The AI Cold War, Signalgate, CoreWeave IPO, Tariff Endgames, El Salvador Deportations

When I wasn't able to use the R word, I would use deficiente for two people. Jason.
And Falham. And Friedberg's dog, Marshall Friedberg.
Oh, come on. I can't stand Marshall Friedberg.
Come on. That little bastardino jumps on the table, eats the nuts.
The worst. The worst.
I ate Marshall Friedberg. I ate him.
I can't stand this bastardino. Look at this little guy.
Look at how he sits. He sits like a moron.
He's so cute. He sits like a depucente.
Look at this dweeb and this depucente. Now, Nick, show them my dogs.
Beautiful. Beautiful dogs.
Valentina Zanini. She's the breeder of breeders.
Look at these two. Beautifully elegant.
Those are my dogs. Look how well behaved they are.
You don't see them

jumping on the table

to eat the main course,

Friedberg?

No, no.

Marshall almost ruined

our Christmas dinner.

This is why I'm holding

a real grudge

against Marshall Friedberg.

He ate some moth nuts.

No, and Allison,

cocking Allison off guard,

she's like,

Marshall Friedberg,

get off the table.

I just love that

he's got a full name.

Marshall Eugene Friedberg.

Let your winners ride. Rain Man David Sack.
We open source it to the fans and they've just gone crazy with it. Queen of Kinoa.
I'm going all in. Alright, everybody.
Welcome back to the number one state sponsor. I'm sorry.
All in podcast in the world. The number one podcast.
Oh, sorry. Straight bullets.
Here we go. Back on the program.
Our guy, Gavin Baker is here. You know him from Atreides Management.
Does private and public. Four billion under management.
And lots to talk about with you. GB1.
Good to have you here. GB1 is here.
Solo, dolo. CoreWeave IPO happening soon.
by the time you get this and nvidia you were there at nvidia you are the one analyst gavin that jensen pulled up you're loved by jensen what's it like to be loved by jensen tell us everything well so first Alfred was from Squia.

And then they had a nice sell side guy whose name is escaping me at the moment. But it is technically true.
I was the only public equity investor on the buy side that Jensen asked. I've known Jensen for 25 years.
He's kind of the same guy he ever was, like just maybe slightly cal gavin can i ask you like all this stuff where they talk about the balance sheet questions that some folks have about nvidia some of the accounts receivable issues and stuff is there any legitimacy to those issues the round tripping like what's the what's the real story of someone that that peers into that pnl and understands it yeah so well i guess maybe to take them in reverse order i really don't think like if nvidia had not put any money into core weave not put any money into kind of other of these neoclouds i don't think it would have impacted their revenues at all. At all.
They would have sold more to Meta and more to Tesla. Yeah, more to Meta, more to Amazon, more to Microsoft.
So the reason they did it is even three years ago, it was a very stable three-player oligopoly from the cloud computing players in Amazon, Google, and Microsoft. And if you're NVIDIA, that's not great to have just three big customers.
Those big clouds, particularly in 2023 when there was such a rush to get GPUs, they each kind of want to do their own kind of custom version of an NVIDIA server.vidia by giving kind of like a standard reference design which someone like core weave bought to core weave you got gpus in the market a lot faster and when you use nvidia's reference design it's generally smoother and easier to stand them up and so the big three kind of cloud computing you know hyp, hyperscalers, their incremental share of revenue went down. And that was nothing but good for NVIDIA because they now have kind of a more fragmented base of buyers who have less power over them.
But what does it mean, Gavin, when like the accounts receivable jumps from a billion five or so to like five and a half billion year over year. Is that concerning or that's just business? So look, it's never good.
But if you think NVIDIA has gone through the biggest product transition in history, in terms of Hopper, you know, this is a business doing 10s of billions of dollars at scale. There's never been a product transition like this in the history of semiconductors going from Hopper to Blackwell, you know, kind of the 2022 generation GPU to this one.
The only precedent for this on planet Earth is the iPhone. And there's something called the Osborne effect, which is, you know, when Apple comes out with a new iPhone for the three months before, nobody buys the new iPhone.

And I think the only reason NVIDIA was able to grow through this product transition is because of reasoning models like DeepSeek, which are just so compute hungry. And this product transition does come back to the day's receivables.
The QM receivables now is like $23 billion. Yeah, it's never good when accounts receivables go up.
But if this is the most understandable time for it to happen. In a product refresh cycle, you're saying? Yeah, and because a hopper server, you know, it's a rack.
It's whatever it is, seven feet high, it weighs 1,000 pounds. It consumes 60 kilowatts, which is 60 American homes, and it's air cooled.
So you cool those GPUs, and the the biggest problem with gpus one of the biggest is they melt you cool it with air blackwell weighs 3 000 pounds so three times as much the rack you know it's eight feet tall maybe five feet deep or four feet deep 3 000 pounds and it consumes 120 kilowatts so twice as much power and roughly kind of the same footprint, three times as much weight and it's liquid cooled. So this is like an iPhone upgrade cycle.
You know, it was like, it's still a pain that we went from, you know, lightning to USB-C. You know, I'll grab a cord and it'll be lightning instead of USB-C.
This is like an iPhone upgrade cycle where to get the new iPhone, not only do you have to change your connectors you have to put in a new generator you have to put in a new boiler and a whole house humidification system you know to kind of make it work so it's a monumental product transition and i think that is a lot of why the receivables went up. You know, they're recognizing Blackwell revenue, you know, while it was still kind of getting into customers' hands.
If that trend continues past the July quarter, then I would say, hey, that's reason for concern. But this is a very understandable time for that to happen, from my perspective.
So basically, the summary is AR accounts receivable builds as you go through this very complicated product transition. But then at some point, it peaks.
And then you start to work through all of it. And it moves off balance sheet, basically gets recognized and you move forward.
And so then that AR should shrink. And just to clarify that that's accounts receivable.
That's the money owed to you by customers for the audience who might have a question what they are. Exactly.
And the reason they're not collecting it is because they haven't delivered it. I mean, the accounting gets very complicated with these systems.
But yes, I mean, they have delivered it. And they recognize the revenue.
But maybe the customer is saying, hey, we're not going to pay you until x. You know, until we get them plugged in and working.
I mean, who knows what it is. Got it.
Because it's a new thing. Yeah, but it makes total sense to have accounts receivable.
It's just that here, the accounts receivable have gone up more than sales. And that's just a function of the complexity of this product transition.
The other part of what I would say is the first part of what you're saying is very similar to what Intel did to scale their chip dominance in the 80s and 90s with this Intel inside program. They didn't really need to do it probably in hindsight, but it helped them support an ecosystem and it helped diversify their buyer base so that fewer people had power over them and so a lot of this quote-unquote round tripping from your perspective is diversifying the ownership pool of nvidia is what you're saying absolutely and sending nvidia gpus to people who are adopting nvidia's reference architecture which they believe is the best architecture for those GPUs.
Whereas each hyperscaler has their own slight tweaks to that server, that hyperscaler does it so it looks more like their other servers, but maybe doesn't run quite as well as the standard NVIDIA reference architecture with all of their chips, not just the NVIDIA GPUs. But the Intel Insight analogy is interesting.
I had not thought of that. Thank you, Jamal.
Well, he is definitely doing keynotes like Intel did and trying to brand the actual names of the units, which is, yeah, it was interesting. Pentium inside, people would go and buy a computer and say, does it have a Pentium? And which Pentium does it have? And now Apple's doing that same thing with the M4, you know, series, and people are actually asking questions like, you know, so there is something to it, that maybe some portion of the consumer base wants to know what's inside, right? And doesn't cost much to brand.
Since we're here, let's talk a little bit about the core weave IPO core weave is going to go public on Friday, we tape on Thursday. So when you listen to this episode, you will have the actual data on what happened with their IPO.
They're going to raise 1.5 billion. They're a Neo cloud.
Neo cloud means not just cloud computing, but a new cloud, thus Neo. And this company has really been growing quickly.
It was reported they wanted to raise 2 billion. And I guess guess they stepped it down to $1.5 billion at a $23 billion valuation.
They had $2 billion in revenue last year, so they're up 8x, and they've got a lot of debt. That's the other issue with CoreWeave that people note, almost $8 billion in debt.
And one customer, Microsoft, accounts for over 60% of their revenue, always a bit of a red flag there. As Chamath mentioned, NVIDIA accounts for 15% of their revenue, and they own 6%.
6% seems small enough to not make a difference. So Gavin, I guess, what do you make of this company, CoreWeave, and their timing, what it says about the markets? Because, hey, this is the biggest IPO we've had in a bit.
I think maybe the last ones that were notable were Reddit last year, and a couple of other companies got out. Obviously, Stripe hasn't gotten out.
So is this a major milestone? Or are they going out because they have to go out because of all this debt? And then this is all against maybe a backdrop of did we overbuild? And are these language models going to require as much hardware as we thought last year? So we're definitely not overbuilt yet. Like since DeepSeek came out, like what has happened since DeepSeek R1 came out is China is buying every GPU they can.
One of the largest Chinese server manufacturers warned last night that there's about to be a shortage of GPUs in China. The price of memory DRAM goes up every day.
So we're not overbuilt today, point number one. And OpenAI yesterday said that they are gating their new image generation service because they don't have enough GPUs.
So we're not overbuilt yet. Blackwell is going to be a very successful product cycle.
There is a little bit of a prisoner's dilemma where you're going to spend on Blackwell almost no matter what, because if you don't, you're afraid that you cede a big advantage to a competitor. You know, if you're meta and you don't spend and Google spins and their AI is a lot better than yours, you're worried you may not catch up.
I would say that that's already the case. Yeah, that's already the case.
But here, this is a brand new architecture, which is a lot. I mean, not only is it really different as we went through, it is a lot better.
But I would say all these GPUs, they're hard to get them working at the beginning. Like right now, hoppers are finely tuned.
Everybody knows how to work with them. Blackwell, it's almost like you're skipping ahead.
It's like, imagine each one of these GPUs is a Formula One car. Now you've skipped ahead 10 years in the future, and you have to learn how to drive that new Formula One car.
And it takes a while until you drive it as well as the old one. So any other thoughts, Gavin, on the CoreWeave IPO, which will have happened by the time people listen to this episode? Yeah, I would say, you know, the sentiment on X, investors on X are pretty negative on CoreWeave.
I think there's maybe a little bit of, you know, negativity in the market, they had to, you know, reduce the range, lower the price. And everyone is very convinced this is a commodity business, loads of debt, loads of CapEx, you know, one really concentrated customer, and that they're completely undifferentiated.

