US Debt Hits A Historic New High, Our Education System Hits A New Low, & DSA's Math Breaks

Key Takeaway

Build a personal financial model today: define one measurable target, map every step from awareness to outcome, and identify the single weakest link. For money, automate a small recurring contribution into a broad, diversified investment fund before entertaining short-term bets. The episode’s practical throughline is that progress improves when you replace vague anxiety with clear goals, constraints, and feedback loops—and build foundational skills, especially reading, numeracy, and financial literacy.

Episode Overview

Tom Bilyeu and Drew examine record US deficits, rising federal interest costs, arguments about the affordability of Democratic Socialists of America proposals, and concerns about declining educational standards. They also discuss financial literacy versus sports betting, health-care cost transparency, domestic manufacturing, data-center impacts, and the economic stakes of the AI buildout.

Full Transcript

Transcript of US Debt Hits A Historic New High, Our Education System Hits A New Low, & DSA's Math Breaks from Impact Theory. Auto-generated from episode audio; may contain minor errors.

Good morning everybody. Welcome to another episode of the Tom Show Live. I'm excited to have you guys here. It's a Friday. Happy Friday everybody. I hope you guys are going to be coming into the weekend hot. And speaking of doing things that are way too hot, the US government officially posted the largest July budget deficit in history. The interest payments. Oh, that was a good one. The interest payments on the federal debt now exceed Medicare and all AI spending, making interest the number two line item on the federal budget.

Kids, we do not want our interest payment to be the number two. And by the way, racing to be the number one line item on the budget, but let's talk about things that would do that. Will Kaine does a very cool breakdown of socialist math that will explain why only taxing the middle class and working class are going to get you to the point where you can actually have their socialist utopia right before it breaks everything. We're going to go through that math in detail so people can see it.

This is the cause and effect universe, boys and girls. And so actually making contact with how that stuff works is going to be very important as we chart a path forward, which I'm going to be talking a lot more about. It would be interesting to see how Drew reacts as a producer as I get on uh a never-ending bandwagon to get people excited about being American. Okay, I'm derailing. Gen Z spends more on sports betting than they invest in the stock market. That might be part of the problem.

More evidence is pouring in about the impact of data centers, and the results are absolutely startling. You guys are going to want to hear that. manufacturing jobs may actually be coming back to the US as Apple opens a facility in Texas. That's very exciting. They're going to be doing the Mac Mini there. PSL founder, which is a uh socialist organization, says that a comrade in Congress should disrupt it as the party prepares for revolution. So, we continue our march to bring you socialists in their own words.

And unfortunately, speaking of people speaking up for themselves, uh teachers are beginning to speak up about the appalling nature of US education in the wake of No Child Left Behind. One video is going hyperviral uh that unfortunately you guys aren't going to believe. It's pretty rough uh to hear some of the claims that are being made, but nonetheless, I fear that they may be true as there's more and more people speaking up, including a teacher uh that won teacher of the year in her district. So, yeah, some pretty gnarly news there.

For anybody with kids, you guys are going to want to tune in. All right, the federal government just set the July record for the biggest deficit ever for July. It clocked in at an absolutely insane $432.3 billion. And again, that's just for July. It's an all-time record for July and the biggest deficit of any singular month since the height of the global COVID pandemic. That is not where you want yes your uh things to be compared to. The pandemic was an absolute slapstick comedy hour of uh irrational and grotesque spending that we are still suffering from.

So for us to be uh in the realm of that, we're not quite at those levels, but uh for that to be the next thing that you're aiming at is not a good position to be in. Spending hit 766 billion, which is also a record for the month of July, which is up 22% from last July. So our deficits are obviously racing in the wrong direction. And unfortunately, revenue is also trending in the wrong direction. Thankfully, not at the same rate, but revenue came in at 334 billion, which is down 1%.

So, obviously, we need to start getting that reversed. Now, to be fair, some of this is much to do about nothing. About $99 billion of that spending hitting in July is actually due to a quirk of the calendar because August 1st fell on a weekend this year. military, uh, veterans, social security, Medicare payments, all of those ended up getting pushed into July when they otherwise probably would have fallen into August. But even if you strip it out, the adjusted deficit uh is still 333 billion. It just wouldn't have been record setting.

Uh, it's still up 18% yearover-year. So, uh, no matter how you shake it or bake it, we are moving in the wrong direction. Uh hopefully if you guys have been here for a while, you know that this is the number one problem that we have to solve in terms of the fiscal irresponsibility of the government regardless of who's in power. Uh the rightwing is not going to save you. The left wing is going to accelerate things. They are both if they go farther and farther left.

Uh we've absolutely got to break that. But to do that, you've got to break the back of the populist movement, which unfortunately is running rampant because of what happened in COVID and the fact that we are um absolutely making it impossible for the average person just to make ends meet. So you have these two things that are completely intertwined and we've got to find some way to begin to separate them out. Uh which is not going to be easy. And so as a PSA reminder, politics is downstream of culture.

If we do not solve solve the cultural issue, uh we are going to stay in this quagmire. I really hope that you guys are spending some time uh looking at what China is doing. Um not only looking at what China is doing in terms of them being an adversary because you can blind yourself to some of the things that are going well in China by doing that. You want to understand what it looks like to have cultural energy, what it looks like to believe in your civilization, to believe uh in you as a country.

And that's the thing that we've lost. And I really feel like uh that's going to be one of the cultural elements that we have to solve. So, um, you can expect me talking about that more and more, trying to paint a vision of an America that's exciting, that you would want your kids to grow up in, uh, where people are enthusiastic about their futures and what we need to do to get there. It's going to be absolutely critical, uh, to focus on that. Um, I don't know that that's going to be won at the level of debate.

I think people just have to paint this is my picture of the future and then let people get on board with the one that they find most compelling and most exciting. Uh, so yeah, I'm excited to um get into all of that with you guys so that hopefully as a collective we can broadcast something that's actually engaging and interesting. Now, the real killer of all of this deficit spending is the interest. Net interest cost uh $14 billion in July alone. Okay, think about that. You're spending $104 billion just in July just to service the debt.

That's not any of the principal. That's just like, hey, for the right of borrowing this money, we're now paying this ridiculous amount. Gross interest expense on the debt was 117.5 billion, which is up 26 billion from July of 2025. Fiscal year to date, net interest is 931 billion. That's up $91 billion or 11%. You know, pretty soon, Drew, these numbers are going to add up to something. You know what I mean? 90 billion here, 90 billion there. Eventually, it really does start to be a problem.

What's 90 billion amongst friends, right? You know what I mean? So, I guess, hey, it's no problem whatsoever. All right. Well, if you keep doing that, you're not going to have money left for virtually anything. And that is the debt cycle. And this is exactly how this stuff blows up. Eventually, you do have to deal with that. But remember, when somebody loans you money, they expect to be paid back. And so, there in lies the problem. Now, it gets complicated and we'll see if you guys want to go down the highly technical route on that later, which I'm happy to do.

Uh, but at the high level, you just when you think about trying to offer more services, I will repeat my line uh until the end of time. You can have anything you want. You're just not going to be able to have everything. So, we're a wealthy enough nation that we can decide, hey, there's going to be a handful of things that we pay for, but right now, as a nation, we're deciding we're just going to pay for everything and steal from our children. Uh so it is an absolutely terrible exercise.

We've got to implement fiscal discipline now. And so part of a vision of America needs to be that discipline is a good thing. Uh and not a sign of white supremacy, which is what it's being built at now. I knew I was going to get a look on that, Drew. I knew that would get a look. It is. Look at the uh the Smithsonian stuff that they were putting out. It's wild. Uh all the things that are being called whiteness. Man, it's crazy. It's crazy. Don't let that happen.

All right. That makes interest the second largest line item in the federal budget. This is bigger than national defense. It's bigger than Medicaid. It's bigger than veterans benefits. Only social security remains as a larger expense. And right now, the way that we're going with our budgets, that is ultimately going to be eclipsed. Uh so it is going to become the single largest line item of our budget. Now, there's a long-standing quote that I think bears repeating, which is that when you have a society that spends more on its debt than it spends on defense, that is not going to be a great nation for long.

So, we are putting ourselves very much in a danger zone that we need to be paying very close attention to. And the only way to back out of this is to actually uh decide culturally what it is that we're willing to pay for. Get ourselves to a balanced budget, forcing ourselves via policy to balance the budget. basically whatever that requires. Uh we're nowhere near that yet. So that's going to be one of the most important vectors that we all judge any politician by is what are they going to do to actually balance the budget.

All right. The weighted average rate on marketable Treasury debt right now is 3.44%. And most of that paper um is was issued when the money was free and now we're having to roll it over and this is a big part of the problem. So 10 months into the fiscal year, the deficit stands at $1.799 trillion. Man, that's so wild. That already exceeds the entire fiscal 2025 shortfall of 1.775 trillion. And we still have two months left in the fiscal year. Uh so yeah, this is all going in the absolute wrong direction.

And nobody is showing a willingness politically to back off of this trajectory, which is going to be a tragedy for the nation. It's going to be a tragedy, Drew. There was something about seeing that combined with the teacher um crying because the kids can't read and write that I was really like, yo, that we're really headed in a dangerous direction. It's very tempting to say that we've sort of already driven off some kind of cliff that is irreversible. Uh but pumping allowing that to become my default position, I think will only accelerate things.

So, I am resisting that frame. But that there was something where America lost its morality. And when Michelle Obama said when they go low, we go high. She got a standing ovation in the room. And she got eaten up on Twitter cuz everybody's like, "No, that's why Democrats keep losing. We need to go lower. We need to go lower." And then ever since that moment, we just been racing to the bottom trying to just one up each other. Nobody cares about the other person. Yeah. I remember in a John McCain, the whitest man in America, one of his supporters was trying to bash Obama, calling him a communist.

He was like, "No, don't say that. He's a patriot. He's a Senate. He works for this country. I don't agree with him." But and it was like if that video was to get played now, he would get a rock thrown out of Metron. Like it's crazy. So nobody cares about the other person. They just want their team to win. And this is what populism is. And I didn't understand populism when you used to talk about it. And I was like, that's whatever that if we just do these things, it'll be fine.

But now I'm starting to realize it doesn't matter what the what's the good for the country. It doesn't matter what good things Trump signs, what bad thing Trump signs. It's like, no, I don't like him, period. I say one negative thing about Trump, I'm automatically a DSA commi. Doesn't matter what else. Like, they just want to bucket us. It seems like it's very disheartening. Very disheartening. Great use of that word. Uh the problem is we're the they. So, everybody is trying to bucket everybody else into that.

There, unfortunately, is no one else to point the finger at. This is just what humans are like as a um as a group species. We are very different when we group up. And so the tribalism from a danger perspective is something that I don't think people give enough credit to. I know I've talked about this before and I really should track this video down. U but I saw this video, this is years ago, but this kid ends up getting beaten to death with like this really big board, like a really big board, comically large.

And I remember watching it and it was one of those where um some sort of fight broke out somehow some way and you just realize because he was like I don't even remember I don't think the kid was like involved in what was going on. He was just sort of around it. And then this kid picks up this I mean it was giant and hits this kid over the head and then people just jump on him and start beating him to death. And they do they beat him to death and it was just some average American kid.

But it was like dude watching that happen you realize when humans break and that crowd thing takes over where people no longer feel like an individual. They just feel like they're a part of that wave of energy. That's one of those and I know people hate when I talk about that we don't have free will. That's when I realize yeah we are um ultimately a herd animal and there is a psychological thing that happens where when the violence breaks people really go ham. And this is where uh if anybody's ever been in a car where the brakes give out and you suddenly realize just how fast you're moving or if you're like sliding on black ice that that was always the analogy that I used.

Uh if you've ever driven and hit black ice where the road looks normal, but all of a sudden you have no traction whatsoever and you're you realize, oh, I'm going to hit the ditch if that's where the momentum is taking me and there's literally nothing I can do to stop it. That's what I feel like when humans uh snap into this like uh populist moment. They've got the tribalism energy behind them. They feel like they're on a team. They've got a they're they're thinking purely emotionally.

They're not able to make contact with like real arguments. they will do the mental gymnastics to um explain why their side is right and the other side is wrong and that you can study this. You can see it happen. We're living the consequences of it right now. And it it is part of the architecture of the human mind. And that that's what makes like diffusing this kind of bomb so um nerve-wracking is like yeah, normally this just ends in violence. like the the way that the momentum carries people, they need something to break them out of that.

And that thing is pain and suffering. And this is one of the most interesting things about looking at Japan now is understanding this was truly a kamicazi culture. And and I mean that quite literally. They had trained their um populace to expect to have to fight to the death uh to win World War II. And that put such a fatigue in people that even though they couldn't stop themselves from doing it when they lost World War II, they were actually able to embrace the defeat because the pain and the lack of a vision of h even having a future that was anything other than death was so foreign.

And so they were already broken emotionally by the time uh the bombs are dropped on Japan. And so this is why you see that just like hard reversal of course on behalf of Japan because there was a sense of relief to having lost. And to think that you could get yourself whipped up into a frenzy such that defeat feels good because you know you've gone so far away from the things that make being a human feel awesome of I'm I'm imagining a future that's exciting. I'm imagining my life being better in a year.

I'm imagining my kids' lives being even better than mine. like we're on the brink of AI possibly bringing in an age of abundance even if we never get to like the utopian thing where you can just press a button and have anything you want but where it just gets productivity is dramatically higher than it is now that um you continue to pull up the bottom where it's like uh people will rightly say that somebody who is quote unquote impoverished today has access to better things than a king did 300 years years ago, even just antibiotics.

So, it's like we're simult We're about to find out we're we're going to have what in games you call a skill check. And we're either going to go through one of these great filters that people when they look out at the sky and they realize that there are no aliens or at least they haven't contacted us. You have to ask the question, is there something that stops every advanced technology so that they never go far enough to actually populate the cosmos? Um, or do they choose not to do it?

And we're literally racing towards one of those moments. Is AI a great filter where uh between what we've done to the economy, what we've done to the culture, plus a technology that people fear tremendously now all gets sort of whipped up into this crazy frenzy of people just turning on each other and where they're so they have such a dark vision of the future that they would rather tear everybody apart rather than continue to proceed. And so that is it's such a fascinating time, but it is admittedly unnerving to run through our record- setting deficits, our backbreaking interest, and um see teachers crying because our students can't even read and write anymore.

It's wild. Um I want to do a round robin around the economy for a second. There was a bunch of releases of different facts and on their own, they're all like, "Yeah, cool." But when you start to stack these things together, especially with our AI story that we're going to cover later, it just starts to see make a more a bleeer picture of where we're at. Um, the first thing I don't know if you put a lot of stock in this, what there's a lot of people who say when you look at the stock market, it shows growth, but it shows nominal growth versus real growth.

It has inflation baked in. It's not showing the actual numbers. So, what somebody did was they measured in gold the story of American like wages. Yeah. So the TDLDR of it all is that the bottom line is that in terms of gold, wages have fallen by 87%. Oh my god. Over what time period? Um since 1965. Jesus Christ. The minimum wage was 71 ounces per gold. In 2011, the senior engineer earned the equivalent of 63 ounces in gold. So measured in gold, we see that senior engineers now earn less than what unskilled laborers earned back in 1965.

That's right. today's highly skilled professional workers making less in real comparative terms than yesterday's unskilled worker. Now I know gold can fluctuate so it might be 10 20% off we'll give people the rounding the discount but it still kind of shows that people are making more we have more like Ben Shapiro said we still have 450 taco uh burritos at Del Taco so don't buy a $20 one but there is this kind of feeling that is bringing these needs to people who are not in the employment there is this malaise I think that's you say this all the time I got that word from you that it's like yes I'm better than the 300 the pe the 300 years ago, but it feels like I'm still on the rabbit hole.

It feels like I'm not breaking through. Yeah. I mean, so here's something that people on the left are just not going to like to hear. There was a time where America was better off than it is now. So, we really should want to make America great again. Uh you can say that the guy in the White House is not the one to take you there. Uh but that notion shouldn't be um problematic. That should be something that everybody should be saying, "Yeah, let's make America great again." Where this all falls down is when you're reasoning from emotion.

You're not setting a um a mark on the horizon and say, "Okay, that's where we want to go." I see entrepreneurs make this uh mistake all the time. Is they're doing a flurry of activity, but they're not trying to get anywhere specific. They just they're they're like in panic mode. They don't know how to get revenue moving in the right direction. They've hit some sort of plateau. They start flailing about and they'll come into um Impact Theory University and they'll ask me a question I hear all the time.

um what should I do? And then I say, where are you trying to end up? And they don't have an answer. Like even if it were just something as uh basic as I want to my revenue right now is $100,000 a month. I want to get it to $125,000 a month. Okay, cool. Then you go, all right, so uh what I teach everybody to do is create a financial model. The financial model is just you do a series of things to take somebody from I've never heard of you to I'm now buying your product.

Okay, what are those steps? Mark them out. Now, at each one of those steps, you're either going to be um call it at industry average, above industry average, or below industry average. Find the one that's the problem because now I know where you're trying to get to. Now, we can talk about, okay, what's the thing that's not working? Like, if you're trying to get to Pikipsy and I say, why aren't you making progress? Uh if your answer is because my car doesn't have an engine, it's like, okay, cool.

Then we need to put an engine in your car or you can take a bus or you can fly, you know, whatever. And then you just start asking a series of questions that are going to get you there. But if you don't articulate where you're trying to end up, you're not going to be able to get there. This is one of the things I find fascinating about socialists is um they understand. They may not be willing to say it in public, but certainly in the private meetings, which I'm getting more and more links to them just talking openly about what they're trying to do.

