Balaji Sets The Record Straight on SBF's Downfall and the Israel-Hamas War

The network is what succeeded here. It was the internet, crypto Twitter, the uncensored crypto Twitter that exposed this guy's crimes. So this government couldn't quickly find some justification to get SBF under legal arrest. I'm not saying that this is good. I don't want them to make up the laws as they go along, but they're infinitely creative when persecuting the innocent, yet somehow ploddingly constrained when pursuing the guilty. I get why people want to claim the system worked. You know, after years of abolish the police, after years of rampant crime and complete— it's refreshing seemingly to see one case that seems to get the the right result. But really what actually happened here, the only reason we're here is that the network succeeded where the state failed. It's funny, like bank fraud. It's like actually there in the name, you know, it's like one of these weird scam bank fraud, right? It's like, it's like nominative determinism.

In today's episode, Balaji returns to Upstream for an unfiltered conversation about recent events. Balaji makes the case that it actually matters who brought down SBF and which institutions and networks led to his conviction. Then we discuss the societal division and ideologies that are present in the Middle East today, shaping modern geopolitics and digital tribes. Without further ado, here's Balaji.

Why are we caring about sort of, you know, SBF or sort of the story of SBF and how this all happened, given that it's over right now?

So honestly, do I care that much? I don't care that much. But I did see— so I was on a plane, okay? And, you know, as one does, I'm just looking, you know, at Twitter, and I caught some noise, and I saw some people totally rewriting history and like actually taking a victory lap, like, oh wow, you know, the government got the right result. See, it shows that you tech bros were so stupid as to ever distrust the American state, you know? And I was like, this is the most bizarre rewriting of history ever. So it's like a long international flight. So it was like a little while before I could, you know, actually touch down and get to my laptop or whatever. So I just wrote up this, you know, post, which actually turned out to be really long, that actually tells the true history of SBF. You wanna just kind of, I'll just quickly surf through it, okay? Congress blew him kisses, journalists gave him applause, regulators promised to take no action, It was only crypto Twitter that uncovered his deception. Read the actual history of what happened with Sam Bankman-Fried. I mean, it's funny, like bank fraud. It's like actually there in the name, you know? It's like one of these weird—

Physiognomy, yeah.

Nominative scam bank fraud, right? It's like nominative determinism, you know what I mean? Do you ever hear that term nominative determinism? It's like your name determines what you are.

Yeah, yeah, that's very funny.

It's funny. Anyway, read the actual history of what happened. And, you know, AI is getting pretty good. I thought this is a pretty funny photo, right? Crypto Twitter, Found SBF's fraud.

Okay.

Okay. And just to go through some of the folks, I have no beef with Dan Primack. He's trying to say, oh, you know, memories. The net result of FTX is billions of dollars was stolen from crypto investors to give to Democrat-aligned politicians, nonprofits, and journalists. Fact. That's why there may be no prosecution. Speculation. But the point is to embarrass the government into actually doing something. Okay. In the meantime, what was Dan Primack doing? By his own admission, if you look here, Dan Primack is asking SBF, hey, Sam, if I need a million dollars to cure world hunger, could you get it? That's the kind of hard-hitting question he's asking. Meanwhile, other actual journalists, citizen journalists, got the tip that brought down SBF FTX's crypto empire, right? Similarly, you know, the Stalwart, he actually blocked, you know, over here a long time ago. I didn't even— I, again, I have no beef with Premack, Stalwart, whatever. I have no beef. But he's also posting similar, lol, you know, I can't believe Balaji posted this. But again, you know, there's absolutely no victory lap for the establishment. Take a look at what you know, the Stalwart is doing. He's asking him on Odd Lots how to make money in crypto, right? Whereas Ryan Sean Adams and Erik Voorhees are confronting him on Bankless because, you know, SBF was trying to centralize crypto, and this is actually, you know, what was, um, what was, uh, you know, part of the thing that triggered the whole investigation, right? Then this guy, who again, I, I, I don't even know this guy, I have no beef with him, he's like, I love reading these ignorant takes from people who know nothing about the law, but ran their mouth in the SBF case because someone told them they're smart. I'm not saying I'm smart. I'm just saying I read the papers. And what I see is things like this: 56 former prosecutors write to appeals court in support of bail for lawyers accused of throwing Molotov cocktail at police vehicle. This is basically something where prosecutors seem to be going very easy on Democrats and very hard on non-Democrats. And I say that as neither a Democrat nor a Republican. And just overseas, okay, you click these links, um, you know, here Is this guy? You know, he's he's basically getting. You know, when do you have prosecutors write in to get you off for throwing a bomb through a policeman's car? Right. Meanwhile, this guy is being thrown in jail for for memes. Right. Ultimately, this this guy Molotov cocktail the car got like a year in jail. This guy got seven months. Okay. So you know almost as much time for a tweet as it is for a Molotov cocktail. The ultimate sentencing enhancement is being a Republican. Finally, this guy over here is like. Oh, lol, you know he's going to say that his tweet worked. It's not my tweet; it is crypto Twitter, right? Because you know Twitter is important. Why did the regime not want Trump to post on Twitter? Why doesn't it want you to post on Twitter? Why doesn't it want Elon to let you post on Twitter? All the way going back to the Arab Spring, it was clear that Twitter could topple regimes, right? That's why Twitter matters, right? It's not any one person; it's Twitter as a whole, right? And if we had just left it to the mainstream media again. You know, just, just to really make the point, here's the New York Times and they're clapping for, for Sam Bankman-Fried at DealBook. Okay. Thank you so very, very much. Right. And everybody here goes, I'm not sure you can hear the audio, but they all go and clap for him. Okay. That was, that was months, weeks rather, after his, his fraud was, was there. So the New York Times clapped for SBF while Twitter exposed SBF. So the thing is, we just can't rewrite history. You know, if you go through this post, right, I'll just show a few more clips. Okay, you can read the whole thing. All right, I love this AI image. I thought it's pretty— it's pretty funny, right? So basically, crypto Twitter is actually what should be taking, you know, the victory laps or whatever. Okay, and it's like, you know those movies where Batman hunts down the villain and leaves him hogtied for the police to just mop up? That's what happened. Twitter exposed the criminal, right, collected the evidence, And the government just did MOPA. Okay. And the way we can prove that is the entire case was broken on crypto Twitter from beginning to end, right? It was Ian Allison that, you know, CoinDesk's Ian Allison revealing SBF had no money. It was, as I mentioned, you know, Voorhees playing hardball with SBF on Bankless. It was David Z. Morris. He was, you know, look, he doesn't like me. He writes for CoinDesk though. He's actually part of crypto Twitter. He's aware of it. He was calling FTX a crime while the establishment was claiming SBF was a philanthropist, right? And it was Elon, you know, and others on Twitter posting about SBF's donations to Democratic politicians. So, you know, who's closer to the truth? Elon is actually pointing out SBF was a major Dem donor. Doesn't that explain why we appreciate you've been candid in your discussions about what happened to FTX? Your willingness to talk to the public will help. We would welcome your participation. Most, to my knowledge, okay, most white-collar crime investigations don't start with testifying to the US Congress. Okay. You know, that's not, that's not typical, right? So especially not being welcomed there. You're so candid, right? So the thing is, the only reason SBF was even exposed, let alone convicted, was because of people posting on Twitter. Okay, let's just be absolutely clear about that. And the reason is, this is the regime's number 2 donor, the number 2 donor after Soros. Of course they didn't want him taken down. Of course he was— it would be an embarrassment if he was taken down. This is not an outcome anybody sought, right? It had to be independents who did it. And the actual only independent journalists are citizen journalists. You know what? You know what? Even the least self-aware corporate journalists in modern history admitted this. Do you remember this? Boom. Here we go. Right? Influencers outshine traditional media on coverage of FTX implosion. Okay? I won't even name this critter, right? But even the least self-aware corporate journalists in modern history recognized that the citizens outshine the corporates. Okay? So let me pause there and then, you know, I'll show a few clips. Go, go, go.