And I guess I would just make a point, which is, in America, if you can pick any category, any retail category, and if you can run a thousand stores in 50 different states with different preferences and have those stores well-lit, clean, stocked by friendly employees with the right stuff in stock, you will create a business that is worth well over $10 billion. And that sounds easy, but very few companies have been able to do it.
I think what may be underappreciated about CoreWeave is it's actually really hard to run these big training clusters. Everybody thinks it's easy, but to synchronize tens of thousands of GPUs where they're melting or cables are being unplugged and you lose a bunch of training data when it happens, I just think it's not, it may not be the commodity that everyone thinks it is.

And it may turn out that it's much harder to do than people think. Would there be an analogy for that? When they're like people thought AWS would never work at the beginning, they were like, who's going to trust Amazon with their compute? And it was difficult.
And, you know, developers didn't understand exactly how to abstract their services into the cloud.

Yeah, the world was convinced AWS, well, a lot of the world was convinced AWS was a terrible business for the first few years. When Microsoft announced they're going to transition to the cloud, it was very controversial because you go from a CapEx light model to a CapEx heavy model.

So, you know, Wall Street consensus has been wrong before.

And I do think CoreWeave runs these big GPU clusters as well as anyone. And there aren't that many people on planet Earth who can run them well.
And, you know, it's kind of easy, you can just look at the NPV of their contracts and the asset value. And so everyone who's kind of confidently putting out negatives here, like, I just think there are some offsetting positives that it's good for, you know, I think people to be aware of and consider.
That's all. I think it's a good company.
I would, I would second. I mean, I think it's a, and it's a great business and I think they deserve to be successful.
Totally true. And it's great to see a competitor to the existing three or four clouds that are out there.
And it's great to see a company go public. I mean, M&A with Wiz and now CoreWeave going public.
Rathalina Khan is over. We got to give the administration a lot of credit for maybe removing the roadblocks to M&A and IPOs, or at least people perceive that.
So I don't know if perception becomes reality here, but it does seem like M&A is a bit on fire, yeah, Gavin? And people are talking. Above and beyond ways.
I mean, CoreWeave bought Weights and Biases, which I think is a really interesting acquisition for them that kind of further differentiates them and maybe decommodifies them a little bit. But there've been quite a few acquisitions by big companies of smaller companies in the last month.
And I think because none of the companies that have been bought have been public. Maybe it's flying a little under the radar, but it's happening in an, and I think, you know, an accelerating way.
And I think this would be, you know, very good for the market and animal spirits and everything that we care about. Do you think that there's any issues? There was a bunch of companies

added to the export control list two days ago. Some were in quantum computing.
Generally, a lot of it, though, was in the NVIDIA ecosystem. So I think that the US government is really trying to make sure that these next-gen GPUs don't go directly to China, but also don't go to countries that could then redirect them into China.
Did you get a chance to look at that, or did your team look at that. Oh, yeah.

And I think this will be part of

the upcoming negotiation. countries that could then redirect them into China.
Did you get a chance to look at that? Or did your team look at that? Oh, yeah. And I think this will be part of, you know,

the upcoming negotiation between America and China. But it is hard.
You know, it's if we can't,

you know, if America cannot keep illegal drugs out of, you know, out of our own country,

these GPUs are arguably dramatically more valuable per unit, you know, like a Blackwell is like,

Thank you. you know, out of our own country.
These GPUs are arguably dramatically more valuable per unit, you know, like a Blackwell is like, you know, the size of this. And it's just hard, particularly like, you know, America, we're trying to keep drugs out.
Here, China is trying to bring the GPUs in. And it's kind of significantly, you i think harder to prevent than than you know smuggling of illegal drugs now everybody does their best but um yeah the united states i think it's always going to be kind of a game of cat and mouse until you get some sort of grand bargain and right now they they're allowed to sell certain kinds of gpus into china and i I'm sure they'll be.
Should we be doing that, Gavin?

Is this going to be an effective strategy?

You know, if you were advising the president, would you say, just let NVIDIA sell them? It's a fool's errand to try to stop them because they're all going to Singapore or wherever, Vietnam, and routing their way around. I think we're putting enough friction into the system that it does theoretically give America an advantage at the cost of creating tremendous incentives for China to develop their own semiconductor ecosystem.
And pressure to kind of, you know, necessity is the mother of innovation. And these export controls are creating an immense incentive for China to be really algorithmically innovative.
And you saw that with DeepSeek, where there were some real algorithmic innovations. Yeah.
So, said another way, if we squeeze too tightly on letting them buy the NVIDIA chips, they might make a better NVIDIA. I mean, I think that would...
Become resilient.

I think they're doing it now.

They're trying now.

Well, they're trying, but I guess,

what are the chances they succeed in your mind, Gavin,

in creating something competitive with or better?

And then what would that say about the AI race?

In the next five years, I think zero.

I think it's really, really hard.

But over the 10 years, who knows?

And if you're the CCP, 10 years isn't that that long if you're america 10 years as an eternity yeah they're thinking in centuries and we're thinking in decades yeah that's probably correct hey um let's pivot over to ai agents since we're in the ai and obviously there's other big topics this week we'll get to you know in politics and signal and all that kind of good stuff. But we have a company that

seen Obviously, there's other big topics this week we'll get to, you know, in politics and signal and all that kind of good stuff. But we have a company that seems to be, you know, having a moment.
It's called Manus, M-A-N-U-S. It's currently in private beta, but they're creating agents.
And we've been talking about this agentic revolution, basically little, you know, jobs going out. We used to call them cron jobs back in the day, but going out and doing things for you.
And it seems to be working, and it's pretty impressive. What do you think about this company specifically, if anything, and are we getting to a point where we're going to have the same chat GPT 2.5 moment, but with agents? And then if we that gavin what will that look like in terms of employment how companies are run look i do think if agents materialize as a reality and you know manis is maybe a little bit of a chat gpt moment for that i would say open ai and anthropic anthropic developed something called the model context protocol that OpenAI just adopted.
I think it will become a standard. And it makes it really easy for an LLM like Stripe can just integrate with MCP.
And then any LLM that uses MCP can interact with Stripe. And this is solving a big, big problem for agents in terms of just making them much easier to use, much more standardized.
But if agents become a reality, one, the ROI on AI and Blackwell is going to be very high. Two, it's not good for human employment, but what what will be kind of, I would say, the rate limiting factor is just compute.
In a world where we all have agents doing things for us all day long, it's going to be a long time before we have enough compute in the ground for that to be a really, really widespread reality. And I think that's why OpenAI was talking about pricing their first agents at $2,000 to $20,000 a month.
Like this ROI on AI question, I think to me really does come down to agents in the short term. Freeberg, your thoughts on these agents and the impact they could have on running businesses, employment, and just generally efficiency.
We're now starting to have some standards. MCP stands for model context protocol.

