Good morning, everybody. Welcome to another episode of the Tom and Bill's new show live. I'm excited you guys are doing this today, all days. May the fourth be with you all.
I absolutely am a total psychopath for Star Wars. We've got a little treat for you guys coming up in a little while, but first, let's get through everything that is going on in the world. Trump is attempting what he calls a humanitarian effort to get ships through the Strait of Hormuz. This is project freedom.
So far, it is struggling to deliver results. We'll see what comes to that. Trump is also withdrawing troops from Germany after the Chancellor said that Iran is humiliating the US. Trump vows that he's going to do a lot more than the initial 5,000 troops that he's talking about now.
We'll see how far that goes. More wild words for all of Europe, in fact. China makes it clear that they will not recognize US sanctions over the purchase of Iranian oil, and that is pitting the two largest economies against each other in a standoff that could get very messy. Elizabeth Warren sells 20,000 shares of Spirit Airlines just two weeks before it goes under.
Man, she's good. She's so good. There's so many people in Congress that are just unbelievable traders. What is their secret?
The timing is just impeccable. You know? And in unrelated news, Representative Tim Burchette points out how corrupt DC is when it comes to investing. Warren Buffett said at his most recent shareholder meeting that people are treating the stock market like a casino in record numbers.
True. Have we heard anybody else say that? I feel like someone around here has said that over and over again. I'm so brilliant in there.
All right. In an effort to curb fraud, interviews, all snap, benefit recipients are going to need to reapply. We've got a story on that one. Marjorie Taylor Greene put Trump on blast for not releasing the Epstein files.
That one's not going away. New data shows, men have remained constant with their political views, but women have skewed far more liberal. And we've all been living through the consequences of that. So we're going to be talking about that in a whole lot more.
Shout out to our Calchi sponsor for today's episode, who we turn to for understanding what the odds are of a given situation. It's really been interesting watching Calchi rise as fast as they have for people trying to not only place their bets on culture, but also just get an understanding of where culture is. So super honored that those guys have shown us love. So shout out to those guys.
All right, Drew, it continues to be a fascinating moment in history. Yes, there's been a lot of changes in the Middle East region. This great herd of moose drama has continued to be drama. Bring it over to the Calchi prediction markets.
They are pretty much pricing in that the price of oil will stay above 111. 54% chance that'll be 11050, 44% chance above 111. To me, that just means that the market thinks that there's going to be more turmoil in the straight arm oops. This is going to be done.
No time. Yeah. Yeah. I think that is very wise on behalf of the public.
I'm surprised that the numbers are a little bit more wild because I don't see what people think the end of this is. So we're starting to hear rumors coming out of Iran that they are more likely. I should say the US is reporting on the word coming out of Iran, which is that they're going to, for the first time, be flexible on some of their nuclear ambitions. And we'll see how true that ends up being, I think, a more realistic read is probably that we don't exactly know who's in control.
There's probably nobody speaking with one authoritative voice that can actually see this all the way through. We talked about in our initial coverage of the war that one of the brilliant moves that the Iranians did was that they decentralized command. So you have a whole bunch of people that if the head gets locked off, which it obviously was in the early days and early minutes of the strikes, that they would still have people that understood the assignment before the Supreme Leader was killed. And so I think they were still struggling with a lot of that.
You hear Trump make reference to it all the time, that there's been regime change. These guys are much more reasonable. We'll see. The ship will still get attacked and straight up removes is that you have that decentralized command that there are people that are making decisions based on the initial thinking, which I mean, look, there's so much propaganda.
It is so hard to know what's really true. But if it's true that you still have regime, pro-regime elements marching in Freedom Square, I think it's called Freedom Square in Tehran, basically saying, nope, we support this regime, we support the new Supreme Leader. If there is as much support for him as we're being asked to believe, then unless they see a path to their own victory, something that they can claim is a win, I think they're going to keep doubling down and doubling down and doubling down. So I don't think this is going away anytime soon.
I think this is the classic case of it's easy to start a war and it's very hard to get out. So yeah, here we are. The president over the weekend also announced Project Freedom. Let's go to Fox News.
They covered it this weekend. Freedom launched this morning. The president calls it a humanitarian effort to safely guide some 800 cargo ships and tankers and their 20,000 crew members safely out of the Strait of Hormuz. The president says these stranded ships are running out of food and supplies and are merely neutral bystanders in this whole thing.
That's a nice part of this. All the people stuck in the ships. Just kind of waiting for it all the play out. The true social post.
The President Trump went on to say, for the good of Iran, the Middle East and the United States, we've told these countries that we will guide their ships safely out of these restricted waterways so that they can freely and ably get on with their business. The ship movement is merely meant to free up people, companies and countries that have done absolutely nothing wrong. They are victims of circumstance. This is a human.
It's really funny hearing China respond to all this stuff. Like when Trump put something out on a paraphrase, but it was like, I don't think China has the appetite to open the strait and then they clap back and be like, the strait was open before you went in the way. He's trying to do it that no sex is all matter to us. We already got a deal going on in my business.
So in a world where the information flows this rapidly and this kind of thing can get out to the world, we are going to have a pretty fascinating time as we collide head on with China. This is not something we're going to be able to brush off. We have a bigger story about that in the future. But one of the things that I was beating the drum about before things really kicked off in Iran is this moment is about US and China.
This moment is about US and China. And despite the fact that all the headlines are about Iran, this moment is still about the US and China. Now, you've got Marco Rubio really drawing the lines of the new Cold War. And certainly there's a trifecta of China, Iran and Russia.
But in terms of who's the big player in those three, it's China by a country mile. And so I mean, I hate that this is true, but it's like people really have to pay attention to Thucydides trap, what that looks like. And I think Trump may be the most likely to be ensnared in Thucydides trap. Like it just from a personality standpoint, everything that he's been doing since he came back into office is completely in alignment with that.
