The Charlie Kirk Show - June 18, 2022


A Comprehensive Takedown of the Biden Economic Disaster with Maria Bartiromo & David Sacks


Episode Stats


Length

34 minutes

Words per minute

184.07028

Word count

6,286

Sentence count

495

Harmful content

Misogyny

1

sentences flagged

Toxicity

2

sentences flagged

Hate speech

2

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Maria Bartaromo and David Sachs join me to talk about inflation hitting a new record high and what it means for the economy. They talk about what they think is happening, why it's happening, and what we should do about it.

Transcript

Transcripts from "The Charlie Kirk Show" are sourced from the Knowledge Fight Interactive Search Tool. Explore them interactively here.
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Toxicity classifications generated with s-nlp/roberta_toxicity_classifier .
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
00:00:00.000 Hey everybody, today in the Charlie Kirk show, a rather comprehensive financial episode here about the economy.
00:00:05.000 If you have any anxiety about the economy, this is the episode for you within two incredible experts, Maria Bartaromo and David Sachs, the mastermind behind PayPal, one of the masterminds behind PayPal, alongside Peter Thiel and Elon Musk.
00:00:18.000 You can email me your thoughts as alwaysfreedom at charliekirk.com.
00:00:21.000 I love hearing from you.
00:00:23.000 Please support the Charlie Kirk show at charliekirk.com slash support.
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00:00:42.000 That is tpusa.com slash SAS.
00:00:45.000 Email me your thoughts as alwaysfreedom at charliekirk.com.
00:00:49.000 I love hearing from you.
00:00:49.000 Buckle up, everybody, here.
00:00:51.000 We go.
00:00:52.000 Charlie, what you've done is incredible here.
00:00:54.000 Maybe Charlie Kirk is on the college campus.
00:00:56.000 I want you to know we are lucky to have Charlie Kirk.
00:00:59.000 Charlie Kirk's running the White House, folks.
00:01:02.000 I want to thank Charlie.
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00:01:37.000 There's just so much economic uncertainty right now.
00:01:40.000 I'm getting text messages from people all across the country, and there is a lack of clarity.
00:01:47.000 There is a lack of understanding of what is happening in the markets, what's going to happen next.
00:01:53.000 And the best economic conditions are ones that are predictable.
00:01:56.000 This is far from predictable.
00:01:58.000 It's chaotic.
00:01:59.000 It is uncertain.
00:02:00.000 It is incredibly fragile right now.
00:02:04.000 And it's well known.
00:02:06.000 I mean, people are experiencing it.
00:02:08.000 They're seeing it.
00:02:08.000 Let's play some tape here right now.
00:02:10.000 Let's play CUT 27.
00:02:12.000 NBC talking about inflation hitting a record high.
00:02:15.000 Play Cut 27.
00:02:16.000 Year over year, these are the money ball numbers.
00:02:19.000 Year over year headline, 8.6.
00:02:23.000 8.6.
00:02:24.000 A new cycle high usurping March, which was 8.5.
00:02:28.000 That was the highest since 1981.
00:02:31.000 Now 8.6 continues to be the highest since 81 because the comp there is 8.9 to 11.8%.
00:02:39.000 And if we look at year over year core, also hotter than expectations, up 6%, following 6.2%.
00:02:48.000 Now, no one has their finger more to the pulse of what's really happening in the markets, what's happening in the economy than the legendary Maria Bartaromo.
00:02:56.000 Maria, welcome back to the program. 0.99
00:02:58.000 Hey, Charlie, great to see you.
00:03:00.000 Thank you, you too.
00:03:01.000 So help kind of us laymen understand what you think is happening right now.
00:03:06.000 It's very confusing.
00:03:07.000 More dollar bills in circulation than ever before.
00:03:09.000 The markets are tumbling.
00:03:10.000 What's your take?
00:03:11.000 Yeah, I think it's pretty much you go back to the very fundamental definition of inflation.
00:03:17.000 Like you just said, too many dollars chasing too few goods.
00:03:21.000 And this was the threat when the Democrats started pushing their spending plan at the beginning of Joe Biden's presidency.
00:03:31.000 We all know that he signed the COVID relief package in March of 2021.
00:03:35.000 And at that time, when he first entered the White House, inflation was at 1.4% in January of 21.
00:03:43.000 So little by little, it has gone up and up and up with all of the spending.
00:03:48.000 They tried to push through a $5 trillion Build Back Better agenda.
00:03:53.000 And that also stoked the expectations of more money.
