Rates Rise, Buffet Steps Down, and the AI Threat Debate Continues

0:00Welcome to Digital Currents, brought to you by Maureen Creek Digital, I'm Xavier Segura. Each episode we spotlight the topics and people changing the tech industry, with the focus on AI, blockchain, chips, and big data. Thanks for listening and please make sure to subscribe if you like what you hear. And remember, stay current. Mark, happy Friday we're back for another episode of Digital Currents. How was the week? Happy Friday. Week was great. Week was great. I thought you know it's funny, I work here in the blue the last two days. I should wear three days in a row where people think I don't have any other color.

1:01So we could have matched actually. I almost had it on but I went with the royal little bit of maze for you. I do. So we got a lot to talk about today. So I did go Bitcoin Orange. I got the Bitcoin Orange game. And I broke out the Bitcoin moon sock game. Now like why? Well, I easily could have done the roller coaster. Because in the past week, since we were together, we're right where we were. A week ago. But we went from 79 down to 78 down to 76 up to 79 down to 75. And now we're back up to 78. But what's interesting about this and the reason I broke out the rockets, you know, we're up 20% over the past month, 21% over the last month.

2:03But most importantly, we've worked off all of the nasty overhang that was there. About a month ago. So in the middle of August, you know, in that first wave where we went from, you know, 50 or six, I'm sorry, 64 K all the way to 80. We got super overbought. I mean, our SI was almost hitting 90. It doesn't stay there, right? But it it actually drifted into the 80s for about two weeks. But it has slowly worked back off to now we're sitting at 56. And 56 relative strength is perfect. It's not like a raging by like when it's 30. But it's beautiful. And that what's beautiful about the chart is we're well above the 200 day moving average.

3:05Which is really good. Good things happen above the 200 day moving average. The 50 day moving average is upward sloping and has broken through quite nicely. And so we got a nice kind of golden cross there. And importantly, the 20 day was starting to roll over. We were losing a little momentum as we fell from kind of 80 down into the mid 70s. But now we've pumped back through. So we're above the 20 above the 50 above the 200. That's a good looking momentum. So I'm not ready to say definitively that the bull markets here. Because we still got to get past October 5th. And I know people are like, oh, you can't really believe in this voodoo of 364 days. I'm like, I wouldn't believe it except it happens every single time. So on October 5th, I'll be willing to declare that we're fully, fully into the moon stage.

4:09I like it. And Mark, I think last week, there was a lot of things that we were setting up to discuss this week. And as you mentioned, big day of everything that we can report upon. Because there were some things that were supposed to maybe happen, but that they didn't happen. And of course, we're talking about the lack of clarity bill, which by the way, we're still without clarity. But this was very interesting, Mark, because the market seemed to have priced this in. Because when it didn't pass over on the middle of the week, there was a slight dip, but then a recovery thereafter. So if we're kind of playing the odds, we should talk a little bit about how the winds are blowing. It's looking very unlikely that anything could pass a very substance that could define the regulatory agency for crypto can define exactly what a mature blockchain is. And kind of some of these other provisions that would help the market understand how to maybe think about this asset until maybe October of 27.

5:14So the question will be, will the bulls continue to roll and roar kind of unfettered? Kind of like in Pamplano, Mark, I've never been to Pamplano. But it seems like it's a combination of the most exciting and the most terrifying thing. Kind of. No, look, I mean, as a good Spanish guy, you probably should at least go watch. I don't know why anyone would put themselves in a situation like, or you could literally die pretty easily. But and I don't know that people die all the time, but you definitely could. I mean, it has happened. It's kind of like why I don't skydive. I actually think the experience of skydiving would be really cool. But the tail risk is really high. I don't scuba for the same reason. And scuba is probably lower tail risk. I mean, not that many people die, but it does happen.

6:18Now, you can say, well, Mark, you get a car every day. And the tail risk of that is the same, right? Every time you get a car freaks me out, especially because we just got our youngest a car yesterday. But you know, that is a new car. That's not new. It's an old car, but it's new to him. You can have that. And he will get to drive it when he turns 16 in January. But we just we happen to find it. Have to say that. But anyway, so you'll appreciate this. It's almost this color. It's not quite this bright orange. It's more chili pepper red. They call it, but it looks pretty orange to me, which I kind of like. So you'll always be able to find it in the parking lot of very important color, because I'll say I went to the US Open last week, Mark. I caught the semi-final, great, great match in the semi-finals with Ben Shelton, who eventually lost in the finals for all U-tennis heads in the audience. But I had my car and my reliable trick of hitting the panic button in the middle of MetLife

7:19stadium filled me because the battery was low. So I was with my buddy and I freaked out because I was like, oh my god, I'm over the car. And then it took us, you know, probably the, you know, that set, that match, actually, so I was forced at probably the fifth set was us searching just for the car. And if I would have had a color like your son's car, I would have found it like that. Well, this is part of the, in part of, look, I, it's a personal pet peeve, right? 85% of cars now are white, black, silver, and gray. Yeah. And it drives me crazy. Like when I was growing up, all the cars, green, yellow, teal, purple, I mean, everything was colorful, everything was awesome, orange, and so I have a blue car. You know, my wife has what you, you know, she's got a gray car, like everybody else. A daughter's got a gray car. Everybody's got a gray car. I know. And so when he was looking, he was like, okay, there's this royal blue

