All right, welcome to the show everybody. Number one podcast in the world. And man, going to be really exciting come September. September 7th, 9th, the All-In Summit in its fourth year this week. Doing Freedberg's job for him because he's been a little busy. Lockdown is in. Looks like Jason, what are you in? Why are you doing this? Cut. Nick beep. Every year you pre-announce a bunch of people who don't show up. It's literally you literally pick people who don't. I got Elon to come three out of three years. I have gotten a couple of trillion dollars in market cap for your freeberg. And more to come. Don't worry about it. This year is going to be better than ever. Allin.com/summit. And lots of exciting news around the tequila boys. Freeird. Did you see MSN covered me sending a case of the tequila to Bezos? I didn't see that. What do we do now? Let# your winners ride. We open source it to the fans and they've just gone crazy with it. We've been crushed with orders. Apologies if we're taking a little bit of time with customer support. You can go to tequila.allin.com. Deliveries begin in late summer, right around the time of the summit. Greenberg and I were in Las Vegas this past weekend. It was a blast as always. We had a really good time. We had 20 of our besties or so with us. Great time. It was great. Good time. I wish I could have been there, but I was on the Snake River doing a little invite. I was in What were you talking about? I was getting lobbyed like cancel your family trip whitewater rafting to come to Vegas. I was like yeah I don't remember inviting you free bird. Do you remember? Trust me people when you go to Vegas you want Jal. Jayl was a good time in Vegas but I didn't got a lot of invites but I Nick pull up the picture. I was on the Snake River there. I was doing my white water rafting trip and so if you're ever interested in doing a fun trip with your family you can do these two three night occasions. Yeah. No, I'm not. You camp on the side. You eat mid food. Yeah. You don't shower for three days and you four days. But yeah, there's the view from the Snake River. It was absolutely stunning. And yeah, we Is that where is Snake River? Is that also where like Snake River Farms comes from? You know, the high quality meat? Yes, I'm sure it is. Idaho border. Yeah, Idaho border. So that is Yeah, that's where Snake River Farms is. Not as good as Long Hill Wagu, but you know. Yeah. I mean, listen, these are that's like two elite steak producers. Get the Koulette, aka the pana. All right, listen. The BBB has passed the Senate. Let's get into this docket, but there was a bit of drama in the House after an allnight session and over 24 hours of deliberation. Senate passed the big beautiful bill on Tuesday. Friend of the pod JD Vance cast the tiebreaking vote after a 50/50 deadlock. Three Republicans voted no and Trump won over Senator Ron Johnson. On this very podcast, he said he would be a no unless more spending was cut. There were significant changes to the bill. We'll get into that in a minute. And so, it's got to pass the House again before Trump can sign into law. Lots of drama. Trump set the deadline for July 4th, which is Friday when you're listening to this. And it will, in all likelihood, get there. According to Poly Market, there is a 96% chance the bill will pass by Thursday and a 97% chance it'll pass by Friday, July 4th, Independence Day, the day we publish. So, it looks like it's pretty much a lock. Some big changes in the Senate. Biggest change, the 10-year AI regulation moratorium, which we're going to talk about for states was removed. Ted Cruz tried to negotiate cutting it to 5 years. Suggestion I made 10 years was a little bit too long for folks, but that didn't work. According to an NGO called National Conference of State Legislatures, over a thousand bills related to AI have been filed by state lawmakers in 2025. So expect a lot of state-by-state AI regulation. I think this is a good place to stop. We don't have Sachs here to talk about AI regulation, but he talked about it the last time. Fraberg, your thoughts on states. You know, we talked about state rights here in relation to abortion, guns, gun regulations, cannabis, many different debates over who should get to decide for the country. Where do you stand on this one? Should states have a voice in how AI is deployed in their borders, or should the federal government take this, and if so, for how many years? Because that seemed to be a sticking point.
