna protest you work for the

1678
01:44:13,039 --> 01:44:19,239
fucking Defense Department, like you're in America and we're gonna

1679
01:44:19,319 --> 01:44:24,159
like basically hold a fucking sit in at Google because

1680
01:44:24,800 --> 01:44:27,319
you don't like the idea of like Google doing something

1681
01:44:27,399 --> 01:44:30,319
for the defense department, but we'll do stuff for the

1682
01:44:30,399 --> 01:44:36,239
Chinese military. And Peter Thiel stepped up and goes like,

1683
01:44:36,520 --> 01:44:41,199
now founder's fund will invest in defense. We're only going

1684
01:44:41,279 --> 01:44:46,279
to invest in defense in space. That's it. And it

1685
01:44:46,399 --> 01:44:50,359
was a brilliant strategy because at that point in time,

1686
01:44:51,039 --> 01:44:55,359
all of tech was doing the fucking right wing publisher

1687
01:44:55,479 --> 01:44:58,680
bullshit right like I'm gonna be the uber of X.

1688
01:44:58,880 --> 01:45:02,079
Like basically it had gotten so easy to do a

1689
01:45:02,800 --> 01:45:05,960
software based startup, right like, Oh, I'll just grab my

1690
01:45:06,079 --> 01:45:09,560
hosting infrastructure from AWS. That will take ten seconds. Oh

1691
01:45:09,560 --> 01:45:12,479
I'll just grab this mapping engine from It's just a

1692
01:45:12,520 --> 01:45:16,279
bunch of APIs stacked together like Legos fast thing.

1693
01:45:16,560 --> 01:45:16,760
Speaker 4: Yeah.

1694
01:45:16,960 --> 01:45:20,720
Speaker 2: Yes, So basically the barrier to entry the amount of

1695
01:45:20,800 --> 01:45:23,640
skills that it was required to start a fucking app

1696
01:45:24,560 --> 01:45:30,159
got dropped so low that every fucking retard had an app.

1697
01:45:30,840 --> 01:45:34,000
So they were diving down narrower and narrower and smaller

1698
01:45:34,039 --> 01:45:37,399
and smaller niches, right like, this is the app that's

1699
01:45:37,479 --> 01:45:40,039
kind of like Uber, but it's only for Indians that

1700
01:45:40,239 --> 01:45:44,199
only eat Chinese food. Like, okay, well what about all Indians? No,

1701
01:45:44,279 --> 01:45:49,039
that's this other guy's app. Okay, right, like they were

1702
01:45:49,119 --> 01:45:53,000
it was. It had become nonsensical because it was so

1703
01:45:53,159 --> 01:45:54,880
easy to do startups.

1704
01:45:55,199 --> 01:45:57,079
Speaker 3: Just that AI to the end of the company's name.

1705
01:45:57,880 --> 01:45:58,960
That'll get your next round.

1706
01:46:00,359 --> 01:46:03,960
Speaker 2: The hardware stuff, the stuff that depending on actually wanted

1707
01:46:04,000 --> 01:46:07,359
to do. Nobody was doing. And Peter Deal's like, but

1708
01:46:07,520 --> 01:46:11,640
the Defense Department pays a shitload, and that whole system's

1709
01:46:11,640 --> 01:46:16,439
fucking broken. And he had a rockstar success with Palenteer,

1710
01:46:17,000 --> 01:46:20,159
and he's like, I guess I'm imagining what his thought

1711
01:46:20,199 --> 01:46:24,920
process was be like if I like, Peter Deal is

1712
01:46:24,960 --> 01:46:28,399
like the Jamie Diamond of the West Coast, right Like,

1713
01:46:28,640 --> 01:46:32,479
whatever Peter Deal says he's doing, everybody else is just

1714
01:46:32,640 --> 01:46:35,760
going to do because they can't afford to bet that

1715
01:46:35,880 --> 01:46:40,039
Peter Deal is wrong, So you just do it right,

1716
01:46:40,159 --> 01:46:42,279
Peter with this way, like everyone reminds me.