00:03:57.000 But I would say, you know, and then the infrastructure package in November of last year.
00:04:00.000 And then, of course, on top of, you know, once we got to like almost 8%, 7.5% inflation, then Russia invaded Ukraine and added to it.
00:04:09.000 I would say one worry that I would have right now is I don't think we've seen the peak.
00:04:13.000 I don't see any evidence of the peak because when you go back to that COVID relief package, you see that there are hundreds of billions of dollars that have gone to states that have not been appropriated yet.
00:04:26.000 So they're still going out.
00:04:28.000 And so you're still having the same situation.
00:04:30.000 You also have not seen the peak months for gasoline.
00:04:33.000 That's the driving months of July and August.
00:04:35.000 So I think we've got a little bit of upset to come.
00:04:39.000 So there's a huge, I don't want to get too wonky, but I think that our audience should know about this.
00:04:43.000 Can you talk a little bit about the bond market losses and how that plays into all of this?
00:04:48.000 I mean, there's been a massive sell-off in the bond market right now.
00:04:52.000 And that sometimes can be a harbinger for things to come.
00:04:55.000 Can you talk a little bit about that?
00:04:57.000 Absolutely.
00:04:58.000 Look, the bond market has seen prices decline.
00:05:03.000 And when prices decline, yields go up.
00:05:06.000 And we're seeing yields go up on the expectation that rates are going to continue to stay elevated.
00:05:11.000 When you have a differential between the two-year yield and the 10-year or the 30-year, it's called an inverted yield curve.
00:05:20.000 And when you have in the past seen the inverted, when the yields become inverted like that, where one is much higher than the other in terms of the rate, that indicates that a recession is at hand.
00:05:34.000 I personally would say we're probably in a recession right now.
00:05:37.000 We know that we already had a contraction in the first quarter, 1.5% lower.
00:05:42.000 We'll get another revision to that.
00:05:43.000 Then the other day, the Atlanta Federal Reserve predicted that there will be no growth in the second quarter.
00:05:50.000 They said 0.0% for the second quarter.
00:05:52.000 So it's probably going to be a contraction.
00:05:55.000 So we probably are in a recession right now.
00:05:57.000 And that is why markets have been really so weak.
00:06:02.000 The market, obviously, the stock market down 32% on the NASDAQ year to date.
00:06:07.000 You know, I mean, double-digit declines for the Dow and the SP as well.
00:06:12.000 And I think what you've got happening here is a sharp slowdown as a result of inflation.
00:06:19.000 So you've got bad policy resulting in bad outcomes of high inflation and inflation cutting into our purchasing power.
00:06:28.000 So, you know, one issue is that earnings estimates are still too high.
00:06:33.000 So, you know, you've got lots of analysts out there and they make predictions about earnings.
00:06:38.000 And that is how stock prices are priced.
00:06:41.000 That's how stocks are priced.
00:06:42.000 Because if you think a company is going to make XYZ in earnings, then you can say, okay, well, I'll buy that stock based on what the potential for earnings are.
00:06:50.000 But those estimates are too high.
00:06:51.000 They have to come down.
00:06:53.000 And that's why we may very well see further declines in this market long term.
00:06:57.000 Having said that, we're already seeing some sizable declines year to date.
00:07:00.000 So we could see a little bit of a rally over the near term.
00:07:03.000 But I would sell into it because you still have the broader macro story that is weakening with the Federal Reserve raising rates into a weakening economy.
00:07:12.000 You know, you look at the mortgage market right now, the mortgage rates right now, 30-year fixed rate mortgage, 6%.
00:07:18.000 Lenders are, you know, are looking at 6%, 6.25%, even though it hit last week, 5.7%.
00:07:24.000 That is called demand destruction because a homebuyer goes into the market, they say, okay, I want to buy a home.
00:07:30.000 They see this, they're getting sticker price from the price of the home.
00:07:34.000 And then they say, wait, I want to get a mortgage.
00:07:36.000 It's going to cost me 6% for 30 years.
00:07:39.000 And they say, you know what?
00:07:41.000 I'm not going to do it.
00:07:41.000 I'm done.
00:07:42.000 I'll have to rent for a little while.
00:07:43.000 That earnings are not there.
00:07:45.000 And so that's what we're seeing.
