Midterm Blood Bath, $4T AI Sell Off, Data Center Freeze, What’s Next for Trump

Here we go. Who would have thunk? Who would have thunk it? Who knew? And by the way, that was with only three of our all-stars on the court. Saks had a board meeting Thursday night and couldn't make it. Tuesday night. He was busy. Yeah, I was busy that night. I think I was passed out in a bar. Passed out? I was drinking the tea. Saks is the only guy who goes to the bar with his own bottle of tequila. He's like, can you put this behind the bar and serve it to me on $50 glass? Special thanks to Ted Cruz, Rahm Emanuel, Shane Copeland of Polymarket. Man, did he have a great night. I think Polymarket nailed it.

99% of their prediction markets turned out to have it perfectly. The hilarious fifth bestie, Tim Dillon. Taylor Lorenz, based Taylor Lorenz, was fantastic and insightful. Brad Gerstner did a solid job, brought some charts. And Ben Shapiro from the right. So it was a really great, great panel. and today we're going to take a pretty systematic approach to what happened this week. We're going to start with a post-mortem on the midterms and then second we're going to talk about the second half of Trump's term the next two years. So I'm sure data centers will come up in our recap post-mortem etc but we're going to do a deep dive into the AI trade potentially cracking. So let's start with our post-mortem on what just happened in the midterms. Obviously, the Democrats sweeped both chambers of Congress and they won at least 29 governor races. Dems will wind up with 54, 55 or 56 seats, depending on how Alaska and Mississippi wind up. They have a lot of Votes still coming in, in the House.

Dems will have at least 250 seats, maybe even 260. The bigger story is where the Republicans lost deeply red states that haven't gone blue in generations, went blue, including the great state of Texas. Please don't blame me. I've only been here for three years, and you might be surprised at what my voting ticket looked like. Kansas, Iowa, South Carolina for the first time in decades. Trump won all of those states by double digits just two years ago. Compared to 2024, the GOP lost ground in every voter group, even white men. So let's go around the horn. Sex people want to hear from you most of all, I guess.

So what went wrong here? What are the lessons the Republican Party can learn? And what did the Democrats do right in the last 18 months leading up to the midterms? This was a schlacking. This was a blowout. It was, I believe, the biggest midterm loss since the Watergate midterm loss. So this was obviously a big defeat for the Republicans. There's no sugarcoating it. What's the reason for that? I believe the vice president, J.D. Vance, explained it very well. It was this war. And the only thing I would add to that is it was this war and the economic consequences that follow from the war. So what am I talking about?

Price of gas, it was around three bucks before the war, went over four and higher. price of diesel even higher. And then that factors into the cost of food, all the goods that have to be transported. Also, fertilizer costs went up. And so you saw the inflation rate at the beginning of the year, back in January, before the war, it was down to 2.4%. We finally had that problem licked just about. Remember, it was 9% under Biden. And in the first year of the Trump administration, we brought it down to 2.4. The market was expecting multiple rate cuts this year. And we were forecasting 5% GDP growth, which I don't think was too overly ebullient based on what we were seeing at that time combined with the expectation of rate cuts. Aggressive, but not unbelievable. Unrealistic, yes. And by the way, the prediction markets back in January were showing a 70% chance of Republicans holding the Senate, and then the House was perceived to be a toss-up. I think that if this election had happened back in January, it would have been a pretty successful one for the republicans what happened since then well you got inflation going from 2.4 to 3.7 percent again mostly driven by the cost of gas and diesel

and all these other products where you have to pay a higher cost of transportation and you end up not having any rate cuts you end up getting a rate hike that brought the cost of mortgages to roughly seven and a half percent. And that overall fed this narrative around affordability. So it's the war plus the perception of the lack of affordability is what really created this tidal wave. Now, you know, I have to admit, I thought that, I mean, look, I didn't think this would be a great election for Republicans, but I thought that it wouldn't be this bad. I was wrong I thought it could be a spritz. That was based on a couple of things. Number one is that the last few elections, the pollsters have all been wrong and Trump has always managed to defy the odds. I thought that this polling data must fall into that pattern. Then the second thing is that the economy is not that bad. In fact, it's quite good. Just today, we had a new jobs report. It was a very robust jobs report. The number of new jobs created is being revised up. You've got unemployment ticked down to almost record low, 4.1%. You've got still pretty healthy GDP growth. In the first half of the year, it was around 2.1% to 2.5%. And then third quarter,

the tracking by GDP now is 3.7%. So I thought, given the fact that you got great employment, you got solid GDP growth, I thought the fact that inflation was too high would not result in this type of tidal wave. I thought it'd be more like the Biden midterms, where he had extremely high inflation, but the economy itself was still pretty decent. And it ended up being more of a red spritz as opposed to a red wave. So that was my pattern recognition. It was wrong. And I think one of the reasons why it was wrong here is because I think the public is in a pretty ordinary mood. They're very concerned about affordability. It doesn't matter how good the economy actually is. It matters how good people perceive it to be for them. And in the first year of the Trump administration, we made enormous progress in delivering real post-tax household income. It rose by like 3.1%. But because of the inflation numbers over the last six months, you're starting to chip away at that, right? Because again, as long as inflation is growing faster than your wages, you're losing purchasing power in real terms. I think the electorate is getting ornery about that. And just one other thing I want to say about it, which is there's one other piece

