Iran Just Struck a US Base — Here's How 2 Wars Merge Into WW3

Good morning, everybody. Welcome to another Tom at Billou show live. We have got a lot to cover today.

Iran has struck US bases in Jordan unprovoked, right after saying that they were going to hold the ceasefire as long as we did. Obviously, that didn't end up being true. Now we're talking about them trying to get the jump on us. That's got Trump in an absolute tizzy.

China is negotiating directly with the Houthis to get oil through, as the Houthis have closed the Bab Elmandab Strait, sort of. We'll get into the details on that.

Ukraine has hit an Iranian ship in the Caspian Sea, but Iran is claiming that things aren't as they seem. We're going to lay out exactly what's going on there. I think there is a lot of BS being spun.

Mom Donny's new grocery stores are coming online. I bet you know how I feel about that. We're going to look at, uh, some of the surprising findings that are coming out of that.

The yen has cracked, and the rapidly changing Japanese economy now presents a massive global systemic risk that, if you are invested, you must understand this one. Going to be going deep on that in the third hour, which we've got some good stuff for you today.

And Sam Alman says that OpenAI is close to creating a genie that can grant any wish. You're going to want to hear what he thinks. The first wish is actually going to be all right, everybody, buckle up because Iran has fired multiple ballistic missiles at a US military base in Jordan. This is on Tuesday. Sentcom called it an attempted surprise attack. Sentcom says, uh, all of them were intercepted.

Now, Iran would, or yeah, Iran would have you believe that that isn't the case, but supposedly on the ground, they actually didn't hit anything. It was Iran's first ballistic missile attack on a US base since Trump paused the American bombing campaign that went for 13 days, supposedly to give diplomacy a chance. I talked about this on Monday. I think that is a bunch of BS. I do not think that's actually what's going on. If it is, Trump has brain damage because he has gone down that road before, and he knows that nothing comes out of it. So, I'm not sure what, uh, the difference is between the mental model that he actually holds and the mental model that he's presenting to us. Uh, but if he was really just trying to give diplomacy a chance, I think he's out of his mind.

As evidenced by the fact that the second he did that, uh, we got struck, or the base in Jordan, they attempted to strike it. They also continued to hit ships going through the Strait of Hormuz. Now, this specific launch came at 5:45 p.m. Eastern time, hours after Trump met Netanyahu at the White House for talks centered on Iran. Uh, Jordan has been hit before, of course. On July 17th, Iranian missiles struck, uh, the Salty Air Base. Uh, three service members were killed in that. That obviously was the first thing that really got Trump, um, up in arms, obviously, understandably, but you live by the sword, you die by the sword. So, nobody should be surprised that Iran is striking us back. And I certainly understand everybody's going to be voting for their home team. Nobody more hardcore than me. But I also like to look at these things, uh, and try to be very clear-eyed about what it means to be at war with somebody. As they say, the enemy always gets a say. And so the fact that Iran is striking back, the fact that Iran is trying to catch us off guard in the way that we have tried to catch them off guard, uh, nobody should be in too big of a tizzy about that. That is how this stuff is going to go. So if you're going to run those strategies against them, you can expect them to run those strategies against you.

Now, I say all of that to get everybody to be very, um, level-headed about what we can expect moving forward. This is not going to be something that we're going to be able to easily get out of. If the goal, and this really does seem to be what Trump is trying to do, if the goal is to break Iran's will to fight, you are going to have to go a lot farther. Remember, when you back somebody into a corner, and it is truly existential for them, because we are being asked to believe, and I think there's enough evidence to support that this is probably true, at least at the margins, we're being asked to believe that there are a bunch of people inside of Iran that hate the current regime, and that the current regime is only getting more hard-lined than they were before the attack started. So if you had people that hated the hardliners before, and now they're even more hard-lined, then you can expect that there is some sort of turmoil that's happening internally. And so the US is trying to put so much pressure and kill so many people in the IRGC that eventually the people inside the country are going to create enough problems that they're just not going to be able to mount a coherent, uh, attack against the US, against US allies. And that's going to be the way that they finally get these guys to back off and realize that they have to come to a negotiated settlement.

Now, if Trump really thought that the 13 days of damage were enough to bring them to the table, Iran is making it abundantly clear that it was not enough, and that they really are a, as Russia. By the way, I don't think we got into this on Monday, but Russia is now saying the same things about, oh, we just need to, um, have like this mosquito attack fleet. We see what Iran is doing. We see the asymmetrical warfare. They don't have to match the US dollar for dollar. They don't have to have the expensive munitions because they don't have to defend against everything. They just have to create enough of a pain in the ass in the Strait of Hormuz that they can cause economic disruption. And they know that if Trump is going into the midterms, gas is elevated, and we are losing US troops, if they can just continue to suck Trump in deeper and deeper. Remember, they desperately want Trump to launch a ground offensive, uh, so that they can start killing US troops. They just have to make it a quagmire. They just have to keep what's happening happening, which is that the US is, now this is me putting my read on this versus what the US is actually saying, but the US is likely encountering a shortage of munitions. The rate at which we can build the interceptor missiles just does not match the rate at which Iran can build these far, far, far cheaper drones. And so that asymmetrical expense is going to play to Iran's advantage. I'm not British all of a sudden. Uh, that that is going to, uh, obviously be something that is a tick in their camp. So if they can keep that pressure, keep the expenses on push towards their side, get the economic disruption to play out and get hotter over time. We're going to talk about Japan and how that's complicating all of this. Just the fragility of the global markets. If you guys have been watching what's going on in South Korea, woo, that is certainly a, um, an example of how fast things can turn, how everything can go red. You can get massive drops very quickly. And so that is the quagmire that Iran wants to keep going. So I think Trump is pulling back because of the shortage of munitions. He wants what he's done so far to be enough, but it clearly isn't enough. And I think that they have every intention to just keep this going as long as they can.

Now, you've also got the Houthis getting involved in that. Uh, and so they're making more and more trouble on that side. Now, going through the Red Sea, you've only got about 5% of global supply, so that's going to be less of a big deal. Plus, they seem to be largely just trying to blockade Saudi Arabia. Talk more about that later, but that is, um, what is playing out right now. So Trump, obviously after this surprise attack, is coming unhinged. I don't know if we have a clip of him saying it. I didn't pull it, but I don't know if you saw it. Um, that Trump is saying, we're, this is a paraphrase, but it is very close. That we're going to beat the [ __ ] hell out of him. I mean, he definitely the, uh, the f-word. So he is, uh, Do you have that clip?

>> Yep. So, if we want to play that, you get a taste of, uh, how Trump is feeling about this all.

>> President Trump speaking to Fox just moments ago about the US Iran conflict. Trey Yang says the information. Trey, what did the president tell you?

>> I'm sorry, it was Trey Yang talking.

>> Yeah, guys, good morning. President Trump react to that Iranian attack on US forces overnight in Jordan. President Trump tells Fox News about Iran, "We are going to beat the effing s out of them." He went on to say, "We'll be hitting them hard. They're going to get a beating."

>> So, >> all right, there it is. This is, uh, this is what stands in for, uh, presidential rhetoric these days. Uh, we're going to beat the [ __ ] [ __ ] out of them. Uh, we'll be hitting them hard. They're going to get a beating. It's not untrue. I'm sure we are now going to spend more of our dwindling munitions, uh, on the IRGC trying to get them to come to heel. But again, it's existential for them. If they really do have people rising up internally, or that they can expect that people will rise up internally, they know that this is something that they have to drag on. They've got to get Trump out of office for sure. Uh, and of course, they want somebody that has more of a stance like Biden, like, um, I mean, honestly, even Trump won. Uh, and certainly, um, Obama. So, if they can get somebody back in position that has leanings in that direction, they'll be in a much, much, much better position, and they can start rebuilding. Um, so it's going to be a question of what actually happens at the midterms.

Now, this gets so complicated because of China's situation, where you've got the housing crisis happening in China. They represent, I think the number was 74%. If that isn't exactly correct, it's within a percentage or two. 74% of the global pullback in the price of oil, or I should say in the, uh, decreased demand, which is impacting the price of oil, uh, comes from China. So we've gone through this in great detail. There are reasons to believe that this is not China playing some geostrategic game. It, it is, they're doing things that only make sense if you have lower demand, not if you're trying to survive a decrease in supply. This is a demand-driven shock that's causing, causing the softening. Remember, at the beginning of the war, people were expecting oil prices to hit $200 a barrel. I think right now we're hovering in like the upper 80s. Uh, I checked this yesterday. I haven't checked it again this morning, but in the last 24 hours, you were hovering in the upper 80s. So 84. So I mean, that's wild. Like, given what's actually happening, given the rhetoric that we're seeing, the fact it's 84.55, that is crazy. So the only way to explain that is that there is some massive softening of demand.

Okay. So the fact that that softening of demand in China is going to work to the US's advantage is pretty crazy. Very specifically Trump's advantage because it's very possible that he can keep bumbling through the war, and that gas prices just don't get completely unhinged. It, this is a very fascinating moment. Now, the question becomes, what's the contagion? You've got Japan hanging on by a thread. You've got South Korea, their stock market over the last couple days has tripped, uh, what are known as the breakers. So they literally just stopped trading because it's declining so fast two days in a row. I'm not sure if that's never happened before or just hasn't happened in like the last 10 years, but I think it has never happened before. You've never had two days of trading, certainly not in recent memory, where they've tripped the breakers twice. So, you've got all kinds of instability in the global economy. And by the way, part of what everybody is worried about in South Korea is that it's basically, uh, two stocks that are putting all the gains or bringing all the gains in South Korean stock market, but in the US, you've only got five. So, you've got this like super fragile global economy. You've got the Japanese yen carry trade. Again, we're going to do a deep dive on this later today. Uh, you've got that unwinding creating a huge question mark over liquidity the sort of world over, if you will. All of that as China's economy is in trouble, the US economy is in trouble, and we've got two wars right now that are threatening to merge into one big one. We've got a whole thing that we're going to do about that later, uh, and exactly how two regional conflicts end up becoming a world war. So, buddy, is there a lot of instability going on right now?

So, um, this is one of those times where predicting the future is essentially impossible. There are way too many moving parts. Um, but keeping track of all of these individual things and asking one critical question, how are these going to impact each other? Because you need to understand them as individual things that are playing out, but then you need to understand how one then gets influenced by the other by the other by the other, uh, to create a far more unpredictable situation, which is precisely what we're going through right now. These are wild times, man.

>> Yeah. And I feel like you can't really isolate them, too, because >> even if we're isolating just what's happening in the war region, we had that attack on the Ukraine ship. We got China. So, it's like every, there's like a spiderweb. So, we can't just say this is just about the Iran war, or this is just about oil, or this is just about South Korea's stock market because that's tied to oil energy production, which is tied to AI, cuz those two big companies are chip companies, which are tied to R5. So, we're just all in bed with each other.

