1/24/23: RussiaGate FBI Agent Arrested, Biden's New Chief of Staff, Microsoft Invests In ChatGPT, Universities Shocked By AI, Ruben Gallego Runs Against Krysten Sinema, Jeff Bezos Sale of Washington Post, Federal Debt, Tech Sector Layoffs, Derek Thompson

Breakingpoints dot Com. Good morning, everybody, Happy Tuesday. We have an amazing show for everybody today. What do we have, Crystal? Indeed we do, Boy oh boy, do we have a perfect story for you about the deep state and the FBI. One of the people who was charged with investigating Trump over Russian collusion has now himself been indicted for Russian collusion,

so we've got all those details for amazing story. We also have a new chief of staff in coming to the White House and he actually kind of sucks, so we'll break those details down for you. We also have a big deal being done between open ai Chat, Open AI's Chat, GBT and Microsoft, so what is that going to mean for the future of that We also have a challenger to Kuirson Cinema in the Arizona Senate race,

Reuben Diego. He's a member of Congress right now, this was expected, but he officially announced yesterday put out a video that I think was pretty solid. So we'll break all of that down for you. And we are tracking rumors that Jeff Bezos may be selling the Washington Post and buying the Washington Commanders. Interesting now right now he's saying no, but the rumors are flying. As I said, Sager is taking a look at the history of federal debt.

I am taking a look at JP Morgan Chase admitting they were scammed for one hundred and seventy five million dollars by basically like a fake company. Amazing story. We also have Derek Thompson back to talk about the Mass Tech layoffs. But we did want to start with this FBI story, which is just incredible. It sounds like it was honestly made up. Let's put the Fox News hair

sheet up on the screen here. So two indictments released yesterday regarding this top FBI counterintelligence agent guy by the name of Charles McGonagall, former Special Agent in charge of FBI's Counterintelligence Division in New York. He retired back in twenty eighteen. While he was at the FBI, he spent a lot of time supervising and participating in investigations of Russian oligarchs, including a guy you might remember from Russiagate by the name of Oleg dere Paska Derek Poskat a

relationship with Paul Manniford. This is part of how the whole Russiagate investigation gets kicked off. Charles McGonagall is there at the very beginning, at the origins of the Russiagate investigation, and lo and behold McGonagall after he leaves the FBI,

gets caught, is accused by the government. Of course, I'm sure proclaims his innocence, but what the government is saying here is that he was taking money rum olig Dereapasca, which is illegal because he is a sanctioned individual and has been for a number of years now, both to help him try to get off of that sanctions list of process they call delisting, and also to investigate another rival oligarch on his behalf, apparently Deripaska and this other

oligarch that they don't name in the indictment we're in some sort of dispute over control of some sort of Russian company. So our FBF former FBI dude was being paid a lot of money through a bunch of shell companies and using fake names and fake email addresses to try to hide his tracks in order to investigate this other oligarch, to see if he had hidden assets abroad, if he had a different non Russian passport, and to see what was going on with this like fight that

they were involved in for this Russian company. So truly, truly incredible. Let me give you a few of the specific details about mcgonagall's involvement with the Trump Russiagate investigation, because this seems important. Let's put this next piece up on the screen. Here from the Washington Free Beacon, they say, plot twist. Ex FBI agent involved in Trump Russia probe

indicted for violating Russia sanctions. Charles McGonagall is accused of conspired to live sanctions off Russian businessman with ties to Vladimir Putin. So he was one of the first individuals that FBI, they say, to learn that a Trump campaign advisor, I think that was George Papadopolis had discussed Hillary Clinton's emails with a foreign diplomat that helped to cause the FBI to open its investigation of the Trump campaign based

on that conversation. Later found no evidence of collusion between the Trump campaign and Russia. He also when he left the FBI in twenty eighteen, he was involved in the bureau's probe of Trump campaign advisor Carter Page, according to text messages that were released by Senate Republicans, and they go on to say, it's unclear what other involvement McGonagall had in the Trump Russia probe, and just let's go out and put the press release here from the Southern

District of New York where they tout this indictment. And then last night there was actally a second indictment that was filed. This one was in Southern District of New York, this first one regarding Derek Paska, but the second one was filed in DC and had to do with while he was still in the FBI, taking about two hundred and fifty thousand dollars in cash from a former Albanian spy. And you know, I think he had set upshell companies to do this sort of work as well. So dude,

was corp while I was in the FBI corrupt. When he was out of the FBI, he was actually involved given a heads up of which individuals will be on the sanction list. So he certainly can't plead innocence here. And reportedly a lot of people who are high up in the FBI really freaked out about this because of the high level of sensitive information this man had access to while he was at the bureau. Look, he can contest his innocence. Yeah, that's as right as an American

citizen that said, you read this indictment. I mean they pretty much have him dead to run. Yes, Like he was creating new Jersey based shell companies while he was specially aged in charge of investigating these Russian oligarchs, specifically to create a money laundering scheme through which Deripaska and this Albanian official could fundy money to funnel money to him personally. At one point, Deripasco was paying him some forty two thousand dollars per month through this new Jersey

based shell company. So he's guilty or appears to be guilty of not only money laundering but straight up violating US sanctions to the tune of potentially hundreds and hundreds of thousands of dollars, and when you read it, what comes through we're talking here not even just about a run of the mill FBI agent. He was a special agent in charge charged with our nation's highest, most sensitive secrets whenever it comes to Russian oligarchs, who literally was

working for Russian oligarchs. What's also crazy, crystal in the indictment is he went to great lengths to appease some of these Russian spies who he supposedly was supposed to be investigating. You know, one of them was an official.

He got his daughter a internship at the NYPD in his International Liaisons office, and the NYPD was kind of sketched out, even though they gave her VIP treatment, saying that the girl was bragging about how she had connections to FBI agents and had seen some very top secret intelligence like what the daughter of a Russian spy working at the NYPD, who says and told open in their counterintellig Division in the counter Intelligence Division of the New

York City Police Department. So we have that, I mean, the secondary part though the scheme, in terms of being hired by Darrek Pasca and no, So let's let's be clear here. Like first he was working at least for a cutout law firm where his checks were coming from. Eventually he just started straight up working for the guy. Also in terms of how they refer to him in emails, it's so funny. It's like out of a movie. They're like the big guy, you know who, the rich Russian guy.

It's like, yeah, I wonder, I wonder who you're talking about. He flew to Vienna to go or to London and to Vienna just to go meet with him, Derrek Paska at his house. There. Straight corruption, outrageous, and here's a question how many more people they got in these things? I mean, it's funny too, because you know, I guess it's probably par for the course in Russia, you bribe

the security States to investigate your rival business opponents. But it was like, now this is coming here to New York, to the top division of the FBI, and you can't ignore. As my friend Chuck Ross wrote in The Free Beacon that he was intimately involved in the Trump Russia investigation in the first place. So it seems that the person most guilty of Russian collusion is one of the FBI agents investigating Russian who appears to have helped to spark, yes,

the Russiagate investigation. I mean again, we really don't have a lot of insight into how directly he was involved throughout the entirety of the Russiagate investigation, but he was definitely there at the beginning. He was the person who initially reported those conversations between with Papadopoulos and that helped to spark this whole thing, and was involved in the investigation of Carter Page, which you know, was a shameful episode in and of itself. So it's just it could

not make it up. You could not make it up. And I do find the details here extremely fascinating. It wasn't just McGonagall that was indicted. There was another dude, Sergei Shstikov, a former Soviet and Russian diplomat who later became US citizen Russian interpreter for courts and government offices.

