E76.5: Food shortage, China's grand plan, inflation, French election plus an All-In Summit preview

1. 0:00 – 1:03

   Surprise part two!

   1. JCJason Calacanis0:00

      All right. What? Oh, we're doing this again? All right, listen. It's a two-parter. You re- you listened to the first part. Now, this is the second part. Episode 76.5, if you will. This is our first ever two-parter, part two of our two-parter. You already listened to part one of episode 76. That's Elon and Twitter, lots of details there. And now, we're gonna cover some more topics, including the global food crisis, China's plan to stockpile a bunch of food, geopolitics, wall around the horn, French election, Germany, et cetera. And then we'll go into details about a little bit of the drama and details, pageantry, parties, poker, all the good stuff of the All In Summit coming soon. Okay, enjoy the show, everybody. I'll see you on Monday.

   2. NANarrator0:43

      (upbeat music) . We'll let your winner slide. Rain Man, David Sachs. I'm going all in. And I said. We open sourced it to the fans and they've just gone crazy with it. Love you, Betsy. Queen of Quinoa. I'm going all in.

   3. JCJason Calacanis1:00

      There's, uh, still a war raging,

2. 1:03 – 9:27

   Friedberg breaks down the global food crisis and predicts China's grand plan

   1. JCJason Calacanis1:03

      but, uh, I wanted to get an update from Friedberg on the food crisis, which he, um, predicted very early. Fertiler- li- ferti- fertilizer prices are still climbing like crazy. There's been some food rioting in China, which I think is a separate issue. He'll educate us in a minute. Sri Lanka. So what is your theory of what we're gonna do from here, Friedberg? Because I think we're all waiting for this shoe to drop, and I think you predicted this is something that we would experience into the fall and into next year. So when- when are we-

   2. DFDavid Friedberg1:37

      So I look at it-

   3. JCJason Calacanis1:37

      ... gonna actually see these food riots occurring? And then does China's food riots have anything to do with this, or does that have to do with a- a fresh food-

   4. DFDavid Friedberg1:42

      Uh, yeah, I think- I- I- I would put the Chinese food riots as kind of a separate localized-

   5. JCJason Calacanis1:46

      Yeah. Okay.

   6. DFDavid Friedberg1:46

      ... supply chain problem related to the lockdowns.

   7. JCJason Calacanis1:48

      Got it.