Now, the problem with Thucydides trap is you can't do nothing. And so you can't just take a backseat, let your country decline. You do have to do something. But I don't know that this is something that you have to do.
So it will be interesting to see how the early moves in this play out with us and China from an economic standpoint, because if we lose any ability to sanction China, which we'll get to in a second, the mechanisms of how China is combating this is very interesting. We'll talk about that in a second. But yeah, this is not something that we can just brush off. But I think what's interesting about the project freedom spin is that making a humanitarian effort, he might be able to win the culture war, at least shift the narrative that's happening in Iran right now.
I don't think so. I think the reality is Trump is every day that the war goes on. He becomes more unpopular here at home. And here at home is ultimately all that matters.
He's already alienated all of our allies. He's certainly not going to win the back with this. His only hope is that China has been doing some headfaints that they're interested in in project freedom. They're not going to get involved.
And at the same time, they're clapping back on his hard on the sanction side. So we certainly can't expect anything coordinated there. And like their official messaging is essentially nil. People are saying like they're signaling openness, but that's going to be pretty vague.
It's not going to be anything that will win people over unless they take action and Trump can say, listen, arm around, gee, here I am, we're having our meeting and it's going swimmingly well. He's totally behind operation freedom. We're going to get those ships sailing. It's great.
Then yes, that would be a victory. I am certainly not expecting that. We'll see. But ultimately, I would expect China is going back channel to Iran.
So they're going to be coordinating that from that perspective. If China wants to see this all end and they put pressure on Iran to actually give us the end of the blockade so that they're saying, listen, you've got to give something up. You've got to let Trump take a victory lap on the nuclear side of things. There's some way for them to reduce the potency of the material that they have now.
And so that I think is if I'm China, that's where I'm applying to pressure. I don't care if Iran gets nuclear. If I really want them nuclear armed, I'll give them nuclear weapons. So I'm going back channel.
I'm like, hey, you need to chill out on that. Let him have that win. That gives him what he needs to get the fuck out of there. And then we can talk about what the go forward plan is, whether that's you guys being able to charge some fee, whether that's you charge a fee, but not to us.
That will be I think where this ends up playing out. So I can see China applying that pressure to Iran, which could bring all of this to a close. But right now, without knowing what exactly China is thinking, I don't know that there's enough give on the Iranian side on the negotiations for Trump to get what he needs to be able to signal to the US that I got this done. So we're still in a lot of question marks around the quagmire of actually getting free flowing oil through the straits so that the price oil can come back down, at least in the short term.
I think there's plenty of time between now and the midterms. The thing that remains a larger question mark for me is if this re-escalates, what does that timeline look like for Congress to put an end to this from a legal perspective where Trump is unable to continue moving forward? Once the Iranians know that he can't use more military force, now they've got the leverage. We're hitting pause for a moment, but there's plenty more ahead.
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HSA FSA tax savings vary. Thanks for sticking around. Let's get right back into the action. I want to kind of drill down into the China of it all.
Let's break down two tweets that we've seen coming over the weekend. One of them is that China says it does not recognize US's sanction on Iranian oil purchases and will not comply with them. And then the second one, and I think this one is a bit more interesting. Trump, like you said, he was sweet and saying different things.
He said at 1300, we would impose sanctions on China for buying Iranian oil. China, at 1310, we do not care about you. We do not recognize US sanctions on Iran oil purchases and we will not comply with them. We have trade agreements with Iran and strongly want Trump not to interfere in our failures.
So it seems that they are pushing back actively whether it's the mandates, whether it's our approach. So what do you think how this plays out between us and China in the Middle East? Well, so in the Middle East, a great qualifier there that keeps my practice much tighter. So to understand what's going on, so as Drew was just reading, China just told the United States that these sanctions don't apply to us.
We're not the country they're looking for. I mean, this is like the ultimate Obi-Wan droid move on May 2nd Beijing's Ministry of Commerce issued a formal injunction blocking US sanctions against five Chinese oil refineries accused of buying a Iranian crude. This is where this gets really interesting. It's the first time China's ever activated.
It's 2021 blocking rules as they're known. It's a legal weapon that Beijing built five years ago, but they never used it. Now obviously they're going to push this through, but the way that it works is really unexpected, fascinating and shows that this is going to escalate as a proper showdown. So in plain English, the blocking rules are a legal mechanism designed to neutralize foreign sanctions inside China's borders.
Okay. So this is China putting pressure on Chinese companies. So the Ministry of Commerce can issue an injunction declaring specific foreign sanctions are illegal under Chinese law. So dear Chinese companies, I get it.
The US is going to sanction you. They're going to punish you. They're going to try in every way, shape or form that they can to cause you pain so that you will acquiesce so that you don't have those things placed against you and you will change your pricing or your deal making, whatever it is that the sanction mandates. But once this injunction is in place, the calculus of all that flips for every company operating in China because it basically says you comply with this foreign sanction from the US and you've now broken Chinese law and the penalties of teeth, Chinese firms harmed by another company's compliance with US sanctions can sue for damages in Chinese courts.
So if the US does something to a Chinese company, that causes a Chinese company to do something that increases their prices for a good that another company needs to buy. So energy being a just absolutely obvious example here, that company who's like, hey, because you complied with US sanctions, my costs have now go up. I can sue you. You can imagine that puts those companies that are caught between their, yes, their Chinese companies are companies operating in China, but they're now stuck between who do I fear more China or the US?
So Beijing can hit a non-compliant entity with regulatory fines, asset freezes, and an inclusion on what they call the malicious entity list, effectively blacklisting them from the Chinese market. So everyone's going to have to decide, am I going to back the US or the CCP? And that I would not want to be caught between those two powers. But this is what this moment is.