They know where they're trying to get to. They don't understand the mechanisms, so they don't understand how it's going to break, but they at least say, "Okay, this is where we're trying to get to." They can repeat it succinctly. That allows them to galvanize people. And so what we have to do is find a way to galvanize people around um a real objective followed by a real set of steps that are going to get us there. So this is why I talk about economics so much.

I never thought I would talk about economics. I never even thought I would care about this stuff. But as you start thinking about, okay, mechanistically, how did we end up here? Um I'll I'll round it to two very simple things. Real wages are going down compared to gold. That's a great way to say it. Uh so your real purchasing power is declining. Um and then you've got the long march through the institutions where we have legitimately stopped wanting to make American kids the most competitive and effective um economic military uh strategic actors on planet Earth.

We we don't believe in that anymore. And so there's this narrative that America is this evil colonialist um thing that that isn't worthy of um admiration. It's not worthy of indoctrinating your children to be pro- America and what America stands for. And the second that you lose that will to be a unified body, everything falls apart. There was a um a clip that I saw of Lee Kuan Yu um who uh I imagine I'm going to be talking more and more about as we talk about finding a way out of this.

So he founds uh essentially uh Singapore and one of the things that he was saying is that basically he doesn't say these exact words but this is the the rough idea that multiculturalism is extremely difficult because you've got people that come from all these very diverse backgrounds and they've got to come together and say that we have a a will to be unified to be a nation and to move forward together. And he said without that the only way to keep them together is force. And that becomes the problem is we're rapidly building a society where the only way to hold it together is force.

And boy is that you just don't want to be in that position. So you want to make sure that people go, "Oh yes, shared ideal. We want to see uh our workers be strong. We want a thriving middle class. We want to make sure I think one thing right now that Americans are going to go to bat for is we want to make sure that we have some sort of universal healthcare. Cool. Like lay out what those things are, but then you have to get into that financial model that I was talking about to say these are the exact steps based on cause and effect first principles thinking that's actually going to get us there.

And so I'll lay these out so this doesn't feel um like it's philosophy. It's very tangible. Uh so you have to balance your budget such that you can build a surplus of cash which is optionality. It allows you to pay for the things that you want to pay for. Um you need to invest in education because the human mind is um it it will break easily first of all and if you don't develop it when it's young the actual centers of the brain don't develop. So, um, a guy that I used to talk about a lot, but I haven't brought up recently, a guy named Jeffrey Canada, um, wanted to figure out why is it that, um, kids in the inner cities end up doing so poorly in life later.

And what he found out was it was the number of positive words that you hear by the age of three or five, I can never remember which, but anyway. And what he realized was the reason that mattered so much was because of what it does to the language centers of your brain. and that the language centers of your brain, if it doesn't hear enough words when you're young, it just literally underdevelops. And so, if you think of that, that we're underdeveloping our kids in a way that is irreversible.

Now, I wish that childhood wasn't as important as it is, but alas, um, our childhood is extraordinarily important. And when we underdevelop kids, they are underdeveloped forever. And I came to a very distressing realization at Quest. This is long before cameras got turned on. I was working with inner city adults. So these are people in their 20s, 30s, sometimes 40s, 50s. Um, and I was really excited to teach them principles of entrepreneurship. And to spare you a very long story, the punchline after years of doing this, making myself available, um, creating leadership programs, all of this was you have to give up on adults.

And that was me at a personal interaction level realizing something that now I can explain from brain development. But the unfortunate reality is if the language centers as one example of your brain don't develop in your youth, you can't develop them later. So the fact that we um aren't making education just a really important part of what we do is is detrimental in a way that isn't like oh like we're just not making education important. It's like no, it has like these massive cascades. So if you want to compete on the international stage and there's no way to avoid competing on the international stage because whether like for anybody that is upset at the way that America bullies the rest of the world, America's able to bully the rest of the world because for call it 150 years, we had this just puritanical work ethic where it was like no these kids are going to be hardcore.

They are going to abide by the idea of picking themselves up by their bootstraps. The Booker T. Washington idea of, oh, we want to build a school. We're going to learn how to make our own bricks, lay the bricks to build the schools, the dormitories, and that's what we celebrated. And so, there was this self-reliance. Uh, there was a sense of the rugged individual. And all of that gave you the strongest country in the world, the wealthiest nation the world has ever produced is America. And then because it it is literally because of that success that we end up falling off and because things get too easy for too long and people start going well but we want to be nice and we want to be kind and no child left behind and through all of that you end up letting kids get soft and you you just you literally can't do that if your aim is the things that I was saying a strong middle class fiscal discipline military strength like if you want those things you unfortunately cannot allow allow the generation of kids to be weak.

And I remember being very angry at my father and hopefully he's listening to this cuz I really do owe my debt my dad a debt of gratitude. Um he forced us to do manual labor as kids. And he just kept saying over and over, "This is going to build character. This is going to build character." And I remember being absolutely I rateate with my father that he was making me do that because I hated it and I didn't want to do it and I didn't know what this character thing was.

Uh, and then I get into adulthood and all of a sudden you have the ability to push through, you know, for me years of being broke, uh, having to push through that, trying to build a business. And you're there, you know, early on a Sunday morning, you're there late on a Friday night. I remember working at 2 a.m. one time. On a Friday, all my friends were at the club, and I was literally under a piece of machinery with bloody knuckles trying to fix a heat decoupling unit.

And so it was like, uh, what am I doing here? And I realized, oh yeah, I have a goal and this is what it takes to get the goal and that's that and thanks, Dad. Like it it literally because as a kid I was forced to figure out how you push through something that you absolutely despise to get to the other side because you have a goal and that goal demands that thing. Uh but we have to we we need a better word than indoctrinate. But that's really what you're doing.

Every parent is indoctrinating their kids with a set of values and you failed to do that at your peril. At the national level, we need to facilitate um parents being able to get their kids into a state where they're going to be able to perform as adults. And the second that you lose belief in your nation, you lose visibility as to what your actual value system is and you don't have shared goals as a nation, you're going to be in trouble. So, that's going to be a big part of that is we've got to I was thinking about this this morning.

Um, we were talking about this when EA got bought and we were talking about can the video game industry like really reboot itself and I said I don't know if EA is going to be able to reboot itself. Some of these like Blizzard I actually have more hope for because Blizzard has a uh a founding story that they could fall back on. And that founding narrative of giving people something to anchor on about who are we? Um, America has this incredible founding story, but we have to be prepared to, um, honestly propagandize it and get people excited about the good parts of the founding story.

Uh, and find a way to come to terms with the negative parts without throwing the baby out with the bathwater. Yeah, we're going to do a deeper dive into education later cuz I feel like I want to bring up the teacher stuff. There's one more finance beat I want to hit and then this is from a recent sports betting um survey and it shows that Gen Z is spending more time directing into sports betting. I'm going to call it more time or more money. More money.

Um I'm going to call it prediction markets as well cuz I feel like a lot of these uh Jenzers be watching sports like that but they predict and they Yeah, I feel like sports is falling off. Interesting. Sports is very falling off. Huh? Yeah, that's weird. Why? Um, I promise this will matter. No, my personal thing is it's no longer accessible because I feel like everybody has a story of like my dad took me to a game and we used to hang out and like watch the ball game and I feel like now tickets to a football game are like 600 bucks.

So it's like Oh, it's just become too expensive. Like they just priced out the market. Interesting. Huh. So you don't have that affinity and to the point people don't have that camaraderie in their neighborhoods like the Philadelphia people, all the people in Philly get together and go to the Eagles games. And I was like, I'm from Chicago and I like the Phillies or I'm from Jersey and I like this team and it's kind of that is factored in that moment. Very interesting. When I went to London and I seen like like Arsenal one and we were by the stadium and it was like I grew up right around the corner and that's the stadium and I could walk to the stadium.

It was so in the middle of the of the community actually. It's open during the day. People they do museum tours and stuff. It's a bit more we're affecting this area where I feel like sports now become a business like everything else in America. somebody figures out a way to capitalize on it and then they say, "Okay, let's see how we can get as much revenue from it as opposed to connect to the community and they disconnect from the it's not a consumer a customer anymore.

It's a consumer." And I feel like those are two different relationships. Uh yes, that's very interesting. I'll avoid the fractal of fully going down that thing. Um but I think that's a really interesting hypothesis. I had a similar feeling about why uh esports don't take off. First of all, the games aren't stable long enough, but you also have lack of geography, and there is something about like, no, no, this is my sports team because this is where I grew up. And those teams are far more global.

Um, and you get the, like you said, there's the divorce of my dad took me to the game. And so, unless your dad is as into the esports as you, it's always about two generations. I think about this a lot as a creator of um video games is if you want to create something like Star Wars or Harry Potter, it's really about the second generation. You have to raise a generation of kids on the IP who then raise their kids on the IP and that's when something becomes a part of the fabric of the culture.

Uh and that's becoming harder and harder. Uh, at one point I was really trying to figure out how do I um engineer the next Star Wars or the next uh Harry Potter and AI broke my heart and was just like the conditions for that no longer exist. And I was like damn because kids interface with um social media and it's such a fracturing thing. Mhm. That's where I thought you were going to go with sports is that kids just aren't spending time watching it because they've got the like um they're they exist.

They spend too much time in tight dopamine loops and it really like you have to really be careful. One of the reasons I'm building Kaizen specifically to be like Minecraft is Minecraft has a much looser dopamine loop. It's about building. It's about setting your own agenda. um having to I've always said entrepreneurs like if your kid is really into Minecraft, they might have an entrepreneurial mind because they have to be so self-directed. Um so yeah, anyway, I think that is also a big part of this that you then find in the the betting thing.

But to really bring this back to economics, part of the the thing that scares me with this is um they have the right impulse, which is I want to engage with a marketplace where I can take my money and I can grow my money, but they're unable to make the connection of risk and reward. And so when you look at betting, you're trading speed of upside um for almost guaranteed prolonged downside. whereas the market flips that and you're almost certainly not going to get it in the short term, but in the long term you're almost certainly guaranteed to win.

Um, if you essentially do nothing other than slowly invest in something very broad. And so this the fact that nobody when they're kids understands investing. Full stop. Um, but now that you're giving them something that they can understand easily, which is to place a bet on a game that they feel like they know and understand and some part of them feels like they can predict the outcome. Um, and it makes watching the game more fun. So, there's like a lot of things working in its favor.

It fills the void of like how can I grow my money? And so, um, yeah, you're putting people in essentially a death loop where now they're not being trained to invest in something where they can win in the long term because if we could convey like you'll hear stories about Ray Dalio. How does Ray Dalio become Ray Dalio? Ray Dalio caddies for people at a country club and those people tell him about he he says, "I just overhear them talking about the stock market all the time." So, he decides he's going to um read the newspaper, find a stock, invest in that stock.

He does it. He just gets lucky, man. and he ends up making a ton of money. So now he feels like, "Oh, the stock market thing is incredible. I'm a genius and I'm going to keep doing this thing." And then over time he actually learns about the stock market, becomes Ray Dalio, one of the richest people ever to walk planet Earth. And so it's like if he hadn't overheard those people talking about it, if instead he was, you know, seeing real after real after real of people sports betting or whatever, uh it just it takes you down that path.

And so a lot of this stuff is just what did you happen to bump into when you were young enough to get excited about that thing? And it it controls so much more of your future life uh than you expect it to. It's crazy. I want to make it practical, but is it just people we need to teach people about the stock market more? We need to have a stock market class because I feel like everybody says we should have financial planning in schools. But my rebuttal to that is half the teachers don't even understand financial planning.

Yeah. Yes. Very important. But you live in the age of AI. So a thous% kids should be learning about the stock market. They should be getting taught by worldclass AI and someone will do this. They will put together an AI that is designed to teach kids about the stock market. And um yes, I think that would be extraordinary. I think that the Trump accounts are absolutely incredible ways to get kids invested because you can imagine if a kid is watching their portfolio and they understand what's happening to it.

And then parents go, "Hey, you can put some of your own spending money into the stock market and watch watch what happens to the one that's managed by the federal government and watch what happens to the one that you manage." And if you're beating the federal government, that really tells you something. And if you're losing, that also tells you something. And that I think will get kids invested. Uh, and if they can do it in a way where they're actually learning the principles via AI, so it's not all just short-term thinking.

It's actually, okay, this is how stocks work. This is the cause and effect. This is first principles thinking. Uh, this is the humility that you have to come to the market with. Why do some things go up and other things go down? And listen, the vast majority of kids just aren't going to find it interesting enough. But there are going to be kids that do find it interesting. And over time there going to be real financial consequences to that. And so seeing that over time then that starts to spread to parents who are like hold on I want to make sure that my kid really understands what to do here.

Uh so that you get that generation being raised on it and then they teach their kids who are raised on it and you start to get a level of financial literacy that we have not had up until this point. Nice. Uh, okay. I want to jump into Will Kane's breakdown, speaking of economics of the socialist math. So, he breaks down the DSA's platform and does the hard ones and zeros of it all. Um, set us up, Tom. All right. So, the Kato Institute just priced out what the Democratic Socialist of America platform would actually cost.

And this is the single most important exercise that people can run whenever somebody puts something forward. So the whole idea behind socialism is we're going to tax the billionaires. We're going to get everything that we want. But the reality is it's not going to work like that. I've tried to explain this to people. Even if you confiscate 100% of billionaires wealth, you're not going to be able to pay for these services. The reason that I say Bernie Sanders lies all the time is he will put forward a plan that requires something to be paid every year and then he'll say if we tax billionaires this then we would be able to pay for and then insert thing here.

But he never says we'd be able to pay for it for only a year and then the next year we have to tax again and again and again and oh by the way even I acknowledge that if I do that every year I'm going to break the engine of prosperity. So they never talk about that even though he absolutely knows that that is true. He is using it to propagandize people. So what the KO Institute is trying to do is give people the math to be able to run this.

Will Kaine ended up doing exactly that. And so we'll get deeper into some of the specifics here, but I'll just let Will uh walk through this. So let's play the clip from start to finish. Let's start with that price tag. How do you get to $200 trillion over 10 years? The number is absolutely staggering and it breaks down into categories. It breaks down into promises on the DSA's wish list. Let's start with universal healthcare. Over a 10-year period, that's estimated to cost as much as $75 trillion.

But we don't stop there. There's been talk of reparations. Add another $28 trillion to the wish list. How about a federal jobs guarantee? That's $60 trillion potentially at the high end over 10 years. Now, if you add this all up, including housing for all, which is another $17 trillion, then you get to a high estimate of $211 trillion over 10 years. Bringing up the question again, who pays? Now, the DSA, it has an answer. The rich, big corporations. So, let's look at reality. This lays out the high-end and the low-end estimates of the DSA's wishlist costs.

Now, if you taxed over a 10-year period, all corporate profits, so you zeroed out corporate profits over a 10-year period, you'd bring in about $35 trillion. If you taxed the wealthiest in America at a rate of 40%, you'd bring in another half trillion. If you confiscated all of their wealth, well, you'd bring in about $6.6 trillion. But I want to go for a second because anybody uh I'll get into this a little bit more later, but he that number is a little disingenuous. It would be higher than that, but again, it would be a one-time thing.

The reason is and he puts it right there on the screen, but people are going to think it represents everybody. So that's Forb's 400 wealthiest. Um there are probably I think 900 billionaires. So that does not include all of it. If you roughly double that, you're getting closer. But the thing I need people to understand is that is the difference between uh confiscating wealth, which would already be impossible. So you're never ever ever ever literally it is impossible to get that number. Not like, oh, they're going to flee.

You can't get that money. The second you try to sell it, it breaks the system. they won't be able to get those dollars and cents, but even if you could, it's still only a onetime fee. Uh, so you get what will sound like a lot of money, but just as a reminder, we're talking about only one decade of this spending. It's going to go on forever. If you confiscate 100% of people's wealth, you're basically uh you you would zero out the economy. So, it it would that's not quite accurate.

You you would throw a monkey wrench into the economy the likes of which we have never seen before. It would be so disruptive that it would be impossible to predict what's on the other side of it. It would be the equivalent of the meteorite striking the dinosaurs. It would be so it would break so many things that it is quite literally impossible to imagine what the world looks like on the other side of that other than to go uh the USSR or mouse China. That will get you close.

Right. So, uh, you're talking about, um, having to give the state control of everything. Once the state has control of everything, everything's ruled by force, everything's top down, yada yada. Uh, I won't fractal on that, but I do want to be clear that he's that number is probably about twice that if we're going to be in fiction land on the left or a member of the DSA be saying, I don't want to stop at 40%. So, let's go further. What if you did what America did in the mid 1950s and60s and you implemented a tax rate of over 90%.

We would still then only bring in about $2 trillion over 10 years. So what the DSA's wish list, it's empty promises run into is the hardcore reality of math. You add all that together and you come nowhere near. Forget the high estimate of $200 trillion, but the low estimate of $71 trillion. So where do you go for the money? They go where they always end up going for the money to you, the middle class. And then of course it's what do we look like? What's the country look like?