   8. DFDavid Friedberg1:49

      But we're definitely... Uh, you know, I- I think I mentioned last week, the USDA planting report showing in the US how acreage is being reduced on corn. And, and we're seeing this around the world where acres are coming out of production, or less fertilizer is being used, which means less food is being made. So everything that we predicted. I mean, this is a slow train, a titanic into the iceberg that we're watching right now, and it's gonna continue for nine to 18 months. So, you know, one of the questions that people are now asking, which I said, you know, would become a really critical next step in this crisis, is how are we gonna bridge the gap in calories? Where's the food gonna come from? And how are we gonna feed nations that are almost entirely dependent on imports that are running out of food or are out of food? So I've mentioned this in the past, the whole world runs on a 90-day food supply, which means roughly 25% of the world's calories are in storage right now. But that's not the case uniformly. So some countries, like Tunisia and Somalia, Ethiopia, have close to zero calories in storage. Some countries, um, like, uh, the United States are roughly, you know, 30-40% of our, you know, annual consumed calories are sitting in storage. China is a complete outlier. For years, China has been stockpiling food, and at this point, China has 150% of their annual consumption of food in storage. So they have supplies that if all food production and import stopped in China, they would be able to feed their population for one and a half years. That's an incredible supply of food. So as you look around the world to places like Sri Lanka and places like Somalia that are struggling to figure out how are we gonna bridge this gap on calories that's about to hit us, Egypt is without four months of food, by the way, and Egypt is dwindling. They cannot get the food, um, out of the Black Sea. So China is gonna be one of the very few potential solutions for bridging the calorie gap over the next year. And I have a strong prediction and a strong belief that because of that, China will use it to maximal leverage, and we will see over the next year an incredible amount of leverage and power being accumulated by China because of transactions that they're gonna start to enter into to bridge the calorie gap around the world. So in the Horn of Africa, for example, there has been this continuous presence of China trying to give themselves a military base, trying to take a, um, uh, um, some influence over local media. Um, and there's been this kind of push and pull with, uh, you know, certain populations around whether or not we should kind of embrace China locally. And I think that, for example, the, uh, the food crisis that we're seeing emerge in Ethiopia, Somalia, Eritrea, Djibouti, is going to be resolved by China, and China is gonna end up gaining influence, gaining military presence, and establishing a more permanent foothold in the Horn of Africa because of the position that they're in of strength with all these calories and the, and the need in these regions. And that's not just there. Sri Lanka, other parts of Southeast Asia, even Western Africa, Northern Africa, China is gonna show up, and they're the only country that can show up. The UN, the World Food Programme, they're gonna do everything they can to shuffle calories around, change food supplies. But I do think that one of the things that everyone's gonna be watching, and it's- it's a slow roll. This isn't gonna be some one big deal and everyone wakes up. Over the next year, while the US is, you know, trying to do everything we can to, uh, maximally impose sanctions on Russia, China is slowly turning the crank around the world on the influence that they are going to gain because of this food crisis and the absolute, um, uh, you know, surplus that they have locally and the ability to export that surplus to support needs around the world. And it's not gonna be free. It's not gonna be cheap. So I- I thought it was worth highlighting what we're seeing, and I shared a couple of articles with you guys and with Nick, articles that no one is paying attention to, and this isn't some conspiratorial, "Oh my God, there's some dangerous thing happening." I'm just pointing out one of the things that's happening as we talk about, you know, the great change in power, the shift in power globally that's happening. It is happening in a very significant way this year, um, given the surplus that China has, the dearth that many countries have, and the inability for the US to, to really adequately respond to the food crisis that, that's emerging.Um, and so I thought it was worth bringing to everyone's attention. There's a lot of little articles that, that support this point. I shared them with you guys. You guys can put them in the show notes and, and put them up on YouTube and whatever. Um, but I think this is going to become a macro trend that we're going to wake up to in six to nine months and be like, "Whoa, what the heck happened?" How, you know, h- how, how did China get so much leverage around the world? And, and, and it's starting now.

   9. JCJason Calacanis6:30

      Sacks, thoughts on it?

   10. DSDavid Sacks6:31

       That's what happens with every war, you know? We all, we go in hot, you know, we, it's, you know, rah-rah, we're all gung-ho. And then at some point in time, we're like, "Wait a second, why did we do that?" You know? (laughs)

   11. DFDavid Friedberg6:41

       Yeah. (laughs)

   12. DSDavid Sacks6:44

       And, you know, and, and look, there's no shortage of, of Neocons and liberal interventionists who are all saying this war is wonderful for us because it's reunited the American alliance and the Western alliance, and that this has been, this war is a good thing for us. Let's keep it going. Let's bleed Russia. Let's topple Putin. Let's destabilize the regime. They, they're in favor of protracted conflict that I've been, you know, warning against. And what Freberg is saying is the longer this conflict goes on, the more of these di- disastrous scenarios are gonna materialize.

   13. JCJason Calacanis7:16

       Uh, what are you, what, what is your take on how crippled Putin is right now, David, just objectively? And again, you're not a fan of Putin. You're just responsible for the war.

   14. DSDavid Sacks7:24

       Listen, yeah, look, I don't- I don't have any-

   15. JCJason Calacanis7:26

       You've been clear about that.

   16. DSDavid Sacks7:26

       I, I, I, I don't have any-

   17. JCJason Calacanis7:27

       But he's just lost a ship, like, I mean, this does not look good for him. Um, it feels like he can't... And he's losing all his tanks. I mean, this seems like a crazy outcome for him.