Your thoughts, Freeberg, on how this might impact, you know, architecting a business,

which you're doing right now with Ohalo. How might this change how people work on a day-to-day

basis? Let's maybe give some examples for the audience.

Look, I'll take a slightly different view than Gavin. I've said this in the past, but maybe I'll try and contextualize it a little bit.
I think that the big unlock with these kind of agentic systems is not necessarily about replacing the easy human tasks, which everyone kind of thinks are kind of the obvious application of them. I think what we're missing is the ability to unlock really complex tasks that are not really manageable today.
I can't come up with a very grand project planning exercise with the team I have today. I have to go hire 30 people.
Let me give you an example. I want to go build a plant breeding facility under the ocean.
Okay, so how do I do that? So to do that today, I'm like, well, I got to go hire people that understand oceans, I understand engineering that understand how to do underwater engineering, I have to hire material scientists,

I have to hire physicists, I have to hire construction project planners, there's a whole

group of complicated people I would need to kind of put together to be able to kind of execute on

that opportunity. But now a smaller group, maybe three or four people or two people can say, okay,

let's use these agents to help us build that project plan, and spec out every step of the

process to find how much everything will cost, what workloads are needed, who's going to do what. So suddenly, that difficult project becomes a reality.
Here's another good example, the California high speed rail program, that's ballooned to this $100 billion. What if we had agents organizing and running that program? Well, maybe the cost of that program, the reality of that program makes it a reality now.
So it suddenly becomes a program that we launch, we get it done, we build this railroad, whereas all the people, all the complication, all the confusion, and whatever grift has been going on has led to $100 billion balloon budget with no outcome. So I think complex projects can actually be tackled in an easier way.
That actually unlocks a tremendous amount of building, a tremendous amount of opportunity for new employment, for people to come in and small teams of three or four to get hired that can now do the work of three or 400 really deeply sophisticated, highly technical people with a very small, less technical group. So I think there's going to be a tremendous amount of opportunity in biotech, in engineering, in manufacturing, in urban design, in transportation, and on and on and on where small groups are going to get spun up that can use these systems to do really complex projects.
It's less about like, oh, you're going to replace call centers. Like, sure, maybe.
But like, what are we going to be able to do with these things that I can't even think about doing today?

Chamath, let's level this up and just talk about the bigger picture, which is

our giant rival in China. They're actually catching up in some cases, exceeding us.

If they get to AI first, and then are able to execute on this, given their top down controls,

given the size of their population, given their advantages in manufacturing that we're seeing now, with Xiaomi making cars, you know, what BYD is doing in self driving and cars, what we're seeing now with chips versus Nvidia, it's kind of getting set up that almost everything we're building here in the US, China's copying at a very fast pace and then exceeding. So what's at stake here, big picture? And then I guess we'll then look at what should our philosophy be in a geopolitical way.
Let's just do an economics lesson. Why does anybody invest? They invest because you, let's just take a dollar.
You want to generate a rate of return that's better than all your alternatives. And the riskier it gets, the more of a return you want, right? That's the basic idea.
So if you invest a dollar in bonds, you can get five or 6%. If you invest a dollar in an early stage startup, you want to get 50 or 60% returns.
Okay, that's obvious. But the return that you generate is in part driven by how profitable is this company, obviously.
And if you have a 300 person group of people that has to do something, it's a lot harder for them to generate profit and then to generate a rate of return than it is if you have two or three people. So the Chinese strategic imperative is no different than small startups versus an incumbent, which is to be as hyper disruptive economically as you can.
So I think the big risk is not necessarily Chinese, but many of these alternatives will come from China, which is to say that where are the incumbents? Most of the incumbents are American companies. If you look at SaaS software, that's a perfect example of where there's trillions of dollars, the software industrial complex, as I call it, that's like a $3.5, $4 trillion industry.
It grows by 10% a year. So every year it's adding 300 billion of quote unquote enterprise value.
Is that value that is being created? I think a lot of the customers would say no. So if you're a startup or if you're China, what is the most disruptive thing you could do? Well, you could

take a three-person team to disrupt a 30,000-person team and blow a hole right in the side of that

trillion-dollar economy. That's the big risk.
So whether the risk comes from here or whether it

comes from the Chinese, I think what you're seeing is that if these agents can scale,

the opex, the actual load of making something will go down by an order of magnitude. And that is

Thank you. if these agents can scale, the opex, the actual load of making something will go down by an order of magnitude.
And that is, and maybe even two orders of magnitude, that is incredibly disruptive because the existing incumbents cannot compete with that cost scale. And Gavin, to just bring this around the horn here, China is playing a different game.
And obviously, there's other competitors on a global basis, but they are subsidizing, for example, their cars, and their entire car industry. So the margin of cars here in the United States and Germany and Japan, that's their opportunity, they don't actually need to make a profit on it, they could just break even there are cars now 10 2030 $40,000 cars now being made there.
so this then leads us to oh my goodness will americans buy these we're pretty great customer will trump block them with tariffs so let's make the jump what would the tariff policy be if as chamath points out here we've got this big broad side of our battleship that they can put a giant hole through, which is our software industry, our car industry, pick an industry that they might be able to just blow a hole in because they don't need to make a profit. They just need to have jobs and break even.
What should our tariff policy be? Or what is it? I mean, we know what it is for autos. It's 25% Do we know what it is? I mean's in flux so maybe we start there what should the policy be what do you perceive the policy is because it does seem to be a moving target we'll see what happens on april 2nd because trump keeps tweaking let's say testing in public yeah i mean this is so traditional economics would say, tariffs are not a good idea.
We should have free trade. You know, everybody understands the principle of comparative advantage.
I do think the Trump administration is pretty convicted that that approach has not worked well for America over the last 20 years. And maybe it's worked well for knowledge workers, but it hasn't worked well for kind of ordinary Americans.
And I think they're very convicted in changing that and trying to bring back kind of good, high quality manufacturing jobs to America. I think they see tariffs as an effective way to do that.
Are they right? Is it going to be because a lot of what we're seeing in factories is automation. So while they may have been right about tariffs bringing back high paying middle class jobs for the past 20 years, we cannot go in a time machine and change that policy.
And isn't where the puck's going that we're going to have optimist robots, figure robots, pick a robot company doing all this work? Here's what tariffs do. Tariffs are a level-setting mechanism that fixes a historical imbalance.