of why the war I think was so bad, which is it fractured the Republican coalition and the Republican base. J. Cal, you've pointed this out. We lost all the podcast bros. I mean, obviously it was Tucker Carlson and Joe Rogan and Theo Vaughn and that whole set, Tim Willen, Megyn Kelly. So a house divided against itself cannot stand. I mean, we lost a huge part of our base. And I would say that the Republicans in particular are dependent on the podcast circuit. Let's call it alternative media. Why? Because the mainstream media hates us. Legacy media hates us. they will never give us a fair shot. And they're 90% left. Of course. And I think one of the reasons why Trump produced such a resounding victory in 2024 is he appealed to that whole podcasting circuit. And frankly, we should have done a better job giving them all front row seats in the White House press room. We should have stayed connected to all of them because they are our media. By the way, they don't work for us. They're willing to defect, obviously.

They have their own opinions. But we have to pay attention. I think our side has to pay a lot of attention to them because without them, we don't have any media that supports us. So I think that losing them was a big deal. It fueled the sense. And I think that a lot of those people showed up and then did a protest vote because they wanted to send the message that they want out of this war. Friedberg, just a couple of quotes for you to react to. Ted Cruz called it a Watergate-level repudiation. Chamath DeSantis said, quote, close to an extinction-level event for the current GOP. And in a very long expost that J.D. Vance did, that was pretty surprising for everybody that there's some reporting it was approved, maybe not approved.

We'll get all that out later. But what's important is what he said. he's in line with use acts the iran war was the driving force here in the loss and that the gop has to rebuild trust with voters on four axes ending the war focus on cost of living putting america first and uh maybe a little controversial uh lee change our relationship with israel what

that's two incredibly um concise and candid recaps of what happened there chamath and just as a side programming note great job on rick rubin's podcast this week if you haven't checked that out chamath was on rick rubin and it was awesome thank you chamath did you sit barefoot in his backyard with

him Chamath or yeah yeah I mean by the way when you go to Rick Rubin's recording studio he walks you around he's like oh Chamath here's Bob Dylan's old touring van that's where we recorded Adele's album and then he's like this is where Kanye and I laid down this album and then here's where Jay-Z and I work I mean it is the craziest place but it puts you in a totally centered state of mind I got to say yeah and we sat around in his studio barefoot sitting across each other just talking and then they they put it out as a conversation telling people this is where i am so the greatest stock market highs of our lifetimes lowest unemployment of our lifetimes and we still had the tsunami when you look back on it chamath what do you think happened here and you said you were uh in a moment of great candor and self-reflection during the live stream you said hey listen i had a blind spot here i got it totally totally totally wrong i got it totally

All right. Incredibly well explained there, Chamath, and I agree. Now's not the time to dunk. Now's the time to dissect all this. And who could have ever seen this coming? Nick, roll the tape. This is why they will lose the midterms. The Democrats are going to shellac the Republicans in the midterms. Trump sold people that price it would go down. We're back up to 3% inflation, folks. Not only is it not going down, it's going up. Trump has failed the middle class.

That's the bottom line. It's basically going to result in the Democrats doing a clean sweep in the midterms. Trump promised not to start a war. He did. He promised to solve inflation. He didn't. The end. A stop clock is right twice a day, J. Cal. Absolutely. Look. I did cheat out, but let me... My take on that is that you were not right until the war began. That last clip that you did, you were vindicated, right? Because it's the war and inflation. I mean, those are the two things, specifically the affordability problem that results when you have this inflation. Look, price of gas, everyone goes to the pump to fill up every week or two, and the average household is paying 200 bucks a month more in gas costs.

Then they go to their grocery store and everything is much more expensive because the cost of agricultural products has gone way up and so on down the line. And at the end of the day, that's what matters to people is their pocketbook. It's like, do you have more purchasing power in real post-tax, post-inflation terms? That's how you measure if you're doing better off. And the Trump administration delivered that in the first year. We did. 3.1% increase in real household income. It was negative during the Biden years and it was positive during Trump 45. What happened? The war begins, price of gas and diesel and all the rest goes up and purchasing power starts to go in reverse. And then on top of it, you lose the young males who are, again, the fans of all of these podcasts. That's where they get their news from. Young males flipped their vote by 36 points in this midterm relative to the 2024 election.