He was apparently mcgonagall's sort of partner in all of this, and he's charged with these same crimes as McGonagall with regards to Derek Paska, and you know, violating the sanctions that were levied on Derea Pasca after Russia's invasion of Ukraine during it was the Obama administration that initially listed Deripaska as a sanctioned individual, So he's charged with those

same things as well. But the day before the FBI came and I don't know arrested them or rated them or whatever, this other associate Sheskita Shstakov sat with FBI agents and totally lied to Oh, no, we don't do any business, no, not now Whatso I barely know Charles McGonagall. Of course we're not in business together. So he also is charged with lying to the FEDS. So look, that's the longest short of it. Again, the details here are fascinating, and it does raise the question of like how common

is this? You know, it's so brazen that you thought you were going to get away with this for and hundreds of thousands of dollars, especially given the all the scrutiny that's on Russian oligarchs right now. Derek Paska is an interesting figure in his own right. He became an oligarch by winning what was called the Aluminum Wars back right after the dissolution of the Soviet Union, so he's

able to gain control of this incredibly valuable resource. So he's a big industrialist, incredibly wealthy man, ends up being one of the wealthiest men in the world. It was also reportedly one of the closest advisors, like really tight buddies with Putin. Since this Ukraine invasion has happened, though, he has made some critical comments on telegram, calling it a war, what you're not supposed to do, calling for peace,

et cetera, et cetera. So he's you know, he's kind of a fascinating figure in his own right, but just an extraordinary turn of events here. Yeah, well he's probably saying that because all of his yachts and houses and yeah, a god, what they really live for are the London houses and the houses here. Yeah, it's right, I mean in New York. Also, he's a famous doyen apparently of Davos. He used to pair allegedly used to throw some of

the best parties in Davos with Dom perry On. Yeah, so he's sad he couldn't make it to Davos this year, were banned. You got to feel for the rough forum, you know there for an oligar, it's really rough out there to be a multi billionaire. But here's what I take away. There is no such thing as former FBI and former CIA. You may not have a badge anymore. If anything, it is worse because he used the badge

effectively to sell to the highest bidder. How many other people, former FBI agents, former CIA, maybe some that you see on TV, are on the take to the people that they were supposed to investigating him. It's a disgusting practice that. Look, the only reason we know about this is because Oleg Deripaska is on the sanctions list, and otherwise none of

this would be illegal. Guy, he probably would have gotten away with the Albanian cash grab, the two hundred and fifty K he got for this, like Albanians brug probably would have gotten away with that. The only reasons because Oleg is on the sanctions list. How many people in this town within walking distance of where we're shooting this show are on the take to the Kingdom of Saudi Arabia,

to Dubai, Oman, Brunei, Thailand, China. I mean, look, those people may not be sanctions, but in many ways they are much richer than Oleg Derripaska. And there's an army, a cadre of former spooks officials and law enforcement officials who are all on the take for them. So just think like this is the one that we know about. It's just the tip of the eyes. So the richest people in this town are the ones who are willing to do the skimmiest work that came out from Manafort.

Remember Manafort's pulling twenty five million dollars wasn't just Russians. He was working for his work, the highest spider anybody. So we could buy all these Persian books other like out it was like an Ostrich jacket or whatever. One of my proudest pieces that I wrote at the Daily Caller was interview with Roger Stone, specifically only about Paul Maniford's wardrobe. Fashion Yeah, Rogers fashion critic hated he thought it was gross, even though they were friends in former

former business colleagues. He was like, this is quite possibly the worst wardrobe I've ever seen, So, yeah, it's a fun piece. Wish we could have Roger Stone critique Kirsten Cinema's outfit at Dovos this year, dressed as a sheep, might be interested to know what his thoughts were. She literally looked like Corella devellop there. It was amazing. We'll show you later. We got that later in the show. I will save my fashion content for later in the show.

Let's go ahead to the next piece here, all right, the next chief of staff at the White House. We now know who that person is going to be. Let's go and put this up there on the screen. Biden is going to tap Jeff Zeines as his next White House Chief is staff to replace ron Klain, who's been in charge of the White House now for two years. Claan apparently, I mean it's normal in terms of the life cycle of chief of staff wants a step down

sometime after the State of the Union. By the way, we will have special coverage for that here on the show. And what does that mean? Zenz has worked in the White House both as a deputy chief of Staff, but really made his bones and got Biden's trust by working as the COVID czar while he was there, so coordinating the vaccine response, policy response and some of the American rescue plan in the early days. Now, why does any of that matter. It's not just about his work product.

It's actually about who he worked for before he was in the White House and how exactly. He leveraged his position from the Obama administration to then become a very, very wealthy man before he went to work for Biden.

Let's put this up there on the screen. The incoming chief of Staff in twenty twenty one was worth eighty nine point three million dollars according to his own disclosure, and built his wealth through healthcare companies that were forced to pay tens of millions to settle allegations of Medicare and Medicaid fraud. For those who've been watching us for quite some time, this is not and this is not a news story. This is somebody who we focused on a lot in the early days of the Biden administration,

specifically when he was tapping aids. Specifically, remember this report. Let's put it up there on the screen from December of twenty twenty. It's kind of a mini biography of what he did. I mean, this is a person who was working for the Obama administration, worked in the economic departments, and was a key advisor who leaves the White House with key knowledge and with connections and leverages it crystal into private equity behemoth, working in some cases at Bain Capital.

The former Mitt Romney firm, which you can't even make that up. That Obama runs against Romney, bashes him and really wins on a message of this person would bankrupt you the way he bankrupted all these companies. And then one of his top deputies leaves and goes works for in terms of private equity and then starts doing like leveraged activity whenever it comes to the healthcare yeactor, it's as scummy as a guest, and no one in liberal media bats an eye. No nobody even noticed, like, hey,

this guy worked at Baden Capital. Weren't you just saying that the work they were doing was evil? And like the American people actually really agreed with you on that. Nobody really said a word about that. I mean, it does represent somewhat of an evolution I think post Obama era, when there was very little room on the left of the spectrum to criticize anything that was happening within a

democratic administration. At least now you have a little bit of a rump caucus that will say, hey, maybe don't bring in the dude that got five millions of dollars and made a bunch of money off of like defrauding medicare.

Tiny A few little news items will be there at least a few lonely voices will say something about it at least But not only does he have that ugly past in terms of making tens of millions of dollars off of effectively healthcare fraud, he also was one of the Obama administration's chief liaisons to executives and lobbyists when anger at Wall Street over the seven A crisis was at its peak. Top lobbyists such as the Business Roundtable and the US Chamber of Commerce have praised mister Science

as someone who heard them mount. So that's who we're bringing in now as Biden's chief of staff, someone who probably belongs in prison given the level of fraud that he is accused of year in which he had his company's affiliated companies had to pay fines for and instead being elevated to White House chief of staff, one of the most powerful positions in the entire country. Yeah, here's

an interesting one. He also owns five million dollars in gold bars and twenty five million dollars in a security that's actually tied to the value of gold, somewhat ironic because that's obviously an inflation hedge, and he is actually now going to be Joe Biden's literal chief of staff. Absolutely kind of hilarious. So anyway, why does this matter Exactly because this person is now going to be the most powerful person in the White House. And let's also

not forget this Biden. He's an old man to the extent that he controls his calendar, legislation, meetings, and all of that, the actual day to day operations of the White House. Who knows and if anything, you know, chiefs of staff have been incredibly powerful under Trump, who was also a disinterested president, and now under Biden as well. I mean, Claine was a top negotiator for a lot of the bills that were happening. He basically controls the

president's schedule, which events and all these things go. He really can't underestimate the power of these bureaucratic positions, and now this person is going to hold that. And Christal, as you were saying, Jeff Science named in Politico, let's put this up there on the screen. Do you want to read your favorite quote from Yeah, well, I love

the concerns that they raised here in this article about science. Now, to be fair, they do have a quote from the Revolving door project expressing concerns over his corporate background, but they also end with this zience selection is also likely to disappoint some Democrats who saw Clan's up exit as a prime opportunity for buying to appoint a woman person

of color as his top aid. So leave it to Politico to make the most surface level critique and observation and not go an inch deeper than that level of analysis. So there you go. Just couldn't resist putting that one in. It's just like, come on, like, are we really being serious here about what's happening? Like this guy, any objection to him, it should not have to do. I don't

even care. You know, if it could be a black woman, if they were also a former Bane consultant, and you know at least ran a company that was guilty of medicare fraud again that they paid fines and fully acknowledged what they were doing, I think that would be the same criticism hundred percent. I mean, to be sure to political they're actually right that this would be the critique that some Democrats wh level. Whereas if it was you know, a minority person or some sort of like trailblazing figure

