Chamath Palihapitiya: hey sorkin i just went through the comments the one question keeps coming up over again

SPEAKER_02: why the are you writing this book jesus christ what a party pooper what a party pooper i don't know man i don't think i think it's supposed to be the book's supposed to be like a beach read a beach read yes come on did you read it my god no i saw the title i was like skip

SPEAKER_08: all right besties i think that was another epic discussion people love the interviews

SPEAKER_10: i could hear him talk for hours absolutely we crush your questions in a minute we are giving people brown truth data to underwrite your own opinion what do you guys think that was fun

SPEAKER_14: shimath you you're gonna love these characters i kid you not i kid you not the people who do who

SPEAKER_17: are involved in this at that time like the the main character totally agree with you i i am a huge to

SPEAKER_18: be honest i've studied this period for a while actually i think it's great that you wrote this

SPEAKER_21: book i think it's incredibly fascinating we're here with uh with andrew ross sorkin chamath and i with another all-in interview riveting today we're going to talk about andrew's new book 1929 and specifically cover why andrew got into it what the history teaches us and are we looking at another 1929 or something different this day and age as a lot of people may speculate but andrew thanks

SPEAKER_02: for joining chamath and i to talk about this thank you for having me and i love your uh your background

SPEAKER_26: there thank you a true image of what was actually happening in october of 1929 crazily enough that's

SPEAKER_21: right and it was colorized by some ai or something i think but uh yeah great how and why did you get into this era of 1929 the great stock market crash of 1929 like you're a busy guy you're on tv every day we see you all over you're at conferences i saw you at a conference in southern california this week then you're at another conference and you're back in new york you're very busy at what point did you say hey i want to sit down and write a book about this era okay so here's what happened to

SPEAKER_14: me so i've written that book too big to fail about the 2008 financial crisis right and people used to always say to me after that they'd get into these like very in-depth conversations about 1929 or they'd want to know more about 1929 and most people know that something terrible happened in 1929 they know there was a crash in 1929 they oftentimes think it like is the great depression or leads to the great depression but if you were to ever ask most people now chamath and you are maybe in a different category and say well who were the people who actually were engaged in this what were they saying to each other who was sleeping with who who was trying to over who what was actually happening here and what were the incentives and what were the motivations that led to what clearly were some poor decisions i couldn't find that so i went on a vacation like 10 years ago with my wife very nerdy and i like downloaded all these books to my kindle and there's some great books by the way about this period don't get me wrong but they didn't have the sort of character driven story like i loved den of

SPEAKER_26: thieves i loved barbarians the gate i love stories about people fabulous books fabulous books what

SPEAKER_31: did your wife think when you ignored her the entire vacation you guys were on and were just reading books

SPEAKER_17: on your kindle i mean i think she thought it was out of my mind but um no so i i read these books and i was like okay where's the story where's the where are the people before you get to the people can you

Chamath Palihapitiya: can you give people a concise tick like i was gonna ask you for a tick tock of the overarching economic issues before we get to the sort of the characters because i think yeah because i think what to your point which is an important one people think it was like okay stocks went down right but the other things like the overproduction of the economy tightening interest rates the war debt like all of this stuff was just co-mingled and nobody fully understands that can you maybe give folks a

SPEAKER_37: precise representation of the setup okay so let's just go back even let's go back to 1919 because

SPEAKER_17: actually i think that's a critical year so prior to 1919 in america people did not really borrow money it was like a moral sin to to get credit but people didn't do it in 1919 general motors says you know what we're gonna start lending people money so that you can buy a car and that was actually like a major inflection point in america because then sears roebuck clocks what's going on and says okay we're gonna do this too for appliances and then a guy named charlie mitchell who ran a bank called

SPEAKER_14: national city which becomes citigroup says you know what we can do this for stocks so we you know and and all of a sudden brokerage houses are opening up you know on the corners of streets the way we see starbucks today it's like literally like that and you could go into one of these places and you could put a buck down and they would literally loan you ten dollars off of your dollar i mean that's how

SPEAKER_43: insane things were and at the time there was no risk underwriting of any kind zero risk underwriting

SPEAKER_14: nobody understood what they were by the way there's no sec there's no regulations somebody who who read this book early said oh in your research did you get a chance to read any of the prospectuses for the companies i was like prospectuses like if there was like a leaflet that they handed out on the street you'd be lucky so there's no there's nothing and it's just like a complete go-go era forget about 1929 in 1928 the stock market went up 48 percent so people are just there's just sort of like this it's a little bit of the chuck prince when the music's playing you're dancing and everybody's dancing and nobody's even thinking about the music stopping kind of like ever now meanwhile there's also these technological changes i mean huge generational technological changes in the same way i think we're probably talking about like ai today radio so rca was like the nvidia of its time everybody wanted into rca the stock ticker was radio because it was like the it was like going to change the world and and the other big piece of this was also similar to today this idea of democratizing finance it was like okay the elites have had their way they've made all the money we're now going to let everybody in on the action now the difference between then and now though was there was also like crazy amounts of

SPEAKER_26: manipulation insider trading as i said there were no rules like literally no rules nobody's going to jail

SPEAKER_45: for this stuff because there wasn't a rule against it by the way it wasn't just individuals that was