>> Yeah, it is the, the way that I'm trying to think through this is, okay, I need to, I can't let any one of these things just be a headline to me. So, take the Japanese yen carry trade. Okay, you really need to understand that as, as an investor. That's the thing that I'm paying the most attention to. Um, so last week, it was really trying to wrap my head around what is going on with the oil. Uh, to understand why is the long tail of the curve saying that we're in a deflationary environment, which nobody would believe. Okay, so what the hell is that about? Uh, are they just wrong? Meaning they, the traders who are setting that price, are they just wrong? Um, are they misreading something? Are prices about to go high? But then you look at the level of disruption in the short term, and it's like, it's not having the kind of impact you would expect. It's having an impact. And so some people, I think, are going to blind themselves and say, "Oh, no, no, no. It, it's really happening." But this is where it is. Dude, one of the things that I love about doing this show is it force me, forces me to say out loud what I think is happening. And when people were talking about $200, uh, per barrel of oil, that seemed very believable. It's like, whoa, we're really marching towards that. So, if you get a mental model where you just sort of quietly update your mental model as you go, and you get to the point where you forget that being at $84 right now is super weird, and that that number should, by historical standards, have been way higher. So, 1973 Arab oil embargo sounds very familiar to what we're going through right now, causes us to go into a recession. Uh, we can't crush demand, no matter what we try. Prices are like astronomically higher, but people are still just like, "Oil's oil, bro. Like, I've got to have my energy. I don't know what you want me to say." So, yes, I'm going to pay a higher price. I'm going to wait in line at the gas station. Uh, there are going to be shortages. It is what it is. We got to have it almost at any price.

>> And now all of a sudden, people expect that to hold true now. It doesn't end up holding true. So, it's like, okay, you've got that piece. Huge question marks there. So, then you start looking at, okay, what's going on with China's economy? What's going on with the US economy? How are those playing into each other? Then you hear about, uh, the US Iran war, but if you're not looking at a map, you don't realize just how [ __ ] close the north of Iran is to the south of Russia. And so now it's like, wait, Ukraine and Russia, that conflict is actually ridiculously close to what's going on in Iran with the US. And so now the fact that you've got Iran being struck by Ukraine is like, whoa, whoa, whoa, hold on a second. Like, how does this now begin to spiral out of control? How does that pull Europe into the conflict? You've got Putin obviously having his own existential battles. So you've got these two allies that are both in these existential crises that are sort of lightly also allied with China. And so now you start seeing how when you start telling, and Drew has the map pulled up. So anybody, if you can pull out your phone, put it on your TV, whatever. But really look at Iran borders the Caspian Sea. Ukraine is trying to manage what's going on in the Caspian Sea because Iran is sending stuff to Russia. Anyway, we're going to go deeper on that later. So I won't, uh, get too deep into the details on that now. But it is, um, it's utterly fascinating. All of this stuff is interlinked. But if you just take like this headline approach and you're trying to understand the gestalt, you're trying to put it all together, I don't think it makes it possible for people to really start making decisions. But once you understand each one, then you have to go, how does this become a rogue wave? So if you guys have ever heard of a rogue wave out in the ocean, supposedly every now and then you'll get this wave that will be three, four, five times higher than all the waves around it. And this is how ships end up getting sunk that are like, "Wait, how did what, like how did you end up getting sunk?" And the answer ends up being that the, the, um, the waves, God, this is where I wish I understood math better. But it's like the, the waves, the amplitude of the waves end up colliding and every now and then they make one instead of canceling each other out, they make one gigantic wave and then it will just smash whatever is near it. And you can get these same kind of rogue waves in the economy where it's like these things that if they were isolated would have a very small impact, but when they start daisy chaining and happening at the same time, they have these runaway effects with each other and then it creates these big problems. This is why stock markets have these breakers that can get tripped, it clicks off. People have to stop trading because you get these, um, psychological contagions where people start panic selling and then it, it wipes people out because they're trading on margin. It's, it's one of these, dude, where you could do the world's longest run-on sentence simply trying to show how all of these different things interconnect and how the likelihood that they cause these amplification effects on each other, um, can be really problematic. And that's why you really do have to sort of have your big crazy wall from what is that show, is it >> it's always sunny in Philadelphia where he's got like all those different things connected to each other. But you do start to sound crazy when you really start showing how all of these things are happening at one time.

>> All right, I, I want to tease some of these things out because to me, the biggest thing is China. China >> fundamentally breaking the oil assumption because they said, "Well, we'll just get oil other places. We'll pull back on demand." But then now there's reports that they've actually have been making backwater deals to avoid the Strait of Hormuz in general. So,

>> Well, sort of. So if, if you look at the way that, um, oil moves, you've got some oil moves through the Strait of Hormuz. Other oil moves through, um, the Bab Elmandab Strait, which is so people heard about the Houthis before they were causing a problem. This like eight months ago or something. And so the US struck the Houthis and said, "Back the [ __ ] off."

>> This was before we were in true kinetic warfare. I can't remember if it was before or after we struck forau, but it was before we got into like the, the actual war with Iran. And so they did back off. But now, as a proxy of Iran, Iran is like goading them back into the war to take a stand to show Saudi Arabia, if nobody else, that we can create problems for you. So then China looks at that and says, "All right, our demand for oil has not dropped to zero. So, we're going to want to get the oil that we want safely through. You've got the US blockade happening in, um, the Strait of Hormuz. So, everybody's going to get checked by the US there, which is one of the things that Iran is pissed off about because they're trying to stop the ships they don't want going through. The US is trying to stop the ships they don't want going through. And so, now you've got China trying to figure out, okay, what do I do? If the US is going to stop, uh, things from going through, then we're going to want to make sure that we get things going through the Red Sea. And so now they're negotiating directly with the Houthis to make sure that they can keep getting, uh, the oil that was getting transited through there through there. Uh, and so they are able to get those direct negotiations going. Now, the question is going to become, does the US try to put a blockade on the, the Red Sea as well? Um, and so I haven't done research there yet. I don't know what the US's proposed response is going to be there. Um, but yeah, you again, it's 20% goes through the Strait of Hormuz, only 5% goes through the Red Sea.

>> So, it's not as big of a question. The, the key thing for me with the Red Sea is that you've got China negotiating directly with Iran to go through the Strait of Hormuz. US sort of [ __ ] that up with their own blockade, but then you've got them negotiating directly with the Houthis. So as you start looking at when you think about this from a world war perspective,

>> you start going, okay, it obviously the winners get to tell the story. So you get access, um, versus allies. So the axis of evil versus the allies. Okay, you're getting something very similar. Now, I won't put the moral judgment on it right now. I'll just say that you've got China, Russia, and Iran, that those guys are negotiating with each other. They're building more alliances. That's all part of the de-dollarization as well. But you, they're able to help each other out, whether it's, okay, yeah, I'm Iran. I tell the Houthis, yes, negotiate directly with China, let their stuff through. We're not trying to create any problems. In fact, we love Russia, or sorry, we love China getting out of this unscathed so that they can continue to rise and continue to hurt the US. Um, so that would be an extraordinary win for Iran if they can empower China, disempower the US. So, um, even if it's merely the enemy of my enemy is my friend, Iran has reason to be friends with China. Now, Russia and China have had a long-standing military alliance. It was either in 2024 or 2025. They were doing, um, more like conjoined military training exercises than they've ever, ever done before. They put out a joint release saying that we're more integrated than we've ever been before. So, think about the US and Israel. So, you have Russia and China with a similar, um, very public statement about how close-knit they are. So, now you've got three very strong countries. I mean, say what you will about Russia. Do you think them weak at your peril? Say whatever you want about Iran, think them weak at your peril. Uh, whether China is struggling right now in their economy, think them weak at your like triple peril. I mean, that that would just be completely unwise because when you think about, okay, who has what stranglehold. So the US still has the strongest military in the world. So they can create problems for China. If we get into a kinetic war with China, they're going to try to strangle. Most analysts think the first move the US will do if China were to move on Taiwan would be to start blocking, um, other straits where oil is going through to get to China. So they'll try to cut off their energy supply. One of the reasons China is trying to diversify away, they've basically created an artificial sun. Have you seen this? Yeah, dude. That [ __ ] is so wild. I look, took one look at that. This is such a, a tangent. I took one look at that and was like, "Yo, I got to build something like that in Kaizen." It is the craziest [ __ ] Look at that, dude. If you're not looking at your phone, holy [ __ ] So, anyway, they can basically hold, um, energy in a plasma state with this gigantic magnet that's hotter than the core of the sun. So, you've got the US doing all this dumb energy [ __ ] You've got Europe doing all this dumb energy [ __ ] And China, on the other hand, like, [ __ ] all you guys. Like, we're going to build nuclear facilities, gigantic magnets that can create, uh, more heat than the center of the sun and hold it steady. It's just absolutely wild. So these guys are playing a very smart strategy, uh, of building energy independence in a way that's forward-facing. It's so fascinating. Anyway, uh, you can get lost in sort of how interesting all of this is and forget how consequential this is going to be obviously in human life and also just the global economy, man. So anyway, if the US is going to go and do that, block them off, they've got to create other ways of being energy independent. So when you look at them, yes, maybe they're having housing problems and it is big and it should not be, uh, swept under the rug, but at the same time, these guys have the will to build and they have the will to point a gun at people and say, you're going to build for cheap or for free if that's what we have to do. Uh, and they have a long-standing history of shooting their own people in the face. Um, so yeah, you can expect that to continue. Uh, this is also on the news that, um, Iran is set to do an arms deal with China. So, this is from the Hermuz letter breaking. Iran is set to receive up to 400 Chinese man pads in a new 60 to 70 million deal. The precise weapon says sales Trump claimed she told him China would never make under any circumstance. With the first shipments arriving within weeks per Reuters citing three sources, the contract covers QW12s and FN16. Shoulder filed short, shoulder-fired surface-to-air missiles signed with Hong Kong-based Jongqing Bao Shang as intermediary deliveries fly from Yuri in western China in transit Pakistan. China said four days ago, strongly supports Iran in safeguarding its sovereignty, security, and national dignity.

>> Yep. Welcome to the fight. So people are going to find allies. That, that is that. And so if you're in a fight with the US, then China is a natural ally for you. Uh, so it is going to get weirder before it gets better. That is for sure. And this is where diplomatic meetings are, um, I mean, just like the US will say one thing and then something changes and they'll immediately change their mind, or they'll just outright lie and then do something different.

