Marty: Laji, welcome to the show. balajis: Marty, good to be here. Marty: I'm very excited for this conversation. I mean, we've been having a few sidebar conversations on the state of the world, the fiat crisis, and the future, what's gonna happen here in the United States and globally. So let's just jump into it, the fiat crisis. I mean, big in the news right now, we just had the debt ceiling raised yet again. Not surprising. People, particularly the Republicans, will larp like they're gonna hold the line, but. the ceiling always inevitably gets raised. Excuse me. And so it looks like we've got more trillions to be added to the national debt here. What does the debt ceiling, how does that contribute to the fiat crisis that we find ourselves in right now? balajis: Yeah, so the debt ceiling issue itself is just one of like 30 things. You know, at least at the time of this pod, there's like some procedural vote, the actual deal hasn't gone through, who knows what'll happen. But just to engage that specifically for a second, they're about to issue something like six months worth of treasuries to try to refill the Treasury general account and try to basically... make up for lost time. And that is gonna flood the market with treasuries. And this guy, William Middlecoup, observed that the last time that happened, where there's a kind of last minute debt ceiling, and then they issued a bunch of treasuries in 2019, it caused this whole reverse repo crisis, and the Fed actually had to start printing in September 2019, even before all the COVID stuff. So it's quite possible that the debt ceiling thing, you know, the deal is actually just the beginning of a series of dominoes, you know, if anything like 2019 happens. So that's A. But B is really, the thing about this year's debate, which was good, is that it actually focused much more attention on the genuine long-term. problems facing the USA. It felt a little different than in previous years. I'm not sure if you had the same feeling where you know that it wasn't like this procedural kind of drama over previous years where it's just a political thing. This did feel like something where folks were engaged on both sides. at least among the troteria, you know, the commentariat. And maybe that's the difference is in previous times, with even 2011, you didn't have social media to the same extent. So you didn't really have authentic commentary. You just had the melodrama horse race of the mainstream media. But I think, you know, just keeping the debt ceiling aside, you know, for itself, the national debt has gone to something like 30 trillion. Have you seen that graph that EX John has made where it's like just kind of going Marty: Yeah, balajis: exponential? Marty: just the red. It's like an exponential balajis: Yeah. Marty: to the downside. balajis: Maybe we can bring that, actually, let me see if I can project that or we can find it in the show notes. Let's see here. Here we go. Can you project that? Marty: If you send me a link on Signal, I can send it to Logan. We can get it out. balajis: Oh, yeah, here actually I can also just... Can I share the screen? Marty: You should be able to. balajis: Let's do that. Boom. Can you see that? Marty: Yep. balajis: All right. So, you know, some people say, oh, it's not a fair graph, you know, et cetera. But basically this is the accumulated debt over many different presidents. This is the revenue and this is the deficit. That's like the one, a few set of years where there was like a surplus, right? And this is due to bond issuance and also deficit spending, you know, where the deficit is greater than revenues. But essentially what you're seeing is, you know, people talk about debt to GDP ratio, but I think debt to revenue ratio is actually sort of more realistic. Like if you have $500,000 in debt and you have $100,000 in annual income, you're basically never gonna pay off that debt, you know? Like if it's five total years of you doing nothing other than paying debt, obviously you have to live. So I mean, even 10% of your income going to debt is quite a lot, but 100% going to debt is just too much, right? And paradoxically, what's happened is, as this has gone more and more, whether it's exponential or quadratic, whatever the actual form of the curve is, but it's going quite crazy towards the end here, as this has gone crazier, you know what people have concluded? They operate as if deficits don't matter. Because it's the longer and longer the time since they've been chin checked by reality, the more they think that it doesn't matter. Marty: Mm-hmm. I mean, this is the balajis: Right? Marty: MMT thesis, right? That is just money we balajis: Yeah. Marty: owe ourselves. balajis: Well, it's even more than MMT. It's basically something where even if you weren't an MMTer and you didn't think you could print infinitely, you just think, well, we've done it and nothing happened, so let's do it some more. We did some more, nothing happened, so let's do some more, right? And so this is actually, Dalia makes this point, that the further away you get from a crushing, global sovereign debt crisis and deleveraging, paradoxically, the closer you get to the next one, because people become incautious, right? They just assume, you can literally never have a problem here, right? So this is one graph, okay? The second graph that I sometimes show people, if I'm showing people, you know, this one is something where it's like, people are just totally unrealistic in some ways, I think, and sometimes these graphs are like helpful to just kind of anchor. But like the other day, this one got like a few million views or whatever, but it's basically a. I'll show you a few more just for like a reality check, just to anchor people, you know what I mean? Okay, so if that's a graph of US debt, okay, here's a graph of Chinese steel production. which looks like the total opposite graph, okay? So here, back in, people will always give me, and probably you, these historical metaphors, and they'll say, oh, biology, oh, Marty, you underestimate us, we won the World Wars, and we beat the Japanese, and Churchill always said that we do the right thing after doing everything else, and you underestimate our capability to reinvent ourselves, and the 70s were bad, but we got past that, blah, blah, analogies just don't actually reckon with, you know, you can only do a historical analogy if there's time series similarity, right? The numbers constrain the letters, you know? So here, if you look at the numbers, the US was like, you know, 70, no actually like 110 something megatons of steel in like 1968 or something like that, right? And China's like 14 megatons of steel, that thin little red thing, tiny, tiny thing. Now today, you know, 50-ish years later, the US is down like 30, 40%, it's like 72 megatons of steel, and China's a billion megatons of steel, more than the entire rest of the world combined. Okay? Go ahead. Marty: Yeah, and that's, we were discussing this too, it was like, yeah, the Peter Zahans of the world who like pointed to China and be like, China's gonna fail, but I think a good way to approach this is just like to take the names off the chart and just look at the chart and say, all right, on this chart, who do you think is gonna succeed massively, and whether it be steel production or increased energy production in places like China and India, if you were to take the names off the chart and just look at it, you'd be like, oh, these countries are gonna succeed. balajis: That's right. Marty: the most. balajis: And the thing is, look, if you think about this as like an executive at a company, okay? there's a lot of people who will try to frame it as, oh my God, you're talking bad about America, that means you must hate America. Well, you know what that's like saying is like, oh, let me show you one more chart and then I'll come back to this point. Here's one more chart, this got a lot of views. And this shouldn't have been a surprise honestly to anybody, but this chart was like a huge surprise to people. And it should be like, you know, just table stakes. So this is the one where it's like, you know, trade with the world, right? In the year 2000, can you see the screen there? In the year 2000, blue are the countries that trade more with the USA, and orange are the countries that trade more with China. So China had like some African countries and Central Asian or whatever. 20 years later, and this is actually like three or four years ago basically, everybody trades more with China than the US, pretty much, right? I'm sorry, I'm sorry. And I think there's like one country that flipped the other way, like Estonia or something like that. Okay. But, and I love Estonia, it's a great country, but I think that's the only one on this graph that like flipped the other way. So for the most part, and maybe that's like arms or I don't know what it is. Point is though that broadly speaking, if you're trying to get people, if you're forcing people to decouple and you just look at this graph and you're saying the US is trying to force you to choose between the US and China, and the US is forcing the issue, which countries don't want the issue to be forced, who are they gonna pick? They're gonna pick China, because China sells them their chairs and their screws, like a lot of people, look, I love high tech, okay? I love high tech, I've devoted my life to high tech, but you know what? China can crush you on low tech, they'll screw you on the screws. They will literally just deny you screws, you know what I mean? And their scale production is just bananas. And so, you know, the thing is, as I was just mentioning, and you and I were just talking about with Zahan is like, I have no beef with Zahan, by the way. Like, I think he's like a well-meaning guy. Nothing is zero, nothing personal. I just want to say that because sometimes people are like, Oh my God, you're trashing him, but not at all. Um, but I do think in 2008, for example, remember the mortgages are rated AAA was, Marty: Mm-hmm. balajis: was it beneficial to either the lender or the borrower to delude the. borrower into thinking that they were AAA, you know, mortgages, like Marty: That was balajis: that Marty: a bit... balajis: these people actually had good credit. Go ahead. Marty: It was bad for both, right? balajis: It's bad for both because the borrower is stuck with a loan they can't pay and the lender is stuck with a loan that's going to default. And both of them are essentially, it's just a trade that doesn't make sense for either side and cause massive damage to everybody else, all third parties, everybody who got a job on that basis of the substance of that economic transaction, they're all wrecked. And this is the same issue. It's like, you know, do you know what happened in 2011 with the S&P and their downgrade of US debt? Marty: Mm hmm. balajis: Just Marty: Yeah, balajis: like the mortgage. Marty: downgrade balajis: Go ahead. Marty: what? Like A? balajis: Well, that's the thing. Just like mortgages were faked triple A, the US government debt was fake triple A, and the S&P downgraded in the last debt ceiling debacle in 2011 to I think like double A or something like that. It's still double A. Do you know what the US government did to S&P? They ordered a federal investigation and their president had to step down and Obama tongue-lashed them, right? And that's the thing is, like you heard the saying, too big to fail, right? The entire US establishment, it's all too fake to tell. Marty: I'm gonna go. balajis: All the financial stats have been faked for the last 15 years. Okay, it's not just AAA mortgages. See, the reason is that AA rating is like the observed unobservable. Because if those agencies were free to actually give freely floating ratings like they do for like El Salvador, right, that's actually like a market determined rating. Okay, if the agencies could actually give freely floating ratings to the USA, they would have downgraded instead. But they're not, they can't because there's a gun to their head. You know? And this is true not just for mortgages, not just for US sovereign debt. It's true for the assets that the Fed bought back at $0.00 on the dollar, whether it was mortgage-backed securities that they were purchasing after the financial crisis. It's true for the stocks that they're propping up with the Exchange Stabilization Fund. It's true for, you know, some people have thought that the VIX itself, that the Fed is putting puts and calls on it to try to keep it in range so that it can't actually bounce up too much. It's like Greenspan's plunge protection team in the late 90s, where, okay, just like what it sounds like, they would just buy assets and prop it up. And on and on and on it goes where inflation is trans-tory. They faked that until they couldn't fake that. Crime is down in San Francisco, oh, because crime reporting is down. Obviously, your windows smash, your car is stolen, nothing happens. In the early days of COVID... They said that there were no, now I know this will be a controversial case among your, you know, maybe some folks here, but like February 2020, people are saying there were no COVID cases in the U S and part of the reason was the FDA was blocking tests. It was literally like people had to do civil disobedience to actually run the tests to find out that COVID was actually present in the U S people were saying it wasn't. And, and there's so many things like this. I mean, another example is just, you know, accrual accounting versus cash accounting, you're familiar with the distinction. Yep. The government, or many governments, exempt themselves, Marty: Ahem. balajis: state governments, federal governments, exempt themselves from accrual accounting. They don't actually take into account the current, the obligations they have taken on in the form of pensions and so on. If they did, they'd be obviously massively and totally bankrupt. By the way, if you're a public company, you have to do accrual accounting. So it's forced on you, right? That's market accountability, but the state exempts itself, right? So. Like the totality of this, it's like at the end of the USSR, all the factory stats were fake. At the end of the USA, all the financial stats are fake. Like the whole thing, you know, like this, without the printer. You know, the exorbitant privilege, right? Check your exorbitant privilege. When that thing goes down, you know what happened to the Soviet Union when it went down? All of these factories that were like selling cars, you know what happened? Those cars were actually worth more if they were melted down as like raw metal. Okay, like the Lada's L-A-D-A, I think it's like the Soviet car. I'm not sure if that's the exact brand, but like the Soviet factories, because they weren't in a competitive marketplace, were literally adding no value. Negative value. Okay, to the cars they were making. And the entire Soviet system had been distorted for so long that everybody was trained on the wrong signals. And that is basically where we are in the U.S.S.A. Marty: And it's predominantly with financial products, right? balajis: It's, Marty: Like treasuries. balajis: it's, yes, it's with financial products. I mean, it's, it's interesting because, uh, you know, this is part of a, should I riff on this for a second? I know I'm, I think there's an interesting digression here. Should I talk about this for a second? Marty: Definitely. balajis: Okay. So one of my macro theses is that history is running in reverse. And so like 1950 is like peak centralization and you have, uh, you have one, um, One telephone company, AT&T, and you have two superpowers, the US and USSR, and you have three TV stations, ABC, CBS, NBC, okay? And if you go forward and backward in time, power starts decentralizing. So you go backwards in time, 1890, you have the... the American frontier closes, but forward in time, the internet frontier opens. You go backwards in time, you have Spanish flu, forwards in time, you have COVID-19. Backwards in time, you have the captain's industry, the robber barons, forwards in time, you have the tech billionaires, right? And I think the reason for this, there's like many, many more examples. A few more. Backwards in time, you have Russia and China are in a partnership, but the Soviet Union is a senior partner. Forwards in time, you have Russia and China in a partnership, but China is a senior partner. Right? You know, go backwards in time, you have, you know, the UK is running India. Now India is arguably the senior partner in the India-UK relationship, just like the China-Russia flip, right? And it goes down to really granular levels. Like 70 years ago, you had British origin guys supervising the partition of India. Now you have an Indian origin guy in the UK and a Pakistani origin guy in Scotland debating the partition of the UK. And by the way, I'm not triumphalist about that or anything like that. I think both those would be bad in different ways. I'm just saying it's like this insane thing where many of the same hinge points in history are coming again, but with the opposite outcome. One more example. In the 1930s, the New York Times sided with Stalinist Russia against Ukraine. In the early 2020s, the New York Times has sided with Ukraine against nationalist Russia. Marty: Ha balajis: OK. Marty: ha. balajis: And in the 1930s, the New York Times tried to essentially, and did successfully, suppress the news. Walter Durante managed to choke out Ukraine, and they assisted Russia in choking out Ukraine. This time, they tried to work with Ukraine to sanction Russia, but it didn't work. So you're seeing, it's almost like an origami thing. You know, have you seen these complicated origami things? You fold them up one way, and you fold them back the other way, right? I'm not... I'm not wise enough to understand the fullness of what I just talked about. There's like 50 more examples like this. It's actually bananas, you know? I mean, the specificity of them is pretty remarkable. And, but what I think the macro of it is, is that going into 1950, we've had several hundred years of centralizing technology. You've had mass media and mass production, and you know, the factory, and this, you know, going all the way through American history up till about 1950, from Washington to Lincoln to Woodrow Wilson, to Roosevelt, and of course Teddy Roosevelt as well. You have generally increasing centralization going into like roughly 1950. And then with the invention of the transistor, you start going in reverse, gradually. obvious that for some things have more momentum and they keep centralizing, you know, more federal regulations, but things