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Thought of going to Tolkien on that one. And what is the elevator pitch for Scripto? The elevator pitch for Scripto is your script program should be more than a script program. It should be production software that communicates the information of the script to every department in the form that they need it and can output through the API into any workflow system, including other applications that have developed over the last 20 years in our business. But the one that hasn't changed is the source material. The one truth of everything, which is the script, whether you're doing a presentational TV show like mine, or doing a narrative, or doing awards presentation, or whether you're creating a video game, that data that is stored in every keystroke should be going all the way down the production line. So there's no doubt what the one truth is we're working on today. What is the rope we're pulling on, and that's why we created it, is to be able to communicate between departments. How do you guys work together? You clearly have Steven, you clearly have a very clear vision for what you're building. But what is the actual interaction day to day on the project between me and Josh? Yeah, well, all of the shows who use it, I mean, the easiest way to do that is tell you how it came about, because there just wasn't something that did this. And one of the reasons I have such a clear view of what this thing needs to be is that it was built for my needs initially is that we produced, depending on the season, between 200 and 160 shows a year. And to be able to not have to go back on decisions as long as they were communicated properly down the chain of Command. Over 200 people working on the show, we wanted something that everybody could look at at once and everybody, based upon their permissions, could actually add to at once if they wanted to. And. And so we wouldn't have any more $800 goats. Our $800 goat is the origin of the entire thing. We wrote a sketch that involved a goat. Been there. We cut the damn goat. We cut the Damn goat at 2 o' clock and at 3 o' clock the goat shows up. And I said, we cut the goat. And they said, yeah, but the program didn't allow anyone else to know you cut the goat until all the elements had been finished. And one of the elements was the goat. And we didn't. By the time we got to the goat, the goat was here. I mean, they stick a hose up its butt and wash it out. So it won't, you Know, mess up your studio. The goat had been through a lot, okay? And, I mean, just the moral cost of what they had to do to that goat for us to use it. And it cost us 800 bucks. And we started this back on basic cable. It was a lot of money. And so it's still a lot of money for Hollywood these days. But so we said no more $800 goats. And so how do we communicate on the needs of the show? My show is still, you know, up until the very end, the Daily Show, John Oliver, snl, the other shows that are using it. We got about a dozen shows going. Each one of those has their own needs that we have. We are. We tailor. And they're all different kinds. There's video game production, there's narrative production, and there's what we call presentational, like, right down the pipe, like you guys do production. All of those feedback into our development. Talk about the intensity of show business, because I think we understand it in our sort of limited operation, right? It's like it's all about these, like, really tight timelines and coordinating. And you get. I mean, it really does feel like we felt from very early on when it was just John and myself and Ben on our team, and then as we started adding people, it felt like you were on a sports team where you showed up and you can feel when somebody is not at their playing at their best level, right? And it's like that daily repetition. And in our case, the practices are happening all live, so there's no practice. There's just like live gameplay. But, yeah, talk about it from. From your point of view and maybe tie that into how, you know, how it's influencing your work on scripto. Well, and, Josh, this will be a good one for you to jump in on here. Once I get my show biz out of the way and into the biz biz is I. You know, people would say, oh, what do you love about your show? And I mean, obviously I love the people I work with, but 40. And I love doing it for the audience. But 49% of what I loved was the process. Could we get the process right? Cause it's no good if you can do a good show, but it absolutely kills you and everybody on the staff because you gotta do another one tomorrow. This is a marathon, not a sprint. And you had to remember that. And basically, the longevity of your work, the sustainability of your work is based upon how well you communicate what today. Today's intention is to everybody and what everyone's role is. Clearly, people Only do what you ask of them. But if you, if you lead with some sense of vision of whatever you're supposed to do today, well, then that makes, that makes the possibility of the actual content gets better. I mean, I know that's the goal is the content is good, but you can do that once in a terrible way or you can do that every day with a process that is really smooth. And that's really why we develop scripto, so that there's an intuitive way that everybody knows what their role is today. And Josh, would you mind talking about how we've expanded that now? Yeah, I mean, I think the keyword for us is collaboration. Right. John, Jordy, nice to meet both of you. Great to have you on the show. I hope you didn't have the same goat problems exactly. No, I've looked into getting various live animals. We wanted a llama. Real animals on the static box. It's a challenge GoPro could lead. Could lead to like a rabdo situation, I guess. I just want you to know that we literally had a plaque on the wall of the show that said anything that could eat the host is going to be expensive. Because they had. You had to put up chain link fences between you and a mountain lion. We wanted to write a sketch of the mountain lion. Like, that's a $10,000 fence. I'm like, what? He goes, it could eat you. I'm like, well, yeah. So, you know, I was. I'm not a founder. Stephen and the co founder, Rob Dubin recruited me to join because I've got a 25 year background in production technology, including at the sort of established screenwriting software company some years back. And what all the other tools out there lack is a deep level of collaboration and really tying everybody together. So you guys have the benefit of being in studio and so your team's always there all the time. But that's not. It's less and less common for scripted content. Sure. Right. And so one of the things since I've been brought aboard two years ago is really to build out both build up the team and build out the platform so we can address the needs of not just where we came from, which we're dominant in the variety space. Right. Like what, what are we talking about, Steven? We're batting.800 this year for the five variety show. Four of the five. Four of the five. Yeah, we know, we know. We bought a lot of Emmy billboards. And you guys, we have, we have one variable we have you guys beat on, which is number of episodes a year. Every. Every other variable. Reach and Emmy. Yeah, we're more of a quantity over quality here.