>> Of course, China's going to do the same. Iran's going to do the same. Ukraine's going to do the same. Russia's going to do the same. Like, oh god, what was it? Was it Kissinger that said the US doesn't have allies, it just has interests. And so if your interests change and they become unaligned with somebody, then they're no longer your ally. And it's that simple.

>> Uh, yeah, and it, it's happening already. Okay, I want to get the last thing on the table and then we can kind of look at it holistically. The last thing being, um, the Iran Ukraine attack. So I have seen reports that Ukraine apologized. They already kind of took their foot off the break in there. So, I don't think this is necessarily the domino that starts that other war. Um, but it has been confirmed that Ukraine, um, it has been confirmed that Ukraine has struck a ship on the Caspian Sea. Um, originally this tweet said that wasn't accidental, you know, quote unquote, but there again, there's been reports that Ukraine is already trying to back off of this. But yeah, another thing to add to the fun.

>> What's interesting is it takes a while to parse through what's really going on with this one. So, I spent a bunch of time trying to piece together what's really going on. Now, to me, what's happening here answers one very simple question. How do two regional conflicts end up turning into a world war? And the way that that happens is you merge them. So far, the US and Iran, sorry, the US and Iran and Ukraine and Russia have been two separate conflicts, but when you look at the map, as I was talking about earlier, they're way closer than you think. And recently, these two wars really are threatening to merge into one. Ukraine struck an Iranian ship over the weekend. As Drew was saying though, the initial messaging was like, "Hey, hey, it's all good. This is just a big accident." You had Iran like really going ham, saying, "No, no, no. This is all just one big mistake. Don't worry about it." But as time goes on, it's looking more and more like in fact, Ukraine struck an Iranian ship in the Caspian Sea on purpose. Zelenskyy actually claimed the strike the same day. He said that Kyiv achieved strong results with long-range strikes in the Caspian Sea, including vessels used in military cargo shipments involving Iran. Iran is saying the vessel was the Anna, which is a commercial dry cargo ship. What do you mean? What's the problem? And you killed one of our soldiers. And so Iran ends up summoning Ukraine's, uh, agency and saying, "Listen, uh, this was a hostile criminal attack. Uh, Archi said that this, bro, this can't go unanswered. You guys are going to have to do something about this. You're going to have to pay restitution. We, we just can't let this slide." Now, Iran's position was that Ukraine had assured them directly that the strike was unintentional. And this is where that early narrative came out. Even I was sucked into it in the beginning was like, "Oh, Ukraine's already said that this was all a mistake." But as you go and tease it out, Iran is the one claiming that Ukraine said it was a mistake. Ukraine isn't saying that. And they haven't even acknowledged the whole restitution idea. Ukraine, in fact, has made it clear that while they're not seeking escalation, their SBU, which is their combo FBI, CIA, hit the ship precisely because it was operating in evasion of international sanctions and moving military cargo between Iran and Russia. Ukraine's representative said he had a frank conversation with Iran, emphasizing the need to refrain from escalatory steps. That part is true, but told Iran they needed to end their support for Russia. Now, Iran is scrambling trying to position this, uh, exchange basically as an apology because they need an off-ramp. And so they want people to believe, listen, we've had the conversation. They've already apologized. Yes, it was private, but they've apologized. They've acknowledged that they're going to have to pay restitutions. But from everything I can find in my research, Ukraine's stance is closer to, you don't want none of this war, homie. Stay the [ __ ] out of it. So, we'll see if this escalates. But like I said, they're not even acknowledging Iran's demand for restitution. So, if Iran is like, well, we need something from Russia. There's some alliance there. There could be the three-way alliance between maybe China is like, hey, you guys should really be supporting them. You've got the Caspian Sea between you. You can get stuff to them that they need. I don't know. That's me just wildly speculating to be very, very clear. But you can see all the different ways that Iran may find itself in a position where it wants to keep supplying Russia. Now, all of a sudden, even though tensions have been a little bit weird between Trump and Zelenskyy historically, seeing Zelenskyy at Lindsey Graham's funeral, hearing some of the things that Lindsey Graham's really trying to help get things moving in Ukraine's direction there, um, and that he felt very supported. So now you've got, okay, is the US now getting stronger and stronger, um, in terms of backing Ukraine? Is Europe obviously now more aligned with the US in terms of the support of Ukraine? That starts getting very interesting in terms of does the US now have the ability to have a little bit of leverage over Europe versus Iran in a way that they didn't before, where they can say, listen, if you want us to keep supporting Ukraine, which obviously you do, because you guys don't want Russia being able to overrun them and then spill into European borders, then I'm going to need some additional help from you guys in the war with Iran. And then Iran, of course, trying to block that by warning everybody in Europe that, listen, we can hit some places that you don't think we can hit. So, be very, very careful. And they were talking at one point like a week ago about actually hitting a base in the UK. Not just a UK base in the Middle East, actually hitting a base in the UK. Now, whether they can actually pull that off or not is a totally separate question. But that's how all of this stuff is starts getting very intertwined and runs the risk of merging into one big conflict. And that is the risk right now that, that we've had people pointing out for a while. In fact, we had, um, on our own show, Andrew Bamonte talking about, you're already in World War II, you just don't realize it yet. And this is, I won't say the first time that it's really come home like, oh, whoa, like I'm seeing how all of this is connected. It's just with the strike, uh, with Ukraine striking Iran and digging into that and realizing, oh, this was not an accident. They do not plan to pay restitution, uh, that there really is a potential obvious path to escalation to merging these two conflicts. Now, right now, both Iran and Ukraine want to leave it at that, that quick little tit for tat. Uh, but we'll see if that holds.

>> Yeah, somebody in the chat asked for that, like, who benefits from World War II? Is it just like the Drake beef a couple summers ago where everybody's like, he's weak now, let's all pile up on him, and it's just the opportunity for the US's ally, like enemies to get an upper hand, or do you think there is a larger nar, like there is a larger problem that can be solved with the US being overly extended in World War II, like fighting all these different wars?

>> I don't think anybody wants World War II. I don't think anybody wants that. However, have you ever watched two guys go from completely rational humans to suddenly acting a complete fool because one of them feels disrespected and then then the other one feels disrespected or like, "Well, I'm not going to back down to you. You're a pussy." And so then it just like they, they both start acting crazy. And everyone on the outside is like, "What are you guys doing?" Like, yes, he slighted you, but are you really going to get into a fight over this? Like this is wild. The second we're, we're playing pretty fast and loose with that punch sound. Uh, we're getting into the zone where people have to acknowledge economies are simply human psychology. Wars are simply human psychology. And >> I think we want to believe that this reaches a state level and that actors start acting very rational. Um, they think of their economic interests. They are held at bay by bigger forces that transcend the pettiness of the human mind. And then what you see, we were talking about this a little bit with World War I. You see, no, World War I was really just whatever, three or four cousins that, um, were in a pissing contest between each other in, you know, like when they were all getting together in one palace and they hate each other and don't like that the other one, um, has more money, or the other one is seen in the eyes of the international community as being cooler, or maybe one of them says some [ __ ] at dinner and it turns into all the young men fighting and dying in trenches, but it's really some petty [ __ ] So now knowing that humans have this propensity to do really petty [ __ ] because somebody did something to you that you simply cannot let stand, layer on top of that massive global economic, um, instability, and you get how there's a bunch of dry tinder. Now step up, go meta. Mhm.

>> Since the end of World War II, the US has first, we were sort of held in check for a long time, and we, it really did seem like we were righteous because we were in the Cold War. And communism, regardless of what your, uh, local community college professor will tell you, communism is very bad, and it's very bad for the people living under it. And we've got the receipts. We can just go down it. So that period in American history was the vast, vast, vast, vast majority of Americans really felt like, yo, we can't lose to Russia because of the ideologies of capitalism good, communism bad.

>> Okay, then we win the Cold War, and now America just becomes the global bully. We're the hegemon, and people start looking around going, "Woof, these guys can, um, manipulate currencies." So, if they want to [ __ ] up South America, they can absolutely do it. If they want to extract resources, they can absolutely do it. Take what we did in Venezuela. Um, good for the US, maybe even long run, good for Venezuela, but certainly a violation of Venezuelan sovereignty.

>> And so, us going in and just doing whatever the [ __ ] we want. It's like we were doing that all over the place. And so, people were just like, "Yeah, you guys might think that you're on the moral high ground, but stay the [ __ ] out of my country." And so we just did all this stuff from, uh, bullying people with our economics, uh, inflating dollar holders into oblivion, uh, to the point where people just started going, we've got to get out from under these guys. And so over time, people just go, I don't want to be second fiddle. I want to be in pole position. I want to be the number one. And there's this concept, a very important concept that everybody needs to bake into their soul if you want to understand humans, uh, is that ambition grows in the Eden. So in the beginning, maybe you're chill, bro. I just, I, I just want to control my own country, man. Just please stay out of my country. Stop [ __ ] with my currency. Let me do what I think is best for my people. Leave us alone. Then you get strong and you think, "hm, maybe I want to run Asia, and I don't want you [ __ ] around with, uh, Korea or Japan, um, Southeast Asia. I want to be able to run around here and do my thing." And so you put a plan together and you're like, "How did the US become so powerful after World War II?" Oh, they were a manufacturing powerhouse. Say less, fam. And so you go, am I willing to effectively enslave my population? Yeah, word. Will I put nets around Foxconn so that if these guys try to jump to their death, that they can't, and I can send them back to work? Yeah, I'm willing to do all that. Uh, will I concentration camp the Uyghur Muslims because, well, I just don't get down with that? Yeah, I'm willing to do that. Cool. So now, uh, I can use my authoritarian tendencies with my newfound love of the free market with Chinese characteristics. Um, and I'm going to become the manufacturing powerhouse. And these dumbasses aren't going to see it coming until it's too late because they're running the empire playbook, which is to financialize everything. Make all your money off financialized assets. Stop doing real [ __ ] Stop moving electrons. So, we're going to do all that, and I'm going to enrich my economy, rightly so, by the way. This is the playbook they should have played. Looking at that and just going, "Yeah, do what's right for your people." And so they have, um, run something that put them on an incredible trajectory and has just completely put them in a control position for the rest of the world. So, do they want World War II? No, they don't want World War II. But did, as they got stronger, did their ambitions continue to grow? And so now they're in a position where you're not going to tell me what to do. And so Xi has said blatantly, I am now going to be dismissive of the West. And they said in the beginning, you got to keep your head down. You've got to recognize where you are in the pecking order. You've got to like, essentially lull people into sleep. Those weren't their words, but that was the sentiment.

>> Make them think that you're weak until you get strong, and then you can start bullying people.

