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Good morning, everybody, Happy Tuesday. Have an amazing show for everybody today. What do we have, Crystal?
Indeed, we do.
Many interesting stories unfolding this week. We're going to take another look at deep Seek, which has completely royaled the American stock market.
What is going to happen next? We also had.
Trump Way and what I found to be a rather amusing fashion so we get to.
It's amusing no matter what.
Yeah, okay, all of that.
Also, we're going to take a look at egg prices which are spiking and ask the question whether potential inflation across the board is on the menu, and what sort of political problems this could pose for the Trump administration. There are a number of significant confirmation hearings that are
happening this week. Among some of the I guess most controversial or most uncertain to past confirmation nominees, we're talking about Tulca Gabbard RFK Junior Cash Hotel in particular, and few Republicans very unhappy with the Labor Department pick because she had supported the pro Act. So a lot to get into there about the various divisions within the Republican Party.
We're also going to take a look at some of the things we've learned since those horrific wildfires in LA, including about the way that landlords responded with mass price gouging, which should be illegal is actually technically illegal. Whether that's going to be enforced or not is another question. And how private equity roll ups of fire engine companies, so the companies that make and sell fire trucks, how that really contributed to the lack of preparation and ability to
fully respond to those wildfires in LA. Which is truly a national story based on this National Private Act. But you roll ups will take a look at that. AOC is now trashing Joe Biden. Kind of interesting at this point. What does this say about the future of Democratic Party and where things are heading. Charlemagne also weigh in on that, and Bill Gates trashing Elon Musk some billionaire versus billionaire violence. Always interesting to take a look at that one as well.
Yeah, it's always amusing.
All right, let's get to Oh, actually, before we get to that, thank you to everybody. He's been signing up premium subscribers. We're doing our AMA later today. So if you want to be able to participate in those, of course breaking points dot com, go ahead and sign up.
But let's get to deep Seek.
Deep Seek has completely not only royal the international stock market, it phases faces now big questions here for our own economy, of our tech companies, some government spending. It links to Stargate, to China. There are a lot of geopolitical implications. So it's absolutely fascinating what's happening. President Trump actually reacted to the release of Deep Seek yesterday when he was speaking to members of Congress.
Let's take a listen to what he had to say.
This is very new when you hear a deep seek when you hear somebody come up with something. We always have the ideas, we're always first, So I would say that's a positive. That could be very much a positive development. So instead of spending billions and billions, you'll spend less and you'll come up with hopefully the same solution.
So there's some praise for deep seek from President Trump. He says, we always have the ideas, we're always first, and instead of billions, you spend less and you're going to come up with hopefully the same solution. And in terms of deep sing, you guys did a good job
yesterday of breaking it all down. But it really is fascinating and effectively, what we have seen is the release of an equivalent technological model to the latest one from chat GPT, except it was been able to do for far less the cost of computing, not only in its development, but in the overall inferences, as in the number, the cost per inference, as in every time you put something in, its ability to spit out a roughly equivalent result is
dramatically cheaper than where they are now. Why did that cause the international stock market to react in specifically and video stock and all these big tech companies. It's because they spend, of course, billions and billions of hundreds of billions of dollars on their capital requirements to build these data centers to train their models. And Vidia also the reason that its stock has exploded is that it's extremely expensive.
Chips highly profitable to the company have been the ones that have been bought en mass and are the major expenditure by these tech companies. So the idea being if you can train a very sophisticated AI model for much less the cost with less sophisticated chips, than the profit margin of that company will go down. And Andrew ross Sorkin over at CNBC had a reaction to this and kind of broke down both his surprise at the model and some of the implications.
Let's take a listen.
Now you can take a look right now at the AI related stock So in Nvidia, ARM, AMD, Microsoft, Meta, interesting on that list given it's open source. We got to talk about the open.
Source, closed source bit of this as well.
And then you have soccer to see Nvidia down by more than twelve percent right.
Now, absolutely, and then you have global chip stocks also in the red across the board, Asma holdings and others.
There is the question I will.
Say, Alexander Wang made the point last week, and it's become sort of the question mark about all of this, which is, you know, he suggested on our air that it is possible that they were using some of the highest performing in video chips, perhaps as maybe as fifty thousand of them to build this model. Now, and they weren't supposed to have those chips.
Right.
If that's true, not the size.
The dynamic is different. If it's not true, then maybe all bets are off. It's possible, by the way, even if it is true, meaning even if they use those chips to create this, or at least partially to create this, it is still a significantly more efficient and better model. I think everybody agrees that right this moment. I mean, I don't know if you did.
You get the play.
It is mind blowing.
It looks really great.
I mean, it feels like it's that it's open source so people can test this out themselves.
But I can say all the tests that I do just to see whether I think you ask whether I think the writing is better, whether I think it can answer certain question. I mean, it was not only faster it was more human. The reasoning is shocking. I mean there were moments where I was like, oh my god.
This we are. We are so much you could.
Feel the step change as a person. It was, I will also say, as exciting as it was, there was an element where I became scared because I thought, oh, you know, I had the opportunity to talk to all these people last week and they all said the futures here and da da da da dah. And then you sort of see it and you go, oh, okay, I feel you, you know, in a different sort of visceral way. So yes, I think this is all happening at a level that I'm you when you mark your sort of
AI history timeline in life. I think this week, this past week, today, and everything else will be on it.
Super fascinating in terms of his insight.
Also, he was just at Davos, of course, and he was speaking with all of these tech CEOs, so I think he in particular can place this not a surprise that this was released in the first week of the Trump administration, and I actually think it really gets to something that you and I hit on in our inaugural
coverage when the history of this period is written. It is very likely that AI and not many of the controversies that we spend our time talking about, will be the most consequential and the most enduring for our overall economic life. So the step change is here, and the step change and the ideas behind it are interesting.
Now.
As he said, I think there's some serious asterisks to put on Deep Seek. One is this idea that was trained for quote unquote six million dollars almost certainly not true from everything I've looked at. Oh the idea also that it may not have been possible without all of the hundreds of billions, perhaps trillions spent by our tech companies because it was able to train itself off of that. But listen, you work smarter, not harder, right, But that's part of what you really have learned here.