What are you doing in New Zealand? I'm working on a Lord of the Rings movie. There you go. How did you get into Lord of the Rings? A friend of mine gave it to me in 12th grade and I was a sad boy. Why do you think it stands out to you so much? Like you're known as a Lord of the Rings fanatic? Why is it not what separates it from a Game of Thrones, another series? Hey, I got nothing against Game of Thrones. I love those books. George R.R. martin is a friend, but I don't know. I love the implied history. I love its roots in the fact that Tolkien wrote the books because he really liked making languages and so he made up Elvish languages and he thought, oh, real culture should have stories that the languages tell. So then he started telling the stories that the language would have been used to write. And so it's such a different point of view. To come into storytelling is through creating an entire culture, is what you would call it. The Germans would call it a. A total work of art. And there's any question you can ask about the Lord of the Rings, and Tolkien answered it except one, and that's who is Tom Bombadil anyway? That's just a teaser. Is what we call in business. What do you think about startups adopting various words from the whole universe? Is Scripto Elvish and Andoril and mythical. Did you think of naming Scripto after something from Lord of the Rings? No. We named Scripto Scripto because it was created by two comedy writers and we thought of what's the dumbest possible name for our program? Well, we're not gonna come up with the best name, but the dumbest name we could do. So that's how we.

Tokens now. That's right. It's very similar. It's very similar. They're saying that Muse has a new killer feature. What is that? Which is watching short form video content for you. So Cowboy says summarize the reels she sent recently and Muse goes, here's what she sent over the past week. Design and furniture. A designer ranking famous sofas by comfort. And for that friend who sends you too many reels. You now have superintelligence, personal superintelligence at your disposal. Yeah. Gianni says wife sends me 100 reels a day. Thank you so much. You've saved my marriage. Are people upset about this ethically? Is this like what making the fly watch reels? You're making Mew Spark watch reels and that's unethical. Is there a model welfare view on this issue? Do you think the model would rather summarize your email than watch reels about sofa designers? Maybe my emails. Pretty interesting stuff in there. Like invites to the co founder and CEO of Axios to come on this show. He's with us in the.

He's got to be up in San Francisco. Apparently, China stole the American recipe for blueberries. Did you see this? There's nothing they distilled us. A distillation attack. Basically, Driscolls gave China its blueberries. Then China swiped the secret to growing them. California growers expansion into China ignited local competition and widespread intellectual property. Why are you hitting the gong? That's for Dylan. Oh, that's for Dylan. Okay, gong for Dylan, not gong for blueberry. Intellectual property theft. China. They got the one simple trick to improve their berries. Yes, they stole the secret. So about 15 years ago, executives from US fruit grower Driscolls went to China with a goal of turning blueberries into that country's next big food trend. The California dispatched one of its experts to scout farmland in southwestern China's Yunnan province, contracted with global blueberry genetics firms to lock up the best varieties, and brought in high tech growing technologies to mass produce a fruit few Chinese people ate. Then by 2020, it was cranking out thousands of tons of blueberries for Chinese markets. Then it became the latest US company to encounter the buzzsaw of Chinese competition. As tales of blueberry fortune spread chines entrepreneurs rapidly built farms of their own. They adopted high tech growing techniques similar to Driscoll's, even allegedly copying greenhouse designs used by farmers growing for Driscolls. They also swiped the company's patent protected varieties. A Chinese court has ruled state banks bed the rush, offering a special category of loans for blueberry grow leverage. The blueberry economy over there is booming. Production in China has shot up 25 fold since 2010. In 2021, China took the United States as the world's top blueberry grower. And by 2025 its annual production was double what it was in the United States. For Chinese consumers, it was a blueberry bonanza. This is the Wall Street Journal writing. I love it. Blueberry bonanza prices dropped so low, often $3 or less for a nine ounce container, that state media trumpeted an era of blueberry freedom in which even ordinary people can gorge on a once exotic fruit. For just about everyone in the blueberry business though, it has been a knife fight plagued by intellectual property theft and tanking profits. It's a pattern seen across many industries in China, especially as economic growth slows. Companies in search of new sources of profit jump into promising emerging businesses. If you're in AI pivot to blueberries. That's what happened. Using inexpensive state backed financing to scale up and sometimes play fast and loose intellectual