This is watch what Trump is saying. Trump now talks almost exclusively about our sphere of influence. So I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I say, I quote of the US so when you hear either Rubio saying that or Trump saying that directly what they're saying is we are not the world's policeman anymore. That might as well be shouting the old world order is dead.
There's a new world order that we are putting in place right now we are letting go of much of not all definitely but we are letting go much of the world that is beyond what they're calling the greater North America. And China, you go do your thing. We're going to do ours do not mess with us in our sphere of influence. We will.
I don't say not mess with you because they actually try to get their tentacles, but they're they're thesis really backing off the posture like for anybody that was around in the 90s and 2000s even early 2010s. like we were the dominant player on the global stage, but getting China into the WTO just changed everything. Those guys have become an economic powerhouse. And because of that, it's just a different world.
And I don't know if you guys aren't old enough to have seen how all of this changed, I get how there's just a blind spot to what's really happening. But if you've been around, as long as I have, it's like all of a sudden you start realizing, whoa, this is a massive change of rhetoric. But this is not gonna be just some smooth walk in that direction. There is this insanely bizarre confluence of things that are all happening coming together in this moment where it is going to be a very dramatic economic, hopefully it stays in the realm of economic showdown between the US and China.
And so all eyes on this do not let Iran be a distraction between what is really playing out, watch out every move, reverberates back to the US via the Chinese. And dude, this one is fascinating because China is turning its guns inward. That was the thing that I thought was really fascinating and just saying everybody make a choice. And so man, this is such a flashback to the 80s where it really became about two economic models, two value sets where it's like, listen, this is if I'm China, this is my pitch.
This is a very chaotic time. Nobody's ever seen anything like it. And because we try to have 5,000 years of history, we can look back and go every time like this, it you need a strong government. Otherwise the catastrophe is so big that it is very worth giving up your personal liberties and your freedoms.
Just get behind us. We're going to keep stability. We're going to make sure you guys are safe and sound. We're going to focus on economic growth.
You're going to be good. And the US is historically leaned into its freedoms, but we're in the pitch goes very similar. Hey, it's chaotic time. The only way to get through this is the entrepreneurial spirit really taking advantage of the unique thing that makes America America is where you know this do or die by your bootstraps place where we have blazed a path forward for the last 250 years that has made us the dominant superpower in the world.
Now is not the time to abandon those principles. And China's just always copied us. We are meant to be the leaders like, come on, let's do this thing. But in the age of social media, that's going to get weird.
And so the Chinese have the ability to really clamp down to keep people silent, James Burnham, James Burnham. And so it's like all those things that I worry about being an outcome of the velocity and volume of information, the confusion, the populism, all of that. China has a mechanism of internal force where they can curb a lot of that. And so we're going to see these two things collide at an unprecedented time in the world.
So man, do ask follow up questions of any of those unclear some things about loud for the first time, but that like swirl of things is going to control the next three years. But to your point though, would you say China has an advantage in that way? The fact that they do turn in where they can do one state, one media message, one government type way to push them through the uncertainty we're in America. We're still inviting and fighting it's ourselves animal or and all these other things.
I have a very strong operating assumption that freedom is the only path forward because what ends up happening and I'll talk about this when we get to the male female dynamic later in the show, when you have a dictator, if they're right, everything's great. The second they're wrong, it's more catastrophic than all the infighting and all that. And so it's fascinating is China will tell you that they've only had one civil war, but what they won't talk about is how fractured they were for a very, very, very long time. But the most deadly thing that China has ever gone through is now.
So that's what happens when one guy has total control of the country and then he's wrong. And this, please trust me when I say this is only one example. It's just the most stark. He was like, listen, the way that we because he understood what he had to accomplish in international affairs.
So he was like, everybody's going to plant this set of crops and they're all going to do it at these exact times. And people tried to tell him that's not how geography and climates work. China's a gigantic country. What works in one place will not work in the other and he just had those people killed.
And so they ended up doing that. Obviously people starve en masse, 45 million people absolutely insane. And so I look at all of that and I say, okay, America ran a different test. And that test was, okay, we're all fleeing these despotic monarchies or dictatorships.
We're coming to the shores of America at ultra high risk, but we want that freedom. And then this thing kicks in that is truly the only way forward is innovation. And the only way to innovate is to break the consensus that we have now, the way that humans think it calcifies into dogma. And so you're in your early 20s and basically your worldview solidifies and you get too far out of your like early 30s and you're kind of useless.
It's utterly fascinating to say that as somebody who's 50, but I'm telling you, like this just plays out over and over and over. And so people can't get out of their own way. Genius is a young man's game. They calcify.
And so we have a system that just eats those people alive. Now it's getting worse because look at how old are Congress and senators. It's crazy. So we have our problems, but it's like, do I want to see us lean more dictatorial knowing that if the dictator gets it right, we'll go fast, but the second they get it wrong, it breaks so bad as to be terrifying.
Or do we stick with the messier thing where freedom does go down a lot of weird paths and you get a lot of infighting and all that stuff. But I still bet on that the because the only way that they to get the dictator through to get their vision pushed through is tyranny. Okay, I want to add in another plot line to this and that's the reports that we're actually withdrawing troops from Germany. So President Trump yesterday said that he's considering withdrawing more than 5,000 troops from Germany.
I think we have a total of 30,000. So it's not like, you know, there's going to be six guns left, but a significant cut down. We're going to cut way down and we're cutting a lot further than 5,000. Thank you very much.
I mean, he's mad at Europe. That's the reality. Now, as the spheres of influence change, I get it the world order. The US and right now there is Carney.
So Canada's Prime Minister, Carney is saying, I think the future is Europe. Now, I don't know if he's being serious. If he's just in Europe and so he's popping off because he's also been blowing kissy faces at Beijing. So I'm not sure what his real strategy is and to say that you think a new world order is going to be born out of Europe is so fucking stupid.