start now moving in the opposite directions like the second derivative, okay? So you go to transistor, you have cable news, you have personal computer, internet, smartphone, cryptocurrency, AI, you start decentralizing, okay? And so that's like one dynamic. And the second dynamic is ideological ricochet. So One of the things I have in the Network State book, and this is just, I'm just mentioning the Network State book because it's like a placeholder for some of the concepts here, you know, like longer version if anybody cares. It's all free, you can look at it, you know. But related to that, all the, you know, in 1991, okay, to first order, the USA was on the capitalist right, and the Soviet Union was on the communist left. Okay, let's say 1988 before the, you know, everything fell apart. And that was kind of acknowledged that the economic access was the primary access in the world, and you had the communists on the left, you had the capitalists on the right. Okay. And Russia and China were far left communist, and the USA was on the right capitalist, and then you had like Western Europe kind of clustered with it, and then you had like soft socialist, you know, India and Israel actually was like, it had its kibbutz's and whatnot. It was like soft socialist, right? Okay. And Switzerland arguably is in the middle as the neutral party. And now, 30 years later, after a time of sort of ideological ricochet, now I would argue the farthest left group in the world is the U.S. establishment, as distinct from red America. Let me partition out red America, right? But the U.S. establishment with the, the progress flag, you know, like Blinken, you know, raising the progress flag on the official Twitter account. That's the one that's like the pride flag, but with the triangle on it. Okay. Um, you have, uh, so the U S establishment is the farthest left group in the world. And, uh, the, um, can you see me? You just kind of blanked out for a second. Okay. Um, your connection, let's see. Uh, okay. So your internet, you want to maybe connect to internet or something like that, just FY. Okay. Um, so the U S establishment is like the farthest left group in the world. And the Chinese, quote, communists are actually like in a sense, the farthest right group in the world. And except now the axis is not economics, but it's culture, because the woke's are culturally left and the Chinese are culturally right. And this is a caricature, but I think to first, it's true. The woke ideology is, you know, white people are the worst. And the Chinese ideology is Han Chinese people are the best. You know, where what's in the middle is Bitcoin and, you know, the internet, which basically is, you know, everybody is treated equally according to the rules of the internet. And it's neither negative nor positive discrimination on the basis of, you know, unchangeable characteristics. Right. And I think of that as actually the general genuine successor of like the the constitutional order or what have you. But that flip. where the US went from the capitalist right to the woke left and the Chinese and Russians went from the communist left to the nationalist right is like this crucial thing to decode the world that most people don't even understand has happened. Once you can see that, go ahead. Marty: I was going to say it's just been like death by a thousand cuts slowly but surely over the course of decades. balajis: It's, that's right, it's gradual, you know, but I think now at this point it's undeniable. And now actually much of the rest of the world has flipped, where now... India and the Visegrad countries, all the Warsaw Pact countries, all the countries that were socialist-ish, you know, they weren't communist, but they were socialist or they were under the Soviet Union, you know. Those countries are now like center-right. They're not like all the way nationalist-right, like, you know, chest-thumping, you know, like the Russian Z and so on are, but they're center-right. And then, conversely, the Western European countries are arguably center-left. Which means they're actually to the cultural right of the USA. If you think about it, you know, the New York Times keeps denouncing Macron. They denounce many European leaders for, oh, they're too close to China or, oh, you know, they want to control immigration or something like that. Right. Oh, they're less enthusiastic about some of the cultural transformations. Basically, woke America is just all the way out here on one pole when it comes to some of this stuff. Right. It's a farthest left culture in the world. And The thing about this is, you know, it's not a complete mirror image. Obviously, there's some countries like North Korea or Cuba that are like stuck in a time warp or whatever, right? But it's enough of a mirror image to kind of say, okay, that plus the fact that we're now decentralizing. I think we have a lot of the same conflicts, but with opposite outcomes. So for example, I mentioned that the New York Times is now siding with Ukraine versus Russia, whereas 90 years ago they were siding with Russia to choke out Ukraine. Okay. Last time they were successful, Russia defeated, Stalinist Russia defeated Ukraine. This time we'll see if Ukraine defeats Russia. It's looking, it's looking like a tie or whatever right now. Who knows what's going to happen. But the initial huge wave versus Russia didn't work, the financial nuking. And now it looks like a grinded out kind of conflict. And Russia isn't going anywhere because it's literally there. And like because the US can bow, it probably will at some point. But we'll see. Right. Charles Kupchan of Foreign Affairs is writing about how they need an exit strategy. And Foreign Affairs itself has admitted the world is now multipolar rather than unipolar, their experts have. And this woman Fiona Hill, who's like a national security person, who's like big into Russiagate and so on, Glenn Greenwald talked about how she has also essentially admitted that the US has lost much of the world on this Ukraine thing. All right. Now how does that all affect the fiat crisis? Basically, if kind of the ascent into 1950 was the essentially like winning every single battle and things centralizing, now it's like kind of happening in reverse. And just the fact that the world is multipolar, that foreign affairs is admitting that, because we kind of knew it was for a while, but the fact that foreign affairs is admitting it, do you know what I'm talking about by the way? Did you see that that poll? Here it is. It's phrased in a weird way, okay? So like the pole is not... Marty: I think I might have seen it, the poll trying to gauge the... balajis: Yeah, so here Marty: the balajis: we go, Marty: willingness balajis: right? Marty: of Americans to be involved. balajis: Well, it's a slightly, it's like, it's phrased a little weird, it's like a double negative. The global distribution of power today is closer to being unipolar than it is to being bipolar or multipolar. So if you strongly agree, you're saying it's still a unipolar world. If you strongly disagree, you're saying it's bipolar or multipolar, okay? Now, foreign affairs is like the, you know, the most establishment of establishment kind of outlets, okay? And... when they have overwhelming disagreement that the world is unipolar, it's now a multipolar world. Now, here's what that means. That's not just some random ass statement. That has immediate implications. Like this entire thing, the unipolar moment from like roughly 1991 to 2021, it's like basically about 30 years. It's done. So here's what that means specifically. All these countries around the world, from Turkey to Russia to China to India, are now setting their own policies and the US can't stop them. Okay, so the State Department in that country can say something, but that country can just ignore it and do what it wants, which was not true for the last 30 years. I'll give some concrete examples, even for allies, by the way. So with the Arab League. they all went and met with Assad, even though the US threatened sanctions for normalizing relations with Syria. In Japan, there was a soldier named Reid Alkonis who was detained. And even though a US Senator was yelling at them online, they still prosecuted that soldier, right? I'm not saying that's good or bad, I'm just saying that the country is disobeying the US. Brazil went and it housed Iranian warships. Again, the US, like some senator yelled at them, nothing happened. OK. Taiwan, when again, whether it was a senator or a congressman, I forget, but somebody, some senior muckety-muck said, oh, the US should blow up TSMC if China invades. Do you see this? OK. Marty: Yes. balajis: And Taiwan said, if the US tries to do that, we'll shoot down the US plane that does it. OK. So those are like, you know, that's Taiwan, that's Japan, that's Syria, that's Brazil. OK. The US establishment is just losing control of events. I mean, there's many more examples. It's China negotiating the peace treaty between Saudi and Iran. Now all three of them are on the same side with the US on the outside. It is. China negotiating the end of the Yemen war. It is Erdogan winning. Who knows what exactly happened that election? Byzantine politics or Byzantine, who the heck knows what happened? I don't know what's going on in a country with 30% inflation and he's got roaring crowds. Who knows? Still, blinking through grid teeth was forced to basically say, well, congratulations to you. And you have France going to China and shaking hands with Xi and saying he's not so bad. You have Xi convening all of the guys in Central Asia, like who are basically Russia's backyard is now China's backyard. All those Central Asian post-Soviet countries are now like basically in China's camp. Russia itself is trading in yuan. You have Southeast Asia, like all the ASEAN countries, the 10 of them have declared that they're gonna de-dollarize. The president of Indonesia said that that's a priority, you wanna make sure they have local card networks rather than Visa and MasterCard. You have the ACU, the Central Asian group of nine countries saying the same thing, the only one overlapping country, I think is Myanmar. And you just have, you have South Africa saying that, you know, if it was up to them, they would not enforce this international criminal court thing on Putin, and that they side with Russia basically in this, and they're saying that to a BBC guy. You have Egypt, you know, obviously defying. You basically have country after country after country where it's a global revolt against. You know, like Americans want to think of themselves as being independent from the UK, and that's obviously a real thing. This is all these countries declaring their independence from America. That does not mean that they're anti-American. That's a crucial thing. Like, it means that they're just moving on their own axis. They're like pro, you know, Brazilian, or they're pro-French, or they're... you know, pro-Indian or they're pro-X or Y, they're pro-Saudi, whatever, right? They're pro themselves, and they wanna basically operate on their own axis, and they don't wanna do what the State Department's been telling them to do. And now, because so many of them are doing it at the same time, the US establishment doesn't have the power level to force them to all do what the US establishment wants. That is the impact of multipolarity. Now, that actually has a domestic impact. Sorry, I know I've been going on. Should I pause there? Was that, go ahead. Marty: No, I mean, it's it all makes a lot of sense. I obviously hindsight's 2020, but you consider the first two decades of this century with the war in Iraq, Afghanistan, the pullout, the financial crisis. Like, I mean, the U balajis: There Marty: S is balajis: is. Marty: obviously in a weak, weak spot. balajis: You know, the thing is, one of the things that's remarkable to me is there's absolutely no discussion of Afghanistan and Iraq. There's no discussion of it. It was like, you know, we got into a rebound war six months after the Afghanistan pullout, because I think in part because the blob was embarrassed. Marty: Yeah, balajis: You know, Marty: they want to sweep it under the rug. balajis: Yeah, or it's like, oh, we can't lose twice or something like that. Right. And like in a real sense, Ukraine was like, you know, a more proper had been wounded. And, you know, of course, it's more complicated than that, but that's certainly one of the motivations, you know. And the thing about the Ukraine thing, obviously, like, innocent Ukrainians are being killed. I can't endorse this stupid invasion. You know, like I'm very sympathetic to the Eastern Europeans, the Estonians and so on who. just got their independence from the Soviet Union and don't wanna be forcibly reintegrated. I get all of that. The thing is that the US is about, or the US establishment, I should say, because the US is not a unitary entity anymore. The US is actually at least three warring tribes. There's Blue America, Red America, and then the tech guys, which are currently gray America, but they're really like a global group that is just alighted in America. And the reason I say that is, Blue America, for the last, I mean, one way of writing the history of the last 10 years is the Blue Tribe, has basically been in both decline and simultaneous war with everybody else, right? For example, Blue Tribe is at war with Trump, obviously, every single day, and Republicans. It's at war with tech, and Zuck, I mean, again, headline after headline after headline, attacking tech guys, whatever. So we're obviously with Russia, literally now physically, but... but digitally for a long time with Putin. It's a war with China, yelling at China all the time. And you may agree with some of these things, by the way, but I'm just saying they're fighting tech, Trump, Russia, China, but also to a lesser extent, but a real extent, Israel, India, Brazil, France, Hungary, like Saudi, I mean, Iran, obviously, everybody, they're taking on all comers. It's like, you know. Like they're basically and for a time until about let's say 2021, it actually looked like they were winning. Okay, because they'd inherited so much institutional oomph. that they had, you know, the New York Times and they had the Fed and they have, you know, Harvard and they have all these institutions and all this money and they could just go bam, bam, bam and spend down their trust to accuse this guy of, you know, like, like, oh my God, Zuckerberg is so evil for, for what's called Cambridge Analytica, it's totally fake. Russiagate, totally fake, right? And many of these things that they've accused people of are basically totally fake, a lot of the cancellation stuff. But ultimately what's happened now. is, once you see it that way, by the way, rather than as quote the US versus Russia and China, or just Democrat versus Republican, but you look at it as a network, and you look at blue tribe just fighting a bunch of other tribes in the same network, right? Some of those tribes obviously have enmity with each other. Red tribe doesn't like Chinese tribe either. But a big part of what blue tribe tried to do is it tried to keep the other tribes from ganging up on it. For example, Do you remember when Trump had that meeting of tech CEOs? Marty: Mm-hmm. balajis: Right after that, Travis Kalanick got singled out to just get purged and attacked because Blue Tribe did not want Gray Tribe and Red Tribe to gang up on it. So put a wedge between those two, just smash, make sure that Travis is like humiliated for saying something lukewarm about Trump or whatever then. Okay. So they wanted to put a wedge, make sure their enemies, and by the way, when I... I describe this as if it's intentional and it might be intentional at the level of some senior editor somewhere. But a lot of it is emergent network behavior, in the same way that you don't tell your white blood cells to go and fight something off. The queen of an ant colony doesn't give instructions to every individual ant. There's an emergent behavior as well as totally centralized. We understand decentralized networks. So blue tribe, when gray and red were maybe cooperating, boom, flying wedge in between. They go after Kalanick, purge poor Travis. And Then when there was some hint maybe of Putin making some positive noises towards Trump or whatever, they had this whole fake Russia story so that Trump and Russia couldn't pair up. And then the— You know, there's various other kinds of things like that. Another example was like tech guys in Saudi, right? Oh, were tech guys going to take Saudi money? Oh, now we're going to be so outraged about this one guy, Khashoggi. Do you know how many people the Saudi government, like before MBS took power, the Saudi government was a lot nastier. They killed a lot more people, right? MBS is actually relatively, I mean, he has reformed the country. And so, you know, it's actually like, you know, it's similar to is how you hear so much more about TNNmen than you do about the Cultural Revolution or Great Leap Forward. Like Cultural Revolution and Great Leap Forward were far, far, far, far worse. They killed millions and millions and millions of people. Right. But while TNNmen or, you know, something like that is bad, it's bad. They're not saying it's bad because it killed a lot of people. They're saying it's bad because they did something that the US didn't want them to do. Whereas with the Cultural Revolution or the Great Leap Forward, that was just China churning in internal chaos. It was not actually going to be a threat to the U.S. Now with this, you know, the Tiananmen thing, that was something where they were, quote, anti-democracies. They weren't flipping over to the U.S. column. They were the only country that didn't really do that in that, like, 89 to 91 kind of era. Again, that's not to say that, you know, what the Chinese did during Tiananmen was good or anything like that. Of course, it's bad. What I'm saying though is basically that the incidents that you hear about are those that are favorable to the US establishment. Another example, Russia after the collapse of the Soviet Union. Did you know Russia in 1993 that Yeltsin shelled his own White House? Marty: No. balajis: Yeah, exactly. That's an attack on democracy, literally. But you didn't hear about it. That's nowhere near as well known as Tiananmen. I don't know, one 10,000th of coverage, okay, because the US was backing Yeltsin during that period and they weren't backing Deng Xiaoping or Jiang Zemin in China, right? So if the US is backing you when they were backing Saudi, all of those crimes that the Saudi, I mean, the 19, 9-11 