The Treasury’s Gold Revaluation Play | Lyn Alden
https://www.youtube.com/watch?v=xagpUfToyqA
Language: en | ASR: large-v3-turbo @ 0a363e9161cbc7ed1431c9597a8ceaf0c4f78fcf

[00:00:00.000 --> 00:00:04.920] Speaker 1: When does the debt matter? My answer is it has been mattering. The Fed's tools are just not
[00:00:04.920 --> 00:00:09.500] Speaker 1: geared toward this type of inflation. Being bearish on stocks basically means you're
[00:00:09.500 --> 00:00:13.560] Speaker 1: bullish on fiat. I write sci -fi because it feels more normal than reality.
[00:00:18.590 --> 00:00:21.270] Speaker 2: Hey Lynn, great to see you. Thanks so much for joining us today.
[00:00:21.650 --> 00:00:22.830] Speaker 1: Thanks for having me. Happy to be here.
[00:00:22.990 --> 00:00:29.190] Speaker 2: Part of your core thesis right now is that commodities and scarce assets are in a bull
[00:00:29.190 --> 00:00:30.950] Speaker 2: market, are the place to be.
[00:00:30.950 --> 00:00:35.550] Speaker 1: Yeah, I think so. I've been bullish on gold. That's somewhat separate from commodities
[00:00:35.550 --> 00:00:40.150] Speaker 1: because that's more of like a competing store of value with the treasury primarily. But I
[00:00:40.150 --> 00:00:43.570] Speaker 1: think that bull market is – I mean, I think it got ahead of its skis for a period of time,
[00:00:43.610 --> 00:00:46.990] Speaker 1: but I think it's still over the longer term on track.
[00:00:48.230 --> 00:00:54.250] Speaker 1: I think silver is a long -term beneficiary from these trends, potentially platinum, copper,
[00:00:55.150 --> 00:00:59.450] Speaker 1: and I'm a long -term energy bull, and also just energy assets, even just assets that
[00:00:59.450 --> 00:01:05.050] Speaker 1: transfer energy, for example, I think are going to be in demand for a very long period of
[00:01:05.050 --> 00:01:10.530] Speaker 1: time. i invest in in places like brazil for example uh and sometimes it's not even a
[00:01:10.530 --> 00:01:15.110] Speaker 1: commodity trade it's like you know one of the best like my favorite trade in brazil has
[00:01:15.110 --> 00:01:21.930] Speaker 1: been owning their biggest bank and it outperforms the index um uh and uh so like there's
[00:01:21.930 --> 00:01:27.670] Speaker 1: kind of associated ways to kind of be adjacent to that that whole trend uh but it's the
[00:01:27.670 --> 00:01:31.850] Speaker 1: idea that capital was primarily going to like non -resource things and now it is going
[00:01:31.850 --> 00:01:36.870] Speaker 1: toward resource things and there's a broad way of playing it. And I do think that that need
[00:01:36.870 --> 00:01:38.550] Speaker 1: will exist for a long period of time.
[00:01:38.790 --> 00:01:43.950] Speaker 2: We ask the experts closest to the real economy to make sense of it. The people who build,
[00:01:44.310 --> 00:01:49.710] Speaker 2: mine, and power real assets and put their own capital behind them. Then we connect the dots
[00:01:49.710 --> 00:01:55.030] Speaker 2: and tell you what it means for your money. Wealthion. So let's talk about that
[00:01:55.030 --> 00:02:01.330] Speaker 2: macroeconomic backdrop. So we have CPI, PPI readings coming out. I mean, we've been above
[00:02:01.330 --> 00:02:07.010] Speaker 2: the Fed's target rate for like 66 months, right? Should the Fed officially abandon this?
[00:02:07.110 --> 00:02:10.270] Speaker 2: What is the new norm for inflation? How are you thinking about that?
[00:02:10.490 --> 00:02:14.370] Speaker 1: I don't think they should abandon it, but I think the challenge is that the Fed's tools are
[00:02:14.370 --> 00:02:19.310] Speaker 1: just not geared toward this type of inflation. And so, I mean, the point that I've made a
[00:02:19.310 --> 00:02:23.910] Speaker 1: lot in macro is that we're in fiscal dominance now, not monetary dominance. And basically
[00:02:23.910 --> 00:02:28.590] Speaker 1: what that means is, so the Fed's primary tools, especially interest rates, but also to some
[00:02:28.590 --> 00:02:34.950] Speaker 1: extent, the balance sheet, are meant to encourage more bank lending or discourage bank
[00:02:34.950 --> 00:02:39.330] Speaker 1: lending and make it tighter. So, I mean, the obvious example is if interest rates get super
[00:02:39.330 --> 00:02:44.210] Speaker 1: high, fewer people are likely going to, you know, take out a really big mortgage and
[00:02:44.210 --> 00:02:48.710] Speaker 1: overpay for the next house, right? They're going to be more conservative with their housing
[00:02:48.710 --> 00:02:53.910] Speaker 1: decisions. And also that just throughout the economy, that'll trickle out in various ways.
[00:02:54.170 --> 00:02:59.070] Speaker 1: So their tools are primarily saying, okay, if things are running hot, if a lot of fractions
[00:02:59.070 --> 00:03:03.690] Speaker 1: are bank lending is happening, inflation is above target, Let's try to slow down that bank
[00:03:03.690 --> 00:03:09.050] Speaker 1: lending and that broad money creation or vice versa. If you're in kind of a stagnation, in
[00:03:09.050 --> 00:03:13.030] Speaker 1: theory, they try to lower rates and say, go borrow more. Go take out that bigger mortgage,
[00:03:13.210 --> 00:03:19.190] Speaker 1: buy that bigger house, which will take more resources and labor and do all that.
[00:03:20.750 --> 00:03:26.590] Speaker 1: And that can be effective in, for example, Paul Volcker's era where bank lending was the
[00:03:26.590 --> 00:03:32.670] Speaker 1: key driver of the rate of money supply growth. it works far less
[00:03:32.670 --> 00:03:39.130] Speaker 1: when fiscal deficits are a bigger source of kind of just new money entering the economy
[00:03:39.130 --> 00:03:44.970] Speaker 1: than bank lending and we've actually kind of reached a phase where annual deficits so
[00:03:44.970 --> 00:03:49.770] Speaker 1: basically the amount of net new treasuries created in a given 12 -month period is now
[00:03:49.770 --> 00:03:56.330] Speaker 1: bigger than the sum of net new bank loans and net new corporate bond issuance and so the
[00:03:56.330 --> 00:04:01.470] Speaker 1: fed can kind of focus all they want on trying to slow down that bank lending channel. But
[00:04:01.470 --> 00:04:06.010] Speaker 1: it's a smaller factor than the deficits. And then ironically, higher rates makes the
[00:04:06.010 --> 00:04:12.950] Speaker 1: deficits higher now. So it actually, in some ways, every time the Fed raises rates, I get
[00:04:12.950 --> 00:04:19.950] Speaker 1: a raise. Any investor that has as much cash as if you have a locked -in mortgage, you've
[00:04:19.950 --> 00:04:24.510] Speaker 1: got a money market fund, you get a raise every time the fed raises interest rates even at
[00:04:24.510 --> 00:04:30.330] Speaker 1: orange juice when we when we raised our capital you know it's it's in uh interest bearing
[00:04:30.330 --> 00:04:36.250] Speaker 1: like fiat and we actually get the fed gave us a raise on a on a pretty large pool of
[00:04:36.250 --> 00:04:40.030] Speaker 1: capital which actually slightly allows us to go out and buy slightly more companies or hire
[00:04:40.030 --> 00:04:45.350] Speaker 1: slightly more people around the margins obviously um and so interest rates at when you're
[00:04:45.350 --> 00:04:51.450] Speaker 1: at 100 of debt to gdp just and the problem is more that deficit than the bank lending
[00:04:51.930 --> 00:04:56.030] Speaker 1: they're just kind of solving a different problem and so it's not that i would say okay
[00:04:56.030 --> 00:05:01.230] Speaker 1: here's what the fed should do it's more just like how should they communicate that it's not
[00:05:01.230 --> 00:05:07.130] Speaker 1: really their purview uh in some sense and yet the whole the whole structure of a central
[00:05:07.130 --> 00:05:11.170] Speaker 1: bank is designed around the idea that they can solve this and it's just it's kind of an
[00:05:11.170 --> 00:05:15.170] Speaker 1: illusion that we have that we've created for ourselves which is just kind of ultimately not
[00:05:15.170 --> 00:05:15.610] Speaker 1: the case
[00:05:15.610 --> 00:05:22.130] Speaker 2: yeah it's it's a sort of 800 -pound gorilla that no one seems to be able to say anything
[00:05:22.130 --> 00:05:28.090] Speaker 2: about, whether it's the Fed or Treasury. But you have this other narrative, and again, this
[00:05:28.090 --> 00:05:33.550] Speaker 2: goes back to what people hear, that we've got the president up every day saying, when the
[00:05:33.550 --> 00:05:36.750] Speaker 2: midterms are over, the war is going to be over, fuel prices are going to go down, inflation
[00:05:36.750 --> 00:05:43.730] Speaker 2: is going to be solved, the affordability crisis will improve drastically. And there are a
[00:05:43.730 --> 00:05:46.510] Speaker 2: lot of people, and sometimes when you look at the markets. It looks like they're pricing
[00:05:46.510 --> 00:05:51.930] Speaker 2: for the end of the war, and we're going to get the energy shock to go away. And inflation
[00:05:51.930 --> 00:05:57.010] Speaker 2: will sort of reign back in. But you're saying this is all coming from fiscal. So that is
[00:05:57.010 --> 00:06:02.730] Speaker 2: not the case. We might get energy prices lower, but will that do anything to resolve the
[00:06:02.730 --> 00:06:03.430] Speaker 2: inflation problem?
