E131: 2024 Fantasy President picks, debt ceiling agreement, Dollar dominance & more

1. 0:00 – 4:01

   Bestie intros + Vegas recap!

   1. JCJason Calacanis0:00

      Freeberg is punchy now. (laughs) He's getting salty.

   2. CPChamath Palihapitiya0:02

      Getting punchy, all of a sudden. He's punch drunk.

   3. JCJason Calacanis0:03

      Salty Freeberg reminds me of a story for this weekend.

   4. CPChamath Palihapitiya0:06

      Ooh. Okay.

   5. JCJason Calacanis0:06

      We're waiting in line to go to the Encore Beach Club to see Kygo.

   6. CPChamath Palihapitiya0:10

      Ooh, Kygo.

   7. JCJason Calacanis0:11

      And me and Freeberg are at the back of the line. Everybody else has gotten through. All you guys are filtering into the booth.

   8. CPChamath Palihapitiya0:16

      Kygo is tight.

   9. JCJason Calacanis0:17

      And Freeberg asks... (laughs) And they say, "Take out your pockets."

   10. CPChamath Palihapitiya0:21

       Huh.

   11. JCJason Calacanis0:21

       So I put down my phone. That's all I had, my key card.

   12. CPChamath Palihapitiya0:24

       (laughs) Yeah.

   13. JCJason Calacanis0:25

       Freeberg takes out a phone, his key card and a small bag of the Salt & Vinegar Salted Pistachios.

   14. CPChamath Palihapitiya0:32

       Oh, he travels with them?

   15. JCJason Calacanis0:33

       (laughs)

   16. CPChamath Palihapitiya0:34

       He won't leave home without them.

   17. JCJason Calacanis0:35

       So he has his little bag of pistachios. And the guy-

   18. CPChamath Palihapitiya0:37

       And they're like, "No food in the club."

   19. JCJason Calacanis0:39

       ... and the guy says, "No food in the club."

   20. CPChamath Palihapitiya0:41

       No.

   21. JCJason Calacanis0:41

       And he goes, "What do you mean, no food? This is in a bag. It's like, it's just pistachios."

   22. CPChamath Palihapitiya0:46

       Sealed. Just pistachios.

   23. JCJason Calacanis0:47

       They get in an argument-

   24. CPChamath Palihapitiya0:48

       Oh, no.

   25. JCJason Calacanis0:48

       ... back and forth, back and forth. He's like, "I'm gonna take a stand. This is outrageous." I said, "Freeberg, come on, let's just go." So we go inside.

   26. CPChamath Palihapitiya0:53

       This is where he takes a stand.

   27. JCJason Calacanis0:55

       And then he's like, "Can you believe it? They took my fucking pistachios. Like, these were my pistachios." (laughs)

   28. CPChamath Palihapitiya0:58

       He's tilted.

   29. JCJason Calacanis1:00

       Yeah.

   30. CPChamath Palihapitiya1:00

       He's tilted. Easily tilted.
2. 4:01 – 30:43

   Sacks donation strategy, Biden's uncomfortable truth, mental acuity concerns, fantasy picks for president!

   1. CPChamath Palihapitiya4:01

      pushed. Uh, speaking about pushing 150 dimes. Uh, Sachs, you've been getting a lot of press for being the architect. I saw some stories. Let me ask you a question.

   2. DFDavid Friedberg4:09

      Total fake news.

   3. CPChamath Palihapitiya4:11

      All fake news. We know that. Everybody's emailing me to try to get answers about you. I just CC you on this, but the press has been trying to cover your role architecting the Ron DeSantis presidential race.

   4. DFDavid Friedberg4:21

      We talked about it last week. What's to cover?

   5. CPChamath Palihapitiya4:24

      We did. Well, the press wants to know what 150 dimeskis is.

   6. DSDavid Sacks4:27

      (laughs)

   7. CPChamath Palihapitiya4:27

      Uh, they can look it up in the Urban Dictionary, I think that would be easier. But let me ask you a question about your giving strategy or your donation strategy. I noticed that you're donating to RFK for president and you're donating to Ron DeSantis. Are you donating to any other presidential candidates? And why are you betting both sides of the aisle? This is confusing to me. I thought you wanted one side to win.

