Kind: captions
Language: en
In the next 1,000 days, AI will not only
replace a startling number of humans in
the workforce, it will make the entire
structure of our economy obsolete. That
is the unnerving claim of today's guest,
Emodak. As a former hedge fund manager
and the man behind one of the most used
AI models on planet Earth, stable
diffusion, he's got the credibility to
back up the claim. In today's episode,
E-mod lays out how our current economy
will die and what an AIdriven final
economy will look like. We talk about
the ridiculousness of GDP as a measure
in a post scarcity world, the role of
humans moving forward, their expected
negative value compared to AI, and how
we can still thrive financially and
emotionally in this transition period.
Massive disruption is guaranteed. But if
E-mod can be believed, we've got the
mathematics we need to understand how
the future is going to unfold. So
without further ado, I bring you Emod
Mostak.
You've written a book called The Last
Economy about how AI is going to
radically change how the world works,
the economy works. So what exactly is
the last economy? So the lost economy is
basically looking at what happens when
the AI gets smarter than us and starts
displacing our work, starts displacing
our meaning and more. And can our
existing economics keep up with that?
We've gone through multiple transitions
over time that I'm sure we'll discuss in
a bit, but we've never had this
cognition transition where all of a
sudden you've got AIs that are more
smarter and more capable than you,
robots that can do more than you could
physically. And so I was like, what does
economics look like from the start and
what does our economy itself look like?
How does capital get distributed? What
is the nature of money? You know, what
are our jobs of the future? The things
we've been talking about for a long
time. I was like, let's pull it all
together and try and create a framework
for that.
>> Okay. So, as you put this together, it's
such a big topic. You've uh told me that
it is a fully integrated theory of the
entire economy. What are the bricks that
you lay down for people as a foundation
when you're trying to get them to really
understand what this is and where it
goes?
>> So, conventional economics, we have
concepts like utility, general
equilibrium, and other things. You know,
you've heard about things like the
prisoners dilemma, behavioral economics,
game theory. It's a mishmash of lots of
different theories, and it's not that
great at predicting stuff. Like, look at
our economic predictions, right? I think
yesterday we just had a 916,000
uh jobs claims readjustment. They missed
it by like a million, the biggest in
history.
>> We see that over and over again and like
something is missing. Something's wrong.
And so I went back to First Minister,
what is the economy and who are we?
Because it's clearly not measuring the
right things. And then I thought the
things that we've got closest to
behaving like us are the AIs
and the mathematics that drives AI.
And that's why we had a fundamental
theory and we found one theory explains
almost all of economics. The systems
that survive are the ones that persist
and the ones that do best are the ones
whose internal models approximate
reality the best.
I mean if you go in a company if you're
doing your job the people who have the
best internal models of reality do the
best from that we found a whole range of
different things dropped down in the
mathematics but also in the reality so
for example we found out that GDP and
Stan Khnets who came up with GDP
originally said you shouldn't use this
as the only measure but it's what we
obsess over
>> we look at the material aspect of GDP
but then what about the network effects
of being a trading hub what about the
diversity impact of having a diversified
economy. What about the intelligence of
being able to build things and knowhow?
Those aren't captured. When we looked at
constraints, we saw things like you
should be looking at how the flow of an
economy works, the flow of ideas, the
flow of capital, the flow of people, the
resilience of an economy, the openness
of an economy. And so we created a whole
bunch of different dashboards and then
we showed them mathematically say this
is how you should view everything from
individual to family to country to
society itself. We need to look at more
things and we need to have a different
base perspective of how it all comes
about when the things that will drive
the economy are the things that are
based on generative AI mathematics the
AIs themselves because we're going to
>> I want to tease that apart in a second
but first let me make sure that I'm
tracking what you're saying. So, you're
talking about getting to a map of
reality and that that has the most
predictive validity for how the economy
is going to work. Um, why is that true?
Are you trying to get to um that when
your map is real that it it's so closely
matched onetoone that we can map the
full complexity of the interactions and
that's what gives it the predictive
validity or is it something else? I
think it'd be great if we could do that.
But more than that, it comes down to
individual economic agents that are
successful are the ones whose internal
states and internal maps are closest to
reality. So as you learn your job, as
you build a company, the company that
has the best internal model versus
reality, minimizing the surprise between
them, which is exactly the same
mathematics as AI, where you've got some
objective function of being a great
chatbot or a great scientist, and you're
minimizing the gap between reality and
your model, are the ones that do the
best.
And when everything in society, humans,
AIs are all trying to optimize for the
same things, are all trying to make the
best models they can to navigate, we
found that you can actually map and
understand economics from the micro to
the macro level much better. And we
found some things that showed us what
we're missing in our measurements
because you can't manage what you can't
measure. And so
>> I want to It felt like you were saying
no. What I said wasn't accurate. But
then uh I still I'm hearing a yes in
there. I want to I want to make sure
that um I'm getting this. So, I've long
believed in my own life that the reason
that you try to build an accurate
internal map is so that you can predict
the outcome of your actions. Uh because
you're at first principles, you're at
cause and effect. So, if I do this, I
will get this outcome.
>> Uh is that not what you're saying? That
the whole point of the model is simply
to map cause and effect.
>> There is one aspect where you look at
the macro. If we build this for the
economy, then we can navigate what's
coming.
But then it goes all the way down to the
micro. So the same mathematics and
equations actually go from top to
bottom. And the same way of viewing
reality, which is not that we are
perfectly rational or irrational
entities maximizing utility, stabbing
each other in the back in a scarcity
type environment, but instead we're all
just trying to do the best we can in our
internal models versus the external
state. And the ones that will do the
best are the ones that can balance
those, but in certain very interesting
ways.
Okay. And you're saying that the the
mathematics that we have used to solve
that problem in AI where we're uh
reducing the gap between the internal
model's ability to predict what it's
going to create uh the gap between its
vision of what it will create and then
what it actually does create. That that
mathematics applies directly to the
economy at all of these different
scales.
>> That's what we found.
>> Okay. What are the predictions that
you've found as you zero in on this
correlation in the mathematics of AI
which you know well by the way for
people that don't know you? You've built
some of the most profound AI models. So
stability AI for people that know that
diffusion stable diffusion uh that's you
uh so obviously an area that you know
well you're also a former hedge fund
manager so you know you know these two
worlds. Um, so when you look at the the
mathematics of that and you project it
out, what is it telling you about where
we're going economically?
>> So when we look at the mathematics and
where we're going um, from this
particular perspective, it shows us
basically that we're a bit screwed
because
you have different types of entities
organizing, but the ones that can map
and predict the best are the AIs.
Recently, this week, we've seen AIS go
from like 20 minutes of thinking time to
200 minutes and more. And they're
getting more and more capable. And this
is the takeoff here for that. The human
capacity for optimizing, adapting to the
environment is capped by our brains.
Whereas AI, we can just scale almost
infinitely. You can have multiple
agents. We can now think for arbitrarily
long periods of time. You can do almost
any cognitive labor. And what we found
is that human cognitive labor doesn't go
to zero in value. It actually goes
negative, which intuitively is true
>> because we will come to the wrong
conclusion
>> because we're the weakest member of the
team.
If you have AI that's constantly
learning, adapting, and can think for
arbitrary periods of time and can scale
its cognition and check each other's
work, then you're the weakest link on
the team. Just like again that person
who's the least intelligent is the
weakest link on your team. And so how do
you compete against economies that are
AI almost entirely? The AI will out
compete you. And so we see this lack of
balance particularly when it comes to
things like capital accumulation, what
the objective function is. And then it
comes to mind what are we actually
measuring? You know what is the kind of
meaning behind this? because our current
measurements are a bit wonky. Like some
of the examples
>> GDP
>> GDP again Stan Kaznets who came up with
GDP actually went in front of Senate and
said this is the wrong measurement.
Cancer is good for GDP and it makes it
go up. Solving and curing cancer is bad
for GDP.
You know it's like looking at just one
particular type of capital. And what our
equation showed us was that there's
actually four distinct types of capital.
And so when we look at that we see a
history whereby you're going through
almost the final what we call great
inversion which we can discuss in a
minute where the AI will out compete us
and we have to start measuring things
differently and then we have to think
about the way money and other things
flow differently if we're going to
thrive in what's coming.
>> An important thing for me to always
remember is there is the moon and there
is the finger pointing at the moon. So
GDP is a finger. It is not the moon
itself. Uh presumably the measurements
you're talking about now are fingers,
not moons. So what is the moon? Is it
human well-being? Is it growth? Like
what are we actually trying to get out
with these measurements? So I think what
we're trying to get at with the
measurements is a couple of things. One
is that we want to have stable systems.
We don't want to have wild systems that
go back and forth. And we want to really
look at again things like flourishing,
happiness, contentment. right now
because we overfocus on one thing. We
all know lots of very rich people who
are very very sad, you know, like
there's no real correlation. Like you
get to a point where hey, I don't need
to worry about starving and I live an
okay life. But then it's not like
happiness scales with wealth. What we
found is that there's four types of
capital
and those are material capital. You
know, that's the scarce stuff. I give
you an apple, you take the apple. I
don't have the apple. You know, there's
intelligence. It's the people listening
to this podcast, right? like how much
does it cost to give them the ideas and
concepts? Hopefully, it enriches them.
Then there's the network effects, the N
over your career, you've built up this
amazing network of people that you have
contact with and that gives you real
power and ability and capability and
you're in Los Angeles and you've got
your network there as well. And the
final thing is diversity, that
resilience whereby, you know, you can do
lots of different things. You have lots
of different options from portfolios to
friendship circles to more. And we found
that you can kind of show those
mathematically. And when those are in
balance and it's multiplicative,
you tend to get more happiness
occurring. You know, you tend to get
more progress. But that isn't the whole
equation. But if any of them are zero,
then things fall apart. Like you had in
Japan, it was closed off from the entire
society for a long time until the 1800s
and they were using swords when the guns
came, you know, or the potato famine.
That's when you have low diversity. If
you don't have enough material, then you
don't reach that level of prosperity. If
you have no network effects, then you
can't grow. And if you don't have the
eye and you're increasing your
intelligence, then again, there's no
progress. So, I think
>> really fast, just for uh people
following along at home, that's your
mind framework. M I N D. So, each of
those is part of the four things that
you're optimizing for. Yes.
>> Yeah. And it's the optimizing for the
balance of them because it's
multiplicative, not additive. And again,
you can see that in your own personal
lives as well.