>> So now you're Thucydides' trap, which is just psychology. It's the dominant player can't accept that it's going to go from one to two. And the guy in second position is not willing to stay in second position. He wants to be in first position. And then you put all the other things back on the table that we've been talking about, and all of a sudden, it's just human psychology of, well, if you would back down and just accept your place as subordinate to me, then we wouldn't have to fight World War II. So what's the problem? Uh, but that's not how humans work.

>> You know who would benefit if we went to World War II?

>> North Grumman.

>> Oh yeah, them too. Uh, Trump Emergency Powers Act. He doesn't have to leave. Third term. Trump 2028 signs. Starting to make sense now.

>> Drew, how dare you?

>> Trump 2028 starting to make sense now.

>> Jesus Christ.

>> Professor Jang said, uh, he might get Don Jr. to run and then die, like,

>> dies. I mean, yeah. He'll just give, he'll just get like, hands back the mantle because you can't run for a third term, but you can't be a president three times.

>> Yeah. I mean, listen, that's exactly, yeah, that was well played. Um, that is exactly what people say was Biden, uh, was Obama's third term.

>> So, yes,

>> I, I couldn't hate that more. But what,

>> I said Obama wasn't even there. And the Biden family came out and they called themselves a Polar Bureau. That was Joe Biden's term.

>> Um, well, was it Jill Biden that said it? She was certainly part of it. I think it was somebody else on the Democrat team that specifically used the phrase Paula Bureau. You can certainly get me up in arms about that.

>> Um, I haven't looked at that closely enough. So, I'm at the headline level of that. Certainly, if you think of the Democrat party as a blob, who is still the most influential person in the Democrat party? I would say it's still Obama.

>> Um, maybe I'm crazy, but certainly during the Biden admin, I can't imagine there was anybody that had more clout than Obama.

>> Certainly not with donors.

>> Well, all right, moving on. I think we got this with the war.

>> Let's go.

>> Let's do it. All right. So, um, everybody's favorite socialist, Madam Donnie, um, has announced plans for city-owned grocery stores.

He did a couple things yesterday. We're just going to start with the grocery stores, cuz there's a lot of other things we need to get into as well. So, um, I know that there's a bunch of different speculation and things like that. They're starting one store right now. The goal is to have five by 2029. It's going to start in the Bronx, I want to say, but 2027 is the first year. Um, I don't know if you want to like jump right into it or if you want to kind of set the scene first.

>> I'm happy to just skinny dip into this. You could literally punch me in the head in the middle of the night, wake me up and say, "Uh, talk about what's going on with Mom Donnie, the DSA in New York." Uh, and I would happily do it. Mom Donnie and the DSA are absolutely determined to achieve affordability, but they're going to do it by emptying the grocery store shelves because nothing costs money when there's nothing to buy. Unless, of course, you're a taxpayer, and at that point, keep in mind that roughly across the US, I don't know if this holds exactly in New York City specifically, but across the US, roughly 50% of people don't pay taxes. So for them, that's of little concern. They just want the lower prices, and so the distortions are going to begin.

Now, people don't understand the mechanisms of how a grocery store works. They certainly don't understand that running a grocery store is one of the most notoriously difficult things to run. It's like restaurants. It's just very thin margins, very hard to do. Now, what exactly is the DSA trying to do? You guys almost certainly know by now. Mdani is launching a five-state, uh, five state-run grocery stores, and he's now put a bill on it. So, it's going to be a $70 million endeavor that is going to be paid by taxpayers. Mamani has announced the five municipal stores will sell a core basket of goods. So, all produce, all meat, seafood, dairy. I think there's like 20-odd staples. And he's going to sell them all at 30% below retail. The way that the mechanism is going to work is they're going to recalculate the price every month for those goods, and then those prices will hold for the month regardless of intramonth savings or swings, excuse me. So if something is changing within the prices in the middle of the month, it doesn't matter. Once they set it for the month, that's going to hold.

The city is going to cover for each of the stores, going to cover rent, property taxes, and the actual buildout to get going. And then, of course, they're going to have to decide whether they're going to actually keep funding to buy things at a loss, which is almost certainly what's going to happen, or if they're going to let the store shelves get empty. Now, I think because the costs are from an incentive structure likely to just skyrocket, uh, in terms of when you think about what a price signal is, it tells you how to distribute rare goods. So if you have a limit of something, the way that you figure out where those things go is by who's willing to pay the price. So the government is either going to say, "Well, we're only willing to pay this much for that core basket of goods," in which case other stores are likely to bid for those items because they don't want to hemorrhage people in their stores. So they either let their store shelves go empty or they bid up. And so that's how those, there's going to be this upward price pressure on all the things that the state-run stores are trying to artificially hold low. So you get that upward pressure, and now both of those groups have to say, "Okay, well, do I just let my store shelves be empty or do I lower my margins?"

Now, the government stores have the ability to reach into the taxpayers's pocket and just say, "Okay, well, this is costing more than we thought. Originally, we thought it was going to be $70 million. Think about the high-speed rail in, um, California." Just because they say $70 million doesn't mean that that ends up being the price that they actually pay. So they are going to be forced to make that decision. So, as the prices fluctuate, they'll have to make that decision. If they continue to expand, um, and create more stores and ask the taxpayer to foot the bill of increasing prices to make sure that the items are stocked on the shelves, then you can expect the surrounding stores to go out of business, which is causing a lot of drama. There are now, uh, the government is being sued because the local, uh, bodegas around the state-run stores are saying, "This is going to put us out of business. This is crazy." So, we'll see how that part of this plays out.

Now, the bad news is that, in reality, um, you're going to have to deal with the fact that grocery stores run on extraordinarily tight margins. So, we're talking 1 to 3%, and that's without the taxpayer sugar daddy. So, even if you zero out profit and say, "Well, the store doesn't need to turn a profit because it's backed by the state." Even if you zero out rent, even if you zero out taxes, you're still not going to be anywhere near the 30% on those core goods. So ultimately, the gap is going to be the thing that the taxpayer has to close. So this one, some people are looking at it and saying, "Well, it's good that they're going to run this test." And by the way, this is a test we've run before, um, but they're going to have to run this test so that they can see that people are, um, that communism, basically, sort of writ large, state-run anything isn't something that's going to work. And by showing people firsthand, by letting them run that test in these very small ways, people will be able to see what actually happens.

Now, the thing that frustrates me to no end about this is that we've already run tests just like this elsewhere. So, in Baldwin, Florida, they opened a city-owned store in 2019. They lost $61,000, uh, in year one, and then they lost $178,000, ended up closing in 2024. In Erie, Kansas, um, they bought a, uh, state-run grocery store. It was the only grocery store in the area, if I'm not mistaken. So, you would think if anybody's going to be able to make this work, they don't even have competition that's going to be driving those prices up. But the mayor, mayor needed $50, uh, dollar a month per customer. He only got 14. The city ended up leasing it out, and now it's scheduled to close. There is one in Atlanta that's claiming to be working well, but I would need to do a deep dive on that to see if it really is or not, because you can hide a lot of sins when you have taxpayer dollars behind you. Uh, but they are claiming that they're going to be opening a second location soon. But ultimately, no store can escape the reality of needing to turn a profit or receive tax dollars to cover the shortage. And when you've got profit-run grocery stores that can't stay in business, you're in real trouble.

And the question I want everybody to ask is very simple. What are the odds that a government bureaucrat is going to run a grocery store more profitably than Walmart? I don't need you to believe it's going to run it more profitably than the local bodega. It's possible the local bodega is being run by a [ __ ] and that's why they're, you know, locked into one local store. They haven't quite figured it out. So, they're always just scraping by. But the odds that a government bureaucrat can outperform Walmart is zero. Not unlikely. It is zero. The reasons are very complicated, but they have to do with the way that the human mind works, which is, if I'm really, really good at something, I expect to be compensated for that thing. And by the way, I can aggregate power as I go in and negotiate. And so when I'm running something profitably and have a strong price signal and have extraordinary talent at running my business and knowing exactly how to get by on those margins and build something where I can raise debt through the public markets, all of a sudden you have an advantage that the government is never going to be able to have. The government is just going to paper over all the problems. They're going to be undisciplined because they have an endless supply, roughly, of taxpayer dollars. And so it becomes a very different ballgame that creates very different outcomes, which we have seen play out over and over and over and over and over.

Now, the thing that I really want to wake people up to is that you don't have to go far to figure out what the DSA's real mission is. Just read the DSA program that was released on July 14th. Food, energy, medicine, and transportation, according to them, should not be for-profit businesses. Now, this is one where Drew, please, if there are people in the comments that are all for this, then we need to go into, uh, what I've been alluding to briefly here, this idea of price signal, what it does, profit, human psychology, why people work as hard as they do, uh, what they need in order to pull that off. We can show China and exactly how they've run this experiment and proven that this is true, including all the things they do, taxpayer fund, and what that does and what that looks like and how you have to keep that going. Um, but when you have the DSA saying that they want those things that I just listed to be common goods, um, you run into a problem where you end up with a whole bunch of public ownership of the largest corporations and essential industries, which means that taxpayers end up paying for unprofitable businesses.

Now, you get what are called zombie companies if all you do is make loans too cheap. Now imagine, and this is a whole thing in Japan, we can talk all about the Japanese zombie companies and how one of the big fears everybody has about them raising their rates is you're going to see a rash of companies filing for bankruptcy because they were never profitable companies to begin with. Now, keep in mind, they couldn't lean on the taxpayer and they still got themselves into zombie status, meaning that they don't make enough to run their business without constantly bringing on this extraordinarily cheap debt. So meaning the public does not care about the things they make enough for them in their current state to actually stay viable. It's what's known as being default dead. So a zombie company is default dead. Once the cheap debt goes away, the company is going to die. When you have state-run entities, they are also likely to be default dead without the taxpayer dollars. They are simply going to go out of business. That means you have something that is poorly designed. It has an extraordinary leak in it, and you make that leak very difficult to detect by stealing, in my words, from the taxpayers and just constantly putting enough new money into the system that you can't notice that it's actually a default dead organization. And by the way, the DSA wants to go way beyond that.

If you haven't already, watch the appearance of the DSA co-chair on Fox News. This is crazy. Drew is right. Uh, every Republican is going to play this as a midterm ad. I legitimately thought we were being trolled. I thought that Megan Romer was for sure a plant, that she was not actually part of the DSA, but she is. Cannot believe that's true. Uh, but she talked openly about wanting to abolish the Senate, abolish ICE, abolish borders, abolish prisons. Absolute insanity. So when you're looking at what's going on with the grocery stores, please map this back to an ideology that is really driven by resentment. It's driven by a desire for a much, much, much larger state, which will require much, much, much more authoritarian rule. And so the real question people should be asking themselves is, okay, they're weaponizing something very real. So the DSA is weaponizing the fact that things have become unaffordable. Now, what's the reason that they give you that things are unaffordable? Billionaires and people that run corporations are greedy. Cool. That's their stance.