   8. DFDavid Friedberg4:52

      I mean, I've already explained this on previous pods.

   9. CPChamath Palihapitiya4:54

      I don't know the answer. What's the-

   10. DFDavid Friedberg4:55

       The simplest way to understand my political giving is just to watch the All-In Pod and I always end up describing who I'm supporting- ... and why and which causes on the pod first. And then I back it up, I put my money where my mouth is. So like, there's no mystery. There's no, like, back room deals going on. It's just me writing checks in support of things I've almost always already talked about on the pod.

   11. CPChamath Palihapitiya5:19

       Okay. So what about this question of betting both sides? So you're, you're, you're betting for both teams in a, in-

   12. DFDavid Friedberg5:26

       Well, I've said-

   13. CPChamath Palihapitiya5:27

       ... in a basketball series. Like, I don't, I don't understand that.

   14. DFDavid Friedberg5:29

       Well, I've said that... It's not competitive at this point. I've said that I would support RFK Jr. for the Democratic Party nomination and I support DeSantis on the Republican side.

   15. CPChamath Palihapitiya5:39

       Got it.

   16. DFDavid Friedberg5:40

       There's no contradiction. I guess if they both made it to the general, then I'd have a real dilemma.

   17. CPChamath Palihapitiya5:46

       Hm.

   18. DFDavid Friedberg5:46

       But let's face it, they're both underdogs in their lane.

   19. CPChamath Palihapitiya5:49

       Hm. Okay.

   20. DFDavid Friedberg5:50

       It'd be a high class problem to have if it ended up being a DeSantis Kennedy race instead of a Biden Trump repeat.

   21. CPChamath Palihapitiya5:56

       Well, I mean, I've played blackjack with you and you do play multiple hands at once. So-

   22. DFDavid Friedberg6:00

       (laughs)

   23. CPChamath Palihapitiya6:00

       ... I guess this does, (laughs) this does track. It's, it's not enough action for you to just play one hand.

   24. DFDavid Friedberg6:05

       I don't really see a contradiction there. Right now there's a-... Trump, DeSantis race going on, and there's a Biden, Kennedy race going on.

   25. CPChamath Palihapitiya6:13

       Okay. Now, you hold a lot of fundraisers.

   26. DFDavid Friedberg6:16

       Chamath and I are actually doing an event for Bobby Kennedy soon, in the next two weeks.

   27. CPChamath Palihapitiya6:21

       Got it. Let's go to you, Chamath.

   28. Well, I think it's important to just acknowledge an uncomfortable truth, and I come f- at it from a person who's independent. I'm not registered Democrat or Republican, but I've donated millions of dollars to the Democrats in the last couple of cycles. But I'm concerned about Joe Biden's mental acuity. And recently, when you look at how the White House behaves, the thing that I'm worried about is that there's almost, like, this sensation that there's a shadow government that's actually running the country, and we didn't elect any of those people. And this is nothing to say anything bad about Janet Yellen or Jeff Zients or anybody else, but I think it's very important to acknowledge that, you know, other presidents have typically seen turnover in the highest ranks of government every two years or so, and there's been incredible consistency. Now, one could say, "Well, that's a good thing." The other side of it is, well, that's what allows more vibrancy in government and to make sure that the president remains always in charge. And so, I think it's very important in this moment, where we have a president who's 82 odd years old, or however old he is, we need to have the chance, the American public, to re-underwrite his mental acuity. And I think that's a judgment that we should all be allowed to make. And I think the fairest way to do that is to field a candidate who can be on the debate stage with him and who can actually just go toe-to-toe on the critical issues so that we, as an American electorate, can decide for ourselves, where does this issue land? Is he mentally super sharp and ready to go for another four years, in which case a lot of folks will support him? Or is this a moment where we actually need to be very responsible about the future of the country and not create some puppet government situation? I don't think it's funny that we have this Weekend at Bernie's, like, meme that goes around about him. This is the President of the United States. He's the most important person in the world. We can't be in a situation where, like, that is a 30% probability that people joke about. So, my support of Bobby Kennedy is in part because what I've heard from him I find intriguing-

