The banking class has basically become what that ‘landholding class’ was, which Adam Smith and others wrote against.
Australian land prices increased by $765b in 2024. Banking profits $40b. Landowners still make a lot.
Reagan read a little speech again tariffs, especially against tariffs that last more than a short period of time, which they played on the All-in pod this week. Friedburg listed 3 problems with tariffs, being 1. traditional assembly line in US can undersell a modern tech assembly in China, so US doesn't have an incentive to innovate, ie lack of the incentives that make a traditonal free market system thrive, 2. near term loss of revenue for US businesses, so government has to issue support payments to US producers (like US farmers during Trump1.0, especially if tariffs last and global markets stop buying US exports, 3. China had a state council meeting and talked about disregarding IP rights of holders everywhere, so with their lower wages and costs they could just take IP and sell it everywhere, even for things like MS Word. They can sell at 10% of the price to all the countries the US has tariffs on.
China is also developing modern chips, and they have the minerals, the factories, and the software. The chip manufacturing base could move from Taiwan to China.
‘The long of the curve is giving us a respite in a storm.' Chamath.
Wall Street smart money thought this was a $250b event (April3). It was actually a $750b - $1t event. It creates the risk of a recession, which risk is decreased by the Fed pricing the front end of the curve, and how easy it is to borrow. Bessent is financing $6t in the back end, and if Powell cuts the front end, they could introduce liquidity in a moment when small and midsize businesses can borrow to weather this period.
Lots of companies have a 15% operating margin.
Bessent said he wants to dereg so banks can issue more credit to businesses, add liquidity that way. They want the capital to flow into building businesses and creating employment though.
Chamath gave an anecdote, his friend operates a $100yo US company, and they've done ‘everything possible to maintain their business in America’, hiring Americans etc, but the tariffs may swing their balance sheet from profitable to a significant ($100b) loss. And that's the kind of company that ‘should be winning.’