Now, what's the reality? COVID drove prices up by 30%. How did COVID knowingly do that? Meaning, how do we know that it was COVID? We know it was COVID for two reasons. One, we printed money like there was no tomorrow. You can just look at the M2 money supply. It goes in an almost vertical line straight up. It's pure insanity. And they did it in a way that was likely to be spent, which means it's going to be maximally inflationary because those dollars are now going to be chasing the goods that are out there. Cool. That was already bad enough. But on top of that, they shut the global economy down by killing supply chains. So now you actually have fewer goods being chased by more dollars. It is the perfect nightmare. And now, on the other side of that, because of the way that increases in costs work, it's always like all these different little pieces, everybody raises their prices. And so people don't just then lower their prices. So once the prices go up, you're basically setting a new normal. And barring some sort of catastrophe, those numbers aren't going to come down. So when COVID, which, by the way, should this ever happen again, we should all look at that very honestly and say, "We can't shut the global supply chains down." Barring something that has like a 30% mortality rate, you just can't do it. It's too [ __ ] crazy. We ran the experiment. It's just so devastating. While every life lost is an absolute tragedy, you just can't shut global supply chains down. We're too interconnected for that. So now what you end up seeing is we allowed them to shut down the global supply chains and prices went up. They should have known they were never going to come back down.

And so you put yourself in a position where workers, workers must be empowered. Okay? Real wages have to go up. If, if we want out of the current unaffordability, the only thing politicians should be talking about is how do we get prices down and how do we empower workers to get wages up? That's it. Housing. We'll set that aside for now. But if you look at those two things, state-run grocery stores do not address either of those. So all you're doing is creating scarcity. So you're going to have a hard time just keeping your shelves stocked. We've seen this over and over and over and over. Look at Russia. Look at China. So that's going to be the way that this game plays out. Um, so it isn't addressing the underlying cause. It is like you have a brain tumor and instead of going, "Hey, we should probably get treatment for the brain tumor," they're just giving more and more, um, Tylenol. That [ __ ] is crazy. So, you might be able to mask the symptoms, but you're still going to die of the brain tumor. And that is the solution that they're putting forward.

>> Um, somebody said in the chat, "How are we saying that communism doesn't work, but China is our biggest threat? What are they doing right that we are not or missing by trying to implement these policies locally?"

>> They're not doing communism. China is not a communist country. No matter what they tell you. So they may call themselves the Chinese Communist Party, but they are not communist. So keep in mind when I say when I'm talking about China and being communist, I'm talking about when China was actually communist. So China was communist for a very long time under a guy named, uh, Mao. And Mao killed, at an absolute minimum, 45 million people. Some people clock it way higher. You've got people that say it's closer to 80 million. Some people say 100 million. It probably wasn't that high, but 45 million is more than enough for me. Uh, same thing when, uh, Russia was doing its thing during the Bolshevik revolution when Lenin took over and then followed by Stalin. They ended up killing 25 million people just in the Ukrainian famine. So when it's actual communism, then people die, largely through starvation.

Now, what is China? China is a very different playbook right now. China realized, "Oh [ __ ], we have to create a free market." Now, they do it with Chinese characteristics. That is very true. So if you think of it as capitalism with authoritarian control, that looks very different. Now, if you want to say, "Well, okay, but that the DSA is just that, that that's going to be an exact mimic of China's policies." Okay, we can at least have that debate. That's not their claim. But let's say that we just go, "Cool, Tom, show me how the DSA doing a Chinese model isn't going to be better for us." And what I will say there is, there's no universe in which I want to put myself in a position where we are living under authoritarian rule, where you have, according to reports, a million people in concentration camps. Okay, please don't lose sight of that one. Uh, that you have some of your most successful business people, they get disappeared for making a comment. Right before Jack, um, Alibaba did its IPO, he complained about the way the banking system was working. They kidnapped him and re-educated him for a few months and then released him back into the world with a totally new attitude. Now, if you guys want the government kidnapping people and all of that, uh, then we live in very different universes. And what I want you to do is run the scenario where you hate the person in power as much as you hate Trump. And now Trump is the one, or the Trump-like figure is the one getting to disappear people in the middle of the night, because I know you're imagining it that you love the person, you like what they're doing. Um, so that to me is one of the biggest, most important differences between, uh, the Chinese model and the American model. America is predicated on freedom, and China is predicated on authoritarian rule.

It was a really interesting article written by, um, Eric Weinstein about this, and he said, "The fact that communism doesn't work for the economy really doesn't matter to me at all." That's maybe a little bit useful, uh, in terms of my real argument, which is that I, as an individual, do not want to be hammered down. And that the way that you really, over a long period of time, get the kind of innovation that you need is by letting the people who seem crazy pursue the thing that they think is right, which, by the way, is the very thing that China is trying to unlock now. They do want to squish it down or aim it where they want to aim it, but what China realized was, "Okay, um, we're going to determine which of these markets we're going to subsidize, largely because of what we want to do to the exterior world and with some eye to very strategic, uh, infrastructure buildouts." So they do make some insistence there, which is part of what's really worked for them. But if you think of China not as pulling people out of poverty, but finally taking the brakes off of people and ceasing a policy of holding them in poverty, you have a much better view of what's actually going on. So the freedoms that they give people to compete, to pursue their ideas, those are the good things. Those are the things that are actually working. China trying to crush people down is the thing that you should fear. The DSA is running a crush people down strategy. So we are reducing the amount of freedom going in the exact opposite direction of China. Reducing the amount of freedom with these cockamamie ideas about what's actually going to work from a communist standpoint, that all of these things are better off being state-owned. Remember, China's not even necessarily trying to state-own most things. China's going in the opposite direction and saying, "All right, listen. If I [ __ ] tell you to do something, you're going to do it. But I understand that I need you guys to go compete with each other. I need you guys to be able to get rich."

As a reminder, China has more, um, inequality in household wealth than the US. Okay, that's hotly contested. I did a whole thing on this. The guy with the most, I think, plausible read of the Chinese economy is like, "You guys don't understand how China reports our data, and when you really start aggregating, um, all of the, um, different things that we can take as real and you put them together," that he reads this as them having substantively more inequality at the household wealth level than the US. So it's not like China's created some great equal society. They most certainly have not. But I will grant them that by no longer standing on the necks of their citizens, those citizens have gone on to do extraordinary things. And I think China's infrastructure buildout was brilliant. So we can get into that stuff. It is a very fascinating debate to say, is authoritarian top-down rule, where you do have to put some people in concentration camps, you do have to do all that stuff, but is it more efficient when the leader is making the right choices? And the answer is probably yes. It's a very uncomfortable truth, but that probably is true. And the US system is designed to protect against something else. It's designed to protect freedoms by understanding that humans have a tendency to bend towards tyranny. And so we are running a very different experiment. Now, we have a much longer track record of success than China does. So let's check back in a little while. But anyway, that would be the more realistic look at the difference between what China is actually doing compared to what the DSA is bending towards.

>> All right. This is from one of the DSA consult, one of the Mandani consultants. So for those that don't know, New York City is running an RFP right now, request for proposal, for people to run the store. This will not be city-owned operated, and this was some stuff from the RFP that the consultant posted. The stores will be run as a public service, not for-profit. The typical profit margin, 1 to 3%, will be folded into consumer savings. I want to highlight this because this is profit margin, not gross margin. I think some people are conflating the two. The stores will be operated by a private sector expert, either a supermarket chain, a grocery cooperative, a nonprofit operator, a retail services cooperative, or a wholesaler with a retail arm. The stores will not be operated by the city. A core basket of pantry items will be discounted at 30% to market prices. This 30% typically covers the gross margin, operating costs such as labor, utilities, G&A, etc., while rent and taxes will be covered by the city. The subsidies will be calculated through item-level discounts multiplied by unit volume sold, the same way promotional discounts are calculated for grocers by their trade partners. This is a straightforward calculus for experienced operators. The subsidies are approved through the city budget, just like public transport, transit, library, sanitation, stores, etc. That was crazy. The stores will not be food pigs or pantries selling donations or leftover food waste downstream from producers. They'll be offering the freshest, best quality products. Good food should be a public service. The store employees will be paid living wages and have significant labor protections. Their stores will have a mix of will have will sell a mix of branded items, private labels, and locally grown products geared to the specific communities and market they serve. Lastly, the stores will be thoroughly thoughtfully designed, laid out, and merchandised so that cash-strapped New Yorkers have a premium shopping experience.

Okay. So, what in that felt important to read?

>> Um, the actual breakdown of how everything was specified. So, why the...

>> What, what does that tell us that we didn't already get?

>> That it's not operated by the city. I think that that's important. That the 30% isn't discounted retail price. But out of curiosity, so given that economics works on, um, physics, the only thing that this says is, "Hey, we're going to try to bring somebody in that even with this 30% discount is somehow going to be able to run the store, um, in like an ahistoric fashion."

>> Your first claim was that, well, who can run a store better, a Walmart person or a government official? You're right, a Walmart person would. So that's why they're trying to get a Walmart exec or a private e-service expert or somebody who was in that grocery operator arm or somebody who has been in this space to come and take over the grocery store.

>> But if, if you go to Walmart and you say, "You have to take a 30% bath on some of the most important, like core basket of goods."

>> The 30% bath, though, I think is, is that's the part that I think we're conflating, 'cause that typically covers like the gross margin, and that's why he said it's a specific pantry of items. So there's a thousand items on there. They're going to get...

>> I, I feel like we're saying words that don't actually mean anything. Okay.

>> So if you have one store that has to sell the core basket of goods that people come into the store for at a 30% even gross margin discount.

>> Uh, people that don't have to do that are already at 1 to 3% margins. That means with all the discounts and all of that, assuming that the basket of goods that we read off is going to make up, I mean, Jesus, 60% of the store sales, it's going to be a lot. So unless they're going to make up money on lottery tickets and, um, [ __ ] cigarettes, these guys are in a position where the primary goods, which is why they're discounting them, the primary goods, they come in at what any operator is going to tell you is, "I, I'm not going to be able to make that work. It's, it's way too big of a discount." Even with all the like gimmies that you're giving me, it's nowhere near the 30% on the, and I'm making up the 60% number. It could be more than that, but off of those goods, that's not going to be enough because we're already going to be, if I could charge the normal price, uh, I would already be at 1 to 3% margins, profit margins. So now that number is going to go down. Anybody that can operate on a 1 to 3% margin is already, like, that's gangster level. So now the question becomes, when you put that kind of headwind against them and say, "Okay, the thing that you would usually use to actually achieve your 1 to 3% margins, you can't." Not only are you not going to be able to achieve your 1 to 3% margins, I'm going to put you underwater, and you might be underwater by 15%. I mean, it's not going to...

