The AI Cold War, Signalgate, CoreWeave IPO, Tariff Endgames, El Salvador Deportations

when I wasn't able to use the r word I would use Dey Chente for two people Jason and and friberg's dog Marshall freedberg oh come on I can't stand Marshall freed that little bastardino jumps on the table eats the nuts the worst the worst I hate Marshall freedberg I hate him I can't stand this bastard guy look how he sits like a [ __ ] sits like he sits like a Dey chanted look at this dweeb and this now Nick show them my dogs beautiful beautiful dogs Valentina zanini she's the breeder of breeders look at these two beautifully elegant oh look at look how look how well behaved they are you don't see them jumping on the table to eat the main course freed no no Marshall almost ruined our Christmas dinner this is why I'm holding a real grudge against Marshall freedberg he at off nuts no and Alison [ __ ] Allison off guard she's like Marshall freedberg get off the table I just love that he's got a full name Marshall Eugene freedberg let your winners ride Rainman David and instead we open source it to the fans and they've just gone crazy with [Music] it all right everybody welcome back to the number one state SP I'm sorry Allin podcast in the world the number one podcast oh sorry stray bullets here we go back on the program our guy Gavin Baker is here you know him from a treaties management does private and public 4 billion under management and lot to talk about with you gb1 good to have you gb1 is Here solo Doo cor weave IPO happening soon uh by the time you get this and Nvidia you were there at Nvidia you were the one analyst Gavin that Jenson pulled up you're loved by Jensen what's it like to be loved by Jens tell us everything well so first he did um there was uh Alfred F was from squa MH and then they had a a nice sside guy whose name is escaping me at the moment but it is technically true I was the only public Equity investor on the buy side that Jin Jensen asked I've known Jensen for 25 years he's he's kind of the same guy he ever was like just maybe slightly calmer Gavin can I ask you like all this stuff where they talk about the balance sheet questions that some folks have about Nvidia some of the accounts receivable issues and stuff is there any legitimacy to those issues the round tripping like what's the what's the real story of someone that that peers into that p&l and understands it yeah so we I guess maybe take them in reverse order I really don't think like if if Nvidia had not not put any money into cor weave not put any money into kind of other of these neoc clouds I don't think it would have impacted their revenues at all at all they would have sold more to meta and more to more to meta more to Amazon more to Microsoft so the reason they did it is even three years ago it was a very stable three-player oligopoly from the cloud computing players in Amazon Google and Microsoft and if you're Nvidia that's not great to have just three big customers those big clouds particularly in 2023 when there was such a rush to get gpus they each kind of want to do their own kind of custom version of an Nvidia server and Nvidia by giving kind of like a standard reference design which someone like cor weave bought to cor weave you got gpus in the market a lot faster and when you use Nvidia reference design it's generally smoother and easier to stand them up and so the big three kind of cloud computing you know hyperscalers their incremental share of Revenue went down and that was nothing but good for NVIDIA because they now have kind of a more fragmented base of buyers who have less power over them but what does that mean Gavin when like the accounts receivable jumps from a billion five or so to like 5 and a half billion year-over-year is that concerning or that's just business so look it's never good good but if you think Nvidia has gone through the biggest product transition in history in terms of Hopper you know this is a business doing tens of billions of dollars at scale there's never been a product transition like this in the history of semiconductors going from Hopper to Blackwell you know kind of the 2022 generation GPU to this one the only precedent for this on planet Earth is the iPhone and there's something called the Osborne effect which is you know when Apple comes out with new iPhone for the three months before nobody buys the new iPhone and I think the only reason Nvidia was able to grow through this product transition is because of reasoning models like deep seek which are just so compute hungry and this product transition does come back to the days receivables the cume receivables now is like23 billion yeah it's never good when accounts receivables go up but if this is the most understandable time for it to happen in a product refresh cycle you're saying yeah and because a hopper server you know it's a rack it's whatever it is 7 feet high it weighs 1,000 lbs it consumes 60 kilow which is 60 American OHS and it's air cooled so you cool those gpus and the big problem gpus one of the biggest is they melt you cool it with air Blackwell weighs 3,000 lb so three times as much the rack you know it's 8T tall maybe 5T deep or 4 feet deep 300 ,000 lb and it consumes 120 KW so twice as much power and roughly kind of the same footprint three times as much weight and it's liquid cooled so this is like an iPhone upgrade cycle you know it was like it's still a pain that we went from you know lightning to USBC you know I'll grab a cord and it'll be lightning instead of USBC this is like an iPhone upgrade cycle where to get the new iPhone not only do you have to change your connectors you have to put in a new generator you have to put in a new boiler and a whole house humidification system you know to kind of make it work so it's a Monumental product transition and I think that is a lot of why the receivables went up you know they're recognizing Blackwell Revenue you know while it was still kind of getting into customers hands um if that Trend continues past the July quarter then I would say hey that's reason for concern but this is a very understandable time for that to happen from my perspective so basically the summary is AR accounts receivable builds as you go through this very complicated product transition but then at some point it Peaks and then you start to work through all of it and it moves off balance sheet basically gets recognized and you move forward and so then that AR should shrink and just to clarify that that's accounts receivable that's the money owed to you by by customers for the audience who might have a question what they are exactly and the reason they're not collecting it is because they haven't delivered it I mean the county gets very complicated with these systems but yes I mean they have delivered it and they've recognized the revenue but maybe the customer is saying hey we're not going to pay you until X you know until we get them plugged in and working I mean who knows what it is got it because it's a new thing total accounts receivable it's just that here the accounts receivable have gone up more than sales and that's just a function of the complexity of this product transition the other part of what I would say is the first part of what you're saying is very similar to what Intel did to scale their chip dominance in the 80s and 90s with this Intel Inside program they didn't really need to do it probably in hindsight but it helped them support an ecosystem and it helped diversify their buyer base so that fewer people had power over them and so a lot this quote unquote round tripping from your perspective is diversifying the ownership pool of Nvidia is what you're saying absolutely and sending Nvidia gpus to people who are adopting invidious reference architecture which they believe is the best architecture for those gpus whereas each hyperscaler has their own slight tweaks to that server um that hyperscaler does it so it looks more like their other servers but maybe doesn't run quite as well as the standard in video reference architecture with all of their chips not just the Nvidia gpus but the Intel Insight analogy is interesting I had not thought of that thank you jth well it he is definitely doing Keynotes like Intel did and trying to Brand the actual names of the units which is yeah it was interesting Pentium inside people would go and buy a computer does it have a Pentium and which Pentium does it have and now Apple's doing that same thing with the M4 you know series and people are actually asking questions like you know so there is something to it that maybe some portion of the consumer base wants to know what's inside right and and doesn't cost much to brand since we're here let's talk a little bit about the cor weave IPO cor weave is going to go public on Friday we tape on Thursday so when you listen to this episode you will have the actual data on what happened with their IPO they're going to raise 1.5 billion they're a neocloud neocloud means not just cloud computing but a new Cloud thus Neo and company has really been growing quickly it was reported they wanted to raise 2 billion and I guess they stepped it down to 1.5 billion at a 23 billion doll valuation they had two billion in Revenue last year so they're up 8X and they've got a lot of debt that's the other issue with core weave that people note almost 8 billion in debt and one customer Microsoft accounts for over 60% of their revenue always a bit of a a red flag there as Troth mentioned Nvidia accounts for 15% of their revenue and they own 6% 6% seems small enough to not make a difference so Gavin I guess what do you make of this company cor weave and their timing what it says about the markets because hey this is the biggest IPO we've had in a bit I think maybe the last ones that were notable were Reddit last year and a couple of other companies got out obviously stripe hasn't gotten out so is this a major Milestone or are they going out because they have to go out because of all this debt and then this is all against maybe a backdrop of did we overb and are these language models going to require as much Hardware uh as we thought last year so we're definitely not overbuilt yet like since deep seek came out like what has happened since deep SE car1 came out is China is buying every GPU they can one of the largest Chinese server manufacturers warned last night that there's about to be a shortage of gpus in China the price of memory DM goes up every day so we're not overbuilt today Point number one and you know open AI yesterday said that they are gating their new image generation service because they don't have enough gpus so we're