So again, in my view, it's very simple. It comes back to the war and its economic consequences. Now, here's the good news is if we get out of the war, we can make rapid progress on this. All the other economic numbers are still good. Again, job growth, the job report today was great. Economic growth is still good. There are lots of very positive economic numbers. The issue is fundamentally the price of oil, the price of gas, price of diesel, and the way these things flow through the economy. If the war has ended quickly, those prices will drop very quickly. Inflation will come back down. That will give the Fed permission to cut rates, so mortgage costs come back down, and we can get back on track.

be about. So, Sachs, you wanted to get to this. Next 18, 24 months, is there a path to redemption for President Trump? Is there a way to turn this presidency around and maybe save his legacy? Well, first of all, let me put up some charts here since you guys are doing the chart game, minute, I didn't know we were going to play the chart game today. So Nick, can you throw up these charts? Okay. So look, J. Cal, there's all sorts of issues out there that people are going to point to. And I know you've got yours, and I'm not saying that every single issue has been executed perfectly. I do think that President Trump deserves enormous credit for completely sealing the border and solving that immigration issue. Agree with that. Just as an example. But look, Again, the question is, why was this not a normal midterm result? Look at the Trump approval rating versus the price of gas. It maps perfectly. Trump net approval maps to the price of gas.

Okay, next chart. This was the prediction market for which party will win the Senate in 2026. And what you see is that the Republicans were expected to win by a very large margin throughout the entire first year of the Trump presidency, all through the things you were talking about, J. Cal. okay so the tariff rollout did not affect this whatsoever that was the liberation day in april not even a blip here okay april of 2025 wasn't a blip and to be clear not a blip on the senate balance yeah yes but but i'm using not the approval rating i showed i get it but i'm using this as a proxy for what just happened where we lost what like eight or nine seven seats okay where does it start to change march march of 2026 what happened when did the war begin February 28th of 2026. Very clear. That's where everything starts to change here in terms of losing the Senate. Next chart. Okay. Now just ask voters, what'd you vote for? Why'd you vote?

Question, thinking about your vote for Congress, how important to you was the war in Iran? Crucial, 34%, a major factor, 40%. So basically, 74% of the electorate said that it was either crucial or a major factor. And then of those, they broke massively for blue. And this doesn't just include Democrats, obviously. It includes a lot of independents, and it even includes, I would say, younger Republican voters. There's a huge divide in the party, I think, between you kind of got the Fox News group. It's kind of the over 50 or even over 60. They're, I think, still supportive of the war. But you look at the younger voters, young males, highly against this. Again, it ties back to the podcast bros.

So again, there's abundant data to show what I've been saying. Now, your question was, can Trump fix this? I think absolutely. Because the root of the problem here- What's your top three things he can do to fix it? Just get out of the war. Okay, end the war. That's my number one, my number two, and my number three. Because what will happen? The price of Brent crude will drop precipitously. On the day of the- election, the price of Brent crude dropped 10%. Is that because something changed in the Strait of Hormuz? No. It's because the market started to price in the mere possibility that the war would end sooner. And we got a 10% cut in the price of Brent crude. It will go from, you know, it's been as high as 117. It'll go from 110 to 70. If this war ends, gas prices will drop, diesel will drop, the price of food will drop. And then the underlying strong economic growth the gdp growth and the employment picture which are still robust will come into focus and i think that trump's popularity will rebound to be back in the 40s okay so i that's the thing we need to do and if we don't do that look if this war continues hold on this is one point if the war continues the republicans will continue to bleed popularity

I don't think this is the war in Iran, meaning it is in as much as it adds to a broken economy. Since COVID, the economy has been structurally broken. And I just think that there's a huge voting bloc that keeps swinging back and forth to either side, asking them solve the problems and giving people mandates to solve a problem. That's why I think somebody needs to understand economic populism. Do you buy that argument or do you think that it's more narrowly just the war in Iran? I don't want to make it like so overly abstract. Like to me, the issue is affordability, okay? And I think the electorate really cares about that.

It's like the central pocketbook issue. I agree. And I think that both economic data and the prediction markets showed that in January of 2026, we were in pretty good shape on that issue. And since then, we went backwards. And I believe that we can get in good shape again without turning to socialism or completely restructuring the economy. Remember the 24 election? I agree with you that economic affordability can be an abstract term, but I think that the voting electorate is smart enough to use a message as a vessel. And I remember in 24, the vessel, which again, I didn't hear it loud enough.

But if I look back, and maybe I'm just imposing my narrative bias on it, was do you remember the whole controversy around the price of eggs and Trump hammered Biden and Harris on the price of eggs? Yes, over and over. It wasn't the price of eggs. I mean, yes, it was. But it was a window into a broad problem and an idea. And I think gas is a problem, but I also think it is a window into a broad class of problems. and i think people focus their energy on a thing because it's easier to message around a thing repeatedly no you're right but the broader data centers that's what look i was listening to gina uh hendosa this is the new um governor elect of texas so frankly it's a race i wasn't even paying attention to because i don't think anyone yeah we assume avid was gonna win gonna win a very successful three-term governor in texas presided over an economic boom that's why we moved to the state. And we thought, I mean, honestly, I think it was the biggest shocker of the whole night. Anyway, so I started watching some interviews with her to kind of catch up on what I had obviously missed. And I watched one interview she did with the New York Times, where the interviewer kept trying to draw her out on social issues, on like, let's call it woke

issues, identity politics. And she said, listen, I'm not participating in your culture war. and then she laid out the case for economic populism as she saw it and then she connected it to data centers which is that the reason why data centers are bad is because they are making your utility bills go up right you're paying more for electricity and the data centers are using up your water I I think that's why the data center issue was resonant is because, I mean, there is anxiety about AI and the potential job loss that could come from that. But I think the big reason why people hate the data center so much is they perceive that it's driving up their utility bills and the oligarchs are getting rich off the data centers while they're paying more.