[00:06:03.650 --> 00:06:07.590] Speaker 1: I mean, it'll do some. I mean, there's always more factors involved. For example, in the
[00:06:07.590 --> 00:06:12.530] Speaker 1: 70s, there was that combination of high levels of bank lending and then crisis in the
[00:06:12.530 --> 00:06:17.490] Speaker 1: middle east which gave us a real world constraint uh and likewise now on one hand we have
[00:06:17.490 --> 00:06:22.370] Speaker 1: that the fiscal uh dominance that the fiscal deficits that are structural and then we have
[00:06:22.370 --> 00:06:27.670] Speaker 1: real world constraints um right now one of the biggest ones is energy and more specifically
[00:06:27.670 --> 00:06:34.190] Speaker 1: refined products um uh and so it is absolutely true that if you know if if the war is over
[00:06:34.190 --> 00:06:40.170] Speaker 1: and if refinery stop being hit and all the all the transportation bottlenecks ease uh that
[00:06:40.170 --> 00:06:44.950] Speaker 1: will contribute to lower energy prices which then can contribute to mildly lower uh
[00:06:44.950 --> 00:06:50.810] Speaker 1: inflation that that part is true the problem is that's that's one factor among many we all
[00:06:50.810 --> 00:06:54.490] Speaker 1: you know we already had a two -speed economy or k -shaped economy and above target
[00:06:54.490 --> 00:07:00.950] Speaker 1: inflation before the war uh this just kind of added you know the next layer of it uh from
[00:07:00.950 --> 00:07:04.950] Speaker 1: what otherwise might have slowly kind of not necessarily go down but just kind of stopped
[00:07:04.950 --> 00:07:10.310] Speaker 1: getting worse for a period of time as they got got mildly worse for a period of time um and
[00:07:10.310 --> 00:07:16.670] Speaker 1: so it's a factor i mean policies matter you know wars matter um uh but the other factors is
[00:07:16.670 --> 00:07:20.830] Speaker 1: that that fiscal side uh and then of course even things like just ai when you're trying to
[00:07:20.830 --> 00:07:26.190] Speaker 1: you know you're building out power you're building you're using these resources um it takes
[00:07:26.190 --> 00:07:31.490] Speaker 1: away from for example building new homes which makes it harder for home prices to go down
[00:07:31.490 --> 00:07:36.350] Speaker 1: despite higher rates um and so a lot of these factors come together but a lot of is still
[00:07:36.350 --> 00:07:39.710] Speaker 1: driven by that fiscal side, which is not going to be addressed in any sort of investable
[00:07:39.710 --> 00:07:40.290] Speaker 1: time horizon.
[00:07:40.730 --> 00:07:45.750] Speaker 2: Yeah. And, you know, that's a lot of folks will say, you know, Besson's got his back up
[00:07:45.750 --> 00:07:51.490] Speaker 2: against the wall. What do you make of, he's been appointing some interesting counselors to
[00:07:51.490 --> 00:07:58.250] Speaker 2: Treasury. Judy Shelton's one of them, sort of known sound money, gold person. And there's,
[00:07:58.290 --> 00:08:03.310] Speaker 2: it's fueled a lot of speculation that maybe Treasury's planning some sort of huge policy
[00:08:03.310 --> 00:08:09.710] Speaker 2: move to kind of try to address these high rates, high debt levels that just stretch out and
[00:08:09.710 --> 00:08:15.970] Speaker 2: seem to be kind of unsolvable, maybe revaluing U .S. gold holdings. Do you give any merit
[00:08:15.970 --> 00:08:17.130] Speaker 2: to that? Have you thought about that?
[00:08:17.330 --> 00:08:21.210] Speaker 1: I mean, I think it's worth monitoring. Revaluing gold holdings is kind of like one of the
[00:08:21.210 --> 00:08:27.310] Speaker 1: break the glass mechanisms that they have, where it's one of the few ways where you can
[00:08:27.310 --> 00:08:31.770] Speaker 1: create, like the government can create new money without creating an associated amount of
[00:08:31.770 --> 00:08:37.910] Speaker 1: debt. So if they increase the official holdings of gold, it basically fills up their
[00:08:37.910 --> 00:08:41.110] Speaker 1: treasury general account with cash, which they can then spend,
[00:08:42.430 --> 00:08:47.970] Speaker 1: which is kind of an interesting effect in the economy. Now that would be inflationary. That
[00:08:47.970 --> 00:08:52.410] Speaker 1: would be a very pro -liquidity move. So if the intention is to weaken the dollar, for
[00:08:52.410 --> 00:08:57.150] Speaker 1: example, that's a mechanism that they have, but they have to balance that with the concerns
[00:08:57.150 --> 00:09:02.590] Speaker 1: around inflation because that that weakens people's wages that weakens um a lot of things
[00:09:02.590 --> 00:09:09.170] Speaker 1: like that so the problem is when when when we're this far along into the dollar system
[00:09:09.170 --> 00:09:14.130] Speaker 1: into debts and things like that all these decisions have trade -offs and there's some that
[00:09:14.130 --> 00:09:18.830] Speaker 1: might be better than others but they all kind of in some ways screw one group and benefit
[00:09:18.830 --> 00:09:25.110] Speaker 1: another group and so they have to kind of do a calculation to say in our term is this is
[00:09:25.110 --> 00:09:29.470] Speaker 1: this a lever we want to pull hard, or do you want to kick it to the next people to maybe
[00:09:29.470 --> 00:09:30.550] Speaker 1: consider doing that move?
[00:09:31.550 --> 00:09:35.870] Speaker 2: And even though kick the can is really popular in Washington, you do have Besson, who's,
[00:09:37.390 --> 00:09:42.030] Speaker 2: you know, everyone's thinking about legacy, and one would think, based on recent comments,
[00:09:42.050 --> 00:09:45.370] Speaker 2: he cares a lot about that. And you just had Hank Paulson say, like, this is a break the
[00:09:45.370 --> 00:09:49.470] Speaker 2: glass moment, right? So there is some support, perhaps, for some sort of extraordinary
[00:09:49.470 --> 00:09:55.130] Speaker 2: measure. Who gets do gold who who get who wins and and who suffers in the immediate
[00:09:55.130 --> 00:10:00.350] Speaker 2: aftermath of that i mean if you hold gold are you super happy if they do that and and who
[00:10:00.350 --> 00:10:02.430] Speaker 2: comes out on the losing end of that the average worker
[00:10:02.430 --> 00:10:06.410] Speaker 1: um i think it's more complicated than that so if they if they revalue gold they're
[00:10:06.410 --> 00:10:11.010] Speaker 1: basically just it's mostly an accounting trick at first so they're not necessarily changing
[00:10:11.010 --> 00:10:16.330] Speaker 1: the price of gold relative to oil or gold relative to houses or things like that they're
[00:10:16.330 --> 00:10:21.310] Speaker 1: saying that the official bookkeeping for what the treasury holds their gold at is, is, is,
[00:10:21.470 --> 00:10:25.630] Speaker 1: you know, instead of, you know, 40 something an ounce, it'll be the current price called,
[00:10:25.630 --> 00:10:30.190] Speaker 1: you know, for 4 ,000 something an ounce. Uh, and that, that basically fills up their
[00:10:30.190 --> 00:10:35.930] Speaker 1: treasury general account, which means they're able to then spend without issuing bonds to
[00:10:35.930 --> 00:10:41.350] Speaker 1: spend, at least until they use up that, that amount. Uh, and in theory, I mean, they could
[00:10:41.350 --> 00:10:46.830] Speaker 1: revalue gold even higher and give themselves even more cash uh and the more they do that
[00:10:46.830 --> 00:10:51.850] Speaker 1: the more that money flows out into the economy which then can find itself into assets like
[00:10:51.850 --> 00:10:58.090] Speaker 1: gold for example so it can influence the gold price uh it would be a shock uh and generally
[00:10:58.090 --> 00:11:02.770] Speaker 1: shocks around that nature likely are to lead people to buy something like gold so i i think
[00:11:02.770 --> 00:11:08.670] Speaker 1: as a gold holder i certainly would wouldn't mind that day um same thing for equity holders
[00:11:08.670 --> 00:11:13.530] Speaker 1: or bitcoin holders or you kind of scarce asset holders in general probably would find that
[00:11:13.530 --> 00:11:20.210] Speaker 1: day interesting uh but because you're creating more fiat uh that is spendable without
[00:11:20.210 --> 00:11:27.190] Speaker 1: debt issuance uh you are you know that that is like a surge for uh inflation to
[00:11:27.190 --> 00:11:31.850] Speaker 1: some extent or it's a surge in money creation it'd be comparable to some of the post -covid
[00:11:31.850 --> 00:11:33.570] Speaker 1: or during covid stimulus that they did
[00:11:33.570 --> 00:11:34.490] Speaker 2: uh
[00:11:34.490 --> 00:11:39.250] Speaker 1: and of course it depends on magnitude where uh it can feel good in the moment
[00:11:40.550 --> 00:11:46.670] Speaker 1: but then your wages have trouble keeping up years later. So in general, that would be
[00:11:46.670 --> 00:11:52.010] Speaker 1: probably good for asset holders and probably bad for wage holders, but that has to be tied
[00:11:52.010 --> 00:11:55.610] Speaker 1: with what they're doing in terms of fiscal policy. For example, if they're doing policies
[00:11:55.610 --> 00:12:00.690] Speaker 1: that are beneficial to wage earners, then you could offset that in theory. So it's kind of
[00:12:00.690 --> 00:12:03.890] Speaker 1: the full mix of policies rather than any one policy.
[00:12:04.190 --> 00:12:09.190] Speaker 2: Yeah. And again, I'm going to venture a guess that that's where people get concerned, like
[00:12:09.190 --> 00:12:14.370] Speaker 2: how well has this been thought out? And are they using that opportunity wisely since it's
[00:12:14.370 --> 00:12:18.750] Speaker 2: going to come with costs? I mean, I think that's where we have to take a really hard look.
[00:12:19.170 --> 00:12:24.010] Speaker 2: When it comes to AI itself, another big risk I hear people talking about is, and, you know,
[00:12:24.050 --> 00:12:28.750] Speaker 2: there are sort of pieces circulating on this, is that, you know, we're facing this, this
[00:12:28.750 --> 00:12:32.310] Speaker 2: reckoning coming. You mentioned before about the capital, you know, the inflationary impact
[00:12:32.310 --> 00:12:36.170] Speaker 2: of all of the capital that's being spent in the build out and the data centers. And there's
[00:12:36.170 --> 00:12:41.810] Speaker 2: a lot of concern that there's going to be a reckoning when it comes to the way the AI
[00:12:41.810 --> 00:12:46.390] Speaker 2: companies have accounted for sales and that some of the obligations, the economic
[00:12:46.390 --> 00:12:50.230] Speaker 2: obligations that are not showing up as debt, but they're kind of these contractual
[00:12:50.230 --> 00:12:54.090] Speaker 2: obligations, sort of the outstanding
[00:12:55.850 --> 00:13:00.630] Speaker 2: rival or are greater than subprime crisis, that there's this reset, except it's not
[00:13:00.630 --> 00:13:05.910] Speaker 2: mortgages, It's these contracts when it actually comes to delivery. Is that something that
[00:13:05.910 --> 00:13:09.210] Speaker 2: you are concerned about in terms of systemic risk?