not overbuilt yet Blackwell is going to be a very successful product cycle there is a little bit of a prisoners dilemma where you're going to spend on Blackwell almost no matter what because if you don't you're afraid that you seed a big advantage to a competitor you know if you're meta and you don't spend Google spins and their AI is a lot better than yours you're worried you may not catch up I would say that that's already the case yeah that's already the case but here this is a brand new architecture which is a lot I mean not only is it really different as we went through it is a lot better but now I would say all these gpus they're hard to get them working at the beginning like right now Hoppers are you know finally tuned everybody knows how to work with them Blackwell you know it's almost like you're you're skipping ahead you know it's like imagine each one of these gpus is a Formula 1 car you know now you skipped ahead 10 years in the future and you have to kind of learn how to drive that new Formula 1 car and it takes a while till you drive it as well as the old one so any other thoughts Gavin on the core weave IPO which will have happened by the time people listen to this episode yeah I would say you know the sentiment on X investors on X are pretty negative on core weave I think there's maybe a little bit of you know negativity in the market they had to you know reduce the range lower the price and everyone is very convinced this is a commodity business loads of debt loads of capex you know one really concentrated customer and that they're completely undifferentiated and I guess I would just make a point which is in America if you can pick any category any retail category and if you can run a thousand stores in 50 different states with different preferences and have those stores well lit clean stocked by friendly employees es with the right stuff in stock you will create a business that is worth you know well over 10 billion and that's sounds easy but very few companies have been able to do it I think what may be underappreciated about cor weave is it's actually really hard to run these big training clusters everybody thinks it's easy but to synchronize ttin of thousands of gpus where they're melting or cables are being unplugged and you know you lose a bunch of training data when it happens I just think it's not it may not be the commodity that everyone thinks it is and it may turn out that it's much harder to do than people think would there be analogy for that wouldn't there like people thought AWS would never work at the beginning they were like who's going to trust Amazon with their compute and it was difficult and it you know developers didn't understand exactly how to abstract their services into the cloud yeah the world was convinced AWS well lot of the world was convinced AWS was a terrible business for the first few years you know when Microsoft announced they're going to transition to the cloud it was very controversial because you go from a capex light model to a capex heavy model so you know Wall Street consensus has been wrong before and I do think core weave runs these big GPU clusters as well as anyone and there aren't that many people on planet Earth who can run them well and you know it's kind of easy you can just look at the npv of their contracts and the asset value and so everyone you know who's kind of you know confidently putting out all the negatives here like I just think there are some offsetting positives that it's good for you know I think people to be aware of and consider that's all I think it's a good company I I would I would second I mean I think it's a and it's a great business and I think they deserve to be successful totally true and it's great to see a competitor to the existing three or four clouds that are out there and uh it's great to see a company go public I mean m&a with whiz and now core weave going public rol lenina KH is over you got to give the administration a lot of credit for maybe removing the roadblocks to m&a and IPOs or at least people perceive that so I don't know if perception becomes reality here but does seem like m&a is a bit on Far yeah Gavin and and people are talking above and beyond Wiz I mean cor we bought weights and biases which I think is a really interesting acquisition for them that kind of kind of further differentiates them and maybe decommodify them a little bit uh but there have been quite a few acquisitions by big companies of smaller companies in the last month and I think as none of the companies that have been bought have been public maybe it's flying a little under the radar but it's happening in in I think a you know an accelerating way and I think this would be you know very good for the market and animal spirits and everything that we care about do you think that there's any issues there was a a bunch of companies added to the export control list two days ago some were in quantum Computing generally a lot of it though was in the Nvidia ecosystem so I think that the the US government is really trying to make sure that these next gen gpus don't go directly to China but also don't go to countries that could then redirect them into China did you get a chance to look at that or did your team look at that yet oh yeah and I think this will be part of you know the upcoming negotiation between America and China but it is hard you know it's like if we can't you know if America cannot keep illegal drugs out of you know out of our own country these gpus are arguably dramatically more valuable per unit you know like a Blackwell is like you know the size of this and it's just hard particularly like you know America we're trying to keep drugs out here China is trying to bring the gpus in and it's kind of significantly you know I think harder to prevent than than you know smuggling of drugs now everybody does their best but um yeah the United States I think it's always going to be kind of a game of cat and mouse until you get some sort of grand bargain and right now they they're allowed to sell certain kinds of gpus into China and I'm sure they'll be should we be doing that Gavin is is this going to be an effective strategy you know if you were advising the president we just say ah just let Nvidia sell them it's a Fool's eron to try to stop them because they're all going to Singapore or wherever Vietnam and and routing their way around I think we're putting enough friction into the system that it does theoretically give America an advantage at the cost of creating tremendous incentives for China to develop their own semiconductor ecosystem and you know pressure to kind of you know Necessities a mother of innovation and these export controls are creating an immense incentive for China to be really algorithmically Innovative and you saw that with deep SE where there were some real algorithmic Innovations yeah so said another way if we squeeze too tightly on letting them buy the Nvidia chips they might make a better Nvidia I mean become resilient I think they're doing it now they're trying now so that's well they're trying but I guess what are the chances they succeed in your mind Gavin in creating something competitive with or better and then what would that say about the AI race in the next five years I think zero I think it's really really hard but over the 10 years who knows and if you're the CCP 10 years isn't that long if you're America 10 years is an eternity yeah they're thinking in centuries and we're thinking in decades yeah that's probably correct hey um let's pivot over to AI agent since we're in the AI and obviously there's other big topics this week we'll get to you doing politics and uh signal and all that kind of good stuff but we have a company that seems to be you know having a moment it's called Manis uh m n it's currently in private beta but they're creating agents and we've been talking about this agentic revolution basically little you know jobs going out we used to call them Crown jobs back in the day but going out and doing things for you and it seems to be working and it's pretty impressive what do you think about this company specifically if anything and are we getting to a point where we're going to have the same chat GPT 2.5 moment but with agents and then if we do have that Gavin what will that look like in terms of employment and how companies are run look I do think uh if agents materialize as a reality and you know Manis is maybe a little bit of a chat GPT moment for that I would say open Ai and anthropic anthropic developed something called the model context protocol that openai just adopted I think it will become a standard and it makes it really easy for an llm like stripe can just integrate with mCP and then any llm that uses mCP can you know interact with stripe and this is solving a big big problem for agents um in terms of just making them you know much easier to use much more standardized but if agents become a reality one the ROI on AI and Blackwell is going to be very high and two what will it's not good for human employment but what will be kind of I would say the rate limiting factor is just compute in a world where we all have agents doing things for us all day long it's going to be a long time before we have enough compute in the ground for that to be a really really widespread reality and I think that's why you know open AI was talking about pricing their first agents at ,000 $20,000 a month like this Roi on AI question I think to me really does come down to agents in the short term freeberg your thoughts on these agents and the impact they could have on running businesses employment and just generally efficiency we now starting to have some standards mCP stands for model context protocol your thoughts freeberg on how this might impact you know architecting a business which you're doing right now with ohal how how might this change how people work on a day-to-day basis let's maybe give some examples for the audience look I'll take a slightly different view than Gavin I've said this in the past but maybe I'll try and contextualize it a little bit I think that the big unlock with these kind of agentic systems is not necessarily about replacing the easy human tasks which everyone kind of thinks are kind of the obvious application of them I think what we're missing is is the ability to unlock really complex tasks that are not really manageable today I can't come up with a very Grand project planning exercise with the team I have today I have to go hire 30 people let let me give you an example I want to go build a plant breeding facility under the ocean okay so how do I do that so to do