>> The largest budget item on any small business, any household budget expense, is usually rent, taxes. So they're not having to pay rent. They're not having to cover the taxes. So that's false. So the, the largest cost is always and forever going to be the cost of goods, the cost of goods and your employees. Like those are your two big costs. Now, when you start like filling a grocery store is going to be far more expensive than the rent. So when you start looking at like, they're losing money every time they sell. So now the more successful the store is in sales, the deeper the hole becomes. So now it's like you get back to, "I've got to clear the shelves because I'm in a position where I lose money every time somebody buys fish, whatever was one of the many things, or produce, I am losing money." So now the only way these operators, this is why I'm saying none of that matters. The only thing that matters is who is paying for the gap, and the gap is being paid for by the taxpayer. If I'm in a position where the store actually loses money every time they sell one of those goods, now we're underwater. So unless you show me something that says, "No, no, no, what, like, here, if I'm going to work with, um, the DSA and I'm going to say, 'Listen, I'll tell you exactly how to make this work. It's going to be absolutely atrocious for the taxpayer and long-term it will be terrible for the five bureaus, but you're going to be able to message this to the public and it's going to look great.'" So, you're going to bully all of your distributors and you're going to go to them and say, "Listen, we're in the business of putting all the other bodegas out of business. So, we're starting with five. This is ultimately going to be 100%. You [ __ ] me now at your own peril. So, you are going to give me the best prices. Period. End of story. And I'm going to give you a guaranteed buyer. So, your margins can either go up with me over time, and I'm going to have the taxpayer cover it, or they can go down, and I'm going to pick the distributor that gives me the deals that I need. And by the way, you're going to go negotiate with the suppliers and you're going to let them know the same thing. They can have a guaranteed buyer in the state or they can [ __ ] off, and I'm going to [ __ ] block them at every possible opportunity. I'm gonna fly people into wherever we're getting our [ __ ] bananas and [ __ ] and I'm gonna start negotiating with those guys directly as the state backed by the taxpayer. That's how you pull this off. It ends up being absolutely god awful for everyone involved because the state now has the power to make sure that everybody along the way is losing money.

I remember there's a story about Walmart putting Pickle out of business. Now, this could be apocryphal, but it certainly illustrates what ends up happening. So Walmart, and I know this from selling into Walmart, Walmart has margin expectations, as the state will have. So let me tell you how Walmart pulls this off. They go and everybody that comes into them, they say, "Listen, we've got the power because we're so big. They are what they refer to as a kingmaker. So if we put your product on our shelves, uh, we just made your brand. So you're going to give us a deal better than anybody ever of all time." Guess what Quest did that made me so fantastically wealthy? For over a year, we told retailers like Walmart to [ __ ] off. We weren't going to give them the margin because we had so much consumer demand for our product. We could just say no until the margins were good enough for us to be able to survive. Okay, go back to classic Pickle. So Walmart says, "Hey, we're going to put you on our shelves. We're the place you want to be." And the margins were so tight, something happened, again, this could be apocryphal, but something happened in the supply chain for like the cost of their lids. And by the cost of their lids going up by, uh, 5% or whatever, Vlasic Pickle, which had been around for over a hundred years, goes out of business. Now, does Walmart give a [ __ ] that Vlasic Pickle went out of business? No. [ __ ] them. They just move on to the next one. But if you want to understand why all of a sudden people start importing cheap labor, they do it because you've got a company, in this case the state, driving your ability to charge a living wage for your employees' time and your product down because they're just trying to make sure that a New Yorker can walk into the grocery store and get [ __ ] cheap. But you've got to [ __ ] somebody in that chain. You can make it seem like the cost of this stuff is just going away. It is not going away. These things operate on physics. There is a cost for the labor to [ __ ] pick the plantain. Somebody has to ship the plantain. The cost of the oil, all of that is going to go into this whole chain. And for them to make that, 'cause remember this is 30%. So prices are rising out here. That 30% becomes a taxpayer burden that gets big in terms of nominal [ __ ] dollars. So now they're on this constant hamster wheel. So, they're very quickly going to realize, "[ __ ], I've got to control my prices because otherwise the bill to the taxpayer, it just becomes too obvious." And the way that they will do that, they will bully the [ __ ] out of everybody in that supply chain, or they're going to go out of business. But like, it is, if I were evil, I would just go sit down with them and be like, "Kids, you got to [ __ ] throw your weight around." And so, you want to get as, you want to get the DSA [ __ ] in as many places as you can. Get as many state-run grocery stores as you can, and now we're going to do collective bargaining and we're going to [ __ ] wrench all these guys down. And now all of a sudden some plantain grower in South America is like, "Used to be living on a dollar a month. Now he's living on 50 cents a month." And so this [ __ ] operates on physics. The only way to make this stuff go away is innovation. That's it. You find some way to get more for what you do. Can be in logistics. Look at Amazon. Absolutely incredible what they've given the world. You can hate them all you want, but holy [ __ ], unbelievable efficiencies that they've gotten from a logistical standpoint. So, when you have somebody innovating, you can start driving prices down. The government is not incentivized to innovate because they have no price pressure. They don't have to be profitable. They don't get to, uh, keep their house based on whether or not they run the grocery store successfully. They get to keep their house based on whether they get taxpayer dollars. So this, this one is wild to me. People need to show me where in that chain is the government going to find these additional efficiencies. They're not. They're going to either take from the taxpayer or [ __ ] coordinate and bully. That's it. Those are your options. One or two. So we'll see what they do.

Moving on. Minani's, um, second, uh, proposal, the Pierre Dear tax for second houses is going live. He launched a website that shows if you have to search, you can search to see if you can find it. Some people are losing their stuff saying that Mdani is doxing people. Um, break it down for us, Tom.

>> This one, I think, so I try to keep my head about me when it comes to Mom. I understand that I have a wild bias towards anybody involved in the DSA. So, let's take a very careful look at the PA terror tax. I don't think it is as bad as people are saying. So, uh, the PAR tax took effect July 1st. Um, there are a couple things that are getting confused here. Both sides have a slight part of this wrong. So, condos and co-ops are subject to a Department of Finance value of a million, houses at $5 million. People are calling the gap a bait and switch. It was like, "Hold on a second. This was supposed to be stuff that was like all $5 million." You'll see as we go through, like, how they factor the math that it probably is closer. Like the $1 million reads is slightly higher in reality, maybe all the way to $5 million. I'm being generous here, but let's, uh, go through this with a generous interpretation. So, the city values condos and co-ops by imputed rental income, not an actual sales price, largely because some of these things don't sell for a very long time. So, if you look at like Ken Griffin's home, and I, I need to do a deeper fact check on this because his is $238 million, uh, the penthouse, but on the city books, for some reason, it's $15.5 million. That actually survives a fact check. Then you start getting the difference between what something was if you build it yourself and then what the actual value that you could sell it for. There could often be massive differences. Now, could he really build that place out for $15.5 million? Maybe, because it's the New York real estate of it all that adds that much value. That one feels like I need to do a deeper fact check on, but just to give you an idea how there can be a discrepancy when something hasn't actually gone through a sales price. I don't know if he built it or anyway, that's the idea that there is a difference between what something really is worth and what it looks like it's worth on the city books. So, legislators set the condo threshold at a million dollars on the assumption that finance values run about a fifth of what the actual market value is, and they want to tax on the market value. So, a very charitable reading would be that it's still roughly in the same ballpark. Now, nobody's published the actual math that they're using, so you could certainly attack them on that, but that's the idea. Uh, now the million property list that people are saying is him doxing, and I'm pretty here. Drew and I were talking about this yesterday. Here's my take on this. Let's assume that they did nothing nefarious. Now, there's a very easy argument to be made that this is the Lenin playbook, who literally said to, he didn't use the word "dox," but he was like, "Publish the list of these people's names," what he called kulaks, or what they called kulaks. He wanted the names of these people published. He went way beyond even just the kulaks, who are the people that are better at farming than other people, but went into people that were landlords and things like that. They had a name for it, it was like people that didn't earn their money. I forget what they say, but that idea, these guys aren't earning their money. They're just [ __ ] landlords. And so he did want them published.

Now, you don't need to believe that that's what they're doing. It really could have been just a mistake, and that's what they're saying, that the department dumped its entire, uh, market value roll. So, every house, condo unit, co-op building in the five boroughs, just unfiltered. So, they didn't strip out the homes that were under the threshold. Again, you can give them a charitable read and say, "Okay, that wasn't, uh, done on purpose. They're not trying to dox people. It just is what it is." Um, it's obviously a mistake right now that I would say is one they need to be way more careful of. New York City not that long ago had a CEO murdered on the streets, uh, because Luigi Manion allegedly believed that he was just being a greedy capitalist. And so when you're in a populist moment, and there has been celebrated, widely celebrated murder on your streets over supposed greedy capitalists, that's probably not the time to print a list that is hyper reminiscent of the list that Lenin was publishing during the Bolshevik Revolution when the communists took over. That's a really bad look. So you want to talk about mistakes not to make when you're trying to beat back allegations that you are, uh, Leninist Marxist. This would be one to avoid. So on this, I think they need to be very careful. I think they owe people a very big apology. I think they have to be really thoughtful about how they protect the people in their city that are the owners of these properties. Even as I say this, I find myself having a hard time being this charitable. But for my own sanity's sake, to not get captured by my own beliefs, I will say there is a potential charitable read here, uh, that it's, as they say, better to explain something with incompetence rather than malice. And this one can be explained with incompetence. So for now, I'm just going to take that read. This was an accident. They didn't do it on purpose, and that the numbers are probably closer than people think. Uh, this probably wasn't a bait and switch. Now, I think that they will find that this kind of thing doesn't raise as much money as they wanted, that they aren't being nearly careful enough in how they count people. So, there are plenty of people that are, um, caught up in this where they're either in their primary residence or they're already, um, somebody that's paying city tax because this was supposed to be for people that aren't paying city tax because they don't, they're not actually a resident of New York. And so they may be catching up people that didn't match the, um, I'll call it propaganda that they were putting out by saying, "Hey, this is meant to tax people that aren't taxpayers of New York City," but in reality, there are plenty of people that live in New York City paying New York City tax, but they happen to also own a second property that they don't live in, and so they're getting caught up in that as well. So that one, I think is the, the reasonable read is probably somewhere more in there versus going all the way to, um, the more aggressive read. So that one, I will say, let's see how this plays out over time. Let's see how they handle that situation. Uh, let's see if they get more careful moving forward in the future. Um, and for now, extend them, uh, as charitable as you want to call it, just making a mistake.

>> Uh, in general, how do you feel about the period to terror tax?

