Bond crisis looming? GOP abandons DOGE, Google disrupts Search with AI, OpenAI buys Jony Ive's IO

This thing is like anti-DOGE. If DOGE was meant to be a reflection of the American voting population's desire for meaningful reform in government, cost controls, some form of austerity, and to get this debt spiral in check, this is the opposite of that.

I mean, do I wish that it made all the DOGE cuts permanent through rescissions? Yeah, absolutely. I think it's outrageous that there are enough House Republicans who didn't want to back up DOGE that wasn't enacted.

I think the writings on the wall that the system is winning and the rebels came in and they tried to fix the inefficiencies in government with DOGE under Elon's leadership and our friend Antonio's participation and a great group of individuals who are true patriots who are spending time trying to help reassess how the government operates.

He was elected to balance his budget and to have austerity. He's going to put more onto the debt, and we sat here on this very podcast, the four of us, and said this was the most important issue on the world, and Trump is putting gasoline on the fire.

I think what's going to happen is the bond market will sensitize this budget at real rates. They're not going to use the 3.6 that Friedberg pointed to. They're just going to re-underwrite this at five, five and a quarter, five and a half. That is a very different risk exposure, I think.

If you look at that region, like you said, it could tip one way or the other. They could be involved with the West. We could be building businesses together. And if we build businesses together, that's better than them building businesses with China.

And we can have these countries be aligned with us and in our orbit, or we could push them into the arms of the Chinese. The choice is, do we want these countries to be the piggy bank for American AI or for Chinese AI?

Cooperating like this, I think, just makes a ton of sense.

That makes no sense. These guys have unlimited resources. They have unlimited ambition. That's just a naive point of view. They want these for themselves.

This idea that somehow they're going to get smuggled, it's like this totally fake concern that's been created. It's almost like a totally fake narrative.

And you will see some very good posts recently on people talking about how a lot of technology that's been developed in the United States is being transferred to China and they are building biotech companies and biotech solutions that take American IP and put them into market. And this has also had a very big dampening effect on the biotech market.

the amount of IP that's available for purchase or for licensing, questionable provenance, but how effective and good it is, is causing them to figure out how to establish more of a presence to just buy stuff there.

I would say if anyone were to identify the week that Google really pivoted into the AI business model, it might be this week. They launched over 15 products at this thing.

It certainly shows that they're in the game and they're not going to get caught totally flat-footed and let the whole world disrupt them while they're trying to figure out AI. I mean, they are responding now and the market seemed to like it.

The search results in AI look elegant. They look, dare I say, perplexity like. When you look at them, I would say I would like to have that as my default

I suspect it will be done in less than a year. And for a large swath of users, they are going to put AI in the front door. I think that's a fait accompli.

What he is saying is that there is increasing risk that that trade unwinds. When that trade unwinds, what you're going to have are net sellers of up to, as Friedberg said, a trillion plus dollars of US treasuries.

And remember, if you look at the historical perspective, when the global reserve currency nation sees their debt sell-off, it usually is part of a global sell-off that happens. It's not just the US that gets affected. And any one of these markets can cause a cataclysmic follow-on to the rest of the global financial markets. Like if Japan sells off too much, we are going to start to see a lot of unraveling happening.

I think that most people in Washington believe that the export controls on China make sense, because we simply can't allow our most powerful semiconductors to be used by China because of the dual use. Now, where I agree with Jensen is that I think we should not place undue restrictions on the rest of the world using the American tech stack, because we will simply concede the market share to China.

Today, the 10-year is around 4.5 percent. At the rate in which it's escalating since Liberation Day, by the end of this year, we're going to be past 5 percent. The 30-year is on a rate now to get past 6.25, maybe even reach 6.5 percent.

Well, I agree that you need to build out power, but I think the administration is committed to doing that. Drill baby, drill.

The thing I do watch the most, Sacks, and that I do think, you and I have talked about this, that I do think is the critical linchpin for all of those other points of abundance being unleashed is the energy equation.

Yeah, look at the number of times that Elon has said this. Like it's like the amount of energy that's available if we just harness it from the sun and redirect it with some storage, would solve all of our problems. But the problem is that we're at like just a little over a terawatt. We're inching along in gigawatts, whereas China is in the terawatts, adding terawatts.

This generation's Manhattan and Apollo Project is energy production scaling in the United States. That's it. All the other shit flows.

You take the financial incentive away and you can't underwrite this thing. What are they going to do? They're just going to stop doing it. So in the absence of electrons, what happens? Prices go up, it's inflationary, and now you'll have to allocate electrons.

Automation, which is unlocked by AI, we are going to see an explosion of robots. They're not going to all be humanoid robots, but robotics allows humans to get an incredible amount of work done. Imagine having the cost to build a giant building go down by 50x.

There is a non-linear relationship between the deficit and interest rates, which drives up the debt problem in a non-linear way, and it gets away from you and you can't fix it.

And if it passes, forget what any of us think, the bond markets will act decisively, and they're going to go in one direction, and it's away from us.

It could be the moment, but, you know, I remember the first week of April when Larry Summers came on the pod and said that the markets were melting down, and that was a different moment that he was trying to sell in favor of his policy. So my point is just there's market volatility, and we won't know for a while whether this means anything. It could just be a blip.

I don't know why we're even talking about this. But they're going and getting espresso. I watched the nine minute video. I wanted my nine minutes back. Nothing happened.

I want the device. They say they have a device. Okay, I'm giving them the benefit of the doubt. They've invented something that they say is world changing.

It could be a new kind of phone that is AI first as opposed to the wall of applications, or maybe it's like some sort of like pendant thing that like tracks what's going on around you and feeds it into AI so it can give you more context, you know, maybe like in the movie Her. Who knows? But it seems like they'll do something with devices in the physical world. So that would be the play, I guess.

the stock ripped 5% on the day, which might be a turning point for Google

This bill passed by one vote margin. It was hanging on by a thread. And if it failed, you get basically hundreds of billions of tax increases, which we don't need right now.

I saw yesterday the Tennessee Valley Authority filed the first ever application for a small modular reactor. Let's go. Hopefully, it gets approved very quickly.

So then it's like, okay, what can I do? Nuclear? I can't, because that'll take till 2035