00:07:46.000 It's so interesting.
00:07:47.000 On a micro, at least some people that work with us, they're moving into Phoenix to come work with us at Turning Point USA on the show.
00:07:53.000 And they said, Charlie, I'm renting for the next year or two.
00:07:55.000 They said, I'm not getting involved in this.
00:07:56.000 And that's going to have ramifications and property values and other things.
00:08:00.000 So, I want to ask you, Maria, in the couple minutes we have remaining, what would you do if you were the Treasury Secretary, the head of the Federal Reserve?
00:08:08.000 Obviously, it's a hypothetical, but they really don't have much left at their disposal except saying, we're going to have to slow this down.
00:08:15.000 I mean, they went so hard, so heavy, so quickly, lowering rates so abruptly, you know, in a reaction to the lockdowns and to the virus, it's almost as if they metaphorically emptied their clip, and now we have to almost live off of the declining sugar hide that was self-induced.
00:08:30.000 From either from a monetary stimulus standpoint or a fiscal stimulus standpoint, is there anything left that can be done, or do we just have to accept the reality?
00:08:37.000 We have to swallow the cough syrup and get used to it.
00:08:40.000 No, we really need to ensure that the market believes there's enough oil and gas on the market.
00:08:46.000 We really need to open the spigots.
00:08:49.000 That is the way to fundamentally change the price of gasoline and oil.
00:08:53.000 Because what you have going on right now is the Federal Reserve slamming on the brakes.
00:08:57.000 They just raised rates 75 basis points, probably going to raise again another 75 basis points.
00:09:02.000 That's slamming on the brakes.
00:09:04.000 So if you're going to slam on the brakes, then you are going to stop an economy, potentially put it in recession.
00:09:10.000 Monetary policy cannot do anymore.
00:09:14.000 The Fed has its hand size.
00:09:16.000 They can't do anymore.
00:09:17.000 You've got to look at fiscal policy.
00:09:18.000 And fiscal policy would be the simple supply-demand dynamics in the oil market.
00:09:24.000 More supply equals lower prices.
00:09:27.000 And that supply should come from America since we have so much of it.
00:09:32.000 But the administration has a climate agenda and they're jamming it through every agency of government.
00:09:37.000 And it's having real-life implications all throughout the economy.
00:09:40.000 Maria, thank you for being so generous with your time.
00:09:43.000 I love your Sunday show.
00:09:44.000 It's phenomenal.
00:09:45.000 It's a great summary of the last week and looking forward to the next week.
00:09:48.000 And your commentary is very helpful today.
00:09:50.000 Thank you so much, Maria.
00:09:51.000 Thanks, Charlie.
00:09:52.000 Appreciate it.
00:09:53.000 Thank you.
00:09:56.000 From cringing at the pump to getting an eye-popping check at your favorite restaurant, inflation is hitting us all where it hurts.
00:10:02.000 Inflation is a thief and it really does hurt.
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00:11:27.000 An interesting story that just popped up here.
00:11:29.000 It's not really a story.
00:11:30.000 Gavin Newsom just created a Truth Social account.
00:11:34.000 So Gavin Newsom is a user now on truthsocial.com and has posted all about red state murders and all of that.
00:11:41.000 I think it's a brilliant move by Gavin Newsome.
00:11:43.000 It's very clear that he wants to run in 2024.
00:11:46.000 I think Gavin Newsom will be formidable and Gavin Newsom will raise a ton of money.
00:11:51.000 Gavin Newsom is much more likable than Kamala Harris.
00:11:54.000 Course, he oversees a terrible state, $10 gas, all that stuff.
00:11:58.000 We can go through it, murder rates, all the trans stuff. 1.00
00:12:00.000 It's terrible.
00:12:01.000 I will say, though, that Gavin Newsom creating a truth social account, I think, is a mark of political brilliance.
00:12:08.000 It makes him look not like a woke liberal, that he's willing to go on conservative platforms and he's willing to engage in dialogue and interaction.
00:12:16.000 He's also going to receive probably a fair amount of anonymous accounts that are going to be saying nasty things towards him.
00:12:23.000 And he'll be like, oh, look at how terrible conservatives are.
00:12:25.000 I come on their platform and they treat me so terrible.
00:12:27.000 Kind of create the victim a little bit.
00:12:29.000 It's a way for Gavin Newsom to kind of get in the headlines and say, look, I went on Trump's social media app.