   29. Hmm.

   30. ... but the more important thing is somebody needs to be in the arena, on the Democratic side, and put to test this mental acuity construct here, and get us to an answer. Because otherwise, I am worried that there's a bunch of folks that were not elected who are actually running the government, and I'm not sure how much Biden actually knows or doesn't know, and I want to know the answer to that question.
3. 30:43 – 1:11:34

   Debt ceiling agreement, US debt situation, is USD dominance in trouble?

   1. DFDavid Friedberg30:43

      interesting.

   2. CPChamath Palihapitiya30:43

      Let's pivot to the debt ceiling really quick here, the House voted overwhelmingly to pass the debt ceiling agreement 314 to 117. It's in the hands of the Senate, could be passed by the time you're listening to this. Some Republicans, uh, think the spending didn't go far enough, no shocker there. But Speaker McCarthy called it a first step, projected the bill would reduce budget deficits by $1.5 trillion over the next decade. Some highlights, nondefense spending flat in 2024 at $704 billion, only increases 1% in 2025 and, uh, aims to limit federal budget growth to 1% for the next six years. Prescinds $30 billion in unspent COVID relief money. That seems logical. Fully funds medical care for veterans, that seems like a good idea. Reallocates $20 billion from the IRS over the next two years to put towards nondefense programs. That's that crazy idea to hire 80,000 or something IRS agents. Pauses on student loan repayments will now end in August, we've talked about that on the show. Biden's student loan forgiveness plan will be settled in the Supreme Court. Some stats on US debt, put up two charts here and then I'll get Freeburg's position, 'cause he's very passionate about this. US annual surplus or deficits through end of year 2022, you see those, uh, great years, I think those are the Democratic.com Clinton years. He did... ran it up. Well done, Clinton. US national debt end of year 2022, my Lord, uh, 32... getting close to $32 trillion. US annual federal spending up at around, um, breaking $6 trillion a year and tax revenue by deficit year, there you have it.

   3. DFDavid Friedberg32:31

      Go to that, uh, the red chart. This is the, our national debt. This is a upside down hockey stick.

   4. CPChamath Palihapitiya32:36

      Yeah.

   5. DFDavid Friedberg32:36

      So this is what's concerning about it, is we're going exponential on this thing.

   6. DSDavid Sacks32:41

      The problem with this, just to reframe it once again for the 100,000th time-

   7. CPChamath Palihapitiya32:46

      Wait a sec, wait, this red chart, isn't this Freeburg's losses in Vegas this weekend?

   8. DSDavid Sacks32:50

      (laughs)

   9. CPChamath Palihapitiya32:51

      I think that's Freeburg. Oh, no, that's our collective losses in Vegas this weekend. (laughs)

   10. DSDavid Sacks32:55

       I think we did the math, this group was... accounted for 10 bips-

   11. CPChamath Palihapitiya32:59

       I got close. (laughs)

   12. DSDavid Sacks32:59

       10 bips of, of, uh, Vegas' blackjack revenue for the year. So good job everyone.

   13. CPChamath Palihapitiya33:03

       Oh, man. Good job. People, everybody in Vegas has now-

   14. DSDavid Sacks33:06

       Yeah.