that today I'm like well I got to go hire people that under understand oceans I that understand engineering that understand how to do underwater engineering I have to hire material scientists I have to hire physicists I have to hire construction project planners there's a whole group of complicated people I would need to kind of put together to be able to kind of execute on that opportunity but now a smaller group maybe three or four people or two people can say okay let's use these agents to help us build that project plan and spec out every step of the process Define how much everything will cost what workloads are needed who's going to do what so suddenly that difficult project becomes a reality here's another good example the California highspeed rail program that's ballooned to this hundred billion doll what if we had a agents organizing and running that program well maybe the cost of that program and the reality of that program makes it a reality now so it suddenly becomes a program that we launch we get it done we build this railroad whereas all the people all the complication all the confusion has and whatever grift has been going on has led to a hundred billion dollar balloon budget with no outcome so I think complex projects can actually be tackled in an easier way that actually unlocks a tremendous amount of building a tremendous amount of opportunity for new employment for people to come in and small teams of three or four to get hired that can now do the work of three or 400 really deeply sophisticated highly technical people with a very small less technical group so I think there's going to be a tremendous amount of opportunity in biotech in Engineering in Manufacturing in Urban Design in transportation and on and on and on where small groups are going to get spun up that can use these systems uh to do really complex projects it's less about like oh you're going to replace call centers like sure maybe but like what are we going to be able to do with these things that I can't even think about doing today chamath let's level this up and just talk about the bigger picture which is our giant rival in China they're actually catching up in some cases exceeding us if they get to AI first and then are able to execute on this given their top- down controls uh given the size of their population given their advantages in manufacturing that we're seeing now with xiaomi making cars you know what uh byd is doing in self-driving and cars what we're seeing now with chips versus Nvidia it's kind of getting set up that almost everything we're building here in the US China's copying at a very fast pace and then exceeding so what's at stake here big picture and then I guess we'll then look at why what should our what should our philosophy be you know on in a geopolitical way yeah let's just do an economics lesson why does anybody invest they invest because you let's just say a dollar you want to generate a rate of return that's better than all your Alternatives and the riskier it gets the more of a return you want right that's the basic idea so if you invest a dollar in bonds you can get five or six% if you invest a dollar in an early stage startup you want to get 50 or 60% returns okay that's that's obvious but the return that you generate is in part driven by how profitable is this company obviously and if you have a 300 person group of people that has to do something it's a lot harder for them to generate profit and then to generate a rate of return than it is if you have two or three people so the Chinese strategic comperative is no different than small startups versus an incumbent which is to be as hyper disruptive economically as you can so I think the big risk is not necessarily Chinese but many of these Alternatives will come from China which is to say that where are the incumbents most of the incumbents are American companies if you look at SAS software that's a perfect example of where there is trillions of of dollars the the software industrial complex as I call it right that's like a three and a half four trillion dollar industry it grows by 10% a year so every year it's adding 300 billion of quote unquote Enterprise Value is that value that is being created I think a lot of the customers would say no so if you're a startup or if you're China what is the most disruptive thing you could do well you could take a three-person team to disrupt a 30,000 person team and blow a hole right in the side of that trillion economy that's the big risk so whether the risk comes from here whether it comes from the Chinese I think what you're seeing is that if these agents can scale the Opex the actual load of making something will go down by an order of magnitude and that is and maybe even two orders of magnitude that is incredibly disruptive because the existing incumbents cannot compete with that cost scale and Gavin to just bring this around the horn Here China is playing a different game and obviously there's other competitors on a global basis but they are subsidizing for example their cars and their entire car industry so the margin of cars here in the United States and Germany and Japan that's their opportunity they don't actually need to make a profit on it they could just break even there are cars now 10 20 30 $40,000 cars now being made there so this then leads us to oh my goodness will Americans buy these we're pretty great customer Will trump block them with tariffs so let's make the jump what would the Tariff policy be if as chamat points out here we've got this big broadside of our Battleship that they can put a giant hole through which is our software industry our car industry pick and Industry that they might be able to just blow a hole in because they don't need to make a profit they just need to have jobs and break even what should our tariff policy be or what is it I mean we know what it is for Autos it's 25 do we know what it is I mean it seems like it's inlux so maybe we start there what should the policy be what do you perceive the policy is because it does seem to be a moving Target we'll see what happens on April 2nd because Trump keeps tweaking let's say adjusting in public yeah I mean this is so traditional economics would say hey tariffs are not a good idea we should have free trade you know everybody understands the principle of comparative advantage I do think the Trump Administration is pretty convicted that that approach has not worked well for America over the last 20 years and maybe it's worked well for knowledge workers but it hasn't worked well for kind of ordinary Americans and I think they are very convicted in changing that and trying to bring back kind of good highquality manufacturing jobs to America I think they see tariffs as an eff way to do that are they right is is it going to be because a lot of what we're seeing in factories is automation so what they may have been right about tariffs bringing back high-paying middle class jobs for the past 20 years we cannot go in a time machine and change that policy and isn't where the Puck's going that we're going to have Optimus robots figure robots pick a robot company doing all this work here's what tariffs do tariffs are a level setting mechanism that fixes a historical imbalance look the reality is that we have had meaningfully lower tariffs for products coming in then those reciprocal tariffs exist for our products going into these other countries that's true and the one thing I'll say about Donald Trump is you may not agree with the tariffs but he's been incredibly consistent I was on YouTube yesterday and I stumbled into an interview he did Nick maybe you can find this with Larry King in 1987 and he ran a full page ad in the New York Times talking about this exact issue and then went on Larry King and he walked through the entire trade imbalance 40 years ago yeah he's been on this so this is not a fly by night thing so what do they want what they want is to create the economic incentives to reshore as much industry as possible into the United States the delicate Balancing Act though is that after 20 years of globalism and a perverted version of free trade because it's not what it is today it's been perverted it is incredibly difficult to do that without these whack-a-mole problems emerging in other areas right whether it's inflation or whether it's retaliatory tariffs or consumption taxes all of these complexities I think are what has to get figured out but the structural reason of why tariffs make sense is not necessarily to overly penalize one country over another but it's simply to say if you charge 5% we charge 5% if you charge 10% we charge 10% Nick has the clip you just just listen to this from 40 years ago we don't have free trade right now because if you want to go to Japan or if you want to go to Saudi Arabia or various other countries it's virtually impossible for an American to do business in those countries virtually impossible so the fact is that you don't have free trade we think of it as free trade but you right now don't have free trade so Gavin let's get back to this original question with chat's important context Trump has been on this for a while but is this where the Puck's going we have the lowest unemployment of our lifetime wages are obviously not where we want them to be so is the right solution to in put in a bunch of tariffs create trade Wars and then hope that people are going to build factories that employ humans when in fact it probably will be robots so is there another solution like maybe raising the minimum wage I don't know what are you your thoughts well one I think it's jamat and that clip Illustrated he is convicted in this it's 40 years old it's happening yeah it's happening and so I would say two things like one I think it's all something I'm always conscious of at um my wife Becky one of her college or High School reunions there's a guy there who' been in her class and had been in the Navy Seals and he deployed to 80 countries he'd been the Navy Seals for like a decade and I said what's the one thing that you learned and he said the one thing I learned is everybody in America is always trying is always focused on making America better have youve been to 80 different places all around the world our only goal should be to not screw it up in America just don't make it worse because America is so much better than everywhere else so the first thing is like you know chth said the word delicate and I think that's right and if I had one thought for the administration it would be every time they say the word tariff whatever they think Wall Street in the markets and I would say you know I think