It's, uh, it's like COVID. It's an environment where people want to take credit and, uh, and set the terms of what actually happened, uh, and it's important to get it right.

It's bananas, right? The system got an F on SBF. And how can you tell? Okay, all of the elections that SBF helped swing with stolen money will never be unwound, right? The investors who put money into FTX, they lost their shirts. But the politicians who got money out of FTX, they keep their seats. So the bad guys got away with it. The, the system didn't work. It's just like the Iraq War, the financial crisis. You know, maybe there's like one guy who gets his wrist slapped, like Bush for the Iraq War, but the system that, that actually made it happen is still there, right? And, uh, you know, they're declaring mission accomplished. And the thing is, basically, you know, I go through this politicians failed. Here is, you know, Chair of House Financial Services. Literally, look at this. Hold on. Look, blowing kisses. Mwah! To SBF. All right? Do you see that? Mwah! I'll show you one more time. Ready? Mwah! Okay? Then here, I mentioned, I showed you the clap, right? So politicians failed. Journalists failed. Here's regulators. Regulators failed. Okay? Look at this. You know, this is, okay, just in case you think I'm, you know, making this up. This is from sec.gov itself. It's right there. Let's zoom in. Zoom, zoom, zoom, zoom, zoom, zoom. Okay. Scroll over. The conditional no-action relief discussed in the statement. What does that mean? Okay. Conditional no-action relief. One of the great things about AI is I can now give a provable paraphrase, right? Click that button, translates. What do you get? Right? Here is perplexity.ai. Please confirm this. If the SEC grants conditional no-action relief in Regulator Ease, that translates to we will not pursue enforcement action. Yes, that statement is correct. Ta-da! Isn't that awesome? It's like, you know, because otherwise people might not trust your paraphrase. Point is, it's hard to get no-action relief. And so he was getting a private meeting where basically he was going to be told by the SEC that we're not going to pursue enforcement against FTX, right? Or at least that's what the strong impression of this is, right? And so SEC had no idea that this guy was bad. But in the meantime, what they're doing, they're blocking Bitcoin ETFs. You know, like they had to be sued to finally get the Bitcoin ETFs through. They've been blocking Bitcoin ETFs for 10 years. So they meet with SBF, While blocking Bitcoin ETFs, all right? So just again to recap, the regulators failed, right? The regulators gave him no action. The journalists gave him applause, and Congress blew him kisses, okay? So who actually succeeded? It was the internet, right? And it was actually the blockchain because it was the fact that he couldn't, you know, the fact that he couldn't enable withdrawals is actually what did him in. See, on his centralized server, he could do things like this with the Like negative balances allow negative or whatever. When he controlled the centralized server, he could fake it. But on Satoshi's decentralized blockchain, he could not fake it, right? That's a fundamental thing. It was when he, uh, couldn't do the withdrawals that millions of people were able to independently fact-check him and test their ability to withdraw and view the results on-chain. And they could see FTX was not fine, assets were not fine. So that's actually fundamentally why the network was, you know, succeeding where the state failed. You see my point?

Yeah, it's well said. Also, it comes off the— you just coming off the Network State Conference, which was a massive success, so it's good timing.

Yeah, exactly. I mean, the thing is, the Network State Conference is really just an articulation of a theme that's actually there, and I just point it out in news stories, and when you see it, you can't unsee it. The network is what succeeded here. It was the internet, the crypto Twitter, the uncensored crypto Twitter that exposed this guy's crimes, When the regime probably, by the way, if Elon hadn't been in control of Twitter by then, it's possible this might have gotten censored. It's the NYT was actually really pushing hard. Congress was pushing hard to make it seem like this was just a mistake, a classic bank run, as opposed to an actual scam. Right? But Twitter, because of uncensored, is able to push extremely hard. I mean, think about the Hunter Biden episode. Right? That was later admitted to be true, but because it was unfavorable to the regime, it was censored in 2020, and then it was later admitted. when it was, it was of no consequence to the election, right? So it's quite possible that Elon might not be in control of Twitter. We wouldn't have actually heard the true story or wouldn't have gotten out there. Okay, point is, you know, A, it was, it was, you know, free speech on Twitter, and then B, it was free markets on the blockchain where those withdrawals were something that he couldn't hit a button and do funny money, right? This is actually a preview. Sam Bankman-Fried is a preview of Uncle Sam Bankman-Fried, where they do hit a button and they defraud you on a centralized server. But if you can withdraw on-chain, they don't have root control, they can't do it, right? So then the criminal justice system, yeah, they succeeded, but only after they failed. And the reason is, this is, this is something where there's actually 3 points to be made, right? First is, okay, remember for years, and this is 2022, by the way, so about a year ago, for basically just like a year, year and a half before then, we'd been treated and we still treated to abolish the police, defund the police. And suddenly they go from abolish the police to trust the police. Again, here's a clip. I'm not sure if you can hear sound. I'm going to just play this for a second. Okay, she's saying we need to completely dismantle the Minneapolis Police Department. Everybody says yay, right? And there's, you know, this wasn't like a minority thing. Everybody's screaming, you know, abolish the police, right? You know, here's, here's NYT, like, literally we mean abolish the police. Okay, they're not, they're not saying it metaphorically. Yeah, yes, we literally mean abolish the police. Okay. So this was what the Democrats stood for. They stood for abolish the police. Then suddenly they pivoted to lol, can't believe you didn't trust the police. What? Right now, the thing is, actually, yeah, we don't trust the police. Why? Because crime is being legalized, right? Hard drugs are sold in public. Soros prosecutors have made it so that supermarkets and trains are looted in broad daylight. Look at this. People just grab stuff out of supermarkets right here. You know, here's like a train where people are looting in public, right? You know, we have car windows are smashed and, you know, 15,000 car break-ins, right? We have, um, you know, mobs swarming people at these BLM-Hamas meetups. They just swarm cars or whatever, right? Just random. The police don't do anything during any of this stuff. Okay, so yeah, there's less trust in the police. And as a prosecution of actual crimes winds down, the prosecution of political crimes ramps up, right? Here, this guy, as I mentioned, he's getting, you know, like 7 months for, for tweeting a joke, right? And this Democrat is getting, you know, 1 year for, uh, for firebombing a police car, right? When you put them in contrast like that, sentenced to jail time. Okay, so, you know, here we are, uh, sentenced to a year and a day in federal prison. All right, so like the ultimate sentencing enhancement is being a Republican. Right? It's quasi-illegal to be a Republican in blue America.