00:12:34.000 I'm willing to go anywhere. 0.76
00:12:36.000 It's not dumb, I got to say.
00:12:38.000 And it also frames the kind of Gavin v. Trump dichotomy that he wants for coming into 2024.
00:12:46.000 It's also a very forceful move.
00:12:48.000 I have to just say, if you look at if you're Joe Biden and you see this, there's no way that Biden, I think, will end up being the nominee in 2024.
00:12:57.000 Whether he runs or not is besides the point.
00:12:59.000 I do think that the Hunter Biden inquiry and criminal inquiry is a way to keep Joe Biden in his box to get him to step down and eventually have Gavin Newsome run.
00:13:07.000 And Gavin, I think, is going to Gavin might run and other Democrats might run.
00:13:12.000 But for most Democrats, I think they would be much more in support of someone like Gavin Newsom, because he sounds like Bain when he talks, than someone like Kamala Harris, who just cackles all the time.
00:13:23.000 It's a very interesting move.
00:13:25.000 Keep your eye on this.
00:13:26.000 I know that's more of kind of an in-the-weeds type thing, but you don't go create an account on Donald Trump's social media application if you're not trying to make a point that you want to be a Democrat leader against the Republican eventual or the eventual Republican nominee.
00:13:43.000 There's something to that.
00:13:45.000 And I don't do not underestimate Gavin Newsome.
00:13:49.000 I think he would be a far more difficult candidate for us to defeat, especially in places like Arizona.
00:13:56.000 I don't think Gavin Newsom would resonate at all in Georgia or in Florida or Pennsylvania, but I think that Gavin Newsom would be very difficult to beat in a general in a state like Nevada, Arizona.
00:14:09.000 I think we could bring it across the finish line.
00:14:11.000 But Gavin Newsom is all the same radicalism that you've seen with Biden, even more so, with a little bit more charisma, an ability to be more articulate.
00:14:22.000 But I think Michigan and Wisconsin, I don't think they would go for a California governor.
00:14:26.000 That doesn't matter.
00:14:27.000 The point is he'd raise an enormous amount of money, re-energize a lot of the Democrat groups in base.
00:14:32.000 So keep your eye on this.
00:14:33.000 Gavin Newsom creates a truth social account to try to frame himself as a Gavin v. Trump 2024 race.
00:14:41.000 It's a little bit of a shot across the bow.
00:14:43.000 If I'm a Democrat leader, I'm looking at this very carefully saying, huh, why would you be doing this?
00:14:47.000 I would much rather run against Kamala Harris or Joe Biden than Gavin Newsome.
00:14:52.000 I would just, I would, running against Kamala Harris, I think, would be very simple or easy.
00:14:58.000 For one of those reasons, play cut 10.
00:15:01.000 This is why I think Gavin Newsome has an opportunity to be the nominee in 2024.
00:15:05.000 Sure looks like Gavin Newsome is starting to raise money for something national.
00:15:08.000 Play cut 10.
00:15:09.000 The vice president has been kind enough to take on managing this part of the portfolio for me, just as I did for when I was vice president for my former president.
00:15:24.000 But it is something that, and I've asked her to personally do this.
00:15:30.000 You can't understand a word he's saying.
00:15:32.000 He's talking about the border.
00:15:33.000 This is all happening, by the way, why The Atlantic, the press release propaganda arm of Lorene Powell Jobs, who is the widow of Steve Jobs, writes the article why Biden shouldn't run in 2024 by Mark Leibovich.
00:15:49.000 Let me put this bluntly, Mark writes.
00:15:51.000 Joe Biden should not run for a reelection in 2024.
00:15:57.000 He is too old.
00:15:59.000 It's what they say.
00:16:00.000 Biden will turn 80 on November 20th.
00:16:02.000 He'll be 82 if and when he begins a second term.
00:16:05.000 The numbers just keep getting more ridiculous from there.
00:16:08.000 It's not that 82 that's the problem.
00:16:09.000 It's 86, one swing voter, said in a recent focus group, referring to the hypothetical age Biden would be at the end of a very hypothetical second term.
00:16:17.000 In recent weeks, I've spoken to 10 official and unofficial advisors to the administration who have spent time around the president during these deranged and divided days in America.
00:16:26.000 What has this been like to him, is what I've been asking essentially.
00:16:28.000 How is he holding up?
00:16:29.000 They say, for the most part, Biden is coping fine, you know, despite the fact there's 8.6 inflation, his depressed approval ratings, his vice president worse approval numbers, the looming wipeout in the midterms, and all other delights attending to Biden as he awaits the big rounded number birthday he has coming up in a few months.