a lot of Business Leaders are convinced that tariffs are bed now maybe Wall Street is wrong and the administration is right one thing everyone agrees on is deregulation is good so every time they say the word tariff they need to say the word deregulation two or three times because the best way to I think maximize the odds of this policy succeeding despite the headwinds from automation I think it's going to be a long time before we have hundreds and millions of robots you know even between China and Tesla I think it's going to take a long time to make vast numbers of humanoid robots the best way to encourage this reshoring is just making it easier to do business in America okay 100% can I just add one thing that's really really important what Gavin said there's a third thing I would add Gavin to your list which is we need to figure out the difference between manufacturing and IP and I think what we want to do is make sure that we trap the real value back back in America as well look I've told you guys a story before but when I was helping to run Facebook I was a signatory when we were setting up Facebook abroad we exported all of our IP to Ireland and lo and behold who do they sue Zach meta and me pink and we've been in this 10year lawsuit 15year lawsuit with the IRS because they're trying to come back and say hey Facebook you owe all of this money why because we exported all of our critical IP to Ireland and we trapped it there that should not have been able to happen we can fix it separately there's many companies who are abroad who live inside the American Market who have given a mechanism would import their IP into the United States if there was a mechanism to do so so not only can you have manufacturing you can also have the critical knowledge not just of that manufacturing but of that product of that supply chain those are the incentives that these nuances if we get right it's really a Renaissance for the United States let's talk a little bit about maybe other Solutions freedberg obviously perhaps raising the minimum wage or increasing corporate taxes in order to do that would that not also help us maybe build back the middle class that is the criticism I think some other people have we you know Trump when he did his tcj ja if people remember the tax cut and jobs act corporate tax rate was 35% we put it down to 21 and now rep ation of cash from overseas as chat's pointing out I think it's only 15% it's like everybody can kind of afford that so would that not be another way to solve this problem of the bottom half the bottom third not making enough or maybe even lowering their tax rate which is already pretty low well I think the proposal that I've heard from this Administration that we heard from Howard lutnick when we met with him was they're going to cut all taxes for people making less than $150,000 a year so get the tax rate to zero do you believe that do you think it's realistic now that it's after you do that you actually think that could happen I 100% do and in what timeline and why well that's the key question this is where this becomes like a first and second derivative problem let's just talk about it this way when you take money out of the economy you want to make sure you're also putting money back into the economy in another way to keep the economy stable or growing so if you're taking money out of the economy in the case of tariffs you're putting money into the government's coffers you're reducing people's spending because everything costs more now so consumers will spend less so what you want to do is you want to make sure that the money that you're repatriating is going back to the consumers so they can now have more money to spend so that's why you want to cut taxes at the same time that you're increasing the Tariff rates so if you increase the Tariff rates things cost more the government is now making things more expensive that's not good but at the same time if I cut your taxes and you got more money now than you did before so you can now buy the things that you were buying even though they're a little more expensive the economy should be able to remain stable or grow at the same time if you're cutting government spending that means that the government can afford to take less taxes in and so they can make that assessment so these are all we've said it many times these are all very related and to Gavin's point you've got to cut regulation at the same time so that the incremental dollars flow into things like automation onshore production so the cost of things come down and so again not a simple equation I would call it a grand economic experiment the analogy for me feels a little bit like there's four freight trains kind of passing by each other at very high speed and you're trying to pass all the ingredients to make a sandwich between the windows of the freight Trends you're trying to get them all over so you can make this delicious sandwich and get to this golden age that's the configuration that it feels like they need to kind of assess as and they're iteratively they have to thread the needle is I think your point and it's really hard to do and you use the phrase experiment Gavin you said before hey don't screw up this amazing country and what we've got here this sounds like a very high-risk you know High dexterity maneuver it feels like a a fighter plane like trying to land on you know a very small you know aircraft carrier can they pull this off can they get to the tariffs working at the same time inflation not spiking not impacting employment getting rid of people's taxes does this sound too complex to you and too much too fast what what is your honest thought Gavin as you watch this as a capital allocator are they going too hard too fast or is it worth pursuing this experiment as as freedberg framed it look Scott bent is probably the single most respected or was the single most respected macro investor in the world like he really understands the markets how they through to policy policy flows back he's an extremely smart talented guy they have a coherent Theory you know I thought Howard and Scott did a great job in the last two episodes Absolutely yeah kind of explaining the theory and the one thing I would just say having you know we all watched the first Trump Administration he is adaptable he adapts to circumstances and the midterms now are whatever whatever they are you know and and pol iCal terms they're they're 15 months away from you know around the corner yeah around the corner so I think they're trying to do a lot as quickly as they can but I also think that if after a few months it's you know 6 months nine months it's not working they will adapt and I think that's one reason there's such an emphasis on reciprocity you know and Vietnam came out and they lowered their tariffs on American goods and that's that's good and so I think the out is oh you know maybe it's not going quite the way we hoped we're going to declare kind of hey we have a series of grand Bargains with these countries declare Victory maybe tariffs on American goods are slightly lower tariffs here are slightly higher feels more fair and you know move on to kind of firmer ground of kind of deregulation balancing the budget cutting government spending and cutting Government taxes commensurate with the spinning Cuts so I think they're trying the risky stuff first and if it doesn't work they will attack quickly yeah that was my perception especially after hearing bent on the all-in pod great job uh guys on getting those long form and I think this is where the administration is strong it's when they do a long form discussion and you hear their thoughts about it it doesn't sound as crazy as when you know all due respect to the president when the president is like I'm going to go easy on them I'm going to go hard on them you know and it's like a reality TV show and who's going to get fired this week you actually have two incredibly thoughtful I will point out Democrats lifelong Democrats around Trump and I I think that's like a really I had this crazy observation gabin I don't know if you notic it as well you know Trump lost his reelection campaign and he filled his whole cabinet with a bunch of Republicans this time he's filled his whole cabinet and everybody around him's a Democrat and he's gone to a really unique concept here of how to solve the US's problems which is get the working man and woman a higher salary and lower their taxes this this could be like an incredible Grand bargain that bent I think is the architect of and letnik is you know the communicator and and uh executor of you think they have a chance of pulling this off what do you if you had to handicap it I hope they do as an American I hope they do I think they for sure have a chance of doing it they have a solid theory of the case they need to execute well um I would say Doge's efforts are important you know if you can really cut a trillion dollars of of waste Fraud and Abuse out of the government government spending that's good you know we should all agree As Americans you know maybe Democrats they want more government spending maybe Republicans want less but for whatever given level of government spending we want it to be as efficient as possible because if you're a Democrat that means more services if you're a republican maybe that means a smaller government so I think they have a solid theory of the case I think there's a reasonable chance it will succeed but if it doesn't I think they will tack quickly and the one thing they can't afford is a recession if they're focused on the def deficit a recession blows out the deficit so they will be ultimately sensitive to these market-based forces you know rates stock markets the foreign Cur foreign currency markets trath you want to uh maybe wrap this up for us here move on to some of the other topics of the Week John Arnold had a post this morning on X he was saying the deficit this year is going to be 1.9 trillion his best guess for 20 26 was 1.9 trillion and he was just kind of asking his followers what they thought if you listen to Howard last week what he said is I'm going to raise a trillion dollars and elon's going to cut a trillion now if that comes to pass then we have a balanced budget if you ask the sharp money on Wall Street their numbers range from 170 billion to 300 billion on the revenue side so let's take the midpoint of around 200 to 250 billion okay 250 if the sharp money is right that means that tariffs and all of that stuff will only really raise a quarter of a trillion which means that there's going to be even more pressure on Elon he's going to have to find not one