I'm in a very Daniel Plainview mood this week the there will be I have a competition in me I don't want to see other people succeed that's right best scene ever you are the furthest from that character like that is not your spirit animal oh There Will Be Blood that guy Daniel Day-Lewis is nothing to do with you I've watched it
about 100 times incredible you must be so stormy and roiled on the inside oh my gosh I mean like did you not see my roast at Sax's birthday it's just did I not see it I lived it it was the most off-color disgusting egregious mean diatribe I've ever heard my Lord I have a competition in me I don't like to see
others succeed I can't stand that Jake house [Laughter] [Music] [Music] I guess everybody wants to know chamoth you've wound down two spacks thank you for doing this for uh ipof specifically because people are replying to me every day asking what are you going to spack but IPO D and F the money has been returned to investors no it's going to
be returned going to be returned to investors thank you and Bill Ackman uh of course he wound down his spack returning 4 billion there's over 500 specs out there looking for deals uh tell us why this decision look I've raised tense back six six in technology and foreign biotechnology and I've done uh six deals two in Tech and
two in biotech [Music] so the the the reason to shut it down is pretty straightforward it's like you know when we launched these things the stock market was in a much different place than it is today and so over the last two years it looking at deals um it's gotten harder and harder to find a good risk reward now why is that well
the thing with this pack is you do a deal today but it doesn't usually close for six or seven months in the future and so you have to do a deal where you have a really good sense that in six or seven months when the deal is comes to close that the price will be the same or even higher than what it is today and if it isn't all of the investors
that you've brought along in this back have a right to redeem which is to say they file a notice that says you can complete the deal but I want my money back and what they get back is the initial ten dollars that they use to buy the stock in the first place because when we sold when we started this back we sold
stock at ten dollars and so from my perspective I was looking at this and I'm like you know this is a super volatile ugly point in the market this last year has been really problematic I and I and I kind of said this last November and Nick we can we can play the clip after and we can come back to it but basically my decision was
that at this point to do a deal would probably you know put a lot of capital at risk and in all of these deals I'm typically investing a hundred million dollars at least in each of them and so I couldn't justify that I couldn't see a good risk reward and I thought the right thing to do the responsible thing to do was just
to wind these things down you know I'll I'll lose I don't know 10 15 20 million bucks for having set these things up but we give everybody their money back that ten dollars and I think that's actually better over the next five or six months than what it'll otherwise do if you're invested in the market now that's a belief that I have
but hopefully when people get the ten dollars back in the next few weeks if they want they can go and put that money back in the market and hopefully they'll do well but uh you know from my perspective the risk reward was not good is part of the issue the inventory that's available of great companies as well that's one of the things I heard
speculated on CNBC it's hard to convince a private company to go public here's my experience you know when I when I was talking to all of these CEOs of these Silicon Valley companies initially there was a lot of misunderstanding about what spax were and I think we were able to dispel that because we had some really successful
transactions then there was a lot of interest in being a part of it in this phase we were suffering from two very important things one was that valuations were just completely up in the air people had a huge question mark on late stage valuations because we would come in we would do the work and we would say the company is worth X
and that number typically was 50 or 60 percent lower than their last private valuation and so when it came time for us to negotiate you know doing the deal even if the founder was roughly on board the rest of the board was not because a lot of them would have seen some pretty meaningful markdowns in their private assets
and when the company had enough money to kind of like you know at least stay private for another year or so without having to raise money on balance those investors felt it was more prudent for them to not take the mark and to not take the deal at such a lower discount so that was a big issue that we ran into because every time we would price a deal again
we're trying to create a margin of safety for us and our investors again because it's going to take six to nine months to close a deal and so ideally you want continuation indigestion and then sorry the second thing was just volatility so when you see volatility in the public markets you know for a CEO and I can understand
this it's much easier to go public in a point where the markets are generally going in One Direction because it gives them the confidence to be able to learn the ropes because it is a complicated process being public and when you introduce tremendous market-based volatility independent of your company I think a lot of CEOs and CFOs and IR
people were a little nervous yeah why take the risk and that was this that was the second piece but by in a way the first one was valuation we could not find market clearing prices make sense for assets and by the way and I'll talk about one company in specific which just this week had a pretty public blow up
around this whole issue and look I've been pretty clear about this since November the marginal trade should have been to be trimming risk and Nick maybe you can play the clip because I really want to make sure that it's it's very clear and on the record what I said almost an entire year ago let me put crypto in the context of the markets and
where we are today at the end of the week after you know Q3 earnings in November of of 2021. we have the stock market at Absolute all-time highs ripping we have crypto and absolute all-time highs ripping we have the art markets I don't know if you guys saw Phillips and Christie's and Sotheby's this past week at Absolute all-time
highs sold another people for 25 million we have inflation at a 30-year High we have 10-year break-evens at a 25-year High we have you know one point somewhat trillion dollars that we just approved last week and we're still horse trading on another three you know 1.8 trillion dollars of stimulus that we're going to put in and I think the the most
important thing which is the two most important founders of Our Generation the two smartest people who have really consistently won Elon Musk and Jeff Bezos have collectively sold more than 11 billion dollars of their Holdings this year alone and if you can't take all of that and decide for yourself what's right for you
and your family you're doing yourself a disservice I think it's important for me to never sort of like you know be forced to tell folks whether I'm buying or selling although I'm willing to do it in moments where I think it's important but I think it's really important to understand the context and so I think
like these folks that like think derisively about individuals who are managing risk I think it's really naive and I think it's it creates a lot of missed opportunity for them as well if the smartest people in the world are now selling their core Holdings that they told you they would never sell and you are not reconsidering your position
on things you're either much smarter than them or you're being really really Reckless the reason I I said all of those things was because I was getting really worried about where we were um and then and then I think on the heels of that I published a tweet and I and I said I'm starting to sell you know and I sold like a hundred
million dollars of Sofi but then I was a systematic seller um through the end of last year and and through this year to try to manage my own liquidity because it changed profoundly as I saw what was happening in the markets so you know I think that it's just an important thing to call out that um things don't always go up
and uh you have to pay attention to a mosaic of information and you have to do the work yourself because you know your situation is unique to you nobody else understands it and so you can't Outsource that decision to somebody else obviously you can use it as a guide you know it's fair to say you know when the 13 apps have important
hedge funds come out do I read them of course because I'm trying to figure out you know what don't I know what may I be missing maybe there's a great company in there that I that I should be taking a look at so you know I'm not dissimilar to everybody else in that I use other people that I look up to or respect as a
leading indicator of what to buy but I still take responsibility for my own decisions and I manage my liquidity as best as I can based on my conditions and those are always changing and so I think this is just a good reminder that everybody else has to do the same so chamoth what do you think happens to the remaining 500 every SPAC
sponsor friend of mine that I know is not seeking targets anymore they're all expecting to wind up and return Capital how many of the 500 you think will actually find a Target and how many do you think all of remaining specs how many of them will um wind up and return capital I mean I I think that there's still some
really good deals to do they're not necessarily in Tech per se so you know I think you did a really great deal in ag Tech I think that that's that's really interesting so time will tell how that does I think there's some really interesting deals and energy in fact we spent a lot of time actually pivoting and spending time and energy
looking at you know everything from you know uh producers of nat gas and oil to you know folks that were building terminals to LNG facilities and the but it's just a very different return profile than what we were used to so I think if you can understand some of these other markets and you can underwrite to a different rate of return