Chamath Palihapitiya: investing and overextended with margin but the banks would take depositors money and they were

SPEAKER_36: going along the stock market the the banks the banks were doing it by the way the banks regular

Chamath Palihapitiya: old corporations i mean could you imagine could you imagine if it turned out that like jp morgan and goldman was going long in video with depositor funds that's a that's the effective

SPEAKER_17: equivalent of what was happening back then too you had you had corporations taking their balance sheet right and effectively then loaning it out so that people could go buy stocks that was the other thing was happening so there's a sort of like just the push towards investing and and over production and and all sorts of other things created this sort of frothy market and you had a fed you mentioned the fed which is an interesting part of this there was a fed it was new started in 1913 they knew this was a mess like they kept saying to themselves you read all the diaries and notes that i was in the

SPEAKER_14: last eight years they knew there was a problem but they were scared out of their mind about doing what they probably should have done which is raise interest rates but they couldn't pull off like

SPEAKER_58: a vulgar kind of thing you sorry but can you double click into what you said about the fact that

Chamath Palihapitiya: there was a social contagion around wealth creation that people felt like the elites had had their way and now it was everybody else's turn just describe that like what had caused that and what

SPEAKER_21: amplified that social content and who and who was everyone else were these factory workers because we're kind of on the heels of a big industrial build out so like was it the fact folks were had savings for the first time like where's this coming from well so what's really happening is

SPEAKER_14: you have a lot of folks who are coming from the from farms frankly and moving to the big cities for the first time that's a huge part of what's happening so most of the trading i should say is happening in the big cities it's not happening you know out in small towns it's happening in big cities for the most part but but that whole sort of scenario once they're in the big city and they're seeing

SPEAKER_17: that there's sort of this wealthy group of people talk about inequality wealthy group of people and they want in on the action also by the way the people at the top meaning the bankers and investors and

SPEAKER_14: entrepreneurs are like we think there's this big opportunity to open this up for the little guy or the ordinary investor we think this is like a huge opportunity there's a guy named john raskob who's sort of like the elon musk of his era um he actually ran general motors created the credit program there then becomes hugely wealthy then gets into politics by the way into building the empire state building but he was trying to create almost like the first mutual fund because he thought that people should be able to get in on the action the way he did that was like his whole conceit and he talked about it pretty openly there was a famous article called everyone ought to be rich uh that was his line everyone ought to be rich and it also was a time where sort of the american dream shifted a little bit i think from sort of a horatio alger story a little bit to like a lottery can we get rich like can like the whole idea of capitalism is going to give us this great opportunity and i you know obviously

Chamath Palihapitiya: do you think that radio played a role in that because it amplified these stories and made them go faster and people would just like start to tell these tales and folks started to forget the horatio elder part like i'm just still trying to understand like you have you have folks on the farms right they're getting educated the industrial revolution is happening so they're moving to the city and the radio then is maybe what instagram is like now you're seeing people with wealth you're seeing this wealth that you don't have you aspire to that yes and then something comes in and fills the void is that is that kind of the mechanic i think something fills the void and all of a

SPEAKER_14: sudden you now have the opportunity because this the bank or the brokerage houses are going to lend you all this money and it's not just radio being the communication device it's really the media so the other thing that was happening during this period so time magazine starts in 1923 forbes 1917

SPEAKER_17: all of a sudden charlie mitchell the ceos are now on the cover of magazines the way babe ruth and charles lindberg had been on the cover so sort of the shift in how people even thought about business

SPEAKER_37: uh none of these guys were you know famous before the 1920s but they became famous and everybody wanted

SPEAKER_72: everybody wanted to be them this was what america was about was this industrialization right and this

SPEAKER_21: was kind of like hey we're pioneering an entirely new world and these are the leaders doing it and these are the rock stars that are transfer transforming this country i mean was that kind of a big part of what was going on at the time totally and everybody wanted to be everybody wanted to be a

SPEAKER_17: rock star by the way it's the same way everybody wants to be you david everybody wants to be chamath or

SPEAKER_14: they all want to be elon like i think there was a huge thing like okay and here's this opportunity and they were being sold the opportunity and given the opportunity not just to invest but again i think

SPEAKER_74: that the margin piece of it was such a crucial crucial element do you think it's a coincidence

Chamath Palihapitiya: andrew that now you're you're publishing this book in 2025 but like how does it feel like eerily similar to you like way too similar where you can almost map one to one those boundary

SPEAKER_75: conditions then in some version of that today like is that is that like a little bit but not i would

SPEAKER_14: say that wasn't my intent like when i got involved in this i just wanted to retell the story and figure

SPEAKER_26: out who these guys were i i ended up after that crazy vacation with my wife i ended up going to the baker library i happened to be giving a speech at harvard and i walk in there and i had some time and i asked the librarian i said can i see these boxes this guy thomas lamont who ran jp morgan at the

SPEAKER_14: time and i said can i look inside these boxes and inside the boxes his secretary is keeping transcripts

SPEAKER_78: of his phone calls with hoover and roosevelt like by the way same way like everybody's probably talking

SPEAKER_14: to trump or trump today and i'm like oh my god i haven't seen it and you're seeing the conversation and i thought okay if you could use those transcripts in an actual story and then you could figure out i didn't know if other transcripts existed for all the other characters yeah wow you could recreate this whole crazy situation right but i didn't go into it thinking okay this is all one-to-one and i don't think it is one-to-one i think there's a lot of leverage in the system today but it's a different

