E58: November's CPI, preparing for a downturn, macro outlook, Better.com's botched layoffs & more
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Actually the funny story from the from our bozzle so hanging with J. Q. And we're talking to people and for some reason jack has been nice to me and he said to people, he said, you know, the sky is the sky is a legend in silken valley introduced me, yeah and I said to J, I like, you know, this is people and who is sold like two sixty million dollars like if like this guys are legend too. And without missing a beat, jacal says, well, maybe for the next year.

We are.

And got. Hey, everybody, welcome to episode fifty eight of the all in podcast. Yes, the podcast I don't know you guys and .

watching and drinking is drinking.

It's a friday were film late on a friday. You can tell from the backyard of behind Christie that is the evening he's cracked open all of something.

something little little delicious hoops, two thousand and two .

and that's that's .

a label of bond, correct?

Yeah on say you in two thousand .

to thank the inside I over episode fifty eight last week, epo fifty seven peaked at number forty episodes in the world so thank you to the fans. We broke one hundred twenty five thousands describers on youtube and um the pod over there are getting one hundred fifty thousand years so thank you. Thank you to the fans a lot of questions about the all in summer, I went to see the locations when I was in miami.

We've got the location we want. We're working on dates and you have more information soon about that. Uh, so welcome back to the program with us today, as always, is the sult of science, the queen of kenwood himself, David freeburg, the rain men? Yeah, he's definitely back from our bosom.

Of course he went our bosses and I don't know if you're bought in the art, but I was on his boat with him, uh, I was rented boat to have sex, and I were on a boat. The boat, well, I like, he hasn't bought one yet, but I think he's moving there. And then, of course, the dictator himself, to ali poli hopeth, a here smale expensive sweater. Tell us about.

yes, yes.

I everybody .

wants any animal was killed .

for that horrible early sweater of this.

This is a collection god of the four skins of some. I mean, IT is incredibly soft and smooth. I'd literally .

got a complaint. I like.

four skins are god is really .

going to bed and .

sex like, what are they talking about?

I literally got complaint on dm about chaos .

computer consumption .

of his sweaters and and he was like, listen, I don't mean to tell you your business, but I think chamois turning off the .

audience with this an angry midd level .

White IT was a White, but a very, extremely successful.

I'll leave at that anyway. Really, really.

we just every week.

really, really.

we have to go through to mos .

sweater SHE pay attention when I put in seven hundred million dollars to climate .

change and you put .

in that much with sweers OK .

listen and just checking if to a moral virtue signaling over, we ve got a lot to cover.

I mean, this.

so quit. And then all into the show and all of the show.

uh, all right, we ve got to start with inflation in the economy. H, wow. Sax and I were in a miami for our bozzle. There was an absolute, uh, panic going on two, three in the morning, people checking their Robin hood and coin base accounts to far out how much they lost in the crypto holdings.

But today I lost more in the Robin hood stock than I have in the robbin hood APP.

That's too soon. Bra, too soon for me. I'm about to distribute. I'm like, do I distribute now our .

way first has been a stone seeking to the floor of the ocean.

Well, I mean, it's pretty be found now, I mean, seventy, eighty billion dollars in pretty great valuation. Uh, right now, I think an opportunity for people, but i'll leave at that. Let's talk about inflation .

were not space.

And right now.

before I distributed with mark, again, like people, I really .

just actually don't show up drunk for the next episode.

kid, if we get there with .

the first story here, okay, inflation.

Does this woman even owned a cash swear that he had person?

是啊， please be that, mike.

Alright, what a fucking and loser.

Good doing with all those four things. Because I want to go to waste. I what do you do? The force of circumcision love .

for you .

to just drive here and touch the sweeter. I mean, I I I can't like something .

to do on a friday night. All right. Inflation numbers, this is important. Fox inflation year over a year.

So but excuse me, but if if you're spending your time working in biotech, working in crypto o and fighting climate change, it's wrong to be a cashmore swear like it's little.

Now we have to start out because being .

ugly is so cool.

Now the idea was, do we have to start to show with your fashion choices?

You started with that bullshit statement by this person who Better be good looking or well dress, otherwise they have no right to make this claim.

Alright, calm down for more. Let's get to the shop.

You insulted the sweet game. Now, most of.

Honestly, you might .

have to called me a might to. Stop IT just a sweater comment and just constitutive consumption.

Is that is that what she's really trying to say? We try try 到 他们的 鼻子 because you brought him up。 Who is IT out her? I'm not. I just cancel her. We're not like nobody's .

in cans for pointing out that you're talking about four thousand dollars that I never .

said how much they cost. We beat IT out. I've never said how much this one do .

you always want to work four dollars, of course I do what I case. So I read my case. I owe many, but this was a boy guys all charges.

It's a big as good subject. Uh, C, P, I, the past three months today, with six point eight year over a year is the largest increasin thousand and eighty two. We're getting back to the post jicara era. Uh and when regan got in there inherited that mass, september was five point for october six point to november six point pots up point six or proximate ten percent over october, one point four percent over september. And um here's the chart um for those of you watching on the youtube channel, this all started in march of twenty twenty one.

That was the first month with A C P, I rose over two percent and who was wrong on inflation with the fed chairman drone pow called a transitory numerous times over the past two years as treasury secretary jAnnie garland, uh in her senate confirmation hearing in december of twenty twenty yellow said you believe the fed and by admin could take advantage of interest strates being your zero and spend more and stimulus I was paul craig man though that was transitory in his oped, how not to panic about inflation that did not age well. What our business is actually starting to set Prices and wages based on the expectation of high future inflation. If they aren't in my bed is they won't be the the lesson of twenty ten to twenty eleven will remain.

Don't panic. My god, he could not have been more wrong. Who was right on inflation? Jie diamond in march? I would suspect there is a pretty good chance you're going to see rates going up and people are starting to worry about that.

The american public, specifically jensie, has been on top of this issue. Uh, seventy seven percent of americans were either somewhere somewhat were very concerned about inflation back in march. And gz people in stated to twenty four had the highest rate of very concerned about inflation, fifty two percent.

Very summer also got this right. tax. What are your thoughts on inflation, which now seems acute and permanent?

right? Well, is definitely not transitory. Member, when I was at about five point one percent over the summer that the administration said the big deal, this is translate, don't panic.

Then I went to six point two. Now, six point eight. Looks like it's headed to seven percent. And that the real problem here is that these guys, the administration, have not adjust a course in light of this data.

What they've tried to instead is now speciously claimed that the same bills that they had written and conceived the bill back, Better bill somehow, even though I was conceived that time that was really deflationary, that somehow is going to fight inflation. There are simply reproposing that is changing the arguments they are using as opposed to changing their their legislative priorities. And just today, we got a report from CPO saying that this bill, back Better bill, wasn't going to cost two trillion and like administration said, is going to cost five trillion and add three trillion.

The deficit ten years .

create over ten years if those programs are not sunset IT. So there's a bunch of budgetary gim ics. I were put in the bill, basically a lot of the programs with sunset after one year or three year or six years.

And so that's the only way we've got to this, you know one point nine trillion dollar Price tag. The reason why that's gigia c is because once the programs are created, there's going to to be IT will create a special interest or constituency who is not dependent on those programs. And no ones ever going want to cut a milton freeman.