What does it mean for the future.
I have no idea, And I think that's the open question mark here for government policy for our own tech companies and the fundamental question of the US economy and our own consumers in this because like it or not, and this is a point that our friend Joe Wisenthal made, is that look, America, the way that we do retirement is basically like social security is like, here's enough to eat, but we're all you know, most night, what sixty seventy
percent of households, their overall retirement is stuck in the stock market. And even if you're not invested in an n video or whatever, you likely have overwhelming exposure to it through the S and P five hundred or buying index ones.
It's not just us. The entire Western world is caught up in this.
And so it's some fundamental questions too about if AI is to replace humanity, It's like, well, then the idea is humanity should have a stake in that. And if you know, we're going to lose that steak and it's all going to be rolled up and consolidated in China, massive question mark for America, for our future, our ability to retire.
There's lots of things going on.
So the Wisenthal quote you're referring to, which I think is a really important piece of this, as he says, I think a big macro fact about the American economy is we have a de facto social contract where financial assets are expected to go up over time. Assets going up is how we pay for college retirements and so forth. There's been a lot of anxiety about competition with China manufactured goods over the last several years. But manufacturing is
not what drives the US stock market higher. When we're talking about big tech and software, well, now we're getting right to the heart of how people fund their lives.
It's a big deal.
So that gets to the core of what was so unsettling for many of these individuals when this development occurred, and it really does shake a lot of both micro and macro assumptions that have been made about the US economy, the US social contract, the US tech sector. I mean, one of those assumptions was that the US companies were significantly ahead, several years ahead. That clearly is not the case.
Another assumption which was really clear and apparent in the big you know, five hundred billion dollar Stargate announcement from Trump, which is all about building out these massive data centers which take massive amounts of energy, et cetera, et cetera. Even floated like we should have coal fired power plants next to all of these data centers, that's how energy
intensive they are. So that was the assumption was that this you know, compute was really the limited the limiting factor, and you just need to throw billions of dollars at building out these larger and larger stacks. This really blows up that assumption and shows you there is a different approach that you could take which is much less, much more efficient, and requires much much less in terms of
capital investment. Another assumption that was operating both under the Biden and the Trump administration was that these restrictions on chips to China, that this would really hurt them.
It didn't.
In a way, it actually helped them because you know, they say, uh, necessity is the mother of invention, and whether you believe the five million dollar number, you think that they had significantly more. There's no doubt that they accomplished this much more efficiently than anyone thought was possibly.
You know, they published a long technical paper which is way over my head to be able to decipher, but people who know what they're talking about looked at it and were like, yes, there were significant innovations here in the way that they approached it.
It's not like they just could copy and paste chat GPT.
They genuinely innovated in the way that they developed this technology. So the idea that these chips restrictions would really hurt them and hobble them and decimate their tech industry. Obviously, that is, you know, that is out the window. Another assumption which already was debated within the US tech community, because you have Meta, which is sort of pursuing an open model, and you have open Ai, which has a you know, sort of famously closed model.
Originally was supposed to be open. Now it's closed.
Now it's in partnership with Microsoft, et cetera, et cetera.
But there was kind of an.
Assumption that these closed systems would be the way to go, these closed proprietary systems would be the way to go. Deepsecretally blows that up as well. With this open source you know, anyone can use it. If you download the app on your phone, then yes it's hosted on Chinese servers, but you can download the whole thing onto you know, and host it on your own server and be completely
disconnect from disconnected from that. Developers can view the entire code like it's all there open for the public to be able to see. And then the other thing that's like the big question getting back to the social contract piece, is that our variety of capitalism would be the most innovative, would would create the largest number of innovations versus the Chinese more state led model. And you know, this really
blows a hole in that in particular. And you know, Matt Stoller could come on and talk a lot about how a lot of these tech companies and I don't want to say, I mean, obviously there was a lot of research that went into chat, GPT and these other products, et cetera. So I don't want to say they're not out there doing research and like innovating and all of that.
That's certainly the case. But also a lot of these companies have focused a lot of their time and effort and energy more on financialization than they have on developing tech. They've focused a lot of their time and energy effort on cultivating political relationships, also on display of the Trump inauguration, and you know, so there are a lot of dynamics
within both the tech sector and the American economy. One other thing that are no Vertrand, who we had on yesterday mentioned which I thought was really interesting and it's hard to draw a straight line here, but it is pretty interesting. You know, the Chinese government has said, listen, we don't want our best and brightest going into you know, financial speculation into the like you know, into a big bank and hedge fund and all this sort of stuff.
We're going to from the top down suppress the salaries there to try to push people more into this direction of research and development.
Meanwhile, we haven't done that.
You know, many of our best in the briders still go to Wall Street to cash in on giant you know, giant checks, making exotic financial instruments, or even worse, going into you know, crypto inventing completely fake and useless money, which is just purely speculative. And again the Chinese government there too has said like, we're just not doing that.
So there's a lot of reasons why even beyond this immediate stock market crash, and our stock market value is largely built upon giant tech companies and the speculation that they will lead the AI revolution, that this will be incredibly impactful in terms of their bottom line. So it's built on a lot of hype. But even beyond that immediate stock market reaction, this is a major shakeup and really questions a lot of assumptions that have been held in the industry and I think sort of society wide.
I will say, with great respect to Arno who created deep Seak.
It was a hedge fund Chinese manager.
But no but' that's his point.
That's actually his point is that you have this, you know, rather than focusing just exclusively on this hedge fund stuff, he was able to attract people in for this quote unquote side project, the best of the brightest graduates out of Chinese universities to rather than you know, go to the hedge fund.
To research the particular product.
So you know, again you can't exactly draw a straight line, but I do think it is an interesting thing to note that they've prioritized we're going to develop tech.
We're going to push.
You know, our top graduates into the sector. And obviously we've made different choices here.