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Again, this is something where this is the era of show trials, Russiagate, That's now, you know, CGR ran this whole long series where they eventually admit the thing to be, to be false, right? They say, you know, the President versus the Press Part 1, this whole long series on how the whole thing was fake 2 or 3 years later when it doesn't matter, right? And the Hunter Biden allegations, again, a few years later, are gradually admitted that the officials who cast doubt on Hunter Biden laptop face questions. Remember around the election, all these guys who signed the letter discounting the laptop's contents?

They, they—

because they do it as a school of fish, they all do it together, so you can't fire all of them. So now, so years later, this— all this manipulation is revealed to actually be false. But this is the manipulation of the justice system. So of course, yes, you know, when actual crimes aren't prosecuted and political crimes are, there is legitimate grounds for distrust, right? Uh, so, you know, if a system that actually wanted to rebuild trust would acknowledge this and say, you know what, I understand why you don't, you know, have trust. I see you're thinking that it's tribal, and I get it. And so that's why we're going to do X and Y and Z and be more transparent about it, right? But that's the exact opposite of what they're doing. You know, they're, they're essentially saying, lol, I can't believe you didn't trust it, after they just said not to trust it. Okay. And, you know, I'm not going to play this Chris Rock clip, but basically it's a famous clip where he's like, you know, this is what you're supposed to do. Okay. Getting a guy who stole $10 billion in broad daylight with literally millions of eyewitnesses and cryptographic proof Okay, that's not something to brag about. That's like an easy thing to, you know, okay, should I say it's easy? Let's just say you paid trillions of dollars to this government. You should expect that being able to catch an obvious fraud with millions of eyewitnesses and lots of digital evidence is something that you can do, right? It's not something that's like, yay, you know, mission accomplished or whatever. It doesn't get a cookie for that. All right. It's not like some cold case where it's, it's not like catching bin Laden or something. All right.

Well, there was this idea that because SBF had supported the Democrats so much that maybe he was going to get off scot-free, and some people— or get off easy. Were you sympathetic to that? Like, why didn't he get off easier given how much he had supported the establishment?

It's ridiculously important for people to keep pressure on their government, okay? To just say that the same thing would have happened without any press coverage— I mean, think about the press itself does, okay? If you go and look at any Pulitzer nomination, look at the Pulitzer Award for public service, look at the Pulitzer Award for national coverage. They'll keep saying press coverage forced this to happen, triggered an investigation into this, pressured this. Okay, so here we go. Uh, spurred an influx of money and legislative changes, right? Exposing failings, right? Impactful journalism. So the whole point is all of their stuff, when they want to take credit Okay, journalists will always talk about the impact of their reporting. Okay, and you know, here is the like the national reporting stuff, right? Here we go for prompting numerous statewide reforms. So the whole point is that news coverage pushes a government to reform. That is the entire premise of investigative journalism, right? It's what all the big prizes are given for. Right, led to, you know, uh, led to crashes, exposed design flaws, right?

Holding accountable.