SPEAKER_26: kind of leverage i like to believe that there's now an sec there's other regulations well you can

SPEAKER_84: believe that there is one paul's doing a good job he's there so i'm not here to tell you that like

SPEAKER_26: we're going off a cliff tomorrow i think there's probably some things that are happening in our

SPEAKER_14: economy today that do mirror that period and i hope there's some lessons in here but do you think do you

SPEAKER_21: think the regulations that have been in put in place over the past hundred years and there have been several cycles one of which happened after 08 of trying to create new protective provisions around how we operate in our financial markets have they actually changed things enough or does the human element always find its way it always finds its way to frothiness to frenzies to these kind of moments of exuberance easy money and this this like will there'll always be a path you know whether some people might argue crypto tokens there was an nft moment a few years ago wherever the regulation

SPEAKER_87: kind of path of least resistance is that's where everyone goes totally that's always going to be the

SPEAKER_14: case that's the human condition we all want more you know there's that great line in um it's it's it's wall street 2 uh where i think michael douglas says to shy laboeuf i thought the second wall street was not as good as the first one by the way says says something like what's your number

SPEAKER_17: and he looks at him and he goes more right and that's that's humans that's humans and that's humans and more means we're all trying to figure out how we're going to get to more and i think that that

SPEAKER_76: was what was going on then to some degree it's what's going on now i think what's always going on it

SPEAKER_72: never changes it's not like there's some unique moment today maybe there's technology that's kind of unlocked this kind of new cycle but look the other piece of this is actually a lesson for me

SPEAKER_14: that i still grapple with today i think people think the word speculation is like a dirty word and the truth is having never written this book and too big to fail and just spending you know all

SPEAKER_17: this time reporting on all this you need speculation speculation is the twin of innovation

SPEAKER_50: right it's putting your capital at risk there is no it's right it's price discovery it's risk

SPEAKER_43: discovery it is the hard underbelly of innovation i completely agree there is no innovation without

SPEAKER_14: some speculation elon musk would not have created tesla and said somebody speculated on him early when

Chamath Palihapitiya: it all seemed totally insane and also he's probably speculated himself in 50 different ideas that never saw the light of day that's what it means it's like you're investing risk capital that capital is not always money it's a lot of time it's time and reputation as well it's convincing other people to come work on something and you're doing it speculatively that's what silicon valley does

SPEAKER_02: betting on the come and so then the question becomes how do you create an environment where you can have speculation not just have it but encourage it but not let it get out of control right like that is

SPEAKER_20: the sort of fundamental question what ends up happening andrew is like no one gives a when a big

SPEAKER_21: fund manager or a big bank or some kind of dark pool of capital loses loses money but when it hits the consumer when it hits the individual then there's this rush to protection it's like we need to protect the system we need to kind of protect the consumer because they're always the ones that get taken advantage of is that kind of fair and if as you look at what happened coming out of a hundred percent

SPEAKER_14: out of oh eight yeah look you can look at both of those things you could look at by the way i think an interesting one because we're now dealing with it now is the accredited investor rule so right you know by the way that really goes back to the 19 late 1930s or 1940 you know the idea was we only wanted the wealthy to be able to have opportunities to invest in private companies because they were the only ones that we thought should be prepared to lose the money and we didn't want the little guy to lose the money here we are now in uh you know 2025 and there's a lot of folks saying you know i want i want the access i want the opportunity and you know sometimes like i remember

SPEAKER_26: chamath you and i probably talked about this years ago i remember i'd either talk about like

SPEAKER_14: gamestop or some of these other companies and tell people you know oh you got to be careful guys this go wrong i said that a little bit about spacking stuff and some other things and people like sorkin stop it you're not protecting me you're protecting the man you're protecting the man and it was sort of regulatory capture it's a very interesting concept so anyway i haven't come up with a you know a neat

Chamath Palihapitiya: answer about that but i do think about it a lot well to your point i think the the 40s act 1940 act i think it was it's been a very complicated piece of legislation because if you fast forward to today we're still trying to unwind and fit a square peg into a round hole if you will the entire crypto economy contorts itself around the 40 act right all these bdc's contort itself private credit contorts

SPEAKER_58: itself and why and well right now we don't have the regulatory will to just go and have a wholesale rip and replace of what is really old legislation i think scott you want to talk about the fort

SPEAKER_59: chamat do you want to just describe the 40s act like what's in it well it was basically written

SPEAKER_58: as a way to sort of try to delineate what is a security what is allowed to be traded what kind of businesses can be public and at the time with the understanding that they had of the economy it all made sense there was a pretty bright line of here's a commodity here's a security and here's what is allowed the problem is as we've seen is that businesses today in 2025 are way too dynamic and they don't map to the brittle definitions of 80 years ago the problem is that when you try to go and rewrite those rules there isn't the legislative will because what andrew says comes up over and over

SPEAKER_117: again which is the fear of what could go wrong stops people from doing what i think could go right and that has pretty profound consequences i think i think in part when you look at what happened in gfc you can pull the string back to the 1940s and the 40 act and people's reaction to regulations the savings and loan crisis that's another one that was absolutely unnecessary but happened because we tried to