hijackers were Saudi, like all of that got swept under the rug. There was nothing there. Oh, you invade in Rockets. Once MBS turned against the US or wasn't fully with them, then anything he does is magnified or what have you, right? Again, this is not to say that one is good or bad, it's just to say that the magnification changes depending on whether it's in the interest of the session. All right, I know, I'm digressing, but I've just talked straight. So I expect you to just kind of interrupt or whatever, but why Marty: No, balajis: don't you go, go Marty: this is the balajis: ahead. Marty: way I like to do it, just let you run. No, but I completely balajis: Okay. Marty: agree with the selective spotlighting of things that are beneficial to the narrative. The one thing I could think of when you're going on that monologue was this is dangerous for our democracy. Like how there's no direct orders, it's just like a light nudging of propaganda that gets put into people's minds and then they balajis: Yeah, Marty: run with balajis: so Marty: it. balajis: on this on the whole, you know, just just to deconstruct that for a second. There are several ways that one can, you know, because this word democracy is. It's like Christianity or communism, where it can mean both like X and its opposite. OK, for example, with Christianity, Christianity and I'm not I'm not anti-Christian or anything like that. I'm sure there's some listeners who are atheists, some are religious Christians. No offense is intended by what I'm about to say. OK. Christianity at the time of the Romans was like the revolutionary religion that tore down the Roman Empire, right? Said, you know, a rich man will sooner go through and I have needled and you know get to heaven and you know like basically it was just a revolutionary thing that was that was about you know the last shall be first and the first shall be last and tore down the Roman Empire. And then several hundred years later, Christianity served as the basis for, and I know it's not a direct successor, but a spiritual, or at least they style themselves successor, the Holy Roman Empire. And then it became the basis for Christian Kings and it became the base for order. And it became like exactly the opposite of what it was. It was now an ideology that supported the establishment as opposed to being dedicated to overthrowing it. Right. Similarly with communism, communism was a revolutionary ideology that tore down the establishment, killed all the landowners and so on. But now, for example, in China, do you know what they called the descendants of senior Communist Party revolutionaries? Marty: No? balajis: Prince links. OK, so just like like the Christian king, right, that revolutionary ideology became a ruling class ideology. Like when you win, you become the king. And now all the same slogans are used to justify a hierarchical rule. And so, you know, one of the most bizarre things is this revolutionary ideology that Karl Marx, you know, dreamed up in, you know, central Europe, that hammer and sickle, where is it flying proudly in the South China Sea, 10,000 miles away by somebody speaking a foreign language on a Chinese worship? Right? When you just think about how far that's, right, that moved from 1848 to, you know, it's amazing the medic evolution, right? It became essentially its opposite from this revolutionary ideology to essentially an ideology that justifies Chinese nationalism, you know? And so the same with democracy, right? Basically, there's like several different, you know, angles you can have on this. The first is that today, democracy, in practice means rule by American Democrats. Okay, Marty: Yes. balajis: why? Because if you vote for a Republican, you must hate democracy. Marty: You're a white supremacist. balajis: Well, right. But a fun thing you can try is, oh, I am for democracy. I am so for democracy, I will only vote for Democrats because other parties are against democracy, so you'll never vote for Republican because they're against democracy, so you need to build a one-party state because that's the essence of democracy. Okay, so if you think about that, that's an epistemic loop. where essentially they have gotten themselves into believing that a one party state without Republicans is how they protect democracy. So let's call that one observation. And what's funny about this is, you can actually get them in an interesting loop where you say, would you ever vote for a Republican? They'll say no. Why? Oh, because Republicans are against democracy. Okay, so democracy means a one party state. And they actually kind of can't choose either, right? They kind of want one party Democrat. And what that means, by the way, in practice is California. It means one party Democrat, blue states. Okay. There's a second interpretation. And what that is is basically that everything that blue tribe does is democracy. So if they sanction you, if they deplatform you, censor you, surveil you, even invade you, color revolution you, whatever, that is protecting democracy. But if you win an election that they don't like, that is an attack on democracy. Marty: Yeah, balajis: OK, Marty: it's... balajis: whether it's Orban, whether it's Trump, whether it's DeSantis, whether it's Modi, whether it's, you know, it could be on the left too. It could be, you know, like Maduro or something like that. I mean, does he win an election? He's a rigged election, right? Point Marty: Bolsonaro. balajis: is Bolsonaro, exactly. So they have a window which they define as, quote, democracy and then anything outside that is an attack on democracy, it's democratic backsliding and so on. OK. Here's a third definition which is, quote, democracy means. US military ally, because it's very difficult to find a country that has high ratings for quote democracy that doesn't have a US military base there. For example, Germany, Japan, South Korea, right? Like essentially a democracy usually has a US military base or is like a former UK colony or something like that, right? If it's got high ratings for democracy. And that's a totally different filter on the world because obviously, you know, Japan, Germany, South Korea, these are like occupied countries with thousands and thousands and thousands of troops there. Right. Um, the fourth definition is there's actually at least three democracies out there or four, um, there's blue democracy, there's red democracy, which is like Republicans, there is Indian democracy, which I'll, which actually, I think is going to be very, very important in the years to come. And there's like tech democracy, the democracy of exit and online voting and so on and so forth. Right. And, you know, at the end of the day, I do think there is absolutely something to a free system where you should be able to choose and so on and so forth. And the exact weights of voice and exit and so on TBD. But just like Christianity could be interpreted to mean both X and the opposite of X or Z. You know, I mean, Christianity is such a big word. Communism is such a big word. It can contain so many things. Capitalism, also a huge word, it can contain everything from the agrarian capitalism of the 1800s to the industrial capitalism of the 1900s to the tech capitalism of the 2000s, right? Democracy is a big word that can contain many interpretations. And what I think, you know, just also, you know, beating up on the blues a little bit. I mean, just like the blues have concluded that what they actually mean by democracy is a one-party state, the Reds have concluded the same thing. They want... understandably, they're like, you know what, if this is tribal warfare, we're going to have one party Republican states. And so that's why, you know, a lot of the, I think a lot of the stuff on abortion, for example, is not so much on abortion. It's actually on immigration. You know why? It's because red states want to keep out blues from moving from blue states to red states if they aren't fully aligned culturally. So by passing these things that are shibbolets that will keep away some kind of blue, they are keeping Florida red or whatever. I think that's like, I've seen some people tweeting about that. I don't know what percentage of motivation there is. I'm not saying it's solely cynical or anything like that. I think that's part of it. Marty: I can confirm in Texas I know people who won't move here because of the abortion laws. balajis: Right. And so if that's something that's, so what's happening is, make America states again. States are diverging. It's, again, that thing about the decentralizing arc. The same kind of conflicts are happening, but in the opposite order. And the conflicts of the 1930s and the 1860s even, but in opposite order. And this time, it's like a freedom revolution. There's another aspect. So I mentioned like four different kinds. The blue democracy, red democracy. And red democracy is like Republicans at the state and local level. passing these bills, building Republican strongholds, and so on, right? The third, Indian democracy is worth noting. And the reason I note it is, again, with the history of running in repeat filter, for most of the 20th century, Chinese communism was and also ran, and a secondary note, to the Soviet Marxist-Leninist variety. But what happened about 10 years, before the collapse of the Soviet Union was that the Chinese started to do a more pragmatic version of communism. Right? 1978, Deng Xiaoping said, you know what? You know, it's famous saying black cat, white cat, doesn't matter if it catches mice, it's trite, it's cliche, but it's true that Deng turned around the entire country. Ezra Vogel has this great book on this, How China Became Capitalist. And so what happened was in 1989 to 91, The leading brand of communism totally face planted. And most communist countries went to zero around the world. There's a few that were holdouts, like North Korea, Cuba, whatever. But most of them, once the funding from the Soviet Union was cut off, all the flags went down, all the trumpets stopped, right? The KGB guys, they weren't being paid anymore. All their PsyOps just went down like this, okay? And the thing is that regime never announces that it's gonna die. You know, there's this great book called Everything Was Forever Till It Was No More. Marty: Mm-hmm. balajis: And it's basically about the last Soviet generation where they, the system, they knew the system was collapsing, but it also seemed eternal at the same time. And it's worth reading because the number of parallels to today, I'm going to come back to this point, the number of parallels today is bananas. I mean, down to like really small things. Okay. But my, just to return to this Indian democracy point. So Chinese communism took a pragmatic turn about 10 years. before the collapse of the Soviet Union. And it was a strong enough state to make its way through the choppy waters of 89 to 91, and make it through and come out the other side. And now, I'm not sure this is something you'd want, but it is the quote, leading brand of communism. Right? In the sense of like it, you know, like Russia is now the junior partner and so on and so forth, okay? And Vietnam is also ostensibly communist and there's There's only a few communist states, like it's China, Vietnam, North Korea, Cuba. I forget the other one. There's one other one I'm forgetting. I mean, it's Laos. I forget the other one. So I think it's five. I'm gonna look it up. Marty: Hahaha of this. balajis: Yeah, Laos, right? So, okay, fine. So, point is that Chinese quote the leading brand of communism, right? They're not exporting their system, but they're the leading brand. So, I have a feeling that in the same way that like the Chinese became pragmatic about 10 years before the collapse of the Soviet Union, okay, the Indians have a pragmatic version of democracy where they can build. And they took that turn about 10 years ago. Like just to give, there's something I tweeted recently, which is, and by the way, I say this, look, yes, I'm of Indian ancestry, but I've never been like a huge, I like to think I call them as I see them, okay? It's like, you know, somebody who's born in an Italian American and they go back home, they're like, whoa, Italy is executing, you know, Italy's buildings, if Italy was doing that, that's kind of the, that's the framework that I'm going into this with, okay? The first, you know, uh, I don't know, 30 something years of my life. I'm like 43 now. Okay. But first 30 years of my life, I mean, I, I, like, uh, being Indian was like, again, being like, um, John Salvatore or whatever you're just like, it's just like a last name. It wasn't like something that I paid a huge amount of attention to, to the old world, you know, it's just in tech. I'm doing math, doing all that type of stuff, but over the last 10 years and especially like the last five. I was shocked by how well India was executing. Like it's it's hard to you know the thing is. You can only really sense this if you've gone back every few years and you've kind of seen what it is right. And then you just see it's kind of like San Francisco but in reverse. You know San Francisco was like this beautiful city and just became a complete shithole. Right. And it didn't have to be that way but lots of blue cities have decayed like this. I don't have to tell you this, you've seen it yourself, right? It's like that in reverse in India. Okay? And that's not to say that it's like totally clean or anything like that. It's not. Okay? But it's improved so much over the last 20 years, and especially the last 10 or the last five, that something really good is happening there. And just one way I can kind of put some numbers on it, like the new parliament building was built in two and a half years and cost 125 million. And you can see it. I tweeted about it. Okay? You could like for a thousand X that amount of money you like it. I mean I think Salesforce tower how much was Salesforce tower. Salesforce tower was like 10 billion or something. How much did it cost. OK, it was like multiple billions. OK, you know, the embassy in Hanoi by the US is like 10 X that cost. It's just the embassy and it's not the not a full parliament building. In India that can build is a completely new thing or rather it's an old thing that is again new. Right. Like like India was. I'm not saying this in a oh, chest umpy kind of way or whatever. But like, you know, Columbus in 1492, he wanted to get to India. That's what he called. the American Indians, he thought they were Indians or he wanted to trade with them. Right. So in Europe, India was Marty: Ahem. balajis: actually a big trade center that they wanted to trade with. It was thought of as something you'd want to go and seek out. So India was not not in a like a chest up way, but it was a formidable player civilizationally for a long time. And then it was just like laid low for a long time. And so was China laid low by the opium wars and whatnot. But now both of those two are just coming back with like about a 10 year delay. And India is just executing. And my point is that just like Chinese communism became like the leading brand of communism after the Soviet collapse, I think there's a chance that Indian democracy becomes the leading brand of democracy if we see a serious financial crisis in the West. I think that's good because at the end of the day, I do think we need an alternative to Chinese communism because that's the thing. Like I don't. I don't say, I mean, at the beginning, you know, when we talked about those graphs in China, I'm not a China triumphalist at all. There's some people who will go and show those graphs and be like, yay, China and so on. I respect China. I fear China. I mean, fear, let's put it like that. Let's say I'm apprehensive about China, right? I'm not like, oh my God, like, you know, but like genuinely concerned about how powerful they are. They are not just going to go away. They execute really, really, really well. They're bleeding in cars. They've just launched their own domestic plane, competitor to Boeing and Airbus. They build more than anyone else in the world. And here's the thing, right now they are playing nice. That's the thing, they've learned to flex a diplomatic muscle. That's the thing they didn't have. They were doing this wolf warrior stuff where they were yelling at everybody. They just learned how to flex a diplomatic muscle. And once they just started playing nice, they've rolled up Saudi, Iran, France, Brazil, all these guys all at once. They're the obvious alternative economic model. Here's the problem. Just like the US was... you know, I think overall good from 1945 to 1991. But once the Soviet Union went away, the US by degrees gradually became very nasty, Marty: Mm-hmm. balajis: you know, because there wasn't that constraint anymore. I'm not saying, it's not that the Soviets were good, it's that their presence meant the US basically, the US played win-win, right? Ultimately, the justification for the US from 1945 to 1991 is West Germany was better than East Germany, South Korea was better than North Korea. Hong Kong and Taiwan were better than the PRC. Chile was better than Cuba. And while the groups that the US backed were not always nice, they were a lot nicer than the other side. Like, you know what the term for left-wing death squads is? It's communist. Right? And so left-wing death squads killed 100 million people in the 20th century. And fighting them off, while it wasn't always nice was on balance better than the alternative. Right. So on balance, you know, even though I was only alive for a portion of that, like I think America during the Cold War was on balance good. And then by degrees, it sort of lost its bearing. Maybe the 90s, you can argue maybe Kosovo was like an early version of that. Right. There were still good things the US was doing during the 90s, in particular, is helping the Eastern European countries get back on their feet. It was, you know, and, and, and build them up economically, the win-win America that I think you and I both respect was still there. Right? Like, that was still in evidence in the 90s and even the early 2000s. But then after 9-11 and Iraq and, you know, it started to lose its way, and now it's just completely lost its way. And so the thing is that without that constraint—and now multipolarity is bringing the constraint Now, here's the problem. Maybe multipolarity is only actually a transitional phase. Maybe if this fiat crisis is as serious as we think, maybe the US is actually gonna financially faceplant. Like, just like SVB, just like these banks just go digitally to zero. When you've got financial wealth and it's all zeros on