And freeman famously said that there's nothing quite so permanent a temporary government program. So that is the game that progresses are playing is are going to create the dependent, the dependency. The constituency who once they receive the program, has never going going to give IT up.

And they're counting on the fact that these programs will not sunset, which means they will cost five trillion and they will add three trillion to to the death set. So you know, the problem is to be one thing, if we were in a deflationary environment, if the economy was in the tank, but these guys are continue to pump more and more stimulus into an economy that has enough. And really, Larry summers made this point all way back in february.

I think this is worth reading what he said. He said there is a chance that mack economic stimulus, on a scale closer to war, war two levels and Normal recession levels, were set off inflationary pressures. That time we have not seen an generation.

He said this in february. Everyone in administration dismiss them all. The liberal conomo that you mentioned basically derided him. He turned to be exactly right, and he was just saying this about the the one point roughly two trillion, they passed back in february for a cover stimulus. And you since then they passed one point three trillion for infrastructure. And now is this another five trillion for build back Better? So know, the real problem here is that they are not adJusting course in light of this data that .

keeps coming out that .

inflation is a good. So the we don't need IT. And this is not what ban was elected to do. You know, he was elected to provide Normal sey stop the chaos, never got a Mandate for this kind of, you know, whatever, a ten million dollar actions wanting .

to do an infrastructure bell for a long time. But we didn't. That was prior to pumping so much stimulus into the site.

done the infrastructure bill and not the bill back Better would have been one thing. But this is basically the the third hyper stimulating bill that they've sought to pass first in the cover release bill at a time when really the economy didn't need that simulates.

I mean, dp telling involved in this is the jobs s report. A november, not foreign yells increased only ten. They expected IT to be five hundred seventy three. So was a big miss, however, kind of a miss bag, because this over a hundred million job openings. And we're now at four point two percent unemployment rate, which is the lost which which is getting towards the pandemic lows. And know this is like before the two thousand and eight financial crisis, to about how do you reconcile inflation along with this crazy, bizarre job situation where people will not go back to work, people are planning on resigning, there continues to speak resignations, and there too many job of, and people are raising salaries and still can't, higher people.

Well, I think we did a pretty good job of unpacking the great resignation. I think he was last pot. So right? Member, like, yeah, there are three structural issues I play in the jobs front.

One is that you have this really meaningful under immigration that happened because of trump. The second was you've had a big mismatch between the degree classes in amErica and the jobs that they can have for what they think they should earn. Meaning you go to school, you get into all this step, you try to become a teacher or something, and then you realize you can make more than amazon warehouse.

Crazy, strange. And in the fourth is you have all these bombers with an enormous amount savings, thirty, forty, fifty trillion dollars, who are pulling forward their retirement and also subsidizing their kids. You put IT all together.

There's less of an incentive to be in the job force unless you pay higher wages. Now plushes put a pin in that for a second. I think the thing that tax talked about is really important, which is that we have to really figure out whether inflation is transitory or its persistent.

And it's here. And I just want to bring up all nickle into these tax h these the twitter links to this. But uh, bill action, eat out these two things today, which is that if you van on the pod, brilliant investor, by the way, uh, great human being, brilliant investor.

Two very specific things. He actually called out something that we ve we also mention before, which is that CPI is horribly calculated and it's really in precise. And if you unpack CPI, there's something Price index to consumer Price index.

There's something in there a component of IT that's very important, which is called the owners equivalent rate, right? How much can somebody basically charge to other people the way that they calculate that, which is thirty percent of the thirty percent of the calculation, is they just survey a handful of people. The problem, you don't need to survey because the actual exact data is available from single family rentals that report this number.

So their survey showed basically a uh, much, much smaller increase than what the actual increases. And let me just give IT. So the largest owners of nationwide single family rentals are reporting a seventeen percent year over year rent increase.

The the O E R that was calculated coron quote by survey in the C P. I was three point five percent. If you flow that through IT means that core C P.

I actually went from four point nine percent today to actually nine percent. And the CPI print, which was six point eight percent, was actually ten point one percent. So IT is goes to show you, we have sources of data that the government is not in a position to collect our measure.

We have horribly inaccurate econometric models that we use. You know, you know that face sort of shit and shut out. So unfortunately, you get very bad. You get very bad. Crapy date up and now of a sudden were printing numbers. We're supposed to make policy against those numbers, but the numbers that underlie this decision making is undammed tally flawed and it's fought in the wrong direction.

Okay, let's bring freeburg and freeburg. What what do you think is happening here? Visit uh, also the creation of companies and entrepreneurship because one of the weird things that's occurring is we're starting to hit a record number of L L C S S corp c corp. Being created IT seems like a lot of people are becoming freeLance nation. Uh, hundreds of thousands of new companies during the pandemic were started.

That is probably one of many places where the water is flowing when you fill my cup and IT shell overflow with um I was talking to a guy .

this week who was .

not that.

This guy has a multibillion dollar consumer credit portfolio and sub prime, which means you know he's got the a bunch of consumers of him money that um generally there's going to be a high default rate and his no comment .

not and um he .

said that this year the portfolio performed beyond like the one percent tile of the model distribution of what they expected to happen. They they had the yield on the portfolio be forty percent higher than they thought I would be because there's so much liquidity in the hands of individuals.

And so I think you know um Jason, while you might make the argument that companies and jobs are be created, that is one of many places where like you know you overflow a river and lots of stream start to flow. You know we're seeing um asset bubbles everywhere in uh N F T, in crypto, in startups, in new startups and new ideas, in home Prices, in everything. Now the problem with the inflation is um you know it's a uh definitely we all use this term and we thought about, but like inflation is really the measure of Price going up over a period of time.

And generally you want to have inflation of some amount that allows you to see economic growth and expansion that allows you to fund the debt that you used to create that growth in the first place. And so without out some sort of an inflationary pressure, which is the output of economic growth, you end up you know being unable to meet your debt obligations and then things get really ugly. And um the system as IT was constructed because most of these governments and systems like we have today are funded by debt.

So um you know Sandy Miller gave a good interview on q two. He was kind of on a road show you know um sounding the alarm bells around what was going on. He was saying the market is not speaking right now because basically the fed kept cancelling the market signals uh with their um with their interest rate policy.

And by cancelling those market signals IT seem like we had a free for all the government level to keep spending. And so I do think that these two are pretty interrelated. The fact that we've kept interest rates low have allowed policymakers to say, you know what the cost of that for this government? zero.

We can do anything we want. Just like consumers are saying, we can do anything we want. We can buy anything we want. We can spend any way we want. And as a result, we're kind of seeing this you know inflationary pressure uh, persist.

The problem is if you then raise rates and you can borrow that money and suddenly ly people have to start to pay that dead down um without economic growth having occurred. The business goes the whole system goes bankrupt or a so the chAllenge that the fed has is how do we raise rates without triggered an economic recession. And if people are now have overspending and or over levered once again and rates go up, it's gonna get really ugly, really fast. And so this is the first derivable balancing at and and yeah there is no simple and easy solution unfortunately. Meanwhile, technology is causing deflationary pressures, which is exactly know maybe you don't want to see happen when you're trying to realize economic growth .

um and that um yeah the other thing that we talked about is that the the fed basically changed them or the the government change the rules on the percentage basically what qualifies as a conforming mortgage of that. And so now that's basically at at a million dollars.