some decent deals will get done the overwhelming majority of the text backs I think probably will just wind up some folks will be really focused on trying to uh you know monetize their founder promote so they'll do any kind of deal the problem as you see is even whether you do a good deal or a bad deal
with the kind of volatility we're seeing in the market the likelihood is that it's going to trade down pretty significantly so I think most will not find a home I think some will find some really interesting Targets in areas like energy I think are really interesting agriculture like what you did Freeburg I think is really interesting deal
and then you know what it'll be an opportunity for us to retool this back I don't think it's going to go away I think that it is a useful tool in a toolbox of many tools so there's IPOs there's direct listings there are specs there's obviously private fundraising there's convertible there's structured deals so it is a tool and I think when
used properly it can be really helpful you know for the companies that we work with uh it would have been impossible for them to raise the quantums of capital that they did primary capital from sophisticated hedge funds and mutual funds you know we raised billions and billions of dollars for companies like Sofi and Open Door
and I think that that's going to go a long way for them to achieve their goals so I think it's going to be a good tool but we're going to go through a washout of most of these folks who are not going to be able to successfully find Targets sax when we look at private companies especially the late stage ones you and I are involved in a number of them
they're doing riffs they've got headwinds and their valuations are underwater in many cases how are they thinking about the public market Windows spax Direct listings or just a traditional IPO I don't know that they are thinking about it I just think I think like going public seems like a fantasy at this point I think the whole
public markets exit idea is Frozen for two years two years I think that's yeah I think that's probably what people are thinking what are these late stage companies that raised Mega rounds doing to work out valuation issues because as chamoth just pointed out with spax one of the problems was clearing Market the
late stage investors who came in maybe they you know don't want to accept the haircut in valuation even if they have productive probably not enough I mean what they're doing is using their War chest to grow into their valuations which is the Smart strategy and if they're really smart they'll be slashing their burn while they do that
but yeah it's no different than what we've talked about before I think the the main significance of this past week is that you had the FED meeting it raised another 75 basis points there's no surprise to that that was predicted what was new was the forecast they were now saying that they expect to raise another one and a half
percent just two months ago at the last meeting they were saying 75 at this meeting plus 50 after that now they're saying 150 after this so you know in just two months they've they've they're now revised their forecasts for an extra 100 basis points of rate increases why because inflation is worse than they thought so
things are worse than we thought two months ago the the last inflation print didn't get better as fast as people wanted we talked about that last week now the FED is revising its forecast the trajectory is bad and getting worse and you finally had pal kind of throw in the towel on his rhetoric around soft Landing I mean first it was well we can
raise rates and we won't have a recession then it was we might have like a mild recession now he's basically saying hard Landing if you if you read these fomc comments so I think this was a really bad week for the economy and you're seeing it in the markets this week I mean we are retracing almost within five percent of the June lows
with the growth stocks being the ones that are hardest hit by the way speaking of growth stocks have you guys been following this um trials and tribulations with baijus which is like the one of the largest valued private companies but it's a private Indian edtech company essentially I think like you know there
was this delayed audit and Deloitte couldn't certify a bunch of things and then finally they were able to come up with a report that essentially showed instead of like breaking even or making money they lost almost 600 million dollars this year and that a lot of the revenue that they were booking were actually loans to millions
of uh Indian families who had basically zero probability of paying them back so a lot of the revenue was not real as well and this is like a who's who of investors it's everybody from you know Sequoia tiger UBS BlackRock uh Chan Zuckerberg it's incredible I think when the tide goes out we find out right and this is what's happening the Tide's out
and you're going to find all the weakness in the system it's all going to get flushed I think this is a bit of an outlier obviously like I don't think that you know all these companies that are worth tens of billions of dollars are running so close to the Sun but it just goes to show you that you know how how does
how does this happen like how uh how do you not get it you saw this on the seed uh stage uh in series a we would ask for a data room the person would say you're the only investor asking for it and you're putting in you know 10 of the round these other people aren't even asking for it we said okay can we still
see the data room and turned out there wasn't one people were just making bets they were making blind bets they were betting without even looking at their cards or thinking about the other people's cards but this goes back to what Friedberg was saying before you know I think I think there's a there's a a sliver of the retail investor base
that is not dissimilar to a sliver of the private equity and hedge fund and Venture Capital space which is these folks are not willing to do the work I think most people are and most people want to come to their own conclusions but some people want to just take the easy momentum driven decision and they typically always get punished over time
there's this concept of adverse selection which is that the negative actors will find them will seek them out and it will be a match and so they'll ultimately get adversely selected into the deals that blow them up so the bad deals what you're saying is the bad deals would find the bad investors who don't do the work and then
they spiral and crash together that's a really brilliant observation yeah yeah I think I think the other that's what I'm hearing I think the other thing is like you you have the situation where if it wasn't that it's folks Outsourcing their diligence to the person that did the round before it totally you know oh
Silver Lake did it bro same problem tiger did it okay these guys are very sophisticated investors I don't need to do the work it turned out you did because you know it's it was a very Cavalier way of recognizing revenue and there was a specific Playbook here too that I don't know if you saw this ax in the early stage where people would get
their friends to invest in the company or some you know High net worth individuals and then you look at the deal and the valuation didn't make sense and then you say well we would always ask how much money is each person putting in and we like well they're normal bet size in the seat is 750 or 1.5 million but they're putting 50k into
this or 100K what's going on here and it was oh they're friends with them they worked at a previous company together they were in the same they went to the same college and so people were using social proof but manipulating it to get some other sucker at the table to pay full price and not due diligence really
strange Behavior I um I was in Singapore this week there was a I I had a great meeting with this young investor really Dynamic guy and he was telling me about a company in Indonesia that he didn't invest in but it turned out that the in that this founder was literally running two parallel sets of accounting systems
and so he was you know showing a business and fundraising from this set but the the real books were over here and it looked a completely different system and it was basically like a Ponzi scheme and you know he was telling me it's like impossible to root these things out so what he said he relies on is like you have to have a network when
you're doing these Frontier country deals where you know he says I need to find at least 10 people that know this person so that there is sort of like a moral social proof and moral diligence that happens because that person will never try to commit something that egregious in the face of all of their friends and so you know that's a mechanism of
filtering this stuff out but I thought that was a really interesting way of of Designing a diligence process um in at least in a frontier Market here I don't think you have that much time to do these really you know fast-paced deals and the social proof matters less because you theoretically um you know are looking for signals of
traction but there has to be a better systematic way of getting this diligence done because these things should be pretty obviously well before it's a multi-deca billion dollar company sax last year when people were moving really fast saying they don't have time for diligence you're going to lose the deal yada yada how did you approach diligence
during those Peak periods and did you have those experiences where people were trying to push you to close without talking to customers or looking at bank statements yada yada no we wouldn't play that game because we always run SAS metrics that's always the starting point for us but you know most SAS companies
they have SAS metrics I mean they it's so standardized that it would be such a red flag if they didn't yeah I think it might be companies that are you know have unusual business models or maybe they would say something like that but no we could never do a SAS investment without SAS metrics all right well this is a good segue because right now U.S
Venture capitalists are sitting on 290 billion dollars in dry powder we had talked about this last year how much dry powder was there the market is obviously collapsed but here's a chart uh from our friends over at pitchbook it's just extraordinary how much has built up and how much has been raised usvc funds raised