What size of government are we dealing with right now? Our government spending amounts to about 40% of gross domestic product. All right. The DSA's wish list agenda on that low-end projection would take it to 57% of GDP. But the high-end projection of more than $200 trillion over 10 years means that government spending would be 92% of GDP. That is a lot of government. That is actually a fundamental rewriting of the American economy and a fundamental rewriting of America. Yeah. I mean that's an understatement that it would be um it it is revolution at that point.

you at 92% of uh everything being in the hands of the government you are communist at that point. So uh then the question becomes well is communism a valid economic uh model or not and um it is important to understand that capitalism isn't vibes communism isn't vibes these are economic systems that can be broken out in terms of what they mean same with socialism again the socialism and communism I will use interchangeably for the very fact that this is based on Marxist thinking Marx never introduced the word socialism he said communism only communism it was Lenin one of the greatest murderers of all time who introduced the word socialism just to be abundantly clear.

So if you think I'm being unfair, it is simply because those literally are the same thing. Uh so and uh yes I'm well aware of what's going on in uh the um uh the Nordic countries which if you there was um I forget which one Denmark maybe uh one of the prime ministers of one of the Nordic countries uh went on record to correct um Bernie Sanders who was saying that there are socialist countries and they themselves said we are not socialists we are free market economies.

So anyway, there's all this tangle up uh because of people using words like socialism or socialist or communist and it gets very muddy, but we can always bring it back to first principles. Who owns what? Uh so when the government owns the means of production, you're talking about communism. Whether you call it socialism or communism, it literally doesn't matter. They are interchangeable uh in terms of the effects. So when you look at this breakdown, getting people to understand that uh you whenever you talk about going all the way to confiscating wealth, which is the only way that you can get anywhere near paying for all of the things that they want to do, that that is a one-time event.

And even that, like if you confiscated all the billionaire wealth, um you couldn't pay off the debt, just to give you an idea. So, um, the economies are so big that there's no way to do it just by taxing the wealthy. By taxing, forget it. You can't even do it by confiscating, uh, their money. Forget their money. You can't even do it by confiscating their wealth, which is fictional. So, um, to say it very succinctly, if you want to pay for everything on the socialist agenda, you can't even do it by confiscating a fictional amount of money.

So that's where it's like as a society we can have what we want but we've got to get into the nitty-gritty of what are we not going to pay for uh so that we can pay for these things that becomes a critical part of this. Now in the Kato Institute's breakdown they were looking at nine of the biggest proposals made by socialists. So we're talking like Will Kane said between 71 trillion 212 trillion in new federal spending over 10 years. Uh Medicare for all alone runs between 40 to 75 trillion.

Then you add in reparations, which apparently Drew wants to talk about, so we'll get into that. Uh federal jobs guarantee, which is insane. Uh housing as a right, insane. Free college, I'm actually far more interested in that one, but that's just me. Again, we can have what we want, we just can't have everything. Uh expanded retirement benefits, uh I think we should be moving in the opposite direction. Personally, making people work longer. don't expect that to be popular, but nonetheless, uh you've got a demographic challenge.

So, unless AI solves that problem for you, uh anyway, I think that if we've got kids paying into that system, they should be able to get uh take advantage of it and not have it be completely bankrupt by the time that they're older. Call me crazy. Uh and then you've got the green energy buildup. Okay. At the low end, US government spending hits 57% of GDP because that's crazy. That that is crazy. At the high end, it's 92%. At that point, it you are the USSR.

Uh so we're what I want to be clear about is we're not talking about what you see in the Nordic model. This is not a European welfare state. Okay? Um it is literally Soviet era state control of national output, which obviously did not go well. It didn't go well for very mechanistic reasons that can be explained. And the DSA socialists, they all want you to believe that you're going to be able to get this from the wealthy. Uh but when you run the numbers, you realize even if you uh go beyond the 400 wealthiest and you go to just everybody that has wealth, it's not quite doubling that number, but we we'll ballpark it at that.

So call it $12 trillion. That's confiscating all of it. Not taxing it. It's it's stealing it to use my language. uh you've only covered 9% of the low estimate when you look at just the 400. So call it 18% of the low estimate if you double it, which isn't realistic, but hey, let's just be crazy. So, and as a reminder, you only get to do that once. And you still have all of this stretching out into the future. So, we're talking about just covering what whatever 18% of a 10-year plan.

Okay? What happens the next 10 years, 30 years, 40 years, 50 years is crazy. So, um, as a PSA reminder to everybody, corporate taxes in the Nordic countries, which is often held up as, "No, no, no, we we don't mean socialism, we just mean the Nordic countries." So, corporate taxes are lower in the Nordic countries than they are here. Now, corporate profits after tax over the next decade are about $35 trillion. Even if you seize every dollar from every company for 10 years straight, that's still only half of the low estimate.

Hopefully you guys see like the numbers just don't add up. So they can say a slogan of the billionaires are going to pay for it. Uh that we're going to tax companies for it, but there isn't that much money coming. The only place that you're going to be able to find that kind of money is the middle and working class. And that presumes that you didn't break the engine of prosperity that creates the middle class to make sure that they're getting paid on the way to trying to get all of this money.

So this is where it it's it's just absolutely crazy. By the way, if you do all of that, you kill the profit motive. So, um there's no year 11, there's no year 12. This doesn't stretch on into the future. People just I mean, honestly, there's no year three or four. People just realize, yeah, there's no point. 92% of what I do goes to the government. It's nonsensical. So, yeah, it will break as it has done. remember even just wealth taxes the countries it's some I forget the exact percentage but I think there are only two countries left that have attempted a wealth tax uh that didn't end up reversing it and so the list of countries is very long of people who've tried that only to move away from it also look at what's going on in South America with this mass reversal of socialism people rejecting left-leaning uh leadership and now trying to move to the right Argentina being the you know the the one that's farthest along So, when you look at all of that, you've got the people that are trying it in the real world and they're saying, "Yeah, this isn't working.

We're moving away from it." You have historical examples that show that this doesn't work. You have future-facing math equations telling you that there the money that you're saying you're going to get doesn't exist. Not when you start looking at um having to take wealth and turn it into real money, which will already be devastating. And then trying to capture that will be far less. even if you capture it all, uh, which they're not even saying they're going to do, but even if you did it, you still can't get anywhere near the cost that this would incur.

And so what ends up happening is uh if you guys were here on Wednesday when we did the breakdown of why socialism has failed every time it's been tried, what you end up getting is a society where uh the same car that was being made 30 years ago is the exact same car that's being made today because there's no way to get the price signal to do the innovation and all of the top down stuff just doesn't work. So if you're going to even get to the Nordic countries, you have to do a broadbased tax of the middle and working class.

Everybody gets taxed and then you can have a large safety net. You still can't have socialism, but you can at least have a large safety net. Uh, okay. I feel like we need to put some road markers in the conversation. So first, uh, politics is political spectrum. Not everybody that's a Democrat is DSA. Um, not every DSA member is a socialist and not every person who's asking for free healthcare is asking for communism. So there are nuances in those. Yes. I I'll grant the Republicans and not everybody's MAGA.

Yeah. But when you say that um not every member of the Democratic Socialists of America, not every Democrat is a DSA member. Yeah. Yeah. But you did go on to say not every member of the DSA is a socialist. Not everybody who's advocating for free healthcare is a socialist. Okay. That's not what you said. So, are you backing off the stated claim that not every member of the DSA is a socialist? It's in their name, so I would assume every member in the DA. Perfect. As long as on that, I will grant you that this is all a spectrum.

Um, sure. Okay. Uh, point number two. Um, the math still breaks. Yep. But them adding reparations in there was hilarious because DSA members don't even have black people in the organization, which is wild. So, I don't understand how we're getting involved in that conversation. Black people got nothing to do with the DSA. Don't bring us into y'all business. Y'all going to take care of that. um as the CEO of the black community, it's been a wild I use that position very lightly because I don't like to speak for other black folks, but don't put us in the DSA nonsense.

That's the second thing. Um third thing, I wanted to pull up some charts. I am advocating for the Nordic model of um of healthcare. Okay. I'm advocating for it in America. Yep. I'm advocating for America because I think it is actually America. There's the base model. If you need healthcare, if something's wrong with you, you can go see a doctor and it's covered. But there's also I don't want to be around poor people. I can get the rich uh express lane and that's the same. It's available for us as well too.

I think all the rich people get to not see poor people when they're getting their health care and all the people who are bleeding out don't have to bleed out and go into medical debt. I think everybody's happy with this model. I want to pull up two quick statistics in US. We spend and this is 2024. We spend 5.3 in healthcare spending for 330 uh million people. And people are still like not having Medicare, dying in medical debt, dying in the streets, all these things. The European Union, the union as a block, different countries, different styles.

But the big boys, Germany's, all of them that they definitely have a universal model of uh health insurance. Yep. 449 million billion people, 449 million people, they spend 1.5 million, 1.5 trillion in healthcare spending. So something that Mark Cuban has advocated for um and nobody else is talking about it. Even the Roana bill, that Bernie Sanders bill that they're pushing, that is political jarbo 101. I think they're just pushing that to create a problem that isn't going to be solved. Just like we're now talking about trans people who aren't in the WNBA, but everybody wants to talk about trans people again in the WNBA.

It's this thing that I can use to politically get power for, but I'm not actually going to solve it. It's the NGO problem. Ah, that seemed like such a weird thing to tack on there because we have we have Can you define the NGO problem as you understand? We don't want to fix the thing that we're supposed to be fixing. We just want to use this to siphon money. Okay. Okay. I I think it's a little bit different than that, but I get where you're why you're likening the two.

Okay. Elizabeth Warren is getting big farmer money. Bernie is getting big farmer money. I love Obama. Obama got big farmer money. Yep. So, there are certain people that are being propped up by this industry that they're also talking about blowing up. So that some a person a man will not go against the thing that is paying him for his principles. Like Bernie Sanders is not going to mortgage his two houses on top of his third one just so that way he can give everybody healthcare. He's going to keep trying to get four more houses and five more houses.

He's not going to stop that. So I think that there is a practical way that doesn't blow up the budget, that doesn't turn us into eating babies, that doesn't kill 45 million people, that America can do healthcare smart and responsibly. Yeah, I think we need to break up the monopolies. I think it's ridiculous that United Healthcare is the health insurance provider and the person that you get your drugs from and is getting back stopped by pharmaceutical industry. Like they're all circle jerking just like with the AI thing.

They're just putting money all around each other and then they're charging the government 10x what they're actually doing for Marty Cuban had a good post and this is the last thing I get off my soap box. The federal government pays for army, military, um, all their healthcare, no problem, 100% coverage. They don't know how much they're paying in medical. They just write them a check every year. That is the problem. The problem that the health the health insurance companies just get a blank check from the United States government.

They say, "Yeah, we got all these people. It's going to be a trillion dollars." It's not itemized. It's not broken out. We don't have when you go to the hospital, they give you the bill after you got the service done. You don't know. Can I get this? Can I get a half of a x-ray and two band-aids? I don't need the band-aids at home. Like, I could go to the grocery store and tell you what I don't want and what I want, but the help but in the hospital it's just shut up, say yes, and then I'll give you the bill at the end.

It's crazy. Soap box done. So, uh I agree with almost everything that you said. Uh if you and I got together and said, "Okay, we're really going to solve this problem." Uh I think that we could solve it in a sensible fashion. So, let me lay out the things that I think we need to do, keep this nice and specific, and then uh maybe we do a a bill uh St. Just ticket and uh we get this finally finished. Um so, it's got to look like this.

Cuban is the the great example of how you can do this. Well, you've got a truly pedigreed entrepreneur who knows how to build a real business who can put his finger on the first principles problem. Uh so you've got your PBMs that are causing you massive issues. You've got to get rid of this. You've got to get transparency. Uh everybody should have to publish their pricing. There should be competition over pricing. Um we should be trying to innovate, drive costs down. Um you can't have the government guarantee everything.

It creates the same derangement as what we're seeing in um home loans as we see in college debt where it was nonsensical. Those people should never have been loaned to in the first place. Um you see that when you're just paying money, it's like that service probably shouldn't have existed. That hospital should be run in a better fashion. And when you have the market pressures on you, suddenly you have to innovate. you actually have to provide a service that people are thrilled with uh at a price that they think is reasonable.

And uh so going through and finding out where are all those beats that are allowing for things to be um charged rates that are just you should literally be in prison for charging somebody that rate. Um because it's one thing if you want to charge an absurd rate uh then people should know about it ahead of time. It should be published. it should be easy for everybody to compare so that people can go I don't want to go uh get my treatment there I want to go over here where they have better pricing better outcomes whatever and people have that level of transparency uh so a thousand% um also we have to be honest about the fact that a big part of the reason that these other countries have the health care that they have uh that they have the standard of care that they have is because of America's broken system.

So, I hate to say it, but the way that America works with the government, paying these absolutely exorbitant rates, is we end up funding all of the research and development. So, these companies go, "Okay, we're going to get the stupid uh fees for these drugs that's going to make up for all of the R&D, give us all of our profit, and then we'll let we'll sell it to the other countries at a better rate, and then they can go and get it at a reasonable cost." And once you break that, there's going to be real consequences to these other countries.

Um, and so you heard Trump talk about that at the beginning of his term. These guys are going to pay like America's not going to pay more than other people. If you just did that and you said this is going to be pricing parody, unfortunately, what you're not going to see is America's prices just drop and everybody stays low. What you're going to see is water rebalancing and it's going to find its way to this is what this costs us profit margin to be sure, but this is what it costs us.

And so now everybody's sharing in that. Also, Europe has been under the security umbrella of America for 80 years. And now that's ending. And those guys are having to spend real money on their defense. As those guys have to spend their whatever 3 to 5% of their GDP on defense, they are going to find themselves in a position where it's like, "Oh we can't let as many immigrants in as we thought we could." Look at the Nordic countries, all of whom now are having alert an allergic reaction to immigrants because they realize one, they're not integrating, and two, um, they are a drain on social services.

So, you're going to see that spread around. Now, everybody's going to have to be like, oh like paying for all this health care uh, is not as easy as we thought. And so if they don't do the Mark Cuban of it all and actually figure out how do we make this an innovative um industry that has market forces against it, they're never going to be able to solve that problem. And so this is where the government is going to have to get smarter than they have been historically.

Fingers crossed that will be with AI, but they're going to have to get smarter than they've been historically because without those market pressures, it will stagnate. So, they're counting on America to have these abused, weird, broken, must get rid of, but at least some exposure to the market um in order to draft off of that. So, that's where I'm like, this is a global problem more than it is just an American problem. But the key thing that you're bringing up that I think is critical for everybody to understand is we pay more per person and get worse results.

So it's not like you even need to pay more. You might end up as a government being able to pay less and get better results. So now we just have to focus on the weird ways that we leverage tax dollars to act like money in politics. It has the same distorting effect when the government just has an absolutely blank check to I can print as much money as I want to give every politician regardless of party affiliation to say, "Yep, we're going to keep giving you all those free things and nobody's going to touch entitlements and however big the deficit gets, we'll just keep writing that check." That has a distorting effect because nobody ever has to choose.

And in real life, I mean this is something that you talk about in film making. Like literally your first day of film school, you have visions in your head of creating a um blockbuster movie. And when I was teaching film, the first thing I would say to my students is make a film that has a scope that matches your black and white silent film. Do not make a film where I'm expecting the people to talk. put them in a situation where it's not weird that they're not saying anything because the second they're in a situation where I expect them to speak now all of a sudden I see your budget but if you let the constraint make you make a film that's like oh this film is even better because I've walked in with a set of constraints and I make this work the most famous example in film making is Jaws if you've seen the original Jaws they never show the shark that was not the intent the intent in the beginning was to show the shark but the mechanical shark kept breaking that constraint forced Steven Spielberg to go to sound uh the musician uh John Williams who did the score and say I need you to represent the shark so that I'm not going to show it but people will know that it's there that makes the film a thousand times better if we go into this right the most famous uh three notes in history so um two notes uh what ends up happening is if we did that to healthcare and we said okay we are going to get the best results that we have in terms of life expectancy see a number of people that are impacted negatively by healthcare debt.

It it is going to be like absolute top shelf. However, we are going to constrain it to what the budget is. Now, if you can get the profit incentive somehow some way in that can be based on results only, right? But somehow you incentivize people to bring that innovation into it which maybe it's the innovation is all at the level of uh equipment or whatever. So those guys can just run their equipment company and that's where people are getting wealthy. Great. But whatever you need some sort of market force where now you've got competition so that you get X-rays that get cheaper over time, your MRIs get cheaper over time.

That's what you need. Innovation is an economic force that drives prices down. But when you don't have the constraint, you don't have the competition, there is no impulse to make things cheaper over time. That is the exact thing that we have to combat. But the open checkbook is the thing that gets you the highest price per person with some of the worst results. 100%. Okay. So, back to Will Kane's list. I think we took care of universal healthcare. I think we took out reparations. Um, federal jobs guarantee.

He said that that's ridiculous. There is a magic trick that Democrats do with increased job growth when they're in term and a lot of it is a explosion in government jobs. job. Um, some of those government jobs are necessary, infrastructure, construction. Some of them are bureaucratic. We have to just keep a spade a spade. You're saying the government shouldn't have a hand in jobs at all. What is the No, no. What I'm saying is uh jobs guarantee. So, guarantee that everybody's going to get a job.

Correct. So, jobs are not a right. Housing is not a right. This is the that we had to scrape and fight and claw our way to get to the point where we had a stable society, where we could even have somebody have a house that they could pay for at a city registry, own it, and not have somebody come and take it from them. Like, that already is the answer to society over hundreds of thousands of years going, I don't like when people come in and raid my village, rape my wife, uh, take all my stuff.

Like, that sucks. And so I want to put something in place where I don't have to spend all my time training with a sword so I can kill somebody when they come in my village because people have lost sight of that's what humans do when there is just the law of the jungle. I have a quick caveat to that. Then couldn't you also say safety isn't a right? Well, if you want to go law of the jungle, safety really isn't a right. But if you want to say what ought the government provide, I would say safety is the thing that they should be doing.