[00:13:09.650 --> 00:13:14.850] Speaker 1: Longer term, potentially. I don't think we're there yet. I think the people are right to
[00:13:14.850 --> 00:13:20.930] Speaker 1: bring that up. I just think we're still kind of in early to mid innings of this. And
[00:13:20.930 --> 00:13:25.610] Speaker 1: generally speaking, things that are less so in the banking system tend to be less
[00:13:25.610 --> 00:13:31.530] Speaker 1: catastrophic than something like subprime. um uh and so i i wouldn't put it quite in that
[00:13:31.530 --> 00:13:36.750] Speaker 1: camp um but it is true that for example the hyperscalers are taking on increasing lease
[00:13:36.750 --> 00:13:40.630] Speaker 1: obligations uh because if you're building a if you're doing all this capex for a data
[00:13:40.630 --> 00:13:44.550] Speaker 1: center you're looking for a client that's willing to sign you know a very long -term uh
[00:13:44.550 --> 00:13:50.930] Speaker 1: lease um uh and uh so that's all happening and then you have even some of the semiconductor
[00:13:50.930 --> 00:13:54.950] Speaker 1: companies have kind of incestuous financing where it's like vendor financing like they're
[00:13:54.950 --> 00:14:01.350] Speaker 1: they'll like help help funds be raised to build out data centers and buy chips and they'll
[00:14:01.350 --> 00:14:07.530] Speaker 1: backstop some of that as the chip maker right so you you get kind of a circular um
[00:14:07.530 --> 00:14:12.870] Speaker 1: complexity there and then of course a lot of venture capital went into the the the the
[00:14:12.870 --> 00:14:19.050] Speaker 1: models themselves open ai anthropic and and they're being kind of chased by the open weight
[00:14:19.050 --> 00:14:24.690] Speaker 1: models uh it's very hard to justify a trillion or two trillion dollar valuation when you're
[00:14:24.690 --> 00:14:29.670] Speaker 1: aggressively unprofitable and you're only months ahead of of like your kind of your closest
[00:14:29.670 --> 00:14:36.490] Speaker 1: copiers um uh and so i do think a lot of this will run into a pretty big drawdown
[00:14:36.490 --> 00:14:42.230] Speaker 1: at certain points um but i i think we're still we're still in the build -out phase we still
[00:14:42.230 --> 00:14:43.930] Speaker 1: have massive bottlenecks and semi -connectors,
[00:14:45.210 --> 00:14:51.230] Speaker 1: we still have a key thing I watch is just kind of like, are businesses spending more on AI
[00:14:51.230 --> 00:14:56.930] Speaker 1: or less than they were months ago? And we always see the occasional headline, like this
[00:14:56.930 --> 00:15:00.730] Speaker 1: business spends so much, they're pulling back and they were spending so much and now
[00:15:00.730 --> 00:15:04.850] Speaker 1: they're putting more safeguards in. And those keep happening and yet the overall spend
[00:15:04.850 --> 00:15:09.050] Speaker 1: keeps going up because we're kind of, again, my earlier point when a new technology
[00:15:09.050 --> 00:15:12.430] Speaker 1: unlocks, there's like a kind of a zero to one moment where everyone has to kind of get from
[00:15:12.430 --> 00:15:18.150] Speaker 1: not using it to some baseline of using it. And there are tons of studies that show, for
[00:15:18.150 --> 00:15:21.730] Speaker 1: example, that just companies that are just higher adopters of AI
[00:15:23.150 --> 00:15:27.370] Speaker 1: tend to be winning and taking market share versus ones in their field that are not, and
[00:15:27.370 --> 00:15:31.690] Speaker 1: ironically tend to increase headcount. Because you have this idea that it's like a zero
[00:15:31.690 --> 00:15:35.730] Speaker 1: sum, like if you use AI, it means you're firing your employees. Sometimes it means that
[00:15:35.730 --> 00:15:40.470] Speaker 1: you're making each of your employees just do twice as much effectiveness with their time.
[00:15:41.090 --> 00:15:45.170] Speaker 1: and so your company is able to run on better margins and better pricing and so you take
[00:15:45.170 --> 00:15:49.970] Speaker 1: market share from competitors and you can actually grow headcount despite using more AI. So
[00:15:49.970 --> 00:15:56.950] Speaker 1: I still think that this has room to run even though like on any given thing
[00:15:56.950 --> 00:16:03.010] Speaker 1: that gets brought up, the vendor financing, the massive AI capex, the shifting things from
[00:16:03.010 --> 00:16:05.110] Speaker 1: the corporate bond side to lease obligations,
[00:16:06.510 --> 00:16:13.130] Speaker 1: questions around depreciation, What is the true useful life of a leading -edge GPU, for
[00:16:13.130 --> 00:16:17.670] Speaker 1: example? These are all very valid questions, and I think it'll probably take more time
[00:16:17.670 --> 00:16:20.090] Speaker 1: before we kind of run into a little bit of a reckoning about them.
[00:16:20.650 --> 00:16:25.310] Speaker 2: Everything we do on this channel has one goal, to make you a sharper, better -informed
[00:16:25.310 --> 00:16:29.890] Speaker 2: investor, someone who understands the macro forces shaping your money before the mainstream
[00:16:29.890 --> 00:16:35.130] Speaker 2: catches on. But information is only half of it. The other half is acting on it, and that's
[00:16:35.130 --> 00:16:39.630] Speaker 2: what Wealthion Membership is for. It's how you go from watching these conversations to
[00:16:39.630 --> 00:16:44.150] Speaker 2: putting them to work in your own portfolio. Membership opens three doors, access to
[00:16:44.150 --> 00:16:49.110] Speaker 2: advisors, helping build real assets into your portfolio, and for accredited investors,
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[00:16:55.870 --> 00:17:01.950] Speaker 2: So commodities have been the safe way to play the AI trade for a lot of people, or the
[00:17:01.950 --> 00:17:08.030] Speaker 2: desired way to play it, given some of the questions. But if AI
[00:17:08.030 --> 00:17:13.950] Speaker 2: slows down, does that kill the demand for commodities? How much of that trade is related?
[00:17:14.090 --> 00:17:19.810] Speaker 2: They seem like they're opposite ends, right? Like the scarce real asset crowd is suspicious
[00:17:19.810 --> 00:17:25.210] Speaker 2: of the AI trade. And yet, are they connected in a way where that demand is what's fueling
[00:17:25.210 --> 00:17:25.690] Speaker 2: commodities?
[00:17:26.130 --> 00:17:31.430] Speaker 1: I mean, I think the feeling part of commodities, I mean, like on the margins, they matter.
[00:17:31.650 --> 00:17:35.990] Speaker 1: In terms of just global commodity consumption, AI is still a very small share.
[00:17:37.830 --> 00:17:42.510] Speaker 1: of course, certain commodities can be more in demand than others in a given area. What
[00:17:42.510 --> 00:17:47.130] Speaker 1: makes this different than say the 2010s internet companies is they were very low on
[00:17:47.130 --> 00:17:52.770] Speaker 1: hardware. They had to have data centers, but social media and search engines are not that
[00:17:52.770 --> 00:17:54.250] Speaker 1: computationally intensive.
[00:17:55.550 --> 00:18:01.230] Speaker 1: And it's more about basically putting everything into mobile, into the cloud, pretty low
[00:18:01.230 --> 00:18:07.330] Speaker 1: physical costs. uh whereas now there are a lot there are a lot more physical costs um this
[00:18:07.330 --> 00:18:13.750] Speaker 1: type of computation is just inherently different um you know and so i do think that the the
[00:18:13.750 --> 00:18:19.830] Speaker 1: whole kind of structural just the need for compute does around the margins may mean we need
[00:18:19.830 --> 00:18:25.070] Speaker 1: more power we need more um just compute materials and things like that so that's a real
[00:18:25.070 --> 00:18:31.010] Speaker 1: trade um but like total energy use is still primarily going obviously to not ai uh total
[00:18:31.010 --> 00:18:34.910] Speaker 1: commodity use like copper and things like that i mean it just in various types of
[00:18:34.910 --> 00:18:39.170] Speaker 1: construction is still a massive deal elsewhere that's one thing i would consider i mean
[00:18:39.170 --> 00:18:43.710] Speaker 1: it's also just the the increased kind of militarization of the world you know europe
[00:18:43.710 --> 00:18:50.190] Speaker 1: spending more on defense uh the u .s uh treasury uh defense secretary asking for a 1 .5
[00:18:50.190 --> 00:18:54.990] Speaker 1: trillion dollar defense budget in the u .s uh these things all have commodity implications
[00:18:54.990 --> 00:18:59.830] Speaker 1: as well i mean if you're if you're building more missiles i mean sadly that is a source of
[00:18:59.830 --> 00:19:06.430] Speaker 1: commodity demand um uh and then just other major factors i mean for example the slowdown in
[00:19:06.430 --> 00:19:10.890] Speaker 1: china kind of china reaching peak demographics is is one of the biggest weights on
[00:19:10.890 --> 00:19:16.070] Speaker 1: commodities because they have all this oversupply uh not just of of buildings they've made
[00:19:16.070 --> 00:19:20.350] Speaker 1: but also manufacturing output so they can actually output more than they are currently
[00:19:20.350 --> 00:19:25.210] Speaker 1: without a ton of build out necessarily So there's an overhang there. So there's like,
[00:19:25.330 --> 00:19:29.190] Speaker 1: there's, there's things that are right. AI is asking for more commodities and defense
[00:19:29.190 --> 00:19:33.810] Speaker 1: spending is asking for more commodities. Whereas like say China is asking for, uh, maybe
[00:19:33.810 --> 00:19:38.970] Speaker 1: not less, but like less growth of commodities, for example. Um, and those have to be
[00:19:38.970 --> 00:19:42.570] Speaker 1: considered as, as competing things whenever, whenever someone wants to have a macro
[00:19:42.570 --> 00:19:44.510] Speaker 1: argument for, for their commodity position.
[00:19:45.470 --> 00:19:50.090] Speaker 2: I get this question a lot. I just got this in my inbox, listening to you talk about gold
[00:19:50.090 --> 00:19:56.810] Speaker 2: and silver and the hard assets. And this was from someone, I wonder your thoughts on this,
[00:19:56.910 --> 00:20:02.230] Speaker 2: from someone called Peter. And he wrote, I find it fascinating that just about every other
[00:20:02.230 --> 00:20:06.770] Speaker 2: financial podcast has guests, one after the other, predicting doom and gloom for the stock
[00:20:06.770 --> 00:20:12.390] Speaker 2: market and gold is the savior. And yet markets continue to climb the wall of worry while
[00:20:12.390 --> 00:20:17.490] Speaker 2: gold struggles. Is this sensationalism to get the public to watch or listen? Listen, like,
[00:20:17.610 --> 00:20:23.990] Speaker 2: what do you think is going on? And we get a version of that a lot. I wonder sort of
[00:20:23.990 --> 00:20:30.910] Speaker 2: when you're a bull on gold or hard assets, what do you say to folks like that who hear
[00:20:30.910 --> 00:20:35.150] Speaker 2: the argument, it makes sense to them, but they just watch that stock market and they're so
[00:20:35.150 --> 00:20:40.570] Speaker 2: conditioned to look at their 401 in equity positions and have a hard time kind of pulling
[00:20:40.570 --> 00:20:42.710] Speaker 2: away and think about diversifying out of it?