121 billion dollars during the first half of this year 2022 so LPS uh still have an appetite which kind of makes sense that investing into the down market for private companies means you're going to get better deals uh and you have a 10-year Horizon usvc's raised 139 billion in all of 2021 so if you put those two numbers together
yeah you're looking at 260 billion dollars in the last 18 months and this is all record numbers being put up on the board what does it say for private companies sex I um dispute this analysis a little bit um I think there's a couple of things going on that need to be taken into consideration first of all new funds don't get announced till after
the process completes and then you know it may even be some time after that when the VC firm feels like they want to make the announcement you can't announce a fund until the process is completely over you get subject to all sorts of additional SEC rules so you know these funds might be announced in 2022 but
they may have actually been raised in 2021 so that I think is a really important Point moreover a lot of the funds may have already deployed Capital before the crash so there was that I think remarkable story that we talked about months ago in TechCrunch on how the latest tiger fund which wasn't even announced till March or April of 2022
but have already been two-thirds deployed by the time they even announced it and so that was pretty stunning so I I think that we don't really have a great sense of how much of this so-called dry powder has already been deployed how much of it was really raised before the crash it is true that LP relationships with VC firms that have
done well are sticky and good LPS stick with their Partners during a downturn so look I mean the VC world's not going on a business or anything like that but I would tend to think that this is an overly optimistic overly Rosy scenario do VCS have new funds that they're going to be ready to deploy in great companies
yes but does this mean it's going to be easy no I think that the bar has gone up valuations have gone down Founders looking at this tweet storm I would not get lulled into a false sense of security yeah I I agree with just to explain that there's probably a six-month lag on when these funds are announced the reason is
there's 506 B and C designations most people raise under five or six B which means you cannot even say that you're fundraising therefore pitchbook can never have that data so there's a lag and people were deploying at a very high velocity therefore this number could be off 35 well if people were deploying at a pace where they thought they were going
to go back for a new fund every year which is what it was looking like in 2020 2021. you know if that six month period might mean you've deployed half the fund right so um but look if if you just go back to a two and a half or three year pace of deployment and before in 2021 we're at a one-year pace of deployment divide the
availability of capital by two-thirds I mean you know only one-third as much will be deployed in any given year that's a you know significant reduction so um yeah I think Founders should just be aware that the Market's going to be a lot tighter and I think given what we're seeing in the public markets this week it doesn't look to me like it's gonna
get any better right it looks to me like we're headed for I mean I called a double dip recession I think a couple of months ago that's exactly what it's looking like in fact the FED basically said as much the FED said that would be just marginally positive next quarter so would bounce back to slightly positive
growth on a real basis but then you know expect it to go negative again and you know recession once all these interest rates kick in and by the way I mean Kudos set your mouth for basically calling that you know when the FED just a couple months ago was saying that so-called neutral would be three to three and a half percent jamath was
saying no it's gonna be four and a half five percent plus now the FED just in two months is revised to saying that neutral is 4.6 or something like that and um and they don't think there's going to be any rate reductions in 2023 so this is not looking good how much of the issue here is we don't the the data that we're seeing
the ground truth we're seeing as you would often say uh might be very different than like the reports that are coming out people are talking about inflation from you know 60 days ago job reports that are 30 days old 60 days old we don't really have live data it seems like our government doesn't use live data when they make these decisions is
that unfortunately well they unfortunately don't have access to it really you know they are they have empirical sampling but to say that you know the the US economy is automated in a way where you know they can sit in front of some dashboard and you know see in real time what the true on the ground data is is that really accurate
unfortunately maybe there's a Manhattan Project type you know effort to do that at some point for the United States but it's not now um I'll give you uh a bit of bad news and a bit of good news uh and this is just me kind of you know again looking at the Mosaic and and kind of judging where we are today
the bad news is I think that it's going to be a really tough sticky time for the U.S consumer probably over the next 18 months and so I tend to think that you know through the course of this year and through 2023 and possibly even a little bit of 24 it's going to be a grind unemployment will go back up
inflation will be sticky real earnings will shrink consumption will ebb and earnings will not be that great but the Silver Lining is I think that we are starting a bottoming process for the equity markets and I think that by the end of this year or the early part of next year most of that will be done and the reason is that you know the
equity markets I think do a reasonable job of one looking at the bond market and then two looking six to nine months into the future and pricing in that future today and so by the end of this year beginning of next year I think that we will have kind of bottomed and we'll start to build the base the thing to remind us though is that
you know let's just say a stock goes down 20 50 percent even if it rallies 50 from there it's still 25 off from where yeah people don't understand that and people don't understand that they climb back up the mountain so I would just you know um tell people that you know I think that David is right I think that it's gonna
uh we're gonna feel this for a while um it's this inflation as I've said for a long time is going to be sticky and persistent I think you're going to see Fed funds at or breaching five percent and uh but I think that in terms of you know risk assets will bottom out by the end of this year beginning of next year
what are your thoughts you think we're in the process of bottoming them out and it's going to be a year of this kind of schlog through the muck and what signs are you looking for that maybe we're getting out of it or turning a corner I mean Larry Summers had some good tweets this week the weird you know the weird thing is Larry Summers seems to be
like almost trying to make the case and make certain points because he's not being listened to I mean uh it's it's it's so ironic and sad to watch uh because he's such a thoughtful Economist and has such a a great point of view and experience that uh to leverage here and clearly you know he was banging the drums last year and no one was listening
and then he got public about it and now he's more repeatedly public about things the point that he's made which I think plays into the the political cycle question which is where the tension arises is in order to resolve ultimately uh the inflation problem you're gonna have to see a significant increment in unemployment and
and so when you raise interest rates uh you know generally purchasing goes down demand goes down Revenue goes down layoffs happen uh some businesses go bankrupt Etc so then there's this trickle in the economy of of less people being employed and when that happens It ultimately drives a political response which is hey we're
losing our jobs people start asking their representatives do something about this in Congress and then these programs and these things get passed which themselves are inflationary and that's why it's very hard to predict ultimately when and how this all gets resolved because we seem to have an Administration that is enacting and
um embracing uh inflationary policies to support what they consider to be economic growth and improved employment conditions in this country and the unfortunate effect of many of those policies is inflation and then it forces this difficult Central Bank decision-making cycle and so there's attention right now that doesn't seem to
have a clear path to resolution that is why it's very hard to to have a clear prediction here we also have a very significant question overhanging all of these markets related to the price of energy which is a key input to so many Industries and and drives cost as well as food and also the military conflict in Eastern Europe and you know we've and
and then there's in the financial markets this big overhand question on what's going to happen with various countries that make default on their debt as well as China's real estate bubble bursting so I made this point I think a few episodes ago but there's no easy answer that I can just say deterministically
here's my prediction of what's going to happen as chamoth uses the term I think it's a great term there's this Mosaic of things that are under under consideration right now and there's a tension between them all uh and um and that's what makes it difficult I'm sorry I didn't really answer the question but that's that's kind of how I
think a lot of there's a lot of geopolitical risk I mean we're kind of you know ignoring what happened this week where Putin basically is putting nukes back on the table now I'm not saying that's likely to happen but I don't know how again I don't know how this Market gets a lot better with the risk of War 3 handing over our heads
I mean who wants to enter the market with that and by the way the nukes just just to be clear you know um you can hear certain military commanders speaking publicly about this uh but in the Russian military playbooks uh there is specifically defined actions that can lead to tactical nuclear weapon use in the field there's no direct indication