They should be protecting private property. They should be guaranteeing bodily safety a thousand. Like those are one and two for me in terms of what their job is. Help me help me square that, Doug. Because they should protect the private property, but my access to private property isn't a right. No, your access to somebody else's private property isn't a right. And I can't What I'm saying is the government should not guarantee that you have something that you didn't earn. Got it. You may hate that, but does that at least make it clear what I'm saying?

Yes. Okay, perfect. So, um, you we agree when we put a government in place that there is going to be one thing that I'm going to let you get without you earning it, and that's your own physical safety. So, you don't have to go learn Brazilian jiu-jitsu and knife fighting, uh, or weapons disarming. You don't have to walk around in Kevlar. Uh, I'm going to have the monopoly on violence and I'm going to square that. That's literally the thing. We give up a whole lot of stuff so that we have that from each other, from outsiders that would come in and take over our country.

Okay. But everything else like you need to earn. And so when I hear people say that um safety or not safety, that property is a right or housing is a right, it's like no, it's not. If you're not doing the things you need to do to be able to earn and pay for that thing that requires the labor of others, then what are we talking about? That's where people get lost is these are things that you can't have unless somebody does things. So if you're saying everybody should have the right to um go out into international waters, pile up sand to the point and have their own country, okay, sure.

Like if we want to say that people can go off into international waters and do their thing, uh and if they're able to build and survive, yeah, nobody should be able to mess with them. Now, they're international waters, so they're going to have to build their own standing army. and you find yourself right back to building a country and being in this situation. But it is the only reason that people can't go out into the woods and live off the land is they have to buy that land.

So if you can I don't want to derail on that, but yes, if somebody has their own uh space that is outside of a country and not subject to its laws and jurisdictions, they should be able to do what they want. But otherwise, we're talking about people trying to take advantage of somebody else's labor. This is why I'm I rate with uh Tracy Rosenthal, I believe is her name, the DSA girl who's talking about abolishing the rent, wrote the book literally abolish rent. Uh she's expecting the labor of others to come to her for free.

It it's absolutely criminal. When you tax somebody, you're already taking a piece of somebody's labor. Um and so yeah, that gets very ugly very fast. Okay. So when somebody talks about guaranteeing um jobs, I go, "Okay, one, just on a moral place, that's ridiculous because you're now taxing other people to guarantee somebody else who may not be earning that job that they're going to get a job." It it it's absolutely crazymaking. Uh also, it destroys your viability on the international stage because you're not able to compete.

You've guaranteed people's jobs so they don't have to compete. They don't have to uplevel their skills in order to get a job. You need market forces for somebody to turn their potential into actual skills. And so this is the rich kid problem. If you aren't having to fight for something to get great, then you won't get great. And so now you have a nation of people who never got great. Uh also you can just point to Japan and say where does the problem end up? Japan the money is so cheap.

You have what are called zombie companies. Those zombie companies soak up uh otherwise talented people who have quite literally been promised a job for life. And because there was no inflation for so long, they could get away with that. So all these companies don't actually turn a meaningful enough profit to survive. And the second the cheap money disappears, you're going to see a rash of companies just fold. Uh but the good news is that will free that talent back up to go out into the workforce and build innovative companies.

So going back to one of the earlier things that I said, which is innovation is the very thing that drives quality up and takes cost down. And so if you don't have people competing for jobs, you won't have that innovation. If you don't have companies competing for talent, then you also won't get innovative companies that have to compete for the consumer. So getting the competition back into the marketplace is the very thing that we should be striving for. So that's why I reacted that way to guarantee jobs.

It's stupid. It's stupid on its face because it requires other people's labor for free. And it is stupid in terms of the knock-on effects because it will weaken that person. the companies that they work for and then the nation as a whole. I feel like you probably feel the same way about housing for all then housing is not a right. What if we like re- retrofitted prisons and it's the shittiest cube but everybody has a cot in a cylinder four cylinder wall. You can't guarantee it.

The reason you can't guarantee it is the person who knows no matter what I do I'm going to be able to get this house. They will abuse it. it will turn into a hole extremely fast because people are not held to account for I mean we just rounded to rent. You have to be able to pay rent but there's some qualifying thing that you must do in order to maintain that up to and including don't be a neighbor who makes way too much noise. Right? The cops will get called on you.

Uh don't if you're a renter don't damage the apartment so you can do inspections and if you see that they're doing something to damage the apartment then you can evict them at least in a sane state. So at all times people should having to be do having to do things to earn their spot. And so whenever you're talking about a scarce resource even if that scarce resource is just geography. So let's say that we guarantee that people had a house. People will want a house or an apartment complex in a certain area.

And so you will always come back to why does this person get this scarce thing and not the other person. And so you end up putting requirements in place. I think it is right. I think it is moral. I think it is just the Yeah, we must do that. These things should not be a right. Treating them as a right creates the rich kid problem. I don't Yeah, it's stupid. People are molly coddling. This is the feminization of everything where it's like, I just want to make sure everyone's taken care of.

You should instead want to make sure that everybody is turning their potential into actual skill set. Then we can talk about, hey, some people just don't have the IQ or a bad break befalls them, they're a quadripollegic, whatever. and that we want to make sure that we take care of those people. I love it. But you can't let like uh paranoid schizophrenics run around stabbing people. Can't do that. U copy that. Okay, let's jump over to a PSL founder. Um PSL is another what's uh something for social liberation.

Socialist. They're basically a uh version they're a DSA competitor would be a super easy well I can give you. So the origins of the uh PSL they were founded for socialism and liberation sir. Perfect. They were founded in June uh 18th 2004 uh as a split from the workers world party. They're headquartered in San Francisco and Washington DC. Um they are governed by a central committee. No surprise there. Organized in local branches. They their electoral footprint is very small but it's growing. Um, so right now I think they're what% so uh in the 2024 presidential ticket they took 167,000 uh votes almost 168,000.

So think of them like a smaller version of the DSA. Uh will they be part of a coalition with the DSA? Possibly. Um so anyway, as you sort of get deeper and deeper into the world of socialist uh the socialist movement in America, you're going to come across them. I feel like they're a tenth the size of the libertarian movement as for scale. Okay. Yeah. You think or that you'd look that up? It's what libertarians are 1 million. They pulled 1 million votes from the last election.

Okay. At 100,000. One of our comrades get into the US Congress. We're going to use it to disrupt the US Congress, to expose the capitalists, to expose the billionaires, and not try to reform the capitalist system, but to expose why it should be toppled and replaced by a rational, humane system called socialism. Let's say wild, rational, and humane. Jesus Christ. So, this guy is either so ignorant to history uh that he just cannot fathom that these things do not go well. um or he is evil and he knows exactly what happens and this is a naked bid for power.

But the reason that I'm gonna keep playing clips like this is I want people to see that you're going to get propagandized. Socialists are going to say that oh we're not for seizing means of production. Oh we're not for communism. Uh yes they are. This is a revolutionary movement. They now the great news is uh because they can feel so much energy on their side. They're going completely mask off and they're just saying the things. Uh so here is a guy that has no sense of national politics.

He's in his bubble and he thinks cool I can just say all the things that I actually believe and they are telling you precisely that they are looking for revolution. They are looking to topple the entire system and then they insert uh empty words and think that nobody's going to go hey walk me through exactly how you're going to pull this off because eventually this becomes policy. As this becomes policy what are you going to do? This is exactly we did the um the walkthrough of what it looked like in Berlin when that city got divided in half and you had the West Berlin and you had East Berlin and in West Berlin it was beholden to all the rules of America and Europe and then East Berlin was beholden to the Soviet Union.

And lo and behold, the Soviet Union realized, uh-oh, we've got to figure out a way to price things because you can't have this without price signal because otherwise it just becomes a bunch of people standing in line like peasants to get their bread handed to them. It became that anyway, but they were trying to avoid it. And so what ends up happening is you come up with some sort of money equivalent so that people can come in and buy things and then oh, things have to cost something.

And so you try to get to a centralized pricing structure. uh instead of just letting it be decentralized. So the experiment gets run in the same city with people of the same DNA, the same climate breathing the same air. And what ends up happening? People that do a bottom up version of free market capitalism, they end up having a thriving economy. You can get a car instantly in a day. You've got whatever I forget the it was like 3,000 SKs versus 12,000 SKs or something in the grocery store.

Uh things where the cost is going down over time. And then over on the Soviet side, it's a 10-year weight list for a new car. A 10-year weight list. That's not me making up a number. A 10-year weight list for a car that did not improve over 30 years. It was more expensive to buy a used car because at least that you didn't have to wait 10 years for it. So, when you talk about this humane system, it ends up being inhumane. Plus, you cannot understand a socialist unless you understand resentment.

These are people, again, this has been studied across cultures. They will vote for something that hurts the poor as long as it hurts the wealthy and they will not vote for something that helps the poor if it also helps the wealthy. So this is not a humane thing no matter how many times they try to say that it. Yeah, this stuff is just ridiculous. But I am grateful that they're just saying the thing now. As you can imagine, my spreadsheet of this is growing and growing and growing.

Tom has some spreadsheets for y'all, boy. Oh, I got some spreadsheets. You got some spreadsheets. Got some spreadsheets. It's going to be funny. How controversial do you want to get, Drew? I I got some spreadsheets brewing in the background. Woo, buddy. Um, yeah. I I'm I'm getting frustrated because when Trump first came in office, everybody wanted to yell and call him a Nazi. And I'm like, don't call him a Nazi. Call him corrupt. Call him a grifter. Call him a swindler. Call him a scammer, but don't call him a Nazi.

like he has things that he actually done on paper that are bad that we can prosecute him for that would other people go to jail for that other people would be politically uh exiled for and he somehow keep beating the case but don't call them a Nazi like that's a waste of an argument and I feel like with the Democratic party at first we kept saying no they're fine no they're not communist and then every day it seems like they're getting more beholden with those primary wins they're starting to say it with their chest so there is a certain se in the Democratic party that you guys do have to call out like you can't just act like oh the DSA is cool they're just helping us and they will try to take over this party.

So it is beholden to the Democrats to look around and say hey call a spade a spade. They actually are doing something that could hurt your party and America as a whole if they get unchanged. Now again if you want to talk about housing, you want to talk about education, you want to talk about um universal healthcare, those are things that have proven models other places. Yeah, cool. But when you start talking about revolution and communism, militias blow the system up, you don't understand the harm that that can bring, the second and third order consequences of that.

Yeah. Also, all you have to do is look at every time that this has been tried, where you have the revolutionary energy, what ends up going. So, uh, yeah, there are a litany of countries that you can look at. A fun one, Paul Pot, if you want to see what he did in Cambodia, that's a good time. Uh, the French Revolution obviously is the most famous of where this happens, but uh, yeah, none of them go well. None. Zero. Uh, okay. I feel like there's a lot of things.

I'm trying to like push everything together. Oh, good thing. Let's talk about good news. I want to talk about good news. I like good news. Yes, we need to change the uh repertoire of it. Um, Apple just broke ground to their or just flipped a switch to their advanced manufacturing center in Houston. That's a win. So, they are now manufacturing the Mac Mini back in America as opposed to in China what they were doing all these other years. This is part of Apple's $600 billion commitment to rebuilding in America.

Um, for context, they gave China 600 billion when they started making iPhones out there. So, they a little late, but I appreciate the Mac Mini and the jobs and Houston in the building and the tax breaks I'm sure Trump and them gave them. But, hey, maybe listen, we we've got to incentivize people to come back. You're not going to get here without carrot and stick. Uh so um listen, Trump's economic policy has been largely a disaster, but this at least is something it's showing that the pressure that he put on these corporations is actually making them come back.

Now, I'll be interested to see given the um Supreme Court ruling on tariffs if some uh companies try to slow roll this, but shout out to Apple, man, for actually opening a facility here. I know we've got some chips facilities coming online. We need to talk about You want to talk about good news. We also need to talk about these data centers, man. So, the working class, the middle class will never thrive unless they have jobs that they can go for um that are dynamic, that are well-paying jobs that give them not only financial means, but give them a sense of fulfillment because they're actually doing something, building something, being proud of their contribution to some of the most iconic products in the world.

Man, listen, I've worked in factories. I used to make paint, okay? I used to be inside of a vat with a giant brush cleaning them between uh runs. So, I know what it's like to be a factory worker. I know what it's like to see the product on the shelf and be like, "Yo, I actually made that." It is a very good feeling. And so for Americans hopefully in an increasing rate to be able to say listen I made that thing and we make a product that is you know going the world over and it is something that's pushing us forward it's innovative it's cool like that is a really good feeling and so getting out of this vision of America as like this just we're financialized we're all white collar like it ends up being a very ungrounded place to operate from because a huge huge portion of the world is extraordinarily gifted at making things at engineering.

We were just talking about this uh I hadn't heard about this till recently, but um so uh Elon is building and I think these slingshots qualify, but he's trying to build mass drivers and they had I'd always heard about it talked about on the moon. So we're going to build mass drivers on the moon that'll launch satellites out into space. you literally just use uh instead of rocket propulsion, you use um like physical force and you just throw it out into space. And now I hear that they're actually building these on Earth.

And so you have engineers that are essentially building a trebuche that can throw a satellite into outer space. That is crazy. But that's the power of engineering. That's the power of teaching kids to make things, to actually move electrons around, to figure out how the inner workings of something happen so that you can create a thing and put it out into the world. Now, this is obviously a very small version of this. But even just building video games, I went from like, "Oh, I'm just the CEO and I'm telling a bunch of other people what to do to actually getting into the guts of the game and building with Unreal Engine and doing that, having to understand the technical side has been incredible.

To see the things that you can do to create something that didn't exist before and it now does exist because you understand the engineering of a thing. That's incredible." And so having these factories here and giving people a chance to start as a line worker and work their way up to really getting inside the guts of the company. Now remember for anybody that doesn't know my background, I spent an inordinate amount of time actually in factories wearing a hairet making protein bars on a line. We had 300,000 square feet, tens of millions of dollars of equipment.

We were engineering our own equipment. I have spent time in the thick of this and I've watched people go from minimum wage line worker to working their way up to overseeing divisions. It's incredible. It's such a phenomenal journey for somebody that either didn't have the economic ability to go to college, didn't have the family reinforcing a trajectory in college, didn't want to go to college to be able to find a place to go and work and see that product on the shelves. It's a really big deal.

So seeing this come back to America is something that we should aggressively be celebrating and doing as much of as we can. And that goes out to every country, man. If you outsource all of your critical manufacturing to other countries, you are going to find yourself in a world of hurt. It might make your widgets cheaper in the short term, but it's going to make you beholden to somebody else in the long run. Um, going back to the data center story, this was based in Quincy, Washington, where a data center that was built there paid 57% of the property taxes.

They funded a 15 million aquatic center with a pool, water slides, and lazy river and 143,000 square foot sports complex. They created almost 1,000 jobs. The city admin called it a miracle. This is this is a good sign. But we do have to also talk about the data centers in like Texas that um Abbott had to pause because they asked for more demand than the entire state of Texas had. But that's for electricity. So I want to be very clear. We are being propagandized against data centers and more and more information is coming out in the pro data center camp for like the last three lives.

I've had something in the dock that was us uh us as America. Um having a data center success story. I want to start covering this more and more. Don't make me start another spreadsheet. But this is really exciting to see. So in terms of water usage, you're being propagandized. in terms of uh there being all this pollution, you're being propagandized. I haven't gone deep enough. I'm not going to be able to give you receipts yet. I will put that together, but looking at some of the people that are starting to speak up about this.

Like if you look at um I I think I have it in the dock. Uh Nick Carter did a tweet. He didn't give enough receipts, which is why I didn't um do uh a whole segment about it, but it it's very interesting. So Nick Carter, who I consider a very credible voice, um I'll let you guys make your own determination, but he says basically what I'm saying now, you guys are being propagandized. So he goes down, uh with all the things you're being told, data centers consume meaningful amounts of water.

They don't. Data centers are responsible for power prices increasing over the last decade. They aren't. Inflation and decarbonization in blue states is. Data centers impose costs on local communities. they generally enrich them uh and make life better, which is exactly what we're talking about here. And the Washington example is not the only example of a town who's like, "Holy hell, like we've got so much tax revenue being generated by this thing that we are in a much better financial situation than we were before." Uh data centers are being built uh for flock mass surveillance.

Flock accounts for generously 0.01% of the data center buildout. Data centers create noise and other pollution. They don't. Again, these are like you'd have to go deeper on these to find out if he's just uh spinning Uh so I owe you some receipts on this, but uh just to keep going, data centers are being built in residential areas. They aren't. Data centers get tax abatements that entirely eliminate their tax burden. Never the case. Abatements typically only cover a small fraction of the taxes. And data centers uh pay a halfozen different types of taxes that go to the state and city.

They are always net and meaningful taxpayers. So, uh, he goes on to say, "Virtually everything your conspiracy-minded friend believes about data centers is false. And it's also completely trivial to debunk using a simple Google or AI query uh, to start putting this all together, which is something I owe you guys cuz right now we're just sort of doing the blind thing. I have the water one if you want the water stat. I also have the residential area one if we want the res." So, go ahead and read those today.

Um, just so people don't feel like we're trying to hold on so people don't feel like we're trying to run from it. But this is one of those where propaganda going to propagandize. And so what you need to do and what I'll do when I go deeper on this is say, "Okay, here's the like pro, here's the negative. Here's where it actually connects out to reality." Because even what I just read, there's not enough information there. It's possible Nick is just propagandizing. I'm g carries credibility in my life because I've been following for a long time.