8:22that Jeep makes, Jeep root cut. And he, we found one of those. And then Bronco makes this beautiful, they make two colors, green. Well, actually, I have the royal blue, but it's hard to find. And, and this chili pepper red. So that's, yeah. But really, the funny part is, the real reason is when you're driving, I don't know if you have this experience, just happened with me the other day, where you glance and the car is the same color as the road. So it kind of, you kind of miss it. Yeah, I mean, I literally almost ran someone off the road. So I look back at my shoulder. There's a gray car. Look, I just missed it. And you will never miss this orangey red car. So my, my wife says, but red cars pulled over more. I'm like, good. Then he won't speed, right? So it's right. You have an artificial deterrent. So there was, there was a method behind the madness, good to hear that he is

9:24outfitted ready to go for January. And of course, he'll have his podcast ready to hear his dad on, on digital currents. But, you know, more on the, the market moves, Mark, because we spoke about clarity. Kind of nothing really happened there. There was not a critical majority of the 60s. It's worse than that, X, right? So when clarity was first, when the clarity act was first created, it was pretty decent. And there's a lot of opposition, right? Especially from the banks, because they're like, no, you can't pay interest on, on stablecoins. And I think quite sadly, you know, people who were champions of this bill, totally caved. But I think it's worse than that to go down sinister Saturday. I think they caved intentionally, because, and I've talked about this before, you know, I like Brian Armstrong. I, although it's funny, I, I don't know if I told this story enough, but when we're up in Alaska,

10:26we met this guy who, he's got this great life, right? In the summer, he guides up in Alaska, and he and his wife live in, in Hawaii. And he is a guide, a horseback guide in, uh, uh, Hawaii. And it's, you know, fancy, fancy, shmancy place, he's a pretty good horseman, I guess. And long story short, one of his customers was Brian. And, and he said, I probably shouldn't share this, but he's not a really nice guy. I was like, wow. Oh, no. I mean, and, and he, and the way, and what he was saying is, I've dealt with lots of rich people, like Zuckerberg, and all kinds of people come to this ranch to learn how to ride. But they don't all treat me like shit. And I like, wow, that's, that's really, I don't, I don't want to hear that. But, but that's not my point is that, Brian, I think in a very sneaky way,

11:30turned from being the champion of the people saying, hey, we want interest on stable coins too. Well, what we really want is this bill passed, and, and actually, wink wink nod nod. I kind of like the fact that if I can't pay you interest, I get to keep it. Because I can lend out your coins, stake them, get the 5%, and it's good for coin-based profits. I, I don't like that. I don't like that at all. And so, I, I don't like how clarity was not passed on this, you know, bipartisan, bipartisan, partisan, politics, nonsense. But I'm okay with the outcome because the bill as it's currently written is a crappy, that's technical term, bill. And, and it got crappy over people who I thought were pretty good people. Like, you know, Senator Lama's, I thought she was on our side, but she just,

12:32she's, I think she just wanted to have a win, right? Right. She's like, whatever, whatever you want. Yeah, I'll, I'll, I'm like, no, you, you were the leader in this, and you were the leader in digital right, property rights, and so I'm, I'm said, I'm, I'm disappointed in the process. I'm not disappointed with the outcome because the bill as it was written should not be passed, because it would have provided, it would have provided clarity, but what it would have done is it would have, it would have done what they're trying to do with AI right now. This is, this is crazy. All this doom, is to get regulations passed that make a walled garden for open AI and anthropic and basically restrict competition. And there's this great cartoon from the 1860s about the railroad trust. This is not an uncommon tale. And so it shows the, the big guys, the big fat guys with the top

13:36hats, you know, behind the gate and then show this, you know, nice little new train being the competition on the other side of the gate. And, and that's exactly what they're trying to do. It's regulatory capture at its finest. And I, I'm glad they stood up. Well, like, they didn't stand up for that. They voted political party lines, but the outcome was anti-regulatory capture, which is fine. But I am, anyway, that's a lot on clarity. So in the, I guess to kind of conclude their mark, a lot of listeners will probably think about, okay, we were kind of waiting for the summer. We're waiting for maybe the fall ahead of the midterms, like now what we didn't get that. So what happens in, in my opinion, is that we kind of move to a session outside of Congress to begin to have some smaller wins to regulate the industry. And then the market is going to react a little bit by a little bit, like what we saw with the SEC

14:36proposing startups to sell as much as 75 million tokens without registering, which we spoke about a couple of weeks back, or how we saw the SEC recently approve Bitcoin perpetual futures in the US. And you're going to see more of these kind of like small pieces that kind of move us in a direction, not sure if it's right or wrong, but sort of that sweeping bill is not. Yeah, well, I like about that, X is you highlight exactly the way a government should function, right? The way bills should get passed. They should get passed on their merits. They should get passed incrementally by themselves, not with all the portfolios. So, well, if you vote for this, put in my project where I get $3 million to build this bridge on this land that my cousin owns, and then, oh, well, I'll do that if you approve this piece. And so we get these 800 page long bills for something that takes four pages because it's filled with nonsense. And so I have always been anti the named acts, like the Patriot Act, right? Had nothing to do with