   18. DSDavid Sacks7:35

       I don't, I don't know anything you don't know in terms of, you know, I'm just a consumer of information, but I tend to think that we are overly optimistic in the West. And look, the war has clearly gone very bad for Putin. But this idea that everything, that magically we're gonna get regime change in Moscow, we're gonna get Gorbachev 2.0., that that is, that is an objective worth protracting this war for, uh, I tend to think it's gonna be a mistake. I mean, that, that's... Now, doesn't mean I support Russia's invasion. I've said it's illegal, it's a crime, it's an er- er- violation of international law, it's a humanitarian disaster. But what I've supported is a, is a, uh, negotiated peace, a settlement that we try to get as quickly as possible. That is clearly not the administration's position on this. They wanna keep this thing going. And, you know, this idea that the, that a long war is good for America's alliances, I would disagree with that because you're already seeing all over the world now, people are starting to object to American policy. You saw it with India and India is the world's largest democracy, they should be on our side. They definitely should not be on China's side because they have a huge, uh-

   19. JCJason Calacanis8:42

       They're not.

   20. DSDavid Sacks8:42

       ... latent tension. But China and India are both de facto on Russia's side on this. Uh, Africa and large parts of Latin America are-

   21. JCJason Calacanis8:52

       Well, India would like to have oil and they'd like to have a good deal on oil. Yeah.

   22. DSDavid Sacks8:55

       They would like to maintain, they are, they would like to maintain their relationship with Russia, and they did not support the denunciation of Russia. They would like to see this conflict end. Large parts of Africa would like to see it end, Latin America. Basically, all the victims, uh, if there's a famine in the world in six months like Freberg is saying, they are all very worried about this. All of them have expressed concern with the American policy, which seems to be to protract this war.

   23. JCJason Calacanis9:19

       Okay. And Freberg, you have to go do your talk at Berkeley. Congratulations. Um, we'll see you next time. Thanks for the contribution.

3. 9:27 – 18:22

   Inflation: 8.5% CPI in March, potential causes, what the rest of 2022 might look like

   1. JCJason Calacanis9:27

      Chamath, any thoughts on the, um, CPI? We, we said a record that seemed to have gotten lost in the, the haze of Twitter.

   2. CPChamath Palihapitiya9:33

      I learned, I learned something really interesting that I just wanted to share with you guys.

   3. JCJason Calacanis9:37

      Uh-huh.

   4. CPChamath Palihapitiya9:38

      So there was a big CPI print, obviously, but there was a report, probably not many people read it, but it was about, uh, home equity. And the takeaway was that since 2020, Americans have taken two, 430, I think the n- exact number is 427, $427 billion of home equity out of their homes and effectively spent it. So what it, what it started to make me think about was if you look at all of that home equity, plus the stimmy checks, plus the unemployment insurance checks, that starts to explain, I think, why the labor markets are so tight and why people haven't gone back to work. There is no motivation because there's just so much money sloshing around for them to basically not have to be forced to do any of this stuff that they don't want to anymore. And I think the, the thing to keep in mind is, like, that's also what's gone into the stock market. It's also what's driven up the price of used cars, new cars, all of this stuff. I just think that kind of, like, starts to paint a picture of CPI that's really important, which is that it's probably a little bit more transitory than we may-

   5. JCJason Calacanis10:49

      Mm.

   6. CPChamath Palihapitiya10:49

      ... actually think. Because when you exhaust all of that extra money that's in the system-

   7. JCJason Calacanis10:53

      Dry powder, yeah.

   8. CPChamath Palihapitiya10:56

      ... there's not as much inflation to be had. And I think most people are now forecasting that inflation is really gonna taper off. And the big warning sign that everybody is sort of, you know, marching towards is, you know, too many excessive rate hikes between now and the end of the year could actually push us into a real recession. And we, we were talking about that before, but the probability is now sort of like one in three. Whereas before, I think, you know, David and I sounded a little bit crazy when we were talking about it. So I just wanted to put that out there as something I learned this week that I thought was really important, worth considering your Mosaic-

   9. JCJason Calacanis11:28

      The labor participation rate peaked at 67, 68%.

   10. CPChamath Palihapitiya11:33

       But half a trillion dollars of home equity-

   11. JCJason Calacanis11:35

       And now it's 61.

