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America's uh idea of winning is to create a god and that god will live in San Francisco and the god works for America. EMF Morgan Stanley >> right now it's just a money bubble and it's money for nothing so I think that's going to end all bubbles for spelled the internet whistling [Music] the AI fantasy bubble Chinese AI was focused on real world application like a uh like in the physical world. So uh it's very much uh oriented towards making things. So uh any technology people want to see it improves production. So uh the first major AI application came in mining while the US move uh moved in the direction of a larger language model. You ask a question it seems like it's talking to like a like a person. >> Hey Chubby BT, how are you doing? >> I'm doing fantastic thanks for asking. How about you? >> Pretty good. >> What's up? So, my friend uh Barrett here, he's been having trouble sleeping lately. And uh I want you to tell him a bedtime story about robots and love. >> Oh, a bedtime story about robots and love. I got you covered. >> Human mind is a natural attractor to something like that. Even though we don't know if it makes money actually nobody makes money, but the but but but the Chinese were we uh thought that they were behind and in something. So naturally they want to catch up. So that's why uh uh uh like Deep Seek happened. >> This is a absolute challenge to the supremacy of Nvidia and the high-end chips. If you can produce an AI model at that scale without the high-end chips that has revolutionized, look at this. Nvidia down 11 12%. This would be the single biggest market cap wipeout ever. Deepseek, the number one app on the app store. >> Uh Deep Seek was not on the radar screen. a bunch of people uh who didn't go to Ivy League schools or didn't work for famous technology companies but uh they just got together with a very little resource they made something happen. So um it's uh it it shocked the world and shocked the Chinese government. Deepseek is a chatbot. Okay, it does what open AI does. But the issue is that uh know Chinese still want to make it useful in the physical world. So it has been integrated into uh uh uh electric EVs. So uh the driver can communicate with the car through deepseek and the deepse kind of talks like a real person. So it becomes useful in the physical world. >> It's the most humbling thing I've ever seen. 70% of all EVs in the world, electric vehicles are made in China. Uh they have far superior invehicle technology. You get in, you don't have to pair your phone automatically. Your whole digital life comes is mirrored in the car. You have an AI companion that you can talk to J chat GBT equivalent in China to your all the automatic payment is already there. You can buy movie tickets. It has facial recognition so it knows who's in which seat and which which media you like. >> Wait, why don't Ford cars have that? Would you need to go with Apple or? >> Yeah, because Google and Apple decided not to go in the car business. We are in a global competition with China and it's not just EVs and if we lose this we do not have a future Ford. So I think this is the most important angle of AI how it can help people in the physical world and I see that China is doing really pretty good job in that regard and in many ways probably China is leading I'm not denigrating the virtual world and and a lot of people spend so much time uh in the virtual world so they they think this is the real world right so so when they talk about AI they they feel like wow Oh, this AI can make a picture for me. I think a lot of people enjoy that. So, this is fine. This is also worth something. But Chinese is much more down to earth. Down to earth. No. So, so uh how do you make a machine uh uh productive today in the race for AI? Who's winning? America or China? If the answer is America, how close is China to us? and what do we do to make sure the answer remains America will win? Mr. Alman, we'll start with you. [Music] >> Uh, American models including some models from our company OpenAI and Google and others are the best models in the world. >> American language is very much dominated by all these sport competition like baseball or or football. So, it's always they put a scorecard on on on everything. And while the US has a dream that uh uh we're going to have a super uh uh intelligent AI, so America's idea of winning is to create a god and that god will live in San Francisco. Okay? And the god works for America. Chinese approach these open source approach is not really about the winning, right? How you going to win if everything is shared, right? So uh Deepseek is open source and anybody can download the model to your own computer much much cheaper than uh what open AI uh charges because that deep model is uh is 10 times more efficient uh than open AI's model. So it uses a lot less energy. So it costs a lot of less money to run. The number one factor that will define whether the United States or China wins this race is whose technology is most broadly adopted in the rest of the world. This is a global market and it will be defined as technology markets typically are by network effects. 