Which goes to... The oligarchs are getting tax breaks and you're getting higher utility bills. Which goes to Chamath's point of people feel they're unheard and they're going to take the only action they can which is going to the voting booth friedberg uh so friedberg you've heard my breakdown you heard um chamat's breakdown and then sacks with a little bit of a reputal there let's uh do an alternate history here friedberg if the war had not started what would the midterms have looked like and then what do you think happens in the next 18 months of trump's presidency is there a way to uh turn around his legacy and if there is a way what two or three pieces of advice would you give this administration to focus on in their remaining 18 to 24 months

the community first perspective if you look at how trump uh president trump looked at it it was from the companies and the economy the gdp's perspective first and but they all they both wind up in the same place, which is don't disturb your neighbors, don't pollute, you know, be a good citizen and maybe splashy cashy a little bit of the funds there. So in terms of what Trump can do, I have a take some people might find a little shocking. I'm not a big fan of pardons, right? But they're the law. They're built into the system. Both parties use them liberally and every administration gets more aggressive in using them. So until we change that, I think Trump right now should pardon everybody. Right now, this week, pardon his family, pardon himself, pardon every single

person in the administration, because he's going to do it anyway. And then that takes off the table, the Democrats doing an endless amount of investigations, or it neuters it to a certain extent. And then he should say to them, let's work, let's make a deal. And the deal he should make, number one, is do some tax reforms on the capital gains laws. Now, listen, we all make our money from capital gains. And then I'm assuming most of the people in our circle leverage margin loans. In other words, taking loans against our equity holdings, we should just say anything over 10 million, you tax it at 50% of the capital gains rate. If you wind up paying the loan down, you get that as a credit. If you wind up selling shares, you pay the rest of the capital gains.

Get that out there, smooth it out. It's a revenue stream, and it makes it feel like, hey when rich people take these loans at least some tax revenue comes in and you get rid of the Bernie Sanders of these people haven't paid taxes and this year they paid zero then we got to work on health care I'll leave it up to other folks with more experience to say what that should be but Trump should say hey let's work on health care I'm going to keep harping on the minimum wage there's two ways to do it obviously you could say no taxes on people under a certain revenue or income threshold as you sort of evoke there earlier Chamath but just say two years a year for four years, get everybody up to $15 an hour. I know that people will call me a libtard for saying this, even though I'm a moderate independent. I think it would be good for the esprit de corps. It would counter this narrative that we don't care about the bottom half of society. And in fact, there's only 10, 15 million people who are impacted.

buy under $15 an hour. So it's an easy thing to do. I would go with number four, a ban on trading stocks in office and doing business with foreign countries. Rahm Emanuel has his proposal, people on the right have it. So I think we should go get some consensus on that from everybody. And then finally, I think Trump should come to him and say, hey, listen, we know housing is the thing that's frustrating people a whole bunch. Let's come up with a plan to incentivize the building of new homes. And he should go right into deal mode. He should go right into populist Trump, which everybody loves, if he solves two, three of these out of five, I think it would redeem his presidency. And obviously, to your point, Sachs, he's just got to end the war. He's just got to end the war. However, it's possible. And I think the Dems may force his hand. And then he might say, well, you know, the Dems forced me to do it. And that gives him this golden bridge to cross. Look, before we totally throw the baby out with the bathwater, I think it's important to realize that if you look at Reagan's presidency, Reagan's presidency has only grown in its stature over time because the structural changes that Reagan made were more obvious to see in its

totality the further you got away from it. And I think the reality is, even though the Democrats may not want to admit this, an economic populist will have to understand that keeping the borders closed is an incredibly important thing, because the base of people that you need to vote for you want more of the pie. And so sharing more of the pie with people streaming across the border is just mathematically a bad decision. So you have that. Then you have tariffs, which if you partner it with the amount of money that people have committed, if that money follows through, and it actually revives domestic manufacturing, the further and further you get away from it and is allowed to compound, that's going to look positive. So I don't think it's fair to say that they lost the midterm, but I don't think it means that history will look at his presidency as failed. Right now, I think what people will say is that these policies, some are obviously good, closing the border. And some, I think people will say are a question mark. And then some, I think people will say, you're going to have to get out of it like Iran.

And the further you get away from it, it'll be clear. So what should he do, Jason, to your point is, I think he should probably figure out ways to support the parts of his agenda that will endure. So to your point, what is a great trade-off to make? Keep the border closed in return for some amount of economic changes. changes. Maybe the Democrats want a higher minimum wage. Okay. Maybe what they should do again, I think the simpler thing to do is 125k or under just wipe out the federal taxes. It's a nothing burger. It doesn't really matter in terms of the revenue that it generates, close a few loopholes.