[00:20:42.710 --> 00:20:49.350] Speaker 1: I say yes and, which is basically to say that one can be bullish on gold and stocks. And
[00:20:49.350 --> 00:20:56.150] Speaker 1: if one looks at the S &P 500 to gold ratio, we are in kind of the fourth major
[00:20:56.150 --> 00:21:01.490] Speaker 1: bear market in stocks relative to gold over the past century, even though it's been pretty
[00:21:01.490 --> 00:21:07.590] Speaker 1: mild. So you can pick a point years ago and gold has outperformed stocks in that time.
[00:21:09.310 --> 00:21:14.370] Speaker 1: But of course, there are years where the opposite happens. And I mean, I like to own both
[00:21:14.370 --> 00:21:20.590] Speaker 1: assets. And this goes back to my whole kind of view on the fiscal dominance. And that's why
[00:21:20.590 --> 00:21:26.010] Speaker 1: I keep fading the equity bears, which is to say when we're running 7 % of GDP deficits, as
[00:21:26.010 --> 00:21:27.010] Speaker 1: far as the eye can see,
[00:21:29.450 --> 00:21:35.710] Speaker 1: you know, being bearish on stocks basically means you're bullish on fiat because you're
[00:21:35.710 --> 00:21:40.370] Speaker 1: seeing what stocks are going to go down versus the dollar. And, you know, certainly in a
[00:21:40.370 --> 00:21:44.330] Speaker 1: year they can. I mean, that's the stocks are volatile. I mean, they went down in 2022, for
[00:21:44.330 --> 00:21:49.430] Speaker 1: example. They can get over their skis for a period of time. Gold can go down versus the
[00:21:49.430 --> 00:21:54.050] Speaker 1: dollar. I mean, when it goes from $2 ,000 to $5 ,000 as quickly as it did, as big of a
[00:21:54.050 --> 00:21:57.770] Speaker 1: market as it did, that needs time to take a breather.
[00:21:59.270 --> 00:22:05.370] Speaker 1: And so I do generally fade the doomer narratives of like sell all your stocks, just own
[00:22:05.370 --> 00:22:12.150] Speaker 1: gold, the reckoning is just around the corner. it's more like we're identifying
[00:22:12.150 --> 00:22:17.190] Speaker 1: that we're going to run at a hot environment which has winners and losers and and generally
[00:22:17.190 --> 00:22:23.690] Speaker 1: speaking hard assets have been the winners so owning gold uh you know let's say since covid
[00:22:23.690 --> 00:22:29.890] Speaker 1: so for example owning gold owning bitcoin owning high quality equities um uh owning the
[00:22:29.890 --> 00:22:34.830] Speaker 1: best real estate with you know a fixed rate like fiat debt attached to it those of all
[00:22:34.830 --> 00:22:39.850] Speaker 1: generally good trades to do and it's been one of the worst five or six year stretches to
[00:22:39.850 --> 00:22:46.730] Speaker 1: hold bonds like in in our parents and grandparents lifetimes it like the the it's been a
[00:22:46.730 --> 00:22:52.930] Speaker 1: massive bond bear market both in nominal terms and especially in real terms um and um and
[00:22:52.930 --> 00:22:57.210] Speaker 1: you know i think that the the degree of that's probably over i mean when you go from like
[00:22:57.210 --> 00:23:03.950] Speaker 1: almost zero rates to 5 % on the 10 -year, a lot of that move is over. But
[00:23:03.950 --> 00:23:09.850] Speaker 1: we're still in this kind of fiscal dominance phase, which does continue to some degree
[00:23:09.850 --> 00:23:16.730] Speaker 1: fueling equities. And so that's why I've been a long -term equity bull, despite
[00:23:16.730 --> 00:23:21.350] Speaker 1: raising concerns around various things, because like anyone who studies emerging markets,
[00:23:21.430 --> 00:23:25.870] Speaker 1: for example, when they have a currency crisis, I mean, their stocks go up in their local
[00:23:25.870 --> 00:23:30.190] Speaker 1: currency terms. They might go down in dollar terms. They might go down in gold terms, but
[00:23:30.190 --> 00:23:34.950] Speaker 1: they're often going up in their local currency terms. So I've been a bull on equities and
[00:23:34.950 --> 00:23:35.070] Speaker 1: gold.
[00:23:35.410 --> 00:23:35.630] Speaker 2: Yeah.
[00:23:37.470 --> 00:23:44.030] Speaker 2: Well said, because I think that in this sort of world of FinTwit, those people get in their
[00:23:44.030 --> 00:23:47.570] Speaker 2: tribes. And I think that's what makes it difficult when you're talking about
[00:23:47.570 --> 00:23:52.630] Speaker 2: diversification. By the way, Lynn puts a model portfolio up on her newsletter and you're
[00:23:52.630 --> 00:23:56.010] Speaker 2: very transparent about it, which I think is awesome when you're explaining some of these
[00:23:56.010 --> 00:24:02.810] Speaker 2: things. You can see some of the areas that she's investing in. Profitable equities. What
[00:24:02.810 --> 00:24:08.850] Speaker 2: in a digitized world where intelligence is going to be ubiquitous, what does a profitable
[00:24:08.850 --> 00:24:15.650] Speaker 2: moat look like? Is that still what we're looking for? Because it seems like
[00:24:15.650 --> 00:24:17.770] Speaker 2: it's hard to know now what that's going to be.
[00:24:18.290 --> 00:24:21.410] Speaker 1: good question i mean for example like the the semiconductor companies are incredibly
[00:24:21.410 --> 00:24:27.930] Speaker 1: profitable um uh and the reason i put that there and that's a phrase i've been using since
[00:24:27.930 --> 00:24:33.270] Speaker 1: like the 2010s really there's this long stretch of just owning unprofitable companies
[00:24:33.270 --> 00:24:38.330] Speaker 1: because in a zero rate environment people are saying you know i don't care when you have a
[00:24:38.330 --> 00:24:41.950] Speaker 1: profit just keep just focus everything on growth there's the cost of capital is almost zero
[00:24:41.950 --> 00:24:47.710] Speaker 1: anyway uh and but now we live in world where there is a cost of capital those kind of like
[00:24:47.710 --> 00:24:53.230] Speaker 1: unprofitable grow at all cost things are that's not where like that's not how you optimize
[00:24:53.230 --> 00:24:57.690] Speaker 1: things anymore that's not where i think most of the value add is uh instead it's more like
[00:24:57.690 --> 00:25:03.150] Speaker 1: profitable growth obviously there's i mean in venture for example you know we're investing
[00:25:03.150 --> 00:25:07.150] Speaker 1: in usually non -profitable growth that's that's the whole point of a venture fund you're
[00:25:07.150 --> 00:25:12.870] Speaker 1: getting scale before you profit but in public markets uh i generally want to see profitable
[00:25:12.870 --> 00:25:17.650] Speaker 1: companies you know if i want to get unprofitable that's what i do venture for uh i'll go
[00:25:17.650 --> 00:25:22.250] Speaker 1: into private markets whereas you know once a company's large up to be public um i generally
[00:25:22.250 --> 00:25:26.690] Speaker 1: think that that at least most of them should be optimizing toward being being profitable
[00:25:26.690 --> 00:25:27.210] Speaker 1: enterprises
[00:25:27.210 --> 00:25:33.970] Speaker 2: yeah balance sheets matter again uh i i just want to kind of finish up and and reference
[00:25:33.970 --> 00:25:38.150] Speaker 2: back to that conversation the conversations you've had with Jock Dorsey about open source.
[00:25:38.470 --> 00:25:44.810] Speaker 2: And, you know, in this kind of when we're looking at profit models and revenue,
[00:25:45.270 --> 00:25:51.570] Speaker 2: is there tension between equity investors who want to benefit from
[00:25:51.570 --> 00:25:57.990] Speaker 2: profits and walls and moats and then sort of citizens who maybe benefit from networks that
[00:25:57.990 --> 00:26:03.630] Speaker 2: are open? And it seems to be playing out very much in the AI space where, you know, open AI
[00:26:03.630 --> 00:26:09.070] Speaker 2: philanthropic want their models closed and their investors likely want them to be able to
[00:26:09.070 --> 00:26:13.670] Speaker 2: monetize that and then the all the other conversations we're having about open source and
[00:26:13.670 --> 00:26:15.590] Speaker 2: should this be used differently well
[00:26:15.590 --> 00:26:20.230] Speaker 1: there's a couple phases there there's this one is from your own company perspective should
[00:26:20.230 --> 00:26:24.830] Speaker 1: your model be open or closed and then there's the the somewhat more nefarious one which is
[00:26:24.830 --> 00:26:31.230] Speaker 1: should you try to get government to ban your open competitors to to preserve your closed
[00:26:31.230 --> 00:26:34.370] Speaker 1: decision right that that's where some of these companies i think i've gotten to and that
[00:26:34.370 --> 00:26:37.570] Speaker 1: that's the that's the you know companies can do with themselves what they want to do with
[00:26:37.570 --> 00:26:42.350] Speaker 1: their own code or their their own you know systems the question is to what extent they want
[00:26:42.350 --> 00:26:49.250] Speaker 1: to lock that in with a regulatory moat um uh and uh and but i think the long -term arc here
[00:26:49.250 --> 00:26:56.030] Speaker 1: is it's a losing game uh i think just open weight models exist um and and trying to to put
[00:26:56.030 --> 00:27:01.370] Speaker 1: out those fires is just kind of like slowing down the inevitable um and i think open weight
[00:27:01.370 --> 00:27:05.750] Speaker 1: models just some degree have to be understood as existing now uh it's like whack -a -mole
[00:27:05.750 --> 00:27:10.230] Speaker 1: trying to make them not exist uh and they make it so that more than just a small number of
[00:27:10.230 --> 00:27:14.670] Speaker 1: companies you know can control the tech that we're all using and people can customize and
[00:27:14.670 --> 00:27:19.270] Speaker 1: run locally uh and run more privately and i think all of that is is valuable
[00:27:19.270 --> 00:27:23.470] Speaker 2: what what economic trend worries you the most um
[00:27:23.470 --> 00:27:27.210] Speaker 1: i would say it's a it's a couple coming together it's not one thing because these these
[00:27:27.210 --> 00:27:31.790] Speaker 1: things tend to come in clusters so one is just the really big demographic trend right so
[00:27:31.790 --> 00:27:36.390] Speaker 1: things are easier when you have six workers per retiree than three workers per retiree for
[00:27:36.390 --> 00:27:41.410] Speaker 1: example so as the world has aged uh that is just a that's just a really big challenge i
[00:27:41.410 --> 00:27:46.630] Speaker 1: mean all of our kind of systems are kind of designed with the theory that every generation
[00:27:46.630 --> 00:27:51.370] Speaker 1: is going to be bigger than the prior one and you know when that stopped happening and then
[00:27:51.370 --> 00:27:56.730] Speaker 1: decades pass we're kind of in the paying for it moment now. So we have really big
[00:27:56.730 --> 00:28:00.990] Speaker 1: challenges ahead of like Social Security, Medicare in the U .S. And obviously Japan's going
[00:28:00.990 --> 00:28:05.670] Speaker 1: through it. Europe's going through it. These are very real challenges. China's going
[00:28:05.670 --> 00:28:10.410] Speaker 1: through it. So that's like a, that's one, just, that's kind of the massive kind of like
[00:28:10.410 --> 00:28:17.410] Speaker 1: background thing that's happening. And then when you add, obviously, like breakdowns
[00:28:17.410 --> 00:28:22.790] Speaker 1: in international law compared to a kind of a we kind of went through this like you know
[00:28:22.790 --> 00:28:27.950] Speaker 1: multipolar stage toward a unipolar stage and then kind of going back toward a multipolar
[00:28:27.950 --> 00:28:33.390] Speaker 1: stage in terms of geopolitics which is really the more natural stage of things uh but that
[00:28:33.390 --> 00:28:40.350] Speaker 1: that transition can be uh tumultuous um and then there's like the this the as we deal with
[00:28:40.350 --> 00:28:44.650] Speaker 1: the demographics and as we have these fiscal things locked in I think the two -speed
[00:28:44.650 --> 00:28:51.650] Speaker 1: economy that we have in the U .S. is, I mean, to your point, that's a huge factor in
[00:28:51.650 --> 00:28:52.110] Speaker 1: trust,
[00:28:52.530 --> 00:28:52.830] Speaker 2: right?