Look, the reality is that we have had meaningfully lower tariffs for products coming in than those reciprocal tariffs exist for our products going into these other countries. That's true.
and the one thing i'll say about Donald Trump is you may not agree with the tariffs, but he's been incredibly consistent. I was on YouTube yesterday, and I stumbled into an interview he did, Nick, maybe you can find this, with Larry King in 1987.
And he ran a full-page ad in the New York Times talking about this exact issue, and then went on Larry King, and he walked through the entire trade imbalance 40 years ago. Yeah, he's been on this.
So this is not a fly by night thing. So what do they want? What they want is to create the economic incentives to reshore as much industry as possible into the United States.
The Delicate Balancing Act, though, is that after 20 years of globalism and a perverted version of free trade, because it's not what it is today, it's been perverted, it is incredibly difficult to do that without these whack-a-mole problems emerging in other areas, right? Whether it's inflation or whether it's retaliatory tariffs or consumption taxes, all of these complexities, I think, are what has to get figured out. But the structural reason of why tariffs make sense is not necessarily to overly penalize one country over another, but it's simply to say, if you charge 5%, we charge 5%.
If you charge 10%, we charge 10%. Nick has a clip.
He's just just listen to this from 40 years ago. We don't have free trade right now.
Because if you want to go to Japan, or if you want to go to Saudi Arabia, various other countries, it's virtually impossible for an American to do business in those countries virtually impossible. So the fact is that you don't have free trade, we think of it as free trade, but you right now don't have free trade.
So Gavin, let's get back to this original question with Shemot's important context. Trump has been on this for a while, but is this where the puck's going? We have the lowest unemployment of our lifetime.
Wages are obviously not where we want them to be. So is the right solution to put in a bunch of tariffs, create trade wars, and then hope that people are going to build factories that employ humans when in fact, it probably will be robots.
So is there another solution like maybe raising the minimum wage? I don't know. What are your thoughts? Well, one, I think it's Jamath and that clip illustrated.
He is convicted in this. It's 40 years old.
It's happening. Yeah, it's happening.
And so I would say two things. Like one, in this it's 40 years old it's happening yeah it's happening and so i would say two things like one i think it's all something i'm always conscious of at um my wife becky one of her college or high school reunions there's a guy there who'd been in our class and had been in the navy seals and he deployed to 80 countries he'd beens for like a decade.
And I said, what's the one thing that you learned? And he said, the one thing I learned is everybody in America is always focused on making America better. Have you been to 80 different places all around the world? Our only goal should be to not screw it up in America.
Just don't make it worse because America is is so much better than everywhere else. So the first thing is, like, you know, Chamath said the word delicate, and I think that's right.
And if I had one thought for the administration, it would be every time they say the word tariff, whatever they think, Wall Street and the markets, and I would say, you know, I think a lot of business leaders are convinced that tariffs are bad. Now, maybe Wall Street is wrong and the administration is right.
One thing everyone agrees on is deregulation is good. So every time they say the word tariff, they need to say the word deregulation two or three times.
Because the best way to, I think, maximize the odds of this policy succeeding, despite the headwinds from automation, I think it's going to be a long time before we have hundreds of millions of robots. You know, even between China and Tesla, I think it's going to take a long time to make vast numbers of humanoid robots.
The best way to encourage this reshoring is just making it easier to do business in America. Okay, 100%.
Can I just add one thing that's really, really important. What Gavin said, there's a third thing I would add Gavin to your list, which is we need to figure out the difference between manufacturing and IP.
And I think what we want to do is make sure that we trap the real value back in America as well. Look, I've told you guys a story before, but when I was helping to run Facebook, I was a signatory.
When we were setting up Facebook abroad, we exported all of our IP to Ireland. And lo and behold, who do they sue? Zuck, Meta, and me.
And we've been in this 10-year lawsuit, 15-year lawsuit with the IRS because they're trying to come back and say, hey, Facebook, you owe all of this money. Why? Because we exported all of our critical IP to Ireland and we trapped it there.
That should not have been able to happen. We can fix it.
Separately, there's many companies who are abroad who live inside the American market who have given a mechanism would import their IP into the United States if there was a mechanism to do so. So not only can you have manufacturing, you can also have the critical knowledge, not just of that manufacturing, but of that product of that supply chain.
Those are the incentives that these nuances if we get right, it's really a renaissance for the United States. Let's talk a little bit about maybe other solutions, Friedberg, obviously, perhaps raising the minimum wage, or increasing corporate taxes in order to do that? Would that not also help us maybe build back the middle class? That is the criticism I think some other people have we you know, Trump when he did his TCGA, if people remember the Tax Credit and Jobs Act, corporate tax rate was 35%.
We put it down down to 21 and now repatriation of cash from overseas as jamaat's pointing out i think it's only 15 it's like everybody can kind of afford that so would that not be another way to solve this problem of the bottom half the bottom third not making them enough or maybe even lowering their tax rate which is already pretty low. Well, I think the proposal that I've heard from this administration that we heard from Howard Lutnick when we met with him was they're going to cut all taxes for people making less than $150,000 a year.
So get the tax rate to zero. Do you believe that? Do you think it's realistic now that after I do after you do that, you actually think that can happen? I 100% do.
And what timeline and why? Well, that's the key question. This is where this becomes like a first and second derivative problem.
Let's just talk about it this way. When you take money out of the economy, you want to make sure you're also putting money back into the economy in another way to keep the economy stable or growing.
So if you're taking money out of the economy, in the case of tariffs, you're putting money into the government's coffers, you're reducing people spending because everything costs more now. So consumers will spend less.
So what you want to do is you want to make sure that the money that you're repatriating is going back to the consumers so they can now have more money to spend. So that's why you want to cut taxes at the same time that you're increasing the tariff rates.
So if you increase the tariff rates, things cost more, the government is now making things more expensive, that's not good. But at the same time, if I cut your taxes and you got more money now than you did before, so you can now buy the things that you were buying, even though they're a little more

expensive, the economy should be able to remain stable or grow. At the same time, if you're cutting government spending, that means that the government can afford to take less taxes in.
And so they can make that assessment. So these are all we've said it many times, these are all very related.
And to Gavin's point, you've got to cut regulation at the same time, so that the incremental dollars flow into things like automation, onshore productions, that the cost of things come down. And so, again, not a simple equation, I would call it a grand economic experiment.
the analogy for me feels a little bit like there's four freight trains kind of passing by each other at very high speed and you're trying to pass all the ingredients to make a sandwich between the

windows of the freight And you're trying to pass all the ingredients to make a sandwich between the windows of the freight trains, you're trying to get them all over. So you can make this delicious sandwich and get to this golden age.
That's the configuration that it feels like they need to kind of assess as they're and they're iteratively thread the needle is I think your point, and it's really hard to do. And you use the phrase experiment, Gavin, you said before, hey, don't screw up this amazing country and what we've got here, this sounds like a very high risk, you know, high dexterity maneuver, it feels like a fighter plane, like trying to land on, you know, a very small, you know, aircraft carrier, can they pull this off? Can they get to the tariffs working at the same time inflation not spiking, not impacting employment, getting rid of people's taxes? Does this sound too complex to you and too much too fast? What is your honest thought, Gavin, as you watch this as a capital allocator? Are they going too hard too fast? Or is it worth pursuing this experiment as as Friedberg framed it? Look, Scott Bessent is probably the single most respected or was the single most respected macro investor in the world.
Like he really understands the markets, how they flow through to policy, how policy flows back. He's extremely smart, talented guy.
They have a coherent theory. You know, I thought Howard and Scott did a great job in the last two episodes.
Absolutely, yeah. Kind of explaining the theory.
And the one thing I would just say, having, you know, we all watched the first Trump administration, he is adaptable. He adapts to circumstances.
And the midterms now are whatever they are, you know, in political terms, they're 15 months away from, you know, around the corner. Yeah, around the corner.
So I think they're trying to do a lot as quickly as they can. But I also think that if after a few months, it's, you know, six months, nine months, it's not working, they will adapt.
And I think that's one reason there's such an emphasis on reciprocity. You know, in Vietnam came out and they lowered their tariffs on American goods.
And that's, that's good. And so I think the out is, oh, you know, maybe it's not going quite the way we hoped.
We're going to declare kind of, hey, we have a series of grand bargains with these countries, declare victory. Maybe tariffs on American goods are slightly lower, tariffs here are slightly higher, feels more fair.
And, you know, move on to kind of firmer ground of kind of deregulation, balancing the budget, cutting government spending, and cutting government taxes commensurate with the spending cuts. So I think they're trying the risky stuff first, and if it doesn't work, they will tax quickly.
Yeah, that was my perception, especially after hearing Basant on the all-in pod. Great job, guys, on getting those long-form.
And I think this is where the administration is strong. It's when they do a long- form discussion and you hear their thoughts about it it doesn't sound as crazy as when you know all due respect to the president when the president is like i'm gonna go easy on them i'm gonna go hard on them you know and it's like a reality tv show and who's gonna get fired this week you actually have two incredibly thoughtful i will point out democrats lifelong democrats around trump and i i think that's like a really i had this crazy observation gavin i don't know if you noticed it as well you know trump lost his re-election campaign and he filled his whole cabinet with a bunch of republicans this time he's filled his whole cabinet and everybody around him is a democrat and he's gone to a really unique concept here of how to solve the u.s's problems which is get the working man and woman a higher salary and lower their taxes this this could be like an incredible grand bargain that besant i think is the architect of and let nick is you know the communicator and and uh executor of you think they have a chance of pulling this off what do you if you had to handicap it i hope they do as an american i hope they do i think they for sure have a chance of doing it they have a chance of pulling this off? If you had to handicap it? I hope they do.
As an American, I hope they do. I think they for sure have a chance of doing it.
They have a solid theory of the case. They need to execute well.
I would say Doge's efforts are important. You know, if you can really cut a trillion dollars of kind of waste, fraud, and abuse out of the government spending, that's good.
We should all agree as Americans, maybe Democrats, they want more government spending, maybe Republicans want less. but for whatever given level of government spending, that's good.
We should all agree as Americans, maybe Democrats, they want more government spending, maybe Republicans want less. But for whatever given level of government spending, we want it to be as efficient as possible.
Because if you're a Democrat, that means more services. If you're a Republican, maybe that means a smaller government.
So I think they have a solid theory of the case. I think there's a reasonable chance it will succeed.
But if it doesn't, I think they will attack quickly. And the one thing they can't afford is a recession if they're focused on the defense deficit a recession blows out the deficit so they will be ultimately sensitive to these market-based forces you know rates stock markets the foreign foreign currency markets chabaf you want to uh maybe wrap this up for us here as we move on to some of the other topics of the week.
John Arnold had a post this morning on X. He was saying the deficit this year is going to be $1.9 trillion.
His best guess for 2026 was $1.9 trillion and he was just kind of asking his followers what they thought. If you listen to Howard last week, what he said is, I'm going to raise a trillion dollars and Elon's going to cut a trillion.
Now, if that comes to pass, then we have a balanced budget. If you ask the Sharp money on Wall Street, their numbers range from $170 billion to $300 billion on the revenue side.
So let's take the midpoint of around 200 to 250 billion. If the sharp money is right, that means that tariffs and all of that stuff will only really raise a quarter of a trillion, which means that there's going to be even more pressure on Elon.
He's going to have to find not 1 trillion, but 1..75 trillion. Again, assuming that that $1.9 trillion deficit exists next year.
So that's the math. It is a $2 trillion bogey, and they have to fill it somehow.
My intuition is that the waste, fraud, and abuse is probably meaningfully more significant than we think. When we were there, we heard about one consulting firm,