And, you know, triggering criminal inquiries. Holding them accountable. The whole point— these words triggering, you know, prompting, like forcing— all of this stuff is essentially drawing a direct cause and effect line between the reporting and the actions of the state. Now, why should it be so different whether that reporting is read on social media or in mainstream media. Of course it's not. Of course the reporting forces them to do grudgingly what they probably didn't want to do. Duh, right? Like when this stuff is getting millions of views, they want to avoid the embarrassment. And so going back to the post, right, one of the things that people claimed is that the whole thing happened at the speed of light, okay? That this was the absolute fastest that he could have been picked up. And so I just made 3 kind of points about that. All right. First is Around the same time, remember Alexey Pertsev? He's still actually in trouble. This is a guy who developed Tornado Cash, a genuine freedom fighter. All right, he was held, picked up within 2 days of OFAC inventing a controversial new interpretation. This is like them inventing like new law, okay? Didn't go and, you know, they held him without charges for writing code for months, right? And this is like, you know, when they want to move fast. Do you remember when they arrived at NASCAR within 24 hours for the fake news? Right? The news in the garage. Okay. Do you remember this a long time ago? Remember Nakula, Bassi Nakula? Hillary Clinton said that there was this movie, okay, that caused, you know, the whole thing in Libya to go down. This anti-Islam film, September 14th, 13th, 2012. Day later, this guy is taken in for questioning. Okay. So when the— these are 3 examples. You can have many more. When the government wants, this guy's picked up at 2 days, 24 hours, 48 hours. We know they can move fast when they want to, number one. Okay. Number two, okay, this guy is from the same office as, um, the folks who actually prosecuted SBF. And by the way, I'm not attacking them. Those guys actually did a competent job. I'm just saying that, like, the idea that the whole thing was, uh, you know, just, just something where you should have trusted the system the entire time— no, I mean, there's pieces of the system that are competent. Those guys did fine. All right. However, this guy from the same office, what's he saying? saying in a different context, cases should begin with the filing of a criminal complaint to be followed by an indictment or information. Now, again, I'm not a lawyer, but my reading of this, okay, just in the plain text of it, all right, what's a criminal complaint? Basically, a criminal complaint is used when prosecutors need to make an arrest quickly. And then if the defendant cooperates, um, then, uh, you know, and they waive indictment, then you file an information, okay? But if they— if not, then you do an indictment. So you basically, um, When federal agents learn a crime is about to occur, has just occurred, must act immediately. They do not have the time. Uh, they, they document called a criminal complaint and then issue an arrest warrant, right? So look, that, that's what these guys recommended for getting all of Trump's guys. And so it at least raises the question, why are you able to do that when they want to get Republicans but not when they want to get a Democrat? It is a legitimate question, as anybody who's out there and asking whether you have sentencing enhancement for being a Republican, okay, and a sentencing lightness for being Democrat, especially in the context of what I showed earlier with the firebombing guy getting off and the tweeting guy getting, getting 7 months, okay. Third, let's be absolutely real, okay. This is, um, you know, this is a government that is doing warrantless wiretapping. It is, uh, you know, warrantless wiretapping. It's, it's, um, you know, by Biden administration, they're putting out interpretations seizing crypto without criminal charges, right? Uh, they put hundreds of millions of people under house arrest for, for lockdown, right? So this government couldn't quickly find some justification to get SBF under legal arrest. And as I note in the footnote, I'm not saying that this is good. I don't want them to make up the laws that go along, but they're infinitely creative when persecuting the innocent, yet somehow ploddingly constrained when pursuing the guilty, right? And so, you know, in my view, in reality, where there's a will, there's a way, okay? When they're doing civil forfeiture, they're doing warrantless surveillance, they're doing undeclared warfare, like, you know, without an act of Congress to, to, or congressional vote, they're, they're basically conducting warfare. They're doing extraordinary rendition. Um, it can just like move through walls, do whatever it wants, right? Make up the law later. Okay. Likewise, when it wants to proceed slowly or is internally conflicted, it can pretend to be hamstrung by statute. Okay. And so the fact that it took an entire month between when it was clear he had stolen billions and when he was actually picked up. And in the middle, you had Congress and New York Times rushing to defend him. That's what rightfully aroused the general public suspicion. And the answer is not to say, oh, you're also paranoid, everybody in the world. But it's that old proverb of actually people who ran the government. They used to say, you know, they used to say Caesar's wife should be above suspicion. But the non, you know, whatever view of it is, Caesar must be above suspicion, to paraphrase that old proverb, right? So the appearance of impropriety is actually a thing. Right? And so if you've got 50% of people who think that the government is biased against a particular group, in this case Republicans, then— or biased for a group, in this case Democrats, then you should do your best to show that it's not the case, right? And so what actually happened? I mean, nobody knows, but there's a few different hypotheses. The first hypothesis is— so we just said, why is there good reason not to trust the police? Because they're, you know, not enforcing on real crimes, they're enforcing on political crimes. Why is there good reason to question the snail's pace of prosecution? Because Because you have the same attorneys who are recommending fast prosecution for Trump with criminal or Trump's guys with criminal complaints, and fast prosecution for Alexei Percev, and fast picking up of of you know the the guy with investigating the guy with the noose or the the person that Hillary Clinton pointed to, and then they're really slow on this. Okay, but why did it actually proceed? So one explanation is you know kind of the NPC explanation, and perhaps you can believe this, where basically. The weeks in which SBF roamed free, a yawner. That's how it always is. You don't know anything about the law. It always takes months to build a case, even though CryptoTrader built the case for them, starting with the CoinDesk piece, that they were moving at the speed of light, even though Percev was jailed without charges in days. And it was totally normal for the New York Times to platform a crook, even though literally this is the same outlet that ran countless articles calling for people to be deplatformed, and they platformed SBF. Remember this one? Trump is too dangerous for Twitter. So these guys were advocating for deplatforming forever, and they platformed a crook. Now, if you believe all that, you believe Russiagate was real until it was admitted to be fake. Inflation was fake until it was admitted to be real. Rittenhouse is guilty until he's determined to be innocent, and so on and so forth. It's basically you just follow the party line, and that's actually only a small percentage of the world. Now, the rest of the world, and actually, because that's the thing, FTX's victims were all around the world. They're people who are neither Democrats nor Republicans. Most of them were outside. Now, for those who are outside the US, the other explanation is potentially intra-Democrat civil war. So this actually informed an article on Puck News by this journo who dislikes you and dislikes me and dislikes everybody in tech. But I will grant him this. He's actually being honest on the SBF thing. This guy named Teddy Schleifer. So inside the SBF blast radius, and it says the fate of Sam Bankman-Fried is being closely tracked at the highest levels of Democratic Party and dozens of allied political groups that are racing to distance themselves from his surname or to find their next check. Okay, so basically for the rest of the world, for the Republicans, the Independents, Bitcoiners, Ethereans, there's 500,000 Indians, by the way, who were scammed by Bankman. Okay, five lakh. Lakh is like 100,000, right? There's mainland Chinese make up eight percent of total. So he scammed people from all around the world. From all these people, they're not interested in American politics. They're like, why the heck isn't this being enforced? They don't understand the internals of it. There is a more parsimonious hypothesis, which is potentially it was an intra-Democrat civil war, and this is actually going to tee up. Your post coming up in a second, right? Because November 15th, 2022, it was admitted that senior party members are watching the case closely. This is a long quote, but basically, again, it's like the fate of SBF is being closely tracked at the highest levels of Democratic Party. Highest levels means White House, but, you know, at least it's DNC or something. Senior elected officials who are curious about what Sam's fall means for the party and their pocketbooks. They're trying to see how it's going to play out, right? He was seen as George Soros 2.0. And it's admitting The optics for the left are awful, uh, especially if people try to claw the money back. Anxiety is running high. So everybody's trying to figure out what's the political fallout of this, right? And you read all the pieces, and essentially a picture emerges that there's those people whose careers would be negatively impacted if SBF was prosecuted, like the NYT guy who's flacking for Mermeixian Waters, and there's those whose careers would be positively impacted, like the prosecutors probably, who finally reeled him in. Now, just to make this A journo literally got a message saying, is it weird I have this urge to say sorry for your loss? Do you see this? Sorry for your loss. Because this is a Democrat-aligned journo, and it was like a huge loss for him for Bankman-Fried to go down. So basically, one thought is it's actually similar. There's other Democrats. Why is this not that implausible? We're in the middle of one between Israel and Palestine supporters, which we'll come to. We went through one between Biden and Bernie supporters. And the SBF cleavage doesn't exactly line up, but it kind of does because the center-left institutionalists wanted to control crypto and they were friends with SBF, right? But the leftists wanted to destroy crypto and thus distrust SBF.