[00:28:53.010 --> 00:28:58.490] Speaker 1: So people will ask me, like, when do fiscal deficits matter? When does the debt matter? My
[00:28:58.490 --> 00:29:03.970] Speaker 1: answer is it has been mattering, right? It's not the moment a bond auction fails or
[00:29:03.970 --> 00:29:09.070] Speaker 1: something crazy because that's not the point here. The point is that when you have these
[00:29:09.070 --> 00:29:13.550] Speaker 1: really structural fiscal deficits, there are recipients on some sides of them. and then
[00:29:13.550 --> 00:29:17.070] Speaker 1: there are others that are not on recipients, but they're kind of paying the cost. For
[00:29:17.070 --> 00:29:21.090] Speaker 1: example, higher rates and a new family looking to buy their first home,
[00:29:21.310 --> 00:29:21.610] Speaker 2: they're
[00:29:21.610 --> 00:29:24.730] Speaker 1: kind of indirectly paying the cost or some of the costs for these deficits.
[00:29:26.730 --> 00:29:31.170] Speaker 1: That's where you get, for example, record high stock prices and record low consumer
[00:29:31.170 --> 00:29:36.010] Speaker 1: sentiment, which we touched on for a period of time. Now we're off the ultimate lows, but
[00:29:36.010 --> 00:29:42.670] Speaker 1: you still have this unusually big divide between asset holders, deficit recipients,
[00:29:43.210 --> 00:29:47.870] Speaker 1: And non -asset holders and, you know, not deficit recipients. And I think that's, it's
[00:29:47.870 --> 00:29:51.590] Speaker 1: just, it's a mess, I think. And it does concern me.
[00:29:52.090 --> 00:29:56.990] Speaker 2: Yeah, it's a mess. And I feel like this is, you know, back to your point about sort of the
[00:29:56.990 --> 00:30:03.730] Speaker 2: lack of information. We're kind of going back down in information because if you
[00:30:03.730 --> 00:30:09.670] Speaker 2: are, have any young people in your life, like this is incredibly apparent to you. You know,
[00:30:09.850 --> 00:30:14.410] Speaker 2: I have college age kids and it's the level. And people like to say they're sort of anxious.
[00:30:14.670 --> 00:30:19.530] Speaker 2: No, they're not. They're accurately looking at what's going on and the fact that they're
[00:30:19.530 --> 00:30:23.830] Speaker 2: getting screwed and they're very concerned about the future. But you talk to other people
[00:30:23.830 --> 00:30:27.010] Speaker 2: and depending on what space you're in, the media that they're getting directed at them and
[00:30:27.010 --> 00:30:32.110] Speaker 2: the messaging, the campaign ads, this is not reality. And I talked to Mike Green one time
[00:30:32.110 --> 00:30:37.350] Speaker 2: and one of his concerns was that rich people aren't even in shared spaces with other folks
[00:30:37.350 --> 00:30:41.930] Speaker 2: now. Like that's a big change, you know, that sort of, you're not even crossing over and
[00:30:41.930 --> 00:30:47.070] Speaker 2: seeing anyone else's reality. So I think that, you know, pointing that out, I think is
[00:30:47.070 --> 00:30:52.790] Speaker 2: really concerning, but it's kind of like out there. It's like right underneath. And I'm
[00:30:52.790 --> 00:30:58.050] Speaker 2: wondering and worrying when that flips to anger, when that anxiety flips to anger. I think
[00:30:58.050 --> 00:31:02.590] Speaker 2: the midterms are going to be really interesting to see whether folks decide to vote on that
[00:31:02.590 --> 00:31:07.530] Speaker 2: or whether they just have given up on the systems and the process altogether, which carries
[00:31:07.530 --> 00:31:14.510] Speaker 2: its own risk, I think. You're doing something really interesting. um so can we remain on
[00:31:14.510 --> 00:31:18.390] Speaker 2: that path first of all before i ask you about this can we remain on a path where the
[00:31:18.390 --> 00:31:25.250] Speaker 2: economy the consumer generationally things are so bifurcated um is that sustainable
[00:31:25.250 --> 00:31:32.090] Speaker 2: can we live in this like sort of two two -tier economy for a long period of time or does
[00:31:32.090 --> 00:31:35.250] Speaker 2: this necessarily come to a head somewhere yeah
[00:31:35.250 --> 00:31:39.070] Speaker 1: it's a good question i mean i think it can go on longer than people think i mean the kind
[00:31:39.070 --> 00:31:44.050] Speaker 1: of entire political structure of aristocracy for example was able to sustain something like
[00:31:44.050 --> 00:31:49.250] Speaker 1: that for a very long period of time uh obviously that's a different era uh you know
[00:31:49.250 --> 00:31:54.830] Speaker 1: different different uh time and space um but you can absolutely have just just very
[00:31:54.830 --> 00:32:01.090] Speaker 1: different um economic realities uh obviously political structures matter differently so for
[00:32:01.090 --> 00:32:07.030] Speaker 1: example people vote and and and things like that um but it you know i the risk is that it
[00:32:07.030 --> 00:32:12.070] Speaker 1: breaks one way or the other. You get the two kind of the horseshoe theory, kind of the
[00:32:12.070 --> 00:32:16.290] Speaker 1: polls, the radical polls start to kind of gain power because people say, well, if the
[00:32:16.290 --> 00:32:19.450] Speaker 1: status quo is not working, they're going to shift away from kind of anywhere near the
[00:32:19.450 --> 00:32:23.050] Speaker 1: center. And they're going to either go hard right or hard left. And that means different
[00:32:23.050 --> 00:32:26.430] Speaker 1: things to different people. But basically, you get these more extreme decision making
[00:32:26.430 --> 00:32:30.690] Speaker 1: points at some points or more extreme election outcomes and things like that. And that can
[00:32:30.690 --> 00:32:36.730] Speaker 1: start kind of fraying certain things. But I think it can often take a lot longer than
[00:32:36.730 --> 00:32:40.870] Speaker 1: people think. And I also think that the algorithms are a really big deal. Like you
[00:32:40.870 --> 00:32:46.930] Speaker 1: mentioned the anxiety that people have. Like in social media, like just from a kind of a
[00:32:46.930 --> 00:32:50.930] Speaker 1: natural standpoint, you know, people being able to communicate with each other over long
[00:32:50.930 --> 00:32:57.070] Speaker 1: distances and find their own groups and tribes is in theory kind of a pretty good thing. uh
[00:32:57.070 --> 00:33:03.490] Speaker 1: and one of the one of the kind of the the risks here is just that the the there's a handful
[00:33:03.490 --> 00:33:08.430] Speaker 1: of really big platforms and they have algorithms uh and they can tune how those algorithms
[00:33:08.430 --> 00:33:14.450] Speaker 1: work uh and their incentives are not necessarily to promote virtue among society or promote
[00:33:14.450 --> 00:33:20.570] Speaker 1: truth among society they're either to profit maximize uh or they're to kind of like be a
[00:33:20.570 --> 00:33:26.150] Speaker 1: funnel for something else um uh like to kind of change discourse around something that that
[00:33:26.150 --> 00:33:31.710] Speaker 1: that that might make profits in a kind of a jason area and actually i did an interview with
[00:33:31.710 --> 00:33:37.130] Speaker 1: jack dorsey about this a couple years ago uh uh you know the the the founder of twitter
[00:33:37.130 --> 00:33:43.710] Speaker 1: because we were kind of looking at decentralized social media's uh market like um that let
[00:33:43.710 --> 00:33:46.310] Speaker 1: you choose your own algorithm and stuff like that
[00:33:46.310 --> 00:33:46.890] Speaker 2: because
[00:33:46.890 --> 00:33:50.070] Speaker 1: he was arguing that it's not just because that was a whole like topic of obviously like
[00:33:50.070 --> 00:33:54.590] Speaker 1: social media censorship and things like that and he was arguing i agreed with him that it's
[00:33:54.590 --> 00:33:59.170] Speaker 1: not just about censorship it's about what the algorithm even has you look at in the first
[00:33:59.170 --> 00:34:05.570] Speaker 1: place so i've i've you know because i'm pretty active online um i see i've seen specific
[00:34:05.570 --> 00:34:09.670] Speaker 1: cases people just kind of gradually fall into these like rabbit holes that are not not very
[00:34:09.670 --> 00:34:14.990] Speaker 1: not very healthy and it's kind of i can just see like this the step by step by step by step
[00:34:14.990 --> 00:34:20.750] Speaker 1: where them it seems normal but i can just see that person's like in a bubble now like that
[00:34:20.750 --> 00:34:24.450] Speaker 1: person used to be talking about this it's on now they just they're in a deep bubble and i
[00:34:24.450 --> 00:34:28.330] Speaker 1: think the algorithm feeds into that and going back to sci -fi for example that was one of
[00:34:28.330 --> 00:34:31.870] Speaker 1: the things i thought about a lot is like what does the internet structure even look like
[00:34:31.870 --> 00:34:37.530] Speaker 1: decades out and i kind of envision is almost like a two like one is like a very centralized
[00:34:37.530 --> 00:34:44.090] Speaker 1: um censored geolocated kind of just fully wrapped up
[00:34:44.090 --> 00:34:49.850] Speaker 1: system. And then there's all this stuff happening on the edges. And I think that's kind of
[00:34:49.850 --> 00:34:53.250] Speaker 1: the direction we're going in. But it's something I think about a lot, that centralized
[00:34:53.250 --> 00:34:57.830] Speaker 1: algorithm feature. And it's quietly one of the most powerful things in society and in our
[00:34:57.830 --> 00:34:58.170] Speaker 1: lives.