15:45patriotism. And the inflation reduction act had nothing to do with inflation. And the genius act was not about being a genius, even though Trump says it was named after him, right? And so it is, it's these big ugly bills. The big, beautiful bill. No, they're big and ugly. And we head towards this, it's not a great place where we're headed. And it happens to every empire. And the empire impoverishes its masses to make them dependent. Like right now, you know, the new thing is, hey, if Republicans hold Congress, I'll send you a check for five grand. He can't, president can't do that. But then I think about, I'm like, well, if Republicans have house and the Senate, they probably would vote for that, which is, is mind numbing, right? You're just

16:50going to pay humans for their vote. So I were in this funky place. And I think the examples that you bring up take us closer to the way it's supposed to work. Let's talk issue by issue. Does this add value, right? Does this restriction benefit? Does this, you know, opening of, you know, drilling permits or whatever it is, is that a net positive? And I get it, that it, it doesn't have the broad, reaching, quote unquote, clarity. But in the end, what all of us want, is goal posts, milestones and boundaries. We want to know what's, okay, I tell the story of this time. So when I was at, no, damn, a hundred years ago, and we wanted to use Cayman

17:53offshore structures to shield the university from something called unrelated business taxable income, okay, you bit, or UBTI. And a board member says, no, no, what if, you know, what if they change the law, then we'll do something else. But until such time is, because we're not doing anything wrong, right? The law exists saying if you set up a Cayman trust, now, did the Cayman government pay money to get that? Probably, I don't know, but tax, as long as we know what the tax rules are, like I know what I'm supposed to pay. Kind of, I mean, it's kind of hard to figure out. I wish it was, you're best guess. Hey, I, you know, like this is the joke, right? I RS, UOS money. Okay, how much? Guess. I don't know, $10,000 wrong jail. Like, if you know the right

18:56number, I RS, what, when she's tell me, and I'll pay it, but making me pay someone to figure it out, I mean, I guess that creates jobs, but it's kind of a weird, weird game. And if I, if I mess up, I got this experience the other day, where, because, you know, we have, because you and, and such and sit in New York, New Jersey, I have to pay tax. I mean, not just because of you, but because we have more Greek as a presence in New York, New Jersey, I have to pay tax in New York. I don't really understand why, but okay, fine. That's what I have to do. So we calculated and long story short, there's like a $13.47 difference. Very precise. Yeah. $13.47. They sent me a letter saying, you owe us $13.47. I'm like, guys, it cost you more than $13.47 to generate that

19:57letter. And it's, that's as crazy as, I mean, I get a check on, I, I'm one share of Cisco from a hundred years ago. And I get a check for 26 cents. Like, it cost more than 26 cents to mail it, let alone to produce the check. Stop. Um, just rolling into new shares or I don't know, but it's just weird. So I, I'm struggling with what we want are the vouchers. And what we want, but the problem is they're not independent and objective. Like Ms. Warren, right? She's anti-crypto. And now she's all AI must cease. Like, she really said this. Like, all AI development must cease. Did you hear what you're saying? And I, and we've seen the same thing in crypto and, and I just,

20:59I want to live in a world where things are decided on merits. Right. That would be nice. That'd be nice. I mean, I guess it's something that we did get clarity on, which we got right on the show, was the Fed voted to increase interest rates by quarter percent. So we saw this was almost inevitable as we saw what the European Central Bank did. And so this was, you know, largely expected. But I think the backdrop of this mark is worth thinking about because it's complicated, right? So while we have energy prices and general inflation and bond yields all very high more than the bank would prefer, you have these kind of mixed signals with employment and consumer spending data that looks like things are healthier than they may otherwise appear. But then we had this kind of, like, interesting mark, which I'm sure that you saw, that we hit over 5% across, across what the index is, which was the highest rate since 2007 before a pullback, right? So over that 10-year treasury yield, which, you know, was back when I was a student in Michigan. And we saw

22:05some of those, some of those marks. And it was a very different economic climate during those, those times. So now the market is reacting there. Obviously, crypto is holding steady, which is kind of interesting. No, it's interesting. Look, my, my first boss had this great line, you know, figures, lion, lion's figure. And it's true in the sense that if you torture the data long enough, it will confess, right? And, and that's what's happening here is they tell us that inflation is low. Like, really? I mean, like, like, the August print came in at 3.2. Now it was down from 3.5 and like, oh, see, inflation is cooling. And like, okay, but your targets too. And we've been above two for 65 months in a row. So one would say that might not be the target anymore. But then it's worse than that because that 3.2 excludes food and energy.