But trade it off for parts of his core strategy, because that's what will endure. And people will know the president as having had the courage to close the border when nobody else would, or when when Biden just let it stream in. And then the populist economic president that then sits on top of those decisions in 28, whether it's a Democrat or Republican, will have to thank Trump because that's how the votes will have come to them. And that's how people will feel like this economic malaise is being fixed. Okay, Sachs, any final thoughts? I'll give you the last word again, aside from getting out of the war, we all agree, that's number one on the list. What else can President Trump do in the last 18 months that would be productive for the country and for his legacy. All right. Well, look, let me just give you three examples of previous midterm elections.

Okay. So we've had big midterm elections before. 1994, Bill Clinton lost the House. It was a huge defeat. That's when Newt Gingrich became Speaker. Clinton still went on to win re-election in 1996. So he made course corrections. Obama lost seven Senate seats and 63 House seats in 2000. 2010. That was the schlacking. Made adjustments, still won re-election in 2012. So presidents can definitely come back from midterm defeats. It's pretty obvious. You just have to make corrections. What's the one that didn't work out so well? In 2006, George W. Bush lost a pretty bad midterm because the Iraq war, people were very unhappy with it. This was three years after the start of the Iraq war. And then he wasn't up for re-election, but the Republicans then lost again in 2008. Why? Because Bush, basically, what did he do after the midterms there? The surge.

So, you know, he could have adjusted course, instead he doubled down. So I think this is really what it comes down to. There are a lot of people, neocons basically, who are encouraging the president to do some version of the surge, some version of doubling down, some strike, like Pickaxe Mountain, Carg Island, what have you. I think if you do that, you're basically going to reenact the whole 2006-2008 playbook. If you course correct and get out now, I think you'll have a very successful next two years. That's what it comes down to. All right. We dipped our toe into data centers. Let's go do a double click here and dive right in.

Stocks got killed earlier this week. NVIDIA, SpaceX, Tesla, AMD, Micron, everything across the board, took a massive haircut, close to $4 trillion in market cap wiped out. Now, again, Trump has overseen the top ticking of the market for the last two years. So overall, I think the market is still up during his second term. But this was the second, this was the worst single day in the history of the stock market by total dollars, not percentage, obviously and it's the worst day for a little while this puts a bit of a dark cloud over anthropics ipo and of course after that open ai's polymarket our great partner in polymarket thanks for shane for coming on on tuesday says that uh they're going to have a 71 chance of going public this year it was 95 before the midterms and the wall street journal reported today that the haircut could be baked in now instead of 1.5 to 2 trillion and then going to 3 or 4 trillion as gavin baker said on this podcast we could be looking at a 1 trillion 1. low x trillion today markets have rebounded a bit and all of this is based upon chamath are these data centers going to go forward or not are they going to be stopped and then what is going on with governor

specifically sacks evoked what happened here with abbott losing to gina inahosa who took the time to do a a little presser last night and give her position went on all the top shows she's being pretty clear she wants a great deal and uh it doesn't seem like she's against them

free bird and just some predictions right now we have the tokens here in the united states if the governors decide they want uh to put the screws tight on big tech hyperscalers and neoclouds and they want to slow this down they will need to understand that these data centers could be put in canada in mexico in singapore in malaysia and many other locations the middle east is a little

the table because of the war war ends you start putting these data centers in the middle east then the job of doing the next large model will not occur freeberg on u.s soil it might occur in saudi arabia uae qatar malaysia singapore we're going to be a net importer of tokens and this will be the biggest cell phone ever because all those 300 400 000 jobs building these data centers are going to go away. All of that tax will be collected locally in Malaysia, where Google is putting a huge data center. And the data can make it around the world quite quickly. It doesn't need to be in the United States, which these governors are going to learn a very hard lesson in globalization. What are your thoughts here on the data centers being banned, or if it is just posturing? And then, Freeberg, could we see the United States become a net importer of tokens as opposed to a net exporter well they might ban the use of ai too okay well now we're going to yeah a very far out prediction that's being floated i mean they're that's the conversation right now okay unpack that who's having the conversation what exactly is the proposal because that seems to me to be a little far out there the farther left you go the the more vocal

politicians get on this point which is no one sees the quote benefit of ai and they don't want to see ai being developed being deployed or being used that's the general statements that are that are being made so they want to ban both its development its deployment they want to ban data centers they want to ban technology companies from making models and they want to ban companies from using the models. And I think this sort of rhetoric leads to somewhere that's obviously more constrained than we are today. What are the chances something crazy like that happens, but handicap it for us here? 10%? California passed legislation and Gavin used and vetoed it. I think it's much higher than 10%. We're seeing state-based legislation. I mean, SACS spent quite a lot of time on this, but there's a patchwork of hundreds of laws that are passing all over the country trying to regulate model development, model deployment, model utilization, what they're allowed to do, whether the local state government gets to audit and inspect how the models operate.

how people are using the models, what they're outputting. What do you say, Sachs? Answer his... And fundamentally, remember, a model is just a bunch of software. It's a code. It's a point about free speech. Can I actually run code on a computer? That is a restriction on, you know, someone basically reading a book is a way to think about it. Because at the end of the day, you're inputting and outputting digits, ones and zeros. True sovereignty. And remember, we have laws and we have regulations about what do those ones and zeros do? So if those ones and zeros go and take money out of your bank account and put them in mine, I broke a law, I'm a felon, I'm going to get convicted of that felony.