[00:34:58.430 --> 00:35:04.510] Speaker 2: Yeah. And I think the stakes are getting higher with AI in the picture now too. We're sort
[00:35:04.510 --> 00:35:06.390] Speaker 2: of seeing that.
[00:35:08.210 --> 00:35:13.170] Speaker 2: You're doing a very interesting thing. So on this two -tier, and correct me if I'm wrong,
[00:35:13.290 --> 00:35:19.410] Speaker 2: but on this two -tier economy, we've been talking about age and demographics, but it's also
[00:35:19.410 --> 00:35:25.230] Speaker 2: sort of like so much money being centralized and directed toward the AI trade or big
[00:35:25.230 --> 00:35:30.990] Speaker 2: companies or mega cap tech, and then everything else seeming to struggle. And we have
[00:35:30.990 --> 00:35:37.890] Speaker 2: interest rates right now. Have we just reoriented our economy around mega that
[00:35:37.890 --> 00:35:44.810] Speaker 2: they are now the driver? Or do we need those smaller, medium -sized businesses, those
[00:35:44.810 --> 00:35:49.170] Speaker 2: sort of startups in order to have a healthy economy? Well,
[00:35:49.250 --> 00:35:52.830] Speaker 1: I do think we need the startups and the smaller companies to have a healthy economy. And
[00:35:52.830 --> 00:35:57.630] Speaker 1: still, like most employment is disproportionately smaller and medium -sized businesses.
[00:35:58.870 --> 00:36:05.570] Speaker 1: I think I would separate the current kind of rapid wave of AI capex from other
[00:36:05.570 --> 00:36:10.450] Speaker 1: things because whenever you have a new technology unlock, naturally there's like a surge
[00:36:10.450 --> 00:36:14.910] Speaker 1: toward that area. it doesn't mean that that that rate is going to continue forever uh it
[00:36:14.910 --> 00:36:19.670] Speaker 1: just kind of means you're going from zero to one because some low -hanging fruit or some
[00:36:19.670 --> 00:36:24.190] Speaker 1: some unlock has happened uh whether it's for example the tech finally coming into place to
[00:36:24.190 --> 00:36:29.590] Speaker 1: make real railroads work or you know once they had both aluminum and hydrocarbons suddenly
[00:36:29.590 --> 00:36:35.670] Speaker 1: the entire field of of aviation just opens up uh whereas like you spent thousands of years
[00:36:35.670 --> 00:36:39.230] Speaker 1: going practically nowhere on flight you know we made a little progress with balloons and
[00:36:39.230 --> 00:36:44.350] Speaker 1: then but once you have hydrocarbons and aluminum you know this the the the runner weight
[00:36:44.350 --> 00:36:50.110] Speaker 1: for for years and decades is really big but then it levels out um once you kind of get the
[00:36:50.110 --> 00:36:54.410] Speaker 1: benefits of that unlock or get good and and so i think that you know obviously the
[00:36:54.410 --> 00:36:59.130] Speaker 1: combination of hardware and software has gotten good enough now it has this new unlock and
[00:36:59.130 --> 00:37:03.370] Speaker 1: it can do things that it couldn't do a few years ago and so there's a there's a massive
[00:37:03.370 --> 00:37:09.410] Speaker 1: temporary reorganization around where we put our resources um now the good news is like so
[00:37:09.410 --> 00:37:16.310] Speaker 1: so for example in the 2010s a lot of the the rising tech companies um like a lot of that
[00:37:16.310 --> 00:37:22.510] Speaker 1: kind of value concentrated in them uh and the i think the good news about ai is that even
[00:37:22.510 --> 00:37:28.970] Speaker 1: though obviously the the winners of that get very large uh the end users still are a
[00:37:28.970 --> 00:37:35.330] Speaker 1: major benefit if they use it correctly. I mean, in some ways it's never been an easier time
[00:37:35.330 --> 00:37:40.510] Speaker 1: or better time to start a small business because instead of asking someone else for
[00:37:40.510 --> 00:37:46.310] Speaker 1: capital, now some businesses still need capital, but just the amount of resources and
[00:37:46.310 --> 00:37:51.550] Speaker 1: things you can do with a very small team has never been better. So it's more like it
[00:37:51.550 --> 00:37:58.110] Speaker 1: separates people that are willing and able to use those tools and understand how to get the
[00:37:58.110 --> 00:38:01.690] Speaker 1: benefits out of the tools without the drawbacks of those tools. Obviously, one of the
[00:38:01.690 --> 00:38:06.490] Speaker 1: drawbacks might be kind of like just AI brain, where you just don't think about anything.
[00:38:06.510 --> 00:38:13.270] Speaker 1: You just ask AI. But if someone is just using it kind of to solve problems,
[00:38:13.450 --> 00:38:16.170] Speaker 1: I think it's actually in some ways an equalizer.
[00:38:16.570 --> 00:38:21.850] Speaker 2: Yeah. So you're doing this interesting thing with Orange Juice, you and the team at
[00:38:21.850 --> 00:38:26.310] Speaker 2: EgoDeath Capital. It's really fascinating because it seems to me that it's solving for a
[00:38:26.310 --> 00:38:32.830] Speaker 2: problem that not a lot of other people are addressing. So you're acquiring small to mid
[00:38:32.830 --> 00:38:38.030] Speaker 2: -sized businesses and then transitioning them into a Bitcoin treasury company.
[00:38:39.830 --> 00:38:45.310] Speaker 2: How does that solve for the challenge? Talk to me a little bit about why this idea came up,
[00:38:45.370 --> 00:38:46.630] Speaker 2: because it seems really unique to me.
[00:38:46.910 --> 00:38:51.970] Speaker 1: Good question. It kind of came up because some of us are both Bitcoin bulls and value
[00:38:51.970 --> 00:38:57.690] Speaker 1: investors. And so the way we look at it is it's not a Bitcoin treasury company. It's a
[00:38:57.690 --> 00:39:02.290] Speaker 1: company that happens to have a Bitcoin treasury as part of its strategy. I think that the
[00:39:02.290 --> 00:39:09.110] Speaker 1: primary thing is that for – if you back up for a second, private equity solves a problem,
[00:39:09.150 --> 00:39:13.770] Speaker 1: which is that one of the hardest things you can sell is a business because it's large,
[00:39:13.890 --> 00:39:19.070] Speaker 1: illiquid, and everyone's unique, right? So that's inherently a very challenging, illiquid
[00:39:19.070 --> 00:39:22.850] Speaker 1: market. And private equity comes in and says, well, we're willing to buy and sell
[00:39:22.850 --> 00:39:29.090] Speaker 1: businesses. And so for decades, that has been a useful service. The problem is, especially
[00:39:29.090 --> 00:39:34.810] Speaker 1: during this like 40 -year period of declining interest rates that is now over, really the
[00:39:34.810 --> 00:39:41.290] Speaker 1: process there was buy a business, lever it up on ever cheaper debt. You have better
[00:39:41.290 --> 00:39:47.590] Speaker 1: cost of capital than the seller did, fire half the staff, and then flip the company in a
[00:39:47.590 --> 00:39:53.270] Speaker 1: few years. And, you know, you've maximized near -term profits and you've made money. but
[00:39:53.270 --> 00:39:58.090] Speaker 1: you kind of set that business up to not really be successful 10, 20 years down the line.
[00:39:58.330 --> 00:40:05.010] Speaker 1: You kind of pulled forward some of the profits. And so there's a, you kind of rip the soul
[00:40:05.010 --> 00:40:09.070] Speaker 1: out of a company or the quality out of the company or the, and like you'll see all the time
[00:40:09.070 --> 00:40:12.790] Speaker 1: people are like, Oh, I love this veterinary clinic in my area before private equity took it
[00:40:12.790 --> 00:40:16.530] Speaker 1: over. Now they're just kind of trying to cross sell products and they're cutting services
[00:40:16.530 --> 00:40:20.550] Speaker 1: and raising prices. And it's just, it's, you know, it's run by someone with a spreadsheet
[00:40:20.550 --> 00:40:24.390] Speaker 1: rather than someone who loves animals, for example. And obviously, you have to balance
[00:40:24.390 --> 00:40:31.190] Speaker 1: business with the true passion of what you're doing. But a lot of private equity businesses
[00:40:31.190 --> 00:40:35.230] Speaker 1: have that outcome, whereas it's geared more toward the spreadsheet. And private equity
[00:40:35.230 --> 00:40:40.710] Speaker 1: companies have a larger than average failure rate because they get loaded up with debt and
[00:40:40.710 --> 00:40:46.530] Speaker 1: have some of their kind of soul ripped out. And so structurally, a permanent capital
[00:40:46.530 --> 00:40:51.110] Speaker 1: vehicle is interesting. And that's just a jargony way of saying a company. So private
[00:40:51.110 --> 00:40:55.090] Speaker 1: equity investors, I mean, managers are not like evil. They have an incentive structure.
[00:40:55.250 --> 00:40:59.890] Speaker 1: They have like a, you know, say a 10 -year fund life. And their mandate is to go buy
[00:40:59.890 --> 00:41:05.270] Speaker 1: businesses, quote unquote, fix them up and then flip them out and build a return cash to
[00:41:05.270 --> 00:41:05.990] Speaker 1: investors.