23:14But those are the things that are rising the fastest. There was a great chart. Again, this morning, where if you look at the cost since the tariffs started and the war, which again, it's like, well, was this intentional? Are we trying to increase certain costs to cause stress to a certain demographic so that they become increasingly dependent on the government? Because I used to say it's all the time, how does it got like Maduro get elected in Venezuela? You know, bad guy, bad policies, stealing money from the poor, I mean, bad, but he gets elected. He was like, oh, it's fake. No, no, I mean, actually with, with real election overseers, he actually got the votes. Can he pay people? And so if you promise people, oh, give me universal basic income or I'll give you free electricity. That's what Argentina does. I

24:20that's the dictator playbook. So if are we becoming a dictator state? I mean, is that what? So if you want to impoverish your people, increase the price of their gasoline, increase the price of their food, which by blocking the straighter hormones, that's what we're doing, right? You can't get oil through. So price oil goes up, price of gasoline goes up, diesel just hit an all-time high. So trucks can't move, trucks can't move, then your food becomes in short supply and so food prices go up. Oh, and you can't get fertilizer through the street. So the next row crops is going to be down. And and again, I don't, I don't think we're going to a polyliptic Mad Max. But it's getting to the point of just farcical. And you know, you've heard me talk about my, my Chapel Hill taco index, right? That's right. The people are very interested in knowing what the current price of 24 dollars, 24 dollars for a play to tacos and a water taxes and tip.

25:25Yeah. And I'm a decent tipper, but I'm not like tip and 50%. I mean, it's it's insane. I mean, they're good tacos. Don't get me wrong, but it's it's insane. That was the same cost mark as what I had for two tacos at the US Open, which by the way is the largest sporting event in New York, which is kind of an honor. It's a little bit of a weird count because over two weeks, and almost a million people go, but yeah, two tacos, 24 bucks, and I will say it's not worth it. I mean, it's not worth it, but in New York, add an event, supply and demand problem. Yeah. Okay. Fine. It's like $15 beers at a football game. I mean, $15. Now I know they're big now, but $15. But in Chapel Hill, North Carolina, I should not have to pay $24 for a play to tacos. It just it just should not be that. And I, I, the problem I have with it is I actually believe

26:30it's intentional. Right? I think there is this master plan to create this K-shaped economy, where a few people have a lot, and the most people don't. And here's it, right? The life of that depressed majority. It's still relatively speaking compared to the rest of the world. Still pretty damn good. Right. And so I, I don't want to, I don't want to trivialize the struggles. People trying to get by on, you know, I think we talked about this stat last week that I had no idea that there are 150 million jobs in America. 105 million of them make $30 an hour or less. That that that that that just shocked me. I mean, and that's pre-tax, right? So

27:3630 and it's just it's just it's just mind boggling. And how someone can afford to live on that. I don't want to trivialize that that is that is that is majorly hard. But it's different than $2 a day in, you know, parts of Africa or Southeast Asia or so. But but generally speaking, it doesn't have to be so oppressive. I don't believe. Like I think we can do things that reverse this trend. But I think the incentives are wrong. I think the incentives favor the people making the decisions. It's kind of like if you ask a group of people to vote on their own salary, they will vote for higher. If you ask people to vote on whether they should have to use the inferior healthcare system or a private healthcare system, they'll vote to

28:41use. So it's it's the system we created. And I say it's the worst system except for all the others. So we are where we are. Yeah. And I think also, you know, as we kind of zoom out in terms of you know, how this has impacted us over time. It's the first rate increase in was it almost three years. And obviously this goes against the president's hand picked lead here, which that's going to be a very interesting dichotomy to follow when you mentioned speaking of dictatorship and independence. Now this is obviously happening at a time, you know, weeks before the midterms, which a lot of these backdrops were very critical in highlighting kind of where the current, you know, temperature is where the where where we are as frogs in the boiling pot, you know, where we're going to jump out or or kind of remain inside. But you know, one thing I guess we're talking about change, we've seen something kind of happen a long time friend of the show Warren Buffett has finally marked step

29:42down as chairman and who came in his place. Well, as son, of course, it's a kind of come and run run the rest of the show. Now, the signals are very big change in where we're going for because there haven't been too many companies marked that have consistently been in the market in a given set of quarters, a given set of years, a given set of decades. And so of course, we're talking about, you know, probably the one and only Berkshire Hathaway, and I think that they become also a very important signaling in catalyst about where the economy and productivity is going. And so, you know, a lot of people are kind of questioning this move if it makes sense. It's a $1 trillion conglomerate that he's led for six decades. Right. And so now we're trying to figure out, I guess his name is Hathaway. So we have been the new Hathaway test, Mark. The Hathaway test for strength. Yeah, right. Right. Right. Right. Right. Right. Right. Right. Or the strength of the economy because Berkshire's consistently beat, you know, all all indexes. Yeah. Look, I don't know anything about,

30:46you know, the son, um, I look, I think he looks a lot like his dad. Yeah. That's one thing. Part of the news because the photos are all eerily simple. I know part of the genius of, not part of the genius of a Berkshire is its structure, right. I mean, they, they lobbied hard and people forget that, you know, Warren's dad was a very powerful congressman from Nebraska. And they were the last company granted this certain tax exemption and no other company has had that sense. Um, and when you think about it, you know, the genius of a Berkshire isn't with their own coke or Pepsi or Wells Fargo or Bank of America, you know, they've owned pieces of different companies, you know, off and on. The genius is they finance their acquisitions with negative cost capital. Like Mark, what are you talking about? Well, most of us, if we want to borrow money to buy something,