Look, I'm a big believer in the construct of our federated republic in the United States where states can operate with as much discretion as they choose with the laws they pass and how they intend to govern. There are however things that affect more than the state. We have interstate commerce. We have international commerce. We have the open internet. And we have a lot# other# other systems at play here that extend beyond the boundaries of a state. And the way that AI tools and AI systems and AI services and AI related jobs are being deployed and activated, I do think it's critical that we treat AI regulation at a national level, at a *** level. To date, there have been, I believe, 70 state laws or statutes passed thus far in the United States with, I think, over a thousand having been proposed to date, if the numbers are right. Having a patchwork of regulations on, for example, model development or telling software companies what software they can deploy would make it practically impossible for internet service providers like a Google or an OpenAI to service customers across state boundaries in a way that is actually going to meet the needs of the customer. This is a huge detriment to consumers and a huge detriment to the *** level if we end up creating a patchwork of regulations on AI this early. One of the things that I would point out is that much of the early legislation like what we saw in California, if you read# that legislation that did not get signed by Gavin Newsom in California, there was a definition on model parameters being a boundary condition whether or not something would go through a regulatory review process. That was such a naive assertion that early in the phase of AI technology development And think about the implication was okay well everything is LLMs but there's other models like vision action models that are going to be used in robotics models that might be used in predicting and driving physical systems like in self-driving cars for example. So the way that the regulation gets written will often be done in a naive fashion by regulators that don't understand the breadth of the technology coming our way. And I do think that it needs to be leveled up and allowed to operate at a federal level So I think it is absolutely critical not just for technology companies, not just for the industry, but for the opportunity for job creation, for improving the economy, for driving GDP and productivity growth that we get something passed that forces AI regulation to be done at a federal level. Even though I generally agree that states should be autonomous, this just has too much of an interstate and global interaction That was the biggest disappointment for me in the negotiations on this bill is that of all the things I thought were going to be passed that were maybe not ideal, getting this AI federal preemption in that bill was probably the best thing, top of the list for me in terms of critically important for the US economy.
which is at some point once the spending levels get too high and the country, the individuals, and the businesses become too dependent on that spending, which is effectively what happens at the end of every empire. You can't back out. You can't stop spending and everyone just votes themselves the dollars. So it's a scary moment and I've said it before, I do think that GDP growth is the one path that's left to resolve this. I don't think we're going to just cut spending. So we need to be really thoughtful about making sure we don't hamper GDP growth, particularly as it relates to AI, which is going to unlock a lot of new industry, a lot of new growth, a lot of new opportunity for jobs. And this is why I worry a lot about this patchwork of regulation in states making it really difficult for AI. You only need five more people like Rand Paul and Tillis. If you get a couple more of those, this could be a completely different discussion if you want to pivot to the next topic.
One way to look at this is how the dollar is trading. The US dollar is now down 11% this year against every single major currency. The dollar was down over 10% through the first half of 2025. This is the worst start in over 50 years. Take a look at this chart. It's kind of shocking. Keep in mind the dollar jumped 7% after Trump was elected. It kind of peaked in mid January. So if you take the pre-election dollar index number 103, it's down 6% since then. Not record-breaking, but significant. And obviously economists are saying tariffs and global trade are a big piece of this. And as we just discussed, the US debt load at $37 trillion. It's more expensive for Americans to travel abroad and it's less attractive to invest in the US. Let me just follow up on the point I just made.
But this is where the chickens come home to roost. The rubber meets the road. This is where you start to see the inflationary effects of the spending and the spiraling debt. Things get more expensive and your earning power doesn't increase commensurate with the higher expenses. So what will happen is the US today imports four to five trillion a year. That's four to five trillion that US consumers and businesses are buying from abroad. We import into the US and use those products and services. The cost of all that just went up by 11% as the dollar declined in value against the average of all these currencies. That's outside of increase in prices that may arise because of the tariff effect. Whether it's the cost of tariffs or the cost of the debt, the dollars you have to spend now just went up by 11% to buy the same thing. If that compounds and continues and your earnings are not growing and your assets are not growing commensurate with that, that's where dollar devaluation happens and asset devaluation, income devaluation. That's where we open the door to socialism. People are like, it's now twice as expensive to buy my groceries, twice as expensive to pay my rent, and I'm not making any more money. I need a solution. We got to get together and get the government to make everything free. That's why I'm so convinced there's a rise in socialism in this country. In this inflationary environment, you don't see it in the dollar inflation numbers, you see it in the dollar currency numbers. You're going to say, I need an alternative. The paradox is free stuff is not free. It means increased spending, which means you're stalling the plane even more.