95 plus of all of their revenue,

multi-billion dollar revenue

comes from time and materials contracts

with the United States government.

We heard throughout the week, I've reposted it on X,

$65 billion is paid out to consulting organizations

beyond just that one

in these time and materials cost plus contracts. If you start to add all of these up, today, we just heard that the $2 billion grift to Stacey Abrams was canceled, and they're now starting a DOJ investigation into how those dollars got given to her.
All of these things start to add up. It may be the case that if there's an upper bound on tariffs that there will be more than a trillion and elon kind of fills in the gap but i think it's possible they are looking gavin also at military spending and maybe cutting that eight percent a year every year for a couple years that's where big dollars are are sitting and obviously nobody wants to touch social security despite i do have to point this out for my best you guys did a great job with that interview and uh you know i just want to say f tmz for like trying to spin it as you know let nick was trying to take away people's social security they've literally took an hour plus interview they clipped it to try to make it seem like he was saying the opposite of what he said he was saying the fraudsters will be the first to respond not my mom my mom would just you know call eventually and say hey can i she would assume that there was good intentions yes whereas the fraudsters would be like oh man i gotta get here i I got to get here.
I think it's great. You know what? You can do this.
Did the same thing? No, let me finish my little thing here. Because I don't want you guys to have to defend yourself.
Listen, I couldn't make it. You guys did these last minute interviews.
Mazel tov. We missed you.
I thank you for saying that. I would have loved to be there.
I will be at the next ones for people who are saying like, Oh, there's some conspiracy. There's no conspiracy.
I had ski week, these guys went to do business or whatever they were doing and see their friends in dc and uh you know these things happened very rapidly uh and i wasn't able to get them bottom line these were great substantive long interviews from democrats one of them a gay democrat by the way the highest ranking gay democrat who's ever been in uh an administration the left and the media should be giving praise to these interviews they should be studying them and they're doing the exact opposite they're trying to spin them into something they weren't it's a gift what the all-in podcast did to the american people by showing them a long-form interview with the administration explaining these details don't spin it i think it's great i think'm sorry, I'm pissed off about it. It pissed me off.
I don't think you should be pissed off. I think it's wonderful that these people lie.
I think it's incredible that they just put it out there and it just further erodes what's happening. I think if once Bobby puts a nail on the coffin of pharma ads on TV.
Bye-bye, Anderson Cooper. Bye-bye, all these guys.
I think it's think it's great i'm so pissed off i'm sorry like when i see people lie like that they should be lying they should be lying they should it's great they're because they will not exist okay gavin you're a neutral third party go ahead no i'll just say three really quick points like first what howard lutnik literally said was if we can find a lot of waste fraud and abuse we don have to raise the retirement age. Everybody's talking about raising the retirement age to 70.
If we administer these programs more efficiently, we can keep it at 65. And, you know, that's good for everyone.
The second thing is, it's just interesting to me, there's so much doubt about this when the inspector generals of, you know, both Biden and Obama, you know, said there were hundreds of billions of dollars in waste, fraud, and abuse. And I would just say someone in my immediate family has had their social security, their identity stolen, and someone is using their social security number to collect unemployment benefits in Alabama.
And this has been going on for two years, and they've been unable to stop it. And so, you know, you don't want to rely too much on anecdote.
But I think this is really happening. And then just the third thing I would just say is I do think, you know, no one has ever raised, no president has ever raised my taxes more than Trump did.
And I think they are pretty convicted in their focus on normal working class Americans and making their lives better is actually genuinely their North Star. You can disagree with the theory of the case.
You can disagree with, you know, the way they're communicating it. But I think their intentions are good.
Absolutely. And you know what he even said in the interview, if you if you really listen to it, he said he was disgusted by the idea that you would even raise the Social Security age.
I think we should, by the way, any rational person, I think the majority of people say, hey, maybe it should go up a year or two, maybe we should have a little austerity here on the margins. But no, of course not.
We can't talk about that. And, you know, the thing this administration could do better is communication.
Those two long form interviews was a great step in the right direction. They should do more of those.
And Doe should do a better job of explaining this waste and fraud. They're doing a good job.
I give them like, you know, a B plus, but there's more work to be done here. And there's waste.
There's overspending, there's fraud, and there's abuse, right? These are like different categories. To get to the fraud, that takes building legal cases.
All that stuff's going to have to be referred to people. We have a justice system here.
It's going to take years to figure out if somebody actually stole. But waste and overspending, we're going to find that pretty quickly.
So it's a process, people. And I, for one, trust the process because we're overspending massively.
Let's get to some other conversations here. I think maybe we start with...
Jake, I'm Doge. I just think it is, whether it's a semi-annual or quarterly, something that is like the Doge report.
And everything's been audited and triple-checked. These are the three categories.
This is what we found.

I think something like that would be very helpful.

I think they need investigative journalists.

I'm happy to help with this.

I'll do a doge pod.

You know, listen, I'm not part of the administration.

Everybody knows I was a never Trumper.

I'm independent, blah, blah, blah.

Disclaimer, disclaimer, disclaimer.

I would totally go in there.

Are you still a never Trumper, J.Kell?

Why do you keep saying independent and then you throw yourself a label that says you're not independent you're dependent telling people i i was a never trumper but if trump is going to surround himself with a moderate democrat truly independent i like to think so i try to be independent call balls and strikes here on the program i'm not going to bend the knee to the administration i'm going to i'm going to be critical of trump coin i'm going to be critical of these deportations which we're going to get to and i will say critical things but i would go in there and i would do the doge pod with elon or whoever in the group is and go point by point through these things to explain it to the american public let's keep moving here we got such a full docket i want to talk about signal text our bestie and talk to him about it i think that's i mean maybe i should go in there because listen i don't even consider this like a trump administration now i consider it's a democratic moderate administration everybody around trump now is a democrat i think i might be in i might be in you guys look like you had a good time last week i kind of want to be included it looked like fun did you vote for trump i don't want to bring in my vote i did not vote for kamala let's keep moving here. I'm going to keep my vote.
I did not vote for Kamala. Let's keep moving here.
I'm going to keep dropping. Wow.
I did not vote for Kamala. I couldn't vote for her.
She said, I don't want to say it, but. Anyway, let's keep going.
I don't want to vote for somebody who was selected. I wanted to vote for somebody who had a primary and the Democrats disgraziade for not having a speed run primary.
Signal Gate. That's the biggest story in America right now.
I think J. Cal is turning.
This is incredible. What a day.
No, I mean, listen, I'm going to call balls and strikes. Right now, 70% of what they're doing, I agree with.
30% I don't. I'm going to get to the 30% on a human rights basis.
I think you just admitted you voted for Trump. It's really incredible, actually.
Anyway, let's keep moving here. I'm from the great state of Texas.
I'll leave it at that. Signalgate, Signalgate, Signalgate.
On Monday, the Atlantic published a story titled the Trump administration accidentally texted me the war plan somehow. Atlantic editor in chief Jeffrey Goldberg was added to a super high profile signal group with our Secretary of State, our Vice President, Tulsi Besant, the CIA Director, the Secretary of Defense.
How is this possible, folks? They added a journalist, the editor-in-chief of the Atlantic, to their war planning signal group. They shouldn't be using signal, obviously, to do this stuff.
And inside this group, they discussed the plans to strike Houthi targets across Yemen.