31:50we have to pay interest. Warren figured out, hey, insurance insurance, I get the money, I get to hold it and use it until that someone has a claim and maybe they won't ever have a claim. And so if I'm good at insurance underwriting, I can actually use that money for even longer. And so I get paid because I get to invest the money in the interim to hold that that's negative interest. So as a negative cost to capital, so he's levering and here's the genius, right? He doesn't buy speculative things. He buys companies that pay out meaningful shares either through dividends or buybacks so that his stake goes up. And so he goes, well, how does he beat the market? Because he is the market, lavered and tax-deferred in pay taxes. So it's a genius structure. And I'm not dismissing,

32:58where's all these such a great stockmaker. Maybe, maybe not. That's not the point. The point is he is genius. And what he created is one of the great structures. And this is crazy. No one's been able to replicate it. There have been a lot of people who are going to be the next Warren Buffett. Right? You know, none of them. In fact, it's actually a kiss to death. If you are labeled the next Warren Buffett, short that person's stock because it's bad. And you know, it's from Bill Ackman to Eddie Lampert to, I mean, there's been a whole bunch. It was was was done back for a while for her record year. And we saw our Kathy have a have a bit of a tumble. And there were some pretty interesting quotes in this first, first to sad quote, but I think it's one that we can all relate to. And this was what Buffett said in his closing moves. When balanced site hearing and memory are all on a persistently downward slope, you know, father time is in the neighborhood. And I think that's why people kind of react very emotionally to these moves because obviously the performance is what it is.

34:01But people remember Buffett probably most for his Buffett sakes, right? You know, you don't you don't want to get caught with their pants down at high tide. My personal favorites, we eat our own cooking. I mean, the list goes on and on. If you want to seem, you know, a point in a meeting, you quote, you quote, Buffett. And then what the market is kind of negatively reacting to. But maybe from, you know, we both have kids from a human standpoint, when asked about a successor, Mark, he said it last year very directly to the Wall Street Journal. He's getting it because he's my son. Full stop. Very very lucky. The fact that I trust all three of my children. And he's the second son. And, you know, how he's been there for 30 years. He's no spring chicken in his own right, Mark. He's 71. I know. I know. It's, well, you know, it's it's funny. There was a there was a skit on Saturday night live years ago. And you know, when when the Pope passes, you know, they do the on the concave. And then you can get the smoke, right? And so they were interviewing the two candidates for

35:02for the new Pope. And they're like, you know, and such and such, father, son, such, you know, is 126 years old. And father, son, such is 211. And they said, so what, what, what do you, what do you think, father, such and such, says, I refuse to let my contender or my, my opponent use my youth, no, my age against me, my youth, my youthful age against me. Yeah. Okay. 200. And so it turns out, particularly in investing, you get better with age, right? Because you've made a lot of mistakes. And if you survive to older age, and yeah, I talk about it all the time that, you know, Roy Newberger was my hero, right? He went in the office every day. She was 94, managed to know money till he was 101. Finally passed 106. So here's Warren beating that one in the office every day to

36:07his 96, just celebrated 96. He'll still manage his own money, you know, for a while. And then he will eventually pass at some point, as we all will. And, and so, but I think what's, what's interesting about that is, is there's the sad part of it, right? Which is, you know, the passing of the torsion and the, you know, the, the passage of time. Right. Look, we, you know, last Friday, when we recorded, it was the 25th anniversary of 911, 25 years long time. Correct. 25 years long time in it. It doesn't feel, don't feel like yesterday, but it doesn't feel like 25 years. Right. Time does go. And so, maximizing your time on, on this, this little rock that we sit on is important. And, and doing something that you love. That's, that's the other thing about Warren that I, that I really do admire. He found something he loved. And he just did it. And, it's funny. I, I probably told the story on the show before, but, you know,

37:12I wanted to challenge Warren to the charity bet. He did the charity bet for, with hedge funds, with Ted Sides. And that was coming to an end back in, in 2018. And I wanted, you know, to do one with, with Warren. And long story short, Ted said, hey, call this number after five o'clock, and he'll answer his phone. And, sure enough, I called it 510, and Warren Buffett answered his phone. As a, oh, my gosh, Mr. Buffett, I, I, I, I'm, I'm Mark Yusko, and I, I, I work at, more in Greek. And we have this digital asset fund. And, and we'd like to make a charity bet with you Bitcoin versus the S&P. And he's like, well, you know, that's very interesting. And I'm not really that familiar with it. And, and I'll, I'll, I'll take it, I'll take it under advisement. And I'll come back to you. And he sent me this nice, typewritten letter saying, you know, my, my partners have said that I'm too old