1717
01:46:42,600 --> 01:46:43,960
Speaker 3: You know, the thing I feel all the time is

1718
01:46:44,000 --> 01:46:46,119
that nobody wants to do their due diligence. That's how

1719
01:46:46,199 --> 01:46:49,960
these scams like FTX happened. Is oh, well, so and

1720
01:46:50,079 --> 01:46:51,920
so invested in them, so they must have done their

1721
01:46:52,000 --> 01:46:54,319
due diligence, so we don't have time to think. Let's

1722
01:46:54,319 --> 01:46:57,079
just ride on their coattails, and then it's turtles all

1723
01:46:57,079 --> 01:46:59,680
the way down until they realize that, like nobody's actually

1724
01:46:59,720 --> 01:47:00,800
done the research.

1725
01:47:00,800 --> 01:47:03,800
Speaker 2: Maybe for crypto shit, but also FTX. The's a there's

1726
01:47:03,840 --> 01:47:10,479
a backstory to FTX that's a lot more covered in spooks.

1727
01:47:10,920 --> 01:47:18,119
But then that was the real reason that exploded because

1728
01:47:18,159 --> 01:47:21,800
maybe it got caught washing a bunch of fentanyl money

1729
01:47:21,840 --> 01:47:26,319
for Channel, so they were definitely't do that. That must

1730
01:47:26,359 --> 01:47:29,079
not have come up in the due diligence. But it

1731
01:47:29,239 --> 01:47:33,079
wasn't because they weren't smart that they were. But they

1732
01:47:33,079 --> 01:47:37,960
were also criminals for a foreign nation, so hey, and

1733
01:47:38,399 --> 01:47:40,239
that's why I think it's very funny that the other

1734
01:47:40,319 --> 01:47:44,960
criminals for a foreign nation, Silicon Valley Bank, also got

1735
01:47:45,399 --> 01:47:50,960
assassinated by Peter Diel. But yeah, what Palmer Lucky is

1736
01:47:51,079 --> 01:47:58,840
doing something anybody could have done, right, Like, wait, we're

1737
01:47:58,880 --> 01:48:04,680
just gonna make drones for the military. Okay, Well, how

1738
01:48:04,720 --> 01:48:08,800
come no one's doing that? Well I don't know, because

1739
01:48:08,840 --> 01:48:13,079
who else was like lockeed and a Pregnor drone that

1740
01:48:13,159 --> 01:48:16,399
costs like twenty million. But the drones were seen on

1741
01:48:16,399 --> 01:48:19,319
the battlefield cost like ten bucks. So who's making those

1742
01:48:19,399 --> 01:48:24,479
for the Pentagon? Well nobody. We don't have it, right,

1743
01:48:24,560 --> 01:48:28,760
Like everybody should have thought of that, right, Like the

1744
01:48:28,840 --> 01:48:33,000
drones we see on the battlefield cost ten dollars and

1745
01:48:33,520 --> 01:48:37,399
will fly right in your face and kill themselves, the drones,

1746
01:48:37,479 --> 01:48:41,479
not the operators. But we don't have drones to do that.

1747
01:48:42,159 --> 01:48:45,520
Where are where are comic cozy drones? We don't have any?

1748
01:48:45,880 --> 01:48:49,800
Speaker 3: Well, and that I think you know. Because software was

1749
01:48:49,880 --> 01:48:53,079
so cheap to make, then people got habituated to that.

1750
01:48:53,720 --> 01:48:57,439
That again, the idea of investing real capex in making

1751
01:48:57,600 --> 01:49:02,600
real physical hardware things was intimidating. People did not want

1752
01:49:02,680 --> 01:49:05,520
to take the opportunity. Costs to take on that much

1753
01:49:05,640 --> 01:49:08,800
entrepreneurial risk did not seem worthwhile until somebody did the

1754
01:49:08,840 --> 01:49:11,800
math and said, well, yeah, but the Pentagon pays crazy money,

1755
01:49:12,199 --> 01:49:15,479
so the risk is justified. But when you're used to

1756
01:49:15,840 --> 01:49:19,439
a low risk entrepreneurial environment. It's very easy to get

1757
01:49:19,880 --> 01:49:20,800
stuck in that valley.