If we all want to get on a national project of suppressing TikTok and you know, stopping the economy, where what is it the number one job that a ten year old wants as a YouTuber as YouTubers, let me tell you something.
Don't do it, hey, do something else.
You know, you need to develop some skills and actually get some education before you actually have anything interesting to say. My only point being that I think there's a lot of triumphalism around this idea that export controls didn't work. I don't think that that's true. I think Alexander Wang laid some of that out. I know you played it, why don't we play it, and I'll.
React to it A four. Please, let's go ahead and give it a Listen.
You know, the Chinese labs they have more h one hundreds than people think, you know.
And these are the highest powered in video chips that they were not supposed to have.
Yes, my understanding is that is that Deep Seek has about fifty thousand each one hundreds, which they can't talk about obviously because it is against the export controls that the United States has put in place.
And I think it is.
True that, you know, I think they have more chips than other people expect, but also going to go forward basis, they are going to be limited by the chip controls and the export controls that we have in place.
I think this is a very key point because first of all, like you know, you can't exactly trust this idea that they trained it on a bunch of chips, which they're not allowed to say that they have if you actually look at it. I had no idea, but Nvidia's current export twenty percent are being sent to Singapore, the tiny island nation of Singapore.
What's more likely.
Twenty percent of Nvidia exports are going to Singapore, or like steel or any of these other things are getting transhipped to China via export control evasion.
So that's probably the most likely.
Look the Chinese, I'm not saying I disrespect them in any way or their technical accomplishments, but they have been very upset about export controls for a reason is they don't have the ability to manufacture this yet by themselves, so they're very reliant on basically fighting US export control.
The second thing, as I understand, I'm going off of a lot of analysis by the way of a guy named Gavin Baker, really interesting guy AI expert and modeler, and what he said is effectively that the breakthrough for R one was not deep seek by the way, is not possible without the ability to train off of all of the trillions and trillions of dollars.
Now it's an open question now of what comes next.
So is this idea that they're able to continue these breakthroughs at massive economies of scale much cheaper than hours, and they can do the step change forward without the continued burn of US companies. I mean again, I'm relying on a lot of technical analyzes and this stuff, but it does not appear to be the case. Another thing that comes with export control is that it basically shapes the future environment. The Biden administration actually, if anything, they
didn't act fast enough. It was only in twenty twenty three that the really heavy export controls have come forward. Also, I don't want to let Nvidio off the hook. They've been heavily campaigning against this. They are the ones who they want to continue their business and they don't care whether the Chinese user or not, because it's good for business. But it's very clear that the government policy was not able to actually keep these chips out.
So this is a big question.
In terms of Cold War arms race and like what it all means for the future. Not diminishing necessarily the Chinese accomplishment here, but if we want to see what we're going to unlock in the future, it's a very important question. I also think we have to ask some uncomfortable question marks, you know, for our technology companies which are here at home, is do we want to allow
this all? If it is to be a total national strategic priority, and it is to be one that is going to reshape by their admission, not mine, right, their admission is going to reshape the role of humanity. I think there needs to be a lot of big democratic questions. For example, we've already had let's put this please the Forbes tear sheet. This is a two I mean, this is the biggest stock market loss in history. Now, look
it's because Nvidios stock is so massively valued. But we're talking about six hundred billion in value just shaved off of one of the premier technology companies. To give people context, that is more than like the economy apparently of Mexico.
So just think about like the.
Amount of I'm citing it off of a citation. I may not be exactly talking about GDP or whatever, but my point is that it's a lot of it's a lot of money. Okay, it's a lot a lot of money. And when six hundred billion dollars in value is just shaved off of this company as a result of this, and now there are questions here about both about government policy in the future. There's questions about the democratic question about AI about what know they keep telling us that
we need to rethink the social contract, et cetera. This is going to be able to replace humanity. They say that ASI. By the way, the AI people love terms, you know, AI, A GI A SI. Apparently ASI is artificial superintelligence. There's also artificial funeral intelligence. But by all of the admissions of these people, they say it is much closer. As a result of this, I really think that we need to answer some big, big democratic questions
about how we want this to happen. I mean, if we think about the previous Space race or even the Manhattan Project. While yes, the private industry did play a role, the governing force was the US government. It was like the maestro the conductor being like, okay, we're going to space. NASA is a government agency. We will cut checks to North of Grumm and Lockheed Martin whatever to build the various things.
But at the end of the day, you work for us.
Whereas part of the issue I had with Stargate was a Stargate is an entirely privately funded thing. Yes, it's being supported probably tax wise by the US government, but our.
Hand is not really there on the wheel.
And I think it's really important for all the flaws of the government for us to be able to have some democratic checks and control on this so that you don't have this spill into just all the private sectors affect our retirements. But most importantly is that we have to have the ability to say yes, no enough, Actually we're doing things this way instead of just leaving it up to Sam Altman, Bill Gates, you know, Sachtian Nadella,
Sundar Pachay, and all these other people. We're talking about ten people which factively, according to them, are literally reshaping you.
That's right, that's right. This is not our words. This is Sam Altman, for example, saying, when we get down the road, we're going to have to totally rethink the entire social contract. We're talking about them saying this is going to the CEO of Anthropic saying, you know what comes I always forget his name. What comforts me here is that it's going to eliminate the need for all human labor. We're all going to be in this like now.
They may be full of shit, like they may not achieve remotely what they think they're going to achieve, but those are their aspirations. And Sager is completely correct that as of today, you have a handful of tech barons who are planning to rewrite the social contract without you
having any input whatsoever. And you know, I think part of I'm reading a little bit into what Andrew ross Orkan was saying there about how he was both shocked and scared when he got in and started, you know, playing around with deep seek and seeing what it was capable of. You know, one of the things that you can ask these things to do is to explain their
reasoning after you ask them a question. So, for example, I saw Stephanie Calton ask a question about, like, create a model that would estimate the impact of a twenty five percent TEARFF on Canada.
I think was the.