Like of all the if he said, look, China is the future. I'll be like, I get it, man. Like that is a real question. China if China didn't have demographic woes, I'd be like, you know, China probably is the future.
That was my next conversation because they're just talking that their economy is collapsing right now. There was a mortgage crisis a couple of months ago, a couple of years ago. I don't know how it's been going on for years. Yeah.
So it's one of those things where it's like, are they also on a Django board economy and they're two pushes away from falling over and not being able to claim their number one spot in the city's. Yes, but in the same way that the US is so we are both on insanely precarious footing economically. The US I would say is more of a dumbbell approach. So we've got more tragedies staring us in the face with the debt than China does, but we also have more opportunity because we are still the world's reserve currency.
So there's a lot of abuse that we can push off onto the rest of the world that helps us. That's gross. And I'm saying it very deadpan, but nonetheless, we are in that position. And so we have a tool that they don't have.
They have been printing light crazy. I'm this I'm out over my skis on the following statement. I would need to look this up. But I think that they have been printing at a rate that in terms of their, I don't know.
I don't know the comparison to the US like on what metric, but it was like their rate of printing is worse in the US. It's not going to be I don't think dollar for dollar worse. There's almost no chance of that. But that was something where I was like, oh, they might be printing more than I thought because my take has always been China is printing.
However, they haven't printed as abuse. We have. So I think they have more latitude than we do. So I need to do deep dive there to find out what the reality is of their economic situation.
But every time I look at it, you sort of dead end at propaganda coming out of China. They lie about everything. They hide as much as they can. People have to start looking at like the amount of luminance coming out of the country.
It's crazy to try to figure out, OK, like what's really going on here, which is wild to think that A, we can do that and B, that they obfuscate their data so much that you have to look at the amount of light they emit. So it's hard to answer that question. I would say we're both fragile, but we're both so far ahead of everybody else in the world that virtually nobody else matters. Got you.
So this really is a two-man game. There's no third quarter, fourth quarter buzz beat is Russia coming out on TV. It'll be alliances. So it'll be if China, Russia, and Iran come out of this stronger than ever.
Like imagine Iran, imagine Russia wraps up the war in Ukraine. They get the territory that they have. They let the world know, do not encroach on our borders. We will take forceful action.
But they get out of that war. So now they've got the new technology because Ukraine and Russia really now are at the forefront of military. So those guys have knowledge that nobody else in the world has. So if they can bullstop spending money, they're going to be in a much better position.
So if Russia can extract itself there, then if Iran comes out of this and goes, we now charge a toll on the Strait of Formuz and everybody's like, I just, what are we going to do? Like the US is unable, like if Trump loses in the midterms and they are still doing their thing, they could be in a position where they can charge a toll on the Strait of Formuz. And if they then spin back up their nuclear ambitions and it's like we face you down once, we're more than happy to do it again. Now it's like, if you see yourself in, I mean, God, how long would it take them three to five years to get their program back up on its feet?
So that becomes very different calculus. This isn't going to happen overnight. But now you're in a position where China has its fear of influence. The US is sort of formally let go of pursuing that.
We've got our sphere of influence, but we got our ass handed to us not militarily, but just outcome wise in Iran. Oil's going up. God, it's so, this shit gets so complicated. I'm not going to fractal.
I'm just going to, I'm going to put a thing here so people don't think I'm blind to it, which drives me crazy. Everybody thinks if I don't say everything out loud every time. If the world turns to the US for oil, that will be great for the US. I'll just set that there economically.
So as we retreat from the world stage, there are some big advantages to us. Okay, this all started based on Europe. Carney's a fucking moron. If he thinks that this is going to rise up out of Europe, Europe has put us about of Europe.
Europe has proven one, they have demographic disasters just coming their way because of unchecked immigration. Two, they are, they're still when combined, they are economically powerful, but they are really starting to fracture. Germany's AFD party wants out of Europe. Germany's AFD party is rising rapidly in the polls.
Maybe they'll never take over, but nonetheless there's that kind of pressure. And then also you're never going to lead economically if what you're known for is regulations. And right now, Europe is one big regulatory body in the face of AI. It is so stupid in all capital letters.
And listen, I get the fears over AI. Nobody shares those fears more than me. Like I understand I have the same anxiety. The thing I've wanted to do forever with my like literally since I was 12 is under threat from AI.
Right now I just keep focused on AI can't do it without humans yet. So just keep executing with this incredible tool. Any technology that promises an advantage will get developed, it promises an advantage. Europe is assuming all of that.
The only two real players are the US and China. So one of us is going to win the AI race. If you're not in the AI race, you don't matter. And so you've got the two biggest economies already the two most important countries on planet earth are the only two that are anywhere near actually being in control of the race to the AI.
And so it's like it is a one to punch that nobody else can count. Taking a short break, but there's more impact theory after stay tuned. Thanks for staying tuned. Now let's get back to it.
It's going to be interesting to see how all the pieces actually fall because I think to our point there is international conflict, there's internal conflict, there's economic conflict. And those three pillars are the foundations of killing empires, those three foundations of killing empires in the past before. So it's interesting to see which one of those actually cause the downfall when all three of them independently can cause a downfall. So it's just a downfall.
So predictable. It's just a bit dramatic because even if we don't- Is it? I don't know if we go straight from here to Argentina. I think there's some steps that have to happen in the middle before.
It depends on your steps. So I can paint a picture of the different approaches. So the reason that I say it's not dramatic to say downfall is if you'll grant me a long enough timeline, these things are just guaranteed. I think the US is on a 10-year clock.
If we don't, if AI doesn't help us roll our way out of our debt, we really are in trouble. I've got a deep dive on Kevin Walsh who, man, I'm so conflicted. I really like the things that he says, but I look at the setup of what he's walking into and the things that he's not saying. And I think it's very strategic what he's not saying.