And if you think about IT, most americans, you know, eighty and ninety percent of their true underlying wealth is their home to the extent that they have built, you know, a positive networks. And if you all of a sudden, you know, push up the upper bound on what are conforming mortgage to a million, a million dollars, that effectively means, yes, I know is roughly about twenty percent. That effectively means that you're moving people is not worth up by about four, five percent.

And so and so if they take that and then they take that money out of their home via headlock or an equity line of credit, right microcredit. And then you know to your point, freeport, they spend IT or they invested or they you know IT could be a real disaster scenario. Um you know this is more like nineteen twenty nine.

Yeah by way, if you go back to the member when we were in like the depths of the market collapsing and everything went basically the economy shut down with walk downs when cob IT started and I was speaking to a senior banker um at that like that day and he told me, look, it's pretty simple. What's gona happen?

The friends gonna drop interest rates to year and gonna pump money into the system because that's the only way you're gonna be able to keep asset Prices from collapsing. And we're going to artificially inflate asset Prices and we're going to do IT for a long time because then people look at the stock market and they say, oh my gosh, stocks are going up on, my god, revenue is going up. Everything gets inflated by pumping money into the system.

And the problem is, while there's a you know, a perceive you you keep saying the home Price goes up and I keep saying stocks go up. But the the purchasing power that arises when the inflation is higher than what those things are going up at indicates economic recession underlying that inflationary bubble and the circumstance needs to be anal has unfortunately a little bit more deeper than that, which is it's not just about inflation. It's about have we pumped enough money and to trigger economic growth that we can come to baLance where the growth can now pay the inflation. And we're not there.

Well.

superimposed on there about IT like one simple analogy, let's say i've got fifty clams, and you know, the suddenly a bunch of climbs come into the climb. Now I got one hundred climbs. And if the number of climbs has gone up by three ex, my purchasing powers actually gone down by a third, I might look like I ve now got twice as many clams. I can only buy one third as much could before because there are so many more claim for in around and that's .

the problem just or I listen uh I did a little bit of math. I've been watching um the uh Price to cells ratios of some of the top companies we can pull this up on the screen.

Um and the Price to cells of uh companies, including zoom, obviously was ridiculous during the pandemic that was a pandemic socks。 So on top of all of this money being present, the system, you had the participation of a bunch of stunk trades, you know, that whole movement buying up mean stocks or others. We had the Price cells ratio of zoom. In other words, the value of the enterprise versus their actual cells was at one hundred and twenty three is now at fourteen point seven and paton was another one of those at twenty three. Now down to three x down eighty seven percent coin base uh square also a drops up very significantly here. Um but you can also be look at the peak Price to cells um and how much larger is then and so some of these are now of eight x four x and then IT drops off two x, one x um but in quiet, I I don't know you guys are looking at the numbers or if you have any thoughts on this, but we're rip IT seems like there was a mispricing of certain equities .

and IT isn't a mispricing. The federal reserve forced a lot of institutional investors to be out as long dated as possible uh in buying earnings because if you if you have to remember, it's not just that real rates were effectively zero, but if you wanted to own inflation protected securities, IT was actually a negative yield. So we were destroying people's savings.

And there are a lot of individual story or not, individual institutions that must owned some of these inflation protected asset. So we were already in a negative yield environment. What are those folks supposed to do if they have to fund and eight percent return a year, pay the pensions of, you know, good people, firefighters, teachers, you know, it's you name at policeman is at a right.

They were forced to invest in the kinds of funds that would then go out further and further out into the future to buy the promise of future cash flow. And when all of a sudden, a whole bunch of other assets that that they held, which were supposed to be safe in plods on them, right, because all of a sudden inflation changes in the front end of the yell curve goes good, and all of a sudden all these assets, when yells go up, Prices go down. Now the firemen's pension is like, oh my gosh, we just lost all this money.

We never thought we were gona lose. And we're long all these, you know, crazy tax talks. And so that they are force to sell so that their overall exposure goes down.

That's called deg rosing OK. And we've been going through a very painful process of this deep growing hedge funds are doing IT um in rows. Can I ask you .

a question then you mom, i'm sorry to robot, should they not have looked at these multiples and said you I want maybe this one's out of wack and I should buy the ones that are not as out of wax.

because this me seems really because for the last fifteen years, if you you the problem with being a value investor over the last fifteen years, since two thousand and a dates, you are basically a dumper diver and you got paid absolutely. You know, you didn't make anything because because they misunderstood. Value was value isn't necessarily things that are cheap.

Value is things that are things that are valuable. And over the last fifteen or twenty years, what was once a question is now definitive, which is that the things that are valuable tend to be technological because they are super high margin. They grow really quickly.

They compound. They create enormous cash flows at scale. So great point. The point is you couldn't own that stuff.

And if you SAT on the sidelines, you weren't meeting you eight percent hurdle. You are all of a sudden looking at some risk of defending on your pension obligations. So this is how this whole cycle brought us to nowhere.

What you're saying is, if I can summer, ze is nowhere else for them to put their money. Sex Price matters. So is this just bad capital allocation? People weren't thinking about the entry Price of their investments. We're giving too much credit.

Well, I think I think what happened is that you are at a liquidity field boom going on so well. We ve seen over the past four, five years. But the first week, november, most the market basically peaked and at least close sox did and SaaS companies did.

If you look kind of devel, eighth was sort of the beginning of the downturn since then. Most of these growth stocks are down about thirty percent plus core pto is down now. I mean, it's sighting as we speak, thirty, forty percent off off a peak around the same time.

What happened around the first week, november, when you had three fed governors come out and make very hawker statements about the fact that the fed was going to need to double the speed of taper and that you're going to have two, three rate increases next year. And so basically, we went from being in a low industry environment, which has been the case, not only is low interest story environment, low interest rates with massive similar and pumping out of washington by both the fed and by by congress. okay.

And so you went from that environment, all of the sun environment, if now we're expected to have rate increases, and that's going to such the liquidity of the system. The the amazing thing that i'm seeing right now is that every investor I know is having the same conversation. That doesn't matter whether you a sas investor or a real investor or ecliptic to investor, they're all having the same conversation, which is what are interesting going to do. How much liquidity is I going to suck out of the system and how much of the boom that we've experienced the last couple years has been because of this unnatural liquidity has been pumped into the system. And so i've never seen i've never seen to be the case that investors across every asset category are having that macro conversation .

as opposed of talking about .

like micro stuff, right? Like which is exactly it's all about what what is happening in the macro o picture. And this is where I think what biden is doing is so unbelievable.

Off base is okay. Look, he didn't start trillion dollar deficits. Um you know that happened to the previous president. I'm not saying that was good. But but now what we have a situation here of um of the fed is getting extremely hawkish of tightening. We're seeing inflation now out of control and yet there has been no adjustment .

whatsoever on a policy basis. We have just called a place this point because I think we can I think I I think biden was, is and will ever be a really moderate down the middle centers. I don't think there has ever been an extreme bone in that land's body.

He has always come off like, you know the word that I think when I ve always thought a biden even now is equanimity mity. The guy is a really um down the middle person. He is not an extreme individual.

I think that's the only kind of personality, by the way, that could have thrived for eight years as a VP with obama and had been in every room, in every meeting. The problem sucks. And tell me if you think this is totally off basis, that there is a head fake after he won the presidency, where there was this fake lurch to the progressive left.