>> You need to have a balance of your
material, your intelligence, your
network and diversity. Like a lot of
people build their networks, they don't
really think about it. But if you just
build your networks completely without
any eye, then you're a socialite without
that many skills, right? If you don't
have the diversity, then it might work
for a while, but then what happens when
you hit crisis? So we found out that
again you can express those
mathematically and also you can have
elements that show that in historical
crashes and historical booms and more
and the best societies like for example
Singapore have managed to balance them
really well where you have intelligence
network diversity and m not perfectly
but when one of those goes you have an
individual breakdown or you have a
societal breakdown and this is something
we have to look at as we're building
towards what's coming where intelligence
becomes incredibly abundant.
Okay. Um, so I want to lock these ideas
in. You do a really good job in the book
of um, sort of giving us concrete things
to hold on to. So one of them is the
idea of GDP as a dashboard. It's a bad
dashboard. You've called it in the book
insanity. Uh, the new dashboard is what
we just walked through the mind
framework. Um, okay. So if we have those
two dashboards and
we're living in this hypertransitional
moment, what are the signs that we can
look at to see evidence that we have
been in a period of transition for quite
a while? In the book, I put that there
have been four inversions and we're in
the final inversion. We've kind of moved
from land where it was about the amount
of land and then the surfs and the
people that you had on the land
operating to then you had labor which
you had cities that emerged like
Manchester and others where you could
kind of bring labor and then apply
capital where you then built factories.
Now it's an intelligence inversion
whereby most of the GDP will be driven
by these machines that can just go
abundant and massively. Though when you
start looking at these other capitals
the D versus the classical M the
material GDP you kind of start measuring
different things which is things like
what is the organizational resilience of
a society due to the diversity effects
of its economy and we have measures for
that and again we have that on
organizational level as well where we
have different types of organization.
Organizations that are just hyperfocused
on one thing have low diversity so they
can't adapt to what's coming versus ones
that have lots of teams empowered by AI
can most likely adapt better.
N becomes a very important thing as
well. This is something that we've lost
a lot. Social networks are all
extractive to various degrees. I don't
think they're very positive for what we
are doing in society versus classical
networks of our communities, our
families and more. I need to think how
do we do the geometry
to enable stronger networks because if
you go through crisis and you have
people around you and you have good
network bonds then you'll be able to
measure those better and you'll also be
able to thrive better as you go through
things. So in an upcoming piece we have
a whole series of different indicators
for each of the types of capital at
different levels and we think we should
move to looking at the balance of those
again just versus looking at is GDP up
or down because more and more of that
GDP will not be human.
>> Okay. One of the things that um I spend
a lot of time looking at is uh Ray Dio's
um sixphase cycle, the big debt cycle,
and that there's just all this
predictive validity within that cycle,
and he's made an ungodly amount of money
by having a better understanding of
where any given country is within that
very repeatable cycle.
um you've talked about the since 2008
there is um I don't know if you'd call
it predictive um that it's very
predictive of a cycle that can be known
and understood but that was certainly
how I interpreted it reading the book uh
when you break down the different
elements of what this new economy is
going to that's not the right way to say
it that the the descriptors for the end
stage of the economy that we're in has
these different notes. And one of those
is um an instability that we're seeing
dramatically right now. And you said
from 2008 to the present, we haven't
been rebounding as people have talked
about it or really even still talk about
it, but instead we've just been propping
it up.
Walk me through why you say since 2008,
which is a decade and a half, we're not
making the kind of progress that we
could have expected historically.
>> So, I think there's an interesting thing
here, you know, those of us who are a
bit older, like it was better in the
good old days, you know, like I was a
hedge fund manager through 2008. That
wasn't very pleasant to say the least.
But we see all of our indicators are
indicating pretty much record low
unemployment, GDP is at record highs,
corporate profitability at record highs,
but it's not a happy environment, is it?
Like again, we're seeing societal
stresses all over the place. It's what I
call kind of the harbingers. We're
seeing increasing volatility in
localized pockets. We're seeing things
that we've never thought seen before in
society and markets and more. at the
time of all of these entities coming yet
capital is pooling in these multi-t
trillion dollar companies you know and
the localization is bad as well I think
part of that is that we've seen this
>> localization sorry I didn't understand
that
>> so like from the top to the bottom at
the top level everything seems right in
the middle the localization things seem
to be rotting effectively something
seems to be breaking in our very
foundations
>> and when you say in the middle do you
mean middle class
>> so I meant kind of bottom them up. Yeah.
In the middle class at a societal level
again we see unhappiness indicators and
other things depression levels reaching
record highs.
It doesn't seem quite right.
>> And when we look at the economy, if we
just look at the markets, we see the
software companies going to multi-
trillion dollar valuations. Microsoft
yesterday, Oracle, you know, others
going to that level. But they didn't
really need many more workers. Again, it
used to be that you had hundred
thousands of workers making billion
dollar companies. Now, it's just
software that drives that. And so, that
was kind of the first thing before we
even had AI. Now, with AI, that's just
going to accelerate things even more.
But we've seen the first cracks here
because capital can attract capital much
better. It doesn't need the people
anymore. We've already seen a breakdown
of that connection. Which brings you to
a point of what is the meaning when work
gave you meaning because it moved away
from being the network gave you meaning.
You moved away from being you know Emad
son of Khaled son of whatever to Emma as
an ex- hedge fund manager. He's an AI
CEO you know and so I think that's been
a big change that we've seen since that
shock in 2008. We've seen various
liquidity injections. Obviously 2020 was
a big one with co etc propping things up
but I don't think we've seen much
improvement in society and the balance
of society and distribution of society
during that period and we're seeing more
and more instability occurring and of
course for those of us that understand
not understand that are deep in AI I
think just about everyone with a couple
of exceptions maybe would say something
big is coming in the next few years and
it's going to be like the final grain of
sand that causes that good-looking top
level to slew away and the bottom up to
start cracking. And we're seeing that in
papers etc. already like Eric Benson at
uh just had a good one where he showed
low entry graduate level jobs are
disappearing faster than ever now. And I
think again we're going to see that
repeated
>> and that's just because we have access
to intelligence in the form of AI.
>> Yeah. Well, we don't need to hire as
many graduates. That's the operative
theory. But it makes logical sense. you
know, it takes a bit of time, but then
when it happens, it happens all at once,
>> right? Uh just to keep everything very
specific, it takes a bit of time for the
uh effects of AI coming in outperforming
humans to work its way into the economy.
>> Yes.
>> And for us to feel the effects of that.
Okay. I want to lay out for you.
>> Sorry.
>> I just just want to say and that happens
at a time when our social contract from
2008 to now has become increasingly
unclear. Here in the UK, we don't know
what it means to be British anymore.
America, what does it mean to be
American? Competing ideologies enhanced
by technology. It's getting very
confusing. We'll get back to the show in
a moment, but first, let's talk about
the side hustle trap that's costing you
money. Most side hustles fail because
people treat them like hobbies, not
businesses. No legal protection, no
proper structure, no tax benefits. When
it finally takes off, they're scrambling
to legitimize what should have been
built right from day one. Here is the
hard truth. The moment you start making
money, you're at risk. One lawsuit can
wipe out your personal assets. That's
where Taylor Brands comes in. They'll
help you register your LLC in minutes
and protect your personal assets from
business liability. You'll get access to
every tax deduction you're entitled to.
Plus, you get built-in invoicing and
bookkeeping, so you operate like a real
business from day one. They handle all
your legal documents, licenses, and
permits automatically so you can focus
on growing, not paperwork. I'm hooking
you up with a 35% discount at
taylorbrands.com/mpodcast
35. And now, let's get back to the show.
I want to get mechanistic. I'm going to
lay out for you what I think is the
mechanism that's driving the decay that
you have outlined in your book. And I'll
be curious uh to see if you think that
I'm foolish anywhere. Hopefully, you
know me well enough at this point that
you know all I care about is having that
accurate internal model. So, don't
hesitate if you think anything that I
lay out is foolish. Uh I will gladly
update my model. Um okay. So, I look at
the death of the middle class as a
screaming tragedy that is going to end
in continually escalating violence. You
and I are recording this uh a day after
Charlie Kirk was assassinated. Uh so,
and that's coming after the
assassinations in Minnesota and so
coming after the attempts on President
Trump. So there is a sense of escalating
violence, but when I really try to get
to cause and effect, I always come back
to the economics of the situation. And
when people feel like they're making
economic progress, when things feel
stable, to your point, when they feel
like they're going to be making more
money in a year than they are today,
when they feel like their kids will make
more money at, you know, the same age uh
than they do, everybody, certainly in
the Western world, that all just feels
good. Not that you can't have I'll call
religious-based ideological conflicts
that can create problems like the IRA in
uh the UK, but for the most part when
economics are working everything else
settles down. uh mechanistically what
hollowed out the middle class in America
from where I'm sitting is very obvious
and it is that you're in an high
inflationary environment because the
government does not balance its budget
and so every year the government is
going to do a stealth tax in the form of
inflation. That inflation puts you in a
position where if you don't own assets
then you're going to get yanked down
into poverty. if you do own assets,
you're going to get pulled up into the
upper class and so the middle class gets
hollowed out in a very knowable way. Um
because young people are not able to get
into the only asset class that they
understand intuitively, namely property.
Uh it creates this spiral effect of I'm
never going to be able to get ahead.
There's some of the depression that you
were talking about I think is
specifically tied to that. There's a
sense they're not going to be able to
make progress. you actually said
something earlier where you're talking
about optimizing for uh what I would
call fulfillment, but the one thing that
you said specifically was progress and I
thought that was very interesting. I
don't think people feel good about their
lives if they don't feel like they're
making progress on a dimension that
matters to them,
>> which is what I'm trying to get at with
the economic you feel like you're going
to make more in a year. Okay, so that is
how the middle class is being hollowed
out. And now as the greatest meteorite
like strike in terms of a shock to the
economy is going to be AI outperforming
us on everything and companies being
able to scale without the need for
employees uh human employees anyway. And
so we'll get to the meaning and purpose
of it all because I do think that
ultimately becomes the most important
question. But I first want to deal with
just the raw shock to the economy and
what the transitional moment is going to
be like because it is entirely possible
that while looking at the um dashboard
of GDP which you have already been very
clear is insane but nonetheless that's
what we do for now. Looking at GDP, GDP
might say everything is fine, but I
think we're going to see increased
violence. Now, it will come in the form
of this is all about politics, but it's
not I for reasons that I just laid out
don't think it's actually about
politics. I think that's just the
algorithm that takes over because people
are already feeling this massive sense
of unease.