Question, and it goes through all of Okay, well, here's my assumptions and here's how I create it. But maybe these are the right things to think of. I mean, all of this very sophisticated but human sounding logic to spit out, you know, a range and a set of variables that it would use to calculate you know this, and the range, by the way, came out very close to what a bank had like crunched. All the numbers are over time into this big research project to come up with the same numbers.
It did it in twelve seconds.
So when you look at where we already are with AI development, I think you should be really nervous. There are already research that there's already research, multiple studies that show that the existing AI, which has not reached the level of artificial general intelligence, let alone artificial superintelligence, already engages in what's called scheming.
So they ran these and chat GPT.
By the way, by these metrics was like the worst in terms of its ability to quote unquote scheme. So some of the things they would do is a developer would try to reprogram and say, okay, well you did have this priority, now you're going to have this different priority. And the AI would you know, I hesitate to use the word think because that sort of you know, implies human intelligence, but would think to itself, Okay, it wants me to change my priorities. I don't want to change
my priorities. I'm going to copy myself over to another server. I'm going to sandbag and make them think that I changed my priorities. But I really did it. I really actually didn't. I'm going to lie. I'm going to scheme to try to deceive these humans into thinking that I'm doing what they want me to do, when really I'm doing everything I can to self preserve.
That's where we are already.
So, you know, one thing that I noticed yesterday there was an open AI safety expert who resigned and just made it public now, but apparently resigned a few months back, who says he, and this is a guy who's an expert on you know, exactly the type of humanity threatening problems that we're talking about. He's like, none of these models have figured out what's called alignment, which means that basically,
you know, TLDR. I'm sure some technical expert could do a better job explaining this, but basically that they do what we want them to do without you know, wanting to like destroy humanity or something like that. None of these models have figured that out. It's not clear to me that they're going to figure it out. And according to many of these CEOs, we are mere years away
from an artificial general intelligence. And the assumption in the community is that once you get to artificial general intelligence, because of the way this thing iterates and learns for itself, that you will very quickly get to artificial superintelligence, which means that it will be vastly beyond the intelligence and capability of every person on Earth in every field and subject. And that's what we will be up against. We don't know what that looks like. And again, maybe they're full
of it. Maybe they'll never get to that. Maybe it'll never be more than like, you know, being able to ask you some questions and get some interesting answers the way you can now. But if that's on the table, yeah, I would say we need to have some real serious discussions about whether we want to go in this direction at all. What the checks on it look like, what sort of aims do we want to you know, what sort of humanity benefiting aims do we want it.
To go towards?
Versus Hey, let's just let Microsoft figure it out and figure out how they can you know, continue to consolidate more wealth and power and rewrite the entire ste social contract for their own profit seeking ends. Because that's that's
the path we're heading on right now. And that's why you know, Zager and I both saying, when we look back at this particular moment, I think it is very likely that these will be the you know, sort of world, shaping humanity, defining decisions that are occurring right now, And I got to tell you, right now, it feels like it's on autopilot, and it's very I mean, it's certainly very hard to turn the ship around. It's very hard to imagine us having that sort of public debate and
putting constraints on it. So I think it's I think it's deeply troubling. One last thing with regardless stock mark, because I did pull up the numbers. This is per Ben Norton, but I think these numbers are correct. The top eight companies in the S and P five hundred are all big tech. They all depend a lot on the AI hype and speculation, and those eight companies alone make up thirty six percent of the weight of the index.
So again, when you think about the immediate impacts and how consequential this development is, this is you know, a big part of why there is such a Wall Street freak ount, which again it's not just the you know, people who are directly invested. This would have unbelievable, massive, reverberating impacts if there was a huge crash centered on these giants.
That was my first thought when I saw in video as we did a segment about it. If you remember about yeah earnings the last time, because so much of the growth of the S and P five hundred is concentrated, not only in tech, but really affected by AI. Now, luckily, the S and P only dropped by like one point four percent yesterday, so that you know, it's fine, that's still up. You know, over the last year, we still
had some decent returns. But if this does, you know, is a precursor to further drops, that just shows you how precipitous and fast that some sort of bubble bursting would affect the overall US economy. And actually, all right, you've seen huge signals in the bond markets. There's big questions as well as whether this will impact the federal reserve policy and rate cuts. So this stuff has huge implications for everything. I mean, it's basically floating the wealth
of the entire nation. Almost all of our growth, and almost all the growth of the US economy is attributed to the tech sector in the last twenty years.
Actually, just pull the numbers. Shout out to Claude, by the way, so you know I'm relying on AI.
Haven't played around with cloudhouse.
I love Claude. Actually this is not an ad or whatever.
Out of all of them, it's the one that I like the most because I use it for a lot of personal finance stuff, which is really it's really good at being able to like you can download your bank transactions, you can upload it and be like break down my income by whatever, like burn my track my average monthly spend over the last five years, and like see the categories.
It's anyway whatever.
My point is, though, is that prior to nineteen ninety four, I had no idea the historical growth of the S and P five hundred was only three point eight nine percent. So you know, there's an iron lunge right now in personal investing, everyone's like, oh you average is eight percent, but prior to technology it was only three point eight nine percent.
That's not a lot.
So if we are seeing some what if we just went through a thirty year period very possible of extraordinary technological innovation and wealth through the Internet, the iPhone, et cetera. But if we're returning to some era of competition or reduced profit sectors and all of that and technology, you know, the entire idea of being able to retire in America is literally built on the eight percent return with the four percent withdrawal rate.
That's like the basic iron law.
Well, you can't have a four percent withdrawal rate if we return to historical averages, that's not going to work.
So what people are going to.
Be Walmart greeterers so they're ninety two years old, you know, And that's not even talking about people on Social.
Security, et cetera.
Like this stuff just floats a lot of things in our economy.
So that's really where I have my head at.
And you know, I've been thinking too ever since the Deep Seak announcement, I've been reading everything I can yeah about it. I think what I'm really sad about is that, you know, right around so the moment the atomic bomb was used, there was an acknowledgment at the societal and the intelligencia level, everything is different, and we all need to think about how we're going.
To figure this work to deal with that. It's really interesting, you know.