trillion but 1.75 trillion again assuming that that $1.9 trillion deficit exists next year so that's the math it is A2 trillion doll Bogey and they have to fill it somehow my intuition is that the waste Fraud and Abuse is probably meaningfully more significant than we think when we were there we heard about one consulting firm 95 plus of all of their revenue multi-billion dollar Revenue comes from time and materials contracts with the United States government we heard throughout the week I've reposted it on X $65 billion is paid out to Consulting organizations Beyond just that one in these time materials costplay contracts if you start to add all of these up today we just heard that the2 billion grift to Stacy abrs was canceled and they're now starting a doj investigation into how those dollars got given to her all of these things start to add up it may be the case that if there's an upper bound on tariffs that there will be more than a trillion and Elon kind of fills in the Gap but I think it's possible they are looking Gavin also at military spending and maybe cutting that 8% a year every year for a couple years that's where big dollars are are sitting and obviously nobody wants to touch Social Security despite I do have to point this out for my besties you guys did a great job with that interview and uh you know I just want to say fmz for like trying to spin it as you know letnik was trying to take away people's Social Security they literally took an hour plus interview they clipped it to try to make it seem like he was saying the opposite of what he said he was saying the frauders will be the first to respond not my mom my mom would just you know call eventually and say hey can I she would assume that there was good intentions yes whereas the fraud would be like oh man I got to get here I think it's you know what swier did the same thing no let me finish my little thing here TR because I don't want you guys have to defend yourself listen I couldn't make it you guys did these last minute interviews mazeltov we missed you I thank you for saying that I would have loved to be there I will be at the next ones for people who are saying like oh there's some conspiracy there's no conspiracy I had ski week these guys went to do business or whatever they were doing and to see their friends in DC and uh you know these things happened very rapidly uh and I wasn't able to get there bottom line these were great substantive long interviews from Democrats one of them a gay Democrat by the way the highest ranking gay Democrat who's ever been in uh an Administration the left and the media should be giving praise to these interviews they should be studying them and they're doing the exact opposite they're trying to spin them into something they weren't it's a gift what the all-in podcast did to the American people by showing them a long form interview with the administration explaining these details don't spin it I think great I think it's great sorry I'm pissed off about it piss me off I don't think you should be pissed off I think it's wonderful that these people lie I think it's incredible that they just put it out there and it just further erodes what's happening I think if once Bobby puts a nail in the coffin of Pharma ads on TV byebye Anderson Cooper byebye all these guys I think it's great I'm so pissed off I'm sorry like when I see people lie like that they should be lying they should be lying they should it's great they're because they will not exist okay gav you're a neutral third party go ahead no I just say three really quick points like first what Howard lutnick literally said was if we can find a lot of waste Fraud and Abuse we don't have to raise the retirement age everybody talking about raising the retirement age to 70 if we administer these programs more efficiently we can keep it at 65 and you know that's good for everyone the second thing is it's just interesting to me there's so much doubt about this when the inspector generals of you know both Biden and Obama you know said there were hundreds of billions of dollars of waste Fraud and Abuse and I would just say someone in my immediate family has had their social security their identity stolen and someone is using their social security number to collect unemployment benefits in Alabama and this has been going on for two years and they've been unable to stop it and so you know you don't want to rely too much on anecdote but I think this is really happening and then just the third thing I would just say is I do think you know no one has ever raised no president has ever raised my taxes more than Trump did and I think they are pretty convicted in their focus on normal workingclass Americans and making their lives better is actually genuinely their North Star You can disagree with the theory of the case you can disagree with you know the the way they're communicating it but I think their intentions are good absolutely and you know what he even said in the interview if you if you really listen to it he said he was disgusted by the idea that you would even raise the Social Security age I think we should by the way any rational person I think the majority of people say hey maybe it should go up a year or two maybe we should have a little auster here on the margins but no of course not we can't talk about that and um you know the the thing this Administration could do better is communication those two long form interviews was a great step in the right direction they should do more of those and do should do a better job of explaining this waste and fraud they're doing a good job I give them like you know a B+ but there's more work to be done here and there's waste there's overspending there's fraud and there's abuse right these are like different categories to get to the fraud that takes building legal cases all that stuff's going to have to be referred to people we have a justice system here it's going to take years to figure out if somebody actually stole but waste and overspending we're going to find that pretty quickly so it's a process people and I I I for one trust the process because we're overspending massively let's get to some other conversations here I think maybe we start with J I just think it is it is whether it's a semiannual or quarterly something that is like the Doge report and everything's been audited and triple checked these are the three categories this is what we found I think something like that would be very helpful I think they need investigative journalists I'm I'm happy to help with this I'll do a doge pod you know listen I'm not part of the administration everybody knows I was never Trumper I'm independent blah blah blah disclaimer disclaimer disclaimer I would totally go in there and I would do a do J why do you keep saying independent and then you throw yourself a label that says you're not independent I'm telling people I I was a never Trumper but if Trump is going to surround himself with the moderate Democrat are you truly independent I like to think so I I try to be independent call balls and Strikes here on the program I'm not going to bend the knee to the administration I'm going to I'm going to be critical of trump coin I'm going to be critical of these deportations which we're going to get to and I will say critical things but I would go in there and I would do the Doge pod with Elon or whoever in the group is and go Point by Point through these things to explain it to the American public let's keep moving here we got such a full docket I want to talk about signal text our bestie and talk to him about it I think that's yeah I mean maybe I should go in there because listen I don't even consider this like a trump Administration now I consider this a democratic moderate Administration everybody around Trump now is a Democrat I think I might be in I might be in you guys look like you had a good time you guys look like you had a good time last week I kind of want to included it look like fun did you vote for Trump I don't want to bring in my vote I did not vote for comma let's keep moving here I'm going to keep dropping wow my go I did not vote for KLA I couldn't vote for her she said I don't want to say it but anyway let's keep going I I don't want to vote for somebody who was selected I wanted to vote for somebody who had a primary and the Democrats disr OD for not having a speedrun primary signal gate it's the biggest story in America right now on Monday turning this is incredible what a day no I me list I'm going to call balls and shrikes right now 70% of what they're doing I agree with 30% I don't I'm going to get to the 30% and human rights basis I think you just admitted you voted for Trump it's really incredible actually anyway let's keep moving here I'm from the great state of Texas I'll leave that signal gate signal gate signal gate on Monday the Atlantic published a story titled the Trump Administration accidentally texed me their War plan somehow Atlantic editorinchief Jeffrey Goldberg was added to a super high profile signal group with our secretary of state our vice president tulsy bessent the CIA director the Secretary of Defense how is this possible folks they added a journalist the edin chief of the Atlantic to their War planning signal group they shouldn't be using signal obviously to do this stuff and inside this group they discussed the plans to strike houy targets across Yemen nobody noticed nobody checked that the editor-in-chief of the Atlantic was in the group chat they included the exact t targets the actions the timing of all of this it was apparently cut and pasted from some other system by heg our secretary of defense and former Fox commentator that's not a dig it's just a fact and I'm not saying it as a dig chth people are losing their mind over this I could get into all the details I think most people know it because it's taking up the whole all the oxygen in the room in the media in the group chats number one what's your general take on what happened to how stupid is this how ridiculous is it does it matter go ahead Jam start us off here I think that what folks have stopped talking about entirely which I think is just worth touching upon okay is what is actually going on that necessitated this group chat to be created in the first place in such haste so I have a couple of images that I pulled just to explain what this issue is so the problem that we have is that somewhere after the war with Gaza Iran continues to fund these houti rebels in Yemen and what do they start to do they start to invade and flood into the Red Sea and they start to block up the suas canal in different points making it very