38:14to take another 10 year bet. Now, what's amazing is here we are eight years. I mean, I can't believe that was eight years ago. He clearly could have done it because he's still, I said, I said, Mr. Buffett, you're going to be chasing my sorry butt around the table, you know, well into a hundred. And so, but he didn't take the bet. No one would take our bet. And it's a good thing because, you know, Bitcoin was 3200. And now it's not. So, um, we, we would have won that bet by a lot. Right. So we'll, we'll, we'll give him a nice, nice shout out. Warren, you're always welcome on the show any time. You invited you many times. So hopefully now you have some more time for, for, for us and for many other person. Another person marked that we quote often on the show is, is, is Jensen, warm. And I kind of going back to a comment that you mentioned before on, on regulation and kind of how some, let's say other louder voices in the industry have had their, their,

39:15opinions about this. Denton said something. Obviously, very interesting. So a dream force. I'm not sure if you've been to these events, Mark, but they're those big, I know, I know. I, um, yeah, rock band, everything in San Francisco. It's, it's a scene. Um, I'm, I'm kind of curious, uh, also a little bit scared of what that actually is like on the ground. But that's a perfect spot for Jensen. That's like Jensen central type of energy. Yes. And so when he said there should, should really kind of stand in some contrast because he said that AI safety should be primarily treated as an engineering challenge rather than legal or regulatory one. And he's saying that existing laws and market forces can provide sufficient incentives for companies to avoid releasing unsafe products. Mark, you and I are students in history, students in the classics. This reminds me so much of the Renaissance. This is Thomas law versus Don Hobbes about our people, uh, ultimately universally good or universally bad in terms of, you know, their ultimate self, their inner self. So what he's

40:17saying here is that we have this lasai fair hands off type of treatment, uh, interestingly echoing, I don't know if you saw the, the clips where the Donald called in to the conference. And then Jensen put them on speaker phone and he said, the robots will be fine or something or the other along those lines. And so obviously this started in a start, start contrast about what some of the others had been saying for a while. They gates the buffet, not the buffets, the, uh, elons and of course the socks, uh, for for some time. So Jensen is the supplier to all of these customers. And he's saying kind of the opposite. Let, let the bulls roam. And so this is kind of interesting because obviously it benefits him to continue to sell to, to both sides here of the, of the arms dealer. Yeah. And he likes lots of like people who need arms. So if, if you say, well, there's only going to be two armies, right, open AI and anthropic and everybody else has to shut down. Jensen's business goes down and you know, he's already been restricted in what he can

41:24sell to, to China. Um, and look, at the end of the day, this is not new. They, they tried this with electricity. They, they tried to demonize electricity that was going to kill everybody. They actually did it with tele tele, telegraphy or tell, tell, the telegraph. This is, this is a crazy story. New York Times, 18, what Dunham, I remember what it was, 1890 or 19, a one or something, something like that. But there was not yet a single, connective copper wire around the whole world. Right. So we had telegraph within the United States. It was within Europe. We had some transatlantic cables, but we didn't have one that the bearing straight was still open. And so, but there wasn't one continuous link that you could have communication. And people were unhappy because if, if you live

42:30pre telegraph and you were the, the ruler of a certain area, you could rule by spreading disinformation or restricting access to information because people couldn't get, they couldn't know what was happening in Europe. So you could tell them what was happening in Europe. Oh, you would want to go to Europe because, you know, it's bad. And then when the telegraph came along, I'm like, that looks pretty good. I think on a vacation there. So long story short, is they made up a story. It's crazy that if you put a connection across the bearing straight and connected the copper wire all the way around the world, that the poles of the earth would demagnetize and we'd float off into space and collide with another planet. I mean, you can go read this. It's a real story in the New York Times. And it's like, it's insane, but there it's the same thing is happening now. And what,

43:34but back then you didn't have the aboded trace. Well, who funded that story and who wrote that story? It is, I mean, Sam Altman and what's his name? Dario Amadee. Or I don't say this about all that. They're just bad guys. And what they're trying to do is bad. And it's in the fact is I don't want them deciding anything. I mean, I have this problem right now. I needed to do some research on one of our portfolio companies is having to struggle with something. And I do some and I'm typing the question into, you know, one of the models. And I'm literally afraid that I'm getting not an actual answer, but a manipulated answer that they want me to know. Like that's no, that's bad. And I'm like,

44:37well, then where can I go? So I go to another model. Like, well, but if it's all trained on the same data, it's going to give the same answers. But then here's the crazy part. So someone did analysis that, you know, there's a reason, I mean, we didn't talk about this actually. Why you can't marry your cousin, right? No, it was not, not on the show notes. All right. So there's a reason that you can't marry your cousin because in the olden days, cousins did get married and come and families tried to keep it insular. It turns out genetic is bad that way. Same thing with these models. If you train these models on a certain data set, okay? Then it now you have new data that's being created by the models. That new data has the same genetic defects as the data set. And as they then train on each other's data, it perpetuates in

45:42the same way like marrying your cousin would perpetuate bad genes. And over time, we're going to get horrible, horrible information and horrible tools. And that's a frightening dystopian nightmareish outcome, you know, to go full sinister Saturday that I just don't want. I guess hard as it is to actually search the whole internet to find source information, then that's superior than having a model say, well, I'll give you what I think you want to know. And I told you this, like I did say this last week, which is in my wife's watching this show silo. I just started working Mark. I'm on season one. I'm right there with you. Yeah. And I was kind of watching while I was playing my game. And I found this new Monster Hunter game, which is unbelievable. And so I'm, and there's this thing where I said, the woman's talking to the algorithm

46:48and she thinks it's the computer responding. And it's just a guy talking behind that robotic voice. Right. And that's absolutely frightening. I don't want Sam, or Dario, or Elon, or anybody else giving me the answer. Right. I don't want that. And that's one thing that is interesting because you're seeing kind of this group of executives and maybe a large segment of the US population agreeing with China. That's also calling for regulation on AI, but for very different reasons, obviously. Their calls tend to be much more about control, about sort of government interest, in particular government information, as opposed to rogue acting agents that can be a safety risk. Although I think underneath it all, it's this idea of, of, you know, information and who can access that, who are the gatekeepers of that information. And then that results in different actions.