18% of the people of the world live in China. 4% live in the United States. 78% live somewhere else. So uh for uh the global south uh where uh 7 billion people live uh I think that the uh uh the US approach is not uh kind of accessible. The US business model is too expensive for them. They investing hundreds of billions of dollars and they expect the users to pay a lot more so they can make more money. Right? China is comes from low price. Everything China does is from low price. Then China tries to make the product equally as good as in the west. Okay. So uh so it it becomes irresistible for emerging economies where people's income is limited. So uh so this is where I see that uh uh the west uh not just in terms of uh uh AI in many other areas it's going to live inside a wall a wall of a high cost. So increasingly over the next decade uh the global south will become uh integrated while global north we have their own tie walls around [Music] >> could you sketch a difference between how the AI industry in United States is being financed and how that is done in China. >> Well, you in the United States like a money is is means nothing, right? So, uh because there's so much money flowing around. So uh uh uh uh it's like a company's worth a trillion dollars you know uh uh uh open air gets hundred billion dollars to burn you know even you know open air doesn't make money but it's worth like uh hundreds of billions of dollars kind so so so the US money means something very different in the United States >> but how come that there is so much money going around >> oh that that goes back to uh uh 2008 when the US started this uh quantitive easing. >> Remember that 200 billion is a starting point. This is it's going to take a while to get this program up and going and um and uh then it can be expanded and increased over time. >> Uh the central bank's balance sheet uh began with $900 billion. Then uh it added $4 trillion. enjoy your Thanksgiving turkey and uh have a good holiday. Thank you. >> Then uh pandemic happened. >> So they doubled the uh the quantity of easing uh another $4 trillion when the people were worried about staying alive and the stock market went through the roof. The consequences of uh the Federal Reserve's policy are farreaching. They have distorted the US economy. Everybody is playing with money. Everybody is playing with money. Not not many people are really doing useful work. You know, you you go to the United States, you ask people, what do you do for a living? It's it's you. It's not many people can tell you that they're doing something useful. Everybody is a consultant. Everybody is a lawyer, a social activist and uh something now but everybody's well paid. Uh something like this will never happen in China. Okay? Will never happen in China. But the uh uh money comes very very very uh hard. Everybody has to work very hard for a little bit of money. The US has become a fantasy land. I think the US is going to face some difficulties uh fairly soon. AI is like a dotcom bubble. In 2000, uh people like a pay. When they hear AI, they pay. Uh they give lots of money to these guys. Anybody with a PPT can raise a few billion dollars. And uh uh as AI company, what does the AI company do? They they buy chips. Nvidia says it's a it's AI company. It makes chips. It's there's no AI in there. It gets Taiwanese company TSMC to make the chip for $1, then resells it for $10. That's that's the business model. Then this profit is priced at 100 times something like that. So the company is worth like $3 trillion. There's no AI in this company. It's just a chip design company. This one node here replaces that entire supercomputer. We're building AI factories. This is the XAI Colossus factory. This is Stargate. The computing part of it, these systems are 4050 billion dollars of it. The reason why people build factories is because you know, you know the answer. The more you the more you buy Say it with me. The more you buy, the more you make. You know, when Deep Seek came out, the media share uh dropped a lot. It's it's come back. You see, nothing has changed. Nvidia still exists. People don't need so many powerful chips anymore. Why N why why Nvidia share prices back? Because there are people who are raising money. All these all these so-called entrepreneurs uh they have startups they come up with come up with a new idea of training a different AI model buying chips it depends on how much money that is going to this fund these AI startups then these startups money becomes Nvidia's revenue you see so so Nvidia's revenue is somebody else's investment it's all based on a dream and ultimately all that investment would that work out actually the people who invest don't care they think that all I need is for this shop to be get listed in the stock market and they're dumb they're big fools down the road so I have I don't care if AI works or not all I need is for this thing to stay uh on this path for another year or so I'll get out and rich and become So cynical. >> Yeah. So that's what's going on. Um, but I understand that there's also a lot of Chinese that invest in the United States. >> Oh, yeah. Oh, Chinese are suckers for a bubble. Even if you tell them that it's a bubble, they go for