   15. CPChamath Palihapitiya33:07

       ... uh, completed their Q3 quarter targets early. (laughs)

   16. DSDavid Sacks33:10

       So the, the problem, obviously, with mounting debt is the interest payments on the debt cause you to take out more debt and it... there's a tipping point where it becomes insurmountable. And there are many people sounding the alarm that we may be entering that point, that in order to fund the interest obligations on the debt, we need to take out more debt, and then there's more interest payments, and therefore there's more debt, and it just keeps getting-

   17. CPChamath Palihapitiya33:34

       Satisfying. (laughs)

   18. DSDavid Sacks33:34

       ... bigger and bigger. And so this chart I'm sharing here is actually from the federal government's GAO, the Government Accountability Office, which acts almost like an independent accounting and forecasting body, trying to provide some outlook on the fiscal condition of the federal government. And this is an analysis, I think, they put out a few weeks ago, showing that as of the fiscal year '22, 8% of the overall federal budget was going towards interest spending. By fiscal year '25, it'll be 26%, and then net interest spending will need to grow to half of the budget. But if you go to the other chart-

   19. CPChamath Palihapitiya34:12

       Sorry, why don't you say the... why don't you say the years? 'Cause it's important to note what years they're talking about here.

   20. DSDavid Sacks34:17

       2051, 2096 is what they're showing. But-

   21. CPChamath Palihapitiya34:20

       Okay, this is a long window, yeah.

   22. DSDavid Sacks34:22

       I get it, but let me show you this chart.

   23. CPChamath Palihapitiya34:23

       Yeah.

   24. DSDavid Sacks34:23

       Just pull up the first chart. So this is our federal government's interest payments per year.

   25. CPChamath Palihapitiya34:27

       Mm-hmm.

   26. DSDavid Sacks34:29

       And so this is how much the government pays on interest for the debt. By the way, most of the debt is getting refinanced now at the higher interest rates, because a lot of this debt was sitting in, in ZIRP era since 2008. But as the debt has to get refinanced and more debt is taken on to fund the interest payment obligations, the interest payment actually starts to, to mount more significantly. And that's what we've seen in the last two fiscal years in particular. Now, when you take this chart and you overlay how much we spend on defense, so here's defense spending, we are, I think as of this month or last month now spending more... the federal government is spending more on interest payments on the federal debt than they are on national defense. Whether we believe we are spending money on national defense in a smart way or in an accountable way, or whether these are good strategic priorities and good strategic decisions, the fact remains that at some point here, our ability to actually fund the programs that we want to fund, whether they're Social Security, Medicare or defense, the, the major cost outlays for the federal government, it's gonna get further hindered and continually more hindered by the fact that these interest payments are climbing so significantly. And if you go to the third chart, I think it kind of provides the final point, which is Social Security. And we're very quickly seeing interest payments mount to the point of where Social Security spending lays. And, and when that happens, obviously, as you guys know, everyone talks about that as being the golden program. The right and the left, the Democrats and the Republicans simply will not touch Social Security from a policy perspective, from a getting elected perspective. But the economic and ar- arithmetic reality is running up against them, which is that the interest payments on the debt are starting to threaten our ability to fund Social Security and, and, and Medicare. There's many more charts we could pull up to, to highlight this. The Republicans, in announcing the, the debt deal this week, made a lot of proclamations about it being a win and showed how we were able to reduce spending by-... $2 trillion, I think the, the, the, the statement they made, the deal cuts $2.1 trillion in spending over the six-year life of the bill, and one and a half trillion dollars in statutorily mandated savings over the next two years. $2.1 trillion over six years, remember, we're talking about a seven milli- $7 trillion per year budget, so that's $42 trillion over those six years. We're cutting two trillion of 42. So it's a 5% impact.

   27. CPChamath Palihapitiya36:53

       To start.

   28. DSDavid Sacks36:54

       It's a start, but what leverage do they have now? And I think that, uh, and, and I'm not, I'm not-

   29. CPChamath Palihapitiya36:59

       Isn't it good news that there was consensus, Friedberg, that they actually did decide to make cuts? Uh, that feels to me, and we did predict here that they would get this done, it does feel to me like this is some amount of progress, right? I mean, do, do you feel good about it or indifferent, Friedberg?

   30. DSDavid Sacks37:13

       I, I think you guys know, I, I, I think that there's... We ha- we have to tackle the, the structural problem of revenue, spending, interest rates. I- those are, like, very, um, big numbers that are, that are challenging each other.

Episode duration: 1:35:58