1758
01:49:25,000 --> 01:49:28,279
Speaker 2: Yeah, kind of, it's kind of like that. Also, the

1759
01:49:28,399 --> 01:49:33,800
Pentagon provided a very safe place to incubate these technologies, right,

1760
01:49:35,319 --> 01:49:41,079
and that I think was the differentiator, because Palmer Lucky

1761
01:49:41,199 --> 01:49:42,960
isn't just throwing a bunch of shit on the wall,

1762
01:49:43,560 --> 01:49:47,399
going maybe the Defense Department wants this, Maybe they want this,

1763
01:49:48,000 --> 01:49:54,560
Maybe they want this. What he's doing is collaborating, right,

1764
01:49:54,640 --> 01:49:57,560
So what we've basically got all the way back to

1765
01:50:00,199 --> 01:50:02,920
is Star Wars, how we got the Internet. I remember

1766
01:50:03,199 --> 01:50:04,800
Pete you and were talking about, like they don't like

1767
01:50:05,119 --> 01:50:09,159
the government. The military has the ability to look thirty

1768
01:50:09,239 --> 01:50:12,359
years down the road when it invests, right, and it

1769
01:50:12,479 --> 01:50:17,439
has the ability to take much greater risks with their

1770
01:50:17,520 --> 01:50:22,800
capital and make really long term investments that may or

1771
01:50:22,840 --> 01:50:26,119
may not pan out. So it looks like VC is

1772
01:50:26,239 --> 01:50:30,800
doing it, but it's not. It's collaborating.

1773
01:50:31,439 --> 01:50:36,039
Speaker 3: This is kind of right where you know where we began, though.

1774
01:50:36,399 --> 01:50:39,359
Is that kind of incubation where they're willing to take

1775
01:50:39,399 --> 01:50:42,000
that kind of risk over a thirty year time horizon

1776
01:50:42,640 --> 01:50:48,239
historically has been proven to pan out. I mean, maybe

1777
01:50:48,279 --> 01:50:50,840
it's just that the right needs to have its own state,

1778
01:50:51,079 --> 01:50:54,359
and that's what will satisfy that level of risk taking.

1779
01:50:56,359 --> 01:50:58,039
But that's what I was trying to get at with

1780
01:50:58,119 --> 01:51:01,600
the patronage thing, is that clearly that model does work,

1781
01:51:02,680 --> 01:51:05,439
but it tends to be state actors who make it work,

1782
01:51:05,840 --> 01:51:08,880
and especially for military purposes. You know, it's Ubisue is

1783
01:51:08,920 --> 01:51:12,439
making air conditioners and they were also making zeros.

1784
01:51:14,000 --> 01:51:16,399
Speaker 1: Well, that was That's a point that I've been making

1785
01:51:16,520 --> 01:51:21,000
for a while now too, is the whole Samuel Konkin

1786
01:51:22,720 --> 01:51:27,760
Agoris thing about building, you know, building a parallel society.

1787
01:51:27,880 --> 01:51:30,119
It's like, well, how do you do that with heavy industry?

1788
01:51:30,920 --> 01:51:34,560
And I guess the way I look at it is

1789
01:51:34,600 --> 01:51:38,359
in nineteen ninety one, when a lot of these guys

1790
01:51:38,439 --> 01:51:41,279
could have been working for the government, they decided to

1791
01:51:41,399 --> 01:51:45,239
do it on their own, but use the government's money

1792
01:51:45,319 --> 01:51:47,560
to do it, use money that they took from the

1793
01:51:47,640 --> 01:51:51,560
government in order to build their parallel society. And that's

1794
01:51:51,600 --> 01:51:55,439
what they're they've done now, and that's really that's the

1795
01:51:55,520 --> 01:51:57,279
only way you're going to do it. You're not going

1796
01:51:57,359 --> 01:52:00,199
to get away with the biggest problem with agorism was

1797
01:52:00,279 --> 01:52:02,439
always heavy industry. Well, how are you going to have

1798
01:52:02,560 --> 01:52:06,399
parallel heavy industry when you have regulation and YadA YadA. Well,

1799
01:52:06,520 --> 01:52:09,119
they found their way around it. Work with the government

1800
01:52:09,239 --> 01:52:13,960
until it's the time to try to destroy the government

1801
01:52:14,039 --> 01:52:16,560
so that you can take their place, which is.