But it's like, yes, these things need to be connected dots. So, what we're about to give are more unconnected dots, but I don't want you guys to feel like I'm unwilling to have them said, so fire away. Uh, the source for the water one, Florida Water and Pollution Control Operators Association, uh, an official like organization, uh, says that a large facility can consume between 1 million to 5 million gallons of water per day, equivalent to the daily usage of a small town of 10,000 to 50,000 people.

And that is water that is not given back because uh 85% of it evaporates after cooling the system. Okay. So um they live in closed systems. So I know for a fact if they don't talk about if they are trying to imply that all of that is new fresh water every day that's a blatant lie uh because these systems recycle the water. Now how much of that evaporates and has to be drawn in new I don't know. Maybe the 85% number is real but I have a feeling it's not Florida.

Sorry, it's from u a most policy initiative uh written by Dr. Vikram Lacenpal. So that's two different sources. But what I'm saying is I've I have never once heard people talking about the water say that oh yeah that that's a one-time draw in that's spun around because these are closed systems. It's not like the water comes in gets polluted and then sent back out and they need fresh water every day. It certainly isn't that 100% of the water just evaporates off and they need new water every day.

Uh, I don't know the number well enough to know if 85% is a real number or not, but the fact that they don't talk about the fact that this is a closed system tells me that they have an agenda that they're trying to push rather than that they're trying to be honest. Now, in terms of water usage, this is where people have said, "Hold on. You guys were up in arms about data centers as if the real beef is water, but I don't hear you saying anything about golf courses." That tells you, given that golf courses use more water, this isn't about water usage.

This is about people hating AI. So that I think is where this all starts to get very complicated. If people really had paranoia over water usage, they would have been picketing outside of golf uh courses for years and they don't. So that's where it's like ah the stuff gets more complicated. No, no, cuz there's certain the way that data centers are being rolled out, they're being kind of imposed on us. Just like 10 years ago, all those Amazon warehouses were being imposed on local communities. When you say imposed on, given that they can vote to deny them, what do you mean by imposed?

A lot of those things happen before committees actually get approved. For example, the Georgia family story. Um, Georgia Power is using imminent domain to clear a pathway for a new line transmission line they have to build for data centers. So, technically a data center isn't being built where their house is, but they need to clear that path out to do a transmission line. So, they're forcing people out and they're giving, hey, we're going to offer you money to move. You have like we're offering you money.

but you're still forcing me to move in order for a data center to exist on that. I get why people would have beef with imminent domain. That's always going to be a thing that people have beef with. Then that becomes a question of okay, is this and I'm saying that to say people aren't using imminent domain to build golf courses for sure. Uh but there's a very good reason why that would be true and there's a very good reason why I would say that AI data centers are the kind of thing that if like that's what we have to do to get something in place that there's reasonable um moments where that might be true.

Now I haven't looked into this so this might be one where I'm like oh this is grotesque. They never should have done it. So I I don't want to say that I'm going to bat for this blindly. I would need to know more information. But let's talk about one. We have to start separating out um okay what what's the real water usage? Let's not ourselves. Uh we have to answer the question about why did we not have beef with water usage on golf courses because you went from okay uh but they're not using imminent domain for golf courses.

Yes, but I was bringing up golf courses not for imminent domain but for water use. So I'm just saying people aren't actually triggered by water use. are triggered by the AI data center and now they are doing mental gymnastics to figure out why they don't like it. I would say they don't like AI data centers because they are worried that AI is going to take their job, their reason for existing and that anxiety is warranted and shouldn't be swept under the rug and we should definitely be talking about it.

I don't think enough people understand Jevon's paradox which is something I didn't give nearly enough credit to when I first started talking about AI. Uh so the odds of it actually taking jobs long term right now does not seem to be true. It does seem like right now anyway because super intelligence is a different thing. But that what's actually going to happen in the medium-term with AI is that as token prices come down that then AI gets put into more and more and more things which creates more and more and more demand which is likely to dramatically increase uh productivity which is likely to increase GDP which is likely to bring more money into the system which is likely to enrich people uh in the medium term as we get into super super intelligence and it's better than us at everything that's a totally different thing and we have to separate these two But I think anxiety around AI is driving people to hate data centers versus the reality of data centers.

So the people that are closest to it, the people that actually put one in their town are saying this has been that guy's quote a miracle. So it's like we need to understand in the final analysis I may be too far on the yay these are great and I may realize nope I I got high on my enthusiasm for AI. I went too far and the reality is a little more mixed. I'm that is almost certainly true. So, but what I'm trying to sort of pull the conversation a little bit closer to reality by saying, listen, a lot of the stuff that's being put out there is uh people are are cherry-picking small parts of something.

They're not giving you the full picture and they're certainly not celebrating the people who are like, "Yo, this has been transformative for our community. Oh, and by the way, you're going to get hit with people that are saying a job should be a right." And I'm like, "Okay, well, you've got to have jobs." So it's like here's the thing that's bringing enormous number of jobs to these communities. These communities are telling you this is transforming our community from uh we now have a tax base and isn't this extraordinary and we're still trying to say data center is bad.

And I haven't even given the most important thing as to like why would we want imminent domain? This is intelligence itself. You are in an arms race with China. You absolutely cannot lose. You do not want first of all you don't want a single country to to be able to monopolize intelligence. So it is a very good thing that first of all China is using an open source model. I'd like to see more of that here in the US. So it's just like everybody's going to have access to this that no one's going to be able to turn intelligence itself into a choke point.

We definitely don't want that. So when I see someone going we're going to have to deploy imminent domain here. I'm like okay I don't know the particulars. So maybe this would be a bad example and maybe there's a better way to handle it. But I get why it is that important. It's important enough that imminent domain could be in the conversation and I wouldn't immediately go that's crazy. If you tell me you're doing imminent domain for a golf course to your point, I'd be like what the Like there's no universe in which like what there there's not a thing that you could tell me.

I already understand forest bathing. So you could tell me electron transfer people actually live longer. I'd still be like get the out of here. Like there are still forests that people can drive 45 minutes to get to if they want whatever. Like there there's no way that you're bumping somebody out of their house because you want a golf course so that they can do electron transfer. No hard pass. But the importance of the race for intelligence. Yes, that I could see. That's I don't know. That's just tricky.

We were just talking about the right to private property and the the right to have safety and be protected unless it's in natural interest and get up. And I just feel like that's wild to me. Um I mean I understand it. I guess uh I feel like I feel cuz honestly I feel like you're you're screwed. You're at the bottom of that totem pole and I know flows downhill and sometimes you just got to eat but that's still like there there's no pat on the back.

Like it should be some type of like all right well if you got to kick these people out you got to give them asking price and a million dollars and somebody has to get the tax. The AI data center you guys got it. Like somebody has to get that tax. But I feel like at the bottom of this it's going to be your house is worth 100. I'll give you 120. That's my offer. and now I have to move, do all these things when the market's at a rate.

What if the house is paid off? In this story, it was passed down from her mom. So, she went from having no mortgage, now I have to go get another mortgage because housing prices are 10x of what they've been when her mom bought the So, it's like it doesn't it's not like it's putting them in a better position. You're just displacing this home for the betterment. Yeah. Of Great. Let's do your policy. There there are many policies that you put forward, Drew, that I'm perfectly ready to sign off on.

So, you're going to bump somebody, give them fair price, plus the pain in the ass bonus. And so, uh, you can dry your tears with $100 bills. Cool. Got it. Love it. I just don't get cuz I've been following all this data center stuff since before it blew up. If they are that adamant about we need these data centers, which I don't think we even need this many, like we need some, sure, maybe, but we don't need this many. Why are we putting them near suburbs?

Why are we putting them near homes? like that we have an open desert. Like figure out how to put it in a desert, you know? Um and maybe that's kind of what you're saying. No. Yeah. With Elon in the Texas, you could build as the the moon on in the middle of nowhere, Texas. Fine. Cool. I have no problem with Elon building the biggest structure in human history. But when it's like, sorry, bro, I need to move you out to route this power line. It's like that's where I don't have enough information.

You guys don't sound crazy to me at all. Find good places for these. I don't know that I can go to bat for imminent domain in this case. All I'm saying is data centers are that kind of important or AI is that kind of important. So, um if there is a better way to build them, I'm all for it. I'd much rather them be built uh somewhere farther away. I just don't know if there's like no no, we have to have access to water supply or we have to have access to the power grid or there's going to be some reason.

I would imagine I doubt they're doing it just for shits and giggles, but if they are, then I'm with you. That's dumb. Well, and I watched a documentary early on about one of Zuckerberg's data centers for meta. And I don't know because this was like two years ago now, I think. Um, so, you know, conditions in this town could have improved. They could have, you know, had regulations and stuff, but this family who lived, I think, a couple miles away from the data center that was built, their water pressure basically nothing.

Their water was brown sometimes. Their electricity bills were higher than normal. Their water bills were higher than normal. It's just like like what we've kind of been saying this whole time is it's like there just needs to be a balance to this stuff. We're not doing that balance and we're rushing too hard. Like I get that this is an important technology and these things are things we should put money into, but I just think we're rushing it. It's the Silicon Valley model of we're going to do it, break it, and fix it later.

And the things that they're breaking impact people's day-to-day lives. It's one thing if my Twitter doesn't load, okay, cool. I I can my water isn't brown. But when you're breaking something that makes my water brown for even for an hour, a couple days, whatever like that, it's like I have to bathe with this, I have to eat with this, I have to shower with this. Like there are certain infrastructure things and like America is due for infrastructure like roll out. Flint's water still brown. So to me, it's one of those things where we just need to align incentives.

America, we have shitty infrastructure. Data centers, you need infrastructure. Hm. I'll help you get this data center in these different infrastructure places, but you can put it in the by the Flint water supply, but you got to fix Flint's water supply. Now, the data center problems fixed. Flint's infrastructure is fixed. Everybody gets water. Everybody gets what they need. Arizona, the Colorado River is at zero. We need you to route a new line. Okay, ADA center, you got to build a dissalination plant. Bring some water in from the ocean.

You have all the fresh water you need. And now you can refill the Colorado River. like there should be some type of I'm building something but in the process of building I'm not leaving devastation to get to the build. It's like I'm building a nice pave road to my factory but at least now the cut town has a pave road I do. So you guys uh you guys sound imminently logical. I don't know that those would be the exact solutions, but I think at this point what we have to do is or what I have to do uh is dive deeper into what is a reality because if you're taking somebody's clean water and making it flint friendly uh hard pass.

Um so that I agree with all of that. If you're imminent domaining like an I agree. We don't want to do that. Um so yeah, I just have to do more research to figure out what's really going on. All right, we talked about it in the beginning. This video has gone super viral. It's a Houston teacher talking about the state of his high school kids. These kids are leaving high school and going to college and they couldn't fill in four words. Four words. I literally broke down in the middle of class.

This is only day two. And I have seniors who simply cannot read and seniors who cannot write. They can reason. They have the ability to defend their reasoning if it's talking to their homeboy, but applying that to a written text, two paragraphs, and they couldn't do it. our young black men, our young brown men, our young black girls, and our young proud girls. These kids are leaving. The emotion is so raw. Uh this is this is a crime against our kids. uh the fact that we have allowed them to get to that stage without forcing them to uh prove that they know how to read and write in order to progress is crazy.

Uh this goes back to this this is an approach where uh feminism is going unchecked. We are not not feminism the movement like femininity that the impulse to care for to not want to see somebody's feelings hurt. Um we are allowing that to put us in a position where we don't hold people's feet to the fire to make sure that they can actually do the thing. Uh and that's crazy. When I was a kid you just got held back. Like if you couldn't do the thing they held you back.

Uh and we don't do that anymore. We are clearly not applying standards. Getting rid of gifted programs and things like that is is having an absolute um negative effect on society at large. The fact that you can have senior seniors, man, you're 17 or 18 years old not knowing how to read and write is is so horrifying because even if um we were prepared to let all of America uh internally get dumb and we're just like, well, everybody around us, we're all the same. It doesn't matter.

You'll get run over on the international stage. If you want to create a permanent underclass, undereducate people. that that is the fastest way to guarantee that you're stuck forever. Uh applied knowledge is power. So know people say they'll round it to knowledge is power. Sure, you have to use it. But um knowing something, even having a framework for something is incredibly powerful. And what is one of the most um tried and true long-standing ways to ingest information is reading. Um it it is terrifying to me to think that these guys literally can't read and write.

And I understand the argument is going to be something along the lines of, uh, well, it's just like cursive. Like, who reads and writes anymore? You're just going to be able to talk to your AI. You're walling yourself off from a method of communication that is, it's terrifying. It's like, imagine your entire life in the country that you grew up in is like being in a foreign country where you can't read any of the signage. That is crazy. That's crazy, man. And you don't want AI to get to the point where you can't even read basic things.

Uh, and you need the AI to tell you, dude, imagine the world just straight going offline if they lost internet connection. That That's wild. Meaning the humans go offline because the AI is down for a second. That's crazy. Or not having the ability to check against something because, well, I I don't even know how to go around my AI and get something for myself. That's crazy. that that is so dangerous at a societal level. Um, oh, you first. No, no, no. I was just going to say because this is Houston, right?

Yes, this was Houston. Yeah. To give some context, Houston is one of the biggest school districts in Texas and historically has always had funding issues across the board just because of how many schools there are. Um, and so I was like telling Chatters and Brent, if you're still in here, Brent Sullivan, uh, I know your wife is a teacher in Texas as well, so feel free to jump in. Um, but I I do know if it makes people feel better. A lot of times in Texas, it's more a funding issue than a statewide education like curriculum issue because like there was a chatter was like, "Oh, kids don't even read to kill a mockingb bird anymore." And it's like, "No, I read that in high school." Um, and so I think the thing that needs to be addressed, at least again, speaking from Texas, is funding of schools, like paying teachers better and that kind of thing.

We we spend more per student than basically anywhere else. I I don't think it's a funding problem. This is a George W. Bush problem. This is a no child left behind problem. Kids need to fail. Kids need to fail and they need to start the grade over again. Correct. We have established a pipeline. They did the it was the in the 90s they did a school to prison pipeline and they needed to get the prisons filled. Now they did a school to higher education pipeline to get the colleges filled.

It's the same type of debt systems. We need the kids to fail. We need them to stay in elementary if they can't read. And with COVID, half of these kids can't read. They're dumb. I'm sorry. I have a daughter. Her friends are dumb. Like there's a lot of dumb kids. And these people are going to turn into our citizens. They're going to turn into our future chatters. They're going to they're going to be in our lives one way or another. That's crazy. Damn. They're going to be in our lives and hot one way or another.

We need super chat's going to be light today. But there are a lot of dumb kids in classes. I agree. Cuz I had kids like that in my Okay, but play play the next one because we have another one. Mhm. I have spent more time on the subject of education. I wanted to be an early childhood educator when I went to college. And I took a system that William Bennett called the single worst in America to where Shawn R and Stanford called it the single best of the top 100.

And it took everything of my soul to get it there. Yeah. We need to take the high school years, let alone the standards and accountability in the elementary years, and revamp them as in the three things I talked about that fit together. B average community college is free. 50% which I would set as a goal is 100 have to graduate with college credit under their belt. And third, nobody gets a diploma that doesn't tell us what they're doing next. College, community college, branch of the armed forces certification school.

I'm not just about college. You're 500 to 600,000 electricians short just for data centers. Broadband 150,000. You can't build submarines because we don't have pipe fitters and plumbers. Okay. So I'm You want to be a pipe fitter? Great. You want to be a physician? Great. You want to be a physical therapist? Great. Have an education system that actually reflects the economy and skills that we need. True. Very good advice. But now there's a another one. Uh so this is line 57. You've got teacher of the year resigns because students can't read and write.

This is I don't think this is in Texas. Does it say where this is at? Uh Metropolitan Government of Nashville. Nashville. I was teacher of the year. of Texas middle school in Antioch um this past year and blue ribbon teacher of the year for the district. Um what you have in front of you right now um is my resignation letter. I resigned in May. Um you can read those three pages at your leisure. Um but I've heard a lot of positive data in this meeting and I just wanted to give you some facts from my firsthand experience.

Um, so first district leaders asked me to fabricate grades for a parent who sat in the office for hours until her daughter's failing grades were changed. It creates false entitlement. What happens when these kids lie, cheat, and cry their way through school and end up as future doctors, police, or politicians? When will you protect the future of our society? Second, that same parent has harassed over 30 teachers. Teachers have filed police reports and entire school districts have had um or entire schools have had restraining orders against her.

Yet she's still allowed on school property showing up to field trips her child didn't earn and filming other students. When will you stop prioritizing parents feelings over the safety of our teachers and our students? I heard you also mention that we're closing gaps in teacher vacancies. I want the public to know that many of those are filled with uncertified teachers. My third point, HR withheld money from my employee paycheck as well as many others. They took 500 from me specifically and it put me behind on my mortgage and then they sent out an email saying that they had to do it to pay other employees.

When will you pay teachers what they are owed? My fourth point, the news reports that behavioral issues are down. They are not. We are simply banned from reporting them, forcing us to keep disruptive students in the classroom. Statistics are being skewed to protect the district, not our children. Our children cannot read and write. They cannot do basic math. And we spend 40 hours a week with these students so we know them better than the district and those fake numbers. Please stop undermining our professional decision decisions because honestly it's breaking the efficiency and it's giving HOA quality.