Chamath Palihapitiya: contort ourselves to expand the economy in ways that were brittle andrew i want to ask you a question which is if we go back to the 29 so we we have a good sense of the the setup yeah can you explain

SPEAKER_58: the big characters and right who they were and the roles that they were playing okay so there's

SPEAKER_26: there's there's two there's a whole bunch of characters but i'd say there's two main characters

SPEAKER_14: in this book that really drive the storyline one is charlie mitchell this fellow who runs national city he is the jamie diamond of his time in terms of fame he might actually be more like michael milken because he he really does develop sort of credit for the public michael of course did it uh for businesses later yeah but um he they used to call him sunshine charlie and he was on the board of the new york fed he was constantly calling for lower interest rates interestingly during all of this and he was the guy who was not just loaning to speculators and stockholders he was also loaning money to different brokerage houses across the country on the other side of the story in washington is a guy who you probably heard of or know named carter glass yeah carter glass was the

SPEAKER_26: elizabeth warren of his time or maybe even like aoc aoc yeah and he would by the way uh he was like a a racist elizabeth warren interestingly uh given the weird things going on down there at the time

SPEAKER_02: anyway he would rail for years about this thing that he described as mitchellism he believed that charlie mitchell and what charlie mitchell was doing was going to upend the economy effectively and as the story plays out they are sort of pitted against each other one of the things that charlie

SPEAKER_26: does is he defies or at least appears at one point to defy the federal reserve which is trying to clamp down on speculation they don't try to raise interest rates what they weirdly do is they send a letter to all the banks saying please stop lending to speculators and the banks don't know what that even means so they stop lending basically to everybody and charlie says we're not going to

SPEAKER_14: have that so we're going to start lending ourselves and that sort of creates this whole other dynamic which leads him to end up being in front of congress and i don't want to give away the story but

SPEAKER_26: he does get arrested on the steps of his own home for doing some crazy things later in the story but those two sort of play a big role and then you get to see how glass steagle came about which by the way is shocking because it is not what you would think at all it almost has nothing to do i don't want to say it has nothing to do with breaking the banks apart for like political reasons but it actually has to do with uh business reasons meaning there was like some major bank money and lobbying going on behind the scenes to f over jp morgan by the guys who are running chase rockefellers so it's it's wild

Chamath Palihapitiya: the story is wild i mean okay so just a summary but the glass steagle i think as i understand it but tommy basically separates commercial banks and investment banks and separate separates commercial

SPEAKER_32: banks and investment banks and then sets up the fdic base and sets up the fdic right again

SPEAKER_26: when you see how that all came together the fdic piece of it it the the back story of like these

SPEAKER_01: laws it's not it's not coming from consumer protection as much as you're saying lobbying to try to basically like marginalize the yes gorilla exactly exactly and you'll see it you will be in

SPEAKER_26: the room with these people literally going in there sitting in the white house begging roosevelt to do

SPEAKER_02: this and and by the way carter glass is actually unhappy about it i found letters where carter glass is like this bill is getting taken away from me and is basically being taken over by the bankers which is almost hilarious because elizabeth warren loves to cite this bill as sort of some panacea

SPEAKER_86: andrew as you look at markets today just to come back to the modern era i don't want to ask you the

SPEAKER_21: simple like draw the parallels but are are we in and i've heard you ask this question a lot lately like

SPEAKER_135: are we in a monetary bubble are we in an inflationary bubble are we in a speculative bubble are we in no

SPEAKER_14: bubble so i'm assuming we're in some bubble and we just don't know when it's gonna pop of some sort and by the way we don't know how big it's gonna pop either you know it doesn't have to be 1929 it could be 1999 could be 2008 could be smaller than that i i don't know do i think that there's leverage

SPEAKER_26: i mean you guys talk about this ai investment phenomenon that's taking place right now and for the most part the big corporations are spending real cash so it's not that's not leveraged but you look at a lot of the real estate plays the energy plays that sort of on the periphery of this there's a lot of leverage there i think the credit the private credit world we don't really know where all the leverage lies right now now i don't think that any of that is as leveraged as what we were talking about this like 10 to 1 situation in 1929 or maybe or even like the subprime situation in 2008 but i don't know at some point you start to look at some of these you know like the nvidia open eye deal or the amd deal and there is a little bit of a circular kind of thing going on there uh for now and i just don't know wait but that could be we could still be years we could

SPEAKER_138: still be years away from this and by the way it could work out on the other end but what about

SPEAKER_135: like government monetary fiscal issues the central bank monetary policy oh interest rates and then

SPEAKER_21: the fiscal issue the government spending right now ultimately if you have a devaluation of the dollar we're seeing gold at 4 000 bucks an ounce we're seeing the dollar basket trade down i think one of the worst years we've ever seen this year uh does that ultimately translate into a higher index on the stock market because the dollar is worth less i mean you know could this actually be more of a monetary or fiscal kind of problem than it is a speculative kind of problem well so you would

SPEAKER_14: think it would be but then explain so yes i think like the traditional the classic economist would say this you know these things should not be happening at the same time meaning look at the

SPEAKER_26: price of equities look at the price of gold look at the price of you know u.s treasuries right now

SPEAKER_14: it doesn't at least classically it shouldn't shouldn't line up the way it's lining up right

