E51: Supply Chain Shortages, Inflation, DeSantis, Ted Sarandos Netflix Memo, Cancel Culture, Fan Q&A

Beginning in late 2021, the US will enter a sustained period (multiple years, not just a few quarters) of elevated inflation driven by persistent labor shortages and rising raw material costs, rather than a short-term post‑Covid blip.

“I put these two things together and I'm like, I think this stuff is here to stay... and now I'm kind of positioning myself to, uh, hedge myself in this situation.” View on YouTube

Inflation in supply-driven economies outside the US will transmit into the US, driving a noticeable increase in US consumer prices over the following 12–18 months (through roughly mid‑2023).

“if you're seeing inflation in those other, you know, supply driven economies, they are going to come on shore. They're going to hit us in the face I think prices are going up.” View on YouTube

If President Biden does not forcefully intervene to end the port labor constraints and move Los Angeles/Long Beach ports to true 24/7 operations, the resulting supply chain disruption will trigger a US recession within the next year (by late 2022).

“Look unless Biden is willing to listen I mean, Chamath, you're right that they're entitled to negotiate. But here's the thing. I mean, they're holding the whole country hostage now. They're holding the economy hostage. So at a certain point, if their demands are unreasonable, it's, I think, proper for the president of United States to step in and say, guys, this is ridiculous. You have to go back to work... unless Biden steps in to solve this, we will have a recession.” View on YouTube

China’s late‑2021 restrictions on coal usage that were constraining manufacturing will be rolled back quickly; they will not allow these clean‑energy‑motivated coal limits to persist long enough to cause a prolonged (multi‑year) shutdown of significant portions of their industrial economy.

“I suspect that China has woken up to this, and they will they're not going to shut down their economy because of concerns about clean energy. So I assume this is a very temporary decision.” View on YouTube

If supply chain bottlenecks and Covid‑related regulatory constraints are not substantially resolved, the US could experience a 1970s‑style stagflationary recession in 2022 (high inflation combined with stagnant or contracting real growth).

“unless it gets fixed, it could absolutely cause a 1970s style stagflation type recession next year.” View on YouTube

From late 2021 through at least the next 2–3 years, the US will experience worsening labor shortages, rising wages, and continued increases in consumer prices, input costs, and energy prices, rather than a reversion to pre‑Covid conditions.

“I just think inflation is here. I think the labor shortage is going to get worse, not better. I think we're going to have to pay people more to get out of it. I think prices are going up. Input costs are going up. Energy costs are going up. Um, so this is it.” View on YouTube

By roughly Q4 2022, both the US Federal Reserve and the European Central Bank will have begun raising policy interest rates and will be in a significantly tighter monetary policy posture than in October 2021.

“I think I think that probably the fed and the ECB are really raising this time next year. They're probably in a really, really tighter posture.” View on YouTube

As interest rates rise over the next ~12–24 months from October 2021, high‑growth, no‑cash‑flow tech stocks will experience a major drawdown, with valuations falling substantially (“in the toilet”) relative to their 2021 highs.

“Tech stocks in the fucking toilet.” View on YouTube

During the coming rising‑rate cycle (beginning by around late 2022), growth stocks with little or no current cash flow will materially underperform dividend‑paying and yield‑oriented equities.

“No no no bueno for no cash flow growth stocks. Yeah. In rising rates.” View on YouTube

Given the 5%+ inflation rate reported in late 2021 and the emerging supply chain crisis, the US is on a trajectory that could produce a renewed stagflation episode (high inflation with weak growth) in the near term (within the next few years).

“We're at something like a 5.1% inflation rate... This is a recipe for stagflation. 2.0” View on YouTube

Within roughly the next 1–2 years (by 2023), the US macro environment will evolve into a late‑1970s‑style regime of high inflation and weak real growth, in which owning risk assets (especially high‑beta ones) will be a poor strategy compared to being “risk off.”

“I think it's coming. Um, I don't think it's a short term blip. And I think that we are in a period that will resemble the late 70s. Um, and I think that, you know, you kind of want to be risk off and not own risk assets.” View on YouTube

There will be a significant downturn or correction in risk assets and a clear manifestation of the inflation/stagflation problem within roughly 8–18 months of October 2021 (i.e., by mid‑ to late‑2023), after a window in which investors can still reposition portfolios.