00:16:46.000 Let me take a pause here.
00:16:47.000 I've said this before.
00:16:49.000 It is a shame that the Atlantic is filled with a bunch of Bolsheviks. 1.00
00:16:53.000 They're such talented writers.
00:16:55.000 That's really, let me just, let me just reread this.
00:16:58.000 They say, you know, for the most part, Biden is coping fine, you know, despite the 8.6% inflation, his depressed approval numbers, his vice president's worse approval numbers, the looming wipeout in the midterms, and all other delights attending to Biden as he awaits the big round-numbered birthday as he comes, as he's coming up in a few months.
00:17:15.000 I mean, it's a very talented writer.
00:17:17.000 The Atlantic has always been able to have a smug, just, I think, very effective way of capturing current events.
00:17:28.000 It's just too bad.
00:17:29.000 It's always to the left.
00:17:30.000 So this continues.
00:17:31.000 But here's another recurring theme I keep hearing, notably from people predisposed to liking the president.
00:17:36.000 Quote, he just seems old, one senior administration told me at a social function a few weeks ago.
00:17:42.000 So they're finally coming around to the fact that Joe Biden is kind of old.
00:17:46.000 You know, Joe Biden signed a proclamation on World Elder Abuse Awareness Day.
00:17:52.000 Quote, on this World Elder Abuse Awareness Day, let us recommit to delivering all older Americans the promise of a comfortable and peaceful life with dignity.
00:18:01.000 I won't even comment on that.
00:18:05.000 The Atlantic continues to write, though, that aside from reinvigorating the Democrats, Biden could instantly burnish his own legacy by opting out of 2024.
00:18:18.000 He spared the country from more Trump in 2020, stepped in, calmed the thing down, and God love you for that, Joey.
00:18:24.000 You should be thanked up and down the boardwalk, ice cream, cone in hand, sooner rather than later.
00:18:30.000 All right, we'll table that discussion for the time being.
00:18:32.000 You guys can email us your thoughts, freedom at charliekirk.com.
00:18:34.000 I think Gavin Newsom is going to run for president in 2024, and either primary Joe Biden or Joe Biden will step aside for multiple reasons.
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00:19:33.000 With us to unpack what is happening in the private equity markets and more is the legendary David Sachs.
00:19:38.000 David, welcome back to the program.
00:19:40.000 Yeah, good to be with you, Charlie.
00:19:42.000 So, David, what are you seeing in private equity markets?
00:19:44.000 We talked to Maria Bartaromo about monetary fiscal pressures, kind of interest rates, but what are you seeing in the private markets?
00:19:50.000 I'm very interested in that.
00:19:52.000 Nothing good, unfortunately.
00:19:56.000 It's, you know, this inflation report we had last Friday, the 8.6% inflation, I think really knocked markets for a loop.
00:20:05.000 The basic reason is that prior to last Friday, you had this narrative that inflation had peaked.
00:20:11.000 And the main reason for that is not that price levels were going down, but because inflation is measured on a year-over-year basis.
00:20:20.000 And so as you started to lap bigger and bigger comps from the end of last year, because remember this inflation started last summer, it started around 5% by the end of the year.
00:20:29.000 It was about 8%.
00:20:30.000 So the theory was that as you started measuring against bigger and bigger numbers last year, the inflation rate would settle down this year and you'd start to see month over month decreases.
00:20:42.000 That was the theory.
00:20:42.000 And there was an inflation report, not CPI, but a different measure a few weeks ago where you start to see a month over month decrease and it looked like this lapping effect was starting to take hold.
00:20:53.000 And so I think that was the prevailing narrative is that we were expecting inflation to peak kind of go down and settle down through the rest of the year.
00:21:01.000 Friday's number a week ago really blew that up where you had this increase from 8.3 to 8.6% inflation on a month over month basis.
00:21:12.000 So I think at this point we're in unchartered territory because since inflation has not peaked yet, since it's still increasing on a month over month basis, this is deeply unsettling to markets because we just don't know where we're at anymore.
00:21:26.000 Why do you think the theory was so wrong?