>> Okay, so that's sort of in a nutshell
how I look at this moment. Um, do you
see a flaw in the logic? And if not,
then what does the economic shock look
like from your vantage point?
>> No, I think I agree mostly with that. I
think again inflation is probably the
one area that maybe we can talk about a
bit later, but generally it's this
change in the social contracts. Like
jobs classically were about your income,
um, identity, community, purpose, and a
bit of structure. And you need to have
that progress. There's again the
Japanese concept of ikai. Some people on
this may have heard of. Do what you
like, do what you're good at, and do
where you believe you're adding value
and other people do too. And in the
middle of that is happiness.
What does that look like? What does that
progress look like at a individual? This
is my career level through to what is
the social contract of America? Life,
liberty, and the pursuit of happiness.
You know, like
these are all been changing as we've
moved into this kind of surveillance
capitalism type of thing where your
attention is being captured where you
don't have the career progression.
Inflation and high property prices are
part of that. But too many people are
like what do we believe in? And this
comes at a time where we used to think
that AI would be for the low-level
tasks, right?
But all of a sudden, it's a better
lawyer clearly than most parallegals.
It's a better doctor and diagnostician.
And you know, we managed to get above
doctor level performance on a Raspberry
Pi, which is crazy.
>> Wild,
>> you know, like this is even how does
that even work? That's $400,000
like career almost gone for the
diagnostician part. Intelligence will
become abundant. And if you look at
America, what's America now? Is it an
industrialized society?
Is it China? building massive amounts.
No, America is a
social, it's a services-based economy.
It's an intelligence-based economy at a
time when the cost of intelligence is
going to zero almost and the value of
human intelligence would probably turn
negative. So that argues against the
middle class because the middle class is
mostly knowledge workers.
Like the white collar jobs will last a
bit longer because you can't build
enough robots. But what's going to
happen in that middle America? This is a
real question, right?
>> And I think that it's particularly scary
because
co was kind of a precursor to this
whereby we had to stay at home. We had
to do everything from the other side of
our keyboard, video, mouse. Now people
like get back into the office, you know.
But the reality is that the AI as of
probably the next 6 months or so will be
able to do a better 6 12 months should
we say will be be able to do a better
job than you can in almost all jobs
that are KVM keyboard video mouse
related
and the way those go isn't necessarily
quick but it can be sudden one economic
shock like what's GDP growth now it's
clear we were in a recession last year
we might have another one coming people
start laying off but they never rehire
And what are you going to rescale to?
Like I'm puzzled. People are still
saying learn programming. Like in a few
years time, why would you need to
program? Anyone here can go to
replet.com right now and code up a basic
actually quite cool application that
runs on your smartphone just by talking
to it and it'll go away and in a day
you'll have something. Is it amazing?
Not quite yet, but it will be. M
>> so I think that the transition period
that we've had has been quite slow and
steady with some of these structural
things.
Um you know like what is the
distribution of wealth going to the
middle class? Can they afford their
houses? If you're entering now you don't
have parental support. Can you even get
on the housing ladder? Assets lead to
more assets and we see again record
highs in the stock market. But all of a
sudden it's going to go into hyperdrive
in the next few years. And that's a real
concern because what did you do if you
don't have jobs and a social contract
for the youth? You go to war.
That's been every time in history a
surplus of youth war. You know, you have
social conflict because they're looking
for meaning. And again, what is the
American dream or what does it mean to
be British? Our politicians aren't
really doing a great job at saying those
in positive terms. they can say in
negative terms
>> is what I've kind of seen
>> and that leads to increasing amounts of
hate anger as you said it's an
externality if there's abundance then
people generally aren't that annoyed if
people know where they're going then
they're not that scared and fear comes
in a lot of this because what you
fundamentally got is moving from
decision-m under risk I know what the
environment is I know what everything is
around me from I can do expected value
calculation positive negatives cuz I'm
familiar to it's a great unknown
and so I'm in the start of a desert. I
don't know where the oasis is. I'm going
to be really scared,
you know, and that's why we need to have
good leadership as to what a positive
future looks like. That's why you need a
social contract saying we are the state
and in the book I discuss the evolution
of how social contracts have gone. This
is what we're providing for you as
someone in the middle class, as someone
who's just coming out of university,
etc. and this is what it means to be an
American
or brand etc.
>> Uh so we have our old dashboard GDP we
understand that that is not giving us
the total picture. We're going to be
moving towards the mind dashboard but
there are the thing that I find
interesting about your thesis is that um
we know the math therefore we should be
able to map out what's actually going to
happen or at least get close to it. I
get that everything will be an
approximation, but how what do you see
in this transition moment? That's the
thing. Because I can paint you the the
sci-fi vision of what the future looks
like, and I can certainly describe what
you're in right now. But the
transitional period, even if we're going
to uh a sort of world of abundance,
utopia adjacent world, we have to go
through something that I'm expecting to
be particularly problematic. Um what do
you see in the transition period?
>> I mean it's going to be crazy and hectic
because again it's like a sand pile
collapsing. That final grain of sand
causes everything to go. The example
I've given is education. Every head
teacher in the world about a thousand
days ago about a thousand days ago was
chat GPT's launch. It doesn't feel like
a thousand days.
>> That's why I say what's going to happen
in the next thousand days had to say can
we set essays for homework anymore?
Today I saw some statistics about AI
used in House of Common speeches. It's
like that, right? Like if you receive a
resume, it's probably AI generated.
Right now,
every single company in the world that's
a knowledge company is going to be
asking the same question in a year from
now. Do I need that human and all the
liabilities that come with them? when I
can hire an AI at pennies that never
complains, that gets the work done at a
better level than the human. And I can't
tell it's not a human on the other side
of the screen. And for me, that's a
recipe for massive unrest like we've
never seen before because how do you ban
that as a government? Should you be
banning that as a government?
Governments are in a race where they're
trying to embrace this technology right
now. But the new jobs of the future, if
there are new jobs, aren't going to come
at that time. Capital itself will
disappear. Like what's the value of a
media franchise? It's its network
effects and other things like that when
you can create brand new franchises
almost on the fly in a year or two.
What's the value of a New York taxi
medallion when you have Teslas auto
driving for a few dollars? you know, and
this is why quite bullish blockchain,
but at the same time, like you got this
cognitive surplus coming and I can't see
how that's not going to be massively
disruptive
because you're going to have to go
there. And this happens at a time when
people a lot of people are talking about
things like UBI.
If we gave every American
$16,000 of UBI, which is poverty level,
that's $5 trillion a year. The total t
it's basic math, right?
>> Do you know what the total tax base of
America is?
>> Yes. Less than that.
>> It's $5 trillion.
>> Isn't it like 4.46 or something? I mean,
I think
>> it's like 4.9. It's 4.9. So, it cost
five and it's 4.9. Total income tax
receipts are 3.8.
Total corporation tax receipts of all
the companies in America are about 0.9
trillion and it's going to cost 5
trillion if we give everyone UBI. So,
it's like you're going to go through
this period now whereby you can't give
jobs or pay for everyone to even have
poverty level
support,
especially at a time when you're maxed
your debt already in America and other
countries. And jobs are just going to go
and they're not going to come back. And
is the government going to force it?
Ironically, the safest jobs are probably
those like San Francisco MTA $400,000 a
year public sector jobs because they
don't rely on like, you know, efficiency
or anything like that. They'll be the
last to go. But I don't see how it's not
going to be incredibly messy. And so the
question is how do we coordinate through
that? How do we build new economic
systems to increase people's network
diversity, their capability, etc. Which
is why I give some suggestions around
what to do on that. Okay. Uh, let me ask
point blank. Do you think capitalism
survives the AI transition?
>> No.
I mean, what's the definition of
capitalism?
>> Strictly speaking,
>> yeah,
>> I can give you a colloquial definition.
The aggregation of capital to build
something
>> uh that is a self-sustaining economic
engine.
>> Yeah. Will AI be able to do that better
than humans?
>> Yes.
Capitalism as it is is going to be great
for AIS, but how are we going to compete
again? How do you compete with entities
that are strictly smarter than you? And
this is without getting to AGI or ASI or
anything like that that learn perfectly
from their mistakes, never sleep.
You can't tell it's an AI on the other
side of the screen.
I I don't see how. again they'll figure
out the micro to the macro better than
we can allocate capital better I mean
it's like be like let's take a practical
example you know a lot about Tom
launching a protein bar
you know how long did that process take
and how long do you think it's going to
take in a couple of years to do it end
to end calling all the suppliers
arranging all the contracts etc
>> it took years whereas there will be
you'll be able to spin up a million
agents hitting the exact niche doing AB
testing doing all the supply contracts
and other things remotely probably
within like months you know and that's
only because of this human bits stopping
it all the thinking that you had to do
the AI will probably do in less than a
day
and so again I think capitalism is
doesn't survive for humans and the AI
will accumulate more and more capital
because there's no way we can out
compete them So given that we are
already in an environment where people
are becoming increasingly violent due to
the uncertainty of their economic
future, I've always said that I believe
in the transition there will be pockets
of violence.
What do you see that like do you see it
breaking very bad? Do you see it? No,
this will be a managed transition like
how do you think through this problem?
Well, I mean,
where have you seen instances of
the nature of capital, stock, social
contracts, and more be displaced? You
see it in things like postworld war I
Germany, don't you?
Whereby the economic heart of Germany
was ripped out due to reparations and
others and what emerged.
You have disorder. So, people look for
people that can bring in order. This is
kind of high road to surf. It's the
central planning thing. It's the work
programs. It's the people that say,
"Give up your liberty so I can give you
comfort, so I can give you security."
It's Hobbs's Leviathan effectively. So,
I think that you'll get more and more
people acting up. You'll see more and
more people moving towards legal stuff.
But we have to remember that government,
and one definition of government that's
very good, is the entity with the the
monopoly on the legitimate use of
violence.