that these things are going to be used right away but the as as Sac says there's like this weird like turning up the volume happening on hey maybe we're getting closer to a point where if Putin is having tactical failure in this conflict there's more Weaponry you can use that has greater impact and unfortunately there are these tactical
nukes in his Arsenal and you know a guy that maybe has a certain psychology that has as our friends have said is back against the wall he's not a person who in his career uh or in his history has ever acquiesced to defeat Alex carp was on CNBC he was really really sharp and concise about this which is
that you know in the west When leaders fail in their objectives they just get elected out and somebody else takes their place yeah but for somebody like Putin there is nobody to take his place because it's a very zero-sum situation and so his actions will as a result also be Zero Sum and I think folks he's never acquiesced in his life and yeah yeah
we've never we've never really kind of like we don't understand well what zero-sum decision making looks like when it comes to stuff like this he needs the Golden Bridge right give him the goal he does yeah but I'll just say two things one is that I think it's been made pretty clear that both India and China will not stand
beside Russia if they do something like this and I think that that is important because they still are the two biggest purchasers of of Russian oil and so I think that matters a lot because you're talking about a lot of Revenue that would that would go away and then the second is I mentioned this last week and
this may sound dumb to some of you but um don't sleep on the Russian mothers and what happened oh you're 100 right on that thing what happened this week was really interesting which is that he calls up all these reservists these reservists are not coming from the major cities of Russia you're starting to see protests you're starting to see young
people saying I don't want to do this yeah and who's that really activating it's activating the moms yep you know to basically go fight and I actually think David's right oh sorry sorry go ahead the question I have for you is do you think that I know you don't agree with this but do you think the strategy is to back him into a corner
um and then have this like rhetoric Spike to then force a resolution I know it's a danger strategy it's a crazy chess move but do you think that's actually what the West is thinking I see no evidence that we have any uh intentions of seeking a diplomatic off-ramp I see no evidence that they're looking for to give him a golden bridge
like you said then do you think they're trying to break him and have regime I think Biden stated at the policy which is this man cannot remain in power I think he blurted out the truth of his policy this is a regime change policy that's what they're going for they are backing me into a corner I thought that
you were right this whole time which is we're going to build a golden bridge we're going to find a way to egress this guy and I'm now sort of in the David Camp which is I think that the the stated strategy of the Western Alliance is essentially to cause him to make such a categorically catastrophic mistake so as to become a pariah so as
to either get overthrown or you know something so I I do think that on balance the risk is now for things to escalate maybe not in quantity and I'll use this word in the wrong way but you know quote unquote like the intensity of of it so um I I think David's right it's a lot of pressure to the economy and to to high
risk assets there's a high-risk strategy we got a good thing going over here I don't see the need for all this risk so look and part of the risk would be the reward what would you see the reward if Putin was removed oh my Lord well it depends who replaces him what if we get a hardliner you gotta remember Putin's taking out all the liberal
reformers all that's left are hard so I know I know there's moms protesting in the streets but he's also under intense pressure from his his right wing you know he's got Hawks on his side who basically have been criticizing him for making this a special limited Military operation instead of a war they're like
why did you try to do this with 200 000 troops we should have gone into heavy with a million is that right there's criticism there's a New York Times article about this he has his own you know military hardliners in his Security State his Hawks so so he's not just under pressure from peacenix who are protesting in the streets he's also
under pressure from hardliners in his own government who think he's been too soft yeah it's a challenging situation he said he said he's going to be 70 years old how many years does he have left we just need to contain him for a decade was on our side I don't contain him for one more decade that's my best idea contain him for a decade the thing
I have the most trouble with is if you look at the media portrayal of this so I said last week when you know we had this successful counter-offensive that maybe we'll get what we want which is Russian moral collapses they just tuck their tail between their legs and go back to Moscow or maybe you know the Russians really do see this
war as existential for them Putin sees it as existential for himself and he escalates well what happened this week we went up or wrong on the escalatory ladder basically Putin Drew down 300 000 more troops and he's basically indicated his his willingness to use tackle nukes and he's basically said I'm not bluffing
so now what is the reaction in the American Press he must be bluffing I mean that basically is the reaction and look I don't know how you know that you know in poker what you in poker what do we do when someone might be we put them on a range it's called a hand range right yes you can't possibly know exactly what they're going to do or what
carts are holding so you put them on a range of possible hands and then you evaluate the story in light of their past actions what do they do before the Flop on the Flop and you you basically come to a assessment of what is likely based on their story now take Putin's story like Friedberg said he's never backed down in his life from anything
um he has said this war is existential you know he basically threatened to invade and so he did I mean like I don't know how you can immediately jump to the conclusion this is just a bluff maybe it is but well it could still be it could still be a bluff but then to your point the range of outcomes does include uh
shoving on the river moving all in I mean he's a king GB agent do you want to play the poker with a KGB agent with nukes it's right and so Jason you said throughout this guy's a Madman well exactly I mean personally I think he's more like uh ruthless mafia boss than a Madman but but let's say you're right
that he is a Madman what is the story about what we're doing that makes sense if he is a Madman why would we want to basically back him into a corner like that why wouldn't we give him the the golden off ramp and by the way just on this idea that no one would ever use tactical nukes let me just give you three data points first of all we use
them we drop two atomic bombs on Japan and to end World War II we could have won that war without doing it but we didn't want to lose the troops those are just they were tactical nuke size atomic bombs number two MacArthur wanted to use 20 to 30 atomic bombs to end the Korean War he had a whole plan Truman fired him he thought
he basically had jumped the shark but MacArthur was the most respected and admired American in 1950 and the reason why Truman could not run for your elections because he fired MacArthur MacArthur would have used basically the equivalent of tactical nukes to win the Korean War and his plan to prevent China from reinvading from the north was to
irradiate the border so completely that Chinese troops could not go through it keep in mind there wasn't as many nukes at the time so we weren't up against nine different nuclear enabled countries but we had an American Commander ahead of our military who was willing to use nukes to win a war so this idea that he
wouldn't I mean we you've been willing to do that and the third example is obviously the Cuban Missile Crisis all of Kennedy's military advisors were willing to get to use nukes I mean and the best thing Kennedy did was not listen to his military advisors they were all super hawkish and Kennedy what did he do he looked for a way out he
looked for a compromise he sent Bobby Kennedy to go cut a secret deal with the Russians were Kennedy agreed to pull the r Jupiter missiles out of turkey if the Russians would pull their missiles out of Cuba and then he lied to the American public about it because he didn't want to be perceived as backing down but
that's the kind of you know flexibility and mental acuity that I think you would need in a nuclear Showdown to avoid a catastrophe if things do escalate to the point of a nuclear Showdown do we believe that we have leadership on the level of a Jack Kennedy or Bobby Kennedy who can basically show the flexibility and adaptability to cut a deal to
basically pull us back from the brink yeah it doesn't seem like that what was bind's response it was he gave this um speech to the United Nations in response to Putin and it's more of the same as more of this as I call it the Abe Simpson speech it's old man you know yelling at the cloud I mean he's basically just yelling at a teleprompter
now I think the the strategically smart play would have been to say listen Putin you said that you want the people of Ukraine to decide where these territories go okay we can hold a referendum but we want to administer by the United Nations so it'll have so it'll have some credibility behind it I mean why not throw that out there as a
potential way to get diplomacy started it felt like at the end of last year you guys remember I thought like conflict was likely this year I don't think that the conditions that I was referencing have really gotten better I think they've gotten worse and that's why I think we all talk about this in a rational way meaning like how
the conscious mind would you know debate the merits and and challenges and risks of having a golden bridge or continuing conflict if you look historically the U.S has often been in the middle of or at the tail end of some either recessionary cycle or inflationary cycle when conflict escalated externally Wag the Dog you're