[00:41:06.290 --> 00:41:06.690] Speaker 2: And they
[00:41:06.690 --> 00:41:06.830] Speaker 1: kind
[00:41:06.830 --> 00:41:08.830] Speaker 2: of use the same blueprint, right? Right. Like they
[00:41:08.830 --> 00:41:09.050] Speaker 1: kind
[00:41:09.050 --> 00:41:13.510] Speaker 2: of like like take on debt, fire some people, squeeze the hell out of the rest of them that
[00:41:13.510 --> 00:41:17.710] Speaker 2: are left. Because, I mean, I know some folks who work, you know, end up working for
[00:41:17.710 --> 00:41:20.990] Speaker 2: something that's been acquired by private equity. And like it's impossible. You know, the
[00:41:20.990 --> 00:41:24.070] Speaker 2: quotas are so much harder. They're running. They feel like they're running on a treadmill.
[00:41:24.310 --> 00:41:28.410] Speaker 1: Yeah, because all the incentive is basically the next few years. It's not about how do we
[00:41:28.410 --> 00:41:34.050] Speaker 1: build a foundation 10 years out? And so but with a permanent capital vehicle, with the most
[00:41:34.050 --> 00:41:39.590] Speaker 1: with the most famous example being Berkshire Hathaway. They buy companies and they just
[00:41:39.590 --> 00:41:44.110] Speaker 1: hold them for decades. And so the incentive structure, obviously, they want that company to
[00:41:44.110 --> 00:41:49.910] Speaker 1: be successful, competitive, to trim areas that need to be trimming and to do well. But it's
[00:41:49.910 --> 00:41:55.950] Speaker 1: all incentivized toward being an indefinite holder that wants the decades of cash flows and
[00:41:55.950 --> 00:42:01.070] Speaker 1: growth from that company, not short -term maximization. So Orange Juice is a permanent
[00:42:01.070 --> 00:42:05.710] Speaker 1: capital company that seeks to buy companies and then hold them indefinitely. So decisions
[00:42:05.710 --> 00:42:10.710] Speaker 1: are geared toward that longer term rather than how can we maximize profit three years out.
[00:42:11.070 --> 00:42:14.910] Speaker 1: And then permanent capital companies in general, because they're not just flipping in near
[00:42:14.910 --> 00:42:19.270] Speaker 1: -term optimizing thing, they need a kicker that kind of makes that long -term strategy work
[00:42:19.270 --> 00:42:24.410] Speaker 1: well. For Berkshire Hathaway, it's insurance. Berkshire Hathaway base has the lowest cost
[00:42:24.410 --> 00:42:29.690] Speaker 1: of capital in the world, more or less, the most stable source of capital. So that gives
[00:42:29.690 --> 00:42:36.110] Speaker 1: them a huge disadvantage. manage. For people that are bullish on Bitcoin, having Bitcoin on
[00:42:36.110 --> 00:42:41.590] Speaker 1: the balance sheet can be rocket fuel as long as you manage it appropriately. And it helps
[00:42:41.590 --> 00:42:47.510] Speaker 1: you build up a kind of a fortress of assets that are volatile, but can't be debased.
[00:42:48.550 --> 00:42:53.650] Speaker 1: And so we've generally found that that synergy is interesting. And also there's a market of
[00:42:53.650 --> 00:43:00.610] Speaker 1: just people that own businesses and like Bitcoin and they'd rather sell their company to
[00:43:00.610 --> 00:43:04.930] Speaker 1: something with like you know for legacy in mind versus like something that'll flip it and
[00:43:04.930 --> 00:43:08.850] Speaker 1: rip it apart and then there's also a really big market of people that want to keep working
[00:43:08.850 --> 00:43:13.850] Speaker 1: for the business but for example you know they're they want more liquidity you know they
[00:43:13.850 --> 00:43:18.450] Speaker 1: might have be wealthy on paper but it's 95 percent in one business and they want to keep
[00:43:18.450 --> 00:43:24.950] Speaker 1: working on the business but they also could use liquidity uh de -risking uh and or just
[00:43:24.950 --> 00:43:31.370] Speaker 1: help with backend for example we hired a cto from nvidia uh uh you know our new cto is from
[00:43:31.370 --> 00:43:36.090] Speaker 1: nvidia and and so we can come in with to these companies that wouldn't really have
[00:43:36.090 --> 00:43:38.030] Speaker 1: necessarily the best ai advice in the world
[00:43:38.030 --> 00:43:38.650] Speaker 2: and
[00:43:38.650 --> 00:43:43.050] Speaker 1: we can give them world -class ai advice not to come in and say okay we're going to fire all
[00:43:43.050 --> 00:43:47.210] Speaker 1: your backend staff and and and just automate it but it's basically saying okay here's
[00:43:47.210 --> 00:43:53.330] Speaker 1: here's how we can help uh so that and it's not again it's not geared toward three -year
[00:43:53.330 --> 00:43:57.990] Speaker 1: outcome is saying, how can we make your competitive as streamlined as possible and reduce
[00:43:57.990 --> 00:44:02.350] Speaker 1: the busy work as much as possible so that you can get back to treating animals or whatever,
[00:44:02.350 --> 00:44:04.030] Speaker 1: whatever the business might be, for example.
[00:44:04.290 --> 00:44:08.050] Speaker 2: Yeah. It's fascinating you said that because when I was reading about it, I was like, this
[00:44:08.050 --> 00:44:14.270] Speaker 2: sounds like Berkshire Hathaway, but with a, with a different twist and maybe in an
[00:44:14.270 --> 00:44:19.510] Speaker 2: environment, you know, that requires something different than what Warren Buffett did, you
[00:44:19.510 --> 00:44:24.990] Speaker 2: know, for the modern day. So it's fascinating to hear you bring that up um what is their
[00:44:24.990 --> 00:44:29.990] Speaker 2: pushback is there pushback from small companies because this solves for a problem i think a
[00:44:29.990 --> 00:44:34.390] Speaker 2: lot of them based on the experience that they're hearing about seeing about uh private
[00:44:34.390 --> 00:44:40.550] Speaker 2: equity is not the fit for them for that reason um but but on the bitcoin part is there sort
[00:44:40.550 --> 00:44:46.130] Speaker 2: of a what's the biggest kind of hurdle is there explaining do you do you look for companies
[00:44:46.130 --> 00:44:51.790] Speaker 2: that already have a leaning toward bitcoin or do you find a good value company um And then
[00:44:51.790 --> 00:44:55.610] Speaker 2: say, like, hear me out, listen to why this might work and be a better option.
[00:44:56.010 --> 00:44:59.830] Speaker 1: Yeah, good question. So our early batch of companies, we've had hundreds of companies reach
[00:44:59.830 --> 00:45:06.470] Speaker 1: out and the funnel in this early stage tend to be company owners that like
[00:45:06.470 --> 00:45:06.850] Speaker 1: Bitcoin.
[00:45:07.050 --> 00:45:07.330] Speaker 2: Yeah.
[00:45:07.450 --> 00:45:13.090] Speaker 1: Right. Because they've those of us that founded Orange Juice, some of us have pretty large
[00:45:13.090 --> 00:45:19.910] Speaker 1: audiences and people hear about it through us and then they come to it. Now, our view is
[00:45:19.910 --> 00:45:26.870] Speaker 1: that if we execute the early acquisitions well, and if we grow larger, then probably some
[00:45:26.870 --> 00:45:32.210] Speaker 1: of the later acquisitions will be founders that don't care about Bitcoin, don't know about
[00:45:32.210 --> 00:45:36.870] Speaker 1: Bitcoin, just they like the permanent capital structure. Kind of like how if you're selling
[00:45:36.870 --> 00:45:40.470] Speaker 1: your company to Berkshire Hathaway, you don't really care about insurance necessarily.
[00:45:42.130 --> 00:45:47.470] Speaker 1: And so that's kind of the way we're approaching it. and basically it gives us just more
[00:45:47.470 --> 00:45:52.810] Speaker 1: avenues of things to do right so so we can ideally do things in a counter cyclical way
[00:45:52.810 --> 00:45:57.430] Speaker 1: they're pure bitcoin treasury companies like strategy for example they investors tend to
[00:45:57.430 --> 00:46:01.170] Speaker 1: want to give them more capital during bitcoin bull markets so they go out and buy more
[00:46:01.170 --> 00:46:06.110] Speaker 1: bitcoin when it's high and then when bitcoin's in a bear market all the capital pulls away
[00:46:06.110 --> 00:46:10.850] Speaker 1: and then the company can't buy as much bitcoin so they end up often having pro cyclical
[00:46:10.850 --> 00:46:16.750] Speaker 1: accumulation whereas with orange juice if we primarily focus on you know acquiring cash
[00:46:16.750 --> 00:46:22.690] Speaker 1: flow producing businesses that's our main focus and if our funnel is really good uh we can
[00:46:22.690 --> 00:46:27.650] Speaker 1: buy more businesses if at any given time we have a softer funnel uh we have this whole
[00:46:27.650 --> 00:46:33.650] Speaker 1: other avenue of what is bitcoin doing is it in a bear market is it surging you know um and
[00:46:33.650 --> 00:46:37.930] Speaker 1: you know so it gives us that whole second avenue of things that we can be doing with our
[00:46:37.930 --> 00:46:43.550] Speaker 1: capital uh in what is historically a volatile but strongly performing asset.
[00:46:43.870 --> 00:46:49.350] Speaker 2: Yeah. And at the same time, giving small businesses, which are struggling and are facing an
[00:46:49.350 --> 00:46:52.170] Speaker 2: environment, which is going to be really tough, if you look at interest rates or you look
[00:46:52.170 --> 00:46:56.990] Speaker 2: at devaluation, and giving them an option other than private equity, which for many people
[00:46:56.990 --> 00:47:02.510] Speaker 2: is not the answer. So really fascinating stuff. It certainly feels that we're kind of
[00:47:02.510 --> 00:47:06.310] Speaker 2: living in a sci -fi movie right now. I mean, I just was reading all these headlines about
[00:47:06.310 --> 00:47:11.830] Speaker 2: AI agents. And I think we all have this weird sensation when you were writing your novel,
[00:47:12.010 --> 00:47:17.070] Speaker 2: because as most people know, you are a published author of a sci -fi novel. Uh, if, if you
[00:47:17.070 --> 00:47:21.370] Speaker 2: describe it as that, you tell us, um, when you were writing the Stolgard incident, did your
[00:47:21.370 --> 00:47:25.990] Speaker 2: macro view influence the book or did the process of writing the book and sort of thinking
[00:47:25.990 --> 00:47:29.430] Speaker 2: about living in the future impact your macro thinking at all?
[00:47:29.670 --> 00:47:34.730] Speaker 1: Uh, good question. I would say both to some degree. So when I do investing, because I come
[00:47:34.730 --> 00:47:38.970] Speaker 1: from a background that blends engineering and finance. And so naturally, when I think about
[00:47:38.970 --> 00:47:43.350] Speaker 1: the future, I think about the path of tech adoption in addition to all the financial
[00:47:43.350 --> 00:47:44.530] Speaker 1: considerations I'm doing.