If that is used to create a weapon that is illegal, I broke the law, that is a felony. And you can go down the long list of things that people should be concerned about. So you have to ask yourself the question, if we already have laws that protect ourselves from the consequence of people using this sort of speech, this sort of software, then what are we actually doing? And I do think, once again, that the primal, call it unconscious political state, is that there is something that threatens the state, that threatens government itself. And I think that that's a big part of the motivation here. And I've said for a long time, there's a power play.

The question is, and this is me waxing philosophical for a second, is does an organization like Anthropic or whomever end up in a place where they're regulatorily aligned with the state, such that the state has unlimited access to that model's capabilities, to development and deployment, and individual citizens and companies do not. and this is almost like if you go back the modern like issue the second amendment issue is no longer about who has the bullets and the guns it's about who has this technology because if the state has the technology but the citizens and the businesses don't then the state has supreme power and remember there's no such thing as a state that doesn't have central planning and command which means you are giving a small group of people an extraordinary amount of power and the whole point of the united states and the whole point of the second amendment was to always have a check on that power okay so if the state ends up getting all of the ai and no one else gets the ai then you no longer have a check on the power i think this is like you're getting into dr doom scenarios i think you're completely wrong i think there's like a one percent chance something crazy like this happens but i like that you exist in the world free bird

to present it because it you are the backstop to this level of lunacy chances you out by the way call me dr doom all you want but but this this is a fundamental question about what's the intention of this country the intention of the country was individual liberty yes the right the rights of the citizen the rights of the individual it is not about state power and it is not about us and we have a lot of laws that protect citizens from each other what we're doing now is creating a different system that extends well beyond the founding principle of the united states to give a small group of actors an incredible amount of power that they're going to centrally command and control okay i think that that's something that we need to pay attention to and i'm not saying this is happening and the world's over blah blah blah well that's why i'm saying like percent as as this it's not it's not binary as the policies develop we have to keep in mind what we're doing and we already have a slippery slope you're saying yes okay sacks but i do think you know just like the p doom where people say 10 percent of people are going to die i like to put a percentage on What are the chances of this happening, Chamath, or Sachs?

You're the closest to this, you know, having been the czar. Do you think that this is in the realm of possibility, what Freeberg's describing? If so, maybe you could put a percentage likelihood of it happening. And then what is your take on data centers and the net exporter, net importer of tokens potentiality here? Okay, so it's 100% that Democrats are going to make a major push for AI legislation in the next Congress. The question is what that looks like. And I don't think you have to speculate too much to understand where it's going. I believe that Democrats want to create a surveillance and.

censorship state that's turbocharged by superintelligence. I mean, that's ultimately the end state. How do you get there? You create a federal department of AI. You require that all the so-called frontier models have to be reviewed and approved by that. The regulators give their notes on it. You can't get a model released unless you address their concerns. And their harms will include all the things that the government is telling us that social media companies should be concerned about, like disinformation and misinformation and dissonant thought, all the things that the government was pressuring the social media companies to crack down on and censor during COVID. I mean, how quickly we forget all of this.

They're going to basically reenact that whole regime again using AI, and it's going to be infinitely more powerful because we're talking about super intelligence here. So I do believe that that is the regime that we're headed towards. So it may not be exactly the version that Freeberg's talking about, where Freeberg's saying that only the government can use the tools. I don't think that'll be the case. Not that binary sack. Sorry, I meant like, obviously, they're going to get access to models and capabilities that the public doesn't. At the end of the day, any amount of distinction between what a central state actor gets and what the general public gets is really where that distinction of power arises and it's really what makes it difficult for the founding principles to persist which would be a quasi de facto uh nationalization of the technology here chamath uh so what what's your take on this i'm going to force everybody to and try to pin you guys down a little bit you think that this nationalization of the technology the government having the best version everybody else uh in the united states corporations individuals having 60 70 80 percent of that version you think that's a possibility here no i don't think this is the

priority. Again, I think people will get animated about this issue, but I don't think this matters. And I think that to the extent that people legislate an oligopoly, it'll further entrench economic power. And I think that that's counter to what these people want. So I think when they put the, they connect the dots, I don't think that that's what's going to get legislated. I don't think they have the energy for that. And I think at the end of it, what's going to get legislated as a quid pro quo. Okay. The quid pro quo is this, the government gets more power and the duopoly of closed model companies get more regulatory capture or moats around their business. That's going to be the quid pro quo. The government's going to come in. The Democratic Congress is going to say, look, we have to regulate this. It's unsafe. What do you think those companies are going to do? Do you think they're going to say, no, you can't do that?