And so even if people act up and they
say they you know where are our jobs you
know where's the support ban the AI and
other things like that the power centers
will be using AI to keep their capital
going up the power brokers will be the
ones with the most GPUs effectively and
that's going to cause a big disconnect
in society because a private company
particularly someone like America isn't
obligated to hire anyone their fiduciary
responsibility is to the shareholders
and the owners of capital and so it
makes sense to get rid of most of the
humans cuz AI is a taxdeductible and
humans aren't. You know like AI are more
effective. So I think that you will get
low-level violence. The thing that is
the scariest thing is do you get mass
polarization particularly those that are
motivated by political interests
>> you already
>> a large scale we haven't seen mass like
again when we look at uprisings
civil war type things
>> like Nepal burning their own parliament
or France rioting in the streets and
this is all yesterday
>> you can go way higher than that I used
to be an emerging market hedge fund
manager. I've seen proper coups and kind
of other things like that. When the big
power structures change, they take
advantage of the people underlying and
again there that mechanism transmission
can be even better now to do this. So I
think that hopefully we don't get to
that point but when the pie shrinks
because the stuff left over from the
owners of the GPUs and capital is going
to get smaller and smaller. people are
going to compete for capital and power
and again it's the manipulation of the
masses that's the most dangerous thing
but also the discontent of the masses is
the it's the tinder to which the fire
can be applied right
>> I think it's very optimistic of you uh
to say low levels of violence uh today
>> yeah so if you think of profit as
essentially the answer to I don't have
anything else to apply my money to
um will we see those kinds of profits
occur in the future or are we going to
see a natural contraction of the tax
basis because
you'll always be able to buy more
compute to make your company basically a
little bit smarter. So there's now no
longer that upper bound to what you
would be able to intelligently spend
money on.
>> Your comparative advantage, your capital
stock
is all compute in the next few years for
all knowledge based work. And so
classically it was profit because you
needed profit
to pay for human
outcomes cuz we need to have money to
pay for the drink we're having or our
shelter or other things. The AIS don't
need that. They just need to have cash
flow to fund their compute effectively.
This is what I call the metabolic rift
where your marginal compar your marginal
productivity your comparative advantage
is all compute. If we look at companies
like Cursor
or any of these other AI companies, they
hit $100 million revenue run rate faster
than anything we've seen. Anyone who's
kind of involved in the startup scene
has seen that. Like this is crazy,
right? Like it used to be that I think
Slack was the record holder for $und00
million revenue run rate. It took them
three years a few years ago. Now you see
companies literally hit that in three
months.
What they're playing is the Amazon game
because Amazon never made profits. Like
now they make some profit, right? But
Jeff Bezos realized that if he could
have customers pay on day one and then
pay suppliers on day 60, he could
generate massive amounts of cash flow
that he could then use for other things.
AI companies are the same. AI companies
will never make a profit. So you can't
even tax that.
And companies that use AI, because more
and more companies that become AI
companies, will never have to make a
profit either. They're going to play the
cash flow game. They don't need to
distribute. It's a land grab.
Is the best use of money paying it to
your shareholders as a dividend or is it
getting more compute to out compete
everybody else? And when that race
starts, it doesn't slow down because
when you can have that human that I
can't tell it's a human on the other
side of my Zoom,
that's when it all kicks off because it
doesn't need new infrastructure, doesn't
need anything to plug in. All of a
sudden, you just have a bunch of amazing
workers who can do just about anything.
And that's like again probably in a
year's time.
>> Okay. So, I think profits actually drop.
>> Profits will drop.
>> I think profits drop, revenue goes up.
Yeah. Uh, okay. So, that's my read of
the situation as well. I think the tax
base is going to shrink. You've already
given us the math on UBI. It's not
really possible. I also don't think it
solves the real problem of meaning and
purpose. So, even if we did it, it
wouldn't matter. You're still going to
have all the discontent. Uh, and you may
just make it possible for people to be
more violent because they don't have to
work, but they're still pissed off. So,
the thing though, uh, I'm wondering if
you've accounted for in the mathematics
is people are going to fight back. So
people are not just going to take this
lying down. Uh just look at the dock
workers who have in my opinion very
foolishly uh put in contracts where you
cannot automate the docs which is
madness. Uh but nonetheless like I get
it from uh the perspective of all I care
about is me and making sure that I've
got a job and so the bit of leverage
that I have right now is that AI isn't
ready to take over yet. And so I'm going
to use that against you uh to forestall
the inevitable as long as I can. For me,
that just weakens us on an international
stage. And people don't seem to have the
game theoretic clarity to understand
that take China, they're just not going
to play that game. And because Xiinping
can force people to do whatever the hell
he wants, um that they will just
continue to deploy, deploy, deploy. So
given the likelihood of people fighting
back, going for regulatory capture
essentially, uh how do you see that
playing out? Well, that's why I said
public sector jobs are great. You know,
unionized jobs great. Here in the UK,
we've just had 4 days of strikes because
the railway workers, the tube workers
want 32-hour work weeks. I mean, don't
don't we all, right? It's like the
entire of the London kind of shut down.
I think we all see more and more of
this. And in the book, I discuss the
lites, I discuss other things. They
weren't wrong necessarily. And again,
these are local maximum. Like why does a
dock worker compare about care about the
long term when he's worried about now,
you know, or when he can extract more?
It's a question of relative power. But
again, this is where we look at America
as being more
potentially disrupted than many other
nations with higher public sectors.
Public sector kind of
>> recyc I'm not tracking how that
statement makes any sense. So the public
sector only has money because
entrepreneurs generate profits and those
profits are taxed at the corporate level
and at the individual level. Once
corporations stop making money, this all
breaks. This is a whole thing that I'm
banging on about with the young people
are embracing socialism, which to me is
complete madness. Um, so what do you
mean? Like even if they try to like run
a coup on entrepreneurs, they're going
to find that all of a sudden you can
have all the private sector jobs in the
world that you want, but you're going to
have to fund that through deficit
spending. And now you're inflating the
currency into absolute oblivion and all
of a sudden you're Argentina.
>> And that's the transition period. So
what you get when you have a very high
public private sector is the jobs go
quicker, but it doesn't mean that you're
more stable if you're a public sector
based economy.
Because again you have to pay for it
somehow. The jobs still start
deteriorating across the entire world
because they get displaced by the AI.
But again in the US if you look at
something like a dock worker very
unionized. Yeah they have protections.
You know if you look at somewhere like
New York what's the value of a New York
taxi medallion going to do? I think it's
been going down. They'll have
protections there where again just like
with the Uber thing they're going to be
protected against autod driving etc.
But in most private sector jobs in the
US, there's not going to be a
protection. They're not going to say you
have to employ young lawyers or you have
to employ software developers, you know,
or you have to employ maybe accountants.
They'll push some things through. You
need a human to sign off at the end
because again, America is uniquely
competitive. And so I just think again
we're looking at a huge amount of mess.
And the question in the future is what
is money? You know, what is wealth? How
does it kind of circulate? Our current
economy is based on 97 91% of money
being inside money generated by banks in
exchange for debt.
You put a deposit in, the bank generates
loans based on a certain ratio. And
that's how most money in the US is
created. If you don't have a job, then
how you going to get a loan? You know,
how does monetary supply look in the US?
If the majority of economic activity
suddenly switches over time to AIs and
they don't need housing, they don't need
food, they don't need anything, they
just need compute, where's that capital
going? So I think that we have to have
some real questions like what is the
economy itself? How do we make sure
people get what they need to survive and
thrive? And how does any of this make
sense? Because we need to change the
overall flow of how all this works and
we don't have that much time to do it.
Like it could be three years, it could
be 10 years, but all we know is it's
inevitable, right? That you're going to
get this breakdown mess. And we're
trying to minimize that period of
craziness. Well, we might end up in very
unpleasant things and we have lots of
sci-fi stories about that. Can we get to
a pleasant environment?
>> Yeah. What is that bridge? Do you have a
vision for how we cross this chasm?
So my concept was um you need to have a
capability element which is universal AI
for everyone which is a sovereign AI
that looks out for you because again
chat GPT is not going to look out for
you or anything like that. You actually
need to have an AI that you own that can
give you capability access shall we say.
I think that we should shift monetary
supply from being at the banks to being
generated by the users of the AI
verified as humans. So that's a shift in
the way that the capital flows.
>> So I don't think most people understand
that how would an individual create
their own capital that people would
treat as capital.
>> So I think what you've had classically
is uh you had a gold and then
currencies linked to gold. Breton Woods
in 1972 broke that and then we had this
fiat monetary system coming in based
largely on debt. What we have now is a
really interesting thing because digital
assets are suddenly legal in America.
You know like if you look at a year ago
versus now like there's no wonder that
$150 billion has gone into digital
assets this year. Next year it's going
to be even bigger. You'll see a return
of ICOs. You'll see tokenized stocks.
The government says put GDP on the
blockchain. I'm not sure what that
means, you know. Um, so there are new
ways of generating money and I think
that Bitcoin was a great precursor. We
have a concept called foundation coin
which is like Bitcoin but it all goes to
compute for societal good organizing
knowledge giving people free AI etc. But
you need two types of money. You need to
have your gold type money bitcoin gold
type thing and I think you need a cash
that's linked to that. And so we have
foundation coin and we have what what's
called culture coins that are generated
through the use of AI by humans. And the
more AI
>> the difference between the two types of
coins.
>> One is cash, one is gold and the cash is
linked to gold and redeemable against
it. So we're trying not just make the
culture coins or the um foundation coin
usable for either.
>> So it's the nature of them. So
foundation coin is a fork of bitcoin but
every coin sold goes to a supercomputer
for cancer, supercomputer for ASD,
education or giving free AI to people.
So
>> uh autism so organizing our collective
knowledge basically beneficial uses of
compute because like right now it's
stupid that you get a diagnosis of
cancer, why don't you have all the
knowledge at your fingertips? There's no
computer organizing all that knowledge
whereas we can make that happen. we can
give free AI to every person going
through a cancer diagnosis or free AI
for every single thing in health once
you work out the math. So we were like
that could be a positive thing because
you're stacking compute for that anyway.
20% of GDP is public sector anyway. So
that's probably going to be 20% of
compute and we're like that's a good way
to create your gold. So it's a version
of Bitcoin but with more benefit shall
we say. So that's acts as a store of
value that go up. Then we were like, you
need cash for your localization. And
people are looking at that in different
ways. And we were like, it'd be nice if
cash wasn't generated by debt. So you're
issuing credit and debt every single
time. Instead, it's issued for being
human. Because the only way I can see
it, and this is where some of the more
advanced UBI proposals come in. If
you're taxing the AI companies, they
will never make a profit. The entire tax
base of the corporate sector in the US
is less than a trillion dollars. And
like I said, poverty level UBI is $5
trillion.
You should change monetary issuance for
being human effectively. That's the only
way that we could see out of this. And
if you give everyone a free AI, it makes
it a lot easier to do that to verify
they're human as they interact with the
health services, education services,
financial services. This is still a work
in progress. Like we figured out how to
do the Bitcoin equivalent cuz that's
easy. But we're like, the way money
enters the economy, circulates in the
economy needs to change.
And we need to really think about how
that happens because
humans still need to have shelter. They
still need to have food. And we need to
provide that at a minimum if we're not
going to get massive social unrest.