perilous for Freight traffic to get there so what do folks do they're either forced to go all the way around the Cape of Good Hope or risk attack through the Suz Canal so what do you think happens well the traffic through the Red Sea in the sus Canal falls off a cliff and then you would ask well why is that important well the problem is that because of that other chart and this chart prices start to Skyrocket so if you're trying to ship things even going into the United States prices start to rise 30 40% going to Europe prices are rising 300 and 400% if you add that all together as Gavin said earlier we're in this very delicate moment where we're fixing all these parts of the economy the thing we can't have is productivity go down you can't have a recession and so if you have a bunch of input prices that go up or trade slow down now you're bringing the likelihood of a recession to the Forefront so that's one thing the second thing which was included in the group chat is it turns out that nobody was in a position to fight off these houthis except the United States the British the French all of their Naval capacity wasn't strong enough or adaptable enough to fight these folks off so the United States had no choice but to attack these guys and reset and so what happened now all of a sudden traffic is reset right volumes are back up by the third week of March which is where we are now we're back to where they were even a year ago the price of shipping is now contained the inflation risk is contained the productivity hit is contained it's just important that's the context why they did the attack great I find it crazy that we still actually for 95 articles though Jason on Signal we have only less than one article on this so I just wanted the smart people listen to our po to actually understand it the second thing the second we're to send the bill to Europe because this is really a European problem because okay so we have the whole Pacific Ocean we can accept things through and you can go ports in Texas or you go so the point is we're on a shock so the point is we're on a shock clock people had to act quickly here's my big problem with signal I think it was a [ __ ] up okay and I think I think I think it was an important set of decisions that had to be made but I think the using signal was a mistake but there's very one narrow reason why and we've said this in our group chat the signal desktop app is total and complete garbage okay and when you build apps somewhere along the way we were all told all of us as app developers oh you need to have an app on every endpoint it needs to be available for Android it needs to be available for the iPad it needs to be available for your phone it needs to be available for the desktop and the problem is now you'll have a computer at home you'll have a computer In Your Den you'll have a computer at the office some it person comes and helps you install this stuff and now all of a sudden instead having one attack Vector you you have seven right so this is insanity so it's a mistake it's a stupid mistake but I think it's a mistake and so I think like you know let's give it two scaramucci I think we'll forget about it give it a scarci or to should somebody resign should somebody be fired no no no I think these are mistakes and I think I think by the way sorry the other thing is John rackliff was very clear there are very clear procedures that they inherited which is no administration's fault but there's some security it person that writes these things it's approved and so rewrite those things to be more normal your thoughts here do you have a take so I think this issue will become one of whether or not government officials can use signal and apps like it for communication this is a controversy that's been around for some time but it's actually being tried in the courts right now there's I think four Active cases so the federal records Act was originally passed in 1950 and then there was this amendment related to electronic communications that was passed in 2014 and the federal records act says all government officials and employees have to create maintain and preserve adequate and proper documentation of activities transactions decisions policies and other business that's the law that's the law and it says adequate and proper documentation is defined as records that clearly document the government's decisions and actions and that can be preserved and retrieved for accountability transparency and hisorical purposes and then we have the foil laws which allow you as a citizen or as a journalist to go make a request Freedom of Information Act this is to have a functioning democracy what you're talking about here freeberg is people who work for us should not be able to endr run their communication and that's the law yeah the Foya provides access to government records because our taxpayer dollars pay for the government to do its work and therefore access so the question is is the particulars of the communication that's taking place amongst these individuals in this case and in the daily work done by government officials that's like this where people are updating one another or talking with one another about things does that have restrictions around preservation of Records under the federal records Act and the amendment that came out in 2014 and so there were a bunch of lawsuits one is the competitive Enterprise Institute against the OSP the office of Science and Technology policy in 2016 where using email accounts and Communications that weren't properly archived or preserved was challenged by this institute and the DC Circuit Court of Appeals ruled that the officials who use private email for official business must copy or forward email Communications government accounts to comply the citizens for responsibility and ethics in Washington act sued the Trump Administration in 2017 and this is ongoing in multiple forms right now in the courts where there's a lot of procedural complexity but the courts have generally said that they emphasize that these officials are obligated to preserve official Communications and that failure is violating the laws then there's Judicial Watch versus Department of Homeland Security and then there's National Security archiv versus Mike Pompeo the state department 2019 which is also still in the courts and I think from these cases and this particular incident there's going to become much greater kind of call it Clarity and also a better understanding of the consequences of what communication do you need to preserve records of and what communication are you allowed to have off the Record that you what do you think freeberg I mean we get it there's a what do you personally think like what do you David freeberg the sulan of science think I think it is counterproductive to have every piece of communication foilable and kept in the public record I think that's a mistake and I'll tell you why when you're making a business decision let's say you're making an HR decision the management team sitting around they're talking about a particular candidate or person at the company should we give this person a raise should we terminate someone you don't want to have a record of that that employees can then go pull up and see and understand because it will have a really muing effect and a dampening effect on the types of conversation on the authenticity of the conversation on the productivity of the conversation that you will be able to have if you're forced to say this is always going to be in the public domain true and so I do think that this idea on like how did you make a decision and what was the action that you took those to me feel like they should be recorded and they should be foilable but all of the background material all of the noise all of the dialogue that leads to that I do not think that should be foilable and I think that you need to justify the actions and the decisions that you're making as a government official but I don't think that you need to have a record personally of everything that led up to that action or that decision because I think that that will be really deeply unproductive let me give a take here this is a serious issue they shouldn't be doing it for obvious reasons it's very easy to hack personal phones and they do have a way to do this which is called the skiff and there's other places for them to have secure communication and as you point out they work for the American people they should be a record of this they're breaking the law by doing this so the the the administration should not be breaking the law obviously we don't want them to do that also hexa clearly took a report of the attack plan cut and pasted it from a some server somewhere and then pasted it over this is a known Vector your your clipboard is what it's called and this is an attack Vector that you know anybody who's in or has basic security training knows that you can get your clipboard hacked very easily they need to take ownership of it and this is one of the things that this Administration and this group does very poorly instead of taking ownership like chamad said here just take just own it no big deal this is a you know a chance for us to learn and iterate on the security protocols yada yada we apologize let's move on they attack and this is Trump's like Playbook we have to attack the journalist so what did they do they attack the journalist they take no ownership and the second thing which this Administration really has an Achilles heal for is on top of just taking not taking ownership and attacking um the hypocrisy because this was the entirety of the anti-hillary movement was oh my God she did this exact same thing with her email and Republicans had a long list of oh my God here's hold on I'll finish you'll get your chance sham to defend your boys the point is it's complete utter hypocrisy and it's distasteful to attack the journalist which you added this is incompetence it's a mistake own it well hold on and then every single person's phone has to get dumped now and so they're not doing a good job communicating what they're going to do to make sure that somebody hasn't gotten onto everybody's personal phone why are they doing this on their personal phones as chth you very much pointed out these are attack vectors they should be using the phones issued to them for these communications not their personal devices goad the first thing is I think you're wrong about the fact that they don't have an adequate claim with this journalist I think it's fair to ask what is the ethical standard that that journalist should have had if you're added to something you know it's