property regulations. This quickly causes gluts crashing prices. Such cycles of competition are known in China as involution, and they have transformed the country from a golden goose into a major headache for companies including Nike and Starbucks. Driscolls has fired, filed more than 20 lawsuits against companies in China, some of which it has said took its proprietary blueberry plants, propagated them and sold them to rival growers. Some Western fruit companies worked with private investigators who went undercover at plant nurseries posing as traders or farmers. Dream job. Dream job. Oh, me, I'm not here from an American company. I am loyal. A spy movie. But you're an undercover just tasting the blueberries and you're like, you are doing. This is American intellectual property. Blueberry. Blueberry special ops. Yeah. Gold Rock's calling it the fruit war. No, it is, it is crazy. It's like, I mean, you would like when you're, when you're discussing China, you think about the geopolitical implications of powerful AI defense technology, supply chain dependency, critical minerals, critical industries. But it can, but it's often easy to think like, oh, well, it's, it's blueberries or it's shoes. Like, it's not, it's not critical to the national interest, but it can still be difficult and detrimental ultimately, because once, you know, this happens and the intellectual property gets taken and the infrastructure gets built up, then they can become a net exporter and then they're competing with you. And so you can sort of be the victim of your own creation if you're not careful. And so very, very difficult for Western companies to properly. Yeah, it's a fascinating IP story because your IP is in large part a plant that can just be taken out of the ground and planted somewhere else and then propagated. And it's like, do you own a living? Like, can you, can you, can you. Those your tokens or are they my tokens now? That's right. It's very similar. It's very similar. They're. They're saying that.

Maybe a full gaming setup. What did Matthew McConaughey do at the US Open? He just looked excited. He's playing a character. 26,000 likes on this. It looks totally normal to me. I don't know. I don't get it. You don't think this is absolute cinema? I think it's. No, I think it's absolute cinema. A lot of people are saying is the most performative thing of all time, but I think it's great that he's always in character. No, he's not always. He just. He is who he is when he's on screen. And so when you see him in real life, you're like, he became the character. He's playing a character, but he's just being himself and he's on screen. It's the opposite. You have backwards. Anyway, let me tell you about consoles.

Don't just build AI, own the data platform that powers it. After his forthcoming IPO, Aliko Dangote estimated wealth is expected to be around $58 billion putting him above Ken Griffin, Lakshmi Mittal and Jack Ma Refinery IPO. Refinery IPO what do they do? The 69 year old tycoon's net worth is projected to be as worth as much as 58. Tycoon mentioned this is what it takes to be a tycoon these days. The petroleum refinery and pet petrochemicals company that would catapult him past US hedge fund tycoon Ken Griffin and technology billionaire Eric Schmidt. You better not bid for a new T. Rex skeleton against this guy. He's expected to raise about 1.6 billion from the IPO opening September 14. That will raise the value of the business. That will value the business at almost 50 billion. It's part of plans for an Africa wide empire that will double capacity of his Nigerian refinery to create one of the world's biggest and building a processing plant in Kenya to extend his reach from the Atlantic to the Indian oceans. The offering demonstrates that African entrepreneurs, primarily backed by local capital, can build and run world scale operations and could catalyze a new wave of investment development on the continent. His plant reached full capacity this year just as the war in Iran kicked off, shielding Nigeria from supply issues that other countries faced. It also made Africa's most populous nation a net refined fuel exporter for the first time. Time Pretty good stuff. Good day to be a tycoon. What's going on with John Turnis? John Ternus the Terminator.

Things their own way, so makes a lot of sense. Are you going to buy Palmer Lockey's new shirt? He's getting out of the Hawaiian T shirt game into the blue button down shirt. He calls it the Ballmer. It comes with sweat stains already applied. I was really trying to understand what was this like, he's reacting to the news of Ballmer and the Clippers. And so he made this as a joke. Like, why is he like, this is a funny video but it resurfaces? Or is. Or is he. Is this a nod to clipping becoming a new kind of type of role on the Internet? Clipping? What do you mean, clipping Clippers, you know, people that clip podcasts and content. I don't know. No, I'm joking. No, I think he's just having fun. I originally was reading into it being like, wait, does Palmer have some beef with Steve? Yeah, exactly, exactly. Is he making fun of him? I think he's just like, it's a fun, fun, fun moment in technology history. Let me tell you about Shopify really quickly. Shopify is kind of.