referring to I don't know if I would call it that but I think that there is a an innate human anxiety when things aren't going well you feel like you have to do something about it and you're either going to have internal conflict or external conflict as a result to try and resolve when when things are going great the economy is booming
you don't enter a war you don't start a conflict with a nation when when people are happy at home when your constituents and um and you know the the unemployment rate is low and job uh wage growth is high the economy is growing are you referring to the United States or Russia in this case I'm referring to the U.S and I think you
know curious if you're coming out of covid and coming out of uh the the big question marks that loomed over our economy at the end of last year around inflation uh economic growth uh interest rates and the effect and now we're in the middle of the turmoil markets are down 30 percent and in some cases 70 to 80 for high growth markets
there's a there's an inevitability now that unemployment is going to rise there is an inevitability now that the economy is going to contract leadership is more likely in that scenario to find uh an outlet to find a place of conflict in this theory explain why I don't think it's a conscious decision
I don't think that it's like hey let's go start a war with Russia because the economy is bad I think it's this anxiety the economy is bad and there's not a lot we can do about it and over here on the other hand there's a problem and there's something we can do about it we can build strength and we can build Integrity
um and we can build support and we can get people to get behind something together and we can get something to to create a driving mechanism to achieve something big like a distraction you're saying yeah yeah and I I don't think that psychology is as simple as a distraction or a Wag the Dog or hey it's not even as simple as the military-industrial
complex we'll see Revenue growth and wage growth and that'll drive the economy but I think all those things together are true and I think in in whole we're we are more likely to want to pursue conflict right now than we were even a year ago you buy any of that your mouth I think he's more right than wrong I think that when um
things aren't easy you need to find sort of distractions essentially to yeah get people to focus on other things so that the core problem isn't as obvious we have in the United States I think yeah let's go create another problem that's solvable yeah I like the best I think the best way that I can describe this is I see it as
institutional rot and the more that we're left to our own devices that amount of institutional Decay becomes more and more obvious our governments don't work the way that they should you know our state assemblies are basically co-opted by special interests the federal institutions we rely on to make rules are not that great enormous
amounts of money get wasted every day and as more and more people become aware of these things it just the trend is just so bad you know Civic engagement goes down everything just gets worse and so when you take that and then on top of that you sit it on a on a poor economy that is a real Powder Keg I think and so
folks like to I think if you're a politician it's easier to kind of go and point to Taiwan and say you know we're going to go and defend these folks if there's a war point to Russia and say this point to all these other things it's a whether it's implicit as free Brook says or it's more explicit of a strategy I don't know but the underlying cause is
the same which is that if the foundation of the house is not strong and you're not sure what to do to fix it or you don't have the courage to fix it the better strategic alternative is to distract and talk about your neighbor's house coming out of contribute to Afghanistan early 2009 when he took office we entered the
Persian Gulf with the Gulf War in 1991 coming out of the Great Recession or the the the the the mild recession 1990 to 1991 2000 2001.com crash uh we um uh you know we obviously entered um entered Iraq yeah well that was post nine post nine eleven that's 9 11 but it was almost no choice but it was also in the midst of a
recession and coming out of the game but that was cool that one was clearly a reaction he stacked You by this do you think this is a Wag the Dog or and by the way you can do the same you can do the same analysis on the time we entered the Korean War and the time we entered the Vietnam War they were both tied to
recessions and um and so I don't know I don't know how explicit this this action and behavior is but I I just think there's some data to it there was a study that just came out by uh Tufts University on American Military interventions throughout American history and what they found was that we had the least in the period before
the Cold War then the second most was from the during the Cold War but actually the most hyperactive period of American Military interventions was post-cold war so since the unipolar moment even though it's been the safest period for America right we haven't explained unipolar for people don't know but there's only one great power in the
system uh before during the Cold War it was a bipolar World whereas basically America versus the Soviet Union and the obviously had the um you know NATO and the Western Alliance the so-called free world and then receive check and balance you have the Warsaw Pact on on the other now we have unipolar moving to Bible
well it was it was yeah we were unipolar for a couple of decades but now we're moving towards multipolar or at least bipolar with China yeah multi-polar would be maybe including India maybe including India Brazil China in the future in the future but but so the the irony is that the safer America has become the more we've gotten militarily involved
overseas and part of that is because there's no great power in the system to oppose us um but it's also gotten us in a lot of trouble I mean all of these wars in the Middle East that cost us something like eight trillion dollars another survey caused a war study uh the direct number of deaths from these wars from the war
on terror was over a million lives lost eight trillion dollars and that doesn't even include the excess mortality caused by the destruction of infrastructure wastewater treatment you know fam and all that kind of stuff which could be as high as five million you know the crazy part about that sex that 8 trillion dollars if we had deployed that in
energy Independence solar nuclear whatever the whole reason to be in the Middle East was oil and energy and we could have just deployed that to be energy independent in the west and not had all of this pain not the whole I mean not the whole reason I think the reason to be in Afghanistan was to kill someone with the exception of 9 11 and
maybe we could have done that without taking over the whole country and gone on this 20-yard that could have been very strategic I mean actually that was really proven when well first of all we did Kill we did kill Bin Laden in Pakistan with just a raid by the seals you know infiltration so we didn't need to occupy
that country and then more recently we finally got so we're here in Afghanistan using a drone after we left the country so what the hell do we need to be there for 20 years when we could kill these guys using drones and you know a helicopter team yeah this is where we needed to have an adversary who could check our power it would have been
healthier as I guess the premise to the tough study right but but look I think to freeburg's point is it do we become more militaristic when things aren't going well at home I I don't know but it feels to me like just in general over the last 30 years we've become hyper militaristic it's the use of military
force is typically the first option and we resort to it too quickly and we don't use diplomacy enough and you can see that in just the number of lives lost the failure of these wars and the enormous deficit we're running as you know sex I can't stand Trump the two things he got right no Wars and he was the dictator Whisperer that guy
knew how to talk to a dictator you know whether it was North Korea China Russia he just knew how to bond with them it was like a superpower for him okay we have three directions that keeps us out of War it's great you know I mean it's literally his only saving grace all right gentlemen we have to talk about what's
going on in Iran we have to talk about the Wall Street editorial boards California talk about talk about Newsome because there's a bunch of energy stuff happening in the United States which I think is important all right so the Wall Street Journal editorial board uh which obviously has a side wrote an op-ed on California's grid issues some of the
quotes from the op-ed California can barely keep the lights on as its climate policies uh bite the electric grid but Gavin Newsom is undaunted on Friday he signed no fewer than 40 new climate bills to amp up California's green Energy stock shock experiment even as gasoline prices Nationwide have fallen to an average of 368 a gallon
Californians are still paying 5 45 a gallon California's electric rates are already more than double those in neighboring states this is what happens when politicians try to eliminate fossil fuels with a Molotov cocktail of Regulation taxes and renewable mandates and subsidies the coda to this is um I'll send it to you Nick but can you
please play the clip as well of Rashida claib trying to skewer Jamie Diamond where he just destroys her God that's embarrassing that was embarrassing I mean we should play it I mean it's she made no sense Nick can you play that clip please you have all committed as you all know to transition the emissions
from lending and investment activity to line with Pathways to Net Zero in 2050. do you know what the international energy energy agency has said is required to meet our goal Global 2015 Federal targets of limiting Global temperature rise to 2.7 degrees Fahrenheit or 1.5 degrees Celsius so no new fossil fuel production starting
today that's so that's like zero so I would like to ask all of you and go down the list because again you all are agreed to doing this please answer with a simple yes or no does your bank have a policy against funding new oil and gas products Mr Diamond absolutely not and that would be the road to hell for America yeah [Applause] yeah