1802
01:52:16,560 --> 01:52:19,399
Speaker 3: Where I brought banking into it, right, Only a bank really,

1803
01:52:19,840 --> 01:52:23,159
you know, spends money that they don't have, which is

1804
01:52:23,279 --> 01:52:26,800
why they don't feel the risk. The way that if

1805
01:52:26,880 --> 01:52:29,279
you had to earn your money in order to invest it,

1806
01:52:29,359 --> 01:52:30,720
you'd be much more cautious with it.

1807
01:52:32,760 --> 01:52:35,279
Speaker 2: Well, so the way that the good to peace question

1808
01:52:35,600 --> 01:52:39,479
to Pete statement, the way that the government is doing

1809
01:52:39,560 --> 01:52:43,560
it now is the government before you had like bell

1810
01:52:43,680 --> 01:52:49,640
labs and ship and now you have incubators which are

1811
01:52:49,720 --> 01:52:54,000
basically the little baby bell labs. Right, So the same

1812
01:52:54,199 --> 01:52:57,840
thing is happening, right, It's just happening in a more

1813
01:52:57,960 --> 01:53:03,000
distributed sense. Because well, so if we're gonna talk about

1814
01:53:03,000 --> 01:53:07,359
if you're gonna talk about a state, I said, I

1815
01:53:07,439 --> 01:53:13,000
said this to you, I think the other day about

1816
01:53:13,039 --> 01:53:17,840
a mutual friend that was thinking about getting a job

1817
01:53:17,920 --> 01:53:24,239
in infrastructure, right, a manufacturing plant or something, and I

1818
01:53:24,399 --> 01:53:27,039
was very excited about it, and I told him I

1819
01:53:27,039 --> 01:53:30,399
think you should do this because right, you have a

1820
01:53:30,479 --> 01:53:36,199
shot at being management at the same time as so

1821
01:53:36,399 --> 01:53:39,960
like right now, well, let's just say, I don't know.

1822
01:53:40,359 --> 01:53:47,279
X y Z production company isn't very exciting. Okay, why

1823
01:53:47,359 --> 01:53:50,720
isn't it very exciting? It's exciting. It's not exciting because

1824
01:53:51,000 --> 01:53:54,680
nine of production of x y Z happens in China

1825
01:53:54,800 --> 01:53:58,800
and we're just a small guy. Well what happens if

1826
01:53:58,840 --> 01:54:02,000
all that production in China stops? Then you're not a

1827
01:54:02,079 --> 01:54:05,479
small guy anymore, and you're going to be a very

1828
01:54:05,479 --> 01:54:07,720
big guy. And now you're very close to the top

1829
01:54:07,800 --> 01:54:11,520
of a very big thing. The more guys that we

1830
01:54:11,600 --> 01:54:15,520
can get working at power companies. See, I don't believe

1831
01:54:16,279 --> 01:54:19,640
in the competency crisis. I don't. I think it's bullshit

1832
01:54:20,039 --> 01:54:25,319
and it's cope. And before everybody like pillaries me if

1833
01:54:25,680 --> 01:54:30,680
Fortune five hundred companies have only been making two percent

1834
01:54:30,760 --> 01:54:34,319
of their hires less than two percent of their highers, right,

1835
01:54:34,399 --> 01:54:36,560
I get you know, more than one percent. I guess

1836
01:54:37,880 --> 01:54:46,399
straight white guys the most talented, highest propensity, like the

1837
01:54:46,720 --> 01:54:51,840
highest number of geniuses. Sorry Jews, that's not you know

1838
01:54:52,039 --> 01:54:55,520
that you're not that a Q. Stuff is bunk. So

1839
01:54:55,880 --> 01:54:59,000
we're like the straight white guy is the smartest guy.