SPEAKER_26: now so i i just don't know i would have thought that the investor class would have wanted to charge us a higher premium for our bonds these days for a whole bunch of reasons but they don't uh maybe that's just like life is relative and other countries are you know not doing as well and so

SPEAKER_142: we're still the the prettiest girl at the dance i think that's exactly right but we've never seen so much

SPEAKER_21: capital so so much uh printing happening as we see today i mean the seven percent debt to gdp and peace

SPEAKER_14: time with an expanding economy never seen that before totally but then if that's the case you'd

SPEAKER_26: think that we'd all have our money in bitcoin and or gold but but we don't why is that i don't know

SPEAKER_21: how do you invest anyone ever ask you that

SPEAKER_14: most people don't ask me that and the truth is i'm not allowed to invest in individual stocks

SPEAKER_26: it's actually given what i do for a living that's part of the right part of the part of the the nunnery that i have to live in you're long the index i'm long the index i am long bitcoin gold i'm long the indexes and uh no i i by the way i wish i could i thought for many many years it's probably shifted now but for years upon years i was always i think tomorrow and i've talked about this i was always worried about buying bitcoin because i didn't know i i didn't want to be on tv or in the

SPEAKER_58: papers i would do it i came on cnbc i know i know to buy it and i would sit there at a coin 200 sorkin would show me a clip of charlie munger telling me that it was poison and he would say what do you think

SPEAKER_17: and i said i have tremendous respect for charlie and warren but they're wrong i remember those moments fondly and sadly because i should have i should have listened i should have listened

SPEAKER_18: but okay so you have a very balanced kind of portfolio pretty vanilla down the middle super

SPEAKER_156: vanilla i'm not gonna get index funds i'm not gonna get rich unfortunately uh do you regret being

SPEAKER_72: a journalist that restricts you from access to the markets i mean you you seem to have a good pulse on

SPEAKER_21: what's going on but really what matters in markets is having a pulse on what the actors in the markets are doing right and you're not able to to act on it

SPEAKER_72: i have misgivings about it how about that you're the character in your show yeah acts where you have all the inside info but you can't do anything about it can't do anything about it yeah exactly but

SPEAKER_26: that's the point i get it i i knew that's what i was signing up for so i'm i'm i'm cool with it i mean

SPEAKER_20: do you like do you like being a journalist i mean do you like sitting as a speculator or an observer

SPEAKER_21: versus being an actor i mean have you ever thought like man i really understand markets i really understand the parallels to history i've got a good sense of this i i feel like i should play a role i want to play a role i could make money i think about that i've thought about that for years

SPEAKER_14: totally uh about you know could i could i be an actor could i play a role and i often go back to the

SPEAKER_26: idea maybe look maybe this is not the right way to think about it but i feel like i've managed to have hopefully some semblance of credibility with some people by doing it this way and i'm and i've been able to be hopefully a good part of the conversation and be engaged in a lot of things now maybe i could do that as as as a sort of a direct actor too i don't know i also think by the way journalism seems to be changing msn legacy media i mean by the way there's a lot of people

SPEAKER_166: i mean you could start a podcast and you could just do whatever you want to do so i don't know i

David Friedberg: don't know what the right answer is tell us who are the characters in the play today who are who are

Chamath Palihapitiya: the actors who are the main actors that you see that's a good question yeah who uh the main actors

SPEAKER_14: well i think you'd probably think about them in a couple different ways you sort of think about

SPEAKER_26: on the financial side and probably the tech side and where they sort of come together so i think obviously and then the government piece so obviously the president scott howard on the sort of business end of things inside the inside the government and then i think in the banking or classic banking world you'd say that probably jamie diamond and larry fink are probably the most sort of powerful players in the sort of traditional legacy piece but then you probably give a nod to brian armstrong at coinbase as sort of being one of those sort of ogs in sort of wherever you think crypto goes by the way i'd buy hats off to uh to vlad tenev who i think's been sort of very outspoken sort of talking about democratizing finance right like he sort of represents that but then you tell me i mean i think sam altman and elon and wherever you think ai is headed next and and the

SPEAKER_72: google guys but it's interesting because you're playing you're saying the technology particularly ai

SPEAKER_21: is playing a key role in yes fundamentally it seems like it is do you think you think that's true well i'm asking because you also i mean the capital that's moving through banks the there's a there's a whole nother set of industries that generate trillions of dollars of revenue that seem to be largely ignored in the conversation about where the economy where the global economy is where it's headed where markets are headed it's all about ai right i mean and i i think that's like but that's because if you kind of and i guess the question is like is that a media thing or is that like a real

SPEAKER_02: economy thing i think it's a real economy thing because i think if you if you x out the mag 7

SPEAKER_26: yeah all of a sudden the economy does not look nearly the same i mean i don't want to say we're

SPEAKER_21: levitating but you know we're either i saw a data point yesterday that said the gdp quarterly gdp was like flat excluding data center spending does that sound right to you did you see that it's definitely

SPEAKER_26: 100 to 200 basis points of gdp yeah so sure so let's so let's say if you if you x out it if you x out the ai boom where you know where do you really stand i think that's a real real live question i think the reason why no one's focused on the rest of the economy first of all the ai story i think is the more exciting part but it is what i think is i don't say propping up the economy but it's keeping