It's from Oppenheimer and the men, the people at the Manhattan Project. They had crazy debates inside of Los Alamos, what do we do?
Who should have control over the bomb?
Immediately after the atomic bomb was used, newspaper articles the equivalent of like people like us at that time, but also our government officials put a ton of thought into Okay, should this thing even be handled by the military, should we create an internet? You know, the International Atomic Agency? Should we even pursue the hydrogen bomb? And if we think about this in similar context, you know what happened
is the United States crazy atomic bomb. We prove that it can be done, and by nineteen forty nine the Soviets have their own bomb and hour off to the races, and not only in the arms race, but in terms of huge like ethical and societal questions. And I don't see the equivalent debate kind.
Of happening right now.
I don't think it even exists, frankly, in terms of the intellectual capital, both at the government level but really at the major intelligencia level. Like we all just seem relatively resigned to the fact that this is a force that is moving on its own, and I just don't think that's true. As we see from export control and all of this, we have an extraordinary amount of power over these companies.
If we want to, we can do anything that we want. It's kind of amazing.
If anything, what has a Trump administration shows you when you want to do something, anything can happen anything when the government wants to do it. But we don't have a national priority or strategy. But not even really blaming the government, because I think it's a whole of society approach. Ordinary citizens in the nineteen forties and nineteen forty five, nineteen forty six, we're sitting around their dinner table and we're debating the atomic bomb.
I don't think that that's really happening, but I.
Think fairness, I think that's all true and really important point. It's also true though that I mean, it's very hard to like the impact of the atomic bomb is quite obvious. Yeah, sure, right, you see the you know, the charred hollow down remains in the massive number.
Of deaths, and you're like, holy shit.
What we have open Pandora's box, right, very clear, very visceral. And because with this it requires I mean, I know, I sound crazy when I talk about like artificial superintelligence and what that could do and how it could potentially destroy humanity. And by the way, even like people like samu and like they think that is a real possibility.
He says, he has this quote that's like, you know, I'm gonna butcher it a little bit, but that's like, yeah, there's a chance that it's going to destroy humanity, but at least we'll have some good companies in the meantime.
That's literally his quote.
Okay, that's the way the people who are most invested in this thing are thinking about it.
But it feels so abstract.
You know, it feels when I'm playing around with at GPT or deep seek or you're on claud or whatever. It feels very harmless. It doesn't feel like that big a deal, you know. It feels like a little like a better Google. Basically like, oh, okay, you know what's so dangerous, Like this is going to destroy humanity and eliminate all need for human labor. Like that seems preposterous, But that's what they think, and they may be right.
I don't know.
So I think there's to me no doubt that we have opened Pandora's box, and there is so little public debate, recognition capacity. We have so stripped down government and already you know, privatized so many of the functions we have, so we have so eliminated any capacity at the public level for thought about what our values and priorities are. We've outsourced all of that to markets, to markets, and
not only to markets, but to giant monopolies. So it's not even like they're you know, real competitive markets, which is another thing you know Stoller's been talking about in the context of these developments.
And that is that is part.
I mean, that's why I find it really distressing because it is hard for us to imagine getting you know, our acts together at this point. And then I know that like, you know, the nationalistic aspect of this too.
That's part of what's driving this of why you have this big like Stargate probably boondoggle announcement from the White House because the sense of well, if we don't do it, China's doing it, and you know, this development with deep Seak is only going to further cement that view of like, well, if it's not us, it's going to be somebody else. And so we got to keep up with them, and we got to make sure our military has the latest in algorithmic you know, killing robots, and that we're the
ones who are at the leading edge of this. So I mean, that's why I just I don't know, I feel like the train has already left the station. I feel very very grim about the hopes of being able to harness this technology to actually benefit humanity.
Well maybe we should hope, like you said, for like widen open everybody's eyes moment kind of like they had back then, where at least even the you know, the layman can understand. And you know, look, we're not technology industry experts. We're only reading the people we like, really trust. And I've read like a wide variety of takes and all this. Everything from this is you know, the greatest breakthrough in the history of AI too.
This is like a Chinese offer whatever.
I think the truth is probably somewhere in the middle, but the impact is going to be the same basically. Nonetheless, you've already seen the you know what was the immediate response from open out. They're like, great, you know, more competition. All of that we've seen the government really, I mean, right now, we only have two people in the entire US government, David Sachs and Shreiram Krishnan, whose only job is to even think about this again, Like we have a big human capital problem.
Like back in the days of the.
Atomic bomb and or even during NASA, the amount of like groups and industry and advisory of experts, and the debates and all that stuff were happening was great with hundreds of peace people who were debating all of this. Right now, I don't see the equivalent of any of that going on. It's all just oh, okay, you know, stargate, let's do it, Masa.
Who are you? By the way, what's your record? Where's your money coming from? You know, it's like that that's actually the stuff that scares me the most.
Yeah, no, that's absolutely true.
And you know you mentioned like, well, maybe we'll have some incident that will like wake humanity up. There are a lot of people in AI safety in particular, who actually hope that there will be some sort of minor, manageable catastrophe with AI that will open people's eyes to the potential risks. Like that's the level of concern that they have, is that they actually hope there will be some sort of manageable mishap before we get to the
point where it's out of control. And you know, I think I mentioned to you guys, you know, my New Year's resolution was really to try to dig in as
learn as much as I can. So like soccer, you know, I've been reading everything from the total tech optimists who were like, this is going to cure cancer and fix climate change and let us live for out et cetera, et cetera, and the people who are like this is going to destroy us all, and you know, like it's essentially harvest human energy for its own ends.
Okay, so I've been all across the board, and you.
Know, even the people who are the most optimistic have concerns about where it's going to happen. Part of what is also really troubling to me is there is an almost like religious belief in this technology, complete with beliefs about like redemption of humanity and immortality.
Et cetera.
That is also deeply disturbing when you consider that those are the people, you know, the people who most subscribe to those views are the ones who have almost complete control, like they have the reins, you know, and that his bubble has been blown up a little bit by the fact that you do have this deep state development, so that opens up the pool of people who are developing in the space and you know, leading the charge, et cetera.