Exactly. Any thoughts here on the dollar?
I think the dollar has devalued 50% in the last 35 or 40 years. So I think it's somewhat useful to look at any single couple of months in time. But this has been a one-way trade for a very long time. It's probably important to understand why that is. It generally has to do with the fact that the United States finances a lot of growth and that has been the right decision. So unless you see a complete collapse in the currency, I suspect this decay continues to happen. The question is, is it a bad thing? It depends. If asset prices increase faster than the dollar devalues, you're still ahead. You may not be ahead as much, but you're still ahead. If you look at asset prices in the United States relative to any place else in the world, it is the flight to quality. It is the thing that everybody wants to own. You see that in equity markets, real estate, hard assets. So I think it's part of the fact that until we run surpluses or completely eliminate the debt, there will always be a reason to be somewhat short the dollar. But the reality is a lot of people still want to own these assets more than they want to own any other asset. Those assets are dollar denominated. As long as that continues to hold in the push and pull, it'll be a slow bleed, but it's probably manageable. That's just the mathematical trend of it all. Unless there's some cataclysmic collapse in asset prices, I think this is just a thing you have to deal with. It's the carry of it all.
Is there a relationship you can explain to the audience between the stock market ripping and the dollar devaluing?
Well, I think the reality is if you think about a country that all of a sudden has to pay a tariff, let's take the Vietnamese example that Freeberg said. Let's say they had to prepay one year of it just to make the math simple. They have to come up with 23 odd billion dollars. How do you do that? The first thing you're going to do is sell dollar denominated assets you already own and generate those US dollars, then send it to the United States Treasury. So you may be selling bonds. You would think that's not really good for asset prices. But then you quickly realize all of that is far outweighed by the fact that all the rest of the stuff you own, whether it's gold denominated or local currency denominated, you want to buy these dollars because you want assets that are safe in turbulence and volatility. Would you rather belong the Vietnamese dong or the Vietnamese equity markets? To a degree, yes. But if you have obligations the Vietnamese government needs to fund, their central bank is probably deciding they need to be long US bonds and fixed income. Other people who hold assets in that country are probably going to be adding exposure to the United States while all this is happening. Because you're seeing the balance sheet of America burgeoning and growing. 23 billion from Vietnam, tens of billions over here, tens of billions over there. It all adds up. This is a very complicated multivariate problem, but the net takeaway is that dollar devaluation is not new. It has existed through market cycles for 50 plus years. It's a decay that has happened and will continue to happen. So I think there's a drag, but can the drag be overcome by the increase in asset values of the hard assets that are dollar denominated? The answer is yes, meaningfully so. As long as that's the case, you'll continue to have a bid for equities. If all of a sudden the MAG7 decided to delist and not be American companies and showed up in the CAC 50 in France, we'd be in big trouble. But I don't think that's going to happen. As long as there's American ingenuity and American supremacy, which goes back to the other thing, we can't kill these golden geese, nor should we kill the emerging golden goose, which is AI. As long as those things are the same, there will be a constant bid for American assets. That will keep the enterprise of America going far longer than most people would guess.
Up to a point. But pull up this chart. I think this is why Buffett speaks about this in these extremely long arcs. You're always ultimately going to be on the wrong side of the trade betting against the United States. It's probably important to say, what would a boundary condition be? I don't think the boundary condition is the dollar. I actually don't think the boundary condition is the debt. I think the boundary condition is if something were to happen with the quality of the human capital inside the United States and its inability to innovate, then we're probably in trouble. But even that story will take 50 to 100 years to play out. For most of our lifetimes, this is a safe trade because it's a winning trade.