>> This one, I'm not as much in a twist about. So, here's how I look at this. Um, you're the DSA. I'm going to strip away the resentment that's inherent in their, um, belief system, which obviously I believe in very strongly. But I'm going to set that aside for a second and I'm going to say, "Okay, you want a lot of things to be free for people." I've long said, as a government, we can have whatever we want to be free. We just can't have everything. So, what's going to be the thing where you raise taxes on, or what's going to be the thing that you stop doing in order to, um, get something new paid for? And so, he looked at this and said, "Hey, we've already got a housing problem. There's limited supply. I don't think this helps limited supply, but you're saying just because the costs are so expensive." Um, so this is not your average person, but it does stop that person, maybe can't get the $5 million one, so they're going for something slightly cheaper. It's possible. So, um, we're going to do something that's going to make it less attractive to own a second property. Uh, people can make decisions whether they want to sell, whether they want to get out. It's likely to drive the cost or the, um, yeah, the cost down of these places, so they're not going to be as valuable as they once were. Now, listen, that has knock-on effects, and there are certainly things to be worried about in terms of investors just going, "I don't want to touch certainly high-end real estate in New York, so I'm out." Um, it's not a great look, but unless you tell me you're just going to go build affordable housing, it, they feel like two separate issues. So, if we want to run that experiment and see what happens, that's not going to be the one that I get in a total tizzy about. Um, my general hypothesis or thesis at this point about what Mom Donnie is doing, what the DSA is doing, stands. Um, but yeah, the PA to tear tax is not going to be the hill I die on.

>> Cool. Somebody who's dying on a hill right now would say, "I'm all man, 'cause AI is going to..." We're going to see. We're going to see. Um, but he was just on a podcast saying that they're creating a genie that will grant any wish.

>> This one's crazy.

>> What we need to explain to the world. Number one, we are close to creating a genie that can grant any wish. Number two, we are going to make sure that our first wishes broadly benefit humanity and that we kind of get the world to a place where a lot more people get to have a lot more wishes. Wishes. And number three, the space of what you can wish for is incredibly big and creative, and it'll be quite exciting to like figure that out with real sort of human values and preferences. But, but I think there's a fourth thing too, which is exactly that. You start making these wishes, the computer grants them, and then you're like, "I didn't think that was going to work."

>> Yeah.

>> What now? It's a weird feeling.

>> Um, so here's the thing. The reason that this is crazy to me is it...

is very likely true. Timeline is a question mark, but I am still at a loss for people that don't think that this is going anywhere.

So just yesterday we built a new pipeline for Kaizen um where we can create 3D assets even more efficiently than we were able to do before. You don't need more breakthroughs for this to already be probably far more impactful than the internet. Okay. So maybe it doesn't become a magic genie, but already right now today with no more uh breakthroughs, just it actually getting disseminated and people building more and more applications that are smarter, you're getting this incredibly transformational technology.

So Kaizen does a new pipeline already. I'm just like beside myself. Like it's [ __ ] incredible. Uh then you've got there was somebody that used text prompts to take architectural drawings and build out all the piping inside the building. So I assume it's both electrical conduit and um plumbing. And the fact that you can do text to plumbing schematics, 3D plumbing schematics by the way, is incredible. And so that is but one of many. And then the one I will just continue to remind people of AI, old AI like this was I mean this happened like a year ago, 18 months ago. Um AI was able to do hyper complex protein folding um that will impact health and longevity, drug discovery, um understanding incredibly complicated biological processes. Again, you don't need another breakthrough. That was a breakthrough that happened a year or 18 months ago, which in AI terms is is an absolute lifetime ago. So that stuff is already that that stuff has already happened. Okay? It's not like it's happening. It's already happened. And so now it's simply propagating through the world. Now that will take time. How much time is a very big question mark. But if you even assume just a a normal sort of 10 to 15 year propagation cycle, it it is going to transform the world.

Now I know that there are naysayers that say that AI is already done what's called an asmtote where it hits like a ceiling and it it's not going to keep getting better. Um I have yet to experience that as real. So every time that I think we've hit some sort of asmtope then something new comes out and it's like oh [ __ ] this is actually more capable and in my actual I am using this life. Um so when it comes to AI I am not just uh a pundit I am using this actively every day. I'm not sure in the fullness of a year that there are less than half of a percent of the days that I don't use AI. So, it it is become an absolute staple in my life. It is a core part of the workflows that we have on the video gaming side of uh what we're doing here. Um it's in all of our um asset uh yes asset creation, but our um content creation pipelines. So, it's it's just Yeah, I don't get it. So, anybody that's sort of naysaying on AI, I think it's absolutely crazy. I think you guys are out of your mind. Anybody that thinks this is a fad, you're just not using it.

Um, so the there's a two-tier question. What he's speaking to is this continues to get better and it really does become like a genie. And again, I think there's only two things that really need to happen for this to feel like a genie. Um, you need to solve solar energy, the ability to capture it and store it. Uh, and then you need to drop labor costs to effectively zero through robotics. That's it. Once that happens, then it's like, okay, I want this thing. Now, it may not be able to um make literally anything you want. But think of anything that already exists right now today. Um if it can be put into a 3D printer, it can be made. And if you guys haven't paid attention to 3D printing in a while, holy Jesus. Uh the things they can print are absolutely astonishing. Um so he's right. It to me is just a question of timeline. Now, you probably have to back off. Like there are things that I can think of that I would ask a magic genie for that AI is not going to be able to grant me. Um, certainly not in anything like the near future. Um, but yeah, a AI is one of those things that it will live up to the hype. It's just a question of how long it's going to take.

>> Um, okay. So, Scott Besson talks about the age of abundance that will be ushered in through AI. >> Question at you. uh Elon Musk gave an interview to I believe to the economist and he said that in five to six years we will have you know more than a we'll have five times the size of the economy we have now and he talked about abundance and he talked about every American having every need and there won't be even a need to save you know for your retirement like we have historically because of this quote abundance that he believes AI will create. Do you believe that?

I I I I do, but I I think I would change the timeline >> very I I've seen Elon speak for a a long time and he is you know look his record speaks for itself both in terms uh as an inventor as a venture capitalist you know as a great American and but he's normally early you know he he's just so far ahead of the curve he sees things that no one else sees but I I do think we are building this incredible economy that we can't even imagine And you know, Sean, 25% of the jobs that exist today did not exist in 2000.

>> That's crazy. This is one of the things that I don't think people give enough credit to is you're not going to be able to predict what the jobs are. So, um it is certainly unnerving and I understand everybody's anxiety very very well as I experienced it myself. But I understand the anxieties of this is going to terraform the world in ways I just cannot anticipate. And change is already scary. Change at this rate is really terrifying. Um, but every technology in all of human history has always created more jobs than it took. And when I think about like that 3D piping, I was like, whoa, that's incredible because now the cost of those things comes down. It's just less expensive to build a new building to run the conduit. So now people get more um ambitious. They don't dial back and go, "Oh, well now we can just do the same thing easier. This is literally like video games." If you've been playing video games for as long as I have, every generation you think, "Oh, the games are just going to get faster." But the games don't actually get faster. You're always like up against your frame limit and it's like, "God, this game is like moving like a slideshow." It's because the ambition of the builders grows because they go, "Oh my god, now this is cheaper so I can do more." That's exactly what's happened with Kaizen. As more AI come online, it's not like my ambitions shrink. I just keep wanting to do more stuff, more stuff, more stuff. So that's where I think the jobs end up getting created. It's just jobs that we can't anticipate right now.

Now, artificial super intelligence is a different thing. So, if you've ever heard me talk about like, yo, on the other side of this, nobody's going to work, nobody's going to need to. We've got the four paths that humanity is going to take. All of that remains true. But that's artificial super intelligence. That remains a question mark. We'll see if that happens. All the things that I've said, I think, will play out. However, right now with artificial intelligence, maybe you'll grant artificial general intelligence. It's a very different thing. What that does is it shortcircuits the need to wait 18 years to bring on a smart human and that the smart humans are you know whatever small percentage of the population. So this allows you to distill intelligence and to bring it online very very quickly and in some cases in an embodied way. Whether that's a car, whether that's one of those little delivery boxes that you might see wandering around your neighborhood, um whether that's a military drone, but you're seeing that or a robot. That was the weirdest way to say that word ever. Uh a robot that lives in your house and does your laundry and whatever watches your kids like all of that stuff is also going to play out. So we are going to be stepping into a world of abundance.

Now I am very tense whenever somebody says you don't need to save for the future. It's one of those yes on a long enough timeline that might be true. Uh, but in the short term that does not help people. And saving for the future is an act of discipline if nothing else. And so being very disciplined about today knowing that this could take 1015 years to really start playing out in a meaningful way. 10 to 15 years long time uh to be fiscally irresponsible. So boy I would really like to see people assume AI never comes to fruition in the way that people are talking about. Assume you need to think about your financial future right now today. If that ends up not being the case, great. Then you can go out with one big bang and spend all your money. Yay. But man, I advise against it in the most aggressive terms possible.

>> Um, okay. So, yes, I want to pivot somewhere to something else that's happening in AI. I was just pulling up a >> picture of it. Um, so there's been a little bit of scandal about all the books that Anthropic has like scanned and discarded. >> The evidence that I'm hearing is that it's a copyright loophole. They're allowed to scan books, but if they keep the books, then it's copyright infringement. But if they destroy them, then it's transferred and then you're allowed to >> do it. >> Fair use. This is going to be litigated for sure. But yes, that's the argument.