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And so what happened probably was that those Factions were in rough balance prior to the revelations of fraud. But as you can see, again, you read all the articles, you kind of get this overall context. You start to see like the online focus became more negative. You know, Michele, we needed to step down. So anybody who was, uh, the folks who were anti-crypto or anti-SPF, they started winning in that intra-Democrat civil war. And of course, there was, there was an attempt to make SBF into a tragic figure. And, and, you know, David Z. Morris, he doesn't agree with me on lots of stuff. But I will give him this again. He is a crypto journalist that wrote FTX's collapse was a crime, not an accident. And he went through basically the whole thing and he was saying that the truth, which is that august institutions have repeatedly seemed to downplay the facts in ways that soft-pedaled Bankman-Fried's intent and culpability. This was happening contemporaneously before the guy was arrested. All right. So, you know, the hypothesis is that ultimately Despite all his good work in helping party members get elected with stolen funds, SBF just became too embarrassing for the party to protect. Kind of like Hunter Biden or something like that, right? So after they got the utility, they just dumped him. And you can read this article like the SBF pandemic. That's a picture that emerges, right? It seems to have taken a few weeks for all these guys to get their story straight. Again, here's an article that's like, everyone I rang in DC started the call by insisting, no, they didn't actually know the guy. Sam Bankman-Fried, who? Right? Okay. Most admitted they'd talked, but never in person. Prodded that turned into sure, they'd yes, they're met, but not one on one, and so on and so forth. Right? So all these guys are trying to get their stories straight, probably sync up with each other. Why? Because there's these massive clawbacks of millions and millions and millions of dollars. The SBF legal meteor. Everyone expects there to be attempts to claw back the money. The SBF legal meteor. Right? So all these articles are the SBF blast radius, the SBF pandemic, the SBF. Legal meteor, right? So there's a massive internal fracas about what to do, and probably that helps slow things down. And we'll never know all of the internal deliberations, but at least let's say there was inter-party conflict and it wasn't like complete alignment. Okay, so you know I close with this. You know, have you ever seen the movie Burn After Reading? Amazing movie. Everybody should watch it. It's very funny. Okay, but it's about it's essentially about something where it's not you know the Bourne Identity. The Bourne Identity—it's all very dramatic and everybody's really competent. Burn After Reading is to The Bourne Identity what Don't Look Up is to Contagion. It kind of shows what like the actual government might do, like this bumbling kind of thing, right? And where everybody's, you know, anyway, so what did we learn? This great, great, you know, clip from Burn After Reading. So I was like, what did we learn from this whole stupid episode, right? First is just don't let the state take any credit for this. They did the very, very last thing of putting the guy in jail. Granted, they did not screw that up. It's true that it's like an undefended layup. They They got it, but it was crypto Twitter that broke the case wide open. It was Ian Allison's article and investigative journalism by citizen journalists that exposed SBF as a fraud. Okay, that's what caused the liability for the party and compelled the regime to take action they didn't want to take on their number two donor. Again, SBF blast radius, SBF pandemic, SBF legal meter. You don't bring a legal meter on yourself, right? The it was independent on crypto Twitter that did it, right? All these foreigners who are neither Democrat nor Republican, right? Number two. Contemporaneously, again, people acknowledged that the citizen journalists had outperformed legacy media and that the legacy media had downplayed the facts that were covering up his culpability. Third, we saw the regulators were incapable of distinguishing good projects from bad. They contemplated no action on SBF while taking no action on approving Bitcoin ETFs. And finally, no legacy journalist or policeman flagged SBF before his stolen money swung elections.

Okay.

not unwinding those elections. They're not even maybe even to give the money back. As I, as I explained in a footnote, like $6 million has been given back, but $93 million like went to congressional candidates, and that money is spent before elections, and SBF was one of their biggest donors. So they can't even probably give it back, right? So that's spilt milk, right? And now, you know, just to close out, I get why people want to claim the system worked. It's, you know, after years of abolish the police, after years of rampant crime and complete— it's refreshing seemingly to see one case that seems to get the right result. But really, what actually happened here, the only reason we're here is that the network succeeded where the state failed. None of the legacy journalists, politicians, regulators, or policemen figured out that SBF was criminal, but the internet did. Period. That's well said.

Well argued. What do you say to the people who say, hey, this is not a success? Maybe there's some parts of it that are accurate, Balaji, but isn't this a failure of crypto at large? Like, how did this fraud even happen to begin with? And doesn't this cast doubt on, on sort of the crypto ecosystem? You know, obviously, we disagree. But how do you respond to those people who are, you know, worried about that?

I can completely understand why people would say that. If you're on the outside of crypto, and you're just in, I don't know, aviation or something like that, you will hear stories of this, like crazy Wild West with these, you know, like frauds and scams and so on and so forth. But that's what it is. It's the Wild West, right? There's extreme upside and extreme downside. It's something where you have Sam Bankman-Fried, but you also have Satoshi and Vitalik, right? You have the worst and you have the best. That's the nature of a frontier society, right? And that's the nature of the Wild West, which we kind of know from, even if it's like a somewhat distorted Hollywood picture, that's what it means to be on the frontier. Now, what I think is that in the medium to long run, it's actually, first it's crypto that caught him because it was the blockchain that actually showed that he didn't have the money. The centralized server wouldn't have caught him. That's actually very important. You know, it's when he stopped withdrawals. What does that actually mean? It means that he could update a centralized database. But you know how people say, oh, the blockchain is just a slow database? It's not just a slow database. It's a database that you can't corrupt, right? He couldn't lie to the blockchain. He couldn't say he had the private keys. They were saying they had billions of dollars. They could have faked it in your accounts. If all you had was FTX money, they could have just topped it up there. No one would have been the wiser. He could have gotten away with it. The blockchain meant he couldn't get away with it, right? So that's actually something that's really, really deep. Point number 2. So first is it's a frontier. And if you don't like crypto, by the way, you don't have to get into crypto. I mean, I think everybody will be sort of forced to get into crypto as the government fails, but that's a whole separate story, right? Go and look at the earlier podcast on that. Okay. And we can talk about that. We don't have to get into crypto. You don't have to. However, within crypto, it is the blockchain that caught Sam, number 2. And then number 3, and this is actually the most fundamental long-term point, we should be able to do proof of reserves and more generally on-chain accounting. Proof of reserve shows that you have a certain amount of Bitcoin in your balance sheet. But a more sophisticated thing is actually something where you don't just have that Bitcoin, you have, or Ethereum or whatever, you don't just have like a lump sum, you also have exactly the individual amounts you owe to each person. That is now provable with zero knowledge and with cryptography. That's actually what accounting should be, right? In a sense, do you know how people used to do accounting before Excel? they had to tote it up on a piece of paper. And think about, think about how insane that is. Okay. That's actually insane. I mean, that, that's that within our, within human lifetime, 50 years ago, they're doing it on a piece of paper before spreadsheets came out. Right. And if you actually think about it, doing accounting without the blockchain is like, is actually almost as bad in many ways, as bad as doing it before Excel. Right. It's a similar jump, right. From piece of paper to Excel and from Excel to the blockchain, because the blockchain is not double-entry but triple-entry accounting. Okay, to not to put too fine a point on it, when, um, when the Big 4 come to audit your firm and you're a crypto firm, do you know what they do? They compare your crypto transactions to the public blockchain records. Think about what that means. That means that this thing, Bitcoin or Ethereum, which is, you know, Bitcoin's attacked as a fraud, but the accountants are using it as the gold standard of global truth. So they can't do that with your fiat transactions, right? Maybe they can pull some bank records. They can look and they can see, and that's actually a ridiculously powerful neutral third party that actually stands between 2 or N parties. If it's a smart contract, it could be more than 2 parties in a transaction. That's ridiculously powerful that the blockchain is this attestation, right? And with some of the zero-knowledge stuff, you can do very sophisticated kinds of attestations, and you go from the debit credit of Bitcoin to the smart contracts of Ethereum, to identity and property rights, and actually all this kind of stuff. Blockchains are fundamentally digital governments, right? So that's the medium to long run answer, is that the response to this is something that is spurring a bunch of tools, which I'm funding, other people are funding, to do provable accounting, where you do not need to and do not want to take SBF's word for it, because he's actually a very convincing verbal fraudster. Instead, you want to take their numbers for it. Right? Show me the numbers, because it was ultimately the numbers that caught him, not the words. And that's why the journos were out of their depth, but the engineers weren't.

That's well said. Um, should we wrap up this topic and go to the next topic, or is there anything more you want to say about it?