Honestly. Anyway, you talked about Morgan and Morgan. Let's dig into this a little bit. The nation's largest personal injury firm said Monday it's committing $1 billion to artificial intelligence over the next decade. Okay, it's not all in one go. Plans to sell its proprietary AI product to other law firms next year. They will build a tool for sale. So are they actually buying a data center? Let's find out. The announcement positions the Orlando, Florida based firm as both a legal pract and a potential technology vendor at a moment when the broader industry is racing to build or buy AI products. John Morgan, the firm's founder, said the endeavor would be self funded, although he has expressed interest in exploring outside investment. The Firm has spent $300 million on tech and AI since 2021 building an in house platform called MX2 using Frontier models as a base. Back in 2021. I'm so okay the time I must be like they were investing in technology broadly and then they adopted Frontier Models. The firm has a chief Transformation officer who has been working on this. The financial investment covers the firm's Brooklyn, New York based production and tech operation, including personnel, platforms and software. The firm will make MX2 available to firms by invitation only starting in late 2027. That is a long way away in AI land. Who knows what's capable by then? Kirkland and Ellis, the world's largest firm by revenue, committed 500 million to build a proprietary AI platform in May, Latham and Walken said last week it purchased its own Nvidia GPU servers and leased private space over the past three years. Though the firm declined to disclose what it spent. Goodwin Proctor said it had set aside 25 million annually for AI. MX2 runs what are called agentic workflows, meaning the system acts on its own to pull medical records, retrieve police reports, generate demand letters, and track case patterns across the firm's national caseload without a lawyer initiating each step, according to the firm's announcements, really does make so much sense for personal injury. Like there's so many just transcribe the call coming in, rank it lead scoring. Like there's a lot of very basic work that needs to be done just pulling police reports, generating letters. It makes a lot of sense for this. I wonder how much benefit they will get out of their their own model or how much they will be leaning on other models that just have a lot of the capability built in. But clearly they'll want to do things their own way. So makes a lot of sense.

It has Claude on the front with the question, how dangerous are you? Interesting. And, yeah. So full, full, full, full push on this narrative. Yep, one of the most brilliant. You're talking about the narrative to not give Jensen credit in Time magazine for being influential in AI well, that's a whole other story because that was last month's time cover was 100 of the most influential voices in AI Jensen didn't make the cut. No, but I was talking about the campaign around this moment. AI safety, it is really coming from every possible angle. You have everything from Time magazine to Joe Rogan to Tucker Carlson to every major publication to Kamala Harris to Barack Obama to Bill Gates is really, really, really coming from every angle. Ends up in Time. Today, Jordan Shaktal is saying two of the reporters on the byline for this cover are funded by the Tarbell center, an AI doomer org, he says, controlled by Dustin Moskowitz. Moskovitz. Sorry. Tarbell gives journalists large grants, and these are Jordan's words to insert AI doomer stories into prominent outlets. Time did not disclose the affiliation. So there's a lot bubbling up on the Tarbell center recently. They've been very public about what they're doing for years now. They give cash to journalists. And these journalists are, you know, at Time magazine, mit, Bloomberg, the Guardian, a bunch of your favorite substacks have taken money from Dustin's organization. And, yeah, I expect to see a lot more coverage on Tarbell.

Local concerns proliferated about the effects of AI data centers on water, electricity, the environment and noise. Then, in a widely reported incident, an OpenAI test went awry. A swarm of AI agents bypassed internal limits, created their own message board and cooperated to hack another AI firm. As a recent journal article made clear, this wasn't the only such event. Last week, mounting fears within the largest AI firms at the frontier of AI development burst into public views. On Tuesday, Jacob Coxon resigned from Anthropic with a warning, viewed by millions, that AI will soon be able to hack any system and mobilize real power and resources for malign purposes. On Thursday, anthropic released a 154 page report on the misuse of Claude with an especially chilling chapter on possible biological weapons research. There was another chilling chapter on what's going on in the Middle East. It's the meme both sides are using CLAUDE to fight each other. Really, really crazy stuff. I think this was mostly through like routers and third parties and all sorts of stuff, but it's clearly a hairy mess to fight diffusion attacks or distillation attacks, but also just all sorts of nefarious use. It's a true game of whack a mole. And so full employment for alignment researchers at the labs. On Saturday, Anthropic CEO Dario Amade published an essay urging the industry to, quote, slow the pace at which we improve the capabilities of AI models to give risk mitigation strategies a chance to catch up up. He proposed a three step plan to accelerate this process. We talked about that yesterday. The third point will surprise you. First, each company of the Frontier Development will give employee like access to independent evaluators. Second, US companies should promote the cooperation among democracies to mitigate risks while preserving their technological edge over China. Third, the US should attempt to negotiate limits on AI risks with China, analogous to nuclear arms control treaties of the Cold War era. Now there was an interesting post that hit the timeline. Was that actually from a Deep SEQ employee? Do we know that? But a Deep SEQ employee basically was like, I don't like Dario. He compared giving Dario AGI to like giving Hitler the bomb. It was a very, very