And I think unfortunately the world will not rescue him. And by that, I mean, AI will not grow fast enough. The world's not going to rescue him. What he's doing is going to be pro inflationary and he's going to accelerate the K-shaped economy.
Okay. So that's a fractal that's worth going down at some point, but for now to keep this streamlined. On a long enough timeline, the US is poised for collapse. They're poised for collapse for the same reason that every empire has fallen over the last 500 years.
Once you realize that debt is magical, your debt is so powerful, but the temptation becomes to abuse that. And so far, no sequence of humans, because you can get one leader that doesn't abuse it, but you'll never get 200 years of leaders that don't abuse it. And so something ends up happening that maybe even with the best of intentions, people start printing money and because nothing bad happens right away, they keep printing money until the bad thing happens. And so as a plea to anybody that can hear me right now, the way that the game plays out is you start printing money, it accelerates, accelerates, accelerates, and then you either get revolution because of the K-shaped economy, which that is what causes the revolution.
So you get the revolution based on the K-shaped economy or you end up defaulting. And you're no longer able to access the debt that gave you the power. And so you become a backwater. Do you go all the way to Argentina?
Argentina went all the way to Argentina. So they were the fourth most powerful economy. I can't remember if it's in the world, but I think it was. So they were massive.
And when we were competing in the 1920s for immigrants, they were winning. So more people looked at the world and said, okay, we can go anywhere. We want to go to Argentina because they have the most opportunity. And so they went from the sort of 1946 and on-era America to being the backwater that has struggled for 100 years.
So it does happen. The UK has fallen. They ruled the entire world. Dude, not that long ago.
And they fell. Spain fell. Portugal fell. It's just like.
Somebody in the chat has an interesting comment point. Andrew Weiss said, what time doesn't realize is there is nowhere else to invest other than the US that keeps it strong. Yeah, stop. So I think this is a really good point.
I'm very glad he brings it up. What he's not acknowledging is right now that only helps people that invest money. And what I'm saying is you have a dual problem. If you only grow the top of the K, you end up in revolution.
And so this is why, remember, not every country falls because they default. The playbook that Warsh is almost certainly going to run is financial repression. Financial repression is also known as a soft default. So you just steal and steal and steal people's economic purchasing power until the point that they revolt or that you become England, right?
Because when England did it post World War II, they never defaulted. So they didn't have a revolution, but they still lost, what, 98% of their purchasing power? So that's in the last 100 years, man. Like this is not stuff where you have to go way back in time post World War II.
Those guys just decline, decline, decline, decline, decline. Would you compare, I think Argentina is the client in the United Kingdom is different. Not really. You put them in the same category.
Yeah, it's economic mismanagement. Yeah. So now the cause for England was a more classic thing that happens to an empire. Argentina was never an empire.
So England was obviously wildly exacerbated by two back-to-back World Wars, overextending themselves in terms of having military bases all over the world, trying to be the world's policemen via the seas, like the very thing. So all of that, yes. But if you go up high enough, they become the same phenomenon, which is economic mismanagement. So going back to, forgive me for forgetting his name, but the person in the chat who's like, Tom doesn't seem to understand there's nowhere else for money to go.
Again, he's only speaking to the top side of the K and as every empire before us has proven, eventually there is somewhere else. And so if he's arguing the 10-year timeline, okay, maybe, but again, I will say when I'm talking about the 10-year timeline, I'm talking about revolt. I am not expecting us to hard default. We're going to soft default, but we are already on a knife set.
People are already flirting with open revolt now. What happens after 10 years driving the debt to GDP up over 130%, like it is a nightmare scenario. That's where I'm like, yes. And it will be interesting if as a community, we can start differentiating between Tom has not said it this time and the thing Tom does not understand.
I cannot encapsulate the entire complexity of the economy every single time I talk. You can't, every single time, Tom. What do you mean? You can't do that.
No. Now also, PSP, by the way, full confession. There are things about the economy that I don't understand as the island of my knowledge rose, so grows the shore of my ignorance. So I'm very glad that people bring things forward because we will inevitably hit that part where I'm like, what the fuck is that?
And then I have to go research that as well. So I eagerly encourage people to bring forward things that they think that I really am missing. That just happens to not be one of them. All right.
There's been some big news over the weekend. Spirit Airlines has officially ceased operations. Luckily for Elizabeth Warren, though, she sold 20,000 shares of Spirit two weeks ago. Still took a lot of stuff because those things were bleeding, but at least you didn't get caught holding the bag.
This is interesting though that Spirit-Sited Rising Fuel costs were one of the reasons that made them go under. This is a byproduct of this war. It spiked fuel prices. So I think all the different airline companies are reporting at least 800 million to a billion in additional fuel costs, just fuel costs, not ticketing and all this other stuff that they have to shuffle around now.
Is this something, I know we're free market and you need to see certain companies go down, certain companies lose, but is this something that could have been avoided you think or is it just what a kick they can down the road maybe? So ironically, Elizabeth Warren and Pete Buttigieg, I think it was at the time they shut down a merger between JetBlue if I'm getting the players right and Spirit Airlines and said that it was antitrust. Now, for me, when I hear somebody trying to break up something for antitrust reasons while I wildly distrust the government, that is the one area where I'm like, oh, maybe I don't need to go look at that antitrust, yay, as a default, probably a good thing. However, I have not done a deep dive, so I don't know if it was warranted for them to do it because you certainly don't want to chill all of mergers and acquisitions, which has been a big problem over the last decade.
So I would have to look deeply into that to know if this could have been avoided. So the question becomes though, why was Spirit Airlines unable to get to the point where they needed to be purchased? So that would be the bigger question mark for me. I don't have the specifics on their economics, but I will just say that when a company goes out of business, if there are no governmental shenanigans that led to it, that's a perfectly acceptable outcome.
People try things, some work, some don't, and that just is what it is. And we should want that. It's the burning of the underbrush in the forest. You don't want these, you know, that dry kindling to keep lying around so that you get something like 2000 or 2008 or COVID.