it. They say, "I know when to get out." You know, I'm smart. I know when to get out. So uh so much money, Chinese money has been pumped into the US bubble. >> You said that the success of the Chinese AI company DeepS could finally burst the US stock bubble. >> No, the the key issue is you know bubbles uh always happen. You look at the economic history, it happens regularly. uh the the foundation for bubble is a monetary policy. You have there's too much money going around. So uh what what happens is that you have shiny light somewhere the money will go there and that's where the bubble is. So when everybody's talking about AI, you know it's it's a bubble. It doesn't mean it's not useful. It's a bubble. The issue is there how when it's going to burst. So you look at the US now the US has so many problems. the fiscal deficit is like a uh for every 100 days they run up $1 trillion dollars in fiscal deficit. It's just unimaginable number right so we have 60% of the people who live paycheck to paycheck so they they basically uh uh and 20% of the people who buy groceries on debt they something service called uh buy now pay later kind of a lone sharking business. So this is like a you you look at economy like that you say hey this thing can can like break it very soon right it doesn't it's because that all these big wigs on Wall Street they figured out how to hold it together three fund management companies uh Black Rockck State Street and Vanguard they control over 80% of the market capitalization okay so this market is can be manipulated okay so uh so uh when uh when people get scared they sell, the market goes down five or 10%. But these three players will look for an opportunity to make it go up again because it's in their interest and they have lunches together every week and they fix the market. They figure out how to keep the bubble going consolidation. So the United States bubble has become extremely resilient because for structural reasons for structural reasons. So it takes a lot a lot to knock this thing off. So will it never pop? There are two things that will pop this. One is foreigners get scared. They don't buy US debt. They don't buy US treasure bonds. Then they bond the interest rate will go high very high. So that will pop up pop the bubble, right? But the foreigners like uh if they panic where else they go? Uh Americans kind of like the hey you have nowhere else to go. You see if you don't like me that's okay but you don't have anybody else. You see? So so that's a kind of a uh uh I may be ugly but I'm the only one guy around. So there there's nothing you can do. So this is the action outside force. Uh that's outside force. Internally it's inflation. US inflation is very serious. Americans uh uh perspective is still every problem I have, I will throw more money at it. If I don't have the money, I'll print it. So, so it's still the this way of thinking, you know. Uh and they so far they've got away with it for decades. So, why should they change their mind? Why should change the the way they of doing things? It's free lunch. [Music] [Music] So what will happen if it burst? >> Well, I don't know. It's this time uh uh uh really uh it it may trigger a revolution in the United States because of wealth. You see this this money monetary bubble has uplift the wealth to to a very small number of people. 10% of the people in the United States account for 50% of consumption. 10%. Jeff Bezos had this uh uh this wedding at the Venice uh for know he spent $50 million just on a wedding. You know, >> it's not a kind of a fairy tale wedding. These are these both are very old people. So So why do you need to show off like that? Because they can. You see >> this side this side. [Applause] Globally there's too much money flowing around and people buying properties go around the world to buy properties. This marginal demand is pushing up prices. So unaffordable housing has become a global thing everywhere people talking about unaffordable house housing that is ridiculous. That is housing is a mass mass market product. How could it become unaffordable to most people? Right? So this is a monetary phenomenon. So this means that uh when the US bubble burst it means that global the global part is also going to burst. Now the good news is that the cost of living crisis in rich countries that should go away. The cost of living should come down but on the other side your asset value is going to be worth less. Life gets easier but you are not as rich as you thought. So are you looking forward to the bursting of the bubble? >> I think that we have to go through it. When this thing burst like it will be like the 1920s the Gatsby, you know, [Music] [Applause] the longer the bubble last, the more dangerous it become. You look at what happened in uh in uh in Germany in the 1930s after the bubble burst. Uh different countries had different reactions, right? Some blamed somebody else and went extreme, right? Uh there will be some serious political ramifications. But the the the uh the scary part is that somebody will blame some uh uh blame another country, right? China is the scapego. Why we poor now? Chinese stole our money. So when the time comes, uh it will be test for everybody.