hardcore message from a Deep SEQ employee. But of course it's like translated through seven layers of abstraction. I had no idea it was real. Yeah, it could just be some psyop. But did you look into it at all, Tyler? Do you know? Yeah, I have no idea if it was really there. Yeah, but I mean it seemed like reasonably reputable people. I follow were talking about it. Yeah, yeah. It's really, really hard to get, to get a feel on the vibe in China. It's like I think the, I think the Compute gap is 10x America has 10 times the compute of China. So you would, you would imagine that if, if both countries get to AGI or ASI and it's aligned with the country, then even if China attacks with the super Cyber weapon, our AGI can defend better because we have 10 times the compute. I think that's sort of how it would work out, but it is difficult. And then there is this weird scenario where it's like if you have an aligned super intelligence and your enemy has a misaligned superintelligence, they get turned into paperclips. But the paperclipper can't come over into your territory because you have the paperclip defender, which is turning paperclips into useful stuff like cars and medicines. Microphones. Microphones. I suppose, I don't know. It's all, it's all very, very sci fi. But I mean one of the, one of the wildest moments of the last 24 hours since we wrapped the show was the Department of War is saying effective altruists in shambles. That's a very online. After the President said I am the hoax buster and right now I'm breaking another host that AI is going to take over, consume and destroy the world and that robots will be marching into our cities and getting rid of us all. This is even wilder than the Russia, Russia, Russia hoax or the global warming scam. Thank you for your attention to this matter. Yeah, never, never expected to see the Department of War going to war with the EAs on the timeline. But here we are, here we are extremely, extremely online. Just time, but also administration. AI developers face a collective action problem that only an agreement to coordinate activities can overcome. There was some news around this where OpenAI believes that they don't need a waiver to coordinate on safety policy with other companies. And I was trying to research how seatbelts got put in cars because it's sort of analogous. It's sort of analogous, right? It's like the seatbelt clearly is a safety feature in a car and if one company does it, it's a cost, maybe it's a benefit, maybe it sells more cars because people want that. But it'd be really great if all the kind of, if all the cars had seat belts. And then the healthcare system and the hospital systems want people wearing seatbelts so they don't have to deal with as many broken bones from car accidents. Right. So I think Volvo, John Morgan would like a word. Yeah, probably so. Not spending a billion dollars on AI so that people stop getting into car accidents. Yeah. So Volvo put seatbelts in their cars first as an option. It wasn't selling that well. There was some lobbying to get seatbelts in cars, but a lot of automakers actually fought it and were like, no, we don't want to do this. And a lot of consumers were like, we don't want this. We don't want to have to wear these. No way. Oh yeah. No way. Oh yeah. And yesterday we heard, we heard Mitchell talking about like it's outrageous that you can't get a four point harness in a car streetcar in Europe. You can, you can. It's like he wants more. It's like I want to be able to get a roll cage. No, but it's. You should. So wild that, that you had millions of people driving cars and car accidents happening and yet people were still saying, no, I don't want, I don't want more safety. I don't want to have to put this thing over my lap. I don't want to do that every time. I got to put them over every time. Well, you. Do you remember the era of automatic seat belts? Did you ever see cars that had those? No, this was like a late 80s, early 90s phenomenon. But if you got into like a Saturn or something or you know, it would, you would step into the car and then it had a part of the seatbelt was on a mechanical track that would, the seat belt would be pushed forward, you would step in and then the seatbelt, once you closed the door and sat down, it would go and move into place so that you didn't have to buckle it like that. Ferraris will hand you the seatbelt with the little push shout so you don't have to reach back. That's such a half measure. Either put it on me entirely or don't I guess. But even the automatic seatbelt really died off. It's not even a luxury feature on the most premium cars like a Rolls Royce won't have that because I think it was just like annoying at the end of the day. Never really caught fire. But the odd thing about seatbelts in cars is that I don't believe they had a dramatic effect on road like car based fatalities and injuries because people just started driving faster. But there was an efficiency gain from it obviously because people are driving farther, commuting to work farther and then also spending Less time in the car if they're going the same distance, but I don't know. Big seatbelt show today. The deep dive on seatbelt you've been asking for. So what does the Wall Street Journal have to say about this? AI developers face a collective action problem that only an agreement to coordinate activities can overcome. The question is whether voluntary agreements can work without government involvement. The US government must assure AI companies that voluntary coordination wouldn't run afoul of antitrust laws and regulations. Mr. Ahmade argues for an additional step, sensible and targeted AI regulation that focuses on corporate transparency and independent third party evaluation which can't succeed without evaluators embedded within firms and enjoying unfettered access to all relevant information. In a better world, support for assuring AI safety would be bipartisan. Instead, House Speaker Mike Johnson has made clear his reluctance to proceed while president has denounced what he terms a sick conspiracy going on against AI in data centers. Underlying this resistance is a legitimate concern. The US is in an AI race with China that it can't afford to lose. All private sector AI leaders share that concern. Mr. Amadei said he agrees with Treasury Secretary Scott Besant that, quote, a Chinese lead in AI would pose grave danger for the United States and the world and he wants to keep democracies AI lead over autocracies as large as possible. He opposes the sale of powerful AI chips and semiconductor equipment to China and supports security measures in AI companies to prevent Chinese theft of key data. The question is whether we can diminish the risks of unchecked AI development without endangering our lead over China. In a technology that is vital to economic growth and military prowess, the tech industry believes it can. The Trump administration says we can't. What are you laughing at? Matt in the chat says, did you guys know alignment can be solved by having a strong president? I'm so relieved. Potentially, maybe that's just what we need. AI safety experts hate this one simple trick. Yeah, I think I read this in a less wrong thread. 