And all of a sudden it's like the government is having to prop up every industry because you had so many economically fragile companies. You know, when you think about the stock price of Amazon fell dramatically, but they came out of it as one of the most powerful companies ever to exist in the history of the world. And the reason that they were able to weather that storm is they were actually profitable. So profitable, tremendous, like once in a generation leadership.
So that is what we should be looking for from our companies. And right now it's like slowly, slowly, this idea that the government should just help everybody at all times has permeated the culture. And so whenever something bad happens, it's like, well, where was the government and all this? It's like, that's where you have to have a principle of do I want the government in the game of capital allocation?
And for anybody that just needs the words to say you do not want the government in capital allocation, they are more runny. They do not know how to allocate capital at all. And they have perverse incentives. So not only are they dumb, but they have the worst incentives in the world because now whatever tiny proportion of companies that they're taking a stake in or they've got some interest in propping up because it's too big to fail or whatever, you create massive distortions for them to help those companies rather than other companies.
This is why if any administration wants to do the right thing and make sure that if we're going to keep running the strategy of printing money that we make sure that Americans own assets, it needs to be a broad basket of assets that are essentially blindly managed. So think index fund, there's just criteria, whatever companies meet the criteria in, whatever ones don't, they're out. And so it becomes harder. I won't say impossible, but it becomes harder to game the system.
And that's the kind of position we want to be in. We want to see more Americans owning assets and we want to keep the government out of deciding what assets are valuable. Yeah. Hopefully we can get some inspiration from Argentina because Happy MLA has been a lot of the budget for the first time in 123 years.
Wow. As of January 2025, you did balance the budget with increases into 2026 as well. When I seen this, I was like, no way, like I got to fact check this, but no, Greg kind of definitely broke it down. Yes, Malay achieved the primary budget surplus for the first time in 123 years to 24 to 25 season and maintains it in 2026 budget plans, one budget plans, 1.2% of GDP inflation lowered from over 200% to approximately 33% annually still like higher, but smaller, 3.4% monthly poverty officially dropped from 52.9% to 28.2% recession overcame growth of three to 4% expected to pay so much more stable.
So it seems like when you balance the budget, numbers go in the right direction. I mean, this is the drum that I'm trying to eat like crazy. Now, listen, everybody needs to understand Argentina is still in a very fragile position. They're not out of the woods yet.
They're definitely trending in the right direction, but there's still a bunch of internal conflict because this kind of austerity does not come without consequence. However, if you want the entire country to get moving in the right direction, you've got to go through this period of pain so that you can get your balanced budget so that you can get things growing again so that there is money actually for the people and you're not in a constant, never-ending position for 123 years of having run out of other people's money as market Thatcher. So eloquently put it. So this is a necessary thing that they have to go through, but it is not without its turmoil.
So this is why Argentina had to come to the US and say, listen, we want to be a very strong ally of yours, but we're going to need a little help. And so we did the currency swap, if I remember right, the US ended up making money on it, but nonetheless, we did take a gamble in loaning the money because it's possible that everything imploded. So yeah, just I want to be upfront about the fact that while I'm clapping so hard for this, I get cramps at the same time. Let's not be delusional about there's no guarantee that it's going to work yet.
It's trending in the right direction. I love to see it. It's a great example for us to pay attention to because our budget is like 6.6% to $1,000. That's directionally correct of GDP.
That's in sanity, which is why we're having to deficit spend in the trillions of dollars a year. So the fact that they were what 1.2, 1.3% of GDP is incredible. That's the kind of fiscal discipline that you need. But the part that people hate about the Malay story is, let's see if I can encapsulate this without turning everybody against me, people, when they looked at the slashing that he wanted to do to programs, to the government, people were screaming, people are going to die.
And Malay's answer was people always find a way not to die. And there are reports, I cannot confirm this truth, this could be pure propaganda. But there are reports that people can't afford their own local beef. And so they are slaughtering donkeys and eating donkey meat, which is going to sound terrible to an American audience.
And let's assume for the sake of the argument that that's true. That's what Malay was talking about. Hey, if you can't afford the beef, then you're going to get a donkey. And so people do find that way to not die.
And it is God does it sound horrible, but nonetheless, it is ultimately what you have to do to be in alignment with the fact that economics operate on physics. And you can't just socialism your way to the other side of this. And if you actually as China demonstrated for the world, you actually have to have a thriving entrepreneurial class that is productive, that is making things and kicking off revenue that you can tax. And if you don't have that, then people struggle to make ends meet for 123 years.
I mean, it's really wild how long this stuff goes and the level of prolonged hardship that you have to suffer through. Yeah, that's real. Let's hope we avoid that. All right, I want to throw up Warren Buffett's message.
This is your turn to do a victory lap time about how the Wall Street is just like a casino and a lot of people are gambling in the markets. You know, compared to the markets to a church where the casino attached and people can move between the church and casino. And I always said there are more people in the church and more people in the casino, but the casino has gotten very attractive to people. You know, if you're buying one day options or selling them, I mean, that is not investing, it's not speculating, it's gambling.
You know, just totally. There's nobody that can explain why they're buying an option for one day. So we've never had people in a more gambling. You're going to make money on it.
The now, but that doesn't mean that investing is terrible. It does mean that's over. Maybe his most important statement. He said, there's never been more people gambling than now.
Yeah, we are in that moment and getting people to understand that the stock market is gambling at its very foundation. I get he probably would not agree with that statement because he's a value investor and he thinks, well, no, these things are as close to a guarantee as you're going to get. Yes, I understand that. But if there was no risk reward, there would be no reward.
So it only has reward because there is risk. The risk is the gambling part. You believe that you understand better than anybody else why this thing will go up. And so you're making it's a new game at the casino where you actually can beat the house.