And IT turned out that IT was a complete headshake because that whole cohorts of people just totally jump the sure, because all that redirection, unfortunately turned out to be not worth much. IT started to blow up in their face in every single election that happened since then, at the local level, in cities, at the state level, in places like Virginia. And in the middle of all of that, I actually think what happened was that faction tried to push extremely aggressive legislative agenda to paint biden as the next roseville, which maybe he didn't even have the the desire to be, because I think that he seems a very low ego kind of person.

And now we're actually realizing, oh my gosh, this makes no sense. And so the part of why I think the marketers are kind of like handwringing, as you would expect at this point, the federal bureaucracy to actually step in. But I think there's like a real lack of confidence because full, for example, today when there's A C, P, I print of summer between seven and ten percent, the only democratic sounding of the talking point was one of the squad proposing a 4 day work week。

I mean, that is in that in crazy debt and you're like nothing to do. We have more money and work less. When the co says robot to go three more trillion into that, the solution isn't affordable.

It's I I actually think if you want to work less work, know maybe you're lucky and your boomer parents can give you money. But there's a bunch of us like me who had to grind. I don't have anybody to fall back on.

And if you all of a sudden pass the law that's a hitch mouths. You can only work four days week. I would be really angry because you're depriving me of twenty percent more of a chance to beat all those other soft Candy asses that went all those fancy schools that weren't willing to work. Yeah, ignore. That's a stupid of next work.

So I think I think this this proposal that came out to be this was a new proposal that they were going to limit work week to ford days a week won't let you will work five days a week. The reason why it's it's a bad idea in general, but it's a particular sort of a brain that idea to propose during a height. You sort of this inflationary period because again, inflation is caused by too much money chasing too few goods.

Well, so that you have a demand component from the pumping in the stimulus, but you also have the supply component, which is we don't enough good and services. why? Because we've been passing out these to my checks that um that this is advice people from working, we have problems with the ports. We have these covered .

restrictions have all gone .

in the way that so we've had a shortage of good and services at the last thing we need is at twenty percent reduction in the number of work days, of work hours that are available. So IT shows like how at a touch these progressives are. But looked to your month, to your point, about bit.

And I look, I don't know, you know exactly what's in biden heart to me. He doesn't really matter. I think I actually think he's pretty liberal. He's not all the way out to where you know aoc is fine, fair enough. But look, at the end of the day, I think you know this idea of biden being a moderate IT moderate is as more moderate does. He has not govern like a moderate, whether that's because, you know, this moderate thing was to stop marketing, stick on his part and he's actually more liberal, or whether he's been locked and taken over by the progressives. I don't really care what the reason is, the fact the matter.

he is not govern least. We pulled back the spending. But I mean, the original member, the original we loaded, we put the bullet in the chapter.

And lower for mention, this bill is not gonna happen, David, with a three, three dollar.

I mean that. But the point is that I look, if people like us don't speak up and say, this is a reckless and you can only fly .

the plane so fast before the wings come off. This is too much b for the air frame. Let's go to a clip of a friend ill.

Let's go to a clip of elon .

talking about capital location. Uh, it's a couple of thirty seconds. And then freeburg like you to comment on the other side. Let's go some point.

Really what you're doing is capital allocation. So you're not it's not money for personal expenditure. What you're doing is capital allocation. And IT does not make sense to take the the job of capital allocation away from people who have demonstrated great skill and capital allocation and give them to you know an entity that has demonstrated very core skill in in capital allocation.

which is the government yeah .

freeburg thoughts set IT in the past.

This is that a world strange journal .

conference by the way, you you can think of um uh a government or a nonprofit or a corporation as an organism, as a living organism and each living organism wants to eat and grow um and there there is no such thing as an organism that says over time I want to shrink and travel away and die.

So the organizing principle of the people in the government is to do more for their constituents, for their owners, which are what they believe to be the taxpayers or or their, you know, the folks that elected them to office. The the politicians themselves, I would argue, are more actors in the wig I board of behavior that's going on here and you know less kind of, you know the the mental designer of a system that they're trying to used to infiltrate, change in the world individually and conquer and gain individual power. There may be some degree of motivation there, but I think largely it's more about the fact that that organism that government wants to grow wants to spend more, wants to do more over time, not less.

And um this is true of any business. Every business wants to grow. If you're not growing, you're dying. And uh, every nonprofit there's no such thing is a nonprofit that says let's not fund rates and let's spend all our money and then shut down um and so I just think like you know, as much as we want to kind of city here and rationalize a way to Better politicians that are going to Better service, that are going to fix smarter.

Um the reality is every government, every you know institution of government and the history of a human kind has tried to grow and eventually they cycle back. You know the united states, like I said last year, you know maybe kind of going out with with a little bit of less of a bang and that's going be a function of the devaluation of currency or of a place in the in the global stage um and so on. But I think you want to right like you know he feels and many people in business fear like they're in competition with the government uh for capital.

So and you yeah and that capital, the only differences is that the government can force that capital, can force that revenue and and and no business can go. And so they've got an unfair advantage in in that that stage of playing for capital. And this is where you know bitcoin feels to a lot of people like a great equalizer. And i'm not a not a huge like i'm not not a bit of maximum or anything, but I think that's where the appeal arises, which is know jeffson said, like every uh, generation needs a revolution and I think that this is the revolution that folks are looking for, which is how do we get this big monopolistic player of the playing field to let us do what we want to do.

Well, I mean, it's so easy. I mean, all buying has to do is what he was like to do about a Mandate for this tenderly indulge ous spending. I mean, the guy ran a basement campaign.

I mean, he was elected to not be trump, okay? He was elected to stop. okay? Not not to engage .

this time .

trying doors. Know, elan, I think made a really good point about capital there. You know, people think, okay, I got all this money, so he must be enjoying this like incredible life.

Start, look, he's right that once you have that much money, you can't spend IT all in person al consumption, you invest IT. And so the question is who's going to make that investment is who's going to Better at IT you want or the federal government? We know elan is Better at IT.

He crates tes, incredible innovations is going to to put people on mars. I mean, he can do incredible things with that capital as the government to anders that you know there's another even on another really good I think you want actually understand economies at macro level really well. He had a really good there's equally good snippy of him on the rogan show know core plenty twenty where he says, look, there's lot of people out there.

Do you think the economy is like this? Warn of plenty that produces all these goods, and the goods is magically appear in no matter what we do. okay.

And so if some people have more goods and others, this is because they stole them from the old one and plenty. What he actually, but he said is, no, this not the way the economy works. People actually have to make the stuff.

You know, people don't make the stuff. There is no stuff, okay? This stuff doesn't just magically appear. And the way the stuff gets made is you have people making small capital ation decisions and engaging in hard work, and that's what actually produces the stuff. And it's not a zero of some game. So you think about like this agenda that we have in washington, IT really flips this on its head. IT is doing everything I can to stop the production of the stuff, whether it's the steamy checks or the covered lockdowns .

or you know the yeah .

or the .

conference, the earnings of people. So the spending on whatever they exactly.

it's a it's actually putting constraint on the production, on the supply of the stuff. And then meanwhile, this is printing all this money. So then we wonder whether the inflation come from office is coming from printing more money for fewer goods. That that's basically the problem with the agenda have .

in washington right now. The increase in the deficit is just getting stunning. If you look back on the five or six, lest, uh, presidents ragin one hundred forty two percent increase, uh, he got us up to one point four two trillion.