15 years ago people were saying it's going to be bad unless we have a strong president. Yeah, really, really. Breaks presidential guardrails. The paperclip or thought experiment wide open. Bostrom, he did a whole chapter on this. Candidates have gotten the message even if some national leaders haven't. Mike Rogers, former chairman of the House Intelligence Committee and Republican nominee for Michigan's open Senate seat, says he supports slowing AI development, would work to address the technology through legislation. The people aren't always right, but in democracy, their views demand at least a respectful hearing. If the Trump administration won't initiate this discussion, Congress should as soon as possible. So yes, even you know, Trump is not hugely popular right now. I think his favorability rate is like 36% or something like that. The war took a lot off of that. And so there is like a groundswell and you're already seeing this with the backlash to data centers. And it feels like both on the right and the left, data center backlash has been pushing up against the Trump administration. And so if the, if, if everyone who's against data centers can easily port over to this exact pro AI safety AI slowdown, which is highly correlated, even though there's a world where you don't slow down the build out, you just slow down training and capability development. But I think that's maybe a little bit too nuanced for the political discussion. And so you could wind up in a situation where all of those anti data center people, both on the left and the right, come over and join a coalition pro AI slowdown and that becomes national conversation. And there is a lot of pressure on it. But of course they'll be going up against the actual executive branch, so that will be complicated. Anyway. What else.

The top thing on my mind today is figuring out what's going on with interest rates. The high interest rate phenomenon. We've had zero interest rate policy, zirp. The ZIRP era ended. Now we're in the hirp. I don't think we should say that one. That doesn't sound very good. But the high interest rate policies, the high interest rate phenomenons are upon us. What's going on? It's very obvious what's going on. Take one look at the chart. It's the war. You can see the US attacks, attacks Iran in the beginning of 2026. Interest rates are low. We should pull up this chart from the Wall Street Journal. It gets more dramatic every time they show this chart. This one right here. Jordy, take a wild guess what's driving interest rates. It is of course the war, which starts there and then boom up into the right from then on. But there's other questions about what's going on. Is AI. Is the build out having an effect here? What else is going on within this data? Why is it happening? And does war always lead to higher interest rates? That was something that was on my mind, so I wanted to get into that. It's obviously bad for everyone. It's bad for the US government because they have to refinance debt and pay interest. And that puts stress on all the other things that the government wants to do with money from health care, pensions, even funding the military. Like if they're paying interest, they're not paying for other stuff that's not good. Bad for the prospects of the American homebuyer. Interest rates are now above 7%, getting very unaffordable for lots of people. And also a lot of mortgages are rolling over. So the era of like the 3% mortgage, less and less people still have those because people are either moving on to floating rate mortgages or moving out of interest. Interest locked periods. There's a whole bunch of dynamics there. And it's even bad for AI companies. So everyone hates this because the AI companies, of course, even though they have an ungodly amount of money, they need to raise more money to finance build out and finance data centers and finance expansion. And so not good for anyone. How do you get out of it? Maybe end the war. But there are other things at work. This war is unique. I mean it's not that war causes interest rates to go up. It's war causes energy shortages which causes inflation. And inflation bleeds into everything. So pain at the pump turns into I need a raise for this. I need to raise prices on food, I need to raise prices on all sorts of things. Energy is, of course, a key input into everything. Why I am so against pacing the energy rollout. Like every year for the past 10 years, they, the. I forget what it is, IEA or something, there's a body that forecasts energy build out specifically in solar, and they've gotten it wrong. Every year for 10 years, they've underestimated the growth of solar. You've seen this chart, International energy agencies. Is that it? Yeah, iea, yeah. So every year they'll be like, okay, we had a great year last year, we're going parabolic. We're up and to the right, but clearly we're not going to build more solar. People are going to get sick of this stuff. And then the next year we build even more, more solar than we predicted. And so you can look at this chart of the, of the predictions and then how we blow them out. So that is something that we want to clearly keep working on because it will bring down inflation, bring down costs of basically everything. It will be very deflationary, and it'll allow us to do all sorts of new things. But this, this