Free. Well, it's winning if you can put up with the currency dropping 11% in six months. And if you pull up this chart, I get it, Chimoth, I agree. But businesses are booming in India, China, other countries now in the way they used to boom strictly in the US. There are other markets having their day. You can see this striking number. In the last 10 years, US treasuries held by foreign holders has declined from 34%. People, foreign countries, businesses, and investors aren't holding US treasuries as much.
Nothing bad about this chart. This is only a good thing.
This chart shows that people don't want to hold US treasuries.
No, this chart shows that foreign governments and central banks have less and less influence on the direction of American fiscal and monetary policy. That's better.
So who's going to buy our debt?
It turns out that when you're the largest economy and you're growing, there are a lot of internal people that will do it.
That means the debt's going to get more expensive if there's a smaller market.
That's not necessarily true either. One thing's true is that we're investing a lot of money and there's a lot of dry powder. The amount of money being invested into data centers and AI, the amount of cash moving into investment specifically in our borders, has to be accretive.
The amount of cash in money market funds probably exceeds the sum total of all the equity markets around the world. That's insane.
And now people are talking about building 10, 20, 30 billion worth of data centers and nuclear power plants again. There's something going on with American exceptionalism. Speaking of American exceptionalism, Harvard is still battling it out with Trump. Their $50 billion endowment is being questioned. It relates to what we're seeing in private companies, tech, and VC. Since Trump has been inaugurated, Harvard borrowed 1.2 billion due to uncertainty around their federal funding. The Trump administration canceled over $2 billion worth of research grants to Harvard. Earlier this week, the administration formally accused Harvard of tolerating anti-semitism on campus. The White House said it will file a civil rights lawsuit via the DOJ unless Harvard comes into compliance and does a deal with Trump. They're looking for Harvard to cancel DEI initiatives, have third party oversight of admissions, and mandatory actions to combat anti-semitism. Harvard has declined to do a deal so far. House Representative Elise Stefanik asked the FCC to investigate Harvard's financial disclosures. They issued $750 million of bonds on April 9th, and six days later sent out a supplemental disclosure with more information about the White House civil rights investigation. Jason claims Harvard's cooked, and I think this is really good for America.
There continues to be rampant Title 9 violations with respect to admissions. I think Creme Nick published that Harvard was continuing to discriminate against Asian students. Harvard's original case was against Asian students. There was a bunch of woke stuff at other Ivy League schools like UPEN. There's all this rampant anti-semitism. It all needs to get fixed. If you get a deal done, Harvard will have to capitulate. President Trump holds all the leverage. There's nothing mathematically Harvard can do. They can stall for another year and a half, but at some point they will not have the budget to sustain themselves. They'll get into a huge world of hurt. What they will have to do to finance their budget in probably 18 months is start to actively sell their private equity portfolio, which from 2019 to this year almost doubled from 20 to 40%. An insane asset allocation, an asset misallocation at the top of the market to the most illiquid asset class. When people sniff this out, Harvard was able to sell a billion dollars of private equity stuff at a 7% discount. There is no smart money on the street that's going to look at any private equity portfolio from Harvard without asking for 20, 25, 30, 35, 40% discount because your back will be totally against the wall. If you don't ask for that, you're a bad businessman. So they're going to need to reestablish federal funding. But the president has been very clear, and for whatever reason, they've refused to address these issues. The Ivy League is fundamentally broken.