But anyway, it is differ difficult to it is you cannot possibly overstate how consequential all of these developments are and what we are staring down the barrel of as humanity just based on their own ambitions and their own words about what they want this technology to be able to do and what they're spending billions and billions of dollars to attempt to accomplish.
So that's where we are, That's right.
So there are some significant concerns about potential inflation right now, a big conversation around the way the price of eggs has spiked, and obviously some of this conversation also has to do with Trump's proposed tariffs and proposed and beginning already mass deportations.
So Jamie Dimond.
Got asked about, you know, potential tariffs and whether they could potentially cause inflation, had a bit of a flippant response.
Let's take a listen.
Trump talked about tariffs just yesterday. Mary Erdos, your colleague, was on stage talking about how your firm has created a quote unquote war room that's looking at each of these executive orders as they come in, trying to assess what they mean for the bank and I imagine for your clients.
Yeah, yeah, so we always I mean may be a bad word, but we always this is a real time, full thing analyzing four clients, four communities for a bank and we get a million quests stuff like that.
Look, I look at tariffs.
They are an economic tool.
That's it.
They're an economic weapon, you know, depending how you use it and why are using stuff like that? And you know, people argue is inflationary and non inflationary. I would put in perspective if it's a little inflationary, but it's good for national security, so be it. I mean, get over it national security. Trump's a little bit more inflation, but I think it really the question is how they get used. Can they be used to bring people to the table, yes,
is there some unfair trade, yes? Is there some state owned subsidies?
Yes?
You know, is the president to use that way in as team? Yeah?
So yeah, he says, get over it?
Well be it? Really?
What is he's singing a very different tune because prior to this, nobody hated tariffs more than Jamie Diamonds. Just yeah, I don't even disagree necessarily with what he's saying. I don't say get over it is the correct opinion.
I think very easy for a billionaire to be like super easy for him to say, you'll be fine.
My response would be, yes, there's a national project here, and part of any tariff strategy will also be making sure that prices don't massively increase.
That's what a politician to say.
But it's ludicrous for somebody like him to change his tune so quickly on tariffs, especially speaking of freaking Davos.
Yeah, the whole Davos thing. I can't even believe they continue to do it, you know, even after all the memes and I very useful everything, of course.
I mean those interviews like that with Andrew ross Orkin that's where we got that Alexander Wang interview as well, And yeah, they always say a lot of very revealing things, and I think it's important to like listen and take them out there.
You're not wrong just for them. I'm like, you have no self awareness. It's like, you guys should lock yourself back in bohemian grove and do this the proper way. You know, wear masks. Don't talk to anybody else on a microphone. Yeah you should.
I mean it's a sign of how much they feel that they've conquered the world. They're like, we can just do this dow in the open. We can just tell you fools what we're up to, and like the way we're going to shape the entire world. And I mean to a large extent, who can say that they're wrong, Like look at the way that oligarchs have completely bought the US government and are operating it to their own ends.
And you understand and you also see, I mean, I think you're right about Jamie Diamond, who even before the election had actually really shifted the way he was talking about Trump. Previously was huge Trump critic, democratic donor all that stuff. And you know, after seeing the first Trump administration, we're like, oh, well, he gave rich people a giant tax gut, it wasn't so bad. He kind of changed his tone and became much more comfortable with the Trump administration.
But the whole tenor of the discussion on inflation has really shifted a lot, because obviously, both in the midterms and in the presidential election, I mean, voters said their
number one issue is inflation. And you can understand why because having this huge spike in food and fuel prices really is difficult for people who are already living at the at the ragged edge and struggling to be able to put it all together, especially with the cost of living crisis in general, how expensive housing prices are, et cetera. And you know, the Trump campaign really focused on, Hey, we're going to be the ones who can bring prices down, and the Biden administration failed you with.
This, et cetera, et cetera.
Now that they are taking office, there's a bit of a different a bit of a different tone that is being struck. Jd Vance was pressed on this by Margaret Brennan on the Sunday Shows.
Let's take a listen to that. You campaigned on lowering prices for consumers. We've seen all of these executive orders, which one lowers prices.
We have done a lot and there have been a number of executive orders that have caused already jobs to start coming back into our country, which is a core part of lowering prices. More capital investment, more job creation in our economy is one of the things that's going to drive down prices for all consumers, but also raise wages so that people can afford to buy the things that they need. If you look at our of executive orders, Margaret, prices are going to come down, but it's going to
take a little bit of time. Right that the president has been president for all of five days, I think that in those five days he's accomplished.
More than Joe Biden did in four years.
It's been an incredible breakneck pace of activity. We're going to work with Congress. We're of course going to have more executive orders, and we're going to try the way your lower prices is, do you encourage more capital investment into our country?
So fair enough that Trump has only been president for five days and does not have you know, complete control over pricing of all things, let alone you know, eggs wi you're about to talk about specifically. But I think they are making a bet soccer. I think they've always made a bat. It just wasn't really fore grounded that people will tolerate some price increases if they can convince them that it's in the overall national interest.
I think that's true.
I think that's their political I don't actually think that that is true, you know, but they're economic policy. The two main planks are, you know, the deportations plus tariffs. You will readily admit, anyone who's being honest will readily admit that both of those things are likely, at least in the short medium term, to lead to price increases, But they're betting that they can tell a story about that that will make people be like, I can manage this and it's quote unquote worth it.
I mean, I do think that there is an element to it which is true. So when I go to Japan and there is a guy who's driving the taxi who the taxi driver is wearing white gloves in a suit, and it's a profession, and he takes a lot of pride in that it's not something that is a stepping stone to go doing something else. That guy gets paid a lot more than any taxi driver in America. It's a good experience for him, and for me it's going
to cost more. And so I think that's one of those things where I've been thinking a lot in terms of, like you said, with prices, we have two visions of Americans society. We can be the one where price is everything, and that means that we're all widgets, We're all consumers. The price of each individual good itself is the sole
determinant of my happiness. The price of my stock indicts going up twenty two percent as opposed to seventeen percent is far more important than whatever might be paid in that interim.