Chamath Palihapitiya: the economy well i would i would flip it on it here i don't i think that those comparisons are kind of dumb because at every point in the economy there are these dynamic reallocation of resources and assets things are important at different times i think the thing with the ai thing is like what is every company doing to figure out what they look like in a world of ai and if they're not going to spend that amount of time their productivity is probably going to on the margin

SPEAKER_117: shrink to a net new company that just does what they do just efficiently and better that's just the cycle of creative destruction we've seen at every point of every meaningful technology so you think

SPEAKER_02: we need to be talking about this much more outside of the sort of like tech and data centers yeah i

Chamath Palihapitiya: made this comment all the private equity wives got their husbands to come in and rail at me in the comments and i said you know the least success i've had at the software company i started has been selling into private equity it's like i have fortune 500 and fortune 1000 customers lining out the door i couldn't sell to one single private equity company what is effectively a platform that uses ai to rewrite all your software and i'm like but this is the first company that should be in line and what it

SPEAKER_117: goes to is that their heads are firmly in the sand and i think that's not a decision on technology it's a psychological decision so i think the weird thing with ai is that it pushes people to a place of psychological insecurity and i think that they think i don't want this to be my problem i need to just wait this out and somebody else will deal with it in the future that's very different than other technology arcs like you know in the dot-com bubble that's not what we live through in the social bubble or the mobile bubble it was always like okay this seems interesting let's figure out how to

SPEAKER_58: embrace it take advantage of it this is the one where many people are like nope i'm just kidding

SPEAKER_02: no all right but here's the question so you know 1932 comes around and we had unemployment in this country at 25 percent 25 yeah okay it was pretty crazy yeah if the ai boom is as successful as i think

SPEAKER_14: we're all excited it could be and it affects every industry in every way and all the things we're discussing here there need to be massive productivity gains like massive like crazy and invariably productivity gains are sort of a euphemism for cutting costs in some other way and that ultimately probably is going to have an impact on employment in this country and the question

SPEAKER_26: or do more things and the question is which one is it or by the way is it a combination of both

Chamath Palihapitiya: i would i would probably yeah it's a combo you high grade people so that they spend less time doing drudgery and you allow them to work on more important things like i'll give you an example my wife runs a life sciences business and what's funny is when she looks at ai she's like all of this stuff is trying to sell me speed and she's like i don't want speed i want quality she's like i'm not trying to make 500 molecules tomorrow i'm trying to make the right molecule for the right disease and i'm happy to take five or six years to do it and right now i think we're still in the novelty slopware phase of ai where most of it is about speed and you know you're spending a lot of money to try to get crappy outcomes out faster eventually we'll replace that with quality outcomes and they'll take a lot more time and i think that that's when you'll have the real productivity

SPEAKER_117: improvements back to life sciences like these guys want to get drugs for every person right that's not a tomorrow thing that's not like type it in in english and all of a sudden pops up the other end and so i think we're going to have to take a lot more time that's when this stuff becomes really real and that's going to be very exciting andrew did we see coming out of the crash

SPEAKER_21: of 1929 a big move towards socialism in this country saying hey capitalism failed us and you know how do you kind of speak to the rise of socialism today and the argument that capitalism's failed most

SPEAKER_58: americans well so yes sorry and to add on to that do you think the new deal would have looked the same

David Friedberg: or would there have even been a new deal if there hadn't been a crash in 2020 okay so two quick answers

SPEAKER_14: uh yes that conversation happened but not nearly as quickly as it happened for example after gfc of 2008

SPEAKER_26: so i remember being down at like zuccotti park wall street occupy wall street all of this conversation

SPEAKER_14: we're having now about socialism versus capitalism like that happened immediately in 1929 that conversation did not happen immediately part of the reason it didn't happen um is because there was sort of like a slow roll on the economy and even the market so there was sort of a disconnect between the economy and the market people forget at the end of 29 the stock market actually was down only 17 by the end and so people thought it was actually going to come back there were times when it actually seemed to be coming back in and hoover had this idea that he could it was almost like a a psychological problem and that the market and the economy were detached from each other

SPEAKER_26: he then starts making all these sort of frankly mistakes obviously the fed doesn't flood the system hoover decides he wants to raise taxes he does smooth holly with tariffs that's something he had pledged to do to try to get farmers to actually vote for him and he thought that was like a pledge that he had to keep and so there's a whole sort of set of policies that came into play and the hoover

SPEAKER_14: villes don't show up being these sort of like tented camps sort of think zuccotti park that doesn't happen really until 1932 and when you go back and look at why roosevelt won it wasn't actually on the economy if you go and look at the polls it was over prohibition great crazily enough and so it

SPEAKER_26: didn't have that sort of social effect having said that you know famously roosevelt you know on his inauguration day goes after the bankers in the inaugural address and then of course the new deal shuts down the banks has with the equivalent of national holiday nine thousand banks go out of

SPEAKER_14: business right and and then that's sort of when the conversation about capitalism and socialism