00:21:29.000 I mean, I was told by experts a year and a half ago that there will be no structural inflation, that our productivity technology will keep it down.
00:21:39.000 How did the financial experts miss this so terribly?
00:21:44.000 It's a good question.
00:21:45.000 And I think it starts with the, you know, the Fed and the Treasury Secretary.
00:21:51.000 Remember, last summer, we had this surprise.
00:21:53.000 This is around May of last year.
00:21:55.000 We had the surprise inflation report of 5.1%.
00:22:00.000 And that was the first print where it indicated something was going wrong.
00:22:04.000 And immediately, almost reflexively, you had Yellen and the Fed kind of come out in unison saying this inflation was transitory.
00:22:13.000 That was the word that was used.
00:22:15.000 I never heard the word transitory used so much last year.
00:22:20.000 The right response in hindsight would have been for the Fed to stop QE immediately.
00:22:26.000 They basically were continuing QE for another nine months after that original 5.1% inflation print.
00:22:34.000 They actually didn't stop QE till the end of Q1, which was just a couple of months ago.
00:22:39.000 QE basically means that the Fed is intervening in markets to buy assets like government bonds and thereby increasing the size of their balance sheet.
00:22:50.000 The reason why they do that is if they're buying bonds, it actually means that the yield that U.S. T bills need to offer goes down because they're creating the demand to buy it themselves.
00:23:03.000 If those bonds were being sold onto the open market and the Fed wasn't intervening, then the implication would be the U.S. government would have to offer a slightly higher yield on those bonds to attract new investors.
00:23:16.000 So essentially, they were subsidizing interest rates and artificially keeping interest rates low through QE.
00:23:24.000 And then on top of that, you had the Fed funds rate, which is the sort of the interest rate that the Fed gets to set.
00:23:30.000 That was also extremely low.
00:23:32.000 So there was not only no reaction by the Fed last summer, they actually continued with QE kind of pumping liquidity into the market for another nine months.
00:23:43.000 I think that was a disaster.
00:23:45.000 What they should have done was immediately stop QE.
00:23:48.000 They could have waited a quarter before raising rates.
00:23:51.000 They could have said, okay, this is alarming, but we're going to wait and see one quarter if it's transitory.
00:23:57.000 But they at least should have stopped with the QE.
00:23:59.000 Because they didn't, because they didn't do that.
00:24:02.000 You saw in private equity, basically VC markets, a real asset inflation, effectively a bubble in the second half of last year.
00:24:10.000 Now, all of 2021, in hindsight, the asset prices were inflated, but especially in the second half of 2021, you got this enormous asset inflation.
00:24:20.000 You got this bubble.
00:24:21.000 And that's going to cause a lot more pain than there needed to be.
00:24:25.000 We didn't need to have that bubble in the second half of last year.
00:24:29.000 Now that bubble has collapsed.
00:24:31.000 The stock market is way down.
00:24:33.000 That has trickled down into VC markets, private equity markets.
00:24:37.000 And there's a tremendous amount of wealth destruction that's taken place.
00:24:41.000 And then that eventually will trickle down into the real economy and we're going to have a recession.
00:24:47.000 That's such a smart point, is that it's an unnecessary benchmark that was set.
00:24:51.000 So people continue to go up with the inflating ballooning assets.
00:24:55.000 And then that wealth gets destroyed.
00:24:56.000 But it's actually worse than that because the dollar bill they have is also worth less, 10%, 12%, 15% less year over year.
00:25:04.000 So you're at, you're on your balance sheet, you look 30% poorer if you bought at the top of the market where you are now.
00:25:10.000 And then your dollar bill is also 15% to 20% less, depending on where you live.
00:25:15.000 So about two minutes remaining, do you think it was political what the Fed did then?
00:25:20.000 Because the way you explain it is quite honestly inexplicable to me how a group of experts could say, yeah, let's just keep on buying bonds.
00:25:28.000 Like let's continue with quantitative easing.
00:25:29.000 Like, sure, why not?
00:25:30.000 I mean, do you think they were trying to create like a year-end sugar high?
00:25:33.000 I mean, what is the possible explanation for this?