So Dr. Battle, my question to you. Thank you. No, she's not she's not here to hear that. Uh yeah. So I have a feeling that this is the tip of a very large iceberg. So we have a problem in our schools and we fail to educate our youth at our peril. To educate them, as Drew said, you have to let them fail. If they're not doing well, we need to know. You got to put these kids through their paces, find out what they know how to do, what they don't know how to do, uh and help them get better.

But you sure as hell don't just move them along, move them along because you don't want anybody to feel bad or you're trying to uh get another um person in debt to go to college. Like, this is just crazy. And you're seeing all kinds of university professors saying like, I've got kids in my math program. They don't know how to do math. And that is just it's absurd. They're going to become the next generation of workers. And if they are not people that are on a path to becoming extraordinary, then we as a nation will decline further and further.

It's crazy. Don't do it. Don't do it to yourselves, man. It's just absolute madness. There are some different implementations that people said. Um when we were talking with Steve King, he was big on we need to take money out of education systems. We need to stop this like pay for education. Um one side of that is school is part of government curriculum. um to Ryan's point to ensure um proper funding. But what they do is they do more standardized tests that for lack of a better term are almost filters.

Asian models do something similar. So if you go to everybody goes to the same elementary school then I think at third or fourth grade you take one test. That one test is like a fork in the road. You go to option B. You can be a engineer or something with your hands, a plumber, something like that. If you fail the next test in middle school, then you could be like a retail worker. like every failure kind of minimizes your career aspects. On the other side, if you excel on this one, you get more opportunity, more open doors for you like that.

Some people might call that harsh, some people might call that honest. The European model, everybody kind of goes through 1 through 12 and then you have like your university. I think there's a university exam and then there's another exam to then get like there's basically like a graduate high school exam and then like the university whatever you have to do like in the UK I know it well because of Lisa. So the UK has like through your junior year is basically the same as what we would expect and then you have something called six form which is two years of almost like preol where you're still in the same building but you're now separated out.

You're pursuing like a specific subset of things. So you're it's not a degree but that's like what did you study in six form? It was like okay I studied these two things or whatever. Then you go to university. Uh, and so you do have to qualify for the thing that you want to study in six form. Yeah. I was just gonna say, is there a certain one of those models you think the US should adopt or you just like put the whole thing is rice, we just need to do something?

Well, so my thing is I came up in um public education. So to me there was I mean this is now almost 40 years ago but 40 years ago things were working well and I did feel a tremendous sense of relief that I was able to go all the way through college and I wasn't constantly getting branched out. Um so to give you an idea my trajectory was in middle school I was denied access to the advanced programs. In high school I was allowed back in.

So had I like in middle school taken a permanent off-ramp that would have been pretty distressing. And so um I and this is a bias because of how I came up. What I like is that there's a skill check at the end of every year. If you're actually not able to do the things then the teacher is expected to hold you back. I had kids in my own grade get held back. They were not kids that would surprise you. It was like yeah that got held back because he's uh he's a disciplinary problem.

He does not pay attention. He doesn't do his homework. And I get it. A lot of that might be because of bad things going on at home, but at the end of the day, the consequence is he's not ready to move on and therefore does not get to move on. Uh and so there was tremendous amount of pressure from the school uh from my parents to both do well in the class. Uh parents would go in and meet with the teachers and it was not my parents telling them how it's going to be.

It was them telling them this is what your kid is really like. And then my parents would come home and be like, "Yo, you got to tighten this up, that up, whatever. You got to get better at this." And then it was, okay, I had to do that homework and figure that stuff out. And that I think is is the most straightforward way to handle this. Now, going all the way to something that's more of a Chinese model. I never think America should try to ape China.

I think we should try to out America China. The one thing they can't like compete with is our freedoms. So, it's like how do we leverage those freedoms? Like, hey, you're free to fail. That's going to have consequences. But if you succeed, like you're going to get to make the choices that you want in life. The problem is we've got the government coming in and guaranteeing everything. I think the fact that I studied film at college that should have been my choice, but that debt was mine to deal with and the government didn't guarantee it.

So, it's like if I graduate and I'm under the weight of the debt, I've got to deal with that debt. Cool. That's on me. It ended up being a manageable amount of debt, thankfully, because I was sort of right on the cusp where the debt was starting to accelerate, but it wasn't um the completely out-of pocket debt. I had to work through college. So, uh, ended up having, they were all part-time jobs, but I had three different part-time jobs that I was constantly moving back and forth between with my studies and like that kind of thing where it's like, yeah, this is on me and I'm going to carry this responsibility.

That's as it should be, but students should be able to discharge debt so that banks have the pressures on them to only back things that are going to help people. So, if I want to take a degree that isn't going to um serve me, but nobody is either helping me get that debt or um not letting me declare bankruptcy if I'm, you know, I go out and it ended up being something stupid, so I'm held accountable, the banks are held accountable, now it's just like, yeah, you've got the freedom to choose what you want, but if you choose poorly, it's going to be a problem.

Did you see the um AOC released her like disclosure, financial disclosure, and she still has student loan debt? Yeah. Uh, what was your initial reaction to this? I need to know how much she's paying in interest on that debt because it is entirely possible that this is incredibly stupid and that the thing that she could do to make the most money would just be pay off the debt. Now, I understand leaving some in cash for some bad thing happening. Um, but the 50k in savings with 50k in debt, I would be very surprised if her savings account is paying her more than the interest on the debt.

I could be wrong. And if the savings is paying her more than the interest on the debt, great. Then she's winning. Keep doing it all day. Um, I looked at that and thought, okay, well, if this is real, and I think it's better to give somebody the benefit of the doubt. If this is real, she's obviously not going off and trading and doing all of that and, you know, taking advantage of some of the things that make me look at some of these politicians as being completely grotesque.

Um, it's also possible that this isn't quite accurate and this is the for show, meaning I'm getting paid and compensated in other ways and this is how I show uh my um my DSA friends that I'm one of you. Uh but uh that feel that's too cynical of a read for me. So, if I were going to advise her, I would say, "Listen, you need to start investing in America as somebody who's likely to be the Democrat nominee uh for president. Don't put yourself in the situation where you're making the same stupid statement that Tim Walls made where it's like, I don't invest in the stock market." Like, what?

That that's idiotic. So, I would love to see her start to get her money up in a way that everybody could be proud of and look at and go, I want to emulate that nice slow steady accumulation of a broad basket. Uh, if she wants to, you know, make it broad basket America because she's she wants to run for president. I love it, man. That'd be amazing. And if she showed me like, hey, this is somebody who's accumulating money the right way cuz she's I forget in in certainly the top 10% of earners in America.

Uh, so seeing her start saving in a way where when we look at the disclosures, it's like every year she's like up as we would expect somebody to be up based on the stock market, that'd be dope. Um, so this one to me without without proof that this isn't exactly what it looks like, I just go to, okay, hey, listen, you got a lot socked away in savings. I'm proud of you. That's impressive. Not everybody can do it. You've got debt. I want to know what the interest is because you could be making a very big mistake with that.

Pay the debt down. keep saving. You know what I mean? So, it's like I don't immediately jump to cynical story. I hate her politics, but I'm not gonna let that make me take a cynical read on her. I mean, hey, would you prefer this or the Nancy Pelosi? I'd prefer this. This is somebody who's not um abusing her power doing insider trading, which it might as well be called that. But, do I want to see her take advantage of the stock market? Absolutely. you're creating if you're investing in uh American companies, you're creating a capital vehicle for those companies and you're getting um money on the back of it.

It it is the way the US system is set up right now. And so seeing somebody expose themselves to the inflation but not expose themselves to the like inflation protection is crazy. Yeah. Um yeah. So cool. Uh let's jump in supers. First up, World Rally family says, "Happy Friday. Just wanted to say I appreciate the ongoing discussions. We need to keep the communication channels open. You guys rock. Have a great weekend, everyone. Thank you, man. Right back at you. Tickle Fights says, "Socialists are flat-earthers of economics and the Scandinavian countries are their ice wall." Yo yo, I love that.

That's good. Truth Devin says, "A white woman got six years for killing her black boyfriend. Bias involved. Government grows too big when pro uh protection creates unequal treatment. I want small government. Judge violence equally free of race and gender politics." Meaning that six years is way too short, right, for murder. Yeah. Yeah. Just making sure that he's saying that's too short. That's what I read it as. Yeah. Okay. Because damn, like these days people get off for crazy Uh so yeah, six years for murder is crazy.

Crazy. Now I don't know any of the facts in the case at all. So I have no idea uh if there were extenduating circumstances, but I don't know how the hell you get a murder charge in only six years. That's insane. Truth Devon again, thank you for the two super chats. Hey, appreciate you. super Devin says, "Why do you think care more about weak people being taken Oh, why do you think we why do you think care more about weak people being taken care of than personal responsibility?

Maybe I should be a billionaire and be the George Soros of the libertarian ideology. A lot of people don't want really smart government." Um, yeah. Why? Well, so if I'm understanding your question, and why do we care more about making sure that everybody's taken care of? Um it is when a society does as well for as long as we have then you unfortunately the um feminine ideal to protect and coddle ends up not getting checked because it's hard to tell people that they need to be disciplined and work hard and carry their own weight is going so well.

So that I think is um one of the things that plagues us the most right now is people are unable to make the argument for why it's good for the individual. Forget the collective. It's good for the individual to be disciplined and be in control of their mind and be able to do hard things and to be endlessly focused on turning their potential into actual skill set to want to carry your burden to look at life as like I want to make my shoulders as strong as I can.

People don't know how to make that argument. And so because they don't know how to make that argument when somebody comes in with a very feminine approach and it's like no but life can be so hard and it's like yeah it all goes to hell in a hand basket just like if you only do the pick yourself up by your bootstraps routine that will go toxic. So you really do need those both in um tension. But in what I am learning, life is trying to teach me that in prosperity everybody softens and that's a a condemnation uh of the human spirit, but certainly explains why history loops.

Blake Bullion says, "If Doge was able to do what it was created to do, we'd have a much better chance of getting what we deserve out of our tax dollars. It wouldn't get rid of waste, fraud, and abuse completely. It would, however, have mitigated it." Yeah, I agree. I I am up in arms about every single person that was up in arms about Doge. So Doge is the right idea no matter what. You can hate that person as much as you want. Um looking for ways to cut fraud, waste, and abuse.

It should be just completely bipartisan. Everybody should be for it. We should all be fish about wanting to find out where the money is actually going. Um so yeah, shame on anybody that isn't for that. Uh, and Daniel Porter says, "Any advice for someone trying to reinvent themselves at 33? Uh, did IT and tech repair for a while after getting a useless music degree? I'm starting a degree in robotics this week, self-funded, but worry about my age." Uh, don't worry about your age at all. First of all, you're probably going to live 33 right now.

You're probably going to live to 150. Uh, so boy oh boy, do you have a lot more time time ahead of you than you have behind you. um as somebody who I really believe that my intellectual life for sure has gotten far more interesting as I've gotten older uh and that is because you end up accumulating so much knowledge and if you've been wise in the knowledge that you've accumulated it has outlets that you can deploy them against. Um so I've never been more excited more interested in creating and building um than I am now.

So yeah I man may that be true for you too. So the thing that I would say as you look forward into your future is just to think about one simple fact. Um you can turn your potential into skill set to the point where people can't stop you from doing what you want to do. So you really can get so good that you can't be stopped. It's one of the great intoxicants of life is to realize the world may be working against you but it doesn't matter because you can get so good at something and it just comes down to whether you put the time and energy into actually building that skill set up or not.

Now, I would highly advise you to pick a lane that is likely to stack so that the more time and energy you put into that thing, um, the more likely it is to be useful deep into the future. So, the fact that you're looking at engineering already has me very excited because the ability to understand things from first principles is one of the single most important things you could do in terms of it is broadly leverable. the things you will learn in robotics, even if that goes away and the AI just does all the assembly.

The way that you have to think about cause and effect, you know, this connects to that, um, I think will serve you no matter what you do. So now it's just about making sure that you remain optimistic about the nature of humans, uh, that you can teach an old dog new tricks. It's just most people stop being interested. They let scar tissue break them mentally and emotionally. If you can avoid that, you're going to be just fine. Um, getting older, there's a point at which your brain starts diminishing.

That is always going to suck. But getting older does not have to mean a loss of enthusiasm, uh, a loss of, uh, power. I mean, you're still so from where I'm sitting, you're so young. But when I even look at just where I'm at now, it's I still have the same energy, the same enthusiasm, the same desire to build. The thing that I have to fight against is scar tissue. So, that's where you've got to be very careful because things will happen to you in your life, you're going to get beat down, you're going to fail at something, going to get um the hard knocks of life.

And if you let that scar tissue build up and make you less excited, you you will lack psychological energy because energy comes in two forms. Cellular, so just are you getting sleep? Is your diet right? Are you exercising? That'll give you the cellular energy you need to do things. But there's psychological energy which is profound and that comes from being enthusiastic, having a belief system that propels you forward uh that makes you believe in yourself and your ability to change and get better. Um and all of that's going to be just as necessary as the cellular energy.

Blake Bullan says, "Did Ryan/Team ever figure out if Nick Fuentes ever called himself a Nazi in a serious way?" If you watch the entire clip, he doesn't actually mean he is a Nazi. Not a Nick Fuentes fan, but this thing happens way too often. I hashed it out with the person in the comments. If anyone's curious, shameless plug, go follow the Discord, which is now linked in the comments. And was it that he does or does not? So, the clip I was thinking of, he called himself, he said, "I'm like Hitler and I want an Aryan win." So, it was actually worse than what I thought.

So, he's not a Nazi, he's a Hitler. No. And then in an interview, he also Oh, yeah. He's a Hitler. Uh, he also said in an interview, "I'm okay with the label white supremacist." So, I feel like I'm validated in what I said last time is all. Yeah. I I think both sides can take a win in that cuz damn if people are saying that well he didn't say he's a Nazi he just said a whole host of other that's absolutely horrifying. Yeah. Uh and admittedly it was when he was younger so like there is that like look if somebody I'm all for people saying um listen I used to believe this.

I can explain why. I now believe this and I can explain why. I'm all for that. Humans are going to change for sure for sure. And I have no beef just immediately moving on. Um, my problem is when somebody claims they've changed but they can't explain why, that's when I feel like I'm being bamboozled. So, um, but yeah, if he's got updated logic, yeah, go join the Discord. You can see all the clips I posted. Let's do it. Oh, by the way, when you join the Discord, which I really hope you do.

Uh, we are we're about to go into our third hour. These are Reacts videos that we go through that fit into the things that we talk about. We just go a lot deeper on them. Um, I would love it if you guys uh find videos that uh you want to see me react to, that would be huge because the amount of time it takes to find the video takes away from the amount of research that I can do on the things that I want to discuss with the video.

Um, so the more things you guys put forward, they need to be in our buckets. It needs to be something that we would talk about um during the live and uh if it's outside of that odds odds are we aren't going to cover it. One thing we have found is you guys don't like philosophy. It needs to be something that's urgent. So it's like, hey, this thing is happening um right now and it matters in this way. So we're we're about to do one right now on AI.

So there's a lot of people claiming that AI is on its last legs. You guys have heard me talk about uh the risk that's being pushed out. Um so we're going to do a video or we're going to react to a video where he's making a lot of claims about AI. Some of them are cultural, which I find is one of the more interesting things about this video. It's a blend of basically debt risk and the fact that people are responding negatively to AI as a thing and they're starting to confuse that for this being bigger risk um than it might actually be.

So, uh finding videos like that, you know, it's something that we would normally talk about. Dropping them into the Discord would be absolutely transformational. Okay, with that, do we have more two more super chats? Do we want to wait? Bring them. Okay. No, no. If we've got them, let's let's do them. Work hard, hold Bitcoin says, "I give like 95% of the credit, my financial literacy to bumping in uh is to bumping into you guys, Andrew Jek and Robert Breedlove during co my parents and friends have a very small idea what's going on.

I try and teach them though. Thanks. Also, can you guys buy a case of beer with my super chat and crack a couple cold ones on Friday together?" Wow. I would love nothing more to get drunk with. Okay, so uh Andrew Press almost can can almost certainly hear my voice. Um, given that that's the request, let's go get these boys some beers. Now, I'll be honest. I don't drink, so you won't get me on that. Told you. Uh, but by all means, uh, let's get these boys a beer.

Andrew Press, let's get Tom drunk. Tom drunk. Sorry. Can I get too high? Yeah. Extend. Uh, you you'd have an easier time getting me drunk because the only time I smoke weed is for purposes of sex. So, Drew is not going to be in the room when we're going down that path. Hit. Drew, get out. Real real. Yeah. If Drew ever sees me rolling a joint, you got to be like, "I got to go. I got to go." We need a Diddy sound effect. We need a Diddy.

Where's the Or like the Undertaker sound effect. Uh, last super chat. Uh, once again, Truth Devin, thank you for the third super chat today. I think that comes out to like 60some. It's appreciate you. And a young dude, too. He's one that I'm 6'5 and I'm 24 years old and my life is perfect. And my bad. I'm hating on truth again. Truth Evans says, "Tom, be honest. What if I worked hard to become a billionaire, create propaganda, be good with politicians and lobby? Do you think I can create a society of personal responsibility, real small government, and libertarian ideology?" You can uh move the pendulum in that direction.

So if you look at history to see like what way can we swing um there's certainly been times in history where we have been far more on the personal responsibility side but because politics is downstream of culture it's really a question of how much can you sway culture um culture tends to move based on larger forces. So it's probably pretty tough to like single-handedly move it that way. But you could make it cool. You could certainly use your influence to um I think of it as being a drop in the bucket.