>> Yeah. So, it's one of those things like, is this just another example of stupid regulation and we shouldn't be destroying all these books or is it just the game is the game and on to the next? Th >> this one to me is ridiculous. People are not thinking through this. Uh it doesn't mean that you don't have a problem with all of the world being digitized, but if you have a problem with all the world being digitized, say that. don't have a beef with the fact that AI is now going back through books and is destroying books. Like the thing that I hear is people are actually upset about the physical copy of the book being destroyed. The number of physical copies of anyone book that are going to be destroyed uh and in fact let me uh is going to be very minor. Let me set the stage. So what's actually happening and has been happening for a very long time. So Google has been um buying books and scanning all of the pages. I'm not sure if they were doing it in a destructive or non-destructive manner, but they've been scanning books for a decade or more at this point. So now, knowing that all of those things exist online, AI has been scraping things. Um, anything that's ever been put on the internet has been scraped. So, if you had a problem with that, fair enough. That that's a worthwhile argument. Argue away. I think it's ridiculous. I come down on a very knowable, articulatable side of that, which is we should want everything, including every word that I have ever said and put on the internet. we want AI to be aware of. Cool. Go do that thing. And then we all get to benefit from the aggregate patterns that arise from all of that knowledge. So to me, it's like I I am putting information out into the world specifically so that people can learn from it. So I would never be mad at a really intelligent person that can learn from me and other people and aggregate that all these patterns and then do something way cooler with it. I'm never going to be like, "Hey, wait. Oh, [ __ ] I bet Elon learned something from me and he's building his companies and I deserve a piece of that." That's just weird to me. So, um I love that AI is able to do that. I am far more enriched by the outcome of that than I am impoverished by my own ideas being part of that big collective. Okay. My job as a human that wants to add value to the world is to add my unique lens through the AI that I'm now able to interface with. Right now, we're in the golden age of the output that the AI will do with input for me is dramatically different than the output of the AI without my input. So, I just think it's fantastic. Okay, so now if you hate that they're scraping all of the world's information, I get why you would hate that they're now just getting more physical books into the system and scraping more of the world. Maybe you thought at least books that were never digitized were safe from this and the AI never learned these patterns. Okay, you're at least being internally consistent. Uh, but if you like what AI has given you, and I hope that's everybody, then yeah, go learn the patterns that are in these historical books. Uh, again, it only takes one book for them and and whether they destroy it or not is whatever. Uh, and if they bought it and then scan it, it's like I own a rare book. Uh, and so I've taken that rare book off the market in a a different way admittedly cuz I could sell it in the future. But that to me is just these were the guys that went and bought these books. So whoever was earlier in the value chain than them and managed to capture the resources from that and now they can do what they want with the book just like I can do what I want. If I bought this rare book and I want to burn it, I can burn it. So I can do whatever I want. It's my book. Um, so this to me is not weird. I'm glad that they're getting this data into a digital format. One, so it's not lost to time. Uh, and then two, so that we can all learn from the patterns.

>> Yeah. And then the last beat on future tech, uh, the Trump administration has did a ban for Chinese humanoid robots and inverters. Um, you can no longer import it as it's the China has taken over the global market. Is this something that is protectionism or do you think that this is just like security issue? What do you think is the driver of this?

>> There's so much protectionism going on right now in the world. Don't be surprised. Anytime anybody does it, the US is going to do it. We're going to do it more. We need to do it more. The reality is this is that Hamiltonian moment. Hamilton laid out exactly what a country has to do to be strong. We are decoupling. This was a globalist uh movement for whatever 30 40 years. We are unwinding that now. And in the unwinding phase, there is a noble playbook that you're going to run. And it is partly protectionist for sure. So, you're going to defend your own industry. Countries need to bring manufacturing back. And yes, that's going to make things slightly more expensive. There's no way around that. But countries need to be able to defend themselves in a time where it's unknown who are the global leaders. What's the ultimate balance of power going to be in what regions? Um places need to be able to manufacture like virgin steel for instance. The UK can't make their own virgin steel. Good luck protecting yourself if you can't make steel. Why can't they make steel? because China specifically has flooded the world with very cheap steel. So now everybody's like, well, why would I make it here when I can just import it from China? The reason is because now China has a choke point on you in the form of steel. So you're going to see a whole lot of this. So just brace yourselves. I don't think this is weird. This should not be unexpected. I don't even think it's bad. I think countries need to do a certain amount of this, but there will be economic consequences. So um you will see the world accordion back and forth between being more protectionist, more allybased and more globalist and then back again. And the globalist moments will be great while they last and the more protectionist moments will help make the country stronger even if things are more expensive. But at least you should be able to protect yourself.

There was a quote somebody put in the chat. I can't find it but it's been flowing. I seen it on Twitter. It's like XV where they say like the goal of AI is to separate the goal of AI is to separate intelligence from labor because then they can separate wealth from like labor or something like that. But basically the the the goal is just to extract all the intelligence so that way we can operate independent of labor as opposed to now currently the only way to access intelligence from certain people is through their labor. that that is the most 2026 take on AI I've ever heard. So here's here's what people are getting at. They have a belief system that capitalists are evil, that they're greedy bastards. And what they don't realize is guess how a capitalist gets wealthy. They give you what you want. You want things to be cheaper. And there is a price to be paid for getting everything cheaper. And the price to be paid for getting everything cheaper is that the entrepreneurs are going to innovate to try to find ways around the things that are most expensive which are raw ingredients and labor and energy. But you when you look at labor as one of your big costs and by the way one of your big pain in the asses as when I'm teaching entrepreneurs one of the things that I always tell them the greatest joy that you will have as an entrepreneur is working with other people. The biggest pain in the ass you will have as an entrepreneur is working with other people. the people are the boon in your company. They are the the people who give you the great breakthroughs and the brilliant ideas and they're the people that sue you and are a pain in the ass. So, it's just that's the reality and they also drive a huge amount of the cost on most people's P&L. Labor is one of the biggest expenses. And so, that's just real. And so, if you want Amazon to give you stuff cheaper and cheaper and cheaper and cheaper and cheaper, guess what? One of the things is that they're going to have to make cheaper. They're going to have to make labor cheaper. So, one of the ways they're going to do that is by importing infinity uh migrants that will work for cheaper. The other is to go outsource jobs to places where the people will already work for cheaper wages. And then the other is AI. And so the they now have a worker that's never going to sue them that uh eats only sunshine literally. And they build once and it will work around the clock without needing to take breaks, without complaining. Uh does exactly what you tell it to do. It's and you don't have to think about its feelings. It is a huge win for the consumer, for you. It is the thing that you want. Now, it's riskier for you as the employee. And that's where the catch exists. That's where all the friction is going to be. But if people think that entrepreneurs get greedy by stealing something, which is what a lot of people think, they're going to be eternally confused. The second you're only going to the local coffee shop, the second you're only buying things from the local non-staterun grocery store, the second you accept that everything in your individual life is going to be more expensive because you want to make sure that all the employees get paid a living wage and everybody can uh feed a family of four working as a a mailroom boy at 18 years old. Great. Go spend your money as you see fit and the world will cater to you. The world will give you what you pay for. And if the world decides they're only going to pay for artisal things, then that's who's going to make money. But I know you [ __ ] cuz you're just like me. You want to see the cost go down, down, down.

>> Yeah, we got some supers. >> Yes, we do. First up comes from John Doe. >> Super chat >> says, "Perhaps to avoid scalpers and people taking more than their fair share of food, the city could implement a sort of voucher book. You hand one to the clerk and each voucher grants the holder a set amount of bread, produce, and meat. Uh, I never like to speak ill of our super chatters. I am so grateful to you being here, but what you just talked about is paying more people to make these vouchers, track these vouchers. And let me ask, dear mom Donnie, if we create a voucher system and you're trying specifically to stop people from buying too much, or because people will sell their voucher tickets, by the way, uh or you only want this for people in New York and you don't want people driving in from New Jersey or Connecticut and taking advantage of these stores. Are you going to ask for ID, the very ID that you won't let people show for voting? Um, all of this gets ridiculous. Just let the price control where things are and how much people buy. That's it. You don't need a fancy mechanism. All of this is full [ __ ] Absolute full capital letters [ __ ] Pro says, "The show has become a major part of my sense uh making apparatus and I'm forever grateful to you and the team. If you can find an excuse to have Eric Weinstein on again, I'd love to see you two chat."

>> Bro, me too. I [ __ ] love Eric. Uh, so we'll see. I I would love it. I would love it. We'll see. Uh, hit Eric up. Tell him that you would like to see him back on the show. That that will be the key to that equation. You're not waiting on me. Uh, so yeah, let Eric know. Hi, Eric. Patrick Writson says, "So, I think it's unlikely that a power like the United States doesn't have some category of zero day weapon. I think it's unlikely that the public perception of our munitions levels is anywhere close to accurate. My two cents

>> that is almost certainly true. Um I think if you look at our manufacturing capabilities, believing that we are far more likely to be short on munitions is way more likely to be accurate. But the odds that we don't have things in our back pocket is effectively zero. the odds that we aren't working with people like Palmer Lucky to build things that are way cheaper is effectively zero. It just becomes a question of timeline. 18 months from now, guaranteed, we've got a much more rapid supply of much cheaper munitions, but it takes time. So, if you look at what Iran uh sorry, if you look at what the Ukraine was able to do, you get a sense of the timeline. But also look at you've got Ukraine um outproducing Russia and Russia being much slower because Russia was running a different strategy. And I would say up until now America's been running a we're the big boy strategy instead of saying we need our own mosquito fleet and we need to overwhelm you by having a lot more mosquitoes than you have. So that's where I'm like oh god did we wait too long? Probably. So just like Russia is now realizing oh I get it. I've got to play the way that they're playing. the US will, if it hasn't already, wake up to that fact. And I am very encouraged by Palmer Lucky and things he's recently said. Um, but I don't know how much funding he's getting to pull that off. I don't know how many um automotive uh facilities or former automotive facilities he would need to take over and refurbish in order to pull this off. And I don't know how long that would take. It's unlikely to be 3 months. It's unlikely to be three years. So, it's probably somewhere in that mix. call it 18 months, call it two years uh before the US can really litigate this war from a um cheaper munitions standpoint. So that that's a long time, especially when you're talking about politics.

>> Also, that was a $50 super chat. Thank you. >> God damn. >> Yeah. >> Thank you. >> Super. >> And that's it for super chats. Not me says, "I love what you're doing for the economic literacy. I've been on the same path and you still have a blind spot regarding Austrian economics. C Mises University, Murray Rothbard, FA Hayek, and then parenthesis says Keith Knight on the DSA.

>> Um, I certainly won't claim myself to be an expert, but I am very aware of Austrian economics. Austrian economics was sort of my entry point, my battle against Keynesian economics. Um, so I would love more data on exactly which part of Austrian economics you think I'm blind to. That would help because I'm sure there I'm very open to I'm blind to something. Um, but it's certainly not them as a school of thinker. Uh, so if you want to drop some specifics into Discord, that would be amazing. Or just um drop it in right now and Ryan will make sure I see it. But thank you for paying to try to make me smarter. I appreciate that.

>> And that's it for Super Jets. >> Beautiful. All right, you guys. Thank you so much, man. This is uh this stuff is incredible. Shout out to Andre. Uh, another phenomenal video. Much appreciated. And speaking of phenomenal things that you should not miss, I'm doing an AI master class August 5th at 100 p.m. Pacific time. Do not miss it. I'm going to show you how to take advantage of this exact moment in time where AI is truly becoming the magic genie that OpenAI and Sam Alman is telling us that it's going to be. But you can deploy it right now today. Uh, you don't have to wait to uh some future point where this thing becomes even more magical. It's already insane. So it's super free. AI masterass August 5th, 1 p.m. Pacific time. Join me and I'll show you how to launch a company using AI. Plus, we got some cool bonuses again for free. So make sure you join me. All right, until next time, my friends. Be legendary. See you Friday. Peace.