who had this exact same terrible track record. They'd be Oh, this is amazing, this is a step forward, most diverse administration history, whatever, and it's like, okay, that's good. But what would be more important is to have someone who's going to be committed to you know, the common person in America and not just cozy cozy with business and doesn't have a track record coming in of basically defrauding

the government. So that's what we're looking at. And Sager to your point about how important this position is under any presidency. It matters a lot what ends up in front of the president, and it especially matters in a presidency where you have a declining eighty year old man who is really dependent on his staff to know what is going on and what's important and to frame issues

for him. And so this individual, who has again a very troubling, very closely tied to both Corporate America and Wall Street in his past, is being brought into a position of extraordinary power. Absolutely correct. All right, let's go on chat GPT. Even more stuff that's going on there. We'll talk about tech recessions with Derek Thompson a little bit later. But a big business announcement of which there's actually a lot to say. Let's put this up there

on the screen. Microsoft is announcing a ten billion dollar investment into open Ai, specifically to fund the chat GPT platform, and it's a partnership where they want to quote accelerate breakthroughs in AI and help both companies commercialize the advanced technologies. So this is the real test for what is the future of chat GPT, And actually I think it goes

to a lot of questions around the Internet. So right now it's twenty twenty three, we came off the heels of a lot of hype around Web three and like what that would look like, crypto ethereum, et cetera. But fundamentally it came from this. There was a frustration that the promises of Web two, of the Facebook, Google and all that they became centralized, felt like innovation was stifling and it didn't feel like using the Internet was fun

or cool anymore. I haven't seen that level of enthusiasm around technology and specifically online then basically until now with chat GPT. But then, just like with those questions of what we should have asked with Facebook and with Google about centralized monopolized control over ad space around the tension and commodities. We got to ask the same questions too around AI and what exactly the quote unquote uses for this are going to be. Are these going to be

open source? You know? Open ai says that they want to have that mission, but Microsoft clearly is eyeing this for what do they do best? Enterprise business control? And there's a lot Look, there's some cool things that could come out of it, right, maybe you're using your Microsoft Teams and it will draft a response for you to

an annoying email or in a chat. That sounds cool, But what if they also use it to automate somebody's job, or what if they also use it to, let's say, like predict exactly how many emails you should be sending in a day and then benchmarking and then stacking everybody up against each other. Like there are all kinds of dystopian corporate ways that you could push these things as well as what the innovations could be. And clearly that's

where they see the business opportunity. Yeah, that's why they're investing ten billion dollars into this. Yes, so open ai they built this thing, but they really they aren't really in the business of figuring out how to make it profitable, it make money, and so they've basically partnered with Microsoft so that Microsoft can figure out how this thing will

make money for them. And you know, that always is a direction that starts to take me nervous, because what is going to make money for a gigantic corporation, a gigantic monopoly like Microsoft, is not necessarily what is in the best interest of society. I am not wise enough to predict what all of those applications could ultimately be. I will just say it makes me wary. I mean, some of the things that have been predicted or I guess are in the sort of rumor mill. Are like

including chat GPT as part of the office Suite. Yes, so when you're like writing or microsoftware document, you might have access to the chat GPT tools right there where you can help use it to write whatever you're writing, or ask questions or learn from it. They also might incorporate it into their search tool to help sort of like you know, garner better results or more useful answers

to questions that people are asking there. So those are some of the obvious directions which are not from the jump deeply troubling We've talked about some of the concerns which I think are justified among academics about like students cheating. Ultimately, I think that ship is sale, though you're just going to have to grapple with this as a totally new world.

And part of why there is a real discomfort with chat GPT, which again I think is understandable, is the fact that now automation is coming for knowledge worker and even creative type people like journalists for example, won't be needed in as large quantities if they get this working really well where they can actually spit out articles or

explainers that are accurate and useful to the public. I will say that just this morning, I sent you an article what was it the Verge that was experimenting already with using chat GPT to create a lot of these like explainers and basic articles, and they had to stop the project because a number of the articles contain significant

factual errors. And they did disclose that they were written by chat GPT, but apparently some of the you know, some of the journalists at the Verge felt like it wasn't disclosed sufficiently, and so and listen and people are reading through this article, they're assuming that it's accurate, so they sort of had to pull the plug on that because the technology is just not quite there yet. It was seen it, but yeah, I'm see which has a

partnership with bank Rate. But I mean, look, that also highlights like we're not there yet, but also it's not that far away. It also shows you where a lot of the big dollars are going to be invested by the tech companies in the coming years. So I would say that the two frontiers where they're pumping the most amount of money is AI and then obviously the metaverse.

Apple rumor to release its virtual reality headset sometime in the next year or so that's going to rival the Oculus or whatever the new name is for it over at Meta Then Microsoft is investing this ten billion. Specifically, it seems to try and get an edge on Google by possibly incorporating chat GPT into the bing search engine. But at the same time, Google itself is already ramping up and has had a long decades long project on artificial intelligence and maybe rolling out their own competitor to

this soon. So this does seem like the next frontier, and I do think it's just really important. There's a lot of questions around this stuff, right, which is already you know, if you go when you ask chat GPT like sensitive social political questions, Oh shocker, you know, it's

got bias or whatever in some directions. So even the way that these things get programmed, I mean, it has a lot of impact on the way that people might think about things, especially if we become very reliant on that technology, and even put the social aspects aside, Like what is this going to look like at an enterprise level? That is the real question, and that's why Microsoft, Remember, is a huge This is a big corporate somehow we never really talk about it, but it's a multi billion

dollar behemoth. I think it's like a trillion dollar or something company. And they're openly also not only competing against Google, but also Amazon, which wants to incorporate AI into its web suite. So I think overall, like this is that this really is one of the next frontiers, and if they've been working on it for quite some time, but this does show you like the moment is here, and I think we're going to be covering this for the

next couple of years. Yeah, no doubt about it. I listened to a long interview with Sam Altman, who is the CEO of open Ai. There are the makers of chat GPT. There was a lot there that was interesting from him. I mean, one thing, he was kind of shooting down rumors that the next iteration of chat GPT

would really be this dramatic step forward. I mean, obviously it'll be improvement, but they're people out there theoryizing that it would be, you know, a sort of like difference in kind where you're getting close to that organic they call it AGI. What does that stand for? Artificial something something intelligence? Right? Anyway, clearly I'm just new learning this, but he says, listen, it's not going to be everything

that people are selling it, sort of downplaying that. He also talked about how surprised he was that the reception to chat GPT has been what it is like that it has been so like people so interested in and so freaked down about it, and sparked this whole national conversation because he felt like they had sort of intentionally released things step by step by step, where this was

the logical next step. But something about this particular iteration and people's ability to really interact with it, you know, it really kind of shocked people and so he was. He was surprised by that. He also talked about the Microsoft partnership. Now they had already had a partnership. This latest announcement is an additional tranche of money and a

deepening of that partnership. So this conversation happened between before the latest announcement, but these comments from Sam still give you a sense of how they are ultimately thinking about it. Listake a listen. Can you talk a little bit about your partnership with microsofticgus, how it's going, how they're using your tech. It's great. They're the only tech company out there that I think I'd be excited to partner with

this deeply. I think Sata is an amazing CEO, but more than that, human being and understands so do Kevin Scott and mckil who we work with closely as well, like understand the stakes of what AGI means and why we need to have all the weirdness we do in our structure and our agreement with them, and so I really feel like it's a very values aligned company. And there's some things they're very good at, like building very large supercomputers and the instruction we operate on and putting

the technology into products. There's things we're very good at, like doing research, and it's been a great partnership. So he's saying, listen, I mean, as we kind of lay it out, what we're good at is building this thing, they're good at figuring out how to market it and incorporate in products in order to make money. And he feels comfortable with the Partnershi. So that's sort of his view. And by the way, it's artificial general intelligence was the