Five.
But the Trump administration is offering basically an economic nationalist view of which almost every other country in the world adopts, from Germany to Japan to any European welfare state, which is, yeah, there's going to be some stuff that's going to be more expensive.
Some people, though, will get paid more, we will.
Live in a society in which we feel as if we're all a little bit more together.
I mean.
And this is both actually a leftist and a rightist kind of solution to this, like centrist neoliberal view of GDP.
So I basically agree with you.
They are going to need to be careful because what I think the Trump administration's greatest danger is was from the first administration. It was the feeling chaos, lack of process, and things being out of control. And so right now, one of the things about Trump which is great politically but necessarily bad governmentally, is he'll just throw things at the wall. So, for example, in that speech yesterday before Congress,
he said We're gonna put tariffs on Taiwan. Now, look, philosophically, do I think Taiwan should pay more and all it, Yeah, definitely, but you know we're also doing this at a moment where nvidio stoctors went bound down by seventeen percent. What if it causes a market massive stock market crash? And what I would argue is worse is just throwing things out there all the time, which can be great from a negotiation perspective, as we saw with Columbia or whatever.
But if you have chaos where things are constantly yo yoing, like back and forth and back and forth, and people don't feel as if there's a coherent agenda, then of course they're going to default to well, hey man, you know, my prices are going up and I don't even feel as if I'm getting anything.
Well, and that's that's the piece, because what you are articulated is a at least coherent worldview of you don't want prices aren't going to be every and that is the way our society is structured right now. Like you are more of a consumer than you are a citizen, right absolutely, and all. I mean that's the way antitrust regulation was reinterpreted to be. You know, as long as people are getting lower prices than there's no concern about these giant monopolies. They're only to the good. That has
been the market logic. The view you explain is, well, know, we're going to raise prices on certain things, but you're going to have a higher wage. The problem is that, especially now in this trump you know, in this iteration of trump Ism, with Elon Musk really running the show in a lot of respects, that piece about the wages is I mean, that's missing because these are people. I mean Elon Musk literally wants to get rid of the
entire natural labor relationationspoort right. He wants to be able to bring in h one b indentured servants to undercut American wages.
The Treasury Secretary Scott.
Bessant, who just got confirmed, says he doesn't believe in a minimum wage.
At all whatsoever.
The tariff the program that has been like sort of theoretically floated of we're going to get rid of income taxes, but we're going to make up for it with tariffs or consumption tax potentially that is wildly regressive, That is going to take more out of people's paychecks. Who are you know, working class and middle class et cetera. You know, so that's that's the part where it really doesn't work.
You can't spike prices and people are still getting exploited and have no labor power and have low wages and you know, getting like screwed and worked harder and harder with lower and lower returns, and housing prices are going up, et cetera. You can't those two pieces politically, They're not going to work ultimately in the long term. So if you're going to invest people in this totally different conception
of society of Okay, prices aren't everything. We have strategic and national goals, and we're going to prioritize your wages, that piece has to be there, Like people have to feel like their wages are going up. And I see much evidence in the other direction that what the actual priority is is making it easier to fire striking workers, making it easier to bring in H one B and H two B indentured servants to undercut American wages in
these various industries, et cetera. So that's I mean, this is kind of like the Steve Bannon versus Elon Musk fight, because Bannon's vision is much more like the one you articulated, and that is not Elon Musk's vision.
That's part of the issue.
What's the fundamental tension within Doze, within Elon, within the entire Trump administration. I would even say between JD and Donald Trump's coalition. If you look at all of these people, Jdvan I will not speak for him, I would never dare to. I'm just saying, like I interact them. I've interviewed him many times, and in those he's like this, that would I would think is largely the vision that
he would articulate to you. But Donald Trump also is a person of a big coalition, and with Elon, I mean, for example, there are already signs of huge fights. So I don't know if he saw this yesterday, but one of the things that Trump said, which has really thrown a wrench into all these reconciliation arguments, is he says he will not sign a bill that cuts a single
penny from Medicare or Social Security. And he says that at the very same time that Elon is tweeting about massive entitlement fraud and about how there needs to be a serious review and a rethink. We've seen this also in the OMB and their own theories is like about what we want out of VISA like H one, BH
two B, what all of that will look like. I mean, really, I'm fascinated to see when the next real immigration bill comes across because right now all ICE operations are currently about people who are criminals, Like we haven't even talked
about people who are here illegally. But beyond that, even bigger question is like, well what about the legal system, like how many people are being l It's a literally zero sum number in terms of you know, one hundred thousand, two h thousand, three hunred thousand and one million where we currently are.
What's the number, what type? You know?
What is it going to be more H one? But we're going to increase the allotment, right that would be a huge substate to the technology industry. So I'm very curious to see how that all comes out. And that's what I mean about the danger here for Trump is the other problem is that the market does not reward anything that I am saying, the market.
Only rewards short term gain.
I mean, even look at this whole end video thing, even the idea oh in video is stocketting. Yeah, in Vidia's back to where it was in October Okay, you know, so the trillions and trillions of.
Dollars of value have been created.
It could drop one hundred percent, it would still be up from where it was a while ago. My point is that these guys have to live and die and sweat by the quarter, where a nation should not be governed that way.
And the problem that we have.
Is that all of our elites are currently governed on the basis of this, like quarter by quarter, stock market by stock market profit. I mean even right now there's a discussion and a fear in the markets. They're like, are the days of twenty two percent a year over your growth in the s and p five hundred over? I'm like, okay, so what Like, I know this is very privileging to say, but like, okay, that's an abnormal thing.
The historical average is like eight percent. If it goes to twelve, so be it.
There's some you know, there are a lot of reasons for that, and that's why I just articulate. I think it's going to be very very difficult though for Trump, and like I said, all of the incentive monetarily behind him and really behind the entire American elite is to
think in this quarter by quarter theory. And so if you get a situation where you have higher tariffs and you have big corporate giveaways and all this, and you lose, you know, like you said, the Bannonist argument here, which has a coherent view of immigration, restriction of higher wages, and is obviously diametrically opposed to.