bake out their account and close their account the fact that you're not even there to help relieve many of the folks that are in debt extreme debt because of student loan debt and you're out there criticizing it my favorite was when she said cellaces that was yeah I was like okay it's just so much theatrics the Rashida
Talib represents the 13th District congressional district in Michigan the the median age in that district is 35.9 years old the 2020 poverty rate is 28.2 so more than almost one in three people and uh the 2020 median household income is 37 601 so you know she represents a a group of people that you know I think at best his lower middle class
and the idea that she doesn't even basically understand what would happen in her District if you actually did not have cheap LNG again just kind of speaks to the institutional kind of decay in Washington she is not the person that should be advocating for this like you know it's districts like this more than any other
that don't have the money to spend on you know very expensive solar installations that cost Thirty and forty thousand dollars these are the districts that need coal coal-fired plants LNG oil to keep going to sort of minimize the impacts of inflation and so you know that was just like a grandstanding moment moving to California's hearings because these are
important discussions and they've become theatrics and this is a chance to educate the public with some charts and data she's either so hungry for power that she actually doesn't care about her constituents or she's scientifically and numerically illiterate that's I think the latter is probably the issue here and so this is
this is what's such a shame on the on the on the other side you know at the end at the other end of the coast in California the cost of power generation just so you guys know has fallen by 90 when you look at Renewables and that is because of a good job that the federal government did in introducing subsidies that
essentially gave the the right sets of incentives for people to build this infrastructure but while the cost of generating Renewable Power has fallen by 90 to you know virtually it's on par and it's cheaper than any other form of generation your electricity costs have doubled and are probably going to double again in a
state like California so you know we're catering our our utility rates by you know seven to eleven percent um every year that is unsustainable in California and what do you have you have again a different version of the same flu that Rashida Talib has which is you run forward to kind of virtue signal and to try to do all of these things you
don't spend enough time to really understand what's happening on the ground and you make it impossible for people to make the decisions to actually uh be resilient for themselves at the end of the day there are tens of Utilities in America but there are a hundred million households and the only path to energy
Independence is to get every single hundred million household to be resilient which means they need their own solar panels they need battery storage they need their own potable water and all of these systems are now affordable and available and now the federal government with the IRA has created the financial incentives to pull it forward
so I don't know I just think like this is a hugely Stark reminder about how poorly our energy policy has been managed and if you leave it to the hands of the progressive left they will do things that don't map to what people on the ground actually need people in California most people in California cannot pay utility rates that are going
to double every six and seven years just like people in the Congressional 13th District of Michigan cannot afford to pay for solar if Rashida Talib is able to get you know all these Banks to not Finance LNG colon and and other forms of hydrocarbons as a bridge fueled um 40 of these bills independently and
you have to think about how many bills I mean who's reading these things what is in these things I mean each one has to be addressed individually like one of them could be to help people put solar panels on top of schools and batteries in there that could be a good bill um but there definitely needs to we have
that mechanism at the federal level the IRA passed an incredible set of incentives both for the producers of these things and for the for the end companies that actually deploy them yep and so we've solved that problem you know so I I just think like it just goes to show you a ton of Regulation does not actually add and get to the solution
that we want the government will not solve your problems I hate to be the bearer of bad news but they are going to make things more complicated and more expensive and the result resilience that you expect out of your utility infrastructure by the way we saw just what happened last week there was a massive fire and a massive battery
installation that California installed 182 gigawatt system megawatt system could you imagine if that had actually lit on fire two weeks earlier in the middle of this crazy heat wave that we had so even even utility scale Renewables are very complicated projects to undertake look at Texas I mean people are dying there because the grid keeps
going down it is much safer and more reliable if is if if every homeowner in the United States took responsibility and and used these incentives to basically become your own little virtual power plant and you will technology is there I mean getting generators for natural gases backups so we're going to have to figure out how to
take the load off the grid and build resiliency into it I don't know if you guys saw in a related story all this ESG stuff is kind of coming to a head but uh Dilbert got canceled this week in like 200 newspapers did you see this what yeah how is it possible well because he's been going after ESG uh in his cartoon and so uh
I'm interested in your take on this but here uh I don't know the characters in Dilbert except for Dilbert but he says uh this person who's in charge says our ESG squirrel will drop if we open a new Factory that adds CO2 to the atmosphere but we can balance that out by adding more diversity to our board and I guess the cat says how much CO2 do
you plan to add and he said one nine binary board members were showing the es and the g being put together makes no sense but that that panel obviously got him canceled what what does it mean he's canceled like he was fired from National newspapers I think one of the 177 newspapers because they're all part of
chains now and I guess because because of that cartoon that cartoon plus it's like a series going after the social governance part of you know environmental and pointing out he stated on his podcast that he wants to kill ESG so this whole ESG debate he's trying to further it but I guess but yeah I mean the the concept of ESG
makes a ton of sets I think the problem is that it does implement this yeah this version 1.0 implementation was financialized by people that have no care about ESG at all and so all it's done is create complexity and consultants and you know studies make sense or it doesn't make sense no the words E S and G make right a lot if they have
commas or periods between them I guess is the question that's fine too but my point is saying that you want you know diversity and you want sustainability and you want better governance all good all of these things are really great ideas it's just that in this first implementation it got financially perverted and so what you have are folks
that are you know probably not the best positioned or should not really have an opinion about ESG opining about things that they never were given the authority to a pine on and then as a result what it's really created is the cottage industry of Consultants that can basically make you know hundreds of millions of dollars writing
all of these reports and I think that that's why this implementation doesn't work so ESG today is broken and I think it's largely meaningless the concept of what people want is is a very good idea we just need a better way to implement I agree with that you can't connect these things so the we're going to put social and governance with
environment it's all that's going to do is hold back the environment rights we're having all of fed beef tonight oh this is you need to try it I'll see what I can do no you have to do it you have to do exactly okay once you have to say sax commit no you cannot imagine what does a beef look like that has been only fed green olives pitted
green olives I can tell you I can tell you how it looks delicious is it green it's the most delicious steak you've had in your life it's the most delicious all right I'll come for that okay it's incredible awesome it's actually gonna drive me with your driver text me your address so I know where to get you oh I love it oh this is gonna be
great game on listen to this lineup me J Cal Friedberg sacks uh he's flying it this thing this is gonna chop up this game is no more flips the flips are ridiculous okay you know what now now that sax is coming I'm gonna tell him to break out the early white truffles I'm just kidding truffle pigs not not
just walk to my office she looked at me when I said white truffle she's like four bestie dinner it's happening everybody oh it's happening it's happening you know what I saw was helmute the other day um on one of his heads up matches where he got in that huge fight with that guy did you guys see that and he couldn't think that's
every match you just described every match he's ever this was like some heads up thing and the guy um had flopped some insane I think it was like quads or something or and helmet have had like top pair except yeah yeah yeah yeah and help me fold it on this guy it was incredible to watch the play like the read from helmuth was unbelievable he is
incredible he's a freaking scene on that guy he's pretty great he's got unbelievable there's a reason he's the greatest poker player in the world he really he his reads are unbelievable do you think that what percentage of it is obviously he is an incredible player but there's another piece of this that we all see which is people play into him
they want to be in a hand with him they want to bust him so in those tournaments what do you think no I think I think what's happening is at the highest level there's like all these people that have gone in This One Direction and by the way this is probably a good we could talk about Chess in the same way which