word that I was looking for there. At the same time, in terms of education, this thing continues to make head roads. Let's put this up there on the screen. The CHAT GPT actually passed I believe it was a ten question test on the MBA exam at the Wharton School of Pennsylvania. It earned a quote solid grade and outperformed some humans on the Wharton course. So what they did is they took one of their test exams. I think it was

ten questions. And then it's in his white paper it's like, would chat GPT get a Wharton MBA GPT would receive a B to B minus grade on the exam, so obviously that's still a passing grade. Now I'm not saying they obviously would have passed the entire curricula, but it does highlight like, wow, this is going to really just

test the grounds of knowledge working what it means. I mean, we talked previously about what level of memorization possibly that this could free up, maybe in some students, not even necessarily for this, but I did see one where chatch ept actually worked on. It was one of the medical

school exams. And one of the reasons why it was so powerful and was able to do well is a lot of people in medicine I believe it from what I've told and some of the doctors and med students who I know, they have to memorize a lot of chemistry, a lot of like rote facts and other things they have to be able to recall off the top of

their head. Obviously, chatch EPT, with the availability of information that they have at their disposable at their disposal, would be it'd be much easier for them to have that

on a general knowledge type test. And then that comes to the question of like, well, how is that possibly going to manifest in terms of the actual room, Like, right, you could have a future doctor who may not have to memorize all that stuff and could rely on the technology be generally familiar and be able to type in something if they need to have a recall and then use that knowledge for future diagnosis or future course of action.

So the actual disruption here to edge and to a lot of these feels, I'm finding that really really fascinating. How does that absolutely? I mean, many management consultants looking at these results and sort of quaking, wondering if they're going to become you know, the peat Boodhagites of the world are going to ultimately become irrelevant here, I mean in playing with the tool as it exists now, Like yesterday,

I was playing with it. I asked it to write a monologue in the style of Crystal Ball about chat GPT and it, you know, it put out a thing that was reasonably good, but it was kind of surface level. It's not bad, you know, I mean, you can definitely tell the difference. It's lacking some like soul to it. You can tell. And there's also they talked about with regard to this NBA test, there were certain things that

it was really good at. You know, the sentences are perfectly structured, the grammar is precise, you know, the factual references are totally you know, totally there and thorough, et cetera. But actually on some just sort of elementary math, they said it was a bismal, just like totally incapable. Now that seems like the sort of thing that maybe even in the next iteration they're going to be able to fix.

But I do think it's a long way to go before these chat ai or other similar technology like the image generation or whatever. Before it's really in a position where you can't tell the difference between the output put from chat GPT and the output from a creative, thoughtful human beings. So don't worry human beings. You're not irrelevant yet. I guess this is my bottom line. Not yet. Also, though, you know, in terms of education, what we're talking about here,

put this up there on the screen. The Stanford Daily did a did a survey of its students and asked how many of you use chat GPT on your final exams. They have a quarterly system at Stanford, I believe, and the results said that all hell of a lot of people were using chat GPT in the fall quarter of twenty two, twenty two. Now, to what extent did you use it? So it was about seventeen percent of all stand for students admitted in an anonymous poll to using it.

So I don't know how many of them actually did it. I would presume and probably be a little bit higher. So how did they poll? Yeah, right, not scientific or whatever. It's not like perfect mind whatever you stand for daily good for them, they gads sense, Yeah, we did a good job here. So to what extent did you use chat ept in your finals? They said, brainstorming, outlining, and

forming ideas. That was sixty percent. That's kind of what I talked about before in terms of getting people started answering multiple choice questions with the help of chat ept. Thirty percent submitted written material from chat GPT with edits seven point three percent submitted written material from chat GPT without edits five point five percent. I want to meet some of those people. Those that's a bold move yet straight up copy of books, especially after some of the

stories and all of that that has come out. Can't remember if it was. I think it was this article where one of the professors had caught a student using it, and he it was like it was pretty easy to tell because it's said in whatever the essay was like as a artificial intelligence chat creator or something like that. And the person clearly didn't even just like read through to pull out any self references that this was in fact or by chat GPT. So come on, guys, if

you're going to use it, don't be that lazy. At least like reread it and make a few edits for yourself. Here's the other interesting thing. If you ask the students, you're like, do you think that using chat GPT is a violation of the academic honor code? So they had over five thousand results here, right, So they said yes, if used for more than just ideas, thirty one percent, yes, if used it all, twenty two percent, yes. If submitted with no edits twenty one percent, no, thirteen percent, twelve

twelve percent said that they were unsure. So a lot of people. It's funny because twenty percent or so of them are using it, but thirty vast majorities seem to say that if you use it at least in some capacity, it is a violation. Yeah, the academic all people kind of divided though, Yeah, no, they are divided. I mean this and seems like sort of mixed on it. As the professors that we've been reading about here and under like,

I get that for sure. I just feel like you're fighting an uphill battle if you're not thinking of ways to you know, test your students and build the skills that they're going to need. Given that chat GPT is now here and is not going away, not going anywhere, and is only going to get better from here on out. So I definitely get the angst around it, and it's

going to be a difficult transition. But ultimately, I think the most fruitful thinking is, Okay, how do we how do we use this tool and then build onto it? What are the pieces that human beings still bring to the table that are additive to this existing technology? That's right, all right, guys. Big political story. So, as you all know, Kirsten Cinema, with much fanfare at least in her own mind, declared her independence. Of course, she has never been truly independent.

She is fully beholden to her corporate donors. While more in that moment, but that opened up a big question of, Okay, well, what are Democrats going to do in terms of this next Senate cycle, Because Kirsten Cinema is up for reelection this next cycle, this next time around, and you could see how they have a bit of a problem here. She was not going to be able to win a Democratic primary because Democrats basically hate her guts. Now, so she declares that she's going to run as an independent.

So you have her in the race, a Republican in the race, and you would assume that she would probably take away from any Democrat who jumps in the race. So there was this question or Democrats just going to let her run and sort of tacit lead back her, or are they going to run their own candidate, And now we seem to have a pretty clear answer, and it was always likely to go in this direction, which I think is a good thing because I think democracy is a good thing and more choices are more better.

Ruben Diego, who is a progressive member of Congress and a rock War veteran. He has officially announced four Senate and put out his big announcement video yesterday. Let's take a look at a little bit of that. Growing up poor, the only thing I really had was the American dream, an opportunity. So one thing that we give every American, no matter where they are born in life, kinds of step up and be about a figure to my three

sisters and skipping my teenage years. I really did feel that I owed the country something and we got sent to Iraq, losing all my friends, consistently being shot at and people are trying to blow you up all the time. You never really fully come back from the war. I will be challenging kirston cinema for the United States Senate and I need all of your support. Most families feel that they are one or two pit chicks away from going under. That is not the way that we should

be living in this country. Very smart way, I think to announce emphasizing the background military service of course genuinely heroic in terms of for those who were just listening. It actually put up on the screen that his marine units suffered one of the highest casual He's actually casualty rates, I believe while he was deployed in Iraq. And then with the economics there at the end, to really punch home the message, combined with the bio, it's a strong ad.

I think it's a very smart play. Yeah. I thought it was well done too. You know, it was emotional. He talks about growing up in poverty, what that meant, how he had to basically you know, be a kind of a leader or father figure to his three sisters. You know, his mom struggling with paying bills, and he would throw in. It didn't seem gratuitous, but there were a few lines that were thrown in Spanish to kind of, you know, for Arizona, like make clear to voters that

he's also fluent in Spanish and culturally connected. So yeah, I thought it was I thought it was ultimately very effective, and it's going to be interesting to see how this all ultimately plays out. Because if it was just Ruben versus whoever the Republicans put up, and there's already talk of Blake Masters running again, there's already carry Lake running again. I think he'd have a pretty good shot at that.