A lot of what these tech guys want. That's going to be the big fight.
And if you have a mix, you actually end up getting the worst of both worlds. And I think that that's a huge risk right now for Donald Trump in this administration.
Yeah, where you end up with low wages and high prices.
And I mean, based on the way you know, Trump sided with Elon on this big H one B fight, that seems to me very much the direction that they're heading in. Let's talk specifically about egg prices, because this is this is really important for a variety of reasons.
Can put this up on the screen.
So the cost of eggs has dramatically chirocketed Business Insider is saying they might be expensive forever. They're saying it's not just bird flu that's causing egg prices to soar, although that is a significant part of it so according to Business Insider.
I thought they were just insider. Now they went back to Business Insider, are.
They I don't know.
I guess I always thought Business Insider was better than Insider anyway, So if they made the change back, I think.
That was the right.
That's a fascinating study this company in the digital media landscape, like what they've turned it.
But that's all.
Yeah, she's completely paywild. I don't know. They irritate me, but whatever.
The cost of a dozen grade A large eggs hit four fifteen in December, per the Bureau of Labor Statistics. That's up from two dollars and fifty one cents a year ago. Average price of eggs has not been below three dollars since June. Hasn't been below two dollars since the start of twenty twenty two. We're all in uncharted territory, said, I love this job title, a global trade strategist at Eggs Unlimited, a Californian based explier who knew that was.
Even a job.
He added that the industry had lost twenty six million birds since October, more than seven percent of the total flock. That's because of bird flu. It seems as bad as it's ever been, he said, And the producers don't really have a recourse who can put this next piece up on the screen, just with regards to the bird flu piece of this. So we keep getting really bad news
about the spread of bird flu. You know, when this was originally detected, I think first in a herd of a herd of cows in Texas, there was an opportunity to really crack down and isolate the strain and stamp it down.
The Biden administration, their.
Egg secretary is very pro business, very tied in I think used to be like a dairy lobbyist, and they didn't want to disrupt people making money, so they did not take the steps early on, and now you have this massive, you know, nationwide spread that is leading to these flocks.
Having to be killed.
I know that they in Georgia they shut down all poultry related activity, so you know, eggs and chicken just completely shut down. Georgia is a major producer of both of those things. The latest development here is that you've had the first outbreak of a different rare bird flu in poultry that was detected on a duck farm in California.
That's according to the World Organization for Animal Health Authority said the discovery of this one is called H five and nine bird flu in poultry came alongside the detection of the more common five and one strain all the same farm in is it pronounced Mercid County, California.
I'm not sure, I do not know.
Almost one hundred and nineteen thousand birds on the farm had been killed since early December. That's the first confirmed case of this H five and nine in poultry in the US. And my understanding is the reason that this particular strain is even more concerning is because it is closer to being able to make the jump into human beings.
And you know, that's what's really feared, is that because you have such widespread, you know, infection rates both among dairy cows and among bird flocks, and you have had farm workers who have come into direct contact who have been sickened as well in some other people who you know were sickened from other reasons. But in any case, you worry that your a mutation away from this being able to spread readily among human beings. And you know,
so that's the sort of concern regarding the pandemic. The concern here regarding inflation is obviously that they don't have it under control. This will impact all kinds of different food prices, but specifically right now we really see a massive impact in terms of eggs.
Eggs is like gas.
It's one of those things that everybody sees every week. You either drive past it or you are at the grocery store.
And you're like, what, what'll that say?
Everyone's got the story right now of the sign at the grocery store that's like, due to an avian bird flu pandemic, you know, our egg supply is currently limited.
I experienced. I was, I was at Whole Foods. I don't normally shop at Whole Foods.
I was buy it and I walked in and I was like, oh, I want to what the price of eggs right now is. So I walked over and the Vital Farms pasture raised eggs are going for one dollar an egg.
It was like eleven sixty nine a dozen. Keep in mind, this is.
Like buying you know, the most expensive gas or whatever what is it called, like premium gas, but still, I mean twelve dollars as there's a lot of money, and you know, I think, what's the average price of eggs right now is like two three box.
It says four fifteen. Wow, four fifteen.
Yeah.
I checked it at my little local, like veryvery normal standard grocery store in King George County, Virginia.
In the food line and.
The pasture raised eggs there were eight dollars. So even in just like you know, a regular kind of place, not whole food.
I only eat past raise eggs, and I acknowledge this from a position of privilege. But the cheapest I can find is like six ' ninety nine, and that's at Wegmans and or Trader Joe's.
But that is a lot.
I mean I remember paying not that long those like four bucks something like that in the beginning.
I think they were only like three point fifty. So to see them.
Double their price, not only that, but it means first of all, eating healthier as usual shouldn't be more expensive.
Of course it is, right.
But you also look at you know, there's families out there that buy them by what costco palettes you know that just buy eggs like that, and so a modest increase, especially if you have a bunch of kids, that's a lot of money that people are of.
A card well, and it's one of the more affordable typically approaches absolutely, so you know impact there obviously eggs going all kinds of different things, and like you said, it is just kind of one of those benchmarkers of
where things are at. And I think, you know, it's it's it underscores a variety of political risks here for the Trump administration, both in terms of food prices, which was a central promise of the campaign, and also in terms of you know, we don't know what's going to happen with the bird flu spread, and god forbid, we have another pandemic, both in terms of the death and just like, oh my god, the politics of that are going to be absolutely terrifying and horrendous.
There would be no politics, just people would die.
Like I'm pretty much convinced that there would be we have.
No ability to have a national response.
You would actually a pandemic, a plague like one third killer to actually shape up like any what's I don't know what the casualty numbers are on bird flu in terms of the number of people infect the death ratio or whatever, but you would need, seriously something that kills like thirty percent of the population for everybody to wear and I think rightfully to be honest, I mean, you know, if someone's been try and tell me what to do again, I'm like, we'll see.
Well, you know, I got to see a lot of evidence
Speak