SPEAKER_21: starts to rear its head i think it's because at that point in american history we had not yet made the promise to the average american that they have the right or the opportunity to buy a home to get a college education to have progressive income every year as you point out most folks were transitioning from an agrarian to an industrial economy and so the big transition in life had been wow i can get an apartment i don't have to work 12 hours a day grueling physical labor in the fields i can actually live and walk to a grocery store and get amazing food and meet people and socialize and live in this amazing city and it was before we had made all of these promises that i think led to these expectations that folks then end up feeling disappointed by and they blame it all on the failure of capitalism that my personal opinion as you know is that it's fundamentally a function of overspending by the government and over promising rather than allowing natural market forces to bring everyone up which um fundamentally

SPEAKER_87: i think created and creates a lot of the the distrust and the issues but can i just add on top of

SPEAKER_26: that because you know you're describing what i always think of as sort of the leave it to beaver american dream that people sort of have in their mind which is really more of like a 1950s style dream and actually was a function i think of a post-world war situation where where the where the country was we were monopoly power everybody else was out of business this is also the time like the reason why unions even worked i would argue for in large part was because there was this period of time where we were the only players in town so we could we could charge monopoly rents for a lot of things and people could buy a house with a white fence and have two kids and and have it all of those things that we uh now say are the dream i'm i'm look there's some people who think

SPEAKER_14: that was an aberration in history i hope it wasn't but i'm saying there were a lot of forces at play that created that dream but i don't think that was the dream in 1929.

SPEAKER_86: yeah do you buy into ray ray dalio's points of view that we're at the end of an empire end of a cycle

SPEAKER_14: i hope we're not i hope we're not you you look i think i think you look at a lot of the things going

SPEAKER_26: on right now just with how much debt we have i i sort of look at the neil ferguson view of the world which maybe lines up pretty directly with uh with dalio which is that when you get uh you know gdp if you start to look at like defense spending as a percentage of gdp there is this point at which at least historically you have like a real problem um and that sort of has set it created the end of

SPEAKER_74: the empire i think that happens in his view of the world like 19 in 2040 so maybe there's still time

SPEAKER_201: to turn it around i don't know what you what about you it's a very exact forecast 2040. you ever read

SPEAKER_21: that um what's that series the asimov series on uh where they've got this like social forecasting

SPEAKER_103: capability uh sorry i totally forgot sorkin do you think that if you look at gdp going

Chamath Palihapitiya: through the crash basically like cratered and then i mean whatever we think of the new deal i think the the reality is that it it just created an enormous amount of investment that then just

SPEAKER_204: turned gdp around is there a version of the new deal that america needs to do today is there a new compact we need to have with our citizenry today well but so there's two things that happen though

SPEAKER_26: there's the new deal and then world war ii i mean so yeah i think you have to sort of lump them in a

SPEAKER_02: way together in terms of the spending profile and why we were spending and and well even i think

Chamath Palihapitiya: even in the mid-30s though like really before we were engulfed in it we were yeah we're cranking like

SPEAKER_117: eight nine ten percent gdp my my point is just more just that idea of a new social compact a new set of

SPEAKER_43: like agreements i i don't know like it is what is that a point maybe maybe we do but what does that look like and and where are we going to get the money to to spend it that's the real question and how can we i think freeberg would say well i'm not going to put words in freeberg's mouth is that the agreement

SPEAKER_58: is actually not about spending more but actually less and getting folks to understand that these

SPEAKER_26: trade-offs need to happen so i i agree with you and i agree with david on that like i think we have

SPEAKER_02: to cut spending in a big way but this goes back to the more issue which is everybody i think everybody

SPEAKER_21: wants more the irony sorkin and i've shared this point of view many many times but i think when we made the promise when the federal government and people who got elected to represent the population and the federal government got elected they said we're going to give you an education and then we're going to use federal spending to do that we're going to give you access to a home we're going to create this federal home loan program and in all these cases when there was a promise made on giving you the more it was all about increasing government spending we're going to give you access to health care and then medicare became kind of this ballooning spending line because in every case because it's not actually a free market the government doing the spending gets taken advantage of and all the costs underlying that spending line get inflated because there's no natural market force of buy and sell there's only a market force of buy and that's why education costs have ballooned that's why housing has ballooned that's why medical expenses pharmaceutical drugs have all ballooned because as soon as the government provides that as a service it completely distorts the market and you can never get out of that free fall so the fundamental challenge is you have to have the more difficult conversation to your point of it's not more it's less and we're all going to have to kind of deal with that or you're going to do the same thing that everyone's done historically which is wealth taxes and you know growth slow all the stuff that kind of we've seen many times

SPEAKER_26: before so but this is now you're talking about like a political it's almost a paradox or a challenge which is how do you get the public to buy into the idea of less right right that is the fundamental question we all know that we have to spend less i i i agree with that i'm and i and by the way i feel blessed so that i could probably afford afford it but to take less but the question is

SPEAKER_02: you know if you don't have it taking less yeah they'll they'll say yeah rich house like you guys

SPEAKER_21: can say that good for you like that's not fair to me and i think that's the big issue is the people who would proclaim that would be immediately attacked like you live with less tax the rich and that becomes where dalio and others have argued historically you see these notions of civil unrest of civic splits that that happened by the way the book is foundation the foundation series i don't know why i didn't come to my mind the idea is called psycho history where the guy can actually

SPEAKER_87: predict all of these social trends because they're all predictable and they all happen in in cycles okay