But it is complicated by the fact that Kreson Cinema is like hanging out there and you know, likely to run as an independent. She's not going to be able to win as an independent. But again, which pot does she pull from more You would have to think it's the Democratic side. So this is going to be complex. It's hard to predict exactly what way this is all going to go because she does not have high favorability ratings. Among any group in the state of Arizona, not among Democrats,

not among Republicans, not among independents. But if she's going to pull votes from somewhere, you would think, since she was a former Democrat, it might come more from the Democratic side. We'll see at the same time. You know, we cover Davos last week and all the elites gathering at the World Economic Forum, and low and behold, guess who was there hob nobbing with a bunch of bankers and other global elites. Kirsen Cinema, herself, real woman of the people. Let's take to listen to a little bit

of what she had to say there. So, as folks know, I have declared, formally declared my independence from what I considered to be a deeply broken to party system. Those who know me know that I was always an independent voice and always have been for the things that I believe in and for my state and for my country. But I do think it's important to note that that

what you've heard about partisanship, I believe is accurate. You know, in the last two years, if we think, you know, January sixth, which is a horrible day from two years ago, created I think concern and fear for every patriotic American across the country. But in the resulting two years, the Democratic Party shared a narrative that said, we would not have any more free and fair elections in this country if the United States Congress didn't eliminate the filibuster and

pass a massive voting rights package. As you as we all know, the philibuster was not eliminated. Joe and I were not interested in sacrificing that important guardrail for the institution. That massive voting rights built was not passed through Congress, and then we had a free and fair election all across the country. We still don't agree on getting rid of the philibuster. That's correct. Thank you well, high five there between two of the most corrupt members of the

entire Senate. I mean, it just drives me crazy. We'll fight about the philibuster another day, but it does drives me crazy. The way that she postures herself like this, Oh, truly independent and she's just speaking up for the voices of Arizona. This is total, complete garbage. She is there for one reason. It's to serve her donors. And I say this because there is a really clear track record by the way you know report from CNBC. Of course, she and mansion and Chris Coon's one of Biden's type

top advisors, put this up on the screen. They went ahead and met with CEOs and private Davos luncheon for World Economic Forum. Again, real woman of the people stuff there. And also she has been the top ally of private equity keeping their goodies in the tax cud, a gigantic loophole giveaway that they get in the tax code. She got a bunch of cash from them. She preserved what's

called the carried interest loophole. She has continued after she went to bad for them to take their money and received donations even from executives at the private equity firm whose founder owns the winery where she interned and fundraised. So guys just don't buy her nonsense here about how she's so independent minded and she's really there for the people because it could not possibly be for their For the truth, well, most people don't buy it. I mean,

that's why she has such low favorabilities. And by the way, it's not like it's actually winning amongst Republicans. She has a low favorability amongst Republicans. The carry Lake people actually hate her guts. She has a low favorability. I believe it's under forty percent amongst Arizona Democrats. One of the reasons that she went independent, but even independent seemed to

be underwater there. I think the gyego is going to really push her because the only way that I could see it is if the DSCC and the Democratic top don't or the top party comes in and intervenes on her behalf. So, for example, Senator Schumer yesterday would not say anything about whether he would endorse Reuben Diego. Neither would Dick Durbin. So I believe one of the top Democrats I know he's want. I think he's a whip who's there. So they wouldn't even come out and say, yeah,

we might support Guyago. Actually, even Bernie Sanders was asked about it and he was like, well, he hasn't asked yet for my endorsement, And I was like, I guess, to be fair, there are other Democrats who may get into this product. That's true, Well, I think it's I think it's reasonable to wait and see who else gets into the race. But if you're really staring at a three way race between Diego, Cinema and whoever the Republicans ultimately put up to then stay out is you know,

I think that's absurd. Meanwhile, Mansion is already saying that he would back here cin Cinema. So they've got their you know, corrupt uh corrupt bond there I guess made of with the with the the folks over at Davos. Yeah, it's an important story. Will continue to track it. It could add up being one of the hottest primaries and probably you know, in terms of her donors, like that would come in big for her. This could there could be a hell of a lot of money. Yeah, that

happens in this race. One last thing, just to put this in context. I was looking at the first Larry Sabadeau crystal Ball ratings for the Senate for the next cycle, and Democrats are on defense in a lot of places including Arizona, Arizona, Ohio, and Montana. They have labeled as toss ups. These are all Democratic health seats West Virginia. Also, Joe Mann is up. He hasn't said he's running for reelection again, by the way, In fact, he's sort of

like flirted with running for president. Okay, dude, give me a breath. But anyway, they have West Virginia, which is currently held by a Democrat as lean Republican. So that's four states where Democrats are at best a toss up Republicans. Every single Republican seat that is held right now is effectively safe for them as the writings stand today, looking

forward to the next Senate election cycle. So this state is going to be extremely key if Democrats have any prayer of holding on to their control of the Senate. There you go, all right, let's move on. Final. The rumors are flying here in Washington basically have been ever since Dan Snyder said that he might be open to

a sale of the Washington Commanders. So the richest duienne of Washington, our richest resident, Jeff Bezos, let's go ahead and put this up there on the screen, may sell, and this is according to sources from the New York Post, may sell the Washington Post to buy the Commanders. Now they're immediately this report denied by Bezos, saying that the

Washington Post is not for sale. But what the New York Posts learned from a source that they say that was close to the situation, said that Bezos had told the paper senior staff in private meetings that while he had no plans to sell the paper, that there were others who he had reportedly discussed the actual sale of the Post to do so. The only reason why I think that this might be dubious is a man is worth what two hundred billion dollars? Does he really need

the He bought the Post for two fifty million. Does he really need the one billion maybe that he would get for the Washington Post, which is a failing business and has yet to turn a profit and is currently undergoing layoffs. Does he really need that to fund let's say at max is like what a five to ten billion dollar purchase for the Washington Commanders. It could be And I think this is actually more likely the case that if he does sell the Posts, one of the

reasons would be he just lost interest. I mean, remember he bought the Post in twenty thirteen. That was kind of his respectability era. That's why he came in here to Washington. He built the largest house here in Washington, which is truly a site to behold. At the same time, he started attending all of these major political dinners like the Gridiron Dinner and others. The White House correspondence dinner.

But then his life all kind of changed after he started dating his girlfriend and started taking TRT and getting jacked and hanging out on yachts at Saint Bart's and in the Caribbean. It's like he kind of resigned as the Amazon CEO. He's now like the chairman of Amazon, not involved as much in the day to day operations. It seems like his interests have gone much more in

the Hollywood pop culture direction. So that's why it would make more sense for him to be one of the deans of America's billionaires, an NFL owner, right, Like that's as good as it gets for a lot of these people in pop culture, whereas with the Washington Post, that's more something that you want to own if you want to influence the political process. That's the only reason I think he might sell it. There were a couple of other things that people were theorizing about why he might

want to get rid of the Post. In particular. I don't know if you guys remember he got into the spat with Joe Biden over corporate tax rates. Yeah, and obviously when you own the Washington Post, like this is no longer just sort of your opinion being put out there.

People that are going to look at the op eds and the articles that are being written at the Post and take a look at whether they are being reflective of the view that you have publicly put forward like you now are no longer just like a neutral observer out there have in your take, it has huge implications for what is happening at the newspaper that you own and pay the salaries at. So some people were saying, Okay, maybe he realized like he didn't like being muzzled this way.