a printer, it can just go to zero. It's like much more like flaky than the factories in China, right? So if that happens and if that faceplant happens, we can talk about the mechanics of it, then... Well, China's really strong in that world. It's a beast out of a cage. The Russian bear, the Chinese panda, boom, they escape all constraints. And everybody who is mean to them is gonna get, you know, oh shoot, Marty: They're balajis: right? Marty: come up balajis: Cause you know what? Go ahead. Marty: and it's just very frustrating. Um, cause I do think Americans, particularly the establishment is severely discounting the strength that countries like China, India and Russia are gathering right now. Again, going back to what we said in the beginning of the conversation, if you just take the names off the chart and look energy production is what I think is the canary and the coal mine. balajis: Yeah. Marty: If you look at balajis: Right. Marty: increased energy production in China. Russia, India, particularly, like they're exploding while we're shooting ourselves in the foot and putting in unreliable energy infrastructure. Then on top of that, again, the propaganda about like Chinese being communist and we'll never make it, just like the nature of being in the Bitcoin mining industry. I've interacted with a lot of Chinese entrepreneurs and capitalists and they're arguably. more capitalist than a lot of the people over here in America. And that's just, people don't like to admit it, but just look at the major manufacturers in Bitmain and MicroBT. They're two Chinese companies. Obviously, MicroBT has moved its headquarters, but it started in China. And they were arguably the most capitalist actors in the Bitcoin, the whole Bitcoin economy. I mean, the ASIC industry they spun up themselves is one of the most impressive things. that's happened in the last two decades. People just don't want balajis: Yeah, Marty: to acknowledge that. balajis: that's the thing is like, you know, so let me show something here. And first of all, you're absolutely right. Um, you just, even if it's a rival, especially if it's a rival, you have to respect them in a sense of you need to actually have, you know, the greatest strength is to know one's own weakness. Like the USA did not win the USA of mid century did not win the cold war by saying the Russkies suck. They'll never do anything. When the Russkies were out, when the Soviets were out executing the US during Sputnik, the answer wasn't, no, we've got the great Mississippi River. Right? Instead, JFK pushed, you know, the moon landing. Right? There was the admission that the other guys had gotten ahead, and there was the redoubling of effort and dedication to get back ahead. Right? That's actually, it's not denial. It's not like, oh, well, we're a democracy, and we've got the Mississippi River. Therefore, we're going to win. That's stupid. You know? Like, lots of countries have rivers. The reason I say this is all the geography stuff. So to your point on the energy thing, so do you see the slide that I kind of put up here? Yeah. So someone was like, I'd like to hear Zion's main pillar is bare thesis, 100% reliant on the US-led world order. If that is true, China cannot secure their own energy, you know, right? And it's like, it's just totally false because PG&E is doing rolling blackouts and China's scaling nuclear, right, to your point on energy. And then someone's like, oh, China also had a blackout or whatever. And I'm like, okay, fine. Why don't we look at the graphs, right? This is electricity production by source in the US. Do you see that graph? Marty: Yep. balajis: And Marty: Everything's balajis: this is what Marty: falling. balajis: it looks like. This is what it looks like in China. Obviously, one news report is not the same as the growth, where it's now at 7,000 terawatt hours and growing. And this is what it looks like for India as well. Not like this, but more like this. And so the issue is with all of this stuff that people, it's like, They are in, it's a difference between founding and inheriting, you know? If you've built something, right? And you know, you've built the TFTC podcast and you know a bunch of entrepreneurs. And are you also an investor? Or do, okay, great. Marty: Yes. balajis: So, you're close to entrepreneurs, you know, I was both a founder, I've been a founder, I've been an investor and whatnot. It's really hard to build something, right? And... The difference between somebody who's founded something and someone who's just inherited something is the difference between the men who built America, who didn't take anything for granted, who did not think number one was their birthright, and they built it up from scratch, versus, you know, I don't think everybody, but a lot of the effete children of empire that inherited the superpower, and it's like taking a McLaren or whatever and running it into the ground. You know, like to mix metaphors, okay, I know you're, I know McLaren's a car, okay, running into the wall. You know what I mean, right? Marty: Yep. balajis: Because, you know, in 1991, the USA was a hyper power that won everywhere without fighting. And by 2021, it fights everywhere without winning. Like the decline in 30 years is very, very, very dramatic. And you know, what could they have done differently, right? I'm not sure they could actually have, I think it's stupid to say, oh, you could have held back China. I don't think you could because they just execute incredibly well. I mean, what I, what I, at least domestically, what they definitely could have done is the establishment could have essentially taken stakes in tech and not fought tech tooth and nail. It could have taken a more win-win posture versus conservatives and not alienated its entire police and military. Right. And, But instead, it, you know, for a variety of reasons, did that. Right? So it's alienated its tech guys and its conservatives, and they're different, right? They're overlapping, but they're not the same. It's alienated its tech guys and its conservatives domestically. And it also has fought guys globally. And so it doesn't have any home base beyond like Brooklyn or whatever, you know? And even then, those people are all stabbing each other, right? Marty: Yeah. balajis: Um, so, oh gosh, it was, oh, one thing I, you know, one point I made, I want to kind of actually talk about this analogy for a second in a more depth. So, you know, I talked about like the fall of the USSR and I mentioned the USA. Okay. Now woke America is to America as Soviet Russia is to Russia. Like there were, you know, Russians were in many ways, the greatest victims of the Soviet regime. You know, Marty: Easily. Yeah. balajis: it was this, right? Go ahead. Marty: No, easily. Objectively, balajis: Well, Marty: they were. balajis: it's complicated because they were also turned by the Soviet regime into victimizers. And they're, you know, like Russians were used to invade Estonia and all these other places and impose locally, right? And so it's very complicated. And even now today, there's a lot of Russians who pine for the time when they were big and strong under Stalin, you know? even if he killed lots of them or whatever. Right. So it's very complicated thing. The difference between like a country and like this globe spanning empire. You know, it's kind of like a you're seeing Venom, the Marty: Yeah. balajis: movie Venom, right? You know the Venom symbiote, how it like powers you up, but it like devours you from within. Marty: Mm-hmm. balajis: Right. That's what like empire is. OK. In a sense, it took Russia from just a country in Europe to the Soviet Union. Right. like the venom symbiotic version of itself, which had propaganda appeal everywhere and could launch nuclear weapons and had satellites and conquered all these people around it. It gave like the Russian superpowers because it gave them ideology. But it devoured them from within and it left them like a shell of their former self when the whole thing left. And then they had hyperinflation and they had all this chaos and they had states break away. And then they had like Have you seen the post-Soviet conflicts? Have you seen that Wikipedia list? Marty: to. balajis: There's like 30 post-Soviet conflicts. It's like the Tajikistan Civil War or whatever. Okay, there's like a ton of these things, right? And everybody's just like shooting each other in the post-Soviet atmosphere, and the US is just looking over to make sure the nukes aren't flying around, okay? And the point is that basically, that's kind of what I think of the USSA is like, right? Like, woke America is to America, Soviet Russia is to Russia means like the current regime oppresses the average American and they're in many ways one of the biggest victims of the regime. But they're also turned by the regime into victimizer, especially abroad. You know, lots of people in the middle East, lots of people abroad, you know, their only encounter is with either the Pentagon or the State Department. And it's either at gunpoint telling you to do something or it is. you know, imposing sanctions and this and that, very high-handed. Like the rest of the world has seen the pointy end of, you know, what, what the US establishment is. And now you're seeing some of that coming back because they've got voices online and they're like, no, I don't want to be bossed around like this anymore. Right. Um, and it's not so much like it's very complicated because just like the Soviet case, there was also, uh, you know, look, as anti-communist as they come. All right. But. It is. it is empirically true that the Soviet Union did have massive technical accomplishments during the 20th century, like from Sputnik to, you know, some of their scientists and mathematicians were like absolutely world-class. It's just complicated like any giant empire is, right? And I think the U.S. delivered a much better life for its people over that time period, and so is the better of the two by far. But now at the end of empire, we've got a situation where The parallels to the USSR are actually, there's a lot. Let me go through them. So first is, both had a chaotic withdrawal from Afghanistan. Both of them have something where there's crashing life expectancy for men. Debts of despair due to drug overdoses and things like that. Both of them have had basically about 10 years of massive internal conflict and confrontation. with a very powerful outside superpower. Both have a guy who took office, who essentially overturned decades and decades of policy, and so it's Gorbachev and Trump. Both of those were totally resisted by the establishment. In fact, six years after Gorbachev took office, there was a coup against him by the communist hardliners. And it's arguably like whether you, whatever you call Jan six, it's like that, but in reverse. And also 1985 and 2015, one of the things Gorbachev did is he allowed Glasnost and perestroika and glasnost was truly free speech and perestroika was more free markets Right and he thought that this would like gradually reform the Soviet Union But actually it unleashed these forces That led to the collapse because once people had freedom of speech they could start talking about all these things the regime had done and all these secrets that bubbled up and Then free markets started to show how? Terrible the actual standard of living was In the US, we have digital glasnost, which is uncensored social media, and we have digital perestroika, which is Bitcoin, and truly free markets. And so for the first time, actually in generations, we have truly free speech in the West. And why did we not have it? It's less obvious in the Soviet Union where they actually put photocopiers under padlock. But until very recently, you essentially had to inherit a newspaper to be able to get your word out. You know, you had You had the freedom of speech to go and talk to your next-door neighbor or something like that. But actually going to broadcast, you need a radio license or a TV license or inherited a newspaper or something like that. So you didn't have practical, you didn't have freedom of reach. You couldn't easily build up reach. Right? It was very capital intensive until basically about the last 10 years. And after an offensive and a counter-intensive and so on, with Alon getting Twitter and now we've got multiple decentralized social networks with Jack, with Noster, and there's Farcaster, there's Blue Sky and whatnot. It looks like... we actually have digital glass and Austin true freedom of speech on the internet. And you know, the battle for Bitcoin, that's still to come. Obviously, you and I think about that a lot. But as you're aware, just like we didn't have truly free speech in the U S we didn't have truly free markets because gold seizures. Right. Marty: Mm-hmm. balajis: And you know, one thing people think by the way is just like the fed has been gaming, you know, the plunge protection team has actually admitted they're gaming the market. Right. And people suspect they're gaming the VIX. People also suspect they've been gaming the gold price with like puts and stuff like that. But now central bankers outside the West buying physical gold seems to be driving that up. Luke Roman is the expert on this. I'm not like a gold expert, but he's talked about this. But now with Bitcoin, we actually have truly free markets. And since the introduction of Bitcoin, as you know, if you look at USDBTC, I think Bitstein, you know, Michael, Michael Bitstein, Marty: Goldstein, balajis: I know Marty: yeah. balajis: he calls himself Bitstein on Twitter, right? So I like him, but he sometimes posts this graph showing the US dollar collapsing against Bitcoin. Because it's lost six, seven orders of magnitude, you know, from from one cent to $10,000. Okay. One order gets you 0.1, two gets you $1, right? Three gets you 10, four gets you 100, five gets you 1000, six gets you 10,000. Right? So the US dollar, the smart money has actually been once Bitcoin is out there. Here's a graph I'm talking about. Marty: That's, balajis: Go ahead. Marty: well, while you're pulling the graph up too, that's like one thing I wonder like with the internet, truly free speech and truly free money and free markets, is this manifestation of this version of free speech and free markets more powerful than the free speech and free markets that were unleashed in the Soviet era? balajis: I think they are. I think it is, actually. And I think also, it's not, so here's a graph that I was talking about. Oops, that's BTC USD. I want the opposite. I want. Do that. There we go. There we go. Okay, since the inception of Bitcoin, the dollar has been collapsing against Bitcoin Right? Marty: Yeah, it's got a couple more orders of magnitude to go to, I would say. balajis: And it's almost invisible on the chart, but it'll be highly visible in real life. So it's just a funny way of thinking about it that once people had truly free markets introduced, they started opting into them. And all of these bombs and stuff that were so dramatic for us, like this is an enormous vote of no confidence against the Fed, which I'll come back to. So going back to that. you know, analogy, right? So there's Afghanistan, there's the life expectancy drop, there's the Gorbachev Trump parallel overturning decades of policy, there's Glasnost and there's Perestroika. But it even goes down to smaller things. For example, once there was Glasnost, you had subcultures forming within the Soviet Union that weren't necessarily opposed to the mainstream, but they weren't aligned with it either. OK. Like that's to say, you know, this is an unusual thing for a Soviet Union that for decades had been so centralized. Now you had cultures that were into, I don't know, rock and roll or something like that. And rock and roll was American-coded, but there were other things that were not Soviet-coded. And that's similar to the internet subcultures that have arisen that are not necessarily anti-regime, but they're not like explicitly pro-regime either. They're their own things. So they sort of hollow out the total alignment of the 1950s with the state. that makes sense. Okay, even more than that, like the Soviets had a word that is very similar to our term clown world. Marty: Hahaha balajis: Okay, like I'll find this term, it's in this book, everything was forever till it was no more. Okay, here's the book. Marty: Their clown world word was probably much more beautiful than... balajis: Well, it's funny because it's like they would joke about the absurdity of the contrast between like the official propaganda and then what was actually here. Let me see if I can show this to you. So this book, Everything Was Forever Until There's No More, The Last Soviet Generation, okay, is worth reading because the collapse, right, Soviet socialism, so the collapse seemed both completely unexpected and completely unsurprising. At the moment of collapse, it suddenly became obvious that Soviet life has always seemed, some say, eternal and stagnating, vigorous and, bleak and full of promise, right? And it's because, you know, the Soviet Union didn't just like, didn't just go down in one straight line. There was all kinds of thrashing and other kinds of things that they tried to do. Just to kind of discuss that a little bit more. Basically, you know my thing about how history is running in reverse, but we're seeing like the opposite outcome, right? One of the big things that Gorbachev did was detente. Because for 40 years prior, the Soviet Union had been locked in this head-to-head with USA and everything from the Cuban Missile Crisis to Vietnam all came out of that. And Gorbachev cooled that down. Trump actually did the opposite. Why? For 40 years-ish prior to Trump taking office, the US had been in detente with China, and Trump escalated it. So Gorbachev took escalation to detente. Trump took detente escalation. Now you might say that's good or bad, but basically very counterintuitive at that time for Gorbachev to deescalate with the hereditary enemy, the USA, and is very counterintuitive at that time. You remember in 2015 when Trump was saying, China, China, China, China, everybody was making fun of him. That was an extremely non-consensus thing. You had to be a working class guy to care about China. Why did you care about China? Are you a racist or whatever? That was absolutely the attitude in 2015. If you just warped back. It wasn't that long ago. And even as late as like 2016, I found this, here's just like an article just to show you like the temperature at that time. Nobody cared about China, nobody cared about Taiwan. Okay, let me show you. All right, just a few years