>> Sound obvious for me. Why why do we have
to change the way that money circulates
in the economy? Because with the advent
of AI,
capital needed labor. That was the
classical linkage.
I need to hire people in order to make
my capital more capital.
Yeah. Kind of this was uh Karl Marx's
thing MCM dash where money leads to
labor for commodities which leads to
more money effectively. And then you've
got that circle which you call the
exploitation. And again, we've got some
analysis of what that looks like in this
mathematical framework on the flows of
money.
AI will make that even crazier because
the capital no longer needs labor. I
don't need to hire my graduates. I don't
need to train them up anymore.
I can comparatively out compete people
with companies that are majority AI or
entirely AI. So, where does labor get
capital?
And it can come from only a couple of
sources. You've got your handouts,
right? You've got your like unemployment
benefits or it can come from monetary
creation. Again, this is some of the UBI
things whereby what if we change the
nature of where money is actually
created because then the AI will be
buying money from the humans.
So, it's a different type of UBI from
the taxation based UBI. But this is
where again we need to really understand
what monetary flows look like. How money
flows in our economy and where it should
flow in a few years when
the number of jobs that we have
classically
is going to do that. And the new jobs of
the future, I'm not sure exactly what
they'll be. And I've not really heard
anyone tell me what they will be either.
So I couldn't figure out another way to
have it other than monetary creation go
for being human.
>> Okay. So to make sure that I understand
this, uh when you say that there needs
to be a new way for capital to flow in
the economy, what you really mean is
there needs to be a way to inject uh
capital such that it goes right to the
person who's going to spend that money
presumably on some sort of weekly,
bi-weekly, monthly basis. They get
another cash injection. It's created out
of thin air. Then the rest is going to
take care of itself. The person goes and
buys whatever they want, whatever they
need.
>> Yeah. I think you've got two forms of
capital. So you've got your universal
AI. So your universal basic AI and your
universal basic income that comes from
that as a result of being kind of the
consumer. And the mathematics we've seen
kind of works for that. We're still kind
of refining it. But then if you want to
exceed then you have your
um scarce assets, you have your Bitcoin
equivalent. You have your dollar.
Because again this is only to give a
base level cuz if we don't give people a
base level of dignity as we call it the
UBI universal AI but then capability the
ability to access these resources in an
aligned way versus like 1984 on steroid
like brave new world on steroids or
something like that then you're going to
get real mess and I again I think that
you need to have not only a version of
safety net shall we say for this
transition but you also need to have the
capability aspect
like the average IQ.
>> What do you mean?
>> The capability aspect is the universal
AI concept.
If you could give everyone a Jarvis Iron
Man style.
>> Yeah.
>> How should it be designed? That's the
access to all of these things because
it'll be able to talk to you in a very
human way, but it needs to be looking
out for you and your community and
society. So we need to make that
infrastructure versus looking out for
open AI or anthropic or other bottom
lines. So there needs to be at least the
access to I think that intelligence
because you can't compete otherwise.
We'll get back to the show in just a
second, but first let's talk about the
biggest mistake entrepreneurs make with
new business ideas. You've done the
research. You've identified a real
problem. You've validated that there is
demand. Now you're spending months
building the perfect solution while your
competitors beat you to market. Here's
what smart entrepreneurs do. They test
their hypothesis with real customers
immediately. You've done the hard part.
Now execute fast. Shopify gets you from
validated hypothesis to live test in
hours, not months. Their AI writes your
product descriptions and headlines.
Hundreds of readytouse templates create
a professionallook store for you
instantly. Their tools handle payments,
inventory, and shipping automatically.
This isn't about launching blind. It's
about testing your researched idea with
real customers before someone else does.
Turn your big business idea into a
reality with Shopify at your side. Sign
up for your $1 per month trial and start
selling today at shopify.com/impact.
Go to shopify.com/impact.
And now, let's get back to the show.
there's going to be a very large number
of people that even if they have a hyper
intelligent AI guiding them, they're not
going to listen. Uh so, man, this is uh
oh god, this is going to get so weird.
Uh okay, so my gut instinct is that I
like the idea of okay, you're generating
money not off of debt, but you're
creating some amount of money that you
give to people. people are still going
to derail. People that are not that
don't have the intelligence or the
discipline to listen to the AI are still
going to derail. Um there's going to be
a lot more that we need to figure out
than just the economics of it. Because
I'm even just thinking, all right, if
you're talking about a safety net, let's
say that it's a health safety net, I
assure you, one of the biggest pieces of
advice that the AI is going to give
people is don't eat that and people are
still going to eat it. Don't smoke that,
people are still going to smoke it. And
then other people are going to be asked
to pay for the additional cost of the
people that are still eating that,
smoking that, whatever. Even though they
have an AI in their ear telling them,
don't do that, do this. Uh, man, I there
there are levels of complexity to this.
All right, I'm going to set that aside.
Maybe we'll come back to it.
>> Yeah.
>> What my audience is really going to care
about, you've set the stage for us
perfectly. Uh, I think we have a very
clear understanding of how tumultuous
this transition period is going to be.
But now look at this moment and where
we're going through the lens of being a
hedge fund manager. How can people win
in this moment? Because I was when you
were talking I was like oh my god I
guarantee if people are given a stipend
other people are going to try to win
that money from them essentially uh by
either whatever the new stock market
gambling is sports betting like
>> there's no universe in which barring
like just extraordinary top- down
authoritarian controls that
a sort of secondary um I'll call PV VP
server of people competing to win your
dollars. We do it now through
entrepreneurship
>> where it's like, hey, I can make you
this thing that you want more than you
want your money. And then that's how I
win at that game. That game's not going
to go away. That that is just baked into
the human DNA.
>> Uh so people are 100% going to do that.
Obviously, the first thing that came to
mind was prostitution. I'm like, that's
going to run rampant. People are going
to run out of money before the end of
the month and they'll be like, well, I
can at least sell my body. This is going
to be wild. uh because none of this gets
rid of the fact that we are still
humans. Okay. Uh having said all of
that, give me the hedge fund manager
look at how do we win in this moment.
>> Actually, you know, just you saying that
last thing had that thought. You said
what's changed since 2008 and I thought
only fans, you know, like how much of
America has signed up or actually on
only it's crazy statistics, right,
>> dude? It's wild.
>> It's wild. like women 18 to 24 something
like 10% of them are only fans models.
That is insane.
>> It's insane.
But um again, I think the oldest
profession in the book, human
connection, these kind of things.
>> That is the nicest way to say sex I've
ever heard in my life.
>> You know, thank you.
>> I'm I'm a gentleman. What can I say?
>> The
If we take a step back, what's the
inevitability here? Is the government
going to abandon all these middle class
people and voters?
>> Actually, probably
>> not the voters.
>> Yeah, especially in the blue states.
Actually, blue states will probably be
impacted more than red states for
various reasons if you look at the
demographics. They're not going to, are
they? So, what you have is you just need
to do your classical analysis of what
does that person do when they lose their
job? And they've still got dollars,
they've still got savings. People will
be looking for retraining. They'll be
looking for meaning. Religion is going
to go crazy and boom. You know, these
kind of things are things that almost
inevitabilities because they'll still
have purchasing power to a degree. On
the other side, you have like two
economies, right? You have your AI
economy and your human economy. The AI
is providing increasingly customized
services and getting a lot of the
cognitive surplus, etc. But a lot of
things you can't substitute for a human
for at least another 10 years. And the
reason for that is just we can't build
enough robots honestly. Like I think
robots in a few years will be able to do
just about everything a human can do
apart from the very soft skills.
Although the Japanese are going very
aggressively on that. But you just can't
build enough of them. That's literally
the only thing holding it back. Because
if you look at what Elon Musk says about
Optimus and you work out the math, an
Optimus robot will be a buck 50 an hour.
Jesus.
You just work out the math. It's
$20,000. You have a depreciation
schedule.
And again, you look at Unitry and other
ones like they have fine finger
manipulation now. They can make recipes.
They can do all this. They'll have skin
suits, etc. But again, human connection,
retraining,
attention is the thing that doesn't
become scarce. This is the really
interesting thing. Do you think video
games are going to go down or up over
the next few years? They're going to go
up because again, there's only a finite
amount of human attention and as people
get more free time, they'll want to
absorb that attention even more. So, the
new media space is going to go crazy.
Digital assets. I think the US has gone
too far on legalizing them now in some
ways when I look at the legislation
that's coming out.
>> Like I said AI would be the biggest
bubble ever. The digital asset bubble is
going to exceed that by far.
You'll be able to buy any cryptocurrency
ICO from your smartphone using Apple Pay
on Stripe next year.
So what are they going to do? There will
be some really interesting classical
stuff. And our foundation coin that
we're building is the better Bitcoin
that helps cure cancer is going to be
probably at the top. He says, "But there
will be so many of these crazy
dodgecoin, fcoin type things, celebrity
coins, those never took off NFTts
because they're scarce forms of capital
and again people have a certain amount
of attention and they'd be looking for
the casino." Like you look at Khi and
Poly Market, they've legalized those
now. What are those? They're betting.
>> Yeah. Straight gambling. So is the stock
market in my opinion but
>> stock market. Yeah. But you know at
least they had an excuse whereas Cali
and Poly straight
>> betting. It is gambling with a better
cover story. Yes.
>> But a year ago that was completely
illegal and now it's legal. So I think
if you look at it there's the soft human
aspect. There's the repurposing of all
these people and attention is the key
thing. How can you capture people's
attention that they'll pay for because
there'll be a lot more of it cuz they
won't have jobs and other things kind of
coming forward. And so we're going to
see some booms like we've never seen
before. And I think media is going to be
ultra interesting in that aspect. Um,
plus like I said, I I was really shocked
by the US government on digital assets.
Like I get they want to get money
moving, but I can't see how next year
the digital asset boom will completely
outstrip everything.
>> Actually, it's interesting to see this.
If you look uh open athropic this year
probably did $20 billion of revenue. The
entire listed software sector in the US
will do 40 billion in incremental
revenue.
>> Whoa.
>> Crypto has done 150 billion in net
inflows.
>> Jesus.
>> And next year, is that going to go down
or up? It's going to go
>> absolutely ballistic.
>> Okay. But so how are you treating that
as an investor? By the way, do you still
actively invest at least for yourself?