And then there's another little sort of drama with regards to any potential interest he might have in purchasing the Washington Commanders, which is that the current owner, Dan Snyder, who's got to be the worst owner in all of NFL football history, as a long suffering Washington sports fan,

he hates Bethos and he hates the Washing Post. Why because they were the ones that did those investigations into all sorts of allegations of impropriety and sexual harassment rife throughout the now Washington Commanders organization, and Snyder, they said, suspects that Bezos encouraged that tough coverage in a bid to force him to sell the team so that he could then sort of pick up the pieces. So you know, Snyder would have to agree to sell it to Bezos,

and he apparently reportedly hayes his guests. It's another complicating factor. Five billion dollars is a real easy way to make that stomach. And again, ultimately, these guys are all just remember of the Green Party. They care about the money. Yeah, put this up there on the screen. Bezos immediately denied the report, but he's not ruling out buying the commanders. I'd seen other speculation that he was considering bringing in outside. I know that this is the way a lot of

people do it now. They'll do like a conglomerate, like a couple of famous people or whatever, with some investments and then buy it the team as a whole. I know they do that in the NBA. I'm not quite sure if they do that in the NFL. You're looking at a real NFL fan here. People knows quite a bit. But I do think that it is important because for me, it just tracks with Bezos's evolution clearly in his in

his in way he sees himself. At first, he was donating all this money to the Air and Space Museum one hundred million dollars, the Obama Foundation, naming the auditorium or whatever he was going for the respectability game. Did Jones get a bunch of cash in that? Yes? Yeah, oh yeah, like he listen, there's the Bezos Genius Grants, which just happened to fund some of the non geniuses

in our society. Though he now appears to be much more interested in Amazon Studios, going to the Oscars, hanging out with the Rock, getting a bridge disassembled in order to get his buying a super yacht. You know what? Did he got into that weird thing with Leo DiCaprio where he like joked about Leo stealing his girlfriend and now buying the NFL. So this seems to be the next evolution of bezos ken. I mean, you know, life

seems fun. Yeah, it's like real midlife crisis kind of vibes too, especially that photo of him with his Miami shirt like bawling out like I think he was literally he literally looked like he was in Miami. Makes sense, He's from there, so maybe you could take the boy out, but that's something that clearly sticks with you anyway. That's Bezos's next evolution. All right, Zachar, what are you looking at? Well, the debt is one of those things that instantly evokes

a lot of emotion in people. It's something that has animated American politics since the founding of the Republic, and the fight's over it, the increase in it, and the way that we manage it actually tells us a lot about the times that we're in. In the twenty tens, it seemed that we were living in the era of debt politics, the rise of the Tea Party and Greece, and then the immense fights that were picked with President Obama.

Trump seems to have wiped some of that away, but with this temporary disappearance that we're back back to what though, exactly what is debt? Should we even care about it at all? How did he even get like this? Anyways? The modern history of US debt is actually fascinating and it tells us a lot about American elites and their priorities, both in the last thirty years and throughout our entire history. So let's go all the way back in time to the very beginning. When did we first incur debt? The

first debt incurred by the sovereign United States. Technically happened during the Revolutionary War, but as we understood it today, after Alexander Hamilton structured the debt to the tune of nearly seventy seventy million dollars in seventeen ninety, debt continued to increase throughout the early nineteenth century with the Louisiana Purchase. Despite attempts at the time to pay it down, it especially ballooned during the War of eighteen twelve to approximately

one hundred and twenty seven million dollars. Now, a familiar story begins to emerge in US history. We get a lot of debt during territorial expansion and during war, followed by a period of kind of paying it off but not really. President Andrew Jackson, in his campaign against the National Bank of the United States, actually reduced the debt to approximately zero in eighteen thirty five, only for it

to then explode a again during the Mexican War. From that period onward, internal strife, territorial expansion, and more continued the debt upwards until it blew up during the American Civil War. There again we saw an increase historic rise in the debt, crossing the billion dollar threshold and peaking at approximately two point eight billion in eighteen sixty five. From there, the wild economic ups and downs of the Gilded Age kept us in debt, combined with the Spanish

American War and other attempts at establishing the American Empire. Overall, the debt remained relatively stable, approximately consistent at two to three billion dollars until you guessed it. Another war, the First World War. It exploded American debt from two point nine billion in nineteen thirteen to five point seven billion when the war ended, and somehow it began ballooning to

twenty five billion in nineteen twenty. The Roaring Twenties helped pay down some of America's debt, or at least keep it stable, dropping below sixteen billion, but going down until somewhat until the Great Depression. The election of FDR, the establishment of social welfare programs unprecedent at the time, exploded the debt again, beginning in nineteen thirty three at twenty two billion dollars and ending after World War Two at a whopping two hundred and fifty eight billion. Here again

we see a new normal. America is the world leader. It has the expansion programs. These things seemed to be okay right up until nineteen sixty five, with the simultaneous expansion of medicare combined with the Vietnam War, pushed the debt up to some three hundred and fifty billion before it just kept blowing up even more exponentially. By nineteen eighty, we began teetering on the edge of one trillion dollars. And when Reagan came into office, he did two simultaneous things.

He massively expanded the military budget and he cut taxes, and from there we are off to the races. The debt was increasing fivefold under Ronald Reagan and George W. Bush under Clint or George H. W. Bush. Under Clinton, we had a very brief respite, mostly because of the dot com boom, which massively increased federal tax revenues, and

because finally we weren't fight any more damn wars. We reduced our military spending and we actually had a budget surplus for an extraordinary period, a very rare occurrence in US history. But all things come to an end. We got smacked by the dot com crash then nine to eleven. Bush then did the two things that you shouldn't do if you care about the national debt. He massively cut taxes and he invaded two foreign nations. Doesn't take a

genius to figure out what comes next. A doubling of the national debt under George W. Bush to finance programs and disastrous foreign wars to the tune of trillions of dollars with less actual with more actual money. Obama similar story. You keep the war machine going in Afghanistan. In Iraq, debt keeps ballooning a trillion dollars or more so per year, in addition to Obamacare and some moderate expansion of the

federal government. Then of course you get Donald Trump, who cut taxes again and for the most part kept the war machine running up until twenty nineteen. Then COVID happens and that accelerated the game even more unprecedented bailouts, stimulus checks, etc. So here we are thirty one trillion dollars in debt today counting. What do we do about it? If you look back at the story I just told, there are three major components that actually contribute the most overtime to

our debt. One is social spending, which is enormously popular and effectively untouchable. Two is foreign wars since our founding, wars have historically ballooned the federal debt and expanded the role of government to levels that we never quite seem to ever get away from. Three is major economic downturn. Every major economic downturn has ballooned the debt, requiring in

recent years not only less federal revenue, but bailouts. Now, I'm not against bailouts per se, as long as therefore the average American and not industry, but you can guess where the vast majority of bailout money has gone in the last two centuries, which brings us to the choice that we face today. Our debt has increased by ten trillion dollars just this year in twenty twenty two up

to twenty twenty three. Worse, our actual debt servicing payments are going up astronomically because the Federals is now raising rates now to the extent that this is a problem, I think it just highlights how futile much of our discussion around this is. Here is the reality. Sixteen percent of the six point twenty seven trillion dollar federal budget is non military, non entitlement spending. That's basically a rounding

error on our debt. We really only have a few good options for actually solving it, and those are stopping military adventurism abroad, ensuring proper federal revenues come in instead of slashing taxes repeatedly for the wealthy, and having a stable, non financialized economy that doesn't crash all the time. I've yet to see anyone actually lay it out this way, And when you look at the story over nearly three

hundred years, it actually seems pretty simple. Unfortunately, we know that at every point we almost never learned the right lesson. It's really interesting, actually, and if you want to hear my reaction to Sager's monologue, become a premium subscriber today at Breakingpoints dot Com, Cristsell, what do you take a look at? Well, guys, as you've probably noticedom is this year is how we seem to be living in a golden era of scams, Crypto MLMs, scam influencers, scam members

of Congress. Truly feels like today the con man or con woman is king. But it's not just listless young men or dumb rich people or desperate housewives who are being scammed routinely. No the highest echalons of society. They are falling victim to the same charlatan's impredations as everyone else. The latest mark here Wall Street Titan JP Morgan Chase, they have now admitted they got scammed by a fraud business to the tune of one hundred and seventy five

million dollars. Now, before I get to all of the details here, and you are going to love some of the details here, let's just set the table. One thing that is core to a successful con is getting the story right, figuring out what it is that your mark wants to hear. What are their vulnerabilities, their wants, their fears,

their desires. And like other successful con artists, the young woman at the heart of this Chase scam knew exactly the part to play and the song to say to successfully defraud people who are supposed to be among the most sophisticated investors in the entire world. So here's what happened. It all started with a big announcement JP Morgan Chase,

led by fame CEO Jamie Diamond. They issued a big press release crowing that they were buying a company called Frank which supposedly made it easier for college students to apply for financial assistance. Here's how CNBC framed that news. Jamie Diamond declared last year he planned to get more aggressive and seeking takeovers, and he's certainly made good on that promise, with JP Morgan buying another financial startup. This