00:25:37.000 I certainly don't have one.
00:25:39.000 Yeah, I don't know exactly what their motivations were.
00:25:42.000 It could just be that they're very slow to react.
00:25:44.000 I mean, I've generally just been kind of unimpressed with Powell and Yellen.
00:25:48.000 They just don't seem like that alert or sort of, you know, hands on the wheel, like, you know, alert to me.
00:25:57.000 They've been sort of complacent and reactionary.
00:26:00.000 So I don't know if it's just sort of like a competence issue or whether there's some other motivation, but I think the performance has been pretty bad.
00:26:06.000 But just going back a second to the point you were just making, I think there's a couple of different effects going on.
00:26:11.000 So you mentioned inflation.
00:26:13.000 That has a huge impact on the real wages of American workers.
00:26:17.000 So when they go to the store and buy meat or buy gas, those prices are much higher and their wages have not kept up.
00:26:24.000 So the wage inflation has not kept up with prices.
00:26:27.000 So everybody feels poor because their wages just don't buy as much as they used to.
00:26:32.000 But there's a separate effect that we were talking about, which is the wealth effect.
00:26:35.000 That something like 14% of global GDP has now been wiped out.
00:26:40.000 That's right.
00:26:40.000 Global wealth through this stock market crash.
00:26:43.000 So you combine those two things and everybody feels poor from the top level to the bottom level.
00:26:48.000 That's going to result in less spending.
00:26:50.000 And that's what's going to cause the recession.
00:26:52.000 It's a completely unnecessary up to go down, basically, is what you're articulating.
00:26:58.000 And I call it an economic sugar high.
00:27:00.000 And you feel awful after it.
00:27:02.000 You're demoralized.
00:27:03.000 And so then people are less likely then to invest and to take risks.
00:27:08.000 David, I want to ask you about the ramifications this could have for startup culture and for entrepreneurs, because I know personally a lot of wealthy people that were just thrown around money in the last year and a half, because if you had a deck, they would invest in it.
00:27:22.000 Like, I am going to create the next Dropbox.
00:27:25.000 I think we're going to see a kind of slow-motion car crash over the next six months of a lot of these bad investments that are just not going to be able to continue to survive.
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00:28:39.000 Do you think that we are going to see a mass amount of, I don't want to say bankruptcies, but just kind of businesses folding because of kind of the faulty investment and as a byproduct of all these cheap dollar bills floating around the last 18 months?
00:28:53.000 Yeah, I mean, I think there's what I call deferred mortality risk.
00:28:58.000 Anytime that you have a lot of starts being created, a good number of them just aren't going to make it.
00:29:04.000 That's just sort of baked into the cake.
00:29:06.000 But it was so easy to fundraise over the last couple of years that not many companies ever kind of got that come up.
00:29:13.000 And so you're able to, even the bad companies were able to raise quite a bit of money.
00:29:17.000 So I think what you're going to see is that a lot of companies that never should have raised or, you know, basically should have been weeded out through our Darwinian capitalist process.
00:29:30.000 They are now going to have a really hard time fundraising.
00:29:32.000 And yes, you will see increased startup mortality over the next two years.
00:29:36.000 So without going into specifics, but if you could kind of guide us through some generalities, where are you placing your capital right now?
00:29:44.000 I think that would be interesting for people to know.
00:29:46.000 I mean, you know, don't divulge any information you're not comfortable with, but just kind of general trends, you know, because people, we just got an email.
00:29:52.000 They said, Charlie, I'm down 45% in the last six months.
00:29:56.000 People are scared.
00:29:57.000 They're uncertain.
00:29:57.000 Like, what wisdom could you possibly give our audience on that?
00:30:00.000 Well, there's the investing that I do kind of personally, and then there's the investing that I do professionally as my day job.
00:30:07.000 And, you know, my day job is I run craft ventures.
00:30:10.000 I'm a venture capitalist.
00:30:12.000 And specifically, I invest in business software, basically software that startups sell to enterprises.
00:30:20.000 And I still think that's a great place to be an investor.