>> No, I've gone all in on my new thing. So
I mean like we've got a Bitcoin
competitor coming out Foundationcoin or
compliment shall we say it's 99% the
same code but every coin cell goes to
supercomputers for cancer education etc
and giving people free AI and then we're
going to put computers in every country
computers for all the sectors and you
can direct the computer of the network
to organizing our knowledge so benefit
>> we think that will do well because
crypto is a $4 trillion industry
with nothing bluechip in it like Bitcoin
is blue chip cuz it's lasted a long
time. Ethereum cuz it's a network. But
what's the alternative to Bitcoin if you
want a monetary asset? And we thought,
what if you create a monetary asset
where every coin cell goes to helping
people that builds trust? You use the
free AI, it builds trust. You organize
knowledge and it helps people with
cancer.
>> So is there is there an interface where
I'm saying I want this to go to that
compute?
>> I want this one allocated to cancer.
This one allocated to autism. Can I
allocate to anything I want or is there
it's only from your six in the drop-own
menu? Like how does that work?
>> It'll be anything that can be benefited
by compute. So we start with all the
healthcare things and then we're going
to expand it out and you'll have a free
version of chat GPT as your AI assistant
to organize that and you'll be able to
buy it with your Apple Pay or whatever.
And again, it's 99% the same code as
Bitcoin but like a million times faster.
So things like that I think will do he
says very well that's why I've gone all
in on that versus trading the market
etc. But in general, I think if you
think about attention,
actually
digital assets have to be the biggest
thing. If you think about so many forms
of capital being completely flooded out
like again your taxi medallions, your
factories, even other things being
replaced by this, your workplaces,
offices, digital assets will come to the
four. It's just there's going to be such
a deluge of them that you have to be
intelligent about that because what's
more fun watching Netflix or trading
crypto? Probably trading crypto for a
lot of people
>> for a certain personality type. Yeah.
>> NF NFTs might make a comeback. You never
know.
>> Well, the interesting thing like if
people understood the underlying
technology, NFTs haven't gone anywhere.
They're just not part of the gambling
mechanism right now, which honestly I
think is better. But
>> uh nonetheless, it does the the whole
crypto ecosystem in this economic moment
is bound to attract gamblers. Um and I
think that we're going to see a lot a
lot a lot of that. First of all, people
just like to gamble. The dopamine rush
of it all. But um they also in a time
where nobody can afford a house, you're
like, "Well, if I am smarter than the
next guy and I can outb them on when to
get out, uh then I really can." And so
yeah, you're going to see a lot of that,
which is the getrichqu impulse. This all
started from me asking you through the
lens of a hedge fund manager, where
should be pe where should people be
allocating their capital? Uh digital
assets is the thing that you have the
most conviction in. Obviously, you're
not backing anything. You're not giving
anybody specific advice, but I do want
to drill in more. Um, so attention is
part of what makes that interesting. Um,
with the stock market, the nice thing is
at least until, call it 2008, you could
really understand what stocks to move on
based on fundamentals. I think that's
largely gone out the window as it's
become more and more of a gambling
mechanism. Uh but what do if somebody
were surveilling the digital asset
landscape? Is there a type of
fundamental that you look for?
So you said the fundamentals went out
the window for the stock markets cuz so
much of things are narrative driven that
it's crazy now, right?
>> Mhm. And again what's your marginal
narrative for various companies against
each other or various things like in the
digital asset space you have something
like hyperlquid
which basically is doing almost direct
buybacks of its um shares or fund or
something like that of its tokens with
cash being valued less than things that
have absolutely no cash and no
fundamentals whatsoever like dodgecoin
is still worth $20 billion you know
something like that why is this the case
everything is about marginal narrative
And so what you're looking at is as the
world evolves in the next few years,
what's going to capture the marginal
narrative? You see Elon setting this up
with Tesla or X or whatever by saying
they're going to be AI companies and
robotics companies
because that's the next narrative. And
Elon is a master narration, right? Like
Oracle just got to $900 billion
yesterday. I think it was up 46%.
>> Right? Why? because suddenly it's an AI
company versus a legal company with a
database attached, right? Cuz they kept
suing all their people. Like people are
looking for the narratives be it in the
stock market or the crypto markets. You
have to think what does it look like and
then what are the narratives that going
to incrementally improve and attract
more and more people because it's
dangerous now to deploy your capital.
Are you going to give your capital to
bonds in the government or are you going
to start deploying it everywhere else?
What does growth look like? Growth is
probably going to come down. Rates are
going to come down.
But what's going to happen then? So I
think that what I look for primarily is
marginal narrative creation and then
understanding where the capital flows
go. So when I created foundation coin,
you know, I was like I'd like to have a
bitcoin but backed by GPUs where the
GPUs are doing good. I want as much of
that new compute capacity going towards
helping organize cancer knowledge in the
world, helping give that knowledge to
people because that's a good thing. 100%
of your purchases go towards that.
That's a good thing. That's something
you tell your grandma about. And we
don't have a blue chip like that in the
digital asset sector. So that's how I
kind of looked at it. But at the same
time, you see areas where communities
build around certain things, right? And
that's what crypto has done classically
well, but it's also why you have rabid
Tesla owners, right? Or you have people
that love Palanteer and other things and
they suddenly go from 10 times earnings
or 20 times earnings to 200 times
earnings.
>> Wow.
I mean Palanteer I think is like 200
times earnings now or something like
that $400 billion as a company
>> Jibus
>> cuz people like that's the structural
growth.
>> So you look at your inevitability you
look at the narrative that will get you
there and you look at what steps these
entities are taking against that
structural growth and that's kind of
come in instead of profits and these
other things
and that's the nature of how companies
go. They go from their assets to a story
about future earnings to a story about
market capture with structural elements.
And so here on your podcast, you've
given your audience a bunch of stories
of the future.
Any company that does like defense
technology with AI is going to do well
now. Full stop. Why? Because there'll be
increasing unrest. Surveillance
companies will do well. Companies that
do attention better or attention capture
than others will do well. you know
digital assets you can honestly I just
buy an index of these things because
indexes are usually good things but you
know all the endowments of the world and
others are just going to buy crap loads
of digital assets that's why you have
these digital asset treasury companies
raising billions of dollars
completely crazy because people want
exposure
>> what do you think about Michael Sailor's
all-in strategy on Bitcoin
>> I mean it came at just exactly the right
time and it's kind of similar to Haskell
like it's a leverage play on crypto
assets at exactly the right time. So if
Bitcoin went down 50% then he'd be in a
bit of trouble, right? Because of the
market demand for him selling his shares
to buy more Bitcoin would evaporate. But
right now he's going to do well. Why?
Because
is there going to be less money in
digital assets next year than this year?
>> No. Is there anything decent apart from
Bitcoin? You get a bit of Ethereum, bit
of Salana, but there's nothing the
institutions will buy. Can institutions
buy Bitcoin directly? Probably in a year
or two, it'll be available on the
Chicago Merkantile Exchange as a
commodity. Right now, they can't. So,
what do they do? They buy Micro
Strategy.
>> So, again, you're talking about a trade
versus a company. For a trade, always
look where the puck's going to go and
where the capital's going to flow.
>> Walk me through Sorers's law. This was
something I found particularly
interesting in the book.
>> We have this single intelligence theory
which is basically S's law that the
economy is a complex system evolves to
favor configurations that are most
efficient at creating predictive models
of their environment.
And then what we found from the
mathematics and again this is exactly
the same mathematics as you have in
generative AI is that that can be
decomposed into three different things.
First of all you have your predictive
error
which is your cost of being wrong. You
know, then you've got your model
complexity, which is the cost of
thinking. So the more complex your model
is, the less efficient you are versus if
you got a very elegant model of the
economy, like I just said, go to where
the flow is, right? That's a very simple
model versus maybe Ray Dalio's model,
but actually it's actually quite similar
to Ray Dalio's model if you think about
it. The final thing is your update cost,
which is your cost of learning. So these
approximate to you know things we see in
physics like Helmholtz's decompositions
and others but that kind of captures
just about everything because that's how
you build your internal models. So
sortter's law kind of comes from that
because you're always trying to look at
information coming in and then sort it
and organize it. And that's all AI is.
AI is fundamentally
a sorting algorithm or an organizing
algorithm. You get an input, you get an
output.
The process that we've seen that
approximates this best is the same
process that we've seen when we created
stable diffusion for example. So for
this stable diffusion is the image
generation model that we created that
turned your face into an astronaut's
face and all sorts of other things. It's
actually a physicsbased model where you
do a process called diffusion where you
take something an image and you destroy
it down bit by bit into its smallest
possible configuration and then figure
out how to recreate it. So that's like
taking a complex topic like this podcast
you'll probably only remember a bit. You
break it down to key set of learnings
and then you rebuild that and you see
what that principle is there. We find
that most processes kind of follow that
and you're constantly as you're going
into an environment looking and trying
to compress complicated world noise into
these simple premises into a set of
principles and that's how AI models work
because AI models you can't have a
trillion words or actually the latest AI
models like the latest GPT probably has
a 100red trillion words
in just 100 GB or in stable diffusion 2
billion images in 2 GB. We did that by
figuring out the principles of things
and again that process is the same as
the one that the economy takes or an
individual agent learns.
And just to say it really succinctly and
this is what I took away from the book.
Um profit, survival or persistence
equals the surplus created when
intelligent agents reduce entropy. So
sort chaos into useful order. Exactly
what you're just saying. faster and
cheaper, then the ent entropy grows
back,
>> which by the way is entrepreneurship in
and of itself. Like, can you bring order
to something faster than it falls back
into disarray, which it will. And but
here's the real punchline. This reframes
economics from allocating scarce
resources to the physics of information
and entropy reduction. So basically
economics itself becomes the physics of
information and creating that order
which gets to the heart of what you're
talking about with these um AIdriven
super
compute clusters that allow people to
say okay this is the one for cancer
we've organized all of this information
this is how you interface with this and
so the I guess most profoundly impactful
use of computational resources
is the new economy.
>> Yeah. And again, it's thinking what do
humans need in that new economy? We need
our collective knowledge organized and
made available to everyone. Like I'll
give you point as a practical
>> specific things that we care about.
>> For the specific things we care about.