Yeah, that's it. That's it. So just look at the Twitter or whatever. And again, I've got no beef. I, I just want to kind of correct the record here. I have no beef with, like, you know, Dan Primack or any of the people on Twitter or anything like that. Weisenthal even. Weisenthal was actually like a reasonably friendly guy for many years, but then he's like a Fed maximalist, right? So he just got really mad after SVB at lots of people on Twitter. Joe, if you're seeing this, I got no beef with you. I've got no beef with any of these people. I do have beef with the ideology, but that's different from the person, right?

One thing that I just thought that was interesting that was not obvious to me until this happened is sort of the woke Muslim alliance, right? Because you would think about progressive values You know, sort of tolerance for, you know, sort of different sexual orientations, feminism, all sorts of different sort of progressive ideology are perhaps the most shunned or the most rejected by, by, by some Muslim groups. And in fact, some of them came out and said, we do not, you know, accept the support that Queers for Palestine is giving us. So they're like directly rejecting it. And yet, and yet they're still more sympathetic to the Palestinian cause than the Israeli cause, even though Israeli Israel is more sympathetic to their own values or acts in accordance with, with more progressive values, even though it's not a totally liberal state, but it's much more liberal. And so what explains that? And to me, it's less about ideological consistency. You know, some people believe that once they just realize that their views are contradictory, then they'll have to change their mind. Maybe for some people, but for most people, it's kind of more just who, whom, and the enemy of the enemy is my friend. And You know, the— what, what, what sort of progressive people and— or super far-left people and, and Muslim people have, have in common is sort of anti— anti-white, right? Um, and so, you know, Jews being a subset of, of whites. And so it's actually quite internally coherent.

Yeah, you should put up your post just for people who haven't seen it, because I thought it was very well written and well said.

Yeah, I'll, I'll, I'll— in post, I'll link to it.

All right, so a few comments here. First is, Obviously, there's, there's 2 billion, you know, people who are Muslims. There's— the thing about it is many of my friends are Arabs or Muslims. Many of them— one of the things actually, in the mid-2010s, I used to get attacked on Twitter for being pro-Middle Eastern tech, right? You know, I, a long time ago, 2016, I was like, you know, Saudi Arabia is more progressive than Austin on self-driving cars and Uber. because they were actually bringing that. It was like a joke, but it's actually true that they were actually more technologically progressive. It was like, you know, and people got so mad about that. And there are folks in the Middle East who are actually really happy I was saying that because, uh, you know, Chris Schroeder wrote this great book called Startup Rising, and there's like Wamda Capital, there's like Careem, which is like the Middle Eastern Uber. There's like awesome stuff that's happening in the region that has absolutely nothing to do with war or terrorism or fundamentalism. There's a lot of good people there. And I like Dubai, and I like, you know, in general the new and much more secular Saudi Arabia. And, uh, and so basically I, um, I dislike the sort of— you know, it's kind of like is, uh, Candace— Candace Owens actually made this point. The people who are looting and burning don't represent her Black Americans, right? She's like that what the media is doing is taking the absolute worst people of Black America and holding them up, the, you know, the criminals and murderers and so on. And, you know, she wants to hold up Walt Williams and Thomas Sowell and Ben Carson. Of course, those are Republicans, but I'm sure there's, there's also accomplished centrists like, okay, Colin Powell minus the WMD thing. And, you know, even Democrats like Van Jones or what have you, you know, like, I don't, I don't necessarily agree with all his positions. He seems like a reasonable guy, right? Those are the people who are the best of Black America. And it's like this incredibly stupid thing to have, you know, like BLM represent Black America, especially given that they're now supporting Hamas rather than folks like Walt Williams and Thomas Sowell. Right. And similarly with the Muslim world, uh, it's this massive thing with billions and billions of people. Obviously there's folks that we know who are secular Persians, secular Egyptians, you know, at the, at the top levels of Uber. You had Travis. I mean, like, I hate doing ethnic bean counting, okay? But one of my friends there observed that at the top levels of Uber, you had Travis, who I believe is half Jewish, and Emil Michael, who's Egyptian from like a Sunni Muslim background, and Shervin, who's Persian from a Shiite Muslim background. And you have, you know, like a bunch of Indians who are from Hindu backgrounds, and everybody's working together fine, right? Like, Not, not in a kumbaya way, but rather in a, dude, let's, you know, build something awesome together. Let's build technology together kind of way. Right. So, and, and that means that there's still the, you know, aspect of competition. Uh, you're not unrealistic about it, right? Like, it's not like everybody's friends with everybody, but the, but the conflict is virtualized to the realm of capitalism. Right. And if you die, your, your company dies and it sucks and it's a hit, but people don't die. Right? And if the company dies, it dies because it couldn't succeed in the market, couldn't build a better product for somebody. I'm describing the idealized version, but there's some truth to this. So like the peace in the Middle East, we've actually, in a sense, seen that in tech where all these folks, when they're pulled out of these situations, are perfectly able, and I should say all these folks, let's say a good chunk of the elite. And of course the elite steer society. All right. In the sense of, you know, there's elite, there's a counter elite, there's masses. We can get into that. But in general, it's, uh, you know, those people are developing the software, they're developing the media, developing the content. They're going to have more influence than your average guy on the street. Okay. Those folks abroad can work together. Right. So I'm totally in favor of, and actually there's a lot of Israelis who say, you know, some, or used to say, I mean, obviously before the conflict, that what they really wanted was somehow to figure out how to, like, Dubai is a good model. Yes. You know, um, there's, there's a quip. that there's actually— the wokes are kind of playing for being the 3rd school of Islam. There's Sunni, Shiite, and socialist. Okay, so Sunni, Shiite, and socialist is what is— go ahead. Isn't that funny?

Yeah, that was a good one.

Socialist Islam is actually like a 3rd large school of it, which is the LGBTQ for Hamas, right? That's the only way that that makes sense. Okay. It is something which is the secularized, woke-ified, Harvard-compliant version. And, you know, Harvard is a woke madrasa, and they preach their own version in a sense that is a fusionist thing with Islam that, you know, competes with the orthodox, you know, other varieties. Right. And they don't just do this for Islam, by the way. They do it for Hinduism. Right. There is a woke version of Hinduism. They do it for Judaism. You know, whether you'd call it, you know, secular or reform, it's very different than conservative orthodox. Of course, they do it for Christianity. You know, as Curtis has talked about, Unitarian universalism. That's maybe the original version. They, they have Chinese liberals, you know, it's less religious obviously in the Sino sphere, but let's say the Chinese Democrat as opposed to the Chinese Communist, Chinese liberal is going to be more woke. Like the Taiwanese are kind of like the woke Chinese as opposed to the communist Chinese. That's not to say, I mean, sometimes I actually might be more sympathetic to the woke Chinese version than the communist Chinese version, but I'm just saying there's a version of it there. And, and so for all of the major religions, it's almost like There's a religion, there's L1, and you have the woke version, which is like an L2 layer on top.