00:30:24.000 You know, it's not like software is going away.
00:30:28.000 You know, software is becoming a larger and larger percentage of the cost structure of enterprises.
00:30:34.000 And there's so many opportunities to create new kinds of business software.
00:30:38.000 It just never, that opportunity is never going away because the business environment is always changing.
00:30:42.000 So it will always need new kinds of software.
00:30:44.000 So I'm bullish on the category.
00:30:46.000 It's also called SaaS software as a service.
00:30:49.000 There are lots of public SaaS companies out there.
00:30:51.000 They have been beaten up very, very badly.
00:30:54.000 If you look at the SaaS index, there's one called Wisdom Tree Cloud Computing, which is sort of an index.
00:31:02.000 It's basically at its 52-week low.
00:31:04.000 I'm not recommending that anyone necessarily buy it because I don't know where the prices go from here.
00:31:08.000 But, you know, I tend to think that these SaaS companies, these cloud software companies, they're great businesses and they will continue to grow.
00:31:17.000 And they're very high margin.
00:31:19.000 And I think they will do well long term, but they've just been beaten up very badly because of the rising interest rate environment.
00:31:27.000 That's good wisdom.
00:31:28.000 So in closing, I just want to ask your thoughts.
00:31:30.000 I know you know him.
00:31:31.000 What do you think is going on with Elon and Twitter?
00:31:33.000 There's been a lot of mystery around it recently.
00:31:35.000 Any insight you could give to us?
00:31:37.000 Well, I don't know anything that's non-public about this, but my interpretation of that town hall meeting he had to with the employees the other day is I would slightly revise upwards the chance that this deal actually happens.
00:31:51.000 It was looking shaky the last few weeks because Elon's been complaining about the bot problem.
00:31:56.000 But I tend to think the fact that he was willing to do the town hall meeting with the employees would be a bullish signal that he actually intends to close the deal.
00:32:06.000 I totally and completely agree with that.
00:32:08.000 And do you think the price of Tesla going down is going to impact this at all?
00:32:12.000 I mean, just this is speculation right now, but he'll figure out a way to finance, I think, this no matter what.
00:32:19.000 I mean, do you think that might be part of the calculus as well?
00:32:22.000 Well, it's tough to say.
00:32:25.000 I mean, I think it's clearly not helpful that his net worth has been cut by whatever percentage over the, you know, 30, 40, 50% over the last few months.
00:32:35.000 But he still has the wherewithal to do the deal if he wants to do the deal.
00:32:39.000 And he's not solely financing it.
00:32:42.000 He has a number of well-heeled partners with deep pockets and big funds who've stepped up.
00:32:49.000 So I think he still has the wherewithal to do this deal.
00:32:53.000 It may not be as comfortable for him personally, but I didn't hear anything in the town hall that led me to believe that he is walking away from this or squeamish about it.
00:33:05.000 I think maybe he wants to renegotiate the price, which would be appropriate if the bot problem is bigger than 5%.
00:33:12.000 So it'll be interesting to see if that happens.
00:33:13.000 If I'm on the Twitter board and Elon wants to renegotiate the price, I would be open to that because if Elon walks away, Twitter's stock price is going to crater because they're affected by what's happening in the market as well.
00:33:27.000 In addition to that, the company is in chaos.
00:33:30.000 So, you know, it'll be interesting to see where this ends up.
00:33:33.000 I guess what I would bet on, although not a lot of money, would be that the deal actually closes and Elon maybe gets some price concession out of them.
00:33:42.000 I hope you're right.
00:33:43.000 I think it's good for the West for Elon to buy Twitter.
00:33:46.000 Thank you so much, David.
00:33:47.000 Great commentary as always, and thanks for sharing your wisdom.
00:33:49.000 Thank you.
00:33:49.000 Absolutely.
00:33:50.000 Thanks, Charlie.
00:33:51.000 See you later.
00:33:51.000 Thank you.
00:33:52.000 Thank you so much for listening, everybody.
00:33:54.000 Email me your thoughts as always, freedom at charliekirk.com.
00:33:56.000 We'll see many of you at Student Action Summit, tpusa.com slash SAS.
00:34:01.000 Thank you so much for listening.
00:34:02.000 God bless.
00:34:05.000 For more on many of these stories and news you can trust, go to CharlieKirk.com.