“I mean, look, I think you got a year to 18 months to kind of clean this stuff up... But it's coming. Um, and I hope I'm wrong, but I think we'll look back on this and we'll say we said it probably 8 to 12 months before it really reared its ugly head. But it's coming.” View on YouTube

US policymakers will continue to rely primarily on monetary expansion (inflation) through at least the coming year (through late 2022) to manage debt and economic imbalances, rather than sharply cutting spending or rapidly raising interest rates.

“I think we're just going to keep inflating our way out of this mess... and, um, it's what we'll do again this year.” View on YouTube

Over the medium term (within the next decade from 2021), US top marginal income tax rates are likely to rise back toward historical 1960s–1970s levels in the 70–80% range.

“remember the top marginal tax rate was what, 7,080% in the 60s and 70s? I mean, you know, that's likely where we're going to go back to.” View on YouTube

In response to fiscal pressures and debt, US policymakers will introduce or seriously pursue wealth taxes and increase the top marginal income tax rate toward approximately 70–80% within the coming years.

“We already got you're gonna you're gonna see some of these wealth taxes get chased down. You're going to see the top marginal tax rate go up 70, 80%.” View on YouTube

Over the coming years, adoption of deflationary technologies such as software automation and self‑driving trucks will accelerate specifically to replace low‑income labor that has become scarce and expensive, partially offsetting inflationary wage pressures in those sectors.

“I feel like we need a deflationary set of technologies that can mitigate all of these effects. Right? So software automation, self-driving trucks, things that take the labor force because people don't want to work low income jobs factually.” View on YouTube

Over roughly the next 1–3 years from October 2021, US labor markets will tighten: employment rates will rise (unemployment will fall), wages and salaries will increase, and inflation will continue to move higher, all occurring simultaneously.

“I do think that over the next year or 2 or 3, you're going to see, you know, labor rates go back up and employment rates go back down and salaries go back up and inflation go back up. All of these things are going to happen together.” View on YouTube

Over time (over the coming generations as large digital footprints accumulate), cancel culture will fade and effectively disappear due to mutually assured destruction from everyone having embarrassing or problematic historical digital content.

“And so you'll have a choice, which is if you're going to hold me accountable, I'm going to hold you accountable. And so it's mutually assured destruction. And I think that's what causes cancel culture to go away in time.” View on YouTube

Netflix, which had roughly 200 million subscribers at the time of this discussion (October 2021), will grow to approximately 1 billion subscribers within the next 7–8 years (by around 2028–2029), continuing to get larger as the world’s largest media company.

“they're already the largest media company in the world, and they're only going to get bigger. You know, Netflix has, what, 200 million subscribers? They're going to get to a billion subscribers. It's just inevitable. And so for them, I do think it's a very rational business position to take, which is that I have to appeal to a billion people over the next, you know, 7 or 8 years.” View on YouTube

Regulatory actions such as CFTC fines, New York and Canada bans, and a reported DOJ wire fraud investigation mark the beginning of the end for Tether as a viable, dominant stablecoin; its position and/or operation will significantly deteriorate going forward from 2021.

“And there's apparently a DOJ wire fraud. So I think this is the beginning of the end, not the end of the beginning.” View on YouTube

Chamath is implicitly asserting that there is a substantial probability (later quantified by Jason as 60%) that Kyrie Irving will choose to retire from the NBA rather than get vaccinated under the then-current COVID-19 vaccine mandates.

“What do you think the odds are? Kyrie retires?” View on YouTube

Within roughly the next 30 years (by ~2051), advances in quantum computing will enable deterministic modeling of molecular and atomic interactions, allowing the design of new molecular systems and processes (e.g., for synthesis like improved ammonia production) via accurate quantum-level simulation.

“using quantum computing. In the next 30 years, hopefully we'll be able to deterministically, um, model these, these behaviors on a, on a molecular and atomic level and as a result, kind of build new systems to make things.” View on YouTube

In approximately 100–120 years from 2021 (i.e., by around 2121–2141), typical people will have an in-room “replicator” device capable of locally manufacturing essentially all desired physical items (including food and complex objects) almost instantaneously, with very low energy use and very low cost, fundamentally changing supply chains.

“In 100 to 120 years from now, I do think we'll all have a replicator in our room, and that replicator will make all the things we want to make nearly instantaneously, with very low energy and very low cost.” View on YouTube