ago, right? Here, this is 2016, okay. You can Google the headline, but basically, is from December 2nd, 2016. And there's other headlines around the time. Trump speaks with Taiwan's leader and affront to China. Okay? Here's a quote, among diplomats in the United States, there was a similar shock. This is a change of historic proportions. The real question is, what are the Chinese gonna do? Okay? So as late as 2016, NYT was up reading Trump for talking to Taiwan, angering China. That was mainstream sentiment back then. This is not that long ago. You with me so far? And if you go back even a few more years, okay? Here, 2011, to save our economy ditch Taiwan. OK, right off one trillion dollars of U.S. debt in exchange for a deal. You know what? Like, this is actually the kind of hardheaded drill politic that should be on the table as a consideration rather than, you know, look after you've just burned eight trillion dollars in Iraq and Afghanistan. Maybe avoid a giant war and have a peace and some treaty or whatever where you can get chips and, you know, so on. I'm not saying it's like the ideal outcome. I'm saying, though, that the U.S. was. in detente with China at that time. And then they went to escalation after 2015 with Trump, right? But the parallel is going even deeper. It's like, you know, one big thing towards the end of the Soviet Union is a huge portion of their youth were actually obsessed with foreign culture, right? Blue Marty: Mm-hmm. balajis: jeans and rock and roll. OK? Now here's the twist. Actually a huge portion of American youth are into Chinese culture. You know why? Marty: TikTok or? balajis: Exactly. TikTok. Marty: Yeah, balajis: That's right. Marty: yeah. balajis: Like, TikTok can't be banned or whatever. It's too popular among the youth. Marty: Yeah, that balajis: It's Marty: TikTok balajis: not like a Marty: K-pop is big too. balajis: K-pop, exactly, foreign influences in general. This is the thing, like the whole Russiagate thing is actually part of a broader thing, which is that for the first time, the US has gone from the coolest country in the world to the holiest country in the world. The US has gone from the holiest country in the world to the holiest country in the world. The US has gone from the holiest country in the world to the holiest country in the world. The US has gone from the holiest country in the world to the holiest country in the world. The US has gone from the holiest country in the world to the holiest country in the world. The US has gone from the holiest country in the world to the holiest country in the world. The US has gone from the holiest country in the world to the holiest country in the world. Okay, Marty: holier balajis: what I Marty: than balajis: mean by Marty: thou. balajis: that is exactly holier than doubt. Like when you and I were growing up, I mean, just think about like, okay, not to pick on him, like Jimmy Kimmel, okay? His transformation from being the Joker of the Man Show to this woke scold. Yeah, all this, Marty: wearing balajis: you know. Marty: blackface balajis: I'm Marty: and balajis: not gonna lie, I'm not gonna lie. I'm not gonna lie. Marty: not only blackface he he uh... he painted up his whole body to imitate balajis: Oh yeah, Marty: Shaq balajis: he Marty: there balajis: made fun of Karl Malone and all this. So Jimmy Kimmel was like a boorish clown, I mean whatever, that was his persona, okay. Marty: Beer and Tits was the show, balajis: Exactly, Marty: the man show. balajis: right? Or John Stewart was very un-PC for today back then. And all of them have become essentially extremely holy. Or Jim Carrey, another great example, right? All these guys who are funny men have become holy men, which is a non-obvious thing. You know, it's a non-obvious transition to go from irreverent body humor to totally worshiping the state. Right. It's like not, you would not think that those two things connected in like ideology space, but somehow that happened. And I think where it happened is these are people who want very high status and are good at getting it and are great actors. And as that changed into like this Neo-state religion. They just changed that, right? But what that left open was true comedy. And so Dave Chappelle and others have kind of taken that kind of role, right? But it also left open coolness and interesting things. And, you know, like you can argue, it may be a little different than cool, but SpaceX is wow, you know, rockets taking off, like the cool stuff, AI, I think that's cool. Maybe you call that wow, you know, like cool versus wow. It's cool is like... you know, the turning of the head and wow is like, aw, jaw drop, it's kind of a different thing, right? But they have left that domain open where there's people who are doing cool things, people doing wow things, and it's no longer, you know, the NPC who's just saying what NYT is saying is neither of those things, right? But actually, I'll give you a puzzle, all right? The biggest, here is the biggest riddle, and for me at least, it's a skeleton key that explains a lot of the last eight years. Towards the end of the Soviet Union, the USSR was copying the USA. And one of the reasons it failed is because it changed from, we are going to build communism to we're going to be like a shitty USA. OK? We're going to be like a crappy clone of the USA. And that was everything from Gorbachev trying to have free speech and free markets to allowing Loosing up, right? Here is my question to you. What country is the U.S. copy? Marty: I mean, if we're really going down the CBDC route, it would be China, right? balajis: Exactly, exactly. This is the non-obvious clue to the last eight years. Republicans, and I'm not saying this as like a diss on any particular group, I'm just saying it's a different lens in the last eight years. Republicans are rejecting free markets to go to industrial policy, economic nationalism, tariffs, trade war, all this type of stuff because they think China's a competition. They're gonna out-China China. Democrats have rejected free speech. There's literally articles saying, I'll just show you just to show you one. China, these guys saying China was right in the Atlantic. Marty: Yeah, China's actually doing something good by curbing speech. We should have balajis: That's Marty: more control balajis: like, Marty: over the money. balajis: yeah, here, hold on, look, see these guys. in the Atlantic that, "'Internet speech will never go back to normal "'in debate over freedom versus control of the global network. "'China was largely correct and the U.S. is wrong.'" Okay, that's in the Atlantic. That's an explicit statement, okay? And often you'll see it said implicitly, but basically the things that made the U.S. the U.S. and even if it was not fully free speech in free markets, those principles were rejected. Right? The right rejected free markets to go to this trade war, economic nationalism, chest thumping kind of thing. And by the way, like I'm not saying that you can't do trade policy well. OK, I think you can. But it's hard to do it well. And simply doing it doesn't mean you're doing it well. OK. And let me come back to it. It's kind of like once the Soviet Union decided to do capitalism, it did it in a terrible way because there's a graft and retrofit on top of the system that wasn't built for that. You know? Industrial policies like venture capital. It's really hard to do profit. It's possible, but hard to do profit. Okay. Similarly, when the Democrats were trying to do speech control, censorship, cancellation, de-platforming, you know, even cancellation has its origins in China. You know what that's called there? Human flesh search. Have you heard that before? Marty: Not human flesh hairs, but I do remember the dunce caps from the balajis: Yeah, Marty: color revolution, balajis: the Cultural Revolution. Marty: the cultural revolution, balajis: Yeah. Marty: yeah. balajis: You know, the parallels, you know, I observed this actually years and years ago. Here, I'm going to show you this. So years ago, I was just observing this, basically, you see this WeChat users block from sending 6489 or 8964, right? June 5th, 2018, do you see that? Marty: Mm-hmm. balajis: Okay, Facebook scrubs any mentions of Sierra Mella. Right? So basically, when you send politically sensitive stuff on WeChat, they censor. When you send politically sensitive stuff on Facebook, they censor. Right? This is three or four years ago. And observing it then, neither side wants to admit, but the US and China are converging in some weird ways, internet censorship, nationalism and socialism, state takeover of tech companies, okay, social credit and cancel culture. And cancel culture is just a decentralized social credit score. You know, and then human flesh search is a Chinese thing for Twitter mobs. Okay. And this was November, 2019. Now, you know what happened just a few months later. ultimate copying of China. Marty: COVID balajis: Yeah, Marty: lockdowns, balajis: lockdown. Marty: all that. balajis: Exactly, right? So which is a bipartisan copying of China. And the thing is, early on, by the way, you know, it is true that in the past, quarantines by well-functioning state have at times been used to control the spread of disease. Didn't work for COVID, you know, that's a whole kind of separate discussion. But the point is that on a variety of issues, as we've just gone through from rejection of free markets to rejection of free speech to the CBDC to the speech controls to thought controls to cancel leash, all this kind of stuff. The US has been copying China. It's a bipartisan thing and it's not admitted. Okay, go ahead. Marty: Well, I think it's not admitted by the establishment, but I think people like us, Bitcoiners particularly recognize, and that's why they focus on Bitcoin. This is like, hey, we're going to get China here with the social credit score if we don't figure out Bitcoin. balajis: True, but I'd say that the full scope of it, I think people will sometimes see one piece of it or another. They'll see it's a CVDC, okay, or they'll see it's... Marty: Cultural Revolution or balajis: Yeah, Marty: with balajis: yeah. Marty: Wilkes shit. balajis: For example, Republicans will see the Democrat incursion on free speech and they'll say, you don't want to be like China there. But then many of them will support industrial policy. And that's like also, you know, to compete with China, we need to do this. Right. And, you know, actually, you know, another big example, you know, something else that the U.S. didn't care about at all. You know, you know, Peter Thiel's concept of mimetic rivalry. Right. Marty: Mm-hmm. balajis: So something you know what the US didn't care about at all for years and years and years. Taiwan. Marty: Right? balajis: Okay, as I just showed just a few minutes ago in 2011, the New York Times read an op ed saying sell Taiwan to China for forgiving the debt. Okay, that is how little it's like Kazakhstan or something. Okay, Marty: Well, balajis: no. Marty: and similarly about Ukraine, like you had all the, there's that picture going off the juxtaposition of the different headlines in the same newspapers, like three years apart. Like Ukraine was an untouchable, balajis: Oh, corrupt. Oh yeah. Marty: corrupt... balajis: Yeah. Well, actually even better is who cared about the invasion of Korea in 2014? Like we were all online then. Do you even remember that? Like that Marty: No. balajis: was like a one day headline at most, right? Nobody cared about the invasion of Korea in 2014. Um, that's a whole separate thing, you know, like McCain and others started arming up, you know, Ukrainians after that became like a whole cause to kind of. But the point is that on all of these different issues on The US has been copying China over the last eight years and it's been copying them in a bad way It's not like the US is not going to be a better China than China It's not going to be better at trade war. It's not going to be better at tariffs economic nationalism Surveillance building censorship state. It's doing a CBDC doing lockdowns Infringing on civil it's not gonna be better at those things because that's not the soul of what it is. That's not the soul of the country That's not the soul of the people. All right, so free people And so that's like a, it's kind of like trying to graph the USA onto the USSR. It's going to, it's causing a collapse. I mean, one of the reasons, you know how like the arms race was part of the reason the Soviet Union collapsed, right? All of this industrial policy that is happening now, you know, the amounts that are being allocated are like hundreds of billions of dollars in some cases. And it's all being spent in the same way that the $300 million bus lane in San Francisco or the $50,000 bus stop, you know? Like all of these things are just wildly, wildly, wildly over cost. It's like legal graft. You're just employing 100x number of people or environmental consultants or whatever on the project. But it's like the late Soviet Union where it's so inefficient that it cannot compete. And when you look at, have you seen those videos I post about like how fast China builds stuff? Marty: Mm-hmm. Yeah, balajis: Right? Marty: they can build balajis: So. Marty: a whole bridge and overnight a whole highway balajis: Yeah, exactly. Like, it's like here, it's like the eight hours. this Marty: Why are balajis: one. Marty: you looking at something? I do want to... balajis: Go ahead. Yeah, we've got a bunch of other stuff to talk about. I know it's been digressing, Marty: Well balajis: but. Marty: that, but like, what is the soul of America? Like how do you think we should be competing? balajis: I'll tell you my thoughts in a second. So for what it's worth, basically China builds a train station in nine hours. California can't build a bus shelter. So it's like, they're actually saying typical bulk shelters often cost 50 K or more and require coordination among eight departments. Okay. These are the guys who are defending their thing. Okay. This LA nonprofit bus shelters costs $50,000 or more and require coordination among eight departments to build a freaking bus shelter. Right. And Essentially what they're saying is the regulations are so arcane that a government funded nonprofit working with a government has to do regulatory arbitrage to get around the other agencies. Do you see what I'm saying? Right? Now, but now there's actually a good to that. You know why? The good is red tape usually prevents other people from doing things, but at a certain point, the red tape ties up. organization itself and prevents it from preventing people from doing things. Okay, Marty: This reminds me, I'm sure you've balajis: go Marty: seen balajis: ahead. Marty: it too, the meme of there was an individual who built like a staircase at the park across the street from him. And then the government came and tore it down. He built it for like 60 bucks and they came tore it down and built a staircase that costs like $80,000 or something like that. balajis: Oh really? I hadn't seen Marty: And balajis: that, but that's Marty: it balajis: a Marty: took balajis: perfect Marty: like balajis: example. Marty: six months. balajis: That's a perfect example. Exactly. Right. And by the way, that gets to a deep point, which is like the, the ability. Here's the, here's the example. You can watch this video, trying to build a transition in nine hours. They just go through whoosh like this, have all these guys team up and it gets done overnight. Right. That's just, that's not like 10% better. That's a just completely different culture. That is something where they have been, it's like People will harken back to when America did manufacturing, but it's like a 75-year-old guy thinking back to when he was 25 and thinking he can just walk over to the bench press and knock out 225 for reps. And you know what? You at least need some warm-ups. Even if you're Arnold Schwarzenegger, like, you're not going to have the strength you did at 25. This is like an old regime now. It needs to regain strength gradually. It took China 45 years of working out every day to build up the muscle tone that it has now in terms of building stuff. You're not going to be able to just regain that overnight. Plus, they did hydrostrength and bide your time the whole time. By the way, your point on the staircase is actually very deep because, and it relates to the rebirth of America, which is because history is running in reverse, I do think that there is going to be a serious clash with the federal government in the years to come, Um, and here's one sci-fi scenario. Okay. Sci-fi scenario. The sci-fi scenario is that the red states and western—so, you know, when the Soviet Union collapsed, the Baltic states and the Eastern European satellites did better on their own when they left the Soviet Union. And in the same way, the red states and the Western European satellites of the U.S. empire will probably do better off on their own. France is already trying to break away, right? Florida, Texas, all these states are already breaking away from the federal government. Make America states again. That's already happening. You've got divergence on gun laws, abortion laws, immigration laws. It's sanctuary cities, but in reverse. And actually, blue states are also going further blue. They are going without a federal thing to kind of do dispute resolution. States are rapidly diverging on policy. And in fact, even during 2020, COVID was like a preview of what is to come because in early COVID, I don't know if you remember this, do you remember the interstate compacts? Marty: Hmm. No. balajis: It's actually something that exists in the Constitution, but because the federal government was like MIA in early COVID, like in a true national emergency, okay, here, like the state capacity just wasn't there. So here we are, interstate compacts, right? So California, Oregon, and Washington announced Western States Pact. Massachusetts joins New York, New Jersey, Connecticut, Pennsylvania, Delaware, multi-seat council. Minnesota governor Tim Walz joins compact with Midwest governors to reopen economy, joining six other ministers to collaborate, right? So the chaotic onset of COVID, when the states just had to fend for themselves, was like a dress rehearsal for like governors to start like becoming actual governors. Okay. And there are other things as well where there were like state checkpoints and so on. I think 2020 is like a trial run for what is to come. Okay. And this is actually, this is an article from 2018 that talks about interstate compacts and actually predicted them before they were used in 2020. Okay. And