March 30, 2021

The Great Inflation Debate, Amazon Gets Spicy on Twitter, Rethinking Supply Chains & More (E27) | All-In with Chamath, Jason, Sacks & Friedberg

The big question on everyone’s mind: Will there be inflation?
- Answer: Yes, but there won’t be hyperinflation
  - The government has printed trillions of dollars
  - Artificial levels of consumption have been created
  - Overconsumption may drive up commodity prices which may end up leading to inflation
    - “I do think it will drive inflation. I do think it will drive commodity prices.” – Chamath
Although Chamath believes there will be inflation, he doesn’t believe there will be hyperinflation because modern-day technology can reduce prices before it happens
The Suez Canal was blocked by a ship that weighed 200,000 metric tons and longer than the Empire State building
- Why is this a big deal? 10% of global trade moves through the Suez Canal
Globalization has made everything cheaper, but outsourcing production has its risks:
- A recent flood in a nickel mine will cause a nickel shortage and prices to increase globally
- The US off-shored its pharmaceutical and Personal Protective Equipment (PPE) production so when COVID happened, it lacked the resources and supplies to help people during the pandemic

Chamath Palihapitiya (@chamath) is the CEO of Social Capital
David Sacks (@DavidSacks) is the founder of Craft Ventures and cofounder of Yammer and PayPal
David Friedberg (@friedberg) is the founder and CEO of The Production Board
Jason Calacanis (@Jason) is an internet entrepreneur and investor
- He is also the host of the “This Week in Startups Podcast” (check out his podcast’s notes)

Every dollar someone earns can be spent in one of two ways: consumption or investment
- Inflation comes from the gross tonnage of volume or when the vast majority of people can afford to consume regular goods which then increases the price of the product (more demand = higher prices)
The big question on everyone’s mind: Will there be inflation? Answer: Yes, but there won’t be hyperinflation
- The government has printed trillions of dollars
- Artificial levels of consumption have been created
- Overconsumption may drive up commodity prices which may end up leading to inflation
  - “I do think it will drive inflation. I do think it will drive commodity prices.” – Chamath
Although Chamath believes there will be inflation, he doesn’t believe there will be hyperinflation
- “I don’t think that it’s even possible to actually have hyperinflation anymore” – Chamath
David Friedberg’s take: Anything the government touches will lead to inflation because when there’s only one customer and no competition, you can charge whatever you want

David calls out Chamath’s tweet about how inflation helped close the inequality gap and shares his Powerpoint to disprove him
David’s counterargument:
- A severe recession began in 1979 which lead to -0.3% GDP growth in 1980
- The unemployment rate was at 6%
- Prime rate 30-year mortgage was at 11.2%
- Long lines at gas pumps
- Recessions and depressions shrink the inequality gap by making everyone poorer
David says that wage growth for the average worker came to a halt in 2001 because the US started to work with China and outsource a lot of middle-class jobs to them
David argues that although it’s reported that 13.5% of Americans live in poverty if you take into account government programs and transfer payments, that number shrinks to about 2%
David also says that one economic boom came from Reagan cutting the top marginal income tax from 70% to 50% in 1981 and from Paul Volcker breaking inflation

Amazon executives have started to respond to tweets from government representatives such as Bernie Sanders and Elizabeth Warren for criticizing their company
- The executives argue that if the government wants companies to pay more taxes or pay employees more, government officials should pass laws to require those changes
Mark Zuckerberg and Jack Dorsey recently participated in a congressional hearing to talk about content moderation and freedom of speech
- Facebook currently has 30,000 content moderators
  - If social media companies are legally required to have content moderators, it will give establish social media companies, like Facebook, a moat because most new media companies can’t afford to hire so sufficient moderators

The Suez Canal was blocked by a ship that weighed 200,000 metric tons and longer than the Empire State building
- On a typical day, about 100 massive ships move through the Canal a day
  - Why is this a big deal? 10% of global trade moves through the Suez Canal
    - This highlights the risk of having a global supply chain
Globalization has made everything cheaper, but outsourcing production has its risks:
- A recent flood in a nickel mine will cause a nickel shortage and prices to increase globally
The US off-shored its pharmaceutical and Personal Protective Equipment (PPE) production so when COVID happened, it lacked the resources and supplies to help people during the pandemic

Microsoft is in talks to buy Discord for $10 billion
- Microsoft may have been worried about Salesforce buying Slack and bought Discord as a way to compete with them
The SaaS and cloud industry is a multi-billion dollar industry and still growing 40-50% every year