He had to obviously a combat. What happened on a Jimmy Carter, a George bush, George H. W. Bush, thirty thirty six percent increase. President bill clinton, a one person decrease the first time we ve had a stimulus, absorb a surplus no long time, and then pushed the second .

fifty seven percent increase economic.

Amazing ago yeah.

But I mean, at the time, what was very interesting as politicians actually took this issue of balancing the budget very easily, deadly seriously, and thinking about how we would pay for things. And now we don't seem to think about who is going to pay for these things. Yes, which is gona screw our children OK.

So you have to remember that bill clinton was the present who said the era of big government is over. And when he left office, he actually dragging about reducing the federal government share of the economy from twenty two percent to eighteen and a half percent. You had never hear a democratic president. Never.

never hear a .

democratic president. Well, first, they wouldn't do IT, but second, they wouldn't break about IT. You know, you can even say something like that.

H, A republic and president of vince s, that any party matters at this point. IT feels to me like the incentive structure is such that the individuals who are representing constituents, who get them elected and they can pass more dollars back to those constituents, drives a systemic model of growth for the government, and therefore the government is complete competing as a monopoly on the field for capital.

Yeah, look, I think I think what .

you thought trump was gonna this guy and trump came in and he ended up spending more. And I recognize they were extansion ating circumstances and so on, but I thought he was going to going. I but the premise was blow up the government to cut all this nonsense and the deficit kind of shot up.

You're right that republicans have a very spotty record on on government spending. And we did have trillion doll deficits precoe under trump and that that was not good. But what bian is doing now in the face of inflation is worse. And look, I mean, historically, the best the only time that you really have this seems like fiscal responsibility is when you actually have the best track records of being you have democrat presence, republican congresses and the republicans suddenly find their principles on spending when there's a democrat, the White house.

You're right that when trump is in office and how congress and uh George of you bush, you know how congress, republicans spent a lot of money too so it's absolutely a byproduct problem but what's happening now in washington is the biden is is unprecedented is a breaking of the bank. They're talking about hitting trillion dollar coins so yes, IT was a problem and republicans but this is even worse um and here's another thing is the fed is now saying they're projecting two to three rate increases next year. So lets call that seventy five basis points mostly that by the close to thirty trillion of government debt that you're talking about, Jason, that's about one hundred and fifty billion a year of interest payments on the debt of death service.

okay. One hundred .

and fifty five extra, extra, extra. yes. So you're looking in one hundred and fifty billion of incremental decor costs, right? So moby, that over ten years, that's one point five trillion over ten years, that's your build back Better right there. Where's this money for build back Better going to come from? We have one point five trillion of increased interest state costs starting next year.

And and how do we get the cycle of people wanting to go back to work and be productive? IT feels to me .

like this could be a.

which is what's happening, but people are so not going back to work. Have you been watched the the in seventy thousand doors? Be a manager of a talk baLance.

People want you to, well, then offer seventy five thousand.

I still don't they feel.

I think that model dead. I think low cost labor's inevitably .

the people I think .

I think be in order for bell is the six dollars going to have to raise labor cost. People aren't to be buying talk o belt are going to go somewhere else. So the low cost model of consumerism in the united states, which has have been a stronghold for our economy for one hundred years, at this point, maybe coming to an end or IT will accelerate the implementation of automation across that sector. The economy, I think that's more likely.

That's more likely one of the if you read the press release for the four days a week. Gabi, in the four days a week thing, IT said, workers for far too long have been forced to work very long hours and not .

get paid and .

when they were not paid. And so the idea is just like, you know, opt out, but then if you walked out, you'll make even less in a moment where you can actually make more. Yeah, these idiots were coming up. These ideas.

the chinese must .

be looking short.

looking at the spout.

Recent american economy.

but in destroyed .

the exact, what we here actually is. The economy right now is not all negative. I mean, the unemployment rate is down to four and a half percent.

The labor participating tion way yeah, I think it's quite low. I mean, IT was three half percent before covets, so we're getting close to we were before coit. The labor participation rate is not great. I think it's like sixty one percent was sixty three IT was sixty three percent for o so we need to get more people working. We could do by ending the steam check check, okay. But the most important thing we can do right now is a mention we do by in the biggest favor, by just putting a bullet in this build back Better plan because I actually think they're be a massive lef rally and the economy would take off like a rocket next year if you just got government out of the way they have printed enough that the best thing could happen if they stop this pumping in stimulus and then the fed doesn't have to raise, raise is aggressively next year. And we could let things have more of a soft landing as opposed to the sun austerity, which is which in the economy.

So just slow the plane down, and then maybe break this bell into two component parts and just try to .

get couple things on the money he spent, all the money spent.

I mean, this is a bar of all bars. And if people are refusing to go back to work, we're gonna have to we talk about the less eps.

So we gonna to think generation this and I think is a generalization, say people refuse to go back to work. I think the jobs that people had open up to them, um you know may not be jobs. They want to go back to cork.

And I think that there's gonna a larger significant growth in the services economy that didn't exist before. Think about how many yoga instructors there are today that didn't exist years ago. How many you know people doing here? Youtube creators craters the cate economy alone, right? Like hollywood no longer has a monopoly on content and people spending more time consuming content than ever before.

So you know, there's a services economy that I don't think we really predicted or model, and we all see, oh my god, but we're not going to know what is going back to work. It's, I guess, what people spending money and they're going to spend money on new stuff. And these new industries are merge.

We know creators, and those creators are going to create jobs around them. Know one amazing creators will hire one hundred people to know staff is video OS and make his music and edit stuff and know run his business and so on. Like it's just it's just the way that the economy shift.

There's been a moment here that is like a cambridge, an explosion of new species of industry um where you know this media right of a covet came in hit planet earth there was eradication of the old species you know minimum wage jobs for a crappy labor work that people don't want to do. And over some the sun came out and new stuff is emerging and new iphones are emerging, new jobs are emerging. And I think we're going to a really ugly transitory period.

But I think like like sax said, I could be really great on the other side. And there's also sorry, there's one more argument to be made, which is our friend brad girls and said, you know today saying, I know you guys are going to rent on your all in pod today and inflation, and I want to remind you about the deflationary effect of technology and IT is really being felt in the economy. I think we all see IT how software alone can reduce the Operating costs in the labor costs.

Businesses drive up margins, increase growth. And so you know there's a number of tail winds here. Um but I think sex is right. There's a masking going on with respective of capital that just being banded about right now. Um and uh it's it's a it's a risky, nasty kind of um you know male term of a of a sea we're trying across right now.

I want to point out two positive things to build on sexist positivity. Number one, I don't know you guys are following uh omicron in the U K. They have record cases right now but deaf and and they they're also done great with the vaccine, obviously a small country with a lot of resources. So they are hitting record cases for this last cycle, but deaths and hospitalization are down. And they say Opera twenty five fifty percent is part is now moved to omicron and IT seems like uh that this could be the end game uh maybe and did you ever see via the end of um was at approach .

where they like drop that bomb IT was like the massive bombs that takes all the air out of the room is like shocks everything and they're like, okay, it's over. You know there could be this thing happening where a micron is the you know the the area bomb that gets dropped clears the room and then it's all over in.