divided we stand, the country's hopelessly split. So interstate compacts, she actually noted them before they were even used by the government. Okay. So. And states had hard borders during COVID. Like you couldn't get from, you couldn't get into Florida without like a, I forget what it was, where there was 14 days of quarantine or something. Like states had various rules like that, if you remember that, right? All that I think is a dress rehearsal for what's coming, which is, as we're seeing, fortunately, there are Democrats who are pro Bitcoin and more generally pro cryptocurrency. It's like Eric Adams is pro Bitcoin and Jared Polis is pro Bitcoin. and ROKAN is pro-Bitcoin. So it's not like purely partisan, which is good. RFK Junior is pro-Bitcoin, but on the right you have Vivek and you have Ron DeSantis and you have many governors who have come out as pro-Bitcoin, right? And then you have on their side, you have Elizabeth Warren and others who are anti, right? Her anti-crypto army. And so, As opposed to exactly left versus right. Have you seen my thing on dollar nationalist versus Bitcoin maximalist? It's like. Marty: no balajis: Essentially, Marty: the government balajis: so here, that's the other tribe. Marty: They're on the losing side. balajis: Well, I mean, here's the thing. Something is big. It's like the Roman Empire. Sometimes something really big doesn't just totally go to zero. It has some successor state, like the Soviet Union had Russia. Roman Empire had the Byzantines. So basically, today it's red versus blue. Tomorrow it'll be orange versus green. Bitcoin maximalist versus dollar nationalists. The decentralized network versus the centralized state. So today you have. If I do the initial frame of this. So today it looks like this, right? You know, have you seen the political compass before? Yeah, so this is like the right and this is the left, you know, this is left authoritarian, left libertarian, right authoritarian, right libertarian, okay. Tomorrow looks like something maybe like this. And that's like RFK Jr. Okay. Marty: Mm-hmm. balajis: And... This is like, you know, you can argue where DeSantis fits, you know, but certainly a lot of maximalists are, you know, arguably over here, somewhere over here, you know. And then you have like Elizabeth Warren types are up over here, but actually there's a fair number of like Republican militarists slash authoritarians who will at the end of the day side with the dollar over Bitcoin. It's a Marty: Trump? balajis: non-zero number, Marty: Trump balajis: right? Marty: might be one of them. balajis: Trump might be one of them, exactly. So it, you know, it doesn't. You know Jack Dorsey is an example actually of somebody who's really is kind of over here, right? Jack Dorsey RFK jr. Basically you pick up a bunch of tech founder type people. Okay left libertarians and you lose some folks who will just Reflexively side with the institutions they were born with Who I understand those people I'm often sympathetic to those people, but they're like the Soviet conservative You know, there's somebody who defends the system. They were born in my country right or wrong Does that make sense, right? Marty: Yep. balajis: So, Marty: Yeah. balajis: now the other thing about this, which is interesting is this term, dollar nationalist, actually, I think it communicates a lot in just those two words. Basically, one of my theses is, you know how in the, and then I'll kind of explain what I think the scenario is where. In 2010. The Arab Spring had happened. Okay, and Twitter and Facebook had been important in that. And so people knew that social media could overthrow governments and so on. But still, it would still have been considered crazy to say, you know, oh. in ten years, we're going to have the President of the United States, the most important political issue in the world, is going to be whether the President of the United States can tweet. Marty: Right. balajis: Okay, that would have still been considered totally crazy, right? And, um, Even knowing that Twitter was important for governments that had literally overthrown governments, it was thought, okay, that's something that's happening over there. It's like a weak government. It's not, I mean, like, obviously it's not going to happen to the U.S. government. It's not going to have the same kind of chaos. But it did. It took a little while longer. It took a few more years to build. Arguably, it started in 2015, you know, not too many years later. Right. And so I think it's fair to say that all politics in the 2010s became social media. Right. Marty: easily has been balajis: Okay. Marty: completely normalize now the dissent is doing is campaign announcement on twitter space last week balajis: That's right. Okay. So now here's my analogy. Similarly, in 2019, 2020, cryptocurrency, Bitcoin has gotten to the scale that every bank is aware of it. Every government is aware of it. By 2021, a country, El Salvador, even adopted Bitcoin as its national or a co-national currency. So clearly, this is something where every head of state, every bank, every CEO had heard of it. And yet, even like most, even most Bitcoin maximalists don't truly take it seriously. Because to take Bitcoin seriously, and there's still a bunch of things that we need to leap between here and there, and there's still it's a Bitcoin experiment, it could still lose in a few ways, which I'll get to. It's not inevitable. You have to work to make it work. Right. But if you just like the most important thing in 2021 was could the president tweet, which was a big leap from 2010. Eventually, the most important thing is going to be, does this government have enough Bitcoin to fund operations? Marty: Mm-hmm. balajis: Okay, like if the price actually does rise, if you know they do devalue the dollar with the digital devaluation dollar, things start to get really real. And a good precursor for that is thinking about what happened with Twitter. So long as Twitter and Facebook were just toys, right? Because it's always a fad, a bubble, nobody cares, blah, blah, blah. And in fact, you know, through the early 2010s, they were basically dismissed in this way. Okay, even as people were using them more and more. right? But after they became important electorally, because it's really Twitter that elected Trump, Twitter elected Bolsonaro, Twitter elected Orban, Twitter elected, um, Twitter did Brexit, right? Twitter essentially led to also BLM and other things. Twitter led to deviations left and right from the consensus. And, uh, to stop is particularly the right deviations after, um, 2016, this gigantic counteroffensive happened, where the state tried to, and more generally the establishment, constrained by the First Amendment. So the state couldn't directly regulate free speech. So instead it tried to decentralize censorship by pressuring all these companies, using social media, ironically enough, to censor social media, right? Using Twitter cancellation campaigns and so on and so forth, as we all lived through. Marty: literally quartering Twitter's offices with FBI agents balajis: Yes. Marty: to censor particular individuals. balajis: but they just couldn't keep up the energy or they left like a door unlocked because it's still nominally a corporation. And like one guy was able to walk through that door. I mean, like you basically had to be Elon Musk to do what he did, right? Because like, you know, a $44 billion hostile takeover, there's not too many people in the world with the capability to do that and the will to do it and to hit the wall of fire that he did. You know, because he hit quite a lot of flack, right? Marty: Oh yes. balajis: And then to fire, go ahead. Marty: No, no, I mean he got the shit storm thrown at him. balajis: Absolutely. And then firing all those people and turning the thing around and stabilizing the thing. And then everything that he did net net now six months later seven months later we have true true freedom of speech. Right. Or at least we have a lawn moderation as different from. Blue moderation. Right. Every other platform you can post and you'll be blue moderated if you want to post that way you can. But at least you've got a different version here which is a lawn moderation. Go ahead. You're going to say. Marty: Yeah, no, it's the transition to Twitter. I mean, obviously, like the stuff with Turkey a couple weeks ago, it's like, ah. And... balajis: Well, yeah, I mean, the thing is he can't fight. He can't fight every single country at the same time. And in a real sense, the US establishment is the most committed enemy of civil liberties and free speech around the world. And Turkey just doesn't have that power over everybody else in the same way. Right. Like, literally that thing where like China was right about internet control. Or here's another example, like. You can cut out my reaching forward, okay? I'm Marty: You're balajis: sure Marty: fine. balajis: I look weird. here, look at, like, NYT literally runs headlines like, free speech is killing us, you know? And here, you can cut out my little Google prompt or whatever, free speech is killing us, noxious language online is causing real world violence, what can we do about it, AKA censorship, right? So, like, there's the most committed enemy of freedom around the world, free speech, you know, civil liberties, is the blue American. Like, that's it, right? Turkey is downstream of that. None of that actually matters, in my view. It's literally NYT that is advocating, saying free speech is killing us, right? The Atlantic saying China was right on internet censorship. It's not even masked or hidden. It's like right out there, you know? So that's why, you know, Elon is basically husbanding his political capital to fight the battle that matters. And, you know, because other ones are all downstream of that. With that said, like, Different countries are going to have different norms and different levels of moderation. They're all going to build their own sovereign social networks. Like a lot of the stuff will become commodity over time, right? There'll be some, you know, remember Orkut? I don't know if you remember Orkut. Orkut was, I think it was a network by a Turkish guy that was, was Orkut big in Turkey? Orkut was big in like Turkey and Brazil, I think. It was an early social network that was, that was popular, you know, around the time of Facebook. It got pretty big. Um, anyway, so, so they may have their own like Orkut 2.0 for like Turkey or something like that. So coming back to the sack. So basically I think it is, uh, it is possible as a sci-fi scenario, it is possible that, um, if red states really lean into Bitcoin. And as you know, I'll just enumerate, most of our, most of viewers probably know this, but like Mississippi and Montana, thanks to like Satoshi Action and Dennis Porter, they have Bitcoin Miner Protection Act. It's not just him, but you know, a lot of people, but he's worked hard on that. Texas has the right to hold Bitcoin shall not be infringed. Colorado accepts Bitcoin for taxes. New Hampshire has very friendly cryptocurrency laws. Tennessee and Wyoming have Dow laws. Florida is against CBDC officially, and DeSantis is officially pro-Bitcoin. Suarez and, you know, Mayor Adams of Miami and Mayor Eric Adams of New York accept Bitcoin for a salary. And so on and so forth. There's quite a lot of red states, purple states, that are pro-Bitcoin now, legislatively, as you're aware, right? So I think the next step right now, when we talk about the fiat crisis. the establishment is waging war but one thing about it is the u.s. is not one country it's two parties to show you those graphs yet i mean spring that up Marty: Well, yeah, I mean you're seeing these trends pop up too. I'm not sure if you've been paying attention to what's going on in Idaho and Oregon with the, balajis: Tell me about that. Marty: a lot of the counties in Eastern Oregon are seceding to Idaho. I think they just had to balajis: Oh, Marty: vote. balajis: yeah, yeah, yeah, yeah, exactly. That's right. So dynamic geography is going to happen, right, where people are the big sort. Right? So here, let me show you some graphs, right? You've probably seen this, but just see it in one place. It's not one country. It's two parties. Like, you can't have nationalism if there is no nation. Like, what's a nation? Marty: Mm-hmm. balajis: A nation is like, you can think of it as a lot of things. But a good way to think of it is a nation is a group of people that think of themselves as a people. But right now, Democrats are nationalists. four Democrats for the Democrat nation. Like what I mean by that is, you know, this is a seven year trend, by the way. This is like, this has been happening for a long time, even by 2011. This is congressional votes, by the way. All blues vote with the blues, all reds vote with reds. This is like the 9-11 votes or whatever, but it's very partisan, very little overlap. And what I mean, and this is also now visible, by the way, at the level of individual social networks, even by 2017, the red network was over here, the blue network was over here. They didn't friend each other, didn't follow each other. Okay, they're growing a... Also, Democrats don't marry Republicans. Okay? Only 4% of marriages in this study are between Democrats and Republicans. Okay, Marty: That's pretty insane. balajis: that means ideology becomes biology in one generation. These are ethnic groups. Go ahead. Marty: I haven't seen that stat before, that's pretty jarring. balajis: Yeah, so that's the thing is this is becoming something that's more Sunni versus Shiite. It already is Sunni versus Shiite or Hutu Tutsi than it is like a difference over policy. It's tribal, literally tribal. Okay. Also, Democrats don't hire Republicans, right? If any Democrat controlled institution, like whether it's universities or it's like the New York Times or something like that, they don't hire Republicans. Okay. And like 91% of faculty were Democrats and 808 departments did not employ a single Republican in this study. Okay, there's lots of other studies like this. So Democrats don't marry Republicans, Democrats don't hire Republicans, Democrats certainly don't vote for Republicans, and now Republicans are returning the favor. So blues and reds have partitioned at the level of both network and state. Like blues have built one party Democrat states in Washington and California, and reds are now doing the reverse in Florida and Texas. Okay, so sociopolitical divergence is accelerating, and you're seeing states, you see this graph, like gun laws are diverging, right? Abortion rights are diverging, marijuana, drug legalization is diverging, homeschooling, education, post-COVID, that's a huge issue. That's diverging, right, with me so far? Marty: School choice. balajis: School Marty: That's balajis: choice, Marty: going balajis: exactly, Marty: to balajis: yep. Marty: be a political or a campaign. balajis: It's already, it's huge. Marty: Yeah. balajis: This guy, Corey D'Angelo, is a great person worth following. So basically, These states are becoming as different as different countries, and so they may be. Okay. Now, both sides have actually made attempts to put the country back together on their terms. Like, woke is one way of thinking about it is it's a Democrat attempt to make Republicans knuckle under by accusing them of being insufficiently anti-racist. And nationalism is like, go ahead. Marty: Yeah, it's just hilarious. I mean, it's hilarious how comical it's gotten, like the memes, like you're balajis: It's. Marty: a white supremacist, you're, I mean, like with balajis: It's Marty: the balajis: your Marty: guy who balajis: Latino Marty: ran... balajis: white supremacist or whatever. Exactly. It's ridiculous. Right. What they actually mean by that, by the way, is if you want. Again, it's obvious. But the secret decoder ring is within the U.S. when they say white, they mean Republican. Marty: Yes. balajis: Right. That's actually what it means. Right. So you're Republican. He's a Republican supremacist, you know, like against there against Republican supremacy, meaning they don't want Republicans to run things. And the way you can tell is all of the blues that in 2020 they tore their shirts and they said how guilty they were. Oh, my God. They feel so guilty for their white privilege. Blah, blah, blah. It's a systemically racist country. They tear down George Washington. All this shit. Right. They did this in 2020. Then two years later, less than two years later, okay, they are telling Africans and Indians that their country is the champion of democracy and that all people of color should trust them and side with them. Okay, that was the pitch in like March, 2022, right? So not even two years after saying that the US was a systemically racist country that was horrifically that no personal color could ever trust. They went with a straight face to India and Africa and you know, so on. And they said, oh, you need to back us to the hill because we're like the good guys champion democracy, right? And now what's actually happening, by the way, what's funny is when you point this out to these blues, they're actually often shocked. They actually didn't even remember. It's very convenient Marty: No. balajis: that they didn't remember. Marty: Well, balajis: Go Marty: you balajis: ahead. Marty: couple that with like Biden going like, you're not black if you don't vote for me. It's like, balajis: That's Marty: wait balajis: right. Marty: a second. balajis: So what's what's actually happening here is they're genuinely surprised that you would bring up something from two years ago. But if you actually just look at it from the tribal lens, they were caught against white supremacy when they were attacking Republicans and they were in a tribal war with Republicans. Once blue tribe pivoted to fighting Russians. Now they're the champion of democracy. Right now, they're obviously the champion of human rights and all people of color should trust them and They're on the side of the good guys, right? And so, you know, of course this propaganda is so, like anybody with a, you know in AI there's this concept of context window, like how much history you have, right? And like the smarter the AI, the more history and context it has on something. So if you have a context window that's more than like a month, like a week, okay? You can now just totally cut this propaganda to shreds by simply quoting them. from like two years ago against them today. Right, go ahead. Marty: Again, it's comical balajis: It's comical, Marty: because there's no logical balajis: it's comical. Marty: consistency. There's no