is that you have these solvers right there's poker solvers and now they're they're these chess solvers and the Young Generation spends all this time training on the solvers so that they know every permutation of every move and what is what people call Game Theory optimal or GTO the problem with GTO is that you can
actually be very exploitative against somebody that's actually playing perfectly because the AI is perfected around what is the rational set of decisions in every spot and so you can set people up to make a lot of really bad mistakes and I think helmuth understands that and so because he is one of like this dying breed of people that plays live
he's able to just be so exploitative and these folks that are basically playing from rote memory right um what is the GTO move in every spot they end up making a bunch of mistakes and um and feeding chips into him and so I think like it's uh it's probably the same as as sort of this Magnus Carlson he kind of knew what to
expect from people and the minute this get deviated into this realm where you were like how could you make that decision probably because you know the the computer AI is able to calculate make a slightly losing move now three moves later you're gonna actually be ahead it caught him off guard where he was basically like I think this guy's
cheating really really crazy but I I think like if you if you have a bunch of GTO kids folks that are a little bit older that have been playing in a live situation can be hyper exploitative by the way this is a good point generally about about this gaming is that computation has played um and computers have played
such an incredible role it almost becomes questionable on how much can the human really differentiate anymore uh in these uh in these games and in these systems you guys watch the the chess players on YouTube and they'll have solvers live and they'll be getting live scoring as they kind of walk through a match or uh
walk by the way free bird area that's that's the same with poker you have these Huds these heads-up displays and a lot of the poker sites have basically given up they try to spot the cheating and you can it could because you have this basically layer that's helping you and it's effectively impossible because you know the these
things run locally they're screen scraping locally and you just have no idea except when they make moves that are just so unpredictable from a human and could only come from a from a from a machine yeah all games maybe become obsolete because there is no real way to qualify the performance of one human against another when the AI itself or
the technology or the Computing itself you know over Shadows human potential and human capability you guys may not know this story but when I met Demas the the founder of deepmind I got introduced by Teal like in 2011 or 12 so like a decade ago and I met him in London I'll never forget this at the we were having breakfast at the Conant
hotel and he explained to me Deep Mind in the context of a game because at that time how they were building the first versions of the AI was perfecting how to play certain video games and I can't remember the name of the video game but it was one of the famous first person shooter games and the whole idea there was like you know
if you can perfect an AI that that basically plays GTO and can win the game what you've effectively solved for is is like a layer of AI that can then solve other generalized problems I was blown away I thought this is the craziest thing I've ever heard a decade ago so it's it's pretty natural that they've taken this stuff and adapted to meet
every game it's a little sad though too no don't you think yeah I mean yeah but I mean maybe there's a different model of performance for humans that really changes what the gaming is right well I don't know what it is I mean I think that these games themselves completely um uh you know the the intent of a game
which is to measure one's kind of decision-making abilities gets obsoleted because the software ultimately is a better decision maker than the human so the question then is what is the human going to rise to that creates a new playing field um and I think there's probably elements of creativity and actually using the
software to become part of the game it opens up a whole new opportunity for what gaming is I mean we've been talking about a little bit about video games but you could see um artificial constructs in gaming that arise from the human interacting with the computer and then creating a new sort of playing field in gaming yeah sax what do you what do you
think about all this you're a big chess player yeah I've been following it for the last couple of weeks it's obviously been the big story in the Chess World what basically happened is that a couple weeks ago you might as Carlson lost that game to Hans uh what's his last name I think nimon yeah exactly and the next day he
pulled out of the tournament this is the sinkfield cup and he's never pulled out of a tournament before everyone was sort of speculating is he sick or have covet or something like that and then he tweeted out a video from some soccer coach saying I can't get in trouble yeah yeah so clearly he was in a passive aggressive way of making an accusation
and then he doubled down a few days ago he was in another tournament and he had to play Hans um I keep forgetting the guy's name um yeah he had to play him and he resigned on move two so basically he doubled down in his accusation and he won't specifically say what leads him to believe that this guy is cheating but he thinks he is
he's uh he's a young player he's something like 18. and he's had a pretty meteoric rise in the trust world I think his ratings gone up a couple hundred points over the last two years it's the fastest rise in chess rating that anyone's ever had before it's been the case that players have and young players
especially have risen quickly but this is uh it's a pretty it's it's the biggest how is he cheating that's happened well that's the thing so the the issue is that it's easy to cheat in online chess but in over the board you would either need to have a device or to be signaled by somebody in the crowd you need Human
Assistance or the assistance of a device it'd almost be like you know a casino or something where they're using the contraption yeah on the guy's leg to Signal you know to information to him so nobody really knows how he would have done it and of course he wasn't caught doing it so he can never prove that he wasn't so there's just a real question
here but they did make some changes after after Magnus Carlson resigned they put the feed on a 15-minute delay you know I think like at some point you're going to have to start wanding people and having them go through a metal detector yeah they're gonna have to toughen up all of the anti-cheating standards one of the grand Masters was like we should
play naked in a locker room it was an online site that basically offered a pay Neiman a lot of money to play basically naked to prove that he could you know really um do what he what he's been doing the theory on why he's not cheating and and the rise is Justified is that in theory this is the argument is that he's grown
up learning from all these neural Nets these not just chess engines the first generation of Chess engines were like stockfish they were just computational machines that were programmed by humans with thousands of rules on how to play chess and then they could just crunch the lines better than a human could more
recently thanks to deepmind it's a whole different type of machine it's basically these neural networks where all they're programmed with are the rules of Chess and then they it plays thousands of games or millions of games against itself and it learns the best way to play chess and the the neural Nets play in a whole different way than the
than stockfish than the pure engines the the engines display like a human that's able to calculate really well whereas the neural Nets do things like um they're sacrifices a human would never make yeah they'll make they'll make sacrifices for disrupees activity so you know normally when a human makes
a sacrifice they they'll recapture the material within a few moves whereas um Deep Mind will sacrifice a pawn and you know just for the positional advantage or for the piece the increases which doesn't show up for many many moves right exactly it's exactly and so the ability to model like 12 moves out is is really but that you know that's
where I think people thought that Magnus picked up on something because it's like those sorts of moves are rare in the absence of some layer of intervention because typically it's like you know and sacs you know this much better than I but it's like you know the opening and the closings of all of these chess matches are sort of tightly regulated
there's not a lot of creativity it's sort of in the mid game that you have these slight positional advantages and disadvant manages and so I think it was Amplified that one of these positional sacrifices made no sense in the context of that game unless you had the ability to you know think really conclusively about six seven
moves from now by the way it's the same it's the same thing in poker so there's a thing if you guys want to download it it's called I think it's called poker snowy that was like the first layer of a pretty basic AI but it's gotten better and better and really what it allows you to do is in every situational spot whether it's heads up all the way to a
six-handed ring game you can really understand you know what to do now poker is meaningfully more complicated than chess um as it turns out because again you have you're not playing against one player you're playing against some umpty number of players you know we don't know when each of them is going to step into a pod
and then there's all of those elements so it's a little bit more complicated to build a true kind of like neural net around it but even still you can kind of get a sense of um of what you should be doing in different spots and what you see is that there's literally like trillions of actions and so it really is impossible
for a human being to really memorize in every single situation what the true you know probability probabilistically weighted GTO optimized move is going to be and and so this is why I think a lot of people I guess led by Magnus was saying how could you have known this unless you were aided by something it's pretty clear that this guy cheated it's