   12. CPChamath Palihapitiya11:35

       I mean, half a trillion dollars of actual spending in the economy, that's a ton of money to be absorbed.

   13. JCJason Calacanis11:41

       Right. If people have a couple of hundred grand in their bank account who own homes or whatever, the- there's no need to go back to a job. And if you don't feel safe 'cause you maybe still have some COVID fears, you don't wanna commute, or you're just out of the rhythm for two years and you're like, "Ah, I'm kind of enjoying skiing," or whatever you're doing, whatever your jam is, maybe there's no, there's no rush to get back and let the million job-

   14. CPChamath Palihapitiya12:00

       You'll wait until you, um, you'll wait until you exhaust all of that money.

   15. JCJason Calacanis12:04

       Yeah. This is a, this is... And then we're not, as we talked about, we're not letting people into the country at the same time. So we still have 10 million job openings.... that flips, that would be economic activity. That would be helpful in fighting, uh, fighting against, uh, a recession, correct?

   16. CPChamath Palihapitiya12:22

       I mean, I, I, I think that, that we're probably gonna have a, a quarter or two contraction. It, it, it's probably gonna happen at sort of at the late end of this year, beginning of next year. Just the real question is how, how high are rates between now and then? And again, I think the setup isn't very good, which is that the investors in the stock market are playing chicken with the Fed. And, you know, they're just at the beginning of a rate cycle and they haven't been able to impact any real forms of liquidity in the equity market. And so, I think-

   17. JCJason Calacanis12:53

       They're holding.

   18. CPChamath Palihapitiya12:54

       ... they're gonna, they're going to attack that, and the only blunt force instrument they have is rates. And so, you know, you could see rates of 3, 3.5%, and that's gonna impact a lot of stuff. And the problem is that, you know, uh, it's going to be after the economy has slowed down because it's going to be after a lot of these, you know, fake savings, if you will, um, have been depleted.

   19. JCJason Calacanis13:18

       Yeah. Well, we're seeing some pressure come off as well. The car shortage is kinda ending, and wages have raised, so the... it seems like they're, in, in this, you know, confluence of events, certain things are starting to work themselves out. Are you bullish?

   20. CPChamath Palihapitiya13:31

       Hey, can I tell you something else? I was, I was in Washington, uh, this week. The number of people that listen to our pod, it is incredible.

   21. JCJason Calacanis13:41

       Huh. That's amazing.

   22. DSDavid Sacks13:41

       It's interesting, yeah, how many-

   23. CPChamath Palihapitiya13:42

       Incredible.

   24. DSDavid Sacks13:43

       ... people in Washington care about our views on politics.

   25. CPChamath Palihapitiya13:46

       It's incredible. The number of people-

   26. DSDavid Sacks13:47

       Because I've heard that feedback too.

   27. CPChamath Palihapitiya13:48

       Yeah.

   28. DSDavid Sacks13:48

       You know?

   29. CPChamath Palihapitiya13:49

       It's really, really, really special. We've, we've stumbled into something pretty cool. And the fact that it's like must... It's, it's, it's, uh, it's must listening. It's must listen at this point.

   30. JCJason Calacanis13:58

       That's like a Sunday weekly show. You just get a different perspective from-
4. 18:22 – 23:08

   Understanding French election results so far

   1. CPChamath Palihapitiya18:22

   2. DSDavid Sacks18:22

      Yeah, and if you look, if you look right now what's happening in France, Marine Le Pen is surging-

   3. CPChamath Palihapitiya18:26

      Unbelievable.

   4. DSDavid Sacks18:27

      ... against Macron. I don't know if she's gonna pull off the upset, but one of the major pillar... Well, actually, here's what she's running on. She is saying that she has been focused on inflation and cost of living, and she says Macron has been distracted by being America's basically lapdog, puppet, whatever on Ukraine. So she's saying we need to focus on the French economy, and she's also saying that we, as France, should set our own foreign policy and not be so deferential to the US. She says that this protracted war in Ukraine and all this hot rhetoric coming out of the Biden administration about war crimes and destabilizing Putin and toppling him and putting him on trial at The Hague, that is not in French interests, that's what the Americans wanna do, but it's not what we should be wanting to do, we need to end this war. And I'm not ready to say she's gonna pull off the upset yet, but she is clearly articulating that message because she is finding purchase with the French electorate based on that message. And you're gonna hear that. If this war continues for three months and six months, and Europe goes into a recession, you're gonna start hearing, uh, politicians all over the European continent saying the same thing and questioning American leadership and why they are dragging this thing out.