The salaries is faster than inflation. People are raising people salaries, you know, in double digits to try to get them to come to these job. So the people who are choosing to go back to work and people are eventually choosing that and switching jobs, to trim's point, I think they're be making more money and they going to be more resilient and they are going to be a little more empowered, and that could end up being a great thing. And then finally, in terms of technology, I have one robot company, uh that serves coffee and they had a record .

week but broke.

One thousand dollars and people ordering from a robotic coffee machine. Previously the record was like seven.

eight week. So people are getting years. Tell you, your stupid lady friend, I have.

And eleven thousand dollars. Weather, no, stop IT. Stop IT. All right. Listen, I don't if you guys saw this Better docomo viral video but ah can you can you break .

this down jack l ahead I was and not following this very simple there's .

a come to call Better docotor get rid of origination fees or whatever in commissions they try to get to faster mortgage insurance whatever they were a back shop bank was going to put in one point five billion in the pipe. Everything was going according .

was already in the company, right? So they're trying to get their own company out yeah .

so uh obviously the market correct. Everybody always asks us, as a group, what happens when the market correct will hear you about to see IT. This guy decides I gotto cut ten percent of the company instead of having his managers go to each group and have a logical, small discussion about how they're onna correct things and maybe some sort of thoughtful process, he decides he's going to get on zoom to the entire nine hundred people were fired. And in a very bizarre.

by nine, nine hundred people were five hundred people.

But over the over zoom.

how big is this company?

Ten thousand employees, and he says to them, but the last time I had to do this, I lay people off as I cried, and i'm going to try to do Better this time. But if you are on this call, effective immediately, the one thank you .

for joining. I come to you with not great news. The market has changed, as you know, and we have to move with that in order to survive.

And hopefully we can continue thrive and deliver on emission. This is a news that you're gonna want to here. But ultimately, IT was my decision, and I wanted you to hear from me.

It's been a really, really chAllenging decision to make. This is the and time in my career i'm doing this, and I do not, do not wanna do this. The last time I didn't, I cried. This time I be strong.

Okay, then here's the second clip where he basically tells everybody over soon that you're not going to be able to log in and you get two weeks seven years, three weeks before a months seven. And it's like three weeks before .

Christmas got laying off about fifteen percent of the company number, the market efficiency and performances and productivity. If you're on this call, you are part of the unlucky group you do is being laid off. Your employment here is terminated effective immediately.

Are you kidding me? What does this mean for what's next? You're onna. Get an email from H R, H R. And Better outcome to your personal email address of and your benefits for all us employees. We're providing a four weeks of seven years, one month of full benefits and two months of camera for which we will pay the present. So three months total benefits.

if you like that. All right. I mean, for we've all .

Operated business before, IT is exact .

wrong way to do terrible.

I I remember in a no .

right way to do IT, but I think the question with this guy is to examine and you know the growth incentive that got him to this point, he took soft bank money. Soft bank, as you guys, as we all know, creates a very strong incentive and capitalized businesses to go after kind of ultra, perhaps unnatural growth. And there is almost always shocks that occur after they do that.

And uh, the circumstances think could have been avoided, maybe built a business more setting, but than evaluation would have been lower and he wouldn't be able to access as much capital. And so you know unfortunately, the loss of jobs is the cost of capital with these ultra high growth incentives that are kind of being structurally built into the fund raising rounds in these later stage deals. Lately, if you guys agree.

but it's just sex and then to math.

okay.

so how would you do this sex?

You're an Operator. Yeah I mean, so i've had to lay people off before, but never in this era of coffee and remote work. So the question and look is miserable.

And I think that IT is the right thing to do for him to take responsibility. If if this restructure was caused by a strategy that was overly prioritize growth, I think he could say something like, look, this is my fault. The companies is fault, you know, not your fault.

So I think he could, I think he could account that I think he could take a responsibility. That being said, I don't think he owed the gravel apology that he was forced to make because look, here's to think, how do you lay hundred people often this error of remote work? I mean, they're all working from home.

There's no office for them to go into where you can sit them down one on one like a human, like useful to do and have a conversation. So they are laying people off by zoom now. And it's unfortunate, but I think it's just this new world that we're in. And I don't know that there is a much Better way to do this. I think the words could be in Better, maybe I could be in more organized, but how do they off?

People are working for me. I have an idea. But you know, the me, you go first. Any thoughts, you and ed.

and not tell you how I would have done IT. I remember when I had to do my first day of at at A A well um was .

on there and and there .

was a lot of those rifts. And I remember the first one. I was in my early to mid twenty as a manager and we had three or four people or whatever, and I remembered distinctly tly, that a well had this policy at the time, because I guess they had maybe like, Better, like tens of thousands of people, employees.

E, lots of calls and rising. Example, theyve had have rifts before. They would have security guards, and there would be a security guard outside the meeting room.

You would bring somebody and and talk to them. And I just remember being seared in my mind, because never having done IT before, I was like sweating previously, really nervous. I didn't know what to say.

I felt really bad. I felt very guilty. And then you've learn how to do these things. And there is a very humane way to try to do these things.

It's never the best thing to do, but you try to give people a fair exit package in all of these things. Let me put that aside because I think what free Brooks said is so good and so important. The root cause of why this is here, as far as I can tell, is not a company that doesn't have consumer demand. It's a company that may have been mismanaged for growth to meet the consumer demand because of too much money. And this is a thing that isn't avoidable mistake.

And this is where you have to figure out how much you wanted basically swim with the tide and be like everybody else, which is to be able to go to the dinner party, say, I raised example of dollars at why valuation and just keep taking IT up and taking IT up or they actually have the discipline to hit the breaks and say, I don't need IT. I don't know what to do with IT. I'm not ready to take IT.

I need to figure out my business model. Those are two different kinds of decisions. There's going to be laufer in both.

But if he actually came at IT from the perspective of listen guys, weapons growing pathetically and there has been a structural change or for example, rates are taking up. There's a lot less demand and we have to write size the company. That's a very different statement. Then maybe we overgrew because we were drunk on free money. And now we have to realize that we actually have too much capacity for the demand that actually exist, and those are avoidable mistakes.

right? I've had to do so. I would say it's it's not fun. Um this was executed terribly to your point, sax, I think of much is your way to do this would have been to go to the leaders in each group and say, hey, listen, are going to have to do these layoffs. It's going to affect different groups.

So you take your group into a subset of zoom, you explain to those people and you do IT. Hey, listen, we are reorganizing because of these reasons to have had some good language they are people did. But this idea of mass firing one hundred .

people with one person .

and that's the critical of IT.

was almost like he wanted to talk about himself in this as opposed to taking responsibility to unpack IT. Um obviously, when something like this happens, then if the flag gates open, forbes got A H twenty twenty email league where he called his own employees dumb dolphins in the email that's been leak since this came out. You are cap locks on too damn slow.

You are a bunch of dumb dolphins and dumped dolphins get caught in nets, eat by sharks. So stop IT. Cap locks on. Stop IT.

Stop IT. Right now, even the pilot on .

the palm for twenty four.

our for twenty four hours, the incarnation of evil in the eyes of the media. And they are going to move on to a new person in a couple of days. So I mean, look.