So, I'm just trying to be a drop in the bucket. There's going to be some small in the grand scheme of things number of people that I'll be able to impact between uh, you know, doing the lives, all the content that I'm doing, the video game that I'm making, all that stuff. Yeah, it'll ultimately be relatively small. But if there's a whole lot of people doing that kind of thing, it really can start nudging culture in a different direction. Um, and man, if you've really able to capture people's attention, somebody like Michael Jordan, uh, taught an entire generation of kids to outwork everybody else.

Now, he's since sort of, you know, faded into the background. Kids now just see him as a crying meme, which makes me very sad. Uh, but yeah, if you play your cards right, capture people's imagination, you can have pretty outsized influence. Cool. Uh, send a request on the laptop. Let's go. We are about to jump into our third hour. This is a react time. Set it up. It's about AI and culture. It is. Okay. So, here is what we're going to be talking about right now.

The reality is that people are having very um warranted fears about AI and very unwarranted fears about AI. This video is going to walk us through answering the question, is AI on its last legs? Is there so much systemic risk here that everybody should be terrified? Let's go. On July 28th, 2026, an AI startup called Orchid posted a launch video that went mega viral on Twitter. It features a couple on their anniversary, but the boyfriend forgot about it. The woman, clearly frustrated, vents to her AI assistant, Orchid, for help.

The assistant says it's way ahead of her and sends messages to her boyfriend reminding him of the date. Then it proceeds to book a table for him and get her flowers she likes. He texts, "Okay, okay, I can do this." And the chatbot says, "You can't. That's why I'm here." Orchid tells the woman he's acting like he planned it himself as he compliments the AI for carrying their relationship. and they live happily ever after. How wonderful. Instead of trying to be a better significant other, you can just stay a piece of and have AI cuck your girlfriend.

What a wonderful world we live in, isn't it? Unsurprisingly, this video generated a massive amount of vitrial. And it's just another one of the many examples of the people building this crap being so incredibly out of touch with the general populace, which will probably lead to its impending collapse. Okay. So, one of the most important things to understand when you're looking at the culture um of a tool like AI, some people are going to use it terribly, other people are going to use it well. But just because something can be used in a way that's absolutely asinine or just because the company behind it is using marketing materials that show it used in a way that you know is going to have these second and third order consequences.

Uh if you get lost at the that layer of the argument, then you end up going down a stupid street. Once you understand AI as an arms race between the US and China for intelligence itself, now you're grounded in the right way. And so, um, I'm really driven to absolute madness by the level of discourse around AI. You need to understand it as a weapon system. You need to understand why intelligence is the single most important battle that we will do as a nation ever uh before we can have any real conversation.

Now he's going to get into the debt of it all and the circular financing and we're going to talk about that. But also just at the cultural layer, I want to make sure that people are thinking about this in the right way. The reason that humans have been able to have the outsized impact on the globe that we have been able to have is one reason and one reason only. Our brains are organized for higher level intelligence. Now, I know that people want to say dolphins are more intelligent than us or um octopus are so intelligent that, you know, we might as well see them as uh an alien intelligence that rivals ours.

Kids, if that were true, they would have figured out how to breathe outside of the water just as we have figured out how to breathe inside the water. The reality is that we are the most dominant species the world has ever seen precisely because we have the higher level cognition. The ability to do theory of mind, the ability to plan for the future, the ability to manipulate objects within our minds and then go out and build them. Intelligence, flexible intelligence is precisely the end goal uh if we want to move forward as a species.

And so when you start thinking about what artificial intelligence really is, everybody's so hung up on the artificial part, they get into the terminator of it all and they forget about intelligence. They forget about if we could scale intelligence, uh it would radically transform our lives, radically transform the world. We look at all these demographic problems and we lament that it takes 18 years to bring an adult into the workforce, but that isn't true anymore. So when you're having the debate at this level uh of being mad because Sam Alman is a douchebag or you don't like Elon Musk, it's like you're you're missing the point of why this technology is as important as it is.

So please keep in mind, don't get sucked into this cultural framing. Thank you to Derek Thompson for this great Substack article which helped guide this video. By now, most of us know that AI is in a bubble. A financial bubble is when the asset prices of a certain industry rise to unreasonably high fake levels that do not match the actual value of what's being built. Okay. Uh I love that this is his framing and it's framing that I'm deeply empathetic to and I'm actually going to step outside of my own frame today a little bit.

I'll I'll certainly give you checkpoints in terms of where I believe we are in terms of the bubble. Um but what I want to do is now argue from the bullcase of AI. uh people like Ral Paul who I just spent time with yesterday who believe that we're nowhere near being in a bubble. Um certainly not the way that people think that we are. And if you look at historical examples, there's reasons for this. So I'm going to be walking us through. I'm going to let him take the bearish case.

I'm going to let him make an argument that you guys are probably used to me making and I'm going to approach this from the outside uh to give a different look at this because I think that um the reason that the bubble continues to inflate is precisely because people do not agree on where we are in terms of the valuation. Are we already completely unhinged and this has really uh the valuations no longer match the actual value of what's being built or are we looking at something where we haven't even begun to scrape the bottom of the first rung of the value that it's going to bring to society.

So that's going to be the collision that we go through. In order to understand just how large this bubble is getting, we need to know what a hyperscaler is and how they're using their money. Hyperscalers are the largest cloud computing and data center providers who have created most of the AI infrastructure. The four biggest hyperscalers are Meta, Microsoft, Alphabet aka Google, and Amazon. Since 2021, these four companies have been pouring an incomprehensible amount of money into AI development and infrastructure. A big reason they could justify this is well for one AI is a race to build the next big thing and so companies are just trying to get there first but also because these companies could afford to.

The hyperscalers free cash flow the cash that a company has left over after paying its day-to-day operations and long-term expenditures has remained in the green since the beginning of the AI arms race. Just 2 years ago, the four biggest hyperscalers, Microsoft, Alphabet, Meta, and Amazon, were generating roughly $210 billion in free cash flow every year. But in 2026, their free cash flow has plummeted to below zero. Of course, not every public company is suffering because the wealth is being transferred from the hyperscalers to the semiconductor companies.

A Okay, before we move on to that, it's important to understand that there's a big difference between cash flow and free cash flow. So what you're looking at are companies that still remain optionally very valuable. So um very cash flow positive. They are default alive. When you have a company that's default dead, it means that they are unable to be profitable to the to offer the product or service that they're generating their cash from. They have to have um outside capital because they're not yet uh even break even with their core offering.

When you have a company like this though, which is spending that money in an optional fashion. So they are their core business remains the same. Their core business is still these insane cash cows. So at any time they could say, "Oh, look, AI was a failed experiment. We're going to stop spending money on that." And then they will go back to being just as profitable as they were before. So understanding that what they're doing now, they're not investing in something that is destructive. So they're making a big bet.

And if that big bet doesn't pay off, that is certainly going to be something that will cause um instability in the narrative story around who they are as a company. But if you look at what Meta did when they changed their name to Meta. That was them placing a bet that the metaverse was going to be the future. Um this was at the height of web 3 and everything that was happening there and they had a vision for what this was going to be. They end up buying Oculus.

Uh that becomes one of the core divisions of the company. They spend billions and billions of dollars every year, year after year focusing on that, end up changing their name, refocusing the entire company, and then they decide actually that isn't going to be the future. They stop spending that money, and they go back to being uh the cash cow that they always were, that they seemed less of because they were investing something in the future, but that core business was still there, churning that money out uh day after day.

The same is true for these hyperscalers. So yes, right now they're putting themselves in a shocking position. And you guys have heard me say many times, yo, it is wild that Google, which has never been cash flow negative since the time that it came online, is now cash flow negative for the first time. That should definitely peique people's curiosity. And if you're investing in them, you should be asking, are is this going to work out? Because they are spending a tremendous amount of capital. But keep in mind they could shut that off as Meta did with their Metaverse initiative.

They can shut that spending off and that money is still there. So making sure that you don't read um optional cash flow expenditures as a fundamental flaw in the business. Very important aka the ones actually building the GPUs and chips AI uses. The problem is these hyperscalers need to keep spending spending spending. So what are they doing? They're taking on more debt. Here's what that looks like from the big four. In order to generate more spending money, public companies will issue bonds. Essentially, a way for investors to lend money to a company for a set period.

The company pays the investor interest at fixed intervals. Then the original amount borrowed is paid back to the investor when the bond reaches its maturity date. From 2024 to 2025, the annual volume of bonds issued from hyperscalers went from roughly $20 billion to 110 billion. And in 2026, that number reached 150 billion. Many are now likening this to the dot bubble in the late 90s and early 2000s. In an article for Business Insider, Jennifer Soar writes about an analyst at JP Morgan comparing the divergence in the AI trade to communications equipment in 1999.

Quote, "Companies supplying communications equipment began to see a parabolic rise in 1999, while companies making heavy capital investments in the space tumbled from their peaks." Okay. So the important thing to understand as we talk about okay what is the real size of the bubble here um before I was talking to Ral Pal I had a sense that these companies were getting way farther out over their skis than they actually are. So when you look at the um the debt as a um percentage of the cash flow what you see is right now these guys are taking on about 4% maybe not cash flows but as a percentage of their value.

Right now they're at 4% in AI. So a very manageable number versus 30% at the height of the dot mania. So right now in terms of scale, we're a long way, which I actually found pretty shocking. I didn't realize we were this far away from the heights of the insanity around dot. So yes, these guys are taking on an extraordinary amount of debt, especially when you just look at it in raw dollar terms. But when you look at it as a percentage of their value, we're still in a much much much ser than we were in the.com bubble.

So, um, as I do my own thinking through this, where I come out is somewhere between RAL and these guys for RAL, there's a sense that or for anybody that's holding the bull case for AI, it's going to go something like this. Um this is the single most important technology that uh the world has ever seen. The US is locked in an arms race with China. There is no way for the US to um not push this industry forward. So even if any one of these individual companies ends up doing something stupid and they get themselves in financial trouble, the US government is going to step in and either prop that company up or they're going to step in and help sell off the assets to the other companies.

So any money that's raised to build the physical infrastructure of the data centers that is going to be used. So it may not be used by anthropic, it may not be used by open AI, but it is going to be used. And so when your mental model is that, oh yeah, I've seen this playbook before, I know that the US will print an absolutely obscene amount of money um to prop up whether it's banks, whether it's housing, but they'll print an obscene amount of money to protect an industry, especially if they think it's systemically important, which it is right now.

Not only is America in terms of the stock market just making one bet on AI in you can make a very credible case that the whole world is making one bet on AI. So the odds that a country like China or the US that has the ability to print their way out of a problem isn't going to do that is basically zero. So if the industry gets in trouble it's going to be backstopped by all of us by the taxpayer. So, you can just expect that this is going to keep going.

Then you combine that with the fact that we're at 4% of uh debt to value versus 30%. And all of a sudden, it's like, okay, we may not be in the same uh anywhere near the same level of risk that we were in when the.com bubble finally blew up. And so, when you ask a question, not is this a bubble, but where are we in the bubble? Are we early innings? Are we late innings? I think that we're in later innings from a stock price purchase perspective and much earlier innings from a actual debt burden on these like just absolute cash cow companies.

So when you look at the um the amount of debt that the companies have taken on, that's not necessarily scary. But for me, when you look at the 40x cape ratio in the stock market, so the cape ratio is designed to say, hey, over the last 10-year average, how much money have these companies been making compared to the value of the stock market? And when the value of the stock market gets too high compared to the actual money that these companies have been producing, now it's like the alarm bells are going off for me.

There the alarm bells are going off. The traditional number is 16 to 17x. So you would expect the value that people are willing to pay to be 16 to 17x the 10-year running average of the amount that the called the S&P 500 was actually making. It's now at 40. And the last time we were at 40 was right before the dot bubble. So this is one of those where it's like, okay, like we're starting to get into crazy territory. But the companies are probably doing just fine.

The.com bubble eventually burst in early 2000, less than a year after that divide was first noticed. What also might be indicative of what's to come is the fact that Microsoft ended June with its worst monthly share loss since the dot bubble in 2000. These companies are basically banking on what other reporters accurately call a miracle. The biggest five hyperscalers are trying to promise that their revenue will double over the next 3 years while cutting roughly $80 billion in operating expenses. As depreciation expenses soar over the next few years due to all the new buildings and equipment, the expenses spent on sales, general, and administrative sectors must go down at an unprecedented rate.

As accounting professor at Purdue University, Kevin Kohhi puts it, "It just seems like the analysts in order to keep the operating margins steady or slightly growing are assuming that whatever depreciation increases by, we're going to see a direct offset through sales, general, and administrative." I can't think of a scenario where that's ever happened before. And this is okay. One thing that I think that they're leaving out is what people are really looking at and this is what um Jensen Hang the CEO of Nvidia has been trying to get people to understand.

Um right now there's a raging debate about what the ongoing value of these data centers are. Now depending on where you clock that, we're either in starting to get into shaky territory or we're doing just fine. Jensen Hang's pitch is listen guys, you you keep looking at the um the depreciation schedule and you're like Michael Bur and you're freaking out and you think that we've got the wrong depreciation schedule, but the reality is that we have um H100s that came on 6 years ago that are still being used.

So clearly these do not depreciate in the three years that everybody's saying. Yes, you're going to get faster chips that will come into the market, and yes, those chips will be better, but you're acting like the old chips just cease to exist, and that isn't going to be true. And this is why he's putting forward a financing package that would allow people to come in and um look at basically the long-term rental of a data center, looking at it as something that generates rent for the long term versus a widget that's going to depreciate very quickly.

And he's so confident that that is true that he's willing to backs stop 25% of a on a deal-by-deal basis, but he's willing to backs stop, basically put insurance against the decline in value of those chips. He's not guaranteeing the loans, but he's guaranteeing the product. And he's saying that that product is um I'm so confident that it will hold its value or potentially even increase in value that I'm willing to backs stop up to 25%. Now, what he's basing that off of is that the cost of uh I can't remember if it's the H100 or the H200, but the cost of that compute per hour hasn't gone down, it's gone up.

So, now instead of this being a depreciating asset, which it is because it's technology, so we don't want to confuse sort of this momentary directionality, but as of right now, they're actually being able to charge more over time. So those ships are becoming more valuable over time rather than going down. So I think he really does have a very compelling case that the data centers that are being built out don't function in the disaster scenario way that people have been assuming because this is an unfortunate reality that when you look at historical buildouts of things that have a very expensive infrastructure buildout, what ends up happening is that first wave of investors gets wiped out because it just takes too long for the technology to come in uh to start generating money.

So, take railroads. You have to build the railroads before you can put trains on them before they're valuable, before people can start using them. But the big difference with AI is that yes, you're still building out the infrastructure, but it isn't like the railroads where there's like zero value, zero value, zero value. Then finally it comes on and all during that zero value, you were just having to pour all of this money into building out the railroad stations and securing the railroad lines and laying the railroad tracks.

Yes, that stuff's going to last for an extraordinarily long period of time, but there's this huge delay in getting the revenue. And Hang and other people that are bullish on AI are like, "Guys, that isn't how AI works. You're getting revenue right now." And not only are you getting revenue right now, and yes, maybe revenue is not coming in as fast as we thought it would, partly because of what China is doing with the open source models, but Anthropic, their revenue is growing faster than any company's revenue has ever grown in history.

Maybe not as a percentage, but when you look at the raw dollars, it is insane. insane the amount of billions of dollars that they're adding to their bottom line even in just the last five months. So, let's all realize that this isn't the railroads that the technology is being used right now. Yes, this technology will depreciate over time, but so far we've seen them last at least six years and the cost for compute is going up. Okay, all very important. Now, I'll give you my maybe more balanced take here, which is that yes, that's true because we're still in the middle of the buildout and right now there's more pent-up demand than we have um actual ability to fulfill that demand.

However, you aren't seeing a whole bunch of other big companies come online. And that puts question marks. It certainly doesn't put a nail in the coffin, but it asks question marks. Where are the other companies coming from that are going to bring this increased demand? Because what we're probably looking at is it's going to take a while for AI to find its way deeper and deeper into the economy. What I always say is for your refrigerator to get smart, your blender to get smart, that stuff is just going to take time.

And if we hit that upper limit where there's no longer uh the growing revenue that we need right now and you start having an overp production of compute now very rapidly those older chips are going to decline in value or if you get China or whoever making algorithms that are more efficient and so you don't need as much compute for the same output. There are several scenarios that could cause the um value of those chips to decline um not just a reduction in demand. So you could have still growing demand, but the need for compute to be coming down at the same time to meet that demand that would cause that value to go down.

This is why Jensen obviously isn't backstopping it at 100% of the cost of those chips. He's only backing up 25%. So he's uh he's confident, but he's not all the way confident. So anyway, that's a much more balanced take on what is likely actually going on. Coming at the same time that we're seeing companies regret cutting their workforces to save revenue, which is causing them to try to rehire all the employees they fired. Okay, I hate this argument because it's So here is what's actually happening.

So you've got these guys. I'm sure there were a certain amount of people getting overhyped. It's like, oh, AI is going to be able to do all of this. AI has limits. AI falls on its face. There are certain things that it does well and certain things that it does terribly. The things that it does well grow by the day. The things that it does terribly get diminished by the day. And so, um, what is likely going to happen with jobs is that some jobs will just be completely wiped out.