1840
01:54:59,439 --> 01:55:02,840
We have the high number of geniuses. So you're telling

1841
01:55:02,960 --> 01:55:08,840
me that all of the major publicly traded companies won't

1842
01:55:08,920 --> 01:55:12,479
hire straight white guys like you know, the genius demographic. Okay,

1843
01:55:12,960 --> 01:55:17,880
well what about private companies. Well, private companies they don't

1844
01:55:17,920 --> 01:55:20,319
get to just issue bombs. They can't just you know,

1845
01:55:21,119 --> 01:55:23,800
borrow money from themselves and sell it to the market

1846
01:55:23,880 --> 01:55:28,359
instant They can't raise money instantaneously, right, Private companies have

1847
01:55:28,560 --> 01:55:34,439
to go to big funds like you know, Larry Finks,

1848
01:55:34,479 --> 01:55:39,479
Faggot Shop or any of these other you know, Fidelity

1849
01:55:39,600 --> 01:55:43,439
or whatever. Right, And because they can't sell their own

1850
01:55:43,479 --> 01:55:49,239
bonds to the market, these institutions like Fidelity, like black Rock,

1851
01:55:49,720 --> 01:55:52,720
they have much more leverage because a publicly traded company

1852
01:55:52,840 --> 01:55:54,239
like oh, black Rod don't want to give you the money.

1853
01:55:55,079 --> 01:55:57,720
Black Rock's got five percent of my shares and is

1854
01:55:57,960 --> 01:56:01,199
being a count on my board. Well, how much is

1855
01:56:01,279 --> 01:56:04,880
five percent of our shares worth? Susan? Okay, all right,

1856
01:56:06,000 --> 01:56:08,600
Well write that number down and go take that to

1857
01:56:08,720 --> 01:56:12,640
accounting and have them spit up that many bonds to

1858
01:56:12,720 --> 01:56:15,119
equal that amount, and let me know when you're done.

1859
01:56:16,079 --> 01:56:18,640
And tomorrow. First thing I'm gonna take that bond money.

1860
01:56:18,800 --> 01:56:21,279
I'm gonna buy all Larry Fings shares and I don't

1861
01:56:21,279 --> 01:56:26,199
want my company more. All right, that's a possibility, But

1862
01:56:26,319 --> 01:56:29,800
a private company doesn't get to do that because he

1863
01:56:29,920 --> 01:56:33,199
can't just go tell Susan to go spit some bombs

1864
01:56:33,199 --> 01:56:35,560
out to the market and raise money to get Larry

1865
01:56:35,600 --> 01:56:36,920
Fink the fuck off his count table.

1866
01:56:37,199 --> 01:56:40,720
Speaker 3: But this is where Michael Milkin creating the junk bond market.

1867
01:56:42,079 --> 01:56:44,920
Speaker 2: Is. It's much worse. If we think that two percent

1868
01:56:45,840 --> 01:56:51,119
of white guys being hired in public companies is bad,

1869
01:56:52,640 --> 01:56:57,439
it is probably worse in large private companies, and there

1870
01:56:57,520 --> 01:57:00,600
are five times as many of them as there are

1871
01:57:00,680 --> 01:57:06,760
publicly traded companies. So I would wager that the amount

1872
01:57:07,000 --> 01:57:13,079
of high value human capital that has been deliberately sidelined

1873
01:57:14,319 --> 01:57:18,079
right is way more than anyone's factoring, because the only

1874
01:57:18,159 --> 01:57:21,039
other stat is that fucking Fortune five hundred company one.

1875
01:57:21,079 --> 01:57:23,760
All those companies are public traded. But like Pete, like,

1876
01:57:23,840 --> 01:57:25,479
let's just say like two or three of the mutual

1877
01:57:25,520 --> 01:57:28,520
friends that we talk about, right, I bet you I

1878
01:57:28,560 --> 01:57:32,159
could take any one of those kids right mid twenties,

1879
01:57:33,159 --> 01:57:37,119
and I don't care whether you're a fucking engineer at

1880
01:57:37,119 --> 01:57:41,880
a nuclear power plant, right, or you make you know

1881
01:57:42,760 --> 01:57:45,119
X y Z. You know, I don't know. I'm trying

1882
01:57:45,119 --> 01:57:50,600
to think the most high you know, risk type infrastructure things.