[00:47:45.990 --> 00:47:51.110] Speaker 1: But from an investing standpoint, really kind of like three to five -year time horizons or
[00:47:51.110 --> 00:47:55.950] Speaker 1: 10 -year time horizons if you're doing venture or buying a whole business, that's about as
[00:47:55.950 --> 00:47:59.650] Speaker 1: far as someone can realistically look out and have a thesis. And that's really when the
[00:47:59.650 --> 00:48:01.730] Speaker 1: investment should should really have worked out or not.
[00:48:03.990 --> 00:48:08.710] Speaker 1: And whereas when you want to think about much farther ahead, I've definitely found that
[00:48:08.710 --> 00:48:11.850] Speaker 1: that fiction is just a more interesting way to express that.
[00:48:13.210 --> 00:48:18.750] Speaker 1: And that can eventually come back and feed into the present, which is, OK, if the world
[00:48:18.750 --> 00:48:22.610] Speaker 1: might look like this in 50 years, what is it likely going to look like at the halfway
[00:48:22.610 --> 00:48:27.230] Speaker 1: point? What is it going to look like a quarter of the way there? And that starts to inform
[00:48:27.230 --> 00:48:31.910] Speaker 1: certain things. um and you know i i would separate i mean part of it is just entertainment
[00:48:31.910 --> 00:48:38.550] Speaker 1: right so i i previously wrote broken money that's non -fiction um uh and in this case i for
[00:48:38.550 --> 00:48:42.030] Speaker 1: a long time i just had a separate interest you know we all need hobbies and i had a
[00:48:42.030 --> 00:48:47.910] Speaker 1: separate interest and just certain uh narratives certain um concepts that i thought would
[00:48:47.910 --> 00:48:53.590] Speaker 1: just be fun to explore uh and so unlike a lot of like sci -fi sometimes is uh described as
[00:48:53.590 --> 00:48:59.050] Speaker 1: kind of like tech focused or idea focused and is usually weaker on character whereas i i
[00:48:59.050 --> 00:49:02.730] Speaker 1: generally actually wrote more toward character driven sci -fi so it's more about the
[00:49:02.730 --> 00:49:08.150] Speaker 1: characters and what they're going through than the tech um and so it's more like it was a
[00:49:08.150 --> 00:49:13.250] Speaker 1: fun thing to work on but in that world i did i did try to put realism as okay what is what
[00:49:13.250 --> 00:49:18.290] Speaker 1: is tech going to look like and call it you know 45 or 50 years what what are political
[00:49:18.290 --> 00:49:23.730] Speaker 1: structures are likely going to still be relevant or have changed um and then of course i
[00:49:23.730 --> 00:49:28.410] Speaker 1: threw in some fantastical elements that are just, you know, on their own. But outside of
[00:49:28.410 --> 00:49:33.190] Speaker 1: like those specific categories for the plot and for fun, I did try to make that background
[00:49:33.190 --> 00:49:39.330] Speaker 1: context what I think is somewhat reasonable and to go from there.
[00:49:39.570 --> 00:49:45.550] Speaker 2: Yeah, that makes sense. And I find it so fascinating. It has to kind of be where your mind
[00:49:45.550 --> 00:49:50.550] Speaker 2: goes, even if you're not really conscious of it. If you're living in that sort of decade
[00:49:50.550 --> 00:49:56.230] Speaker 2: experience, I think that's, I think it's natural that it would be where you speculate
[00:49:56.230 --> 00:50:00.450] Speaker 2: things might go, you know? I thought, I'm really interested in this at the moment because
[00:50:00.450 --> 00:50:04.370] Speaker 2: I, I mean, I joked about feeling like we're all in a sci -fi movie, but I, with my friends,
[00:50:04.530 --> 00:50:09.990] Speaker 2: have said recently, like, how did they get it so right? Like, are they just seeing the
[00:50:09.990 --> 00:50:15.770] Speaker 2: future or, you know, folks in that genre? Or are we sort of mapping out the future based on
[00:50:15.770 --> 00:50:19.890] Speaker 2: what we've read, you know? it's sort of a really interesting kind of chicken and egg
[00:50:19.890 --> 00:50:24.130] Speaker 2: situation that feels very relevant right now. I don't know. Do you feel that when you see
[00:50:24.130 --> 00:50:24.670] Speaker 2: these headlines?
[00:50:24.950 --> 00:50:29.610] Speaker 1: I do. And one of the jokes I've made is that I write sci -fi because it feels more normal
[00:50:29.610 --> 00:50:33.970] Speaker 1: than reality, which is not how it's supposed to be. And some things like all, you know,
[00:50:34.190 --> 00:50:39.050] Speaker 1: because even though the book came out earlier this year, I mean, it was in the works for a
[00:50:39.050 --> 00:50:44.170] Speaker 1: couple of years and the idea stage goes back over a decade. And it's funny because my
[00:50:44.170 --> 00:50:48.610] Speaker 1: natural instinct is to kind of tune certain things down don't don't exaggerate things and
[00:50:48.610 --> 00:50:52.030] Speaker 1: then you get to the present it's like if anything i'm under tuning things like i should
[00:50:52.030 --> 00:50:57.190] Speaker 1: just i should just be more direct you know um and you know like in sci -fi for example
[00:50:57.190 --> 00:51:02.370] Speaker 1: there will be dystopias and some more rarely there's utopias so something like star trek is
[00:51:02.370 --> 00:51:04.210] Speaker 1: is actually closer to a utopia
[00:51:04.210 --> 00:51:04.610] Speaker 2: uh
[00:51:04.610 --> 00:51:08.370] Speaker 1: whereas you know obviously there's no shortage of dystopian science fiction generally
[00:51:08.370 --> 00:51:14.050] Speaker 1: speaking conflict creates story so people are more likely to write uh something closer to a
[00:51:14.050 --> 00:51:19.090] Speaker 1: dystopia and my world is like intentionally messy like it's it's it's our world just
[00:51:19.090 --> 00:51:23.370] Speaker 1: extrapolated in technology and some and then by extension extrapolated some of the social
[00:51:23.370 --> 00:51:27.870] Speaker 1: trends around technology like a world where for example people just naturally distrust
[00:51:27.870 --> 00:51:32.430] Speaker 1: video or like they just crazy things can happen and they're just like i don't know if
[00:51:32.430 --> 00:51:35.590] Speaker 1: that's i don't know if that actually happened or not and even in that world like there are
[00:51:35.590 --> 00:51:40.330] Speaker 1: safeguards against it like you can you know for example you can have a device that takes a
[00:51:40.330 --> 00:51:45.090] Speaker 1: photo and cryptographically signs the photo so you can say like you know this came from
[00:51:45.090 --> 00:51:49.370] Speaker 1: this apple device with this serial number it'd be very hard to prove otherwise like to hack
[00:51:49.370 --> 00:51:54.890] Speaker 1: it and make that not the case but the human brain still has just only so much kind of
[00:51:54.890 --> 00:52:00.010] Speaker 1: bandwidth to matter for all that so like investigators might put a look through and kind of
[00:52:00.010 --> 00:52:04.570] Speaker 1: pinpoint what happened uh but a lot of people are just kind of like there's so much noise
[00:52:04.570 --> 00:52:08.630] Speaker 1: out there now that almost their world shrinks and one of the one of the kind of the sci -fi
[00:52:08.630 --> 00:52:13.710] Speaker 1: things i brought into reality is this idea that technology so far given us almost like a
[00:52:13.710 --> 00:52:19.490] Speaker 1: bell curve of of global awareness which is obviously a long time ago before we had even
[00:52:19.490 --> 00:52:23.830] Speaker 1: like the telegraph or things like that we were obviously very confined to our communities
[00:52:23.830 --> 00:52:29.110] Speaker 1: our local areas traveling far was like a rare thing that only a few people did and even
[00:52:29.110 --> 00:52:33.790] Speaker 1: information arrived very slowly and then i would say kind of like in the in the 20th
[00:52:33.790 --> 00:52:38.510] Speaker 1: century obviously when we have video and all this we're suddenly in this like really
[00:52:38.510 --> 00:52:43.170] Speaker 1: connected world and we're in a world where it's it's much easier to capture and share video
[00:52:43.170 --> 00:52:48.430] Speaker 1: than it is to like doctor videos like fake videos uh so we kind of had like a peak
[00:52:48.430 --> 00:52:52.810] Speaker 1: understanding of like what what is actually happening in the world and then we also had
[00:52:52.810 --> 00:52:56.670] Speaker 1: kind of like um we had trust in media trust institutions so for example the combination
[00:52:56.670 --> 00:53:01.350] Speaker 1: like video and like walter cronkite saying here's things that are happening we all kind of
[00:53:01.350 --> 00:53:05.770] Speaker 1: would agree on roughly what is happening and then disagree on on certain kind of margins
[00:53:05.770 --> 00:53:11.570] Speaker 1: whereas we've kind of now when we get to the age of like ai and things like that video as
[00:53:11.570 --> 00:53:17.430] Speaker 1: as proof has gone down a ton uh trust in in authorities has gone down a ton institutions
[00:53:17.430 --> 00:53:23.090] Speaker 1: governments and all this and so when things happen people are kind of like did that happen
[00:53:23.090 --> 00:53:28.570] Speaker 1: and like if it did happen it is is the narrative blowing it out of proportion or shrinking
[00:53:28.570 --> 00:53:33.130] Speaker 1: it compared to what's happening why is my intent like is the out it out of 10 things that
[00:53:33.130 --> 00:53:37.550] Speaker 1: happened why is the algorithm focusing on this one is this actually the biggest thing maybe
[00:53:37.550 --> 00:53:41.710] Speaker 1: it is or is it just that the algorithm wants me to look at this thing because it doesn't
[00:53:41.710 --> 00:53:46.690] Speaker 1: want me to look at this other thing and and so that clutter in some ways it shrinks our
[00:53:46.690 --> 00:53:52.850] Speaker 1: world back down because people are just kind of like that's all crazy and messy and sad. So
[00:53:52.850 --> 00:53:57.270] Speaker 1: I'm going to focus a little bit more locally. And I think that's actually kind of like a
[00:53:57.270 --> 00:54:01.110] Speaker 1: kind of a trend that technology has sort of contributed to.
[00:54:01.710 --> 00:54:05.670] Speaker 2: Fantastic stuff. Lynn, such a great, fun conversation. Thank you for wearing so many
[00:54:05.670 --> 00:54:09.330] Speaker 2: different hats with us today. But it was great to get your thoughts on so many different
[00:54:09.330 --> 00:54:10.670] Speaker 2: subjects. So appreciate it.
[00:54:10.950 --> 00:54:11.970] Speaker 1: Of course. Thank you for having me.