   5. CPChamath Palihapitiya19:34

      The, the thing that's the scariest thing about the French election, and I'm not sure how many Americans, uh, paid attention to it, but just to maybe summarize in a very quick nutshell, you actually had this really interesting dynamic of three candidates; one was what would be considered far-left, uh, Jean-Luc Melenchon, one far-right, Marine Le Pen, and then one that was ver- very centrist, Emmanuel Macron. And what's crazy is both of these two were, you know, 22-plus percent of all of the votes. It was just that Le Pen and Macron were one and two, and so they go into a runoff election and, you know, Melenchon was very clear, he was like, "Under no circumstance should any of my supporters vote for Le Pen." But it just shows you what's happening, which is like France, which is, you know, sort of coming undone under this populist fight, um, is probably, uh, a canary in the coal mine for how this stuff could play out in other places, and it's kinda scary.

   6. JCJason Calacanis20:40

      It'll be interesting to see what happens in Germany as well, as they look at this enabling of Putin.

   7. CPChamath Palihapitiya20:45

      Well, they were able to hold the line. They, you know, they still have a center-right government. But, you know, in Austria for a while, that wasn't the case, in Hungary it's not really the case, um, so there is a lot of countries, at least in the Eastern block of, of Europe, where you've, you've seen it tip in one direction or the other. Um, it's not unreasonable to think that in France it could tip in one direction or the other. Fortunately in the UK, or unfortunately, however you look at it, it's still really a two-party system, um, for the most part, I think. So, I don't know, we're, we're in a really, uh, precarious moment in world history, I think.

   8. JCJason Calacanis21:19

      Yeah.

   9. CPChamath Palihapitiya21:21

      By the way, I wanna talk about one thing that I ta-... At the end of last year I talked about, just a very random thing, um, about, you know, uh, Visa and Mastercard and how you could short them, um, or, you know, like basically, like the payment networks were gonna start to get, you know, dismantled this year. It's really interesting to see. I don't know if you guys have been really paying attention to all the activity that's been happening in payments over, like the last literally 90 days I think has been really incredible, up until, you know, just today. You know, Visa and Mastercard I think are doing the single dumbest thing they could do by being a duopoly, which is raising prices, especially into an inflationary moment, (laughs) which just lacks complete knowledge and sensitivity of the moment.

   10. JCJason Calacanis22:05

       So dampen ec- economic activity.

   11. CPChamath Palihapitiya22:07

       But also-

   12. JCJason Calacanis22:08

       Yeah.

   13. CPChamath Palihapitiya22:08

       ... creates the incentives for disruption.

   14. JCJason Calacanis22:10

       Sure.

   15. CPChamath Palihapitiya22:11

       Right? Because then the gap between you and your next clearest competitor becomes more obvious. And again, in capitalism you compete away these advantages, and I just think that, uh, the setup is becoming more and more obvious for this shift in payments. I just think it's quite interesting. So Dick Durbin actually today basically is gonna create a big, you know, hubbub in the Senate around these increasing merchant fees, which will eventually spill over to consumers. There's some talk that, you know, uh, I- I- I've... What is it called? Zelle, uh, is that how you pronounce it? Zelle? The, the-

   16. JCJason Calacanis22:40

       Yeah.

   17. CPChamath Palihapitiya22:40

       ... the, the, the interbank payment system? People are talking about them converting that to being a more substantive payment system. And then this week I was able to see a little bit under the hood of, you know, Solana Pay, and that's really exciting. So it's all coming, I think, like, uh, it's like a swarm of activity, uh, to dismantle these payments businesses. I just wanted to just give the 90-day update from our, from our discussion in January.