Nobody noticed, nobody checked that the editor-in-chief of the Atlantic was in the group chat.

They included the exact targets, the actions, the timing of all of this.

It was apparently cut and pasted from some other system by Hegsen, our Secretary of Defense and former Fox commentator. That's not a dig.
It's just a fact. I'm not saying it as a dig.
Chamath. People are losing their mind over this.
I could get into all the details. I think most people know it because it's taking up the whole all the oxygen in the room in the media in the group chats.
Number one, what's your general take on what happened here? How stupid is this? How ridiculous is it? Does it matter? Go ahead, Jamal. Start us off here.
I think that what folks have stopped talking about entirely, which I think is just worth touching upon, is what is actually going on that necessitated this group chat to be created in the first place in such haste. So I have a couple of images that I pulled just to explain what this issue is.
So the problem that we have is that somewhere after the war with Gaza, Iran continues to fund these Houthi rebels in Yemen. And what do they start to do? They start to invade and flood into the Red Sea, and they start to block up the Suez Canal in different points, making it very perilous for freight traffic to get there.
So what do folks do? They're either forced to go all the way around the Cape of Good Hope, or risk attack through the Suez Canal. So what do you think happens? Well, the traffic through the Red Sea and the Suez Canal falls off a cliff.
And then you would ask, well, why is that important? Well, the problem is that because of that other chart and this chart, prices start to skyrocket. So if you're trying to ship things, even going into the United States, prices start to rise 30, 40%.
Going to Europe, prices are rising 300 and 400%. If you add that all together, as Gavin said earlier, we're in this very delicate moment where we're fixing all these parts of the economy.
The thing we can't have is productivity go down. You can't have a recession.
And so if you have a bunch of input prices that go up or trade slow down, now you're bringing the likelihood of a recession to the forefront. So that's one thing.
The second thing, which was included in the group chat, is it turns out that nobody was in a position to fight off these Houthis except the United States. The British, the French, all of their naval capacity wasn't strong enough or adaptable enough to fight these folks off.
So the United States had no choice but to attack these guys and reset. And so what happened? Now all of a sudden, traffic is reset, right? Volumes are back up by the third week of march which is where we are now

we're back to where they were even a year ago the price of shipping is now contained the inflation risk is contained the productivity hit is contained it's just okay that's all great yeah that's the context okay so this is why they did the attack great i find it crazy that we still actually for 95 articles though, Jason, on Signal, we have only less than one article on this. So I just wanted the smart people to listen to our pod to actually understand it.
The second thing, the second thing I'll say is. And we're going to send the bill to Europe because this is really a European problem because.
Okay, so. We have the whole Pacific Ocean.
We can accept things through. So, the point is.
So the point is the point is so the point is we're on a shot now yeah so the point is we're on a shot clock people had to act quickly here's my big problem with signal i think it was a okay and i think i think i think it was an important set of decisions that had to be made but i think the using signal was a mistake but there's very one narrow reason why and we've said this in our group chat the signal desktop app is total and complete garbage okay and when you build apps somewhere along the way we were all told all of us as app developers oh you need to have an app on every endpoint it needs to be available for android needs to be available for the ipod it needs to be available for your phone It needs to be available for the iPad. It needs to be available for your phone.
It needs to be available for the desktop. And the problem is now you'll have a computer at home.
You'll have a computer in your den. You'll have a computer at the office.
Some IT person comes and helps you install this stuff. And now all of a sudden, instead of having one attack vector, you have seven, right? So this is insanity.
So it's a mistake. It's a stupid mistake is insanity so you it's a mistake it's a stupid mistake but i think it's a mistake and so i think like you know let's give it two scaramuchis i think we'll forget about it give it a scaramuchis or two should somebody resign should somebody be fired no no no i think these are mistakes and i think i think by the way sorry the other thing is john rackliff is very clear there are very clear procedures that they inherited which is no administration's fault but there's some security it person that writes these things it's approved and so rewrite those things to be more nor Friedberg your thoughts here do you have a take so i think this issue will become one of whether or not government officials can use Signal and apps like it for communication.
This is a controversy that's been around for some time, but it's actually being pried in the courts right now. There's, I think, four active cases.
So the Federal Records Act was originally passed in 1950. And then there was this amendment related to electronic communications that was passed in 2014.
And the Federal Records Act says all government officials and employees have to create, maintain and preserve adequate and proper documentation of activities, transactions, decisions, policies, and other business. That's the law.
That's the law. And it says adequate and proper documentation is defined as records that clearly document the government's decisions and actions.
And that can be preserved and retrieved for accountability, transparency and historical purposes. And then we have the FOIA laws, which allow you to as a citizen, or as a journalist, go make a request freedom of information act, this is to have a functioning democracy.
What you're talking about here, Freeberg, is people who work for us should not be able to end run their communication. And that's the law.
Yeah, the FOIA provides access to government records because our taxpayer dollars pay for the government to do its work and therefore access. So the question is, is the particulars of the communication that's taking place amongst these individuals in this case, and in the daily work done by government officials, that's like this, where people are updating one another or talking with one another about things.
Does that have restrictions around preservation of records under the Federal Records Act and the amendment that came out in 2014. And so there were a bunch of lawsuits.
One is the Competitive Enterprise Institute against the OSDP, the Office of Science and Technology Policy in 2016, where using email accounts and communications that weren't properly archived or preserved was challenged by this institute. And the DC Circuit Court of Appeals ruled that the officials who use private email for official business must copy or forward email communications government accounts to comply.
The Citizens for Responsibility and Ethics in Washington Act sued the Trump administration in 2017. And this is ongoing in multiple forms right now in the courts, where there's a lot of procedural complexity.
But the courts have generally said that they emphasize that these officials are obligated to preserve official communications and that failure is violating the laws. Then there's Judicial Watch versus Department of Homeland Security.
And then there's National Security Archive versus Mike Pompeo, the State Department in 2019, which is also still in the courts. And I think from these cases and this particular incident, there's going to become much greater kind of call it clarity and also a better understanding of the consequences of what

can you cases, and this particular incident, there's going to become much greater kind of call it clarity, and also a better understanding of the consequences of what communication do you need to preserve records of? And what communication are you allowed to have off the record that you can What do you think, Freeberg? I mean, we get it. There's a, what do you personally think? Like, what do you, David Freeberg, the Sultan of Science thing? I think it is counterproductive to have every piece of communication foiable and kept in the public record.
I think that's a mistake. And I'll tell you why.
When you're making a business decision, let's say you're making an HR decision, the management team sitting around, they're talking about a particular candidate or person at the company. Should we give this person a raise? Should we terminate someone? You don't want to have a record of that, that employees can then go pull up and see and understand because it will have a really muting effect and a dampening effect on the types of conversation, on the authenticity of the conversation, on the productivity of the conversation that you will be able to have if you're forced to say this is always going to be in the public domain.
And so I do think that this idea on like, how did you make a decision? And what was the action that you took? Those to me feel like they should be recorded. And they should be foiable.
But all of the background material, all of the noise, all of the dialogue that leads to the equivalent of this would be I do not think that should be foiable. And I think that you need to justify the actions and the decisions that you're making as a government official.
But I don't think that you need to have a record personally, of everything that led up to that action or that decision, because I think that that will be really deeply unproductive. Let me give a take here.
This is a serious issue, they shouldn't be doing it for obvious reasons. It's very easy to hack personal phones.
And they do have a way to do this, which is called the SCIF. And there's other places for them to have secure communication.
And as you point out, they work for the American people, they should be a record of this, they're breaking the law by doing this. So the administration should not be breaking the law.
Obviously, we don't want them to do that. Also, HEGSA clearly took a report of the attack plan, cut and pasted it from some server somewhere, and then pasted it over.
This is a known vector. Your clipboard is what it's called.
And this is an attack vector that anybody who's in IT or has basic security training knows that you can get your clipboard hacked very easily. They need to take ownership of it.
And this is one of the things that this administration and this group does very poorly. Instead of taking ownership, like Chamath said here, just take just own it.
No big deal. This is a, you know, a chance for us to learn and iterate on the security protocols, yada, yada, we apologize.
Let's move on. They attack.
And this is Trump's like playbook, we have to attack the journalists. So what did they do? They attack the journalists.
They take no ownership. And the second thing, which this administration really has an Achilles heel for, is on top of just not taking ownership and attacking the hypocrisy.
Because this was the entirety of the anti-Hillary movement was, oh my God, she did this exact same thing with her email. And Republicans had a long list of, my god here's hold on i'll finish you'll get your chance to defend your boys the point is it's complete utter hypocrisy and it's distasteful to attack the journalists which you added this is incompetence it's a mistake own it well hold on and then every single person's phone has to get dumped now.