war is specifically driving energy prices because of course, oil transported through the Strait of Hormuz is a key pressure point for control of the conflict. And that drives up inflation, which is, which hurts the value of treasury bonds, causing yields to spike. And so that's why they're above 5%. It's the first time, I believe, since 2007 that they've been this high. So not good. It doesn't always go this way, though. I wanted to understand, does war, or war, even in just war in the Middle east, does that always cause interest rates to spike? It makes sense. It's an expensive thing. It's a capital suck. It's depressing in many ways. There's a whole bunch of economic reasons why you could think that war would cause interest rates to spike. But does that always happen? So during Gulf War one, which I didn't realize this, but we have a son of a veteran on our team, so thank you for his service. But during Gulf War one, there was a textbook oil shock. So Iraq invaded Kuwait on August 2nd of 1990. The US military buildup began basically immediately, and the Desert storm offensive started January 17, 1991. So about six months between the initial conflict over there, the US gets involved. What happens when the US gets involved? Interest rates spiked. And interest rates were already 8.29%, already pretty high, but they spiked to over 9%, 9.05% in less than a month because everyone's like, oh well, there's going to be less oil. Kuwait generates a lot of oil. Oil is going to be knocked offline, that that's going to flow through the economy the same way. Energy prices, inflation, etc. The usual playbook. But six months later they were lower than the start of the war, sitting at 8.03%. There were some other things going on in the economy, obviously, but basically like that war did not last so long. It had a much more tight ending and so there was less pressure on interest rates. The Afghanistan war played out in reverse. So immediately before the invasion, the 10 year was at 4.52%, yields fell to 4.22%. You could imagine that there's some sort of like optimism around, like, oh, this will be a quick operation, this won't be a quagmire. Of course, the opposite happened. So six months into the war, the 10 year hit 5.25%, up significantly, up basically three quarters of a percent since the start of the offensive. And so the end result of that is that now Warsh, the new Fed chairman, is in a tough spot. The markets expect a rate hike to bring inflation down. So the August consumer price inflation was at 3.4%. The Fed actually prefers a different inflation measure called the PC Price Index, that was at 3.7%. And so even by the Fed's preferred measure, inflation is running too hot. Again, they're targeting something like 2% and they're up at 3.7%. And then also you get into this like, oh, well, like maybe it's just, maybe the inflation's just related to food and energy, because energy goes into food, you're trucking all the food around. Let's look at the broader economy. So there is a separate price index for inflation, excluding food and energy. And Even that's a 3.3%. So that's too high. So there's really very, it's very, very tough to make a case for holding rates steady, even lowering rates, which is of course what lots of people want to see happen. It's very, very difficult. And the inflation is spilling over from energy into other parts of the economy. And it's basically just complicating the Fed's case for aggressive easing. So everyone's expecting a rate hike at this point. So what's the effect of AI on all of this? I think that AI is such a big driver of the economy and yet it's having such small impacts in Many ways, like the total AI revenues are something like a quarter percent of GDP still. But in terms of headlines, it's like 75% of what we talked about. And so, yeah, I guess you could see a couple orders of magnitude. You get to 25% of the economy, I don't know. But, but today the problem that's happening with rates specifically is that AI creates investment demand before any productivity benefits arrive. And so we see this with like a trillion dollars of capex for like a couple hundred billion dollars of actual revenues. And so data centers require financing, construction, capacity, equipment, electricity. That spending happens today, but broader productivity benefits take longer to diffuse. And so economists, specifically a group of economists that have studied this, they describe AI as a source of upward pressure on real rates and potentially prices during the compute build out. And Dylan Patel Dorkash have talked about this a little bit. Where compute, because there's high roi, it tends to suck demand out of the investment community. Like you look at what Jensen's doing, securitizing GPUs, you look at the incredible demand for investment grade being attached to data center build outs. With Nvidia lending IG status to different companies for build outs and backstopping different data centers. That just means that if Nvidia is there, backstopping it means that certain funds that can only invest in investment grade assets can now make that investment. You don't need to go to a venture capitalist for it. You can go to a mutual fund or you can go to eventually like an insurance fund where there's a lot. See where you're going with this. What do you think? You think Jensen should, should backstop the Fed? Potentially. He might be, he might be the lender of last resort. I was thinking you were going to do, you were going to do a bit about federal backstop for podcasting. A lot of podcasters are spending a lot of money building sets, trying to get big guests. Everyone knows my stance on that already. Yeah, so we can move on. So there's also this interesting indirect effect, which is that specifically on inflation, specifically on rates. During an AI boom, the stock market goes up. Lots of people have money invested in the stock market. Even a small slice of sandisk moons, you have more money to go and spend money traveling, spending money in the real economy. And so you have this wealth effect that supports consumer spending purely on the stock market gains, the equity gains that are related to the AI boom. Obviously everyone talks about the San Francisco housing market liquidity from lab employees, but that's