They're going to say, okay, let's work together on this. And the government ends up with more power and those companies end up with regulatory protection. I don't think so. I think that to the extent that anybody legislates AI, I think it's going to be broad-based and include a lot of coverage around data centers and AI factories. And to the extent that that happens, maybe you'll get some regulatory capture on the one end, but you're going to constrain the supply so severely on the other that the real people that will be in control of it are Meta, Amazon, Google, Microsoft, and SpaceX. And so you have to remember, the foundational model companies are not home free. What does home free mean? That they have a fortress balance sheet, a profitable business model, and quasi infinite compute for their own ambitions. And right now, they are renters. And the renter class in data centers, as of Tuesday, is very much at risk.

And so, if anything, I think what's going to happen is all the renter classes will get co-opted. For example, I don't know if you guys saw today, but Google just took over a Crusoe data center. They co-opted the renter. They're like, you're gone, we're going to take it over. They did? Yeah. So, why is that happening? It's because they have all of the core critical ingredients, specifically the power. even a red capture campaign can only work to the extent the government then goes and violates all these other rules and says, here's all this free electricity and go build wherever you want. And we don't care about energy because there's no money to pay for that. And there's no political will to do that. So I think the practical reality is that you have the mag seven or mag eight have more power. And when they look at that calculus, I don't think politicians want that

Can I respond to that? An open source, obviously, is the power of that. I think you're on to something, J. Cal. Look, when we're talking about AI regulation in the next two years, I think we need to separate, there's two different things, right? There's federal and there's state. What the feds are going to deal with is the AI safety and creating a federal department of AI and all of those Orwellian sorts of risk around what could turn into censorship and surveillance and control.

Okay, that's one bucket of issues. There's another bucket of issues around infrastructure, which will be dealt with at the state and local level, right? And both of them are going to play out. Now, at the state and local level, I think people are just being way too optimistic about

that right yeah but they already have set the table they have so such amazing footprint right now they're already in the pole position tanking the economy i think opens up an attack vector for

them i think they're much better off to saying here's what we want and extract value from them just extract value we want free electricity we want schools we want this just negotiate hard and if you don't yeah yeah and if they don't if the data centers and the and these governors whose job it is to fight for their people and get the best deals just like it's the company's job to get the best location the best deal for their shareholders if they can't come to an arrangement again, these things can be put in Canada. These things can be put in Mexico. These things can be put anywhere. And we have Starlink and fiber lines. It's extremely easy, extremely easy. It's very common to run fiber cables everywhere around the world. It's an incredibly speed-efficient system we have here. It's not like 20 years ago where, you know, loading your Gmail in Japan was extremely difficult. It's very easy. It's very crisp. We have CDN technology. It's going to be a no-brainer, let alone the prescience of SpaceX, which is severely undervalued as a stock and as SpaceX, Tesla. I've been buying shares through this whole insanity. They're going to space to bring them up there. Now seems like a pretty brilliant idea, doesn't it, Jamal? If they're

going to block it, all of a sudden, once again, Elon saw around the corner, did he not? Well, do you remember, I think we talked about this, which is, we said his 90 day out with anthropic is probably because he negotiated and he saw around the quarter not the other way around because people used to think oh my god this is really bad for spacex that they could pull the ripcord that's not going to happen it's now the question is does it happen the other way around it's a it's pretty interesting i think elon and the anthropic team have a pretty positive working relationship oh this has nothing hold on i want to be click.

This has nothing to do with their working relationship or whether Anthropic is a good or bad company or SpaceX is a good or bad company. This has nothing to do with that. This is a spreadsheet. And the spreadsheet will dictate the answer. And the question is, if spot spikes, you are economically forced to do this beyond a certain threshold. Okay, I'll take a I'll take a slightly other side to that. There's still a lot of acrimony between OpenAI, Sam Altman, and Elon. Elon has aligned himself very deeply with the Anthropic team. They have an incredible working relationship. I don't think he just throws it open to Spot, even if that was the most short-term, mid-term, economic model.

Let me finish this. That's not what I'm saying. You're not listening to what I'm saying, though. Okay, just let me finish. Then you can counter. You guys are allowed to let me finish my sentences. I know that's hard to believe. Not if you miscast what I'm saying. You can totally respond to it. Just take a beat. moving to spot might be the the right ruthless economic decision i think that the the decision made by elon is going to be in part informed by his relationship with sam altman or lack of one and by uh the loyalty of anthropic and their success making them a great long-term partner especially for the space data center business so i could see him instead of throwing it up to spot saying hey let's meet somewhere in the middle that's what i think is a longer i'm not saying throw it out to spot what i'm saying is when spot moves sufficiently even a long-term offtake moves so much that existing contracts are negative ev and so you just got to move existing contracts to positive ev territory and if you can get out in 90 days and reprice something into positive ev territory, you should. So my point is more that beyond a certain point, if a bunch of data centers get slowed down, a bunch of constraint happens, there's going to be a lot less capacity than