And so they're not doing a good job communicating what they're going to do to make sure that somebody hasn't gotten onto everybody's personal phone. Why are they doing this on their personal phones? As Chamath, you very much pointed out, these are attack vectors.
They should be using the phones issued to them for these communications, not their personal devices. Let me say a couple things.
the first thing is I think you're wrong

about the fact that they don't have an adequate claim with this journalist. I think it's fair to ask, what is the ethical standard that that journalist should have had? If you're added to something, you know it's inappropriate.
The guy just sat there lurking. You don't know how it was added jason you're speculating it could have been sure hold on it could have been injected okay it could have been injected into a laptop nobody knows yet this is why i think just admit what happened was a mistake i think they did that they're looking into it let them look into it i don't think you need to have scalpels and heads and all this other stuff but i do think it's important to say why was this guy lurking about okay what ethical standards should he have at clearly he had none and by the way this guy no that's ridiculous you're so wrong in this spot he he tried to figure out okay your opinion is wrong in this case okay he tried to figure out what was going on here and then when he did figure out it, he contacted them and removed himself.
He didn't stay on there indefinitely. If he did that, that would be wrong.
But for him to be added to something he may have he may have been being attacked himself. And the other reason you're wrong is they went on the attack immediately.
And they denied that there was anything wrong. They did not take ownership of it.
And that's why we're having this debate right now is they don't take ownership of these things marco rubio did say someone made a big mistake there were no consequences we learned we're going to do better and he is the secretary of state so someone in the administration did say that this was a mistake yeah and the other guys attacked the journalists so that's what i find distaste no no but hold on a second trump said it was a mistake too i don't think these guys it is it's a mistake so fix it and move on but the point should be what is the mistake the mistake is the security protocols that these guys rely on i don't i'm going to just go out on a limb as expert as they are are in policy, I think they're inexperts in technology. So there is probably somebody that is responsible for how all of these folks communicate, how all of these folks get software installed on their multiple devices, okay, how they get new devices.
I'm guessing that it's not them. So I think that that's just- They're using their personal devices.
I think that's the problem. Why? Why is anybody in government using a personal device to share plans? How do you know that for tech? Because they said it was their personal devices.
They've said it this has been established that they did this on their personal devices that that that's totally established now. Okay.
So and they have skiffs for this. So I just don't understand why they don't.
Why is there? But again, I'm saying the bigger issue is that they had to operationalize quickly, they weren't in a position to be together. The importance of the issue is getting lost.
It was an important issue that has no consequences. They're all within 10 feet of a skiff at all times.
Their their SUVs are skiffs, their offices are skiffs. Gavin, you thoughts why before we move on to the yeah i would just say i thought the contents were interesting and that there are a couple of things you know there's all this you know oh the trump administration is you know cozying up to russia i mean you know trying to blow up these you know this post world war ii alliance with europe there are two things one They said, we are the only people on our side of the ledger who can deal with the houthis and our side of ledger meaning like recognizing kind of europe you know traditional alliances the good team the good team so i thought that was interesting that just for all the rhetoric they're conscious of who's the home team and second they It was very clear to everyone clear to everyone in that chat, and JD Vance raised it, 3% of America's trade goes through the Suez Canal, 40% of Europe's trade.
So we are really doing this. It will help us a little bit, but it will help Europe a vast amount.
And we're doing something that helps them that they cannot do. Now, hey, they're asking that they want to be paid.
But I just think it made me think that behind the scenes, a lot of this rhetoric about, you know, the US and the European schism is overblown. And we're still helping them.
That was interesting. Yeah, I think it's important note.
Okay, let's move on to our final two stories. The Trump administration has deported 238 alleged gang members to a pretty severe prison called CECOT, C-E-C-O-T, prison in El Salvador.
Here's a clip of them being dragged out of the United States and put into this extremely notorious prison. This was all done under the Alien Enemies Act of 1798.
This allows the president to detain and deport individuals without due process from quote an enemy nation during an invasion or quote predatory incursion. It's been used before but only during actual wars.
FDR used it to deport thousands of Germans, Italians, Japanese during World War IIi the trump administration is claiming that the gang members were sent to the u.s intentionally calling them a hybrid criminal state not surprisingly most of them were not all of them had criminal records in the u.s this was confirmed by ice and obviously some number of them appear to have been misidentified as gang members or terrorists i can tell you you know coming from a law enforcement family and just looking at the statistics out of 238 you're not going to bat a thousand so maybe you get a couple of these wrong former pro soccer player jersey reyes barrios he fled venezuela after being tortured by the government for protesting he's a refugee he has been mistaken for a gang member according to his people because he's got an arm tattoo supporting his favorite club real madrid and there is a social media post that ice officials believe featured him making gang signs but it was actually the language for i love you according to his attorney second example a shoe salesman and social media influencer noberto rodriguez he fled venezuela for colombia out of desperation because he and his family were starving he's a father of three he was also suspected because of a tattoo which features playing cards and dice his family says he got to he got it to cover a scar on his forearm and third and final example stylist and makeup artist andre hernandez he is being represented by the immigration defenders law center he claims he has no criminal history he sought asylum after fleeing venezuela where he was persecuted for being gay again his arrest was based on tattoos that his attorneys claim are not gang affiliated this has caused the u.s district judge to pause these deportations the administration has apparently continued these deportations and they're even gloating by doing videos highly produced videos threatening people with the prison in el salvador again the ccot your thoughts chamath on this extradition process if any i mean as long as there's a mechanism for these mistakes to get rectified seems like the overwhelming majority of these folks should not have been in the United States and were part of illegal criminal organizations. Okay, so there should be a mechanism.
Gavin, your thoughts? If innocent people were sent to a prison, like that's a terrible mistake. And you know, that happens.
And it shouldn't happen And hopefully it gets rectified. But I guess my bigger thought is a little bit, you know, this administration, as we discussed, they have a really ambitious agenda.
They want to fundamentally change America in ways that they think will be better for kind of blue collar, normal working Americans. And things like this, you know, signal gate, if they made a mistake and sent innocent people to this prison, there's only so many of those mistakes they can afford before they lose kind of the mandate necessary to accomplish their goals.
And, you know, hopefully it's, you know, we're in whatever, we're not even into the, you know, third full month. 66 days.
66 days. We're into the third month.
We're 4.5% of the way through the second term. And it feels like.
Yeah. Six Garamuchis in.
Yeah. It's brutal.
It ain't easy here. This is such a good point though, Gavin.
Continue. They just, execution matters.
Like if they say to accomplish their goals, they need to execute at a high level and communicate clearly and effectively. And just if innocent people were sent to, you know, this prison mistake signal gate.
Look, you know, hey, maybe it's a big mistake. Maybe it's a small mistake, depending on where you sit.
I thought Marco Rubio's response was good. But just like I think execution is important for them to accomplish their goals.

Great. Freeberg, any thoughts here? I do not agree with sending people to prison or detention center without due process.