I think have you ever rote that only do we have .

an email, ys, gp, T, I all caps. You guys .

really quit. connect.

Something said about OK. So you this larger question about what did the company grow too fast in founders asking the right questions about going too fast. Let me connect that with the first conversation we had about the macro economic situation.

I think, you know every start, a board right now probably needs to be having a conversation about the macro o picture because there's one of two possibilities happening right now. We've already seen in the past five weeks, we've seen thirty or forty percent correction in the public marked for gross stocks and says companies that is absolutely trickle down to venture valuation. I think IT already has.

If you look at the cross of our guys like tiger and coto and d one I gave to you, they're all obtained their models, evaluation models based on the public comes. So you know, we are now in a slightly different environment. I don't know that one hundred times A R is is is the metric anymore.

As was said two months ago, I don't know where the new metric is going to land. We were going to see some deals get done post correction. But you know, we could be in a very different environment here. And I think I think these two possibilities, either the rate increases are coming next year now pricing and we going to go back into, you know, a mode of going back up into the right. And especially I think if this bbb built gets killed, we'll go back and up to the right or this could beginning be the begin of attracted slide as you more and more mark partisans realized that we're in a very different kind of environment and we may not have seen the body.

You were running a company sacks, and you had just raised one hundred million dollar crazy around at one hundred times. What do you do? If you is the company, what would you do? I have this .

conversation with one of our set founders. They disposed moster round and a great valuation. And literally a few weeks ago, and they have some interests for more people went to get to the round.

And I just pointed that out. Listen you, we may be going into a very different environment, and I think the company is worth the valuation we got. But you know, if you just look at the public comes valuations are down thirty, forty percent. So if we were to take more money into the round at the same valuation, that kind of a good deal for the company and that gives us .

more runway because .

we are so those the types of conversations, I think is print to be having right now. And Frankly, there's a lot of investors and certain ly a lot of founders who never lived through the dom crash and downmarket keys, and they don't know how bad I can get theyve .

only seen good times, right? When eighty months of nuclear winter. No, no chest mean.

yes.

I ve got, what if you have in the cupboard is what you're .

reading for the next two thousand? Three, you had three years of nuclear. When are pretty much but you know in two thousand and eight two thousand nine is about eighty .

months of nuclear winter I mean if I am anna.

hear a great uh two thousand and eight two thousand nine fund raising story. Sure i'm at facebook market just employs and we need we decide that we need to raise some insurance, just a little you know little insurance policy, little money, little downside side protection. And um I remember that we have are having all these conversations with A T C V.

And you know there are really good firm, very smart. And basically you we told them what the Price was. I think he was like seven billion dollars per right.

Like seven billion dollars. We, anna, raise five hundred million. Just please, just do IT when we just want little, little part in a safety. And they came back with their model and they updated their model, David, your point and um uh they came back at like six point eight or six point seven and something like that six point five and we were like, my god, what the fox is like, this is not seven.

We just like we just want to raise some money at seven and seven was a downwind because we had already taken money for microsoft fifteen. So we had thought we had hit the jack part when a year ago, a year earlier, we raised two hundred and forty nine million dollars from microsoft. Now, by the way, why two forty nine? Because at two hundred and fifty million, bomber would have to go to the board.

So he goes one, one million under the number where bomber can sign the check himself. So we get bomber in for two, forty nine and fifteen billion. A year later.

The great financial crisis happens. We are raising money. We tell T, C, V, please just give us five million at seven or eight.

Some number. They come in seven hundred million. And because their models as whatever.

And I will never forget, this was a saturday afternoon I was on the phone and I think he was was like tedi at our general outof the time and we got a term sheet from a certain person. You're military. D.

S. T. And you're man. He he throws the high heater at like eight and half or nine, no board seat, all common. I mean, a completely disruptive move, move and move.

And all I just remember asking tedi IT was, does he that meaning like will the wire clear? Will justice let the money come in to that? Not knowing, right? Because we had heard you know anyways, the money cleared, we took the check and the rest of history, I have a good story.

When you are when you are facing an enormous downturn, you have a fiduciary responsibility, David, to your point, to make sure you will capitalize. But then on the other side, you have a really important for ducey responsibility to you and all the employees and everybody else to run this thing problem. And you cannot get confused that value and valuation are not the same thing. And so the minute you can flag the two and you're like, i'm an x billion dollar company in start behaving that way, you're dead.

By the way, there's a big difference. I think it's important to know. I know it's been said many times before, but I i'll say you again, there's a difference between what your responsibility is as a board and as a fiduciary to the shareholders of that individual company and what the incentives and motivations are for the big investor that just put all this money into your company for their portfolio as a whole, for their own portfolio as a whole.

They would rather tell everyone, go hard, go fast, spend as much money as you can. And they hope that one out of ten companies becomes a hundred x from there. And it's OK if nine out of ten die.

So they don't care if you die. They care if one out of ten companies goes one hundred x you you have a different incentive and a different motivation. Because if the company dies, your shareholders, you as an entrepreneur r your team, lose out.

And that tension needs to be understood really clearly by entrepreneurs and executives that are taking money under these conditions. Tiger global soft bank, go to the great people. There's good people investing there, but the incentive for them is quite different than IT for you.

They're betting on a big winner. Yes.

I do do not expect that just because they're betting on a big winner that they're expecting you will be the big winner.

It's very different. As long as they have one go one hundred x it's fine. I matter what happens when I met uri milner came to a certain poker game.

Not the point, but just to say hi. And I said, I said, you put all that money into facebook. This was like a week or or two after happening, said, why didn't you take A A board seat? This never happened. And he looked at me because Jason kanas, you don't need to have a board seat to be influential.

you.

guys. You do not need board seat to be influences. I like.

what do they use complement?

What are I.

anna know? I um corpora man, he's good guys and something i'll tell the story of the three legia. How you know, are I listen for? I, uh, I don't know. We have .

anything to clean up here.

I J J is IT Jessie.

Listen, famous front actors as dave shipper, causes of the famous front actor, juicy bully.

Listen, I don't even want to go there, but I, there is a person who pretend this. I mean, I think it's actually worth talking about us. We do go to we do to talk about race.

Sometimes there's an actor who faked that he was attacked in a bias attack. He was found guilty. Y of doing this. It's strange.

It's sad issues. I'm a gossip stories you get, so let's .

ve else we got on the duck. I don't to free. I don't. I miss .

freeburg paro. I A hug freeburg .

bony body.

Why you to the .

party? I did the thing with the thing of the thing. I.

Think right.

that's all good.

So I know i'm the beals and you know what I try not starting to john learn is going to hang out, going to show up to you after going guys.

you do want half parties from where I live from.

I know good. I play. I do.

Community comes to your house every week.

and I love you for that.

and I love you for that. Are you .

to go sex? What's the chance of sexual P, R, P? Are you going to go to A V, P? He didn't .

even do one of his freebody .

holy party.

yes. Well.

the conflict, you need to drink some all .

they part of more night.

So you're going down for his party. Can I go? I'll skip free birds for that.

Yeah.

I all second, you're picking over freedoms. G, I mean.

I ve gone to all the party for, like the last five years or whatever, IT is a number, maybe more years. And that is always when you see them.

if you look at in the eyes and say, what if you done for me lately?

