Fixing the American Dream with Andrew Schulz
Speakers
Chamath Palihapitiya
— CEO, Social Capital
Andrew Schulz
— Comedian
David Friedberg
— CEO, The Production Board
Jason Calacanis
— Angel Investor / Founder, LAUNCH
Summary
The All-In hosts are joined by comedian Andrew Schulz for a conversation that moves from Gavin Newsom's podcast and the tariff experiment to why the American dream feels broken. Chamath argues the administration is deliberately taking wealth out of asset markets and that housing is next, to be repriced 30 to 40 percent lower by unwinding the mortgage support that Fannie Mae and Freddie Mac provide from conservatorship. Friedberg presents an analysis showing the Social Security trust fund, invested only in Treasuries and heading for insolvency around 2032, should instead own the S&P 500, and separately argues households hold far too much of their net worth in their homes and too little in equities. The back half covers Schulz's direct to YouTube career, the Netflix deal, and the state of American institutions.
- Comedian Andrew Schulz guests for a discussion of tariffs, housing, retirement and the American dream.
- Chamath says asset owners were over rewarded since the financial crisis and expects trillions more of equity wealth to be removed.
- Chamath expects the housing market to be whacked 30 to 40 percent via Fannie Mae and Freddie Mac leaving conservatorship and lower mortgage rates.
- Friedberg argues the Social Security trust fund should be invested in the S&P 500 rather than Treasuries, citing roughly 11 percent versus 4.8 percent long run returns.
- Friedberg notes 60 percent of middle class net worth is in the home versus about 10 percent in equity index funds, and calls 20 percent real estate the right allocation.
- Tariffs are debated as an exploitable negotiating tactic with poor communication and real costs for long duration capital decisions.
- Schulz calls crypto a scam that is popular only because it feels like the only access point, and prefers broad market index investing.
- Other topics include fertility science, Gavin Newsom's podcast, going direct on YouTube versus streamers, and Elon Musk and DOGE.
Ideas
Equity wealth reset has further to run
Chamath argues that ever since the great financial crisis the people who owned assets were richly rewarded by zero interest rates and cheap leverage while everyone else was left behind, so the level of the stock market has stopped being a measure of how ordinary Americans are doing and nobody should care about it