47:52So I think we, we must mark, go full sinister in the time that we have left and go and look at a chart that is a painful chart. It's a chart that can only be described exactly as the title suggests. It is the misery index. Yes. Yes. So it rises. A lot of what we were talking about earlier in the earlier part of the show, but also, you know, how kind of these these economic indexes come together to show a picture of where we are in this, in this current point of time. So as usual, I will project my screen mark and we'll get, we'll get your, your comments about, you know, what this, what this means for us. And all I set this up. I think that this is a good time as, as any to, to remind our listeners, we, we do this on, on many platforms. We've had a lot of success lately with, with some of that

48:52engagement on, on YouTube. So we'll continue to remind you guys. We can figure out if we've been de-fate, whether we're matching, of course, what the Bitcoin, Salt Game reveal looks like, as well as many other things over on on YouTube. We'll do a ton of, of fun things. So I will quickly give us the screen share and we will, we will die then and go from there. Well, while X is, is putting up the, the chart of the week, you know, if you want to know about, you know, the perils of restricted access to information, just go online and, and watch a couple speeches by Eric Voorhees. So portfolio company bar is Venice. AI, you know, Eric is an early Bitcoiner, big libertarian, and man, he is such an eloquent speaker on this topic. And it's

49:55such an important topic that information should be free and ubiquitous, freedom of speech, freedom of information. It shouldn't be locked behind paywalls. It shouldn't be determined by, you know, certain groups of people. But go listen to Eric speak about this because he, he's, he's the master. Excellent. Yes, yes, he is. It's just taking me an extra minute to get my misery index. I think it's, it's my body naturally reacting to not, well, it's not you. It's, it's, it's, it's the internet masters. They don't want, they don't want to, you know, they don't want you to show this because it's, it's, it's painting an ugly picture. That's right. Well, we try, we try not to, not to hide behind, you know, the, the illusions of what could be a rosy picture. And when, when the picture is rosy, Mark, we, we describe it as such. And when it's not, we also, you know, dive into, you know, why, why that is the way that, that it is. And we'll just probably mention to, to tend to make a brief,

51:00brief cut for the listeners to, to get it a little bit, a little bit faster here. Just give me one second while my computer catches up. You know, one other thing while, well, waiting for a chart of the week is, you know, I am taking full credit. So as we have been recording the show, so we're 53 minutes in. And I did the sock game reveal about 51 minutes ago. And I said I was wearing the Bitcoin moon, you know, the rocket ship. We have blasted off from about 78 K to 81 K, just, just in the 50 minutes where we've been sitting here chatting. So clearly wasn't just me, something else, you know, must have happened. Somebody must have said something. Maybe the Donald said, you know, the war's off. I don't know, but, yeah, oil prices are down a lot. So maybe he did say, you know, the war's off.

52:01But I, something happened. And, but I'm taking full credit because I wore the, the rocket ship sock game. As, as, as you should, Margaret, I think that so much happens just in this, in this Friday hour, that it's worth, that it's worth kind of jumping, jumping in there. Because we could take credit for, you know, causal things and end or observational things that will happen while, while we, while we record. But here is, here is the chart that I finally was able to pull up. What you know when this comes up at long last. Okay, so what the misery index is at long last is this combination that you know, Mark, of the sum of inflation and unemployment rates. And why I liked this one was, this shows kind of this 20-year period between 05 and 25 when we're mentioning, you know, the Donald by 11. And that was, that was 25 years.

53:04So I think what I liked was usually in economics there, we talk about this kind of period. We talked about Bitcoin cycles, but those are not the only cycles. Usually over a seven-year period, you can see both, you know, recessions and both booming points in the economy. And so here we have this, you know, very interesting sign curve that we're starting to react to. And while kind of in the middle of this and the economic or the beginning part was more of the economic crash in the late 2000s, you have very high unemployment at that time. And then now there is reportedly stable unemployment around 4%. You still have sort of similar jewelry outcomes, Mark. So I'll kick it over to you for your thoughts as we wrap up this sinister Saturday on the misery index. I mean, people point to this all the time and say, oh, because not that bad, you know, misery index, you know, seven and a half. And you know, seven and a half in some of the good times and in the mid-ten's. And in those early,