inappropriate the guy just sat there lurking you don't know how it was added Jason you're speculating it could have been Sure hold on it could have been injected okay it could have been injected into a laptop nobody knows yet this is why I think just admit what happened was a mistake I think they did that they're looking into it let them look into it I don't think you need to have scalples and heads and all this other stuff but I do think it's important to say why was this guy lurking about okay what ethical standard should he have at C he had none and by the way this guy oh no that's ridiculous you're so wrong with this he he tried to figure out okay your opinion is wrong in this case respect he tried to figure out what was going on here and then when he did figure out it he contacted them and removed himself he didn't stay on there indefinitely if he did that that would be wrong but for him to be added to something he may have he may have been being attacked himself and the other reason you're wrong is they went on the attack immediately and they denied that there was anything wrong they did not take ownership of it and that's why we're having this debate right now is they don't take ownership of these things Marco Rubio did say someone made a big mistake there were no consequences we learned we're going to do better and he is a secretary of state so someone in the administration did say that this was a mistake yeah and the other guys attacked a journalist so that's what I find distaste no no but hold on a second Trump said it was a mistake too I don't think these guys it it is it's a mistake so fix it and move on but the point should be what is the mistake the mistake is the security protocols that these guys rely on I don't I'm going to just go out on a limb as expert as they are in policy I think they're in experts in technology so there is probably somebody that is responsible for how all of these folks communicate how all of these folks get software installed on their multiple devices okay how they get new devices it I'm guessing that it's not them so I think that they're using their personal devices I think that's the problem why why is anybody in government using a personal device to Share Plans how do you know that for because they said it was their personal device they've said it this has been established that they did this on their personal devices that that that's totally established now okay um so and they have skips for this so I I just don't understand why they don't just their but again I'm saying the bigger issue is that they had to operationalized quickly they weren't in a position to be together the importance of the issue is getting lost it was an important issue that has consequences they're all within 10 ft of a skiff at all times their their SUVs are Skiffs their offices are Skiffs scav you have any final that's why before we move on to the yeah I would just say I thought the contents were interesting and that there are a couple of things you know there's all this you know oh the Trump Administration is you know coing up to Russia and you know trying to blow up these you know this post World War II alliance with Europe there are two things one they said we are the only people on our side of The Ledger who can deal with the houthis and our side of Ledger meaning like recognizing kind of Europe you know tradition alliances the good team the good team so I thought that was interesting that just for all the rhetoric they're conscious of who's the home team and second they made it was very clear to everyone in that chat and JD van raised it 3% of America's trade goes through the sus Canal 40% of Europe's trade so we are really doing this it will help us a little bit but it will help Europe a vast amount and we're doing something that helps them that they cannot do now hey they're asking that they want to be paid but I just think it made me think that behind the scenes a lot of this rhetoric about you know the US and the European Schism is overblown and we're still helping them I thought that was interesting yeah I think it's important note okay let's move on to our final two stories the Trump Administration has deported 238 alleged gang members to a pretty severe prison called Cott CE coot prison in El Salvador here's a clip of them being dragged out of the United States and put into this extremely notorious prison this was all done under the alien enemies Act of 1798 this allows the president to detain and support individuals without due process from quote an enemy Nation during an invasion or quote predatory incursion it's been used before but only during actual Wars FDR used it to deport thousands of Germans Italians Japanese during World War II the Trump Administration is claiming that the gang members were sent to the US intentionally calling them a hybrid criminal State not surprisingly most of them were not all of them had criminal records in the US uh this was confirmed by ice and obviously some number of them appear to have been misidentified as gang members or terrorists I can tell you you know coming from a law enforcement family and just looking at the statistics out of 238 you're not going to bat a thousand so maybe you get a couple of these wrong former pro soccer player jersey Rees baros he fled Venezuela after being tortured by the government for protesting he's a refugee he has been mistaken for a gang member according to his people because he's got an arm tattoo supporting his favorite Club Real Madrid and there is a social media post that ice officials believe featured him making gang signs but it was actually the language for I love you according to to his attorney second example a shoe salesman and social media influencer noberto Rodriguez he fled Venezuela for Columbia out of desperation because he and his family were starving he's a father of three he was also suspected because of a tattoo which features playing cards and dice his family says he got to he got it to cover a scar on his forearm and third and final example stylus and makeup artist Andre Hernandez he is being represented by the immigration Defenders Law Center he claims he has no criminal history he sought Asylum after fleeing Venezuela where he was persecuted for being gay again his arrest was based on tattoos that is attorneys claim are not gang affiliated this has caused the US District Judge to pause these deportations the Administration has apparently continued these deportations and they're even gloating by doing videos highly produced videos threatening people with the prison in El Salvador again the seot your thoughts chth on this extradition process if any I mean as long as there's a mechanism for these mistakes to get rectified seems like the overwhelming majority of these folks should not have been in the United States and we part of illegal criminal organizations okay so there should be a mechanism Gavin your thoughts if innocent people were sent to a prison like that's a terrible mistake and you know that that happens and it shouldn't happen and hopefully it gets rectified but I guess my bigger thought is a little bit you know the this Administration and as we discussed they have a really ambitious agenda they want to fundamentally change America in the ways that they think will be better for kind of blue Coller normal working Americans and things like this you know signal gate if you if they made a mistake and sent innocent people to this prison there's only so many of those mistakes they can afford before they lose kind of the Mandate necessary to accomplish their goals and you know hopefully it's you know we're we're whatever we're not even into the you know third full month 66 days 66 days we're into the third month but um we're 4.5% of the way through the second term and it feels like yeah six gamucci in yeah it's brutal It Ain't Easy here this is such a good point though Gavin continue they just execution matters like if they they to accomplish their goals they need to execute at a high level and communicate clearly and effectively and just if innocent people were sent to you know this prison mistake signal gate look you know hey maybe it's a big mistake it's a small mistake depending on where you sit I thought Marco Rubio's response was good but just like I think execution is important for them to accomplish their goals great freeberg any thoughts here I do not agree with sending people to prison or Detention Center that due process I felt similarly that Guantanamo Bay because I don't think it matches the rights and the values that the United States should stand for I think it's different if you believe that they're here illegally part of a criminal Enterprise and we don't want to try them in courts here then we should ship them back to a port of departure somewhere else in another country maybe it's back to Venezuela and let their courts try them but I will talk a little bit about this El Salvador motivation as you guys know the El Salvador prison that they set up for putting the um the gang members in had a radical impact on living standards in the country in 20 15 the homicide rate per capita in El Salvador was 103 people per 100,000 so out of every thousand people were murdered every year they introduced this aggressive policy of rounding people up without you process and putting them in this prison and through that action they were able to reduce the homicide rate per capita below two per 100,000 which is what it was last year 1.9 so it had a radically positive effect on society but obviously at the cost of a value that we in the United States hold dear which is the the value of due process and and the importance of due process because all it takes is one innocent life being locked up but so you're saying El Salvador there was no due process there was no due process and so there are plenty of stories if you watch the documentaries on this prison there are plenty of stories of people that later were released when they were found to be completely innocent and randomly rounded up or caught up in a sweep or something that they shouldn't have been at um and there was actually one fascinating interview I saw of one of the guys who spent over a year in the prison was completely Innocent but he said you know what it was worth it because the government's been able to clean up the streets I got to find this clip but I was really like shocked I couldn't believe that a guy that spent a year in this prison actually had something positive to say because it was such a say that to get out who knows you know well it was such a profoundly difficult place to live in El Salvador and we've all heard