time it's college financial planning platform. Frankc dot COM's he Son as the exclusive details on the story, and he joins us now, Hugh, why this deal? Hey, it's good to be with you, Kelly. So the short answer is, what they're getting is a software platform that's been pretty effective at serving people young people who are heading to college and need to try to pay for it. So it's got a bunch of tools. The biggest, I think the main tool is an automated service that helps students

apply for federal aids. It's got five million users, and you know, Japie Morgan wants to get in on that. They want to basically have an affinity program essentially that you know, as you're thinking about attending college, you've got to chase you know, if all goes going to plan, you got to chase bank account. And after that, you know, if you graduate, perhaps you're going to add a credit card, mortgage in auto. So this is their plate to sort of get people hooked into the Chase ecosystem at an

early age. So Frank this company specifically claimed to JP Morgan that they had more than four million customers who were already using their tools to apply for financial aid, and as the CNBC analyst coldly observes, this represented an enticing opportunity for Chase to be able to get these young people hooked on their debt products early. Sure starts with a streamlined aid process, but before you know it, you've got these eighteen year olds into credit cards and

many other services. Wonderful new way for Chase to profit off of the college affordability crisis while also hooking young people into a whole lifetime of high interest in debtedness. The business prospect of getting their hooks into these young people early through a seemingly charitable service was absolutely irresistible, and the young founder of Frank herself, Health Charlie Javis, Like Elizabeth Thernos and Sam mccinfried before her, she had

exactly the right personal narrative to sell to elites. As The New York Times put it quite well, I thought, Miss Javis's story is an archetypal tale of late stage startup hustle culture. A teenage prodigy turned Ivy League social enterprise maven and shape shifting savior of higher education, or so she would have the world believe. Let's get a

sense of our protagonist here, alleged con woman extraordinaire. Here is Charlie Javis on some show that's sponsored by American Express, answering a question about what she's had to overcome as a female entrepreneur, major roadblock, and you might hear it from other female entrepreneurs who are trying to pitch like tampon companies or like underwear. Who knows, but male investors

just don't know about that full segment of the market. Now, try and take a segment of the market where investors who are usually wealthy have inherited it or made their money, have zero exposure to fatso or the financially process, and so it's almost like take odds where you might have fifteen to twenty percent female investors. Now flip it to people where literally maybe one person out of the hundre as I've spoken to has had personal exposure with it,

and that's the largest roadblock. In selling Frank, Javis spun elaborate tales of the pain that she had personally suffered in trying to afford college. She recounted difficult stories of her mother weeping as she tried to sort through the complicated financial aid process, months of agony as they waited to get answers. In her telling, Javis started Frank to keep other struggling students from dealing with the excruciating ordeal her own family had supposedly been put through. Course, turned

out both her parents had master's degrees. Her dad literally worked on Wall Street for Goldman, Sachs and Merrill Lynch for decades. Hard and Matt and Javis was quite as financially strapped and struggling with complex financial bureaucracy as her corporate origin story would have you believed. But no one in the female empowerment press or business journalists world looked into any of these inconsistencies. So Javis started peering in

all the important lists of up and coming entrepreneurs. She made Forbes thirty under thirty, she made Cranes forty under forty she got this weird quote, and forty under forty. By by the way, in this write up, where she says that since women disproportionately hold student loan debt, Frank is quote not as masculine around money, whatever that means.

As time went on, academics and even government agencies in the student loan space started growing suspicious of the many claims made by Frank about their services, their customer base, and their purported college partners. But JP Morgan Chase apparently

didn't talk to any of them. So when presented this seemingly perfect package, a four million plus receptive young Frank customers that they could market their products to, and a fresh face founder named on all the right list, they jumped right in with that one hundred and seventy five million dollar offer. It was just one little problem. Those four million plus established customers that Frank claimed that they

had they were fake. All but a few hundred thousands of of them were invented out of whole cloth in order to get through the JP Mortgan Chase vetting process. I'm talking fake names, fake birthdays, high schools, everything, As Chase put it in their legal filing against Javis quote. In reality, Frank was nearly four million short of its

representations to JP Morgan Chase. You see, after her initial pitch to Chase claiming she had four million plus customers, she had to actually put together a fake list in order to pass that vetting process. So to accomplish this, she took a couple of different approaches. First off, she hired a data scientist to generate a quote synthetic list, just totally fabricated data is what that means. That was enough to get her through that deal diligence and get

the deal closed. But then Javis had another problem. Chase obviously wanted to market to those four million customers, and they were going to need to send some actual, real email addresses solicitations. So to solve that issue, Javis purchased a list of real college students and their email addresses, hoping that these acquired addresses would be enough to continue tricking JP Morgan. Chase red flag started to pop up with this list, though almost immediately. First of all, this

is kind of funny detail. A Chase engineer noticed that the number of lines in one of the files that they were see from Frank suspiciously matched precisely the maximum number of rows that you're allowed in an Excel spreadsheet. The whole cover story was completely blown though. When emails went out to a subset of this new purchased list, more than seventy percent of Chase's marketing emails to this

supposed Frank customer list bounced back as undeliverable. Of the emails that did go through, almost no one opened the email or clicked on any link contained therein. That's the sort of result that you might expect from a purchase list of random college students, which is in truth, what this list actually was. Definitely not the result they expected from a cultivated list of students that had supposedly affirmatively signed up with interest in the products and services that

Frank and Chase were then offering. After the marketing campaign testra and crashed and burn, whole plot was uncovered quite easily, hilariously, all of Javis's scheming about how to generate these fake names and make it look real, that was all done on Frank email accounts, and once JP Morgan Chase acquired Frank, they also acquired those email accounts and could just go back through the email traffic that documented every step of

the fraud in the merger. All told, Charlie Javis pocketed about thirty million dollars in proceed and also secured a twenty million dollar retention bonus. JP Morgan Chase is of course trying to claw all of their money back, and I should add here for the lawyers, Miss Javis of course denies any wrongdoing and is in fact counter sewing JP Morgan Chase. So what is the big takeaway here?

Number one? Know yourself and your vulnerabilities, know what stories you would be susceptible to, and don't be an easy mark, because I truly do believe we're living in a moment that is a wash in audacious schemes and audacious fraud. And if JP Morgan Chase can be tricked, you can be too. Number two, it's humiliating that one of the world's most sophisticated financial institutions could be duped by such

a brazen scam. Remember all of the supposedly brilliant minds and a lead investors in famous business journals who were fooled by Elizabeth Holmes of Farnos and Sam BigMan Freed of FTX are not half as smart or all knowing as they think that they are. Finally, in these successful cons we can see the outlines of the failures that exist in our society, and that honestly is the part

that fascinates me the most. With this story, we catch a glimpse of a criminal higher education system that inflicts deep financial pain on millions to the profit of a few. We see greedy banks licking their lips at the chance to market a lifetime of debt to these young people. We see bio and identity weaponized to gloss over failed products and fake claims. We see how little due diligence any of our higher institutions of media and finance are actually doing, at least when it comes to people who

have been vouched for by other elites. If we are in a golden age of con artists, it's because we are in a dark age of societal failures that have left almost everyone vulnerable. And this was a humiliating experience for Chase because they had to pull down the website. And if you want to hear my reaction to Crystal's monologue, become a premium subscriber today at breakingpoints dot com. So

joining us now we have the aforementioned Derek Thompson. He's a staff writer at the Atlantic and host of the podcast Plain English, the latest episode of which looks at these tech layoffs. Great to see Derek, Good to see Man. Good to see you guys too. Yeah. Absolutely, so let's go and throw his piece from the Atlantic up on the screen. Here. The headline is what the tech and

media layoffs are really telling us about the economy. About one hundred and thirty thousand people have been dismissed from their jobs at large tech and media companies in the past twelve months. Why and what you get at here, Derek, is something that we've been really interested in as well, which is, you know, in previous years you had these sort of knowledge economy and tech workers that were in very high demand and seem to be able to sort

of like name their price. And at the other end of the spectrum, we had service sector workers who you know, employers are basically treating as disposable. Well, now you have a very low unemployment rate, but at the same time you see these huge layoffs in the tech sector in particular, but also, as you point out, in the media sector as well. So what is going on here isn't an incredible flipping like in the first part of this century.

