Okay.

So then what do you do, right? Then you say, "Well, then we need to cut entitlements." No.

"Then we need to raise taxes." No.

Like, these are all noes.

So then you start with theatricality and deception by playing twist games that the three of us when we were in the office together and if we saw something like this, we would start laughing at each other and like, "What's 4 billion gonna do?" Well, he said at least 4 billion, which means it's infinite.

He's trying to have his Draghi moment.

Um, so I think he is going to keep trying to get rates down because that's what he needs to do over the next six months to nine months.

Right.

Yeah

... what, what I know.

So on the asset management side, and I- I'm gonna attribute this statement to a Binghamton University fellow ZBT guy, Jeff Davies.

I saw it on Twitter, and he said, "There's no, there's an insatiable appetite for investors, high net worth investors, if you could promise them high single digit yields with no volatility." Right? Think about, and the, the TAM, the investor TAM of that market is infinite, right? Or, or near infinite.

And I believe when, when the powers that be were sitting down to say, "How are we gonna raise all this money?" right? They probably came up with this scheme of saying, "Well, why don't we guarantee first loss piece, right? And also semi-soft guarantee investors a high single digit yield.

We'll get money coming in the door.

We're gonna charge between 50 and 100 bips, right? And perhaps maybe an incentive fee if it works better than that." And so therefore, there will be the third party asset managers just collecting a fee, collecting a toll, and they're gonna get all their high net worth LP clients, like you said, to invest in this.

Yeah.

But give me, give me your thoughts here coming out of the last few days here, both testimony and the data that we've been seeing recently.

Well, let's, let's break it down into short-term, long-term, and what Warsh needs, right? The, the, we'll start with the basics.

The most important thing he needs is he needs for our country to have a lower cost of capital so we could adequately service the debt at a low price, right? So then you gotta figure out, well, how, how is he gonna go about doing that? Um, well, you could do it one of a bunch of ways.

Let's start with the thing he's not going to do, right, which is, "Hey, why don't we tighten rates, implement austerity with government policies, tighten the belt?" Um, let's take that off the list.

He's definitely not gonna do that because that probably equates to the S&P being down 30 to 40%, if that was the case.

The second thing he, he's gonna try and do is to jawbone that he's an inflation fighter, and right now he has it on his side that inflation has been elevated, except for today, uh, and as a result, keep the dollar strong and hope the market responds in the form of lower yields, which has not been the case.

Maybe a function of the fact that, uh, we, we increased escalation in the Middle East.

So...

But give me, give me your thoughts here coming out of the last few days here, both testimony and the data that we've been seeing recently.

Well, let's, let's break it down into short-term, long-term, and what Warsh needs, right? The, the, we'll start with the basics.

The most important thing he needs is he needs for our country to have a lower cost of capital so we could adequately service the debt at a low price, right? So then you gotta figure out, well, how, how is he gonna go about doing that? Um, well you could do it one of a bunch of ways.

Let's start with the thing he's not going to do, right? Which is, "Hey, why don't we tighten rates, implement austerity with government policies, tighten the belt." Um, let's take that off the list.

He's definitely not gonna do that because that probably equates to the S&P being down 30 to 40%, if that was the case.

The second thing he, he's gonna try and do is to jawbone that he's an inflation fighter, and right now he has it on his side that inflation has been elevated, except for today.

Uh, and as a result, keep the dollar strong and hope the market responds in the form of lower yields, which has not been the case.

So...

Right.

Right? A- and, and it's sad because a- as Porter said, you know, we too were young.

We, we, we, we were very, very idealistic on what we thought.

But, you know, through the years and the gray hair comes in, you realize a few things.

One, which is the market really doesn't give a shit about your idealism and what you think, right? Um, and no one...

And I've come to learn that unless you're going, uh, down, I live, I live in New York, on the Acela train with a suitcase full of dollars ready, ready to coerce politicians, they're not gonna listen to you, right? Uh, the second thing we learned, took a while, but we learned through the great financial crisis, was the desire for any material adverse price discovery, normal capitalism as we call it, is sadly dead, right? And, and so as a result, behaviors in markets start to form as a result of other people figuring this out earlier, right? And s- so we have created a bailout mentality, uh, uh, particularly the higher you go up on the totem pole, the, the, the higher the ability for you to get bailed out.

And, and, you know, 14, 15 years of that type of behavior is going to create a type of market that we have today, that we see today, where younger people, well, and they're not wrong, everything they've seen is, "Yeah, we could have a bad two, three weeks.

How about you, Vin?

Uh, probably right.

Because, because what it requires to go higher is exactly what you said.

It will be up the day they announce something, and you probably buy it.

It's a fa- it's a fair assessment from a, from a unbiased understanding what they do perspective.

So-

Yeah.

No, the GM's doing a good job, like- [laughs] Oh, doing great.

This is the best they've done.

So that's what I was gonna say before you brought up Micron.

You know what, I wanna add one more piece to this, is that we put in our Discord, put in a poll, um, and I, I scratched out the names and, and gave valuation and growth rates.

And, uh, mostly the Mag Seven plus, you know-

Got it.

Exactly.

Uh, uh, Porter, that's, that's a great analogy is to, is to everyone is suck money out or using NVIDIA as the short.

If you, if you work at Citadel right now, or Millennium, right? You're playing every semi name and funding it with NVIDIA, and you've made a lot of money doing that right now.

So probably the same thing's happening in the miners, my guess.

Right.

Right? And, you know, AI's not there just to create some interesting memes, uh, and, and, and better memes and, and, and search engines.

The way I think about it, and this was written yesterday, it was a very controversial piece, is, you know, the intent and the goal is to wipe out 20 to 30% of the workforce.

And, and what happens if that is the case?

I've been telling him for 20 years.

Right.

And I would counter him and say, "Your creative destruction was in the form of government jobs, and that's why we blew out the fiscal deficit." Right? So, and you'll point to healthcare, and I'll be like, "That's a government job.

Medicare and Medicaid is paying for that." If all of a sudden you're creating a machine that is learning quicker than humans, that is gonna, that is gonna reduce employment, I think yesterday, I, not yesterday, I think the last two to three weeks, people are doing the what ifs, right? And the what ifs are, what happens to these companies i- in our old neck of the woods? What happens to insurance brokers? What happens to wealth managers? What happens to all of these people that have been charging fees if all of a sudden a machine can do it quicker, better, and cheaper?

Yeah.

And the running joke, when Por- Porter and I and Danny were saying, it was like, "Well, I don't think AI's gonna figure out how to mine gold, uh, in the ground," so I'm probably fairly certain there.

I'm pretty certain that AI's not gonna be able to extract oil out of the ground.

So, so there's a ton of sectors where you're just...

it just can't touch it.

It might even enhance and increase the cost, uh, improve the cost structure, but I think where we're sitting and we're residing, I, I feel like we're pretty AI-proof.

Although, maybe three days from now, I'll see the gold stocks go down 10, 15% because Claude discovered something where they could dig to the core-

[laughs]

Have the book and the movie sort of screwed up your memory of the experience in the way you're, you know, f- pictures from a family vacation screw up your fa- memory of a family vacation? 'Cause all you end up remembering is the pictures? Uh, or do you have scenes in your head that are just separate from that, that are vivid to you about the experience?

I'll give you a great personal business scene that really gets to, I think, what you're getting at.

So, I might get the date slightly wrong.

October 2008.

Okay? My now-deceased father-in-law takes the entire family on a Disney vacation.

And we were there during the time that the markets were blowing up.

So, while I'm on It's a Small World, I know that the S&P is down 3, 4%.

Explain that to a child, what material adverse price selection is.