The two of them, the two of them haven't .

look each other in the area.

have one in the, was the first .

meet .

accidentally n ji.

I think quite.

We want to .

talk about new bank .

I P with you. Plus feed IPO was a complete disaster. Eighty percent of people already in their space buz feed is circling the drain was a disaster the end. Thank you .

for tuning .

in to the .

all .

in part that we have .

on the docket .

today. I was traveling. We like people in town. I .

run K, I go to, I ling my god.

Oh my god. IT, we lost our minds. Oh, no.

And there is.

there is some big house story. There was some enormous carnage of, uh, wires were initiated today. So everything is settled.

I you carnage? No, I did a little bit of this. I did a little chewing of the car cassis like one of those.

Was there a well? And you're just like a great White chart, just taking bites after the .

whales dead of the labor we could have three A M and IT was IT was nice.

That is crazy, right? It's over justice now that a free brake on. Yes, I mean, is very weird. I mean, I think on a race issue, this is like the worst possible thing to happen because we do have instances of asian hate of, you know, people being being up before the color their skin for their sexual preference, whatever IT is. And then this person is so mentally during anged that they set up a bias race attack, apparently. Am I correct that he did this in order to get sympathy so that his acting career would do Better? Or do we .

know he was negotiating his contract .

and he from the show, he was on the show empire and is worry about getting cut from cut from the show. But look to .

me to explain me. I can confidently show. So the logic jump is.

if I had a race attacks.

they can fire me. The sympathy and sympathy I yes, I just want .

to make sure i'm understanding i'm not crazy. Made him self into the lab two thousand when everyone was worried about you trump. So he claimed that he was beaten by two maga, you know, haters who tied a new around us that can pour bleach on him. And not sure what the bleach was about. I think maybe that was something .

he said was two White dudes. Okay, and then and then at one point, he in the in the age of view, when they hit the the integers or of the investigator pressing, are you sure they were why he said, well, you know, I don't want to be racist in life and then I turned out the two tudes or black like, I mean.

like from the, yeah, he hired them. He hired them when they paid them by checks. So this is not like a master criminal is no.

Lex user.

no, no. But look, I think this story, what is really about is not just a story about one social path. Doing this crazy thing is really more a media story.

This is about how the media cover IT. They loved IT. And I think this all all to wall coverage. And I think this reflects all the worst qualities of the media. Number one, rush to judgment.

They immediately bought into the story, and they were attacking the trump administration for creating the hate and the making people. So there was a feeding friendly number two, there was no. And this goes with the russia judgment.

They didn't do any fact checking whatsoever, right? Because the story was too good, if fit all their priya, just like the roling stone iver mecon hooks about, you know, the magical people, you know, in oklahoma's itals, whatever. That story was too good.

And rolling stock, Rachel meta bought the client sinker because they into the fact checking at the number three, no corrections. None of these sources ever apologized. Did the ma copa issued a correction? There's just an iry silence coming out of all the sources who pumped the story like Grace.

you have to work a neck, please put in the showing te the there's got to be a youtube clip of the chapelle joke around juicy smaland. The basic joke is like every coloured person stayed silent, all the blacks, all the brands. And the joke, the punchline of the joke, is because we were all like. You know, like why arent you defending juice bully? And the whole point is he looks kind guilty to.

well, I mean.

how incredibly .

funny if you let us play fifteen seconds of this a deeper linked to his first interview. I think this is his first full interview. Just play ten seconds of that because.

yeah.

I noticed the rope around my neck and I started screaming and I said, this rope around .

and you get any kind of description of the attack.

I gave a body description and, you know, because I saw this, but and you know right here or whatever, but I didn't see, I can't tell you what color their eyes were told you, and I did not see anything except the second person I saw running away and the first person, yeah, I saw, saw his fetcher. I gave the description as best as I could. You have to understand also that it's chicago. In winter.

people can wear ski Marks. And nobody's going to question that.

I mean, the poker tels are flying off of him .

is like thinking, this is making a bad. No, David is a producer. Are you iring .

him now or not?

Oh, my god, started too soon.

But the crazy thing here is that a lot of people, all the liberal leads, basically fell for the hook, line, sinker, all jump the gun on this and denouncing what they bought into the story. They were denouncing the racist attack and blaming trump and the ministration.

the new policy. I wait until the court case is over to comment on these crazy things. I don't want to comment on a twitter. I don't want to like IT or retweet, give IT justice system if this stuff is hit, the justice system just let the process happen because, right, the velocity of social media is such that if we talk about algorithms all the time that are something like this happens, it's going to become the number once or in a billion people are going to see IT. And then this fall out, and the fall out here is IT just vides o just .

everybody shut up and wait. The thing happened on the wash room, just White. You premises attacker based like a school shooter IT turned up, be totally false.

But you know, the court systems have been doing in an amazing job. When you think about the cases, I think the courts have been on quite a run in. I think contrary direction to the media keeps getting IT wrong, right? So you think about IT.

So dirk jovan, convicted justice, smaller, convicted the the three killers of a motor arbery convicted of, but current house, not guilty. Kenneth Walker, not guilty. This was beyond tailors boyfriend who killed a cop when they killed her.

Remember I was in the apartment. He basically puts his case. He floods self defense because he either know who was shooting at them.

He, he got off. He got off, just like our unit. So, you know, people, I think, are jumping .

the gun. And that mostly finds a way to get to the right place, obviously, their moments where we completely get IT wrong. But David, to your point, those are some really powerful examples in modern history with a lot of scrutiny.

Where are our peers? American jurors found the way to get to the right answer. Yeah, feels great. Provo to america, problem to those folks. But by the way, the beyond Taylor example is a really wonderful example in the moderate thing was really important to me. Well, thank you for bring you up.

Well, because because I think when the write house verdi came down, a lot of people were saying, well, look, if if color written house had been black, he wouldn't gotten this self defensive just as well. Kind of worker. Actually, that case was a self defense case. And he killed that called .

a single article in the mainstream media to basically, actually defend kind of worker.

yeah. And he actually shot a cop, right? And but and he still got off, because when they bust m to that apartment, the jury thought I was reasonable, very, very itself offence.

tragic. The office died. Sorry for the family, but I really hope that Kenneth Walker has A A really amazing.

productive life from here. I mean, a situation lesson of, like, are these no knock warrants even warranted? Like what are we doing like, if necessary.

if inter lives a productive life and does good in the world from here, he does a smaller out to kind of makeup for that injustice of beyond a Taylor and probably, you know, kind of creates a positive comer for the family of the officer that passed away. And that's the best that you can do.

We just be great if IT as americans, we could start looking at these issues and saying, like, justice is worth pursuing, the truth is worth pursuing, and we're all in this together, the united states we talk about.

we got that right in places that the elite coast kind .

of point you .

and look down on. We got IT right in places like georgia and deep parts of georgia, you know. And and and I think that that's something for us to also think about IT.

IT is the a vial and strain of the liberal that really do judge the rest of the country for being in a way that is actually not true. They they got a right in canobia, georgia. Can tokyo annoy just to be, just to put her on the record.

we will see you all next time on the for the dictator rainman and the queen of can walk, see all next time .

by bye your.

Winter, man.

We open sources to the fans and .

they just got crazy with.

Like sexual attention to rely .

be A B.

我 一定 只 给你。