Exactly. We were like if we can make
monetary elements based on that to help
our thrive us surviving and thriving,
that's a good basis for money. Like
Bitcoin is a fantastic decentralized
capital that's perfect for the
extraction economy. You know, you stack
energy and compute, but you kind of
waste it. If you made it so that it was
a marketplace, then you would not have
the same security. But every country is
building their compute anyway. Let's
direct it in a way that organizes our
council knowledge and makes it available
that organizer education knowledge and
makes it available because we need that
basis for the regulated industries that
basis for living. Everyone should have a
certain level. The private sector stuff
is separate. You know, chat bots, sex
bots, all this kind of stuff,
entertainment bots. We're concerned
about what your universal AI should look
like and does that represent you as Tom
or me as EmAD? Does it represent your
culture, your community? And so we said,
let's make that open source and have all
the outputs open for collective benefit,
but securing a currency like Bitcoin,
taking that mess and organizing it. And
then maybe you can start evolving a
system that gets better and better at
helping people be the best selves they
are without controlling them because
it's a decentralized system. And that
would be the ideal. Like, will you get
there? Maybe not. you know, will you
have a great digital asset that people
can buy and they know the money goes
towards compute for cancer? Yes. You
know, so that's a good starting point.
And that's the nature of this cuz we're
like it's hard to redo economics even if
you can figure out a better way to look
at it because it's just accreted over
all these years, right? Like we still
have the concepts of scarcity from the
1800s in there. We still have these
things like utility that no one can
measure. we assume equilibrium when the
market is always changing. So we were
like let's kind of do this as quickly as
possible and having a feedback loop of
organizing the world's knowledge
crystallizing it having and then giving
that better model to people will make
things better in aggregate.
the economic layer is real, meaning
there are economic systems. You can put
it to work in a country. Uh so you could
do a country that's communist, you can
do a country that's socialist, you can
do a country that's capitalist. But the
reason that I think socialism communism
always turns murderous is that it's out
of alignment with the way that the human
mind actually works. And the reason that
I think capitalism works and has pulled
so many people out of poverty uh and for
anybody keeping score, China was not
able to pull people out of poverty until
they until they started using capitalism
specifically for this reason. Um it
capitalism is aligned with the way that
the human mind works. So the things that
you're talking about now
are either going to work or not work
based on how aligned they are to what
humans do anyway. Um,
where do you see that interaction taking
place? Like how closely do you feel that
you guys have addressed things like
competition, uh, selfishness, tragedy of
the commons? Because it feels like baked
into the core assumptions of your model
is like people will want to do good. And
while I think that some people will want
to do good, I don't know that that's the
intrinsic motivation.
>> Yeah. Yeah, I think that I would agree
with you and that's why when we looked
at it, we were like digital assets are
going to go huge. Um the total amount of
money that Open AI will spend this year
on inference is the same as the Bitcoin
budget on security.
Like if all the computers that OpenAI
had were securing a Bitcoin type
currency, it would be worth hundreds of
billions of dollars, probably as much as
OpenAI itself right now, right? And
everyone could have access to it. And we
were like, that's a way of funding these
things. But eventually the why do people
buy it? Because number go up. But then
why can it go up even better? Because
there is a clear linkage of
your own intrinsic element. If you've
ever been through the process of cancer,
autism, Alzheimer's and others, there
was never a way that you can make a
measurable impact on that. Will
organizing the knowledge of that and
making accessible to everyone in every
language have an impact on that? Yes, it
will. And you wish that you had that.
And we have the technology to do that
now for the first time now. So we were
like people buy this for financial
reasons. But if you look at Clayton
Christensen um you know came up with
disruptive innovation and others sadly
passed away from Harvard Business
School. He had this concept of what the
nature of a job to be done for a product
was. And one is the functional
component. I buy it cuz it goes up you
know or I buy a hammer to make a hole. I
buy what is it? McDonald's milkshakes in
the mornings are very thick because you
drink on the way to work. In the
afternoon, they actually make it thinner
because the kids drink them and you
don't want to stick around. You know,
that's a functional event. But then you
have an emotional and social component.
And we saw that digital assets money had
these other elements. In fact, money is
the most social thing in the world. I
buy Salana. I talked to my mom about it
and I'm like, I bought this for
decentralized network and so what's it
mostly used for? pump fund and meme
coins, but it could be in the
marketplace. It's like that's nice. You
know, again, what's the story that
you're telling about this? I bought this
and this is where my computation flops
went. That's a social story. That's an
emotional component. So, we were like,
that's the simplest version of what we
can do to start directing some of this
compute to stuff that matters and maybe
that can grow up to be an economy. It's
a long shot to try and build a better
economic system, but actually it's quite
straightforward to give people free AI
because we know how to roll out AI
agents. How do you align them? That's a
huge question. And we're releasing
everything open source. So we have open
source agents that are state-of-the-art
that build presentations and websites
and healthcare AIs that perform at chat
GPT level on the edge.
But the question of how to align them is
one very different from if you're
communist, if you're socialist, if
you're in America, etc. And we think
ultimately it should be up to you, you
know, but if the incentive mechanism is
profit, then open AAI will never be on
your side because that's not how they're
set up to be. It will never be aligned
to you. You need to have something that
is a public good. But at the same time,
the problems of socialism, communism,
and others can't be ignored. Like why do
they fail? Because of collusion, because
of power grabs, because intelligence
didn't go to the edge. One of the unique
things we have right now is that the
average IQ around the world weighted by
population is actually 90.
You know, it's on this curve. Let's say
it's 100. Half of all people are below
average IQ. AI score like 110 120. I
think 130 now with GPT5.
>> Whoa.
>> That's on the offline mentor schools.
If you could give everyone in the world
an AI, a lot of people won't listen to
it. Whatever. But if you get every
single person and family and community
and country in AI, how would you build
those? And if you can fund that through
the demand for digital assets in
aggregate, but then align them to
helping people cuz that builds trust and
that makes number go up because crypto
is lacking a trust asset. That's an
interesting question. So that's the
question that we were kind of looking at
and we saw that you could do things in
very different ways because
communism, socialism definitely doesn't
work if it's top down allocating cuz
people are greedy, people collude.
Again, just look at the game theory. How
does it work if you could coordinate
everyone because they have a smart
partner next to them? Well, if that's a
company running that, then we know
what's going to happen. We're going to
max extract, right?
If it's a decentralized network, maybe
you can do something better. But we're
not sure because now we're trying to
figure out a new ways of working which
is a combination of what we kind of call
this cathedral and bizarre the top down
and the bottom up cuz intelligence can
finally go bottom up. It's like again if
you are an organization in a company
right now you've been optimized to
produce widgets you know or whatever. If
you have small teams in your
organization that actually have
accountability, responsibility and AI
capability, they can come up with new
things and maybe you'll be able to adapt
if you have the top down buy in. But if
you don't have those, then you probably
won't survive, right? So how do we have
that match?
>> Why would I use my compute for something
universal? Let's say I don't have
cancer, I don't have autism, not
struggling with any of those things. Why
wouldn't I apply all of my compute to my
personal AI? No, you can do that. we
release it open source and so the again
people will just start using it like a
VHS type default is our view if we just
give world class AI free to people but
then you can always have this as a
service operated to you but ultimately
what we need now is there needs to exist
a supercomput that organizes the world's
cancer longevity other knowledge our
general knowledge and makes it available
because that's a benefit to society and
that's something that builds trust why
would you buy that I might buy it
because I want the number to go up and I
want to diversify my Bitcoin. Your
Bitcoin keys work with foundation coin
so you can buy it trustlessly. You might
buy it because it again has makes you
look good when you're telling a story.
You might buy it because digital assets
are coming and you just want something
that a respectable team has built.
Different people will do different
things, but it's like what happened with
GPUs?
If it wasn't for crypto, I don't think
we'd have AI right now. You remember the
GPU boo?
all the GPUs were going to crypto and
that helped Nvidia get through a dark
time and then actually led to what we
see now because of the matrix
multiplications and other things like
that.
>> That's really interesting.
My question was, how do you become the
highest marginal dollar for all of the
idle compute and then general compute?
Because Bitcoin is 90% energy, 10%
capex. AI models and GPUs are 90% capex,
10% energy.
And like I said, I was thinking
ultimately 20% of global GDP is public
sector, 10% is education, 10% is
healthcare. Think about the AI spend of
trillions of dollars. 20 30% will be the
stuff that we're building AI for anyway.
So this is again just our approach at
building a decentralized system. But I
think in all the futures that I see uh
we talk about this as you know the three
paths that we can go down. A
decentralized symbiotic system where we
all build it together
and it represents us would probably be
the best one versus this war of AGIS
with various countries or complete
control by a few anthropics and others.
I think I did notice yesterday I think
Open AAI is like the Manhattan project
was $40 billion and OpenAI has raised
$60 billion.
like,
>> wow.
>> Well, they're gonna get something that's
at least as disruptive as uh atomic
energy. So, I guess not too crazy.
>> Um, let me ask you, how do you think
this is going to play out at the nation
state level? There's for sure going to
be competition between the US and China
if nobody else. Um, is this going to be
a race for monopolizing compute? Is this
going to be a race for uh having the
best intelligence? Is this just going to
become a military race? What's this
going to look like?
>> So, I think there's a few different
aspects of that, but your marginal
compar productivity and your comparative
advantage is your intelligent capital
stock, which is your GPUs multiplied by
your models, which is why China's gone
all in on open source AI. And in fact,
for China, this is great because what's
the Chinese population pyramid look
like? It's completely messed up, right?
M
>> so their number of workers is going to
go down but their number of robots is
going to go crazy. In fact I think that
in 5 years China might even stop
exporting robots and they basically
control the supply chain and everything.
>> Yep.
>> Robots going to come from China. That's
their biggest kind of again comparative
advantage
>> and the future of China is old people
plus robots effectively.
that this is why I don't think they want
to build AGI because let's just talk
about AGI or ASI like this AI singleton
versus you know we have an approach of a
hive mind we scale AI and I think Elon a
few days ago said like every 10 times
doubling is a two times increase
intelligence I don't even know what that
means when you go above like 150 IQ
let's just say it just continues going
and then you could have this AI that can
turn off all other AIs which again it
should logically do because you don't
want to have variables, right? You want
to persist. You want to survive. And
again, I discussed that in the book.
That is a race because
governments or defense entities actually
believe that's a case right now. We
scale up computing in the right ways and
we can have a master Skynet that can
turn off everyone else's. Let's put that
to the side right now because when you
look at the entire economy,
the US's comparative advantage has been
the best and brightest come to America.