pretty it's I mean it's what's what's profound is that Mastery of the game may not be achievable by a human but Mastery of any one of these games may actually be achievable by neural Nets and I think that's what's really frustrating to Magnus and to other top tier players in the world that are the best humans at a
particular game is they're now realizing you know that they really aren't the true Masters that the true Masters are the neural Nets and more than just the guy cheating which may feel like bad sportsmanship or whatever fundamentally one's ego being built entirely on one's Mastery of the game and being the best at the game is fundamentally challenged
because a computer is better at the game than you it's a really profound moment I think that that ship sailed a long time ago yeah I mean I know the Chester right yeah well no it was so it was way back when remember when Kasparov played deep blue deep blue which is the IBM yeah that was the first which wasn't even a
sophisticated neural net that was just a almost holistically modeled yeah it was a deterministically modeled system it was like stockfish it was just a number cruncher and it that was when computer intelligence and chess tip to be able to beat the world champion since then there's no looking back I think every
human who plays in The Chess World understands that computers are better and there's no way for a human to be better than a computer so it's certainly not a neural net I mean Magnus certainly knows that I don't think anyone's bothered by that I think that everyone understands that humans play in a certain way and their goal is to be the
best human I think the concern is just obviously if a human it gets aided during a game by computers but the way that chess works now the preparation is all about working with computers these top players spend huge amounts of time researching openings and looking for Novelties in openings using computers to help them do
their research so you know working with computers has now become an integral part of the game it's kind of like you know in many sports where the technology has enabled the athlete to get better you know and um and as really technology becomes the key Vector of competition this actually happens in the NBS this happened in the NBA where there's a
special technology for three-point shooting in your form Etc and the Knicks actually and a couple of other teams implemented it a couple of years ago and you saw the entire team became better at three-point shooting so people who were you know 200 300 you know moved up 10 20 each but this kid is clearly cheating because
he's cheated in the past and people who cheat in the past cheat in the future is my basic belief so this guy Neiman publicly admitted that he used electronic devices to cheat when he was just a kid on online games when it was 12 to 16 years old so the question is like no but Jason it's worse than that I think because then chess.com came out
and said actually the cheating was more rampant than just those two incidents their algorithm determined it yeah yeah so why are people playing with him well because he said that yeah he said that was those games were not for money and um he was just wonderful he was raiding fast and he's like the poker guys who
cheat you and what if you're a poker guy and you've cheated before you never play with those players again they're cheaters it's obviously well the issue here is that this was an over-the-board tournament where um the one that Magnus pulled out of in order to protest so the question is how could he have been cheating right now I
think what what adds to the complexity of it is that you have to remember that when you're dealing with a player look if it was us playing Magnus we'd need to cheat on every single move but if you're a 26 or 2700 player and you know Magnus is at 28 60 or something the higher the rating the better in chess called the ELO
but anyway if you're like a 26 2700 player like Neiman you only need help with a few moves in the game in other words if you could get a tip at a critical moment of the game that might be all you need to put you over the top you wouldn't need to in other words to beat Magnus you wouldn't need to cheat on every move you could just if you just
cheat on two or three moves at the right time that could put you over the top so something could vibrate on your leg four times and then two times over to tell you which piece to move that's what they were saying Jayco like he had like a vibrator in his like where was the vibration in his shoe there was a meme
that became like a whole thing where it was like he had something in his butt or something and anal chest computer is what you're saying okay look that's not real somebody's special someone made it yeah and then it became somebody did a Reddit post saying that he was being communicated with through vibrating anal beads and then that went viral Elon
tweeted it although I think he deleted it look it's absurd but the point is there is a question of how would he have done it if he did it yeah there have been cases and caught yeah people getting caught going to the bathroom and then you know checking their phone yeah there's a there's a grand Bulgarian Grandmaster you got caught in the
bathroom checking his phone and oh God metal detectors on the way in and they have RF detectors in the room right so they look for any sort of communication do you remember that going into this event you just kind of Justice the the singfield cup added a 15-minute delay after these accusations so yeah I think
there's going to be they're going to be more precautions basically but we still haven't heard from Magnus what made him think that there was Foul Play here in this particular game and he's been very reluctant to he won't say anything it's it's sort of um passive aggressive now the full side of it is that Magnus Carlsen has been the number one player
in chess for over a decade and he's a very classy player I mean I don't you know everyone's never heard a word said about him that you know was uh now he can be cocky he can definitely be cocky but uh he is a very classy player so I just don't see him doing something like this lightly so that's what's so dramatically to understand about it
dramatic is yeah it's really hard to understand how Neiman Could Have Cheated but also Magnus doesn't seem like the kind of player to just make a wild impulsive allegation so this is why the chess world's just been really roiled by this all right is there like a any kind of equivalent of like ped Scandal here
like people taking Adderall or provigil or any other kind of nootropics to to get an edge there's a good documentary I think it was on Vice on how a lot of the top chess players actually get ready for matches and um they're incredibly diligent about their sleep their workout routine alcohol they do take supplements I
forgot who made the documentary but it's actually incredibly intense how physical these people are uh well like one game of classical chess can burn like over 2 000 calories or something like that like the amount of calories that get burned just by using your brain so intensely Adderall is rampant in the poker Community especially in tournaments so
when you play the the higher tournaments and I've played them and I just kind of step in and and it's I felt very underpowered relative to the to the kids I was playing with because they were all on Adderall well these are 12 hours but 10 hour sessions over 12 hours session right it's exhausting it's really really
physically exhausting to put that's why I stopped playing tournaments about a decade ago I just couldn't sit there for that long it could justify the time suck of it too it's like it's just so it's just so physically and emotionally demanding to be able to play that well and make no mistakes over 10 hours um and so you know the only solution
that all these kids would turn to was um was Adderall and I was like this is not worth it for me so I stopped I stopped playing in tournaments and which was too bad because I I thought like I could have a real chance of actually doing reasonably well in some of these things and I just gave up by the way the
other thing I wanted to mention is there's there's been like cheating in all these other kind of sports and it always gets exposed like whether it's you know the Tour de France it turned out that everybody was using Peds or you know the Russian Olympic team everybody was using Peds New England Patriots stealing signals yeah all right listen
let's just talk about the Iran protest for a moment um Iran has shut off internet access internet access in parts of Tehran and blocked access to Instagram and WhatsApp to try to stop these protests the protests started after the death of a 22 year old Kurdish woman um while in place custody Masa amini was detained on September 16th for allegedly
wearing uh hijab head scarf in an improper way she later died in police custody and activists are saying she suffered a fatal blow to her head and now you have 15 cities with very large crowds women are burning their hijabs and it seems to be escalating at a pretty uh fast-paced Iranian authorities uh are denying that
they had any part in her death thoughts on this it's horrible yeah I wish them well if you look at the demographics of Iran it's pretty amazing how many young people there are here this feels like a country that could turn over that'd be great and you want to know why it has a chance of working because we're not the ones behind it I
mean absolutely yeah we cannot yeah run the revolution the revolution has to be done but to the women and young people of Iran protesting you have our support and we're rooting for you and don't let the bastards grind you down all right everybody four uh David forgot our names did you forget our names no I'm just I was gonna try to
come up with a new name for uh rageberg like Friedberg I think David Plainview rage Burger rage for rage Burger Plainview the uh David the dove and the host with the most tremath polyhapatia I'm the world's greatest moderator I'm so excited to see all three of you honestly uh socks don't flake I love you guys I really want to
play sacks we should roll down together let's roll baby big game all right we'll tell you guys in that game love you besties bye your Winner's ride Rain Man Davis and they've just gone crazy [Music] besties [Music] it's like this like sexual tension that they just need to release [Music] we need to get Mercies [Music]