people think. The dollar cost per megawatt per month is going to go through the roof. The dollar cost of a GPU hour is going to go through the roof. And the people that will be willing to pay the premium are going to be the ginormous companies with huge balance sheets. And so you could just sell it to google or meta if you wanted to you don't have to sell it to open ai okay sacks the really interesting part of all this just to dip into the science corner is these uh this infrastructure does two things right inference people using the product every day and then building the next model if you want to run away with the next model cornering compute at any price is a huge advantage so for google which has been behind if they use all their compute to make their make their model, or if Microsoft or NVIDIA decide they want to start accelerating their internal models, which they have, this could determine who has the best frontier model.

Over to you, Sex. Final word. I'll say something very quickly. When you're talking about infrastructure of this magnitude, these gigawatt-powered data centers, they cost around $50 billion. Nobody can make that investment in conditions of uncertainty. The last thing you ever want to do is break ground on a project like that. And then when you're halfway through, you get enjoined, you end up with a strike by your workers, there's some community group that stops you, you really need conditions of certainty before you make an investment like that. And I think that we're headed towards conditions of great uncertainty. You've got our biggest data center states where there's basically been a regime change. And all those governors are basically indicating that they favor moratorium until XYZ happens, right? They can be a little bit different in what that is. So my sense is that, look, it may not be a conspiracy to hurt the Trump economy. It may just be the reality of what's going on. But I would expect that, I think there'll still be meaningful CapEx in 2020.

27 as a base case, meaning those fully permitted approved projects can move forward or finish. But I think by 2028, I would expect that the pipeline will either be closed or significantly reduced, and that will have a big economic impact. And I do think that Democrats will try to blame the president for that, even though they will be solely responsible for this. All right. Everybody has been demanding, Friedberg, that we do a science corner on this exponential time hypotheses. I guess a layman's way of explaining it would be computers can't solve important problems quickly, but there seems to be some science and some recent innovations that say maybe this hypothesis is no longer true.

And again, it's one of these moments of humility for mathematicians, for computer science, being like, holy s**t, I would have never done that. And Sachs, you were just very heated about the exponential time hypotheses in the group chat for the past three weeks. So, when you hear Freeberg teed up here this crisply, how does this impact your thoughts on the 2028 election and the future of humanity? Look, I think that AI, superintelligence, whatever you want to call it, is going to create a lot of good things.

And the fear around it, maybe some fear is justified because anything that seems powerful can make people afraid. And obviously the future is unknown, so you can't prove exactly what's going to happen. But I tend to think there's going to be so many benefits to this technology. And frankly, if we don't do it, China's going to, they're going to be the ones that benefit jcal you're right that if the u.s doesn't build the data centers they'll get built in other countries and we'll be paying to import the tokens very dangerous situation it's so dumb yeah crazy chamath i saw you nodding there yeah you have a background in computer science my formal education was in electrical engineering but i mean i've worked around software engineers for so long now this is an incredibly interesting insight all right another amazing episode of the all-in podcast the number one two and three podcast in the world in terms of the rankings i think uh wow what a week we had we're number one in the live stream and obviously four weeks running we've hit number one thank you to the audience and we truly appreciate you being on this journey with us and you can always expect as uh candid a discussion in the world as possible which it was very interesting in your discussion

with rick rubin chamath he was very very taken with the pockets and he is a somebody who understands art and unique moments in the world i thought it was very interesting that he kept pressing you on what what's the magic here because he's he's kind of the sherpa of magic in many ways and i think the magic here is that we're candid and we break each other's chops and we try to move the ball forward with our candidates and you had some very nice things to say about all of us chamath and i just wanted to say thank you you are my brother and i love you thank you i love you too i mean what I said to him basically at the core of it is we are a family and we get together and chop it up once a week. And it's very rare to have a window into family squabbles. I think that's basically, it's basically why it works. It's kind of unique. You know, that's maybe why the Kardashians work. Maybe you had it, you had such a compliment. I think it was the greatest compliment I think I've got in my life. He said, you know what J. Cal is, you know, that quote from the, the, the scene from the town where Ben Affleck goes to Jeremy Renner and he says, I need you to come with me we're going to mess some people up

and you can't ask me any questions and Jeremy Renner looks up and says whose car we take yours or mine I've always felt bad about you that was very common All right. We'll see you all next time. Love you, besties. Bye-bye. We'll let your winners ride. Rain Man David Sacks. I'm going all in. And it said we open source it to the fans and they've just gone crazy with it. Love you, besties. I'm the queen of Ken Y. I'm going all in. Let your winners ride. I'm going all in. Besties are gone. That is my dog. We should all just get a room and just have one big huge orgy because they're all just useless.

It's like this sexual tension but they just need to release them out. Wet your feet. Wet your feet. We need to get merch. I'm doing all in. I'm doing all in