retrospect, balajis: There's no large gr- Marty: introspection. There's no. balajis: And what it is is I think they are selected actually for being- You know the concept of like a method actor? Marty: Yep, somebody balajis: Like a Marty: who balajis: method Marty: plays balajis: actor- Marty: the same character. balajis: Oh no, that's like a character actor. Like Marty: Character balajis: a method Marty: actor, balajis: actor- Marty: yeah. balajis: Yeah, so it's like a method actor, you know, they inhabit the spirit of the character they're playing. It's like, um, I am Batman. I Marty: Yes, balajis: growl Marty: actually. balajis: even when I'm offset. Go ahead. Marty: Yes, the dude who played Elvis, Elvis still in Brooklyn when they were filming that, and he was like wearing tight jeans and a tight black shirt with cigarettes rolled up in the sleeve. He was method acting. balajis: That's right. So these guys are, many of them are method actors. They're NPCs where they get the software update and then they instantly now believe the same thing. And they've always believed it. Right. I mean, I can find things from like 2020 or earlier where I talk about Walter Duranty and how the New York Times choked out Ukraine and how the Oxlalsburgers profited from from this and they didn't return the Pulitzer or anything like that. Oxlalsburgers, that's a family that owns the New York Times. By the way, like. They trash everybody as being for a decade. Everybody else was, you know, white and this and that. I'm not the kind of person by the who thinks white is an insult, okay? But these guys are, you know, the family that owns the New York Times is literally rich white nepotists, you know, and like, you know, and particularly they trash like Mark Zuckerberg so hard. But you know what? Zuckerberg built his fortune and Salzberger inherited his. Like they just like hate, merit and so on. Anyway. The point is, before 2020, I used to sometimes talk about Walter Duranty in Ukraine. And you know what I'd get back often on Twitter, or elsewhere, you know what people would tell me? They'd be like, policy, nobody cares about Ukraine. That's what they would say. Okay. Marty: Right. balajis: They'd be like, yeah. I mean, they thought of Ukraine as like, if I said Bolivia today, who cares about Bolivia? Right. They literally, honestly, truly didn't care. They had no emotional reaction to it whatsoever. Someone would even deny to me that, you know, oh, Stalin didn't actually even mean to do it or this kind of stupid stuff. Right. We obviously choked out the entire country. Then a couple of years later, stand with Ukraine, you know, like with the flag and so it's over. Marty: flagging the balajis: Now Marty: emoji balajis: I'm at. Yeah, Marty: or flagging balajis: like. Marty: the profile. balajis: I'm actually sympathetic to, I mean, the Ukrainians had a tough century. Like they're like the Poles, you know, they got crushed by multiple people overrun, starved, all type, I'm sympathetic to them, you know, like the average Ukrainian has had a pretty tough time of it. But this like really cynical, like regime operative who it doesn't even think of them, they're like, you know, they're actually like in China. And this is actually a funny parallel. Okay. How many, most people have done this. Do you know how many, in China by the way, they don't call it CCP, they call it CPC, okay? And CCP is a tell that you're like hostile to China. CPC is what they call it within China, okay? Kind of as part of China. Do you know how many CPC members there are? Marty: Hmm... no. balajis: What's your guess? Marty: 800, balajis: Yeah, it's Marty: within balajis: actually. Marty: the. balajis: So that's it. So it's a really good question, right? There's actually a hundred million CPC members. Marty: CC. balajis: It's about Marty: Okay. balajis: so on the one hand, it's like a huge number of people on their hand. It's like 6% of society. Okay. And it's like a, it's Marty: I balajis: basically Marty: thought that would balajis: like Marty: have balajis: a. Marty: been flipped. balajis: Well, I mean, it's 1.4 billion people or whatever. So even, even a hundred million people, it's actually a relatively small group. Okay. And what does a CPC member do? Well. First, they're expected to kind of be like an example to their community. They're constantly watching out for deviations from the party line. They will keep they will read the official things from like journals like QC, which kind of explain what Xi and the central committee have decided. And then they will explain them in their own words. They'll write longhand interpretations of them and so on and so forth. Right. And that sounds really boring until you realize that America is an analog. You know, the. the NYT subscriber is almost exactly analogous to the CPC member in China. Okay. Millions of people subscribe to that official regime outlet, and then they pass opinions off as if they're their own. And they're looking for deviations from wrong think within their company. Right. And just like the DI officer in the U S that's like the CCP officer. at every company in China to make sure you're not too divergent from the party line. Okay? And it's amazing how, you know, obviously there's some differences in the systems, but it's really kind of impressive how it's evolved to be the same type of thing, you know? Marty: Oh, and balajis: And go ahead. Marty: it's insane how they'll get the message and they'll run with it. Like learn to code is my favorite example. Like when they were telling all the coal miners to go learn to code, then as soon as there were layoffs balajis: Right. Marty: in the media sector and people were like, oh, balajis: That was Marty: learn balajis: banned Marty: to code, balajis: on Twitter. Marty: holding up a mirror, literally banned the hashtag. And then they were like, oh, I'm gonna balajis: Right, Marty: go to the balajis: right, exactly. Right. And, you know, the thing is that, um, I actually, you know, some of them, I assume are good people, right? So to speak in the sense of what I mean by that is, um, I think most of the media is just like, has become or genuinely evil, but there were people who just like to write about travel or something like that, you know, and those all got And only those people who just enjoyed knifing people for the regime, those became like the dominant voices within media, especially by the late 2010s. You know, part of it is because the pay in media became so poor after the financial crisis, like normal people couldn't actually have a job in media anymore. You have to be a totally status hungry, sociopathic, usually born rich kid. So that's a secret, by the way. Lots of these journos have. trust funds of some kind. It's not just Arthur Salzberger of the Ox-Salsberger family. It's like Kara Swisher is born rich. So many of these journos went to expensive private schools and so on and so forth. And you know who they hate the most? new money. Marty: in the new balajis: Right? Marty: world. balajis: Exactly the first gen, you know, like, like lots of tech guys, right? Marty: The founder, not the inheritor. balajis: Exactly. That's right. So that's actually, by the way, just to talk about that for a second, this is one of the least documented. I think it's actually even more important in some ways than the blue-red political axis is the blue-gray political axis. Okay. So blue-red, we hear lots and lots about that, that you know a lot about Democrat, Republican, but let's talk about like establishment versus tech. Because obviously, Elan is a huge part of this whole thing and it's kind of, you know, gray is its own small but very high strength to erase your tribe. One way of thinking about gray tribe is it, have you heard the term gray tribe before, by the way? Okay, it comes from like Scott Alexander, his blog in 2014. One way of thinking about it is, you know how like Yale split off from Harvard, right? Grays are like blue defectors, you know? raised in blue cities, often went to blue colleges, but did math and science and computer science, not humanities and other stuff. And what happened, and then a lot of them came from abroad. Okay. And so Silicon Valley was like the main gray outpost, but now it's decentralized. Like now gray is global. There's tech and entrepreneurship and venture capital worldwide. Most of the unicorns are now outside the United States. Most of the investment is now outside the United States. Most of the, like a lot of that stuff is happening outside. I'm not saying San Francisco or California isn't still a center, it is a center, but there's other centers. And so the thing is that the, like the blue versus gray split is worth really understanding because that's the elite and the counter elite in the sense that, of course, these are porous boundaries. Okay, but. Essentially, if you think about how blues relate to reds, John Stewart is just contemptuous of your average southerner, okay? That he's constantly shitting on them. And part of the reason is that the red, I mean, what is a Republican Harvard? Is it like Hillsdale, right? What is a Republican Hollywood? It's some, I don't know, some people making memes online. In many ways, the reds are just, they have Fox News, I guess, right? They kind of have like the op-ed page of the Wall Street Journal But for the most part the Reds are playing at a huge disadvantage relative to blues control of institutions but Greys set up their own institutions or their new things and so You know like what is a competitor to Hollywood will actually YouTube and Netflix and so on are actually better than Hollywood in some ways and what's a competitor to Harvard? Well online education again YouTube, but also Corsair, Udacity, et cetera. Now, the counter argument is, blues have recaptured some of this gray territory. The counter argument is, grays can keep founding new ones, Marty: Mm-hmm. balajis: and they're doing so, and you're also seeing, especially post-Trump, that gray kind of founder-CEO spirit assert itself against Elizabeth Warren types, you know? One way of thinking about the gray kind of founder-CEO, and like Jack Dorsey's kind of like this, not to call out any one person, but... Many of them just couldn't really respect Trump because they didn't think he was as good a CEO or founder as they were. You know, that's like, that's, that's reductionist, but it's funny. They didn't want to report to a man that they didn't think of as like better at executing than they were, you know. Marty: Mm-hmm. balajis: But they also don't want to fold into like, like this extremely stupid regime that, that is in power now. Right. So they're, they're just like, uh, you know, you, you don't become a billionaire founder CEO without a very strong will to power. You know, some of them, like the older ones, you know, they become like, you know, Bill Gates and they go and do the giving pledge or whatever, and they just kind of, they accept the establishment bridle, you know. But enough grays have gone rogue, as you've seen, right? And it's a lawn, obviously, that's the most public one, but it's Dorsey, obviously. Mark Anderson is being very public. You know, Saks with All In, right? Quite a few grays have now... Um, you know, they're not, you know, and I think, I think in my own way, I think I've contributed to this, you know, in a, hopefully a positive way, I would never go to the South and like, you know, or even Texas and pretend that I was like, going to be shooting guns and one of the good old boys, something like that. Right. That's your culture. That's your people's culture. And I'm not saying that in a patronizing way at all, just like my people's culture is those saws and fire child them and, and Vada from like South India. All right, right. Of course, there's aspects of American culture that we both share. But the like, for lack of a better term, the gray or the tech libertarian ish kind of person, the tech CEO, the tech founder and the red. This is actually also in some ways crypto and Bitcoin. OK, like Marty: Mm. balajis: in terms of those two different cultures, there are overlaps and there are shared areas of interest as opposed to blue. OK, maybe maybe that's all obvious. But. I think one thing that is underappreciated by lots of reds is how much gray and blue have fought over the last 10 years. The very explicit is the political fights, which you see it's labeled between Democrat and Republican, but it's incredibly visible within tech at least that the establishment also hates the tech guys. They managed to capture the big tech companies. They managed to capture Amazon and others with blues. And actually, if you notice, many of those CEOs have left because the organization is overrun with blues. Marty: Mm-hmm. balajis: But they haven't captured the brains of the next generation. And a lot of the folks who are founders of 100 billion or $10 billion companies are just pure gray and they're not blue. Even red sympathetic in some ways, right? At least today. However, I think enough reds are now mad at gray because they, I saw this during SVB. A lot of reds have been convinced that all grays are blue. Marty: Mm hmm. Well, yeah, I mean, particularly with like the censorship during the election balajis: Exactly. Marty: and COVID with all that, it's left a really bad taste balajis: That, Marty: in everybody's mouth. balajis: of course, and I totally understand that. What basically happened is over the course of the 2010, see, the original kind of gray spirit, like early 2000, even before Gray Tribe was like even a thing, was like Linux and open source, and it was like a fight the man kind of culture, right? And it was, Twitter called itself the free speech, wing of the free speech party. And Google, it would laugh if you ever said that anybody would censor their search and so on. This is how they were in the 2000s and the early 2010s before it was considered a threat to the regime. What happened in the mid 2010s, especially after 2012, is, and that was actually the exact moment, starting in spring of 2013, is when the tech lash by Blue Against Gray began. And basically what had happened, just to show you this chart. Marty: Well, as you're describing all this, I think many would define as like Bitcoin maximalists. They're like the red and the gray coming together getting back to balajis: Yeah, Marty: that Linux. balajis: yes, there is an aspect of that. The thing is that I think, yes, there's absolutely an aspect of that. Now let me talk about that. Here we go, ready? Look at this. This is like a really important graph to keep in mind to understand the just degree of economic warfare between blues and grays, okay? Can you see this graph? Okay, so this is newspaper advertising revenue adjusted for inflation, okay, 1950 to 2014. So for most of the century, like, it was good to be blue, you know, but like peak was like 2000, almost $70 billion in ad revenue. And what this meant is you could write like five or 10 articles a year, you could fly around smoke cigars, being like a time journalist was like an awesome job. You had a lot of influence. You had um, you know, a pretty easy schedule. Uh, you could write about what you wanted. It was actually a pretty good job. Right. Then, you know, things were kind of flattened after, you know, the financial crisis, the dot com crash, right. Uh, but they were okay. And this was the period where like tech was ignored after the, you know, dot com crash, and this was like the period of, um, you know, Iraq and, and, and all this type of stuff and, you know, it's media was just kind of doing its own thing. Then suddenly. Once a financial crisis hit, their revenue, Google had been scaling during that time, and at this point, all these advertisers were like, let me look for a more efficient channel. It was 2008, the internet was still actually pretty new, but it wasn't brand, brand, brand new. And so all this money suddenly went to Google. Look at that, look at that absolutely massive drop off. Okay, this thing, all the print media, all these journos, saw all their money go to Google like overnight. Do you see that? Marty: Yep. balajis: Okay. And then Facebook zoom like this. Okay. So by, by, you know, it took them one election cycle to adapt because in 2012, right, the, um, I don't know if you remember this, uh, Facebook was still considered to be in social media was considered to be, um, pro Democrat, right. Uh, meaning, you know, when the nerds go marching in, right, like You know, how a dream team of engineers from Facebook, Twitter, and Google built the software that drove Barack Obama's re-election, okay? November 16, 2012. Do you see that? Marty: Yeah, balajis: Okay. Marty: hope, change. balajis: Hope change, well actually no, this is the re-election. Okay, Marty: the real. balajis: so, all right. And even in May of 2012, okay, they were writing articles like, There's no such thing as a brogrammer, may have 2012. Okay? But by the, oops. by the next year, okay? but not even one year later, or maybe like, it's actually sooner than this, but by August 2013, would you just look at all these rich people, that's value of exceptural vision and that should be so much more. Essentially, they were just attacking tech people every single day in very slanderous terms for anything they did. Very personal attacks, right? Bitter, venomous attacks, okay? And we're talking like, lying about them, stalking them, all this type of stuff. You could just be an executive at any company. You could be a random engineer. They just target you for cancellation. Marty: Peter balajis: Were Marty: Thiel, balajis: you aware Marty: Galker, balajis: of this? Go ahead. Marty: all that stuff. Peter Thiel, balajis: Yeah, Marty: Galker. balajis: exactly. That's right, all those guys, right? And I think you were probably aware that they had done this like Peter Thiel, but you may not be aware, or your audience may not be aware, that they did this to everybody in tech. And the reason they were doing this is because they lost so much money. tech and they couldn't build search engines or write social networks. What they could do is they could create stories and shape narratives. And so they essentially wrote a story where tech guys were bad and they were good. And you know tech was uniquely vulnerable to this. You know why? It's because in the 2000s, the very early 2000s, there was a guy Terry Semel who ran Yahoo, and he was like an old media guy. and he tried to do like TV on the internet way before broadband was feasible. And what everybody in tech learned from that was you don't do content. Instead, you build a dumb pipe. Google, YouTube, Dropbox, Facebook, Twitter, all