I felt similarly about Guantanamo Bay because I don't think it matches the rights and the values that the United States should stand for. I think it's different if you believe that they're here illegally, they're part of a criminal enterprise, and we don't want to try them in courts here, then we should ship them back to a port of departure somewhere else in another country, maybe it's back to Venezuela, and let their courts try them.
But I will talk a little bit about this El Salvador motivation. As you guys know, the El Salvador prison that they set up for putting the gang members in had a radical impact on living standards in the country.
In 2015, the homicide rate per capita in El Salvador was 103 people per 100,000. So one out of every thousand people were murdered every year.
They introduced this aggressive policy of rounding people up without due process and putting them in this prison. And through that action, they were able to reduce the homicide rate per capita below two per 100,000, which is what it was last year, 1.9.
So it had a radically positive effect on society, but obviously at the cost of a value that we in the United States hold dear, which is the value of due process and the importance of due process, because all it takes is one innocent life being locked up. I'm sorry, you're saying El Salvador, there was no due process? There was no due process.
And so there are plenty of stories. If you watch the documentaries on this prison, there are plenty of stories of people that later were released when they were found to be completely innocent and randomly rounded up or caught up in a sweep or something that they shouldn't have been at.
And there was actually one fascinating interview I saw of one of the guys who spent over a year in the prison was completely innocent. But he said, you know what, it was worth it because the government's been able to clean up the streets.
I got to find this clip. But I was really like shocked.
I couldn't believe that a guy that spent a year in this prison actually had something positive to say because it was such a- Maybe he had to say that to get out. Who knows? Well, it was such a profoundly difficult place to live in El Salvador.
And we've all heard these stories. But I do think that there's a cue being taken by this administration that there's a way to kind of very quickly resolve to a positive outcome with respect to immigration and crime.
But I do think Gavin's point is right, that we do have to have some boundary conditions, particularly as it relates to human rights that we do value here in this country. And as long as there's a court trial, as long as there's a judge, as long as there's some sort of, it doesn't need to be a jury of peers, but as long as there's some evidentiary hearing to make the determination that someone is, you know, likely this criminal, it makes sense.
But again, I'm much more in favor if there's going to be forced movement of people, I don't think that they should necessarily be moved into a prison as much as move to a port of departure and have them tried in another country. If there's a crime.
Or we try them here and put them in prison. I agree so much with what you just said.
Due process is important. Like America, like human rights, are a core American value.
Ed, it was great you acknowledged that like the outcome in El Salvador was good. Homicide's down 99.9%, lots of lives saved.
And just, you know, there needs to be a balance between these yes then let me ask you guys a question very pointed question if you guys could implement an el salvadorian style incarceration system tomorrow and it would have the exact same effect on american crime so yeah cuts it by nine with and and and I'll give you there's a four or 5% error rate. Would you do it? Would the benefit of the safer society be outweighed in your minds by the error rate or not? Absolutely not.
Most people would say yes, because they would view it wouldn't affect them. And then the two to 5% of people who have family members who are innocent get locked up.

I get that. I'm saying, what do you think?

Yeah, I wouldn't compromise that value.

Yeah, we don't want to compromise that value. It's incredibly dangerous.
Yeah, incredibly dangerous.

We've been riding on a bit of a high. And I think there's a couple of things here this administration could do better.
And communicating when they make a mistake. And then human rights is such a core part.
I believe, me, Jason Calacanis, believes that there is a sadistic nature to this administration. It is an Achilles heel for them.
And when you see them doing videos from these prisons and saying, this is going to happen to you, and this prison is known for torture, and this prison is known for just absolutely the most abhorrent issues in the world this is the sadistic nature of this administration that i think they need to drop because it is going to derail them and people care in this country deeply about human rights and process and there is a constitutional issue right now because trump and this administration is disobeying the court when they say hey let's slow down here there is no cost zero cost to americans sending these people to a way station and investigating each of these cases to make sure we don't send a gay hairdresser to el salvador another country to be tortured in prison if that is in fact the case and it is against all american

principles to not have due process and to have innocent people potentially go to jail and what

all republicans should do is here is say this is going to derail the administration these are the

things that will build up over time and people just pragmatically speaking people in america who

are rooting for this administration to do some good things like i am when they do stuff like this

and I'll see large swath of people, it loses them votes. And this is why they I predict, this is why they will lose the mid turns if they continue to do this type of stuff.
That's my position. It's not virtual signaling.
I've cared about human rights long before the All In podcast existed. My first job was working at Amnesty International.

And this is a giant mistake by this administration.

Gavin, you had some thoughts?

This whole debate is a question of ends versus means.

And it's like, we all agree that the homicide rate down 99.9% in El Salvador is a good outcome.

It's a good end. And this is one of the great philosophical questions.
And it's, you know, we can debate it endlessly. And there has to be a balance between the two.
Human rights are a core American value. And I agree, I think, with a lot of what David said.
But I also think if you are, you know, going back to that homicide rate, the Trump campaign, you know, they spoke to the mothers and the families of people who were brutally murdered or raped and murdered by people who were illegal immigrants and were convicted criminals in their home country and were known convicted criminals and somehow still were not apprehended and then committed terrible crimes that were very similar to the crimes they committed there. You have a lot of compassion for the victims too, but all they have to do, like one of, I thought, Elon's best moments, and I think, you know, it's what Doge is doing is great.
These are brilliant people working hard for free to do things that have never been done before in the government in terms of efficiency and kind of modernizing IT. But, you know, Elon said at the first press conference, he says, listen, we're going to make mistakes and then we're going to quickly correct them.
So, to me, I think all the administration needs to say, and I do think more due process, to David's point, is good, is like, listen listen, if we made a mistake, it's terrible, and we're going to fix it immediately.

And it just gives you so much credibility when you say that.

Agreed.

But isn't due process happening?

How else would you guys know that three out of the 238 were miscast?

The fact that you know that means the process is working. I think the question is, what about the other 235 people? Their families talked to the press.
This wasn't from the administration. But the point is, it's there.
So whether it's the Freedom Project, or whether it's the Southern Poverty Law Center, my point is, there are resources. Is it bad when this happens? Absolutely.
My question is, do you just blow the whole process up? And then what do you do with the other 235 people? You'd hold all 238 at Gitmo if you wanted to in

humane prisons, and process them, and then have their attorneys get to look at their case,

or you could give their cases to you could be public with their cases and say, here are the

cases. These are the people we're deporting and why? Right.
So your specific issue is where

they're being sent? Yes where they're being sent.

Yes, they're being sent to the most sadistic prison in the world.

Do you want to answer your question about like the 5% trade off?

Like if you sweep up 5% of the people being innocent, whether it's worth that trade off

for crime?

Did I get an answer?

Well, you asked the question, but I wanted to hear your answer. Like, what's your point of view on that? I think that that's probably what happens today in America's prisons.
In fact, it's probably more than 5%. But I guess the question is, Jamath, what is an acceptable, you know, it's a little bit like the trolley problem.
You know, there are many variations of this. I think the important thing is, I think that that's a bit above our pay grade, but I don't think it's above the president's.
And I think that that was part of what he was elected to do is make that call. Because I don't think he hid behind any rhetoric.
He was very clear about what his intentions were. And to your point, he did bring the, you know, Lake and Riley Act.
I mean, they were very explicit about what their intentions were. yes but man it just feels like a little more due process

being a little more careful with the signal. But also just going back to what were four and a half percent into the administration.
I'm not saying, hey, mistakes were made and it's okay. Innocent people were sent to this prison.
That's terrible. And I hope it gets rectified quickly.
If there was some concession here, hey, if we made a mistake, we're going to fix it. That would be a lot better than putting out promotional videos, lauding how brutal this prison is.
That would go a long way with me. But we're seeing the opposite.
They're releasing videos that they're producing. We'll play one here for you to see.
By way i think an important point about this and perhaps like the key part of the strategy of the administration is that this isn't the beginning of a continuous process but they're sending a signal which they expect will cause people to naturally emigrate out of the country that are committing crime or at risk of being caught for being associated with gangs and while being in the United States as a way to kind of chase folks out. So I think that there's some calculus and what's going on here with respect to the risk and the actions being, hey, look, if we do this to the first 240 people, and even if three or four innocent

people get caught up, there's a net benefit ultimately, because it will reduce the

immigrants kind of coming to this country that are parts of gangs, and perhaps some of them

will choose to go home. You know, they clearly believe that this is going to save innocent

lives in America. That is their clear belief system.
Well, yeah, and everybody wants that. Here's Secretary Christie Noem from the prison itself.
Here at CECOT today and visiting this facility, and first of all, I want to thank El Salvador and their president for their partnership with the United States of America to bring our terrorists here and to incarcerate them and have consequences for the violence that they have perpetuated in our communities. I also want everybody to know if you come to our country illegally, this is one of the consequences you could face.
First of all, do not come to our country illegally. You will be removed and you will be prosecuted.
But know that this facility is one of the tools in our toolkit that we will use if you commit crimes against the american people harsh words she's trying to make it a deterrent clearly all right another amazing episode of all in is in the can for gavin baker david freeberg and jamoth polyhapatea i'm jay cal jason calcanis and we will see you all next time. The world's greatest virtue signal.

Motherfucker.

You motherfucker.

Did you see that?

I love you. I mean, I can't even take it there.

I love you.

I love you.

I'm sorry I'm passionate about some things.

I'm passionate about some things.

Look at this.

I can't tell how much of the tension is real versus like.

I love Jason.

I mean, I love you. We'll let your winners ride.
Rain Man David Sack. And it said, we open source it to the fans and they've just gone crazy with it.
Love you, Wes. I'm the queen of Kenwa.
I'm going all in. Let your winners ride.
I'm going all in. Besties are gone.
That's my dog taking a listen to your driveway.

Sex.

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We should all just get a room and just have one big huge orgy

because they're all just useless.

It's like this sexual tension, but they just need to release somehow.

Wet your feet.

Wet your feet.

We need to get merch.

I'm going all in.