There was a tweet that went around that basically compared Israel-Palestine right now to gay marriage in the 2000s, where basically it's 10 years away from flipping. All the young people are, are, you know, more Palestinian sympathetic. Is that going to— is that going to continue? And what does that mean?

I think that's so— here's the thing. You know, some people who, you know, we both like are blaming this all on TikTok. And I think that's very downstream. You know, for better or worse, this is reflective of global. So first of all, TikTok is global public opinion minus India and China. Okay? Why is it minus China? Because China has their own version of TikTok domestically, which is different and censored different way. Why is it minus India? Because India banned TikTok. So the billion Indians, one of the consequences of that is it's it's less obvious than you might think, right? On the one hand, yeah, TikTok isn't beamed into India. On the other hand, Indians aren't visible on TikTok. So you have the billion Hindus who are disproportionately sympathetic to Israel, let's say, who are out of the conversation on there, right? So first, that's a really important point, by the way. Somebody made that point. TikTok is global public opinion minus India and China. And if you actually did a look at all those countries in the UN, global public opinion minus India and China, global democracy would not vote for Israel or America in its current position, right? All these UN countries vote against it, right? And the thing is, that's what social media is. Social media is not an attack on democracy, it's ultra-democracy. Everybody's voting all the time. They have, you know, basically freedom of speech, especially in a non-English language, they're kind of less censored. And, um, popularity, instant popularity is what wins. There's a plebiscite on anything, and it's just pure majority rule. You know, I think Is it true that there's, you know, perhaps on the margins there's some system administrative stuff that, you know, TikTok is, is doing? Yeah, but you're seeing the same stuff on Twitter. I don't think it's that different. Maybe somebody could quantify it. I don't— I really don't think the Twitter conversation or Instagram or whatever is, is that different. Um, I mean, Harvard isn't TikTok and they're reflecting this. Now, you know, as you and I correctly both discuss, or I think correctly, I think we both have observed that there's institutional civil war here, as there was with the SBF thing. That's how these things connect, right? Both of them are like kind of Democrat civil war, just like Bernie Biden, between the left of the party and the center left of the party. And the center left, the older guys, the institutionalists are still pro-Israel, but they're just there with formal hard power. The soft power is on the side of the left. Now, the tricky part is it's not just like gay marriage because there's a similar kind of thing happening on the right where the center right is with Israel, but the right is kind of not. It's not so much that they're anti-Israel. It's that some of them are if you go to the very far right, but a lot of them are just anti-intervention. They're just through with spending money abroad, and they're like, let them all figure it out themselves. They'll basically give verbal support, but they'll say, let Israel do what it wants, and we just can't have more Americans get involved in the Middle East. We don't have the money to deal with this, and so on and so forth. I actually understand that position. Ilana Newhouse, Uh, ran an article on Tablet basically saying the same thing, but from sort of the opposite perspective, that the American money that's going to Israel is constraining them. Of course, that was before the current events, and you might need it for the defense spending. It's all very complicated in, in, in, you know, the specifics of it, right? Um, you probably don't want to cut off, you know, funding right now when they're in the middle of, you know, you want to do it in a gradual way so people can, can get, um, can get ready, not right in the middle of a catastrophe, but, you know, things are very complicated. You should also— there's also that visual that that guy made about the inverse horseshoe. Do you have that? Can you put that on screen? It's really good because it shows that there's essentially 6 groups: far left, left, center-left, far right, right, center-right. Hold on, let's see if I can find it.

Just while you're searching, one side note is like, I remember in 2015, like Ezra Klein and, you know, etc., were really concerned about Islamophobia, right? You know, post, uh, post-9/11, there was like a good 10 years, I guess, of concern about that. And then it kind of went away with all the, you know, BLM, MeToo, all the new sort of, um, civil rights activism. We stopped talking about Muslims for a few years, and it feels like now it's back in a— and it's going to be back in a really interesting way given the war, given immigration in Europe coming to a head, um, given what could be a refugee problem. Um, so it looks like, yeah, it's— this, this is going to dominate the conversation for, for quite a while.

I don't know about that, because you think about Ukraine and it's like, I think what's happening is we're sort of flipping from this to that to this to that. And okay, so I thought this was a very— this is a very good post and essentially identifies 6 regimes, right? So the far left is just anti-Western, and, um, you know, they are for Russia and they're for Palestine. The left sides with the oppressed, rather. And so they think Ukraine is oppressed relative to Russia and Palestine is oppressed relative to Israel. The center-left sides with whoever the American state sides with. And so that is, the state sides with Kyiv and it sides with Israel. The American right kind of also sides with where the state— but they're kind of where, let's say, their model of where Western civilization is with. Okay. And so, uh, they're with— I would argue that's outdated now, but, you know, they're kind of similar to the central left. They also side with, uh, this is like McConnell and Mike Johnson, the current speaker. They side with Ukraine, they side with Israel. The, uh, the right is basically with those people who they think are, um, you know, pro-civilization or what have you. So they're pro-Russia because they're anti-trans. Uh, or like they're anti, you know, they'd say they're anti-mutilation or what have you. Okay. Which I understand. And they basically think Russia is Orthodox Christian. And so it's better than Ukraine. Um, and, and so they're basically pro-Russia, uh, and they're pro-Israel because, you know, net-net, they look at Israel as being a better society than, you know, what's been created in Gaza. And again, I would say like Arabs have created pretty good societies in the form of Dubai and other places. It's unfortunate what exists in Gaza. And you can argue who's to blame about that, but okay, that's where the right is. And the far right is, uh, you know, just not to put too fine a point on it, they don't really like Jewish people that much. Um, and so they identify Zelensky and, you know, Ukraine, uh, and, uh, they don't like, you know, Israel. So basically they're like against what they perceive as the Jewish side in this, right? So that's actually the 6 groups here, right? And, uh, and I thought that was actually a pretty good cutting of the political spectrum. But, you know, the big tension is here because Democrats especially are currently in power. There's also kind of a fraying over here where Republicans are pro-Israel, but maybe not pro lots of military spending there, especially given the Ukraine thing. But, but we'll see what, what kind of happens there. Does that make sense to you? It's a good horseshoe theory thing.

Is there any other predictions you have on this topic or anything else you think worth particularly Noting, I guess my prediction is intra-civil war among the left for, for quite a while.