these stories but I do think that there's an a cue being taken by this Administration that there's a way to kind of very quickly resolve to a positive outcome with respect to immigration and crime but I do think Gavin's point is right that we do have to have some boundary conditions particularly as it relates to human rights that we do value here in this country and as long as there's a court trial as long as there's a judge as long as there's some sort of it doesn't need to be a jury of peers but as long as there's some evidentiary hearing to make the determination that someone is you know likely this criminal makes sense but again I'm much more in favor if there's going to be forced movement of people I don't think that they should necessarily be moved into a prison as much as moved to a port of departure and have them tried in another country if is a crime or we try them here and put them in prison I agree so much with what you just said due process is important like America like human rights are a core American value that was great you acknowledged that like the outcome in El Salvador was good homicides down 99.9% lots of lives saved and just you know there needs to be a balance between these yes then let me ask you guys a question very pointed question if you guys could Implement an El Salvadorian Style incarceration system tomorrow and it would have the exact same effect on American Crime so yeah C by with and and and I'll give you there's a four or five% error rate would you do it would the benefit of the safer Society be outweighed in your minds by the error rate or not absolutely not most people would say yes because they would view it wouldn't affect them and then the two 5% of people who have family members who are innocent get locked up I get that I'm saying what do you think yeah I I I wouldn't compromise that value yeah yeah we don't want to compromise that value it's incredibly dangerous yeah incredibly dangerous we've been riding on a bit of a high and I think there's a couple of things here this Administration could do better and communicating when they make a mistake and then human rights is such a core part I believe me Jason calanis believes that there is a sadistic nature to this Administration is an Achilles heal for them and when you see them doing videos from these prisons and saying this is going to happen to you and this prison is known for torture and this prison is known for just absolutely the most abhorent issues in the world this is the sadistic nature of this Administration that I think they need to drop because it is going to derail them and people care in this country deeply about human rights and process and there is a constitutional issue right now because Trump and this Administration is disobeying the court when they say hey let's slow down here there is no cost zero cost to Americans sending these people to a was station and investigating each of these cases to make sure we don't send a gay hairdresser to El Salvador another country to be tortured in prison if that is in fact the case and it is Against All American principles to not have due process and to have innocent people potentially go to jail and what all Republicans should do is here is say this is going to derail the administration these are the things that will build up over time and people just pragmatically speaking people in America who are rooting for this Administration to do some good things like I am when they do stuff like this and I represent a large swath of people it loses them votes and this is why they I predict this is why they will lose the mid turns if they continue to do this type of stuff that's my position it's not virtual signaling I've cared about human rights long before the all-in podcast existed I my first job was working at Amnesty International and this is a giant Mistake by this Administration Gavin you had some thoughts this whole debate is a question of ins versus means and it's like we all agree that the homicide rate down 99.9% and Al Salvador is a good outcome it's a good end and this is one of the great philosophical questions and it's you know we can debate it endlessly and there has to be a balance between the two human rights are a core American value and I agree I think with a lot of what David said but I also think if you are you know going back to that homicide rate the Trump campaign you know they spoke to the mothers and the families of people who were brutally murdered or raped and murdered by um people who were illegal immigrants and were convicted criminals in their home country and were known convicted criminals and some how still were not apprehended and then committed terrible crimes that were very similar to the crimes they committed there you have a lot of compassion for the victims too but all they have to do like one of I thought elon's best moments and I think you know it's what doge is doing is great these are brilliant people working hard for free to do things that have never been done before in the government in terms of efficiency and kind of modernizing it but you know Elon said at one of the at the first press conferences listen we're going to make mistakes and then we're going to quickly correct them so to me I think all the administration needs to say and I do think more due process to David's point is good is like listen if we made a mistake it's terrible and we're going to fix it immediately and it just it bring gives you so much credibility when you say that agreed but isn't due process happening how else would you guys know that three out of the 238 were miscast the fact that you know that means the process is working I I think the question is what about the other 235 people their families talked to the press this wasn't from the administration from but the point is it's it's there so whether it's the freedom project or whether it's the Southern Property Law Center my point is there are resources is it bad when this happens absolutely my question is do you just blow the whole process up and then what do you do with the other 235 people You' hold all 238 at GMO if you wanted to in Humane prisons and process them and then have their attorneys get to look at their case you could give their cases to you could be public with their cases and say here are the cases these are the people we deporting and why right so your specific issue is where they're being sent yes you Cham they're being sent to the most sadistic prison in the world Cham do you want to answer your question about like the 5% trade-off like if you sweep up 5% of the people being innocent whether it's worth that trade off for Crime did I get an answer you well you asked the question but I wanted to hear your answer like what's your point of view on that I think that that's probably what happens today in America's prisons in fact it's probably more than 5% but I guess the question is Jam what is an acceptable you know it's a little bit like the trolley problem you know there are many variations of this I think the important thing is I think that that a bit above our pay grade but I don't think it's above the presidents and I think that that was part of what he was elected to do is make that call because I don't think he hid behind any rhetoric he was very clear about what his intentions were and to your point he did bring the you know Lake and Riley act I mean they were very explicit about what their intentions were yes but man it just feels like a little more due process being a little more careful with the signal but also just going back to what were 4 and a half% into the administration I'm not saying hey mistakes were made and it's okay inent people were sent to this prison that's terrible and I hope it gets rectified quickly if there was some concession here hey if we made a mistake we're going to fix it that would be a lot better than putting out promotional videos Ling how brutal this prison is that would go a long way with me but we're seeing the opposite they're releasing videos that they're producing we we'll play one here for you to see by the way I I think an important point about this and perhaps like the key part of the strategy of the administration is that this isn't the beginning of a continuous process but they're sending a signal which they expect will cause people to naturally immigrate out of the country that are committing crime or at risk of being caught for being associated with gangs and while beinga uh in the United States as a way to kind of Chase folks out so I think that there's some calculus and what's going on here with respect to the risk and the actions being hey look if we do this to the first 240 people and even if or four innocent people get caught up there's a net benefit ultimately because it will reduce the immigra immigrants kind of coming to this country that are parts of gangs and perhaps some of them will choose to go home you know they clearly believe that this is that this is going to save innocent lives in America that is their clear belief system well yeah and everybody wants that here's secretary chrisy Noam from the prison itself at Cott today and uh visiting this facility and first of all I want to thank El Salvador and their president for their partnership with the United States of America to bring our terrorists here and to incarcerate them and have consequences for the violence that they have perpetuated in our communities I also want everybody to know if you come to our country illegally this is one of the consequences you could face uh first of all do not come to our country illegally uh you will be removed and you will be prosecuted but know that this facility is one of the tools in our toolkit that we will use if you commit crimes against the American people harsh words she's trying to make it a deterrent clearly all right another amazing episode of Allin is in the can for Gavin Baker David freeberg and jth POA I'm Jay Cal Jason Cal canis and we will see you all greatest next time virtue signal [ __ ] [ __ ] did you see I love I mean I can't even take it there I'm sorry I'm passionate about some things I'm passionate about some things look at this I can't tell how much of the tension is real vers like I love I love let your winers ride Rainman David and instead we open source it to the fans and they've just gone crazy with it love queen [Music] of Besties that's my dog taking [Music] driveways oh man myit will meet me at should all just get a room and just have one big huge orgy cuz they're all this useless it's like this like sexual tension that they just need to release [Music] Som we need to get mer [Music] I'm going all in