54:10you know, kind of 0-4 to 0-7 recovery period before the global financial crisis hit. And then it got got super ugly. And then we had the recession in 21 that wasn't called the recession, but it was recession. Obviously, there's an unemployment one up. The problem I have with all this is back to figures, lion-liars figure. If you tell people that we should only be unhappy if the combination of inflation plus unemployment is above 10, then all we got to do is keep that number below 10 and everything's good. Well, what does take unemployment for a second? So everybody says, well, unemployment is really low. Well, is it or is it just that now the way they calculated, every time someone turns 65, they take them out of the workforce. Well, it turns out 10,000 people turn 65 every single day in America. So every single day they're taking people out of the workforce. Well, I know a lot of 65

55:12year olds who are still working, right? Howie 71 still working. Warren, 26 up until yesterday, still working. So it's silly to say those people are not in the workforce, but that's just the way they do it. And so real unemployment is probably meaningfully higher than what is stated. And then we know the inflation problem, which is if you're using CPI, if we calculated it the way we did 30 years ago, it'd be closer to like 11 or 12%. If we calculated it the way we did 10, 15 years ago, it'd be closer to 8, 9%, but because we don't count food and energy and we use something called owners equivalent rent, which does say is the rent you pay yourself to rent your house from yourself. I'm like, well, that would never go up. I would never increase my own rent. So it's always flat. And so you can artificially manipulate the numbers. And it's like the birth death ratio or the

56:16BLS just makes up jobs numbers. And then they restate it later like last year a million jobs just vanished after the fact. But none of her goes back and looks at the adjustments. And these numbers, the misery indexes, all calculated with the current numbers. So if you adjusted last year's number to reflect the fact that those million jobs didn't actually exist, that number would be closer to 10. So I'm always intrigued by any indicator, like we have the Buffett indicator. And the Buffett indicator is the ratio of market cap to GDP. And if you think about it, that ratio should be about 0.7 because it cost money to make money. There is a cost to running businesses. And so all of the GDP cannot be converted into market cap of equity. But you could say, well, companies are more efficient today and they're more international. And so maybe it's supposed to be closer to 100.

57:20Okay, I don't agree with that. You could say that. But at 226, that's just stupid. But people just get saying, oh, no, no, the world's changed. And we were measuring productivity wrong. And we're measuring profits wrong. No, it's just if you torture the data long enough, it will confess. And if you ignore things long enough, they won't bother you as long as you can control things like money supply. Like if you can just print new money to pay off the debt or give Scott Bessent money to buy the bonds that no one else wants, sure. I mean, Japan's been doing that for years. And it works until it doesn't. And it's just a confidence game or con game. And it's literally just hey, if you trust me, it'll all be fine. And maybe mostly it will. But the risk is, I think if you

58:24ask the average American, a lot would say the misery level is higher. If you ask the top 10 percent, no, miserable, not zero. Ask the people in the middle, they'd say the misery feels a little higher. Yeah, I thought I was really interesting, Mark. And thanks for bearing with us, what we're getting that up is that in research for that chart, depending on when you go back, I think I found one that went back into post post wartime and kind of through this point. The real kind of takeaway that I found was that things were very miserable in the 70s as it relates to financials. It's like, oh my goodness, if you want to kind of take that period in itself, that could be a digital current series by itself unpacking the misery there and lessons learned. Although as miserable as it was from an economics perspective, God, it was awesome. There are some fun. Growing up in the 70s, other than the clothes, like I did a webinar last night, my around the world. And I used game shows from

59:28the 70s as well as games. The pictures from the dating game. Oh my God. I mean, the clothes that we all wore in the 70s, I pull up, I always tell people, pull up the original picture of the Microsoft 11. Those are some ugly clothes. Now they're all multi billionaires. I should not make fun of them, but those are some ugly clothes. But the 70s were awesome, but they were miserable by that measure. Well, Mark, I think somehow we managed to do it. We went all the way sinister, but I try to pull us into the darkest economic time. And they're still light at the end of the tunnel, which means we can find some now. So we can all we can. We can all do it. We can't like that. I'm not sure who Notre Dame. Who's Notre Dame paint? I'm actually, I'm actually, I'm actually doing day trip. It's a night game. So, you know, my son's playing high school football. So I can't go on Friday. Like I normally do to games. So, you know, the morning games, I can't see. But there's a night game tomorrow. So we're going to,

1:00:29you know, jump out tomorrow morning and do 24 hour dash to South Bend and watch the Irish play Michigan State. Excellent. We'll enjoy the victory because Michigan State is in in a new direction with Pat Fitzgerald in his second lease on life over over at a little brother. We are placing you tap, which hopefully will be a nice little tune up before Big Ten Play. Best part of the year mark is in the fall. We want to wish all of our listeners a great weekend. And for the long weekend, for those that observe have have a good set of time catching up on digital currents. And as always, stay current. Thank you for joining us this week on digital currents. Check out our links to our website and social media in the show's description box. Please make sure to subscribe if you like what you hear. And remember, stay current.

1:01:29This podcast should not be construed as investment advice nor solicitation for the celebrity security advisor or other service. Investment themes and ideas discussed may be owned by phones managed by the hosting podcast guests. Any conflicts at the time of production have been mentioned by the host but are subject to change. Listen to Michigan's solar personal financial advisors before making any investment decisions.