So fair enough, you can beat the house. It's one of the few games where that is true. But nonetheless, you're still betting against other people and getting people to understand that the reason these things work over time is that there are winners and losers. And for you to make money, somebody somewhere lost money unless you held the entire time and then you sell once to somebody who's going to hold for 20 years and then they sell once to somebody who's going to hold for 20 years.
And so every, yay, thank you. And they just keep going up and up and up. But the market doesn't work like that. So on balance, like, yes, if you put your money in and you don't touch it, you're good.
But the reality is the market's worked the way they work because most people buy high and sell low. That's just the truth. Very sad. Most people cannot just hold.
And that for my money means that the church sort of is a casino. And that's definitely my mental model. I mean, it definitely doesn't help its reputation when the highest asset class is Pokemon cards. So people need to look at this.
This is wild. I look this up so I was like, there's no way this is real. Somebody forges this AI at least believes that this is directionally correct with some nuance and caveats, of course. But yeah, this one is crazy.
So if you would have invested $1,000 five years ago, S&P 500, your money would be up 31%, Bitcoin, your money would be up 35%, gold, you would be up 160%, Pokemon cards. You'll be up 19 hundred percent. That's wild. That is crazy.
That's well. Yeah. Now, I'd be very interested to see if they're treating the Pokemon cards like a an index where it's all cards across everything. Like, because the vast majority of cards are going to be just absolutely worthless.
Even today, they'll be pennies. But yeah, it is very fascinating. And I'm not entirely sure yet what this says about long term investing, because I have a feeling that whenever you're seeing pop culture become this level of a phenomenon, that it is a bad sign that the markets were just so far out on the risk curve that people are investing in this and that this is going to contract in a very similar way to it, not as bad as Shaquinds, basically, but it is in a similar vein. You have people that treat investing like gambling and, oh, I can gamble on this thing that I really like.
And so there is this natural affinity for this stuff. However, when people begin treating something that doesn't really have core fundamentals, it has nostalgia, it has extreme emotional connection, totally understand, as somebody who collects one piece of cards, I get it. But I don't collect them as an investment. I collect the cards.
So that's one of those things where, man, I would not, I would feel very exposed if I were investing in this kind of thing in a major way in the same way that I would feel exposed if I were fucking with Shaquinds. So I would just warn people that, man, if you want a long term invest, there are far safer bets. And this is based on a little bit of knowledge, but think about a baseball card from, you know, whatever, a hundred years ago, it's just not going to have the popularity that it has now. And so cards for athletes tend to die off over time because the people that grew up with that player, they go through a phase with a get money.
So in their 30s, 40s, 50s, like they're really hunting that stuff as they start getting older, first of all, they're dying off and second, they're not going to be in high risk assets. So that's where those things tend to have a much more aggressive natural curve than something like an index fund in the stock market where the world only operates because of companies. And so you're going to have a lot more long term viability there, don't bet on individual horses, but on the fact that that will be the way that the world operates versus that that particular card people are still going to be into. So I'll just be a little bit careful.
I had to get a little bit of credit. They do do a good job of getting the next generation. It's as excited and that's whether you're Gen 1, the first 150 or Gen, I think they're at like five now where there's like a thousand Pokemon now. So it's like they are trying to with every iteration every year, keep the younger audience, where I see your points, sports cards, the people who really, really love Michael Jordan are now old rocking chair people and everybody's like, Oh, we love LeBron now.
Then 20 years LeBron is going to be the rocking chair people and there's going to be some new kid who does crazy things. So I do see that with time those popularity and culture investments can like decrease. But do you think art decrease over time? Like as an asset class, it's very useful, but it's the same thing.
You've got to be so good at identifying what piece of art is really going to stand the test of time, win is something high enough to get out of it. But yeah, art has, as I don't know for how many hundreds of years, been a very meaningful place to put your money. There are people that are going to argue that art is also a great way to scan the system, which is not unfair statement. And so how much of arts value falls in that vein?
I don't know. But people humans really respond to art. There's a real appetite for it this weekend. I spent real money on cards because I have an affinity.
I do not expect to ever sell them. For me, it's when a piece of IP really impacts me as interesting. We're talking about this on May the 4th when a piece of IP really impacts you. You want to wait to engage with it in a more deep fashion.
And so there's a certain type of person that is a collector. I'm not an investor when it comes to pop culture. I'm a collector, but there are obviously huge amounts of investors that can invest because there are people like me that collect and whether these things go up and value are down and value is irrelevant to me. I want it today.
That's the price of it today. I'm either in or I'm out. So yeah. Yeah.
Yeah. The MTG has been on a tear really going anti Trump saying that he is the reason they don't have the full FC files. Speaker Johnson has been there trying to protect them. This is a five minute video.
So we won't jump into the whole thing, but just to kind of set us up. Do you do you see where she's coming from? Where do you put her kind of in the same category as like Tucker Canis? She just kind of.
OK, I'll give my naked read on MTG and I will say that I have not gone super deep on this. I could be getting completely bamboozled when she first made my radar was at the State of the Union. I can't think it was Trump's first. Maybe it was Biden's last.
I don't remember, but it was one where she was like screaming and yelling and smacking things together and just acting a complete fool. And so I was like, this woman is unhinged and completely rotor off is somebody not worth paying attention to. And then when this all happened with the FC files and she actually left Congress, now she might be on a run for something else. And so maybe this is a grand political strategy and I'll eat my words.
But when she left, I was like, wait a second. Is this somebody who's actually standing on principles and was willing to act a fool because she so believed that she was right and she understands social media. And so she was just like, I know how to get attention. I'm right.
I really believe what I'm saying. And so I will make a spectacle of myself simply to get people's attention so that they hear my real message now that she has toned down and she's not like yelling and screaming and banging things in a place that I consider just completely inappropriate to do that. And she's just laying out her message. She's like, listen, I was in the room.