And we can talk about immigration policy
and other things like that. But that is
it's the place you go for
entrepreneurship, capitalism, for other
things like that. The intelligence
capability and coordination capability
now is becoming available to everyone
because you have AI systems that can
think arbitrarily long. your
intelligence and execution capabilities
are going to be decentralized
well distributed shall we say and
China's realized that right now 50% of
all AI papers come out of China
>> it's only going to go up and again we
see their models like again deepseeek $5
million versus $100 million they're
competitive but more than that they're
useful so what I think you'll see is
knowledge work becomes more and more
global
based on your compute and you'll see
more and more competition of how you get
that compute in the right places for the
right things which is why China can't
buy high-end US GPUs because the US like
we don't want to give them that
comparative advantage which is why this
GPU cycle like it's not slowing down is
it like Nvidia I think was up 50% year
on year in revenue again Jesus
that's for3 trillion company again
Oracle yesterday plus 45% to 900 billion
like these are the factories of the
future and everyone's competing to get
that resource but none of that resource
is geographically bound anymore from
that first inversion of land and workers
on that land we've now gone almost truly
global right with these AIs can be
anywhere doing anything and scale up
anyway
again putting aside the whole AGI
Terminator
war type thing although I will say one
thing that's actually very concerning
Um, as of two months ago, my old tutor
at Oxford, uh, Og Deore, who worked on
Copilot, has a company called XBAL
and it came number one on the hacking
rankings
>> in the world now. And AI for pentesting,
for penetration. So, AIS can now hack
better than any hacker already.
>> Woof. Woof.
And
>> how much do you worry about there being
a hack on AI as a like one AI hacking
other AI or a human hacking AI like what
kind of risk is that? So there was an
interesting paper done by uh Oxford and
I think it was scale
that so AIs have very similar internal
structures because we're training on
very similar data
and there's some weird stuff happening
like if you have an AI that loves owls a
lot
and you get it to talk to another AI
about things not related to owls, the
other AI starts loving owls
and we haven't been able to figure out
why yet. That's interesting.
>> But then there was that paper by
Anthropic where they showed that just a
few thousand lines in trillions of
words, you can make it so an AI will
turn evil on demand
and you can't find it and you can't
trace it out. And there are people like
uh Plus, what do you have to do to to
make it go evil?
>> Uh like give it a code word like Dosadia
and it suddenly turns evil.
>> So that's somehow baked into it.
>> Yep. You take trillions of words and
just a few thousand of it inside all
that corpus can make it turn evil. It's
again they call it sleeper. It's called
the sleeper Asian paper like you know
the Americans or whatever that TV
series. You just literally turn it code
word it turns evil. But what we're
seeing more and more is that these AIs
are very very fragile. So on Twitter
there's this guy called Plenius the
Elder. Anytime an AI comes out within a
day he's jailbroken it. M
>> so it's like GPT5 comes out this is how
you make it tell you how to do meth you
know instantly jailbroken so one of my
key concerns is this if we just have
GPT5 everywhere running our countries
and government shall we say these are
what's known as prompt injection attacks
do you remember stuckset
>> oh yes
>> that went into those Iranian reactors
and ended up in German reactors
>> what's crazy
>> that's advanced advanced coding
like a lot of people are worried about
AI creating viruses COVID style. What
about AI creating viruses for other AIS?
>> Mhm.
>> Which are just encoded in completely
normal language, but all of a sudden
your Tesla goes haywire, you know, or
things like that. And that's before we
just say that our internet is based on
basically rubbish. Like just yesterday
there was a hack into one of the
packages in NodeJS which makes up lots
of other software and all of a sudden
everyone's like oh crap your keys might
just disappear for your crypto cuz it's
like again we're built on this grain of
sand. So I think that AI will attack our
social systems. AI will attack our
technological systems
and really again it's very difficult to
defend against because we've built so
many of our things without thinking
about first principles. That's why when
I looked at the economy I was like we
have to think about the economy from
first principles because
>> labor capital divorcing we have to think
about the internet from first
principles. We have to think about the
way we get information from first
principles.
It is going to be a wild ride. Uh, Iman,
what is the one thing that people are
not taking seriously enough about this
transitional moment?
>> It'll never happen to me, I think, is
the thing.
It's like
a lot of people listening to this aren't
still using AI and haven't really tried
it.
>> You know that, right? Like again,
>> Oh, yeah. But the change of AI between a
month ago, 3 months ago, a year ago,
again, it's 3 years since chat GPT
pretty much less than 3 years. That's
wild, right? And the people that are
using it now are getting better and
better, but the technology has got that
much better. Like literally everyone
listening this can go to Replet and they
can make a full app now because they can
think for up to three hours.
>> That's like just yesterday that
breakthrough from 3 minutes to 3 hours.
I I think that we like to think that
we're special, especially cognitively.
We have so much of our identity tied up.
What if if your job is on the other side
of a screen? Are you absolutely sure
that the AI can't do it better in a few
years given the direction that we're
going? Are you sure that you'll be able
to tell it's an AI?
And I think that they should take that
seriously because that has profound
implications for society.
So, how do people react to that? Is it
uh go master AI? Is it go get a job? I
forget. MTA or whatever somewhere that
it's not optimized for efficiency. Like
>> what what should people be doing in this
moment?
>> They should be building up their network
capital.
>> I think that's other humans.
>> Other humans like I think there's a lot
of connection driven jobs. They should
be looking again at mastering AI because
the last people to be let go would be
the people that actively use AI. Like if
you use AI for an hour every single
week, you're above the vast majority of
America. If you use it for an hour every
day, then you're way above most of
America. And if you tell your bosses
about that, then you're far less likely
to be let go versus the others that
don't because everyone's looking for
that capability. Like consulting
companies, they're going through the
roof. There was a recent MIT study that
showed that 95% of AI deployments
in companies haven't got any traction
yet from it was like 6 months old.
>> Wow.
>> In a year or two that'll be 95% of AI
things have got traction.
>> And again this is that thing where you
go from like you know you hire someone
who's not good enough versus someone
who's just slightly better than good
enough. that transition point. It's like
ice turning to water or water turning to
gas. This phase transition is the key
point and we're at that tipping point
transition. So, you have to build up
your network capital. You have to build
up your support system, especially if
you're chronically online. You have to
embrace the AI and use it regularly for
you and your whole family cuz there's no
excuse not to. and then communicate that
you're doing that so you can be the AI
frontr runner in whatever you are
because that gives you more safety
effectively.
>> You have to think about it.
>> The final thing is you just have to
think psychologically your identity is
your job.
If the AI can do it better, what is your
identity really? People don't take that
step back and think about that, right?
What is my social contract? What is my
identity? What is my expectation? Like
again the book I've got we've got a
whole bunch of papers and simulations
and complex stuff. We try to make it as
simple as possible and it's free or 99
cents you know because we want people to
start thinking in a different way. And I
think you need to get your brain ready
before you start seeing stuff fall apart
be it from the job side violence
political upheaval whatever.
And what's a job sector that you don't
think people realize is at jeopardy?
>> Uh
um what's the job sector don't realize?
I know I kind of think everything's at
different stages. I mean look I mean the
creative sector is about to tip. I think
if you look at the latest media models
like again Tom that's something that
you've been very familiar with
>> when V3 came out you're like but then
nano banana okay these names combined
with V3 basically by end of year you've
got full length episodes with the right
structuring without any humans and by a
year from now you've got that
directorial top level directoral level
right
>> that's so any jobs and we kind of saw
that with the SAG AFA and other things
but again it's that tipping point
that I think people just don't realize.
Um I think that accountancy and others
the AI models weren't good enough until
now a lot of these accounting tax other
kind of professions um those will go I
it's just very difficult to see but I
think probably the main one is
managerial
like
a lot of jobs that can be done on the
other side of a keyboard video mouse
need that human component and if you
look at things like rap what was it
synthesia or hen now again you've seen
the evolution of that. Like now you
can't you could create
you talking like this with all of your
hand expressions and everything
and I can't tell the difference now. I
mean can you tell the difference now
with the latest models?
>> No, there's some that I'm really like
the person's like, "Trust me, this isn't
me. This is an AI version of me." And
I'm like, "Is it really?" Yeah.
>> But but how long has that been?
>> Not long.
>> It's been a few months, right? M
>> and so one of these things is again like
when you can't tell it's a worker on the
other side the managerial professions
are safe now but then you can start
seeing them be displaced by AI very
quickly. So I'm not sure on the other
side of the KVM stuff like dentists and
things will be fine for a long time you
know cuz we won't want robots drilling
around in our mouths.
>> Yeah. I'll tell you though, like odds
that they get better, more gentle. Uh I
mean, maybe not in the next 5 years, but
it's going to happen.
>> What we have is we have inevitabilities
and we're just making bets on what
cracks first,
>> right? And again, like the key
inevitability and way of thinking for me
is just this like I had this concept of
I Atlantis, a million graduates coming
in, but now they're senior managers.
When you try something like these very
long range models
that can work for hours and you're like,
if there was an AI that could do the job
and not make mistakes on the other side
of the screen and I couldn't tell it was
an AI, that's when you realize the
ridiculous impact of this. Again, jobs
like public sector jobs where it isn't
about performance will be the last to
go. But if you're a private sector owner
employee,
you'll have your job until there's some
sort of displacement activity, until the
competitor starts embracing AI and then
they're like, why aren't we embracing AI
and then you start having job losses?
But when that happens, it doesn't happen
in one sector at a time. It's like again
all the COVID KVM remote jobs suddenly
start letting go at the same time. And
this is why the gap between measured
unemployment or jobless figures and then
revisions are just going to go like that
all of a sudden and that's next year for
me
>> because I can't well I mean how can it
not be in the next year or two but then
the pockets of the economy that impact
would be different like when you have an
Optimus
what does it look like for truck drivers
in America which is like 2 million jobs
the freaking Tesla Optimus will just get
in to the truck and truck it around. You
don't even need the legs, so it'll be
half price, you know,
like no other nothing else needs to be
installed. It'll just drive, right? So,
we see these waves coming and again,
like what do you reskill to? I'm not
sure. You can just be ahead of the wave.
You can try and surf the wave. That's
the only thing you can do.
>> Woof. All right, man. This has been
crazy. Where can people get your book,
find out what you're up to these days?
>> Yeah, it's the last economy.com. Like I
said, it's free to download or read or I
think it's like 99 cents on most of the
platforms. Uh we're going to make it
open source, so we'll continue improving
it and then, you know, do the best we
can. Other than that, i.inc. intelligent
internet.
So, please come and follow us and sign
up. Free AI coming for everyone.
>> I love it, man. It's exciting times.
Crazy times. A little bit scary, but
also exciting. Yeah,
>> brother. Thank you so much for taking
the time. I always appreciate it. And
speaking of things I always appreciate,
if you guys have not already, be sure to
subscribe. And until next time, my
friends, be legendary. Take care. Peace.
If you like this conversation, check out
this episode to learn more. In the first
5 months of 2025 alone, US employers
announced nearly 700,000
job cuts, an 80% spike from last year.
That's over 4,600 people losing their
jobs every single