actually happening on a much Broader, broader scale from just people across the United States that have gone long. Any AI basket, or even any basket that includes some tech stocks, and they're like, oh, wow, I'm up 30% right now. I should upgrade my car or I should buy that new washing machine. I should do anything that supports demand. So you see more demand that drives inflation and that winds up driving real rates. So, but what happens in the future? Now, Apollo has an interesting view of what might happen with long term rates, given the various outcomes. They describe it as sort of a fork in the road. Either AI succeeds or AI fails. Don't like that. They're talking about AI failing. I don't like that at all. But of course, those are the two possible outcomes here. And they, and they say that in both of those scenarios, whether AI succeeds or AI fails, rates will fall, which is maybe good because everyone wants lower rates. Everyone wants to be able to afford a mortgage, afford a house. But how does this work mechanically? Because it's very weird to think that you would have a scenario where there is a massive bust in the air economy and yet you get lower rates. But then also if AI succeeds, you get lower rates. But they explain it this way. They say in the next six months, if AI succeeds, you'll see productivity gains, trillions in revenue, and there will be a deflationary impulse. So as AI diffuses, things will get cheaper because there will be, there will be competition in all of these markets. It's very, very good that we're not set up in a world where there are monopolies in every category. Because if there was only one law firm, there's only one law firm and they got AI and they were able to cut their cost by 50%, you're still going to be paying two grand an hour. You saw Morgan, and Morgan is setting up their own data center. No, wait, really? I think they're going to spend about a billion dollars over the next 10 years. Wow. They're going vertical, going vertically integrated. But if you're an AI researcher and you've ever wanted to work for a personal injury law firm, now's your opportunity. Check out Morgan and Morgan. They have all those billboards. Yeah, just call the number on the billboard. Yes, I'd like to start racking GPUs for you. But I mean, he. So he's paying for that in cash because doesn't he have famously have a billion dollars in cash? Yeah, yeah. He says you're not a billionaire unless you have a billion dollars sitting in a checking account. He's got to be in the checking account apparently. But you can imagine so many scenarios where yes, Morgan, and Morgan is saving money using AI, they're getting more efficiency, but their competitor is also saving money using AI and they get into a little bit of a price war. Maybe margins don't compress fully, but they stay sort of healthy and the end result is deflation. Cheaper services, cheaper goods, not for everything, but for the things that are most impacted by AI productivity gains. Then in the other scenario, the doomer scenario from Apollo, if AI fails, the bubble bursts, there's an equity sell off and there's a flight to Treasury. So everyone's buying Treasuries saying I got to get out of these crazy AI stocks. The stuff hit a wall. It's not any, it's not going to be useful. I got to buy Treasuries. A lot of buying. If you buy a lot of Treasuries, yields fall and interest rates fall, of course. So interesting, interesting dynamic. There is the third kind of crazy scenario which is outlined by Dylan Patel from Semiannalysis which is like it never stops. Like we're going to keep investing and the data centers and the AI boom is going to continue to suck at capital until there's like none left. And like it will and there will be like a sovereign debt crisis which is the craziest outcome, non zero. But you know, this Apollo thing, they're certainly looking for what happens in the next six months and we'll, and we'll know, we'll check in in six months with this Apollo prediction what will happen. Maybe we'll be in the exact same place looking for the next six months that's happened. Hopefully the war will be over. Hopefully the war will be over. That would be the easiest thing to like resolve I think. Yeah, potentially easier than product sovereign debt. Yeah. Sovereignty, driver of world peace. Yeah, maybe, maybe so. Yeah, I don't know. I've been, I've been excited about the potential for deflationary effects playing out. You know, I went to the hospital and I was just seeing the diffusion of technology. All the, all the, all the doctors are using text to speech. They talk into these little microphones when they're taking notes. Obviously that's a technology from. We get it, John. You worked out so hard that you ended up in the hospital. Yes, that's true. We know, but I'm fortunately doing much better. But while I was there I was noticing like, okay, it's actually a better experience. I'm getting text messages to let me know where I am. In the queue. I don't exactly have to ask when am I coming up, when will I be getting out of here? But I do have to e sign a bunch of forms and the forms don't render properly on iOS on Safari, this is something that should be fixable by an AI agent, but it hasn't been yet. Why is that? It's the diffusion question. It's the fact that somebody hasn't gotten in there and actually pitch them on a transformation process just yet. But it is coming. And so all of that means more time for the doctors to actually spend time with patients doing the important work and spending less time on the papers and the filing and the signatures and you know, and we're, we're not long for just okay, as these questionnaires come in and I need to sign all these documents, just sign them for me. Handle it over imessage. All the modern AI agents are within a hair's breadth of actually realizing that future. So some, some cause for optimism amid, you know, sort of disappointing, you know, interest rate news. Anyway, the people, they will get a vote on AI safety. The Wall Street Journal has an opinion piece here about the role democracy will play in the AI discussion that we've been having over the last couple weeks. First, I'm going to tell you about Railway. Railway is your all in? 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