1883
01:57:50,800 --> 01:57:53,119
So I let's keep using nuclear power plants. Let's just

1884
01:57:53,119 --> 01:57:54,800
say you're the guy that builds the reactor.

1885
01:57:55,479 --> 01:57:55,600
Speaker 3: Right.

1886
01:57:56,159 --> 01:58:00,279
Speaker 2: There is not a fucking job in that nuclear power plant, right,

1887
01:58:00,439 --> 01:58:02,800
or the manufacturing of the pieces that went into that

1888
01:58:02,960 --> 01:58:06,600
plant that I couldn't teach one of our mutual friends

1889
01:58:06,840 --> 01:58:09,960
in a year, right, Like, hey, go sit underneath this guy,

1890
01:58:10,199 --> 01:58:13,680
whatever his job is. Learn that. Every single one of

1891
01:58:13,720 --> 01:58:17,319
those guys can learn whatever that fucking job is in

1892
01:58:17,399 --> 01:58:22,800
a year. So I don't see a competency crisis. I

1893
01:58:22,920 --> 01:58:28,159
see a misallocation of human capital crisis. Right. But they're

1894
01:58:28,239 --> 01:58:29,880
not dead. They exist.

1895
01:58:31,000 --> 01:58:32,720
Speaker 3: Well, so yeah, I mean this is what I've been

1896
01:58:32,720 --> 01:58:36,640
saying too, is that somebody has to act as matchmaker

1897
01:58:36,800 --> 01:58:40,000
between there's a glut of weaponized autists who don't know

1898
01:58:40,039 --> 01:58:41,960
what to do with themselves and can't make any money,

1899
01:58:42,520 --> 01:58:46,359
and then the capital that wants to invest in those

1900
01:58:46,439 --> 01:58:48,319
kinds of people but can't find them.

1901
01:58:51,239 --> 01:58:53,560
Speaker 2: I think that capital exists, they just need to be

1902
01:58:53,600 --> 01:58:54,359
allowed to hire them.

1903
01:58:54,399 --> 01:59:00,840
Speaker 1: Again, We're running up on close to been going for

1904
01:59:00,920 --> 01:59:07,960
about two hours so and I mean we could pick

1905
01:59:08,000 --> 01:59:09,600
this up at a later date and I'm sure we'll

1906
01:59:09,600 --> 01:59:15,760
have a lot to talk about. So yeah, you guys,

1907
01:59:15,880 --> 01:59:18,640
happy with a happy with the conversation we've had so far.

1908
01:59:20,319 --> 01:59:23,920
Speaker 3: No, we didn't fix everything, there's still more to do,

1909
01:59:24,319 --> 01:59:25,119
but it's a good start.

1910
01:59:25,199 --> 01:59:33,359
Speaker 1: Yeah, yeah, bastards, both of you. All Right, I'll I'll

1911
01:59:33,760 --> 01:59:38,920
make sure to promote your your Twitter account, Sean like

1912
01:59:39,039 --> 01:59:42,760
I did last time. And do you want me to

1913
01:59:42,840 --> 01:59:46,479
point people to your Twitter account Stormy? Yeah, sure, absolutely,

1914
01:59:47,800 --> 01:59:50,359
all right, we'll do that because you've been having some

1915
01:59:50,479 --> 01:59:54,720
banger threads lately. I mean some ones that, uh, you know,

1916
01:59:55,119 --> 01:59:58,399
someone's putting out a good thread when like people either

1917
01:59:58,479 --> 02:00:02,600
love it or hate it m hm. And yeah, I

1918
02:00:02,680 --> 02:00:05,520
think you're seeing a lot of that lately. So I'm

1919
02:00:05,600 --> 02:00:08,600
gonna sign off. Thank you. We'll pick this up at

1920
02:00:08,600 --> 02:00:10,359
a later date, all right.

1921
02:00:10,399 --> 02:00:12,720
Speaker 2: You can take care of no substack to shill or

1922
02:00:12,800 --> 02:00:13,399
anything else.

1923
02:00:16,680 --> 02:00:18,479
Speaker 1: All right, y'all, take care of a good night.