SPEAKER_14: can i start one other thing in this because i'm so curious about it and i spent a lot of time thinking about smooth holly in terms of tariffs so there's an art there's a there's a i think a fair argument that tariffs were now tied to national security resilience today and like we may decide

SPEAKER_26: philosophically you want to have an automobile industry in the united states because if you let byd sell cars in this country we would not sell cars in this country we wouldn't make cars in this country ever again and you may think that that's a bad idea and you want that to be here having said that if we do this which we are we will probably spend more to buy less technologically capable cars 10 years from now than the next time we all you know if you go on vacation to europe or asia and get in the back of one of these other cars and how should we think about that that to me

SPEAKER_14: is like a real fundamental question about capitalism and also about resilience and national security what

Chamath Palihapitiya: i would offer to you is the way that we should think about this is how do americans and american society preserve maximum optionality in the face of very difficult decisions in the future so if geopolitically we are induced into a war all wars have tremendously bad consequences how would we have the wherewithal to not have to be a part of it if you look at the last number of wars these are all ultimately over resources right right and if you think about resource independence there are many many things today where america is just fundamentally unstable because we don't have resource independence but if we were to get that and then we have the building blocks we wouldn't actually have to fight a war now there may be other reasons and people may pull us into wars and i i get all of that but i think that that's a really big question would i be okay with a less better car but having a national

SPEAKER_204: transportation infrastructure that we control and cannot be turned off by somebody else on the margins i would say yeah i'd be okay with that and the interesting part though is there's gonna be a

SPEAKER_140: premium on that right like we're gonna pay more for that and that may just be the cost of doing

Chamath Palihapitiya: business sure and i mean i meant that's that may be the cost of strategic flexibility and optionality and i think if you just think about what the downstream consequences of not having that are

SPEAKER_02: and maybe and by the way maybe those costs are even higher and and we and those costs don't get

Chamath Palihapitiya: added and they don't get added into the model right you're absolutely right they're they're always higher because they're measured in human lives it's always higher it's always more costly

SPEAKER_21: andrew who do you sell the uh movie rights to of your book and when's the movie coming out

SPEAKER_74: uh haven't sold them yet we're talking to a couple people hopefully we'll have some news on that

SPEAKER_21: sometime soon because it sounds like it's a very people driven story so it should make for

SPEAKER_02: kind of great drama right oh totally i mean i tried to write it i didn't try to write it uh for film per se but i tried to write it in as cinematic a way as humanly possible given that i

SPEAKER_26: was also constrained by you know i had to have archives and notes and diaries you know it looks like a long book by the way folks it's a little bit shorter because there's a hundred some odd pages of end notes at the end uh for those who want to uh and by the way some of the end notes are kind

David Friedberg: of fun andrew when you write these things do you and then when you license it for example like when

Chamath Palihapitiya: they started to make billions yeah do you take a strong point of view and how the scripts in that case or the screenplay in this case will be written or do you kind of say okay here's my source material you guys do the best you can and you kind of do you care who the actors are do you care about any of that stuff or do you think it's like okay they're licensing it off off on your merry way

SPEAKER_14: do the best you can you know i think actually in this day and age just because it's probably in

Chamath Palihapitiya: your mind right you have a vision of what this whole thing looks like visually you probably have faces right you probably you probably have all of this so how do you do you let go of that or

SPEAKER_26: well i think first of all i think you have to let go a little bit at some level because that's just the nature of the business for better or worse i think right now in this streaming environment you know there's sort of two ways you can go sell projects like this one is you go to sell to a streamer and they go off and they try to develop it they go find the team that does it the other approach is you know find the actor maybe a director maybe the writer all at one time and then walk in with it so in that context you probably have more of a say in the future of it you know right now just the way the business is you know the hollywood's buying a lot less stuff and i think is more interested in sort of the former version where you show up with the whole thing sort of pre-packaged pre-planned but you know it almost changes you know by the month in terms of what they want

SPEAKER_86: are you uh doing the audiobook yourself are you reading i read it you guys are in the audio

SPEAKER_142: business yourself so you i will tell you i went in it's 13 hours though the book in total you do it on you know double time and you'll be done in uh you know six and a half hours but uh it probably took

SPEAKER_05: me like 30 hours it takes a while and they do it i did do it yeah i did it it was fun it was like

SPEAKER_112: a first time was it your first time reading the audio i've never read it before when when too big to

SPEAKER_14: fail came out we had a british actor do it and i enjoyed reading i enjoyed listening to him

SPEAKER_142: he added some gravitas to the to the project because of that you know the brits always sounds

SPEAKER_234: smarter than us pretty much pretty much pretty much okay sounds smarter smarter i was going for

SPEAKER_72: sounding smarter than us they do they do well andrew thanks for joining us this has been awesome congrats on the release of your book thanks for chatting good broad-ranging topics i'm buying it thank you

SPEAKER_142: yeah i appreciate guys uh you know i i enjoy this so much and i listen to you guys so religiously so uh

Chamath Palihapitiya: this is a you're the best bro thanks for doing it i mean it's an incredible period of of american history that to your point not enough people really understand it is so interesting yeah so and i find

SPEAKER_58: it so interesting that 20 year period i would say 28 to 48 well thank you wow it's got everything thank

SPEAKER_240: you guys i appreciate it we'll talk soon thanks man see you thanks