This is exactly what was being said. Um, I completely extended myself to Trump partly because I really thought he was a guy that was going to fight for these women and that he has not done that. And he has said to my face and to other people that, you know, there are good people that are going to be hurt by this. And she's like, what the fuck?
Like there are good people that were already hurt by this and you're now silencing their voice. And so my mental map of her has updated to somebody that behaves in a manner that I don't find interesting most of the time, previous to this, however, is really somebody that's standing on principle. Now we'll get to the emotional reactivity of it all when we talk about the growing divide between men and women politically and what from a neurological standpoint, I think is driving that. So she's got a behavioral affectation that I don't respond to, but I'm now mapping her somebody who is deeply sincere about a set of principles that she really believes in and will be the man that violates us.
Um, I want to tag this on with this kind of anti war coalition that's happening right now. Somebody in the chat just said something like what Tucker and Canis aren't in the same category. How can you compare them to? Interesting.
But there is this category of we might have different ideologies politically, but we're both aligned that we want to be an America first anti war coalition of people just until midterm, just until the next. Dude race and political party. Same thing. Values, you suddenly see like, Oh, it's not about being on the left or the right.
Cause that's a tribe at this point. It's about what do you actually believe? And so now all of a sudden there's this common ground being found between people on the like hard left and people on the hard right who are like, on this issue, we share a value set. And so now all of a sudden it feels good.
Like you see this thing that I really care about the same way that I do. And they are discovering an age old reality about being a human, which is values are the only thing you care about. Everything else is an affectation layer. It's a presentation layer.
It's not like it's not the real thing. You don't give a fuck about that. Like that's all just like, do you like blondes or brunettes? The reality is that it doesn't really matter.
You could end up marrying somebody that is completely different than you ever thought because it's how does this person make me feel? So that's fascinating. Yeah. Do you think that it takes that much?
Because I think right now I have been feeling frustrated politically because I see all the things real. Yes. Yes. Yeah.
I have been seeing all the things that are wrong, but I don't understand necessarily how to combat that what where to start, how to move. And even in this exchange, I'll jump right to it. Maybe it's on kind of retweeted Tucker Carlson's New York Times interview and says, Hey, Chank and all the other fellow anti-war leftists, I get the desire to ally with anti-war rightist in this movement, anti-war leftist, anti-war rightist. That's the coalition.
But this is one of the many, many reasons I still have issues with Carlson. He lies so easily and casually and demonstratively. It's a trust issue with him. And then Chank replied, I genuinely don't understand why you think it think in this binary way that in order to be allies with someone on issue, you have to vouch for that person in their entirety or every policy position they have.
No, you just have to be their ally on that issue. Do you agree with that that you can make allies as long as you guys have one principle that you can stand on or doesn't matter the totality of their character before you get to a partnership with somebody? I think the politically expedient thing, and this is where I go into Tom Billy Mode, which is, oh man, does it drive people crazy, but the way that I look at it is, I'm just going to tell you what is. It is politically expedient to partner with somebody that can help you get a thing you really care about done, knowing that you disdain them in a thousand other ways.
And so politicians will do this all the time. They'll become bedfellows for a minute and then they completely jettison each other or talk shit on each other again. Once that, thank you, you did what I needed you to do and now I don't care about you anymore. This is precisely why I hate politics.
So then there is the flip side of that coin, which is it's a very caustic strategy. And so it makes you look like a slick politician who doesn't actually care about people. And so for anybody that reads the situation of, well, but hold on, this is a this person is a whole character. I cannot look past these other things and anybody that can, like you're faking, you're manipulating me.
And so you'll get that reputation over time. So that's what is now. I don't think that people are going to be able to politically get things done that they want to get done if they're not able to partner with somebody that they don't agree with across a whole bunch of things, but do agree with on one. I think you have to take again for political experience.
You have to take the partnerships where you can get them knowing that you're going to ditch them. The classic example of this is one of the biggest monsters of the 20th century. One of the biggest monsters in all of human history was Joseph Stalin and the U.S., the U.K., the allies partnered with Joseph Stalin to get rid of Hitler. And it's not that they didn't know what Stalin was up to, then you perfectly well.
The reason that they partnered was that it was expedient. We both hate Hitler and Hitler is an acute threat right now. You're a long term threat, but he's an acute threat. So cool.
You help us out. We'll get this and then we can fight our world, which we then ended up fighting all the way up until like 99. So it's or 92, sorry, 91 anyway. So that's the thing that I think we need to look at.
So if I were advising the country, I would say, yes, partner with somebody, if they can help you get this thing done, like if we needed to partner with China to get what we want out of Iran, do it. But knowing we're still in Thucydides, trap China, nothing is going to change that. So that's how I would play it. It's reminding me like a quick fractal.
It doesn't have to be big, but like, are you one of those people that can separate the art from the artist like that whole argument? I can, but it does tarnish it. Even Star Wars has been damaged for me by the most recent stuff. Star Wars is about training, using the force to improve yourself.
George Lucas started taking it down a bad path with medical Marines. That was just a crazy mistake on his heart. And then modern Disney just absolutely ruined it by saying, well, as long as you're a woman, you're already powerful. That's just stupid.
Showing a woman earn her stripes is dope. So that's why like take a movie like Kill Bill, female protagonist. Nobody had beef. In fact, she's dope is the day as long, but you watch her train and become a badass.
She's not just badass by dent of being female. So period to keep it from being. No, I got to. I got to.
It's interesting that we'll see how this coalition kind of happens, because I think that while everybody's friends, when everybody has a need, but as soon as one person gets a need and then the opportunity arises, I'll be interesting to see who jumps, ships and backtracks and who says, OK, cool. Done onto this. And now they're attacking again. So we'll kind of see, but it seems like this war has united different factors of people and ways that I didn't see coming and we'll see when we get to the midterms.