The Wall Street Journal reported that Harvard would face a billion dollar budget shortfall every year if Trump followed through on his funding cuts and tax hikes. He was also saber rattling about getting rid of their nonprofit status or changing how endowments worked. There's an excise tax in the BBB that taxes foundation assets. I don't know the final language, but there was a version where excise tax on foundations was upwards of 8% a year. Let's say it's half that, 4%. If you're paying 4% tax on your endowment every year, it adds up. For Harvard, that's like 2.5 extra billion dollars a year they have to pay. Reportedly, Harvard is at the table in discussions with the White House after a couple of months of defiance. What's your take? Is this an important priority for America and the Trump administration? Is it a sideshow? What are the larger ramifications?
Let me suspend the brand and history of Harvard for a second and talk about these prestigious higher education institutions. What are the two primary functions? The first is to educate students, and the second is to conduct research or create facilities for research. These institutions do not direct research. They recruit and enable researchers who apply for grants to get funding to do their research, and they educate kids. The internet was the first leg on the stool to break higher education. It democratized access to information and knowledge. You can watch MIT graduate courses. All the core educational content delivered in prestigious institutions has been largely democratized and is broadly available for free on the internet. That's an incredible transition for humanity. AI is the next leg of the stool to break. AI may break education, higher education, and eventually make its way down to childhood. From first principles, how do we educate? What are the other benefits besides core domain knowledge? There's socialization and project-based work. But AI fundamentally rewrites the ability for an individual to get a good quality education. Kids in Africa and South Asia could get the equivalent of a Harvard graduate degree at zero cost through personalized tutoring enabled by AI and ubiquitous access to knowledge. That core function of the university is broken. They're now starting to reconcile what that means for the long-term viability of these institutions. The research function is also being rewritten. In Europe, China, and Asia, there are independent research institutions that get funding. They can say, this institution is just used to run research, it doesn't need to be within an educational framework. We're going to see more independent research funding from the federal government, nonprofits, endowments, and foundations. There's a real reckoning underway. These guys have created a monopoly, accumulated capital to build great buildings, attract great researchers, get research funding, and use that to raise more capital. That is breaking.
I like where you're going, but there's one hole. I don't think any of that is nearly as valuable to most kids applying or parents forcing them to apply as brand and the cycle employers put back. How do you fix that loop?
You can YouTube your way to something and AI your way to something, but at the end of the day, Goldman Sachs loves to recruit from Harvard. That's a big deal. The Teal Fellows program has highlighted that you don't get exceptional performance by exclusively going to people with prestigious degrees. The Teal Fellows program offered significant funding to kids coming out of high school, 18-year-olds. They've created amazing startups. But how do you deal with 500 million kids graduating a year globally with no brand differentiation? How did Teal Fellows do it? How do you hire Chimoth? You just did a program for 80 or 90 to find people.
We did a coding challenge. The best way to determine if a person can do a job, if you don't want to outsource it to a logo like Harvard or Stanford, is to watch them do the job. Hire them for projects or internships. That means you have to invest in professional development, which slows companies down. The hack is to just pick a logo. In our venture firm, we created a training program for associates. We hire three at a time, two make it, sometimes one. You have to invest in your own professional development. Organizations that do that succeed and have a massive competitive advantage. Doing a codathon and scoring people is another way. Having an AI interviewer is another way. You can interview 10,000 kids instead of the 50 you chose out of Harvard because Harvard is your first filter. The real question is what mechanisms employers will use to create new filtering systems. I don't know if the brand holds over time.
What you're saying doesn't address that there are a lot of kids who aren't ready to bloom when they're 18, 19, 20, or 21. I'll take myself as an example. I was a marginal performer in university, but I did well in co-op jobs. Those co-op jobs were because employers only wanted to recruit from the University of Waterloo. If I had to compete with 50,000 kids, I'm pretty sure I wouldn't have gotten it because I was a bit of a layabout. When I got into the professional working world after a couple of years, everything clicked. In the absence of brand, it will be very difficult to differentiate oneself and filter people. What Jason says becomes the huge problem: the burden of professional development for all these young kids is extremely heavy. The idea of all this tooling is good and necessary, but it's insufficient. There's something else we need. Being able to differentiate yourself in a coding challenge is not the future. It's for a very narrow class of person.