5. 23:08 – 37:58

   All-In Summit update and preview

   1. CPChamath Palihapitiya23:08

   2. JCJason Calacanis23:08

      All right, everybody, uh, we will see you May 15th, 16th and 17th in Miami for the first All In Summit, now sold out, no more tickets available. There's a wait list but we're not gonna be able to get to anybody on it, sorry. You can sign up and we'll make sure you know about next year, if there is a next year. This might be a one-and-done kinda situation. Three amazing parties. Sunday night is our poker tournament for charity. The top, uh, it's gonna be a sit-and-go format. If you win your sit-and-go, you go into a, a sit-and-go bake-off, and then you get to sit at the final table with the four besties. The winners are gonna get to make a donation to the charity of their choice, uh, paid for by the besties. And, uh, Sunday night's party will be the Goodfellas party, Monday's gonna be the Havana White party. Bring your linen sacks, I know you've got a whole closet full down there. And then, uh, Tuesday night's our Miami Vice party. Here are the mock-ups of the invites.

   3. CPChamath Palihapitiya23:56

      Is this the reveal?

   4. DSDavid Sacks23:57

      This is the first time I'm seeing it-

   5. CPChamath Palihapitiya23:58

      Yeah, me too.

   6. DSDavid Sacks23:58

      ... at the same time as the audience.

   7. JCJason Calacanis23:59

      Just a little reveal.

   8. CPChamath Palihapitiya24:00

      Me too. I wanna see.

   9. JCJason Calacanis24:00

      There, there's a lot of work, the copy I didn't write, we're work-shopping it. It's just we, we got a little, uh, what do they call that? Like a mood board. It's a little bit of a mood board. Here is your, uh, Wet Your Beaks party for Sunday night, it's gonna be a Goodfellas theme. Should be a lot of fun. We got a-

   10. CPChamath Palihapitiya24:14

       This is like, it looks like Goodfellas.

   11. JCJason Calacanis24:16

       It looks like Goodfellas. We're gonna keep working on it. Uh, Wet Your Beak's probably not gonna be the name of your party, but that's Sunday night.And then next up is our Havana White Party.

   12. DSDavid Sacks24:25

       Wow.

   13. CPChamath Palihapitiya24:26

       Despite all the shit you take, uh, you do such a good job with this shit, I gotta say.

   14. JCJason Calacanis24:30

       Thank you. And then we're gonna have our-

   15. CPChamath Palihapitiya24:32

       This, this, I think is-

   16. JCJason Calacanis24:32

       ... uh, Buena Vista Social Club.

   17. CPChamath Palihapitiya24:34

       ... I apologize, but I think this is complete dog shit, this one.

   18. JCJason Calacanis24:36

       Okay. Well-

   19. CPChamath Palihapitiya24:37

       The first one-

   20. JCJason Calacanis24:37

       ... it's supposed to be Buena Vista Social Club. You're just a heathen. You never saw that picture.

   21. CPChamath Palihapitiya24:40

       The first one is so good. This is horrendous. W- I don't even know, what is this picture of? This-

   22. JCJason Calacanis24:44

       Bueno- it's, it's a, it's a theme on the Buena Vista Social Club. It's a, it's not the right image, but we're work-shopping it, like I said. But-

   23. CPChamath Palihapitiya24:51

       Yeah.

   24. JCJason Calacanis24:51

       ... that's gonna be our Havana White Party. Everybody's gonna wear linens on Monday night. And-

   25. CPChamath Palihapitiya24:54

       This is, that's terrible.

   26. JCJason Calacanis24:55

       ... it's gonna be at a beautiful space.

   27. DSDavid Sacks24:56

       You missed Altmas' name in that.

   28. JCJason Calacanis24:57

       Yeah, I, like I said, this is just a designer-

   29. DSDavid Sacks24:59

       Okay.

   30. JCJason Calacanis24:59

       ... coming up with ideas. And then, of course, we're gonna have our Miami Vice. We're gonna rent a couple of, um-

Episode duration: 37:58