Is let's say the late twenty twenty tens. The story was that the labor market was terrible and Silicon Valley was the future, and then the pandemic was sort of that narrative on steroids. We had a flash freeze depression in twenty twenty, but the big tech companies continue to hire more and more people. Now the opposite is happening. The overall unemployment rate is three point five percent to

the first decimal. That is the lowest unemployment rate of the twenty first century and the lowest unemployment rate going back at least forty fifty years. At the same time, now you have one hundred thirty thousand people laid off from the big tech and media companies. One hundred and thirty thousand people. To give you an impression, that's the size of Apple before the pandemic. That is a lot of people. And yet it's not showing up in the unemployment rate because we are having a kind of jobs

recession that is concentrated in big tech. So why is this happening? I run through a bunch of reasons both that article and my podcast Planned English. I'll start with this. People thought that the pandemic was going to be an acceleration. We said, you know, we're going to be living like this forever. In the future, we're working from home, ordering all of our groceries from online, never going to grocery stores,

never going to movies, streaming everything that we watch. But what happened as the pandemic wound down, as we'd gotten too the sort of let's call it late pandemic period, we flipped back. We sort of going at out restaurants, We started seeing movies a little bit more, we sorted commuting to work a little bit more. And as a result, is future that tech thought would materialize and not materialize the exact same way. Obviously, at the same time, inflation

went up, rates went up. That means their stock valuations came down, and they said, we hired for a future that did not materialize. That means we have to start laying people off, and that brings you to six percent ten percent layoffs. I just want to throw one more thing in here, and we can discuss that whatever you want. I also think it's an element of what's called in psychology social proof. That is, if Microsoft lays off ten thousand people, it's much easier for Google to then lay

off exactly ten thousand people. Much easier for salesforce to then lay off ten thousand people. You can have kind of cordated layoffs or de risked layoffs as a CEO, because you don't expect the media to get as mad at you if everybody is doing it right. It's a little bit like a riot. If the first person throws a rock through window, they're crazy. If the nineteenth person throws a rock through window, they're just a part of

the crowd. So I do think there's an economic story to tell here, but there's also a psychology story to tell here with regard to the CEOs that are doing this to juice up their stock valuations. That's a really excellent point, actually, Derek. I've seen a lot of Silicon Valley guys who were looking at the Elon situation. Many of them are like, look, I'm not even a fan of Elon. They're like, but if you can fire you know, seventy percent of your staff and your product still works.

And I'm putting aside the ad revenue and the down on that, but the core product itself doesn't appear to have as many problems as predicted. He said, you're an idiot. If you think every Silicon Valley CEO is not paying attention to that, Do you think that that might have played summer role in this in addition to the cheap money discussion. Yeah, it's a really interesting point. Let me

say two things here. The first point to make is that you're putting meat on the bones of the social proof theory Elon might have offered in this story, social proof that you can lay off a ton of engineers and computer programmers and people maybe in HR or in some other part of the company, and the company seems to be at least the product seems to be still moving predictably through the rails. Okay, fine, that I understand why that might get some people to say, I thought

about laying off five percent of my workforce. Now maybe I can lay off ten percent of my workforce and I won't fundamentally damage the underline products. But you also put your finger on something that's very important. How is Twitter doing as a company? Yes, terribly, but terribly. Their advertising revenue is down forty percent. You go on the platform and it's a bunch of like recommended promoted tweets

from people that I don't even follow. The product might basically look the same, but as a business, it is software to the point that Elon now has to scroungejump more money to make that first interest rate payment. So if I'm a CEO, I'm a smart CEO in Silicon Valley, you want to be careful about what lesson to draw from Twitter. Yes, maybe you could argue that your company is overstaffed in terms of computer programmers, and therefore you can lay off some people and you know, whatever Google

or Azure whatever can still can still function. But at the same time, I don't think that what Elon Musk is doing to the business of Twitter should offer any kind of roadmap to anybody yet, because Twitter is a dumpster fire in terms of its finances. Right, excellent point. Let's talk a little bit more about the cheap money piece, which has shifted just in the past year, because I

find this part really interesting. I was listening to an interview with Sam Altman, who's the CEO of open Ai, and he was saying, counterintuitively, like, listen, I actually think now is the best time to start a business. Yeah, financing is going to be difficult, but everything else is actually easy because you're gonna have an easier time getting people, You're going to have an easier time distinguishing yourself and being able to innovate and create sort of real value.

And inherent he put this all very diplomatically, by the way, but inherent in his analysis was the fact that you had a bunch of tech companies that really didn't have a business model that only were continued to able to continue to exist because of the ability to grab some of this cheap cash and sort of like float their

debt forever and ever and ever. So I have a lot of compassion for the people who are being laid off right now, Like that's an incredibly traumatic event ultimately, even if you are higher up on the income scale. But do you think there could be a silver lining here where there is more of an emphasis on like actual real business models that generate a profit and include innovation and ways that you know, consumers and others ultimately

benefit from. It's certainly possible. You could definitely tell a pretty compelling story that when rates are low and money is easy, hiring is easy, which means hiring the right person's hard because everyone is trying to hire at the exact same time. But it's a different story when rates go up and then hiring is a little bit harder people are laying off rather than adding to their headcount. That means that there are more people that are available

to be hired. And as a result, you know, you take the ten thousand people that are being laid off from Google, you add it to the ten thousand people being laid off from Salesforce and Microsoft and Amazon, you think, wow, this could be the kindling for a really interesting startup. So yeah, I think it's important to both have a lot of you know, compassion for people who are losing their jobs right now. Losing your job sucks, even with what I hope would be the fantastic or relatively fantastic

severance packages from a place like Alphabet. I also think that we could be primed for pretty interesting period of innovation because now these kind of employees are in the marketplace and they're thinking, Okay, what do I do next? Do I go right back to you know, trade desk, Do I go right back to a shopify, or do I think, you know, I really want to do something that matters to the world. I want to start a company or belong to a startup that's really doing something interesting.

For the world, and not just creating a new way of digitized gambling, which I think is what a lot of these crypto startups were. That is an optimistic read to put on this. Of course, it's economics. The most optimistic read that you can put on something is not always the thing that happens, but it certainly could happen theoretically. Yeah, I think that's the most important Derek. I know that you're really interested in the history of innovation. Where do

you see things right now? Are you optimistic about this in terms of possibly changing the terms of the way that tech is going to operate, or do you think

they were ending more of a lull period. I think that we are entering a period where tech is going to continue to be an absolutely massive part of our lives, and that we would make a mistake if we think that one hundred and thirty thousand people being laid off from big tech is going to change the role Google in our lives, or Amazon in our lives, or Microsoft in our lives. These companies continue to be the largest, most powerful, most profitable com company in the world. Yes,

they laid off six to ten percent of the workforce. Yes, that is in many cases the largest layoff in these companies history. But these still are the most significant institutions organizations may be in the world. So if you're a regulator, or if you're just an analyst, I would say, don't let up. Continue to scrutinize, continue to look at what they're doing and criticize what they're doing if it looks like they're abusing their power, because they still have quite

a lot of it, right. I think that is all very well put. Guys, follow Derek. He does fantastic work and it's going to make you think harder about a lot of different topics. Great to see you, my friend critzea man, thank you. Thank you guys so much for watching. Really appreciate it. I'm sure you guys enjoyed our videos on Instagram yesterday modeling some of the new Austin merch You can check that out at the actual Austin show, all made in the USA and in a Union shop,

which we're very proud of here. Thanks so much to our pre union subscribers who help support the show. Look out for Counterpoints tomorrow. Yeah, they got some great Suprise planned. They've got some good stuff. I'm always excited to see what they is. It's just nice to have a continuous flow throughout the week and then of course we'll be back here on Thursday. Love y'all, See you Thursday.