Yeah, but, but actually, so here's, here's what I think. You know Scott Alexander's post on scissor statements? Every issue like this, if we put Taiwan-China on that same thing, you'd get yet more factions. Okay, I have to think a little bit about how we would map out, right? But it would probably be something where Everybody other than the center was just anti-war, and the center was, you know, like pro-war or something like that. I'd have to think about it, but that'd be my guess. Okay, um, because war with China is a really big deal. And, you know, you saw that thing I posted where they said it— there would be, you know, you'd have to have conscription with war with China. Did I show you that? You know, in the abstract, everybody's like tough, and then in the concrete, you know, here This is the Army War College. They published something. Okay. And they're like, Army theater planners may anticipate a sustained rate of roughly 3,600 casualties per day. Okay. In, you know, in a, in a serious fight. Okay. In large-scale combat operations, basically 2 decades of fighting in Iraq and Afghanistan was 50,000 casualties in a real fight with China. And that's implicit in what they're writing. The U.S. could experience that same number of casualties in 2 weeks. Okay, meaning they need to have a draft, right? They're floating the concept of draft. They're not the only ones. Military.com is also floating the idea of a draft. You know, here's the Military.com, you know, article. It's saying like, we need a limited military draft. Okay, so the point being that, um, like every new thing like this is another scissor statement, which chops people into 2 factions. But you start doing it like if you look at Russia-Ukraine as one axis and Israel-Palestine as a second, not completely orthogonal, but partially orthogonal axis. And then China-Taiwan is a third axis. Again, not completely orthogonal, but partially orthogonal. What you start actually doing is fracturing the whole thing into tribes. And those tribes are defined by their friends and their enemies as opposed to their ideology. Does that make any sense? That's where I think this is going. If, insofar as there's a prediction, and it's not really a prediction, it's an observation because we've seen the retribalization of society. It's like the diplomatic relations of your tribe, your network, as opposed to your state. And this is why people are like, oh, the USA has diplomatic relations. But once you see, like, there's at least 6 tribes within the USA, right? Far left, left, center left, center right, right, and far right. And each of them have their own diplomatic relations. along with each other, right? It's, it's kind of like saying, is Iraq a real country? It's not a real country. It has Kurds and Sunni and Shiite, and the Kurds, you know, for example, are allied with the Americans, and the Shiites are allied with the Iranians. They have— it's like a tribal zone within that territory. It's like, um, I mean, we sort of understand this when, you know, you don't actually have a formal state, but people have become state-blind where they think that everybody within a certain set of borders is loyal to that flag or that government. That's simply not the case anymore. That's not what it used to be. It's not what it's becoming. You know, actually, the one place that has taken strong measures to ensure that that is true, actually China, right? This is something that came up in, you know, you and I were chatting about this a few weeks ago. The nation, the state, and the network can be thought of as like 3 different levels, right? So nation, nation-state, nation-state, and network, they're 3 different things. Nation is the people. Nation comes from the root word of natality, right? So it's shared genetics or shared language or shared culture. Shared birth, shared descent, right? So the Chinese nation, um, of course there's overseas Chinese, of course there's people in Taiwan and Singapore and, and, and so on, but the majority of the Chinese nation in terms of the people is within mainland China. Okay. 1.3 billion. And the Chinese nation all speaks, basically all speaks Chinese, different dialects, but you know, speaks Chinese. Then you have the Chinese state and that's a party state. That's a communist party. Okay, and and they call it the party state because it's a one-party state, kind of like California is one-party democracy, right? This is like you know it's actually quite similar. You know the the they won't they won't like that comparison where the elections happen and the Democrats always win. The elections happen; the Communists always win. They also had elections in the Soviet Union; the Communists always won, right? Okay, the and you can also it's a fun kind of thing if you ask a Democrat, you you know you'll say oh. So would you ever vote for a Republican? They say no, no, of course not. They're against democracy. So what they actually want is a one-party democracy, right? And it's funny because it's a it's a nice little contradiction. Anyway, so the party state, right? The party state, the and nowadays, by the way, Republicans are also building their own one-party democracies. They just call them republics in in like Florida and so on and so forth, right? So tit for tat. Okay. So so the party state—that's like the second level, and and then the third level is the Great Firewall, the Chinese network. Right? So China has essentially taken the hit of making sure the network, the state, and the nation have roughly the same boundaries. They have taken the hit, meaning they've taken the PR hit of imposing digital borders. And they actually talked about this, like, I think even a decade ago, right? Um, you know, one of the things I tried to do is rather than reading just NYT and Wall Street Journal and WaPo and crypto Twitter and whatever, right? English language is good. And you can actually get a lot of signal out of it, but it's useful. Like, uh, you get more signal if you triangulate that with Indian papers, Middle Eastern papers, Russian, Chinese, even if you disagree, right? It just at least allows you to see what they're saying domestically, right? And sometimes it gives you just an insight into their point of view or, or what have you, right? And, and a big thing that China's been talking about forever as being like digital border control. That's how they justify the Great Firewall. And what's funny is, uh, you know, a lot of Democrats are actually quietly with them. Um, it's, you know, Republicans are actually more overtly copying China. They don't want to admit it either. But, uh, you know, it's like Democrats are, um, are saying China was right on speech, right? And here, I'll show you just one example of this, okay? Internet speech will never go back to normal. In the debate over freedom versus control of the global network, China was largely correct and the US was wrong. You can find comparable articles where Republicans are saying, well, China's doing industrial policy, China's favoring their products, we should do the same thing. That's actually, that's, that's, you know, explicit, right? So Republicans have turned on free markets because China's beating them in free markets. Democrats have turned on free speech because China, you know, seems to be doing a better job of crowd control with their controls on free speech. Free speech, and so so China has actually taken the hit of. And when I say taken the hit, they've taken the PR hit, they've taken the social hit, they've set their institutions this way, and and they're just doing everything they can to keep nation state and network. It's like cynic centralization, full stack vertically integrated, right? And then the rest of the world will probably have a degree of chaos because the English internet. Is not centralized like the Chinese internet. The Chinese internet is roughly one country. I mean, as I said, there's Singapore and there's Taiwan, but it's roughly one country. The English internet is all the countries, right? And that's why you have open borders on the English internet. As I said, it's the ultimate democracy. So there's all these people who are in the American conversation that just really don't agree with the American government. And, you know, the very first inclination of that, or, you know, it was like, oh, we're mad about Russian influence on the English internet. And then we're mad about Chinese TikTok. But if you notice, Korean K-pop is influential. India is going to be extremely influential. Europeans are popping up in the English internet, right? The English internet is just a free-for-all where it is like this giant new cloud continent that has integrated all these previously disjoint communities. And, and I think we're just going to see like a lot of chaos coming out of that because the true community is in the cloud where you're people who think like you are. And that's not necessarily reflected in the land, a theme that I've talked about for 10 years.

I think we should wrap on that.

Sounds good.

Upstream with Erik Torenberg is a show from Turpentine, the podcast network behind Moment of Zen and Cognitive Revolution. If you liked the episode, please leave a review in the Apple Store. Turpentine is a network of podcasts, newsletters, and more. Covering tech, business, and culture, all from the perspective of industry insiders and experts. We're the network behind the show you're listening to right now. At Turpentine, we're building the first media outlet for tech people by tech people. We have a slate of hit shows across a range of topics and industries, from AI with Cognitive Revolution to Econ 102 with Noah Smith. Our other shows drive the conversation in tech with the most interesting thinkers, founders, and investors like Moment of Zen, And my show Upstream. We're looking for industry-leading hosts and shows along with sponsors. If you think that might be you or your company, email me at erik@turpentine.co. That's erik@turpentine.co.