of them were based on just solve the technical problems and we're not building any content ourselves. The users are bringing the content and we're just totally neutral. Maybe we filter porn and spam, but that's about it and let them go for it. Right. That was a first of all, that was a good thing to do because content has risk. You know, when you fund content, you're paying money for it. User-generated content, no risk. They're taking all the risk on it. You know, they're generating the content, whether it's a video or a post, right? So as user-generated content was this amazing innovation, and for basically 12 years, it was awesome because tech could just focus on the tech, and then other people brought their own content. Until 2013, when now media still controlled content, and they decided to go to war with tech, Basically it was after Tech had helped get Obama re-elected that the knives came out. With me so far? Okay. So then, for the next six years, you know, you can see it by the way, it's not something, you know, I, uh... Marty: Well, this is why the trend of own your content strategy or distribution is becoming bigger. At least that's what we balajis: Oh, Marty: tell balajis: exactly. Marty: our... balajis: That's right. So I'm going to get to this. Yeah, exactly right. So here. You see that? Facebook Things and New York Times coverage of it has gotten more critical, it has. January 2019, okay? So, you know, generally, NYT articles were positive on Facebook, and notice they started trending down before the election. And then they got really negative, right? So that trend line is happening before, you know, October 2016, or November 2016, okay? And the reason is, the tech lash had already begun. and you could see it burgeoning. And so essentially, what was the consequence of that? By stalking all kinds of people in tech, by canceling them, this is actually why San Francisco became such a shithole. Anybody who pointed out the homeless problem in San Francisco was hammered online. So all the tech guys learned to not talk about it, and so it just got worse and worse and worse. And this is also why all kinds of folks got pushed into tech companies because you're constantly trolled for your quote lack of diversity by, and look, this honestly feels like multiple generations ago at this point, but what's funny about this, here look at this. Tech, look, I'm not the kind of person who thinks white is an insult, but the journalists are. And they would constantly call tech, white, white, white, white, white, oh my God, you're so white, blah, blah, blah. And they're 30 to 40 points wider than tech is, which is like mostly immigrants. Do you see this graph? Right? So it was a complete inversion of reality to go after tech for being quote, you know. racist or clickish or whatever when this is basically an entirely a thing the journals were just projecting right nevertheless that race trolling Was successful in getting a bunch of di type people Into tech companies in the 2010s and that is how the internet censorship stuff was affected Okay, so blues affected essentially a social war Hostile takeover of gray institutions and partly of course there were grays I mean, one way of thinking about it is lots of grays are math guys. And they went to college and alongside like the math and programming stuff that was installed in their head, they also got humanities malware. Okay. And so it's like, you've seen the movie, the Manchurian candidate, Marty: Yes. balajis: right? So they had this latent blue malware that they've gotten installed at Harvard or Stanford or MIT, and they didn't take it too seriously. But then in 2013 or 2014, when, you know, the New York Times started broadcasting the signal, right? Their eyes started glowing blue, and within these organizations, they became like blue zombies. Okay, it was like awakening that late in malware, all the moral premises, because the thing is, you know, most people don't go and wipe and reinstall their moral operating software too many times in their life. Very few people do that. keep the default install that they had in K through 12 in college, and they just don't think that deeply about it for the rest of their life, especially lots of tech guys. Marty: It's just sitting balajis: So Marty: there like a zero day. balajis: exactly, right? So they had gone to these woke madrasas, right? That's what Harvard and so on are, that we should install this humanities malware to mix metaphors. And so then hitting the right button at the right time, their eyes glue blue, and they didn't have counter arguments against it. Right? They didn't, you know, there's a few people who are like born to argue, like, like you or me or whatever. Not too many people are like born to argue. Right. And to be good at math or whatever, it's actually a relatively rare combination. So, so that is how gray got tr this is the thing I was mentioning before where blues at simultaneous war with Trump tech, Russia, China, and blue is good at getting groups to fight each other. So blue got gray to hit red. And now red, I think. in a kind of reactive way, thinks all tech is woke. It is true now, I mean, it's good that like, Sax and Alon and Dorsey and Anderson and others are out there in different ways. Of course, they all don't agree with each other, you know. That's the thing, they're not, it's not like a movement like the books. The books are one borg that has one party line, right? The Grays all have their own character and they have obvious disagreements with each other or whatever at times, but they are human beings, you know, they have their own opinions and so on. So anyway, that's, while, while, while digressive, I think it's really important to understand for people to understand that there's lots of Grays tech guys who are not blue. They may not be red either. And why might they not be red? It's because more than 50% are immigrants, you know, so like they're Korean or they're Chinese or they're Indian or they're Persian or they're like from the Middle East or something like that. And they just, you know, they weren't raised like five generations in America or something like that. This also, by the way, is actually why, the reason the blue-gray divergence is so extreme is, well, first grays were in Silicon Valley and you know, the New York, Boston, Washington corridor. So geographically they were separate. Second, demographically, blues didn't really, if you were in a blue household and one of your, you know, your spouse went to zero because their advertising went away. If you married like a Google executive and it balanced out, you might not have been so mad. But they were across the country. So they didn't have like inter household kind of thing. Right. So demographically, they're different because blues are like disproportionately old money, Northeastern establishment. And grays are disproportionately like tech, especially Asian immigrants, Indian immigrants, and so on. And the third is ideologically and just kind of personality wise, blues are verbal and political and media oriented and so on. And grays are, quote, autistic in the sense of good with computers, good with math, literal. You know. numerical, et cetera. So those three differences, the geographical, the demographic, and the psychological, led to like a partition here between like the quote elite and the counter elite. And it didn't necessarily have to happen that way. There's alternate realities where if Steve Jobs hadn't died, for example, it's possible that Bezos bought the Post, Jobs bought the Times, and Larry Page or Zuckerberg buys the Wall Street Journal. And if so, we'd be on Mars by now. Marty: Haha. balajis: Okay, Marty: Well. balajis: I really do believe that. And the reason I do believe that is a huge part of the last 10 years is, so have you seen the graph of like woke words going through the roof? Marty: Oh yes, that's what I was gonna say, like talking about the blues attacking everybody at the same time that in 2013 they were coming after tech for DEI stuff. They were the utterance of like anti-racist and white supremacy started going through the roof. balajis: That's exactly right. And so the thing is, the way to understand it is, the New York Times in particular caused a trillion dollars or more of damage to the social fabric to make a billion dollars in stock revenue, okay? So here, this is New York Times word usage frequency, okay? 1970 to 2018, okay? And this is the, let me see if I can zoom in on the graph. So sexism, misogyny, all this stuff goes out. I mean, and you've got control words by the way, like Amazon is like on a natural exponential, right? But there's other things that are on fake exponentials like intersectionality. That's an editorial decision, right? These words don't appear there by accident. It's an editorial decision to appear there. And now recently they've made an editorial decision to remove it. Okay, if you notice they're much less woke in the. It's like pouring chemicals into the water supply, right? One way of thinking about it is, if you've seen the NYT stock price. like Marty: I've not checked balajis: here. Marty: it. I can't imagine balajis: So Marty: it's doing well. balajis: well here we are. So ready? Basically they, so especially after the financial crisis, they got absolutely crushed. Okay? They're down, they're down from like you know pre-financial crisis. They were like 26 whatever right? And then afterwards they just tanked all the way down to like 442. Okay? Can you see my cursor there? Right? And then they were kind of like just bumping along the and they had to take out this whole loan from Carlos Slim. And then in, you know, it was huge, this big loan from Carlos Slim. It kind of rattled up a little bit. And then they discovered like, you know, woke trolling and political warfare with Trump in particular, and whoosh all the way up over here, right? They basically, you know, essentially till late 2021, mid-late 2021, they basically, I shouldn't say 10X their stock price, I don't know, it was like five X or something like that. Okay. And... So the the Ochs-Sulsbergers that own the New York Times made hundreds of millions of dollars from this, okay? But they did so at the cost of like tearing the social fabric, okay? And just to, you know, put not to find a point on it, here is, you know, here's like a whatever, here's like a graphic of this, okay? So they published their proxy statements so you can actually see, right? And by the way, you know what's funny is you had recognized Mark Zuckerberg, right? You've seen Mark Zuckerberg's face a thousand times, right? You would not recognize Arthur G. Salzberger, the guy who owns the New York Times. All right. And yet, isn't that amazing? This guy who is surrounded by a thousand journalists at all times. You've never heard of him. He's the only person who has privacy in the world. Marty: Yeah, balajis: kind of amazing, right? Marty: it balajis: Like, Marty: is pretty insane. balajis: I don't agree with every decision Zuck has taken, but Zuck is at least like the man in the arena taking the hits. And, you know, one thing again to know about like Zuck and Facebook is a lot of his people went, became blue zombies at the same time. So he couldn't like fire half his company. In fact, I'll show you something that he did in 2019. Zuck gave a talk. on free expression in 2019, which he did not have to do. Basically here. Marty: That's interesting, particularly right now it seems like he's, I don't know if you would call him a mea culpa or something like that, but he called out the FBI and their pressure and now he's getting balajis: Yes. Marty: like all jacked doing combat sports, like finding his manhood. balajis: Exactly. The thing is, I mean, there are folks within gray. I mean, gray is a spectrum, right? There's folks like, let's say, Mark Benioff or the eBay founder, Pierre Omidyar, who are just true blue all the way through, basically, right? Marty: Mm-hmm. balajis: With exceptions, it's complicated. Sometimes they'll support somebody else. But like, Zuck really is, Zuck was somebody whose hand was forced and wasn't in full control of his org, in my view, right? Somewhat like Jack. Okay. And yeah, you can see like Zuck lifting, and you look at Bezos getting jacked and so on. These guys, you know, these are will to power founders who did not like knuckling under to the establishment, but in many ways, invisible to the public had a gun to their head. I mean, in its own way, like, you know, you might think, oh, this guy who's like super rich has all this optionality that, like an employee of some company doesn't, right? It's actually often not true. And what I mean by that is, yeah, sure, they can buy like a bigger car or something. But if you're CEO of a very large company, you're very constrained in what you can say and what you can do. There's so many people who are paying attention to every word you say. And in fact, especially if you're like a really famous billionaire, there's people who spend an entire year or multiple years trying to get like one meeting with you. You know? And they are analyzing you like a CIA officer. And so this is actually why, for example, why does both Zuck and G do this? They maintain an impassive expression. The reason they do that is even a smile or something like that in a meeting will be like, oh, he endorses my thing. He's gonna invest $10 million and people run off half cock like that. Right? Marty: Mm-hmm. Yeah, it's like Janet balajis: Anyway. Marty: Yellen wearing a purple jacket. She's wearing royal colors. balajis: Yeah, Marty: The Fed balajis: yeah, Marty: is feeling confident right now balajis: exactly. It's kind of like that where you cannot really, the larger the organization you're running, the harder it is to just actually be a human being. Elon is the exception that proves the rule, you know, and maybe we're going back into the time of actual individuals running something, but at least during the period I'm talking about in the 2010s. Anyway, I'm just explaining that lots of gray isn't blue. It's not necessarily red, but it's definitely not blue. And now that there isn't one clear leader in the US anymore, they don't have to knuckle under the Trump. It's kind of a free for all. It just feels like a totally different world than even 2020. Like it is digital glasnost. Like some icebergs are broken because I'm not sure exactly when it happened, but sometime in 2021, 2022, it became difficult to cancel people. Marty: Well, balajis: I mean, Elan, go Marty: I think it had to balajis: ahead. Marty: do with balajis: Elan's Marty: the vaccine balajis: a huge component Marty: mandates. balajis: of it. Go ahead, Marty: The vaccine balajis: oh Marty: mandates, balajis: really? Marty: like going from safe and effective to obviously not effective and arguably not safe, really set off something in people's heads where it's like, wow, you just lied to us, locked us down for balajis: It's Marty: years. balajis: it's something where it's funny. I would love to see a quantification of this, but I feel it's something where blues have just lost so much support from so many different groups because they fought everybody at the same time. You know, like lots and lots of tech guys, for example, just like a small thing, like you mentioned the vaccines. That's that's a big thing in your neighborhood. Right. A big thing in my social neighborhood was the, you know, New York Times attacking Scott Alexander. Okay. Who writes, writes this popular blog, journalists versus rationalists. And from that, tons and tons and tons of very smart people who are good at arguing on the internet got, for lack of a better term, red-pilled, because they're like, wait a second, New York Times is lying about Scott Alexander, what else are they lying about? They're like, Marty: Mm-hmm. balajis: they're wildly distorting him, right? And that's the thing that breaks the illusion that Jelamé and Amnesia, people have to see a falsification of something that's close to them to see that they're lying about everything. Anyway, so so yeah, I think you're right about, you know, COVID lockdowns. I think it's fighting with other tribes. What it is, is they've blue can only defend blue now. Blue can no longer blue no longer has, you know, in football, like there's a free safety like run Marty: Yep. balajis: and just tackle somebody. Right. Blue no longer has free safety. So I started noticing this around the time of the Joe Rogan thing with Spotify. Right. Blue used to have enough troops that on social media, if one person like to comment defending somebody who's being canceled they would get pile drive too. Right so blue used to just have total you know just just a bunch of enforcers running around right and then they just the thing is to do that you have to be like 99.1. But by the time of the Rogan thing with Spotify, yes, they could grind out a win. They did manage to get Spotify to pull down some Rogan episodes or whatever, but they couldn't cancel everybody who supported Rogan. And so if you graph it, right, you're going from 99.1 to like 55.45. Because I graphed some of these things, right? Marty: Yeah, it had balajis: So Marty: like balajis: I Marty: a balajis: could see. Marty: diminishing marginal return on utility, essentially. balajis: Yeah, exactly. Their ability to cancel was dropping off, right? Also another example of this in 2020, for years before they had been canceling tech execs left and right, okay? For anything and everything. Oh my god, just they literally they have some slack room where they find the latest tech guy They just attack them like rabid dogs, right? And then in 2020 we had just an absolute Donnybrook back and forth between tech and media and The crucial thing was the tech now had a spinal column I was actually pushing back, Gray was pushing back on Blue, and there's like, I won't bore you with every single back and forth there, but the fundamental thing is Blue is waving that cancellation wand really, really hard. And when it doesn't work, and when other people see it's not working, and when the target of it is not apologizing and not backing down, and crucially has enough social support that they're not fired or whatever, then it like, it kind of breaks the cancellation wands power. because it has to be like one shot, one kill, you know? So Blue is now kind of retreated to, like their media power, their soft power is gone, but they still have two powers left. the money power and the military power. Marty: Yes, the intelligence apparatus, which is balajis: It's going to Marty: very balajis: be crazy, Marty: blue. balajis: right? Do Marty: Yeah.