They will never exist again. No human is ever going to do those things again. Uh, data entry, um, data analysis, things like that. It's just going to go away. AI is so much better at it. or if it doesn't go away, the number will be so dramatically reduced. Same thing with driving that what will end up happening is like one data analyst will be able to oversee a thousand AI going out running in a you know um getting the data pulling it in and they're just there to check to make sure that everything is running well.

So instead of it being a department, it's one person and a bunch of AIs. But that doesn't mean that new jobs won't be created. So this story that we're beginning to tell ourselves of like, oh, we thought AI was cool. Psych, it's actually not cool and we have to rehire all these employees isn't true. One, just because you laid off a bunch of people and are now hiring, doesn't mean that you're hiring for the same skill set. So you might have fired all the people that were resistant to using AI.

Now you're hiring people back that have similar job descriptions or even the same exact job title, but now you're hiring a different kind of person that's going to scale AI in the role versus people that might be very resistant to that or just not good at it. Uh they're not a digital native or whatever. So this is where you've got to be very careful about buying into the narrative. If you're not using AI, I think it's very easy to get sucked up in the hype. Either that it does more than it says it can and you just believe it because you're not using it or the, you know, the doomer hype of like this is all it's not real, this is all going to go away.

Um, if you're in the thick of it every day as I am, you learn very quickly. Yeah, there's a lot of things that it doesn't do well, but damn, like new features, new abilities are coming out all the time. It's coming out so fast. It's really pretty extraordinary. So anyway, don't get sucked into this messaging. Market research from Robert Half indicates that roughly 29% to 32% of organizations that cut jobs due to early AI projections have already started restaffing those exact roles. Which begs again, but potentially with different skill sets.

The question, what the hell do these companies expect to do to live up to those projections? Despite companies rehiring their employees, finding a job in this market can feel impossible. Whether it's ghost jobs or entry-level jobs going extinct, finding an employer who will actually view your resume and give you a chance is like finding a needle in a hay stack. If you're someone who's been struggling to make the advances they want in their career, a career coach on today's sponsor, Strawberry.me could help you. Strawberry.me connects you with a professional coach that keeps you accountable towards reaching your career goals.

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So, if you know you have the qualifications to get a better paying job, but you just feel lost in a sea of online job slop, you can go to strawberry.me/coolhastings, which is the first link in the description, and you'll get 50% off your first coaching session. At the same time, these companies are rehiring after layoffs, one country is out AIing us by a huge margin with much less cost to the bottom line, China. If there's one thing China is really good at besides making their cities look like cyberpunk paradises on social media, it's creating scalable costefficient products while accepting thinner margins to gain market share and beat international competition.

All right, so I'll agree with that. China is extraordinarily good at um they'll allocate tax dollars to an industry to make sure that it's thriving. Um and they are very good at optimization. to say that they're ahead of us in AI is not true. Now, they're rapidly catching up and this is definitely an area that from a national defense standpoint, we have to stay on our game. Uh but right now, it's very clear AI in the US is the absolute frontier models. China is close behind creating open source models that can do, let's call it, good enough uh for much cheaper.

So, I would say they're winning the price war, but they're not yet winning the actual frontier war. So it becomes a question of how important is the frontier going to be as we march towards super intelligence. The frontier becomes incredibly important and their openweight AI model could take a large share of the industry soon. True. Released on July 27th, 2026, Kimmy K3 is an openweight model by the Chinese company Moonshot AI. Now, unlike the closed models from OpenAI and Anthropic, Kimmy K3 can be downloaded, modified, and run on your own hardware without relying on Moonshot servers, which by the way is amazing, and we should want to see more of this.

Um, unfortunately, it may have a detrimental impact on the US um bleeding edge research frontier model. It may make it harder for them to um generate revenue at the rate that they thought they were going to, but ultimately for people this is better for you to um have the ability to get a hold of uh AI for essentially free for whatever it costs you to run it on a local server um is really incredible and they're already talking about this lowering token cost by I think up to 60%.

Uh so it is very impressive. Because of its efficiency, Kimmy K3 can be served at a fraction of the inference cost of many leading Frontier models while delivering comparable performance across many benchmarks. Also, can we just pause to laugh at how hilarious graph metrics are sometimes? Like, what the hell does maximizing intelligence per dollar mean? Well, I'm glad you asked. It's actually, ironically, uh one of the most important things in uh the idea of AI. So understanding that we ultimately whoever can get the most intelligence for the cheapest is going to win.

So that's the whole point. So I get it seems kind of funny in a spreadsheet, but the reality is um if it's like saying I can get the smartest employee on the in the world for the cheapest and whoever is able to do that, whoever is able to hire the smartest people for the least amount of money is going to have a tremendous advantage in their company. That's just true. So now it becomes a question with the models. How much intelligence am I getting for my money?

It's bang forbuck just in AI words. Anyways, China's models are already starting to comprise a huge chunk of AI traffic. According to Open Router, Chinese models went from 1.2% of token traffic in 2024 to more than half of it by the summer of 2026, overtaking American models in total volume. Think of the potential consequences of this. Some of America's largest companies are heavily invested in Open AI and Anthropic. In Q1 2026, other income accounted for 60% of Google, 51% of Amazon, and 27% of Nvidia's profits.

Some of those investment gains come from stakes in leading AI companies like Anthropic and Open AAI. If a huge portion of the market shifts to Chinese models, OpenAI and Anthropic could see their revenue shrink, reducing the billions they're currently spending on Nvidia chips, cloud infrastructure, and massive new data centers. But if you want the AI bubble to burst quicker, I mean, that would be a great thing. Speaking of which, yeah, this is exactly what we've talked about before. China poses a real threat to the AI industry.

If they can start um hollowing out some of the revenue that's coming in, that slows this down. We go back to the railroad argument. If the debt is growing faster than the ability to bring in the revenue, the whole industry begins to be a series of question marks around whether they'll be able to get cash flow positive before the debt basically explodes. Uh, and if the debt ends up breaking and they need to keep raising money in order to stay solvent, but you can no longer raise debt because the revenues are coming in too slowly, now all of a sudden the industry uh stalls out.

Now, if it stalls out, that's not necessarily the end of the world. It's if it gets to the point where the company is never able to achieve profitability and so they're not able to um actually become a default alive company. That's the question. When you look at the Microsofts, the Google's, they're all cash flow positive. So, if they stop the buildout, they're going to be just fine. But Anthropic and Open AAI are not. They're nowhere near cash flow positive. So, those guys really could implode. But then it goes back to what do you think is going to happen?

and will the US government step in or not? Your answer to that question tells you how risk how at risk you think we are. Let's talk about the next threat to AI. Increasing negative sentiment from the public regarding anything related to AI. From 2023 to 2025, the percentage of Americans who said the effects of artificial intelligence will have a very or somewhat positive effect actually increased from 15% to 27%. However, in that same period, those who said it will have a very negative or somewhat negative effect went from 40 to 47%.

Yeah. Hm. I wonder why the general populace hates AI so much. Could it be due to the fact that the people building these models have a poor moral compass and only care about growth and profits instead of helping humanity? Not really. I think that uh people put up with an absolute obscene amount of uh amoral and push back almost not at all. What people care about is what is my life like? If my life is good, then I'm good. If my life is bad, now I'm looking for reasons.

I think AI induces a level of anxiety that is causing people to be very um unable to view AI from first principles, which is causing a lot of our problems. If you think AI is going to make your life worse, it's going to make it not worth living, you're not going to have any meaning and purpose, you're not going to have economic prospects into the future. If it just creates so much uncertainty about the future that it makes you feel absolutely horrible, you're going to jettison out of that.

People saying that this is because um uh open AI is run by a moral monster. It's not the real reason. You know, I think AI will probably like most likely sort of lead to the end of the world, but in the meantime, uh there will be great companies created with serious machine learning. Could it be? Now, that's a horrific thing to say. There's no doubt about that. Yeah, this sounds absolutely asinine, but I don't think that's what's really driving this due to the fact that workingclass neighborhoods are being torn down to make way for data centers that produce a ridiculous amount of noise pollution and sap up all the water.

Or maybe it's the AI content slop to drop shipping pipeline empires it's enabling. What's going on guys? Smith here. Today I'm going to show you guys how videos there there are going to be downsides. Now again, I'm going to do uh much deeper research into data centers. I'm operating under the belief now that the reports that are coming out from the towns that have actually implemented the data centers referring to them as a miracle. Uh they generate so much tax revenue that they're increasing job opportunities in the towns.

Uh my current standing belief is that they certainly add more value than they take away. But we'll we'll do some deeper dives. Now AI slop that is a whole another thing and people are definitely going to have to find a way to uh parse it out of their lives. like this. Had to mute the music for copyright reasons, making almost $30,000, give or take, every single week on average. Perhaps it's the way it gaslights or acts like a toddler. Hey, can you see me? I can't see you just yet.

If you'd like me to see what's going on, you'll need to turn on your camera. It will get better over time. I just turned on the camera. All right, I'm ready. I can see you now. What's going on? What do I look like? I'm seeing a person in front of the camera. If you're not looking at your camera, he did not turn his camera. the fact that a lot of AI use cases revolve around disintegrating human connection, critical thinking, and creativity. But perhaps the most egregious use case of them all that really grinds my gears, especially as someone who just published their debut novel, link in the description, is the fact that these AI companies are now trying to destroy rare books to train their models.

This scandal actually starts last year in AI's first major copyright settlement. Court records first reported by the Washington Post revealed that Anthropic bought millions of physical books to build a searchable database for training its AI models. The internal project dubbed Project Panama relied on a process called destructive scanning. Machines removed a book spine, fed the loose pages through industrial scanners, and then threw away the original copy. Their reasoning? Well, physical older books are verifiably not AI slop writing. And from what we know about AI training itself on its own slop, that makes human written books extremely valuable to them.

Anthrop, I get why people don't like this, but I have a totally different take on this. We have a problem in America right now where kids can't read. Kids are not running out to buy these books. We do not we're not at risk of like some uh tremendous wealth of knowledge being lost because the AI is breaking these books. What we are at the risk of is that information being lost forever because it's stored in a format that people don't even engage with anymore. So somehow someway getting these books actually recorded to me is far more interesting.

And if we're able to get these books recorded in a fashion where you could actually go back and read them later, that would be my preference. But at a minimum being able to get them into the AI so that the AI can learn from the patterns that are in there. you're going to be able to interact with the knowledge. And to me, being able to interact with the patterns that emerge out of that is actually more important and more useful than just being able to go and read that actual book.

Now, I would never want to have to choose between the two. I don't want to have to choose between books never existing and me never being able to hear someone's exact words and just the amalgamated um patterns that arise out of that. That would be a terrible trade. But if you're asking me if I'm worried that them taking one copy of a book and destroying it, knowing that, yeah, there may be a very limited number of books out there, but they're not destroying all of them.

Uh, also, uh, I did some more research on this. This seems to be overblown a little bit. They did, I think it was anthropic, reached out to a bunch of these bookstores. The vast majority of them never even replied to them. Uh, there's no evidence that they got millions of books and are destroying these. Um, so yeah, I think this is probably much to do about nothing, but nonetheless, I wouldn't want these books to get lost to time. Topic was required to pay $3,000 per book, and the majority of authors they stole from were paid.

However, what the court documents didn't reveal was how companies were sourcing millions of physical copies in the first place. One possible glimpse came from a report by 404 media. ISBNDB, best known for maintaining metadata linked to international standard book numbers, appeared to be positioning itself for the AI boom. The company advertised a service that would help AI developers acquire anywhere from 1,000 to 1 million printed books for large language model training, describing it as being built for the quote scale AI demands. The web pages were later taken down and ISBNDB said the service was never launched.

So, we still don't know how exactly Anthropic and other AI labs were acquiring these books at scale, but this proposal's existence suggests that there was already a market emerging to supply physical books for AI training. The really nefarious part takes place in the present day. This month, Dutch antiquarian book seller Peter Devry received a strange email from a person named Natalyia, who represented a company called 2077 AI. She said the company wanted to place a fairly large order of books and attached a spreadsheet containing more than 3,000 ISBNs asking for matching titles, price quotes, and shipping estimates to China.

At first, the book seller dismissed the request as spam and barely read past the opening lines. It wasn't until weeks later after being contacted by a journalist investigating the inquiry that he realized it was connected to the AI industry. He later shared the email and spreadsheet with Fortune revealing a list of 3001 mostly academic titles published between 2020 and 2021 by publishers including Elsair, WY, Routoutlidge, Oxford University Press, and Emerald Publishing. So now imagine these are highly academic books that nobody is ever going to read again.

They are going to sit and collect dust and someone is saying we're going to turn those into usable knowledge that the whole world can take advantage of. And if these were going to China, odds are they're going to end up in an open source model that everybody will have access to and we somehow have beef. That's the part that I don't understand. Like these are people trying to protect something that they never cared about until they heard that somebody else is using it. Now, if they were just burning the books and they just didn't want anyone to ever have access to them, I get why people be up in arms.

I would be up in arms. But the reality is that we're putting this in a format where we can all take advantage of the information. And I actually reject wholeheartedly the idea that um this is that when you upload something into AI that you are stealing it. There is a way that you can steal it. There is a way that you can uh get um say uh oh god what was it? Figma. Figma is uploading all of its data into OpenAI or Anthropic and they're very excited and you know they're working with the code and they're building something new and then uh whichever one of them it was ends up turning that into their own software version and selling it.

Okay, cool. That is you literally taking directly that and then republishing a free version essentially of that software. Okay, that's shitty. if somebody took in um Stephen King and then republished Stephen King like that would be bad. But if you learn from all authors and listen I know this is happening to me. I know that given the thousands of hours of their content that there is out there of me speaking, I have had other people create tomb bots of what it would look like uh to ask me a question and the answers are pretty close a lot of the times.

And it's like that is what it is to have access to all of the other information in the world. It is a small trade to say all of my old stuff now exists in the same way that any of you could go watch all that stuff if you wanted to and then learn the way that I answer questions and do go do the same. That to me that is um you used to hear this a lot. You would hear oh that person is a child of meaning intellectually they went and learned from them and they're basically retelling their ideas.

And that's how it's worked forever is we all go learn from the people that come before us. We say we're standing on the shoulders of giants. The fact that we've now made it far more efficient that we've ingested all of human knowledge and given that access to everybody that has access to an internet connection is a trade-off that is well worth it. Now, moving forward, I'm the only one that can create new versions of what I would say to do something that is surprising and so nobody can take that away from you.

But anyway, I reject the idea that that's theft. According to the book seller, several other Dutch antiquarian book dealers received the same request and likewise assumed it was a scam. Yep, these companies are no longer pursuing just mass marketed books. They're targeting rare antique books. It almost feels like a second attempt at the burning of the library of Alexandria out here. AI companies so again, the knowledge is being preserved, it's not gotten rid of. Oh, desperate for valuable humanmade data, are resorting to removing antique bookspines, feeding the pages through scanners, and throwing away the text, never to be read again by another set of eyes.

Because I can tell you something, despite all the talk of synthetic data replacing human knowledge, the industry's most valuable resource is still authentic human writing, and it's becoming increasingly scarce. That's where things get strange. On one hand, AI companies are scouring the world for ever rarer sources of human knowledge because they still need fresh, high-quality data. On the other hand, investors are betting that AI is on the verge of becoming intelligent enough to improve itself, eliminating the need for humans altogether. Those are two very different stories, and whether the second one actually comes true may determine whether today's AI spending boom ends up looking visionary or like one of the biggest bubbles in tech history.

Of course, like all my videos, I'm going to try to leave. All right. So, the incredible thing that everybody needs to put together is that it is very important that you have a sense when you're thinking about your own portfolio. What am I going to do with my money that you have a better sense of where AI is likely to end up? What are the metrics that matter? So, I think that my view on where we are is somewhere between the uh pessimism that you saw here and then somebody like Ral Paul who just is all barecase all the time.

He says AI can't get big enough. There's no amount of money that could pour into it where he would think, okay, that's completely unhinged. Um, this is the single most important technology of all time. It is best thought of as an arms race. That means that the US government will backs stop it. The Chinese government will backs stop it. These are not industries that are going to be left to die in the vine. However, debt matters. The rate at which uh your revenue is growing compared to the rate at which you're bringing on that debt matters for the people who are invested not necessarily to the long-term viability of the technology.

And the thing that I find really interesting, the thing that has really um got me focused right now is uh what um Jensen Hang is talking about in terms of the fact that right now today anyway, the depreciating schedule of these is not what people think. It is longer for right now. Now, it's probably a little bit more precarious than he wants you to believe in terms of the things that could knock it off of that path. But the fact that we have not been able to meet demand for intelligence yet, compute, uh, tells you something that for all the money that's getting poured into this, it isn't like the railroads where we just have to wait and wait and wait.

The revenue is growing at an incredible rate. The usage rate is growing at an incredible rate. As we're using it, innovations are coming out both from the US and from China. Costs are coming down, but revenues are still growing. Whether that holds in the long term is a bigger question. And so that does raise the final thing that everybody has to analyze is not are we in a bubble, but where are we in a bubble? In the bubble. I think that's the very right answer. All right.

Do we have any super chats? Oh, uh, no, let me triple check. I didn't see any coming. Amazing. Nope, none. All right, guys. Thank you so much for joining us. Appreciate it very much. We have an upcoming AI master class. Make sure you join me Thursday, September 10th at 1 p.m. Pacific. I am going to show you guys how to start a business using AI. It is free and the link is in the description. All right, everybody. Have a phenomenal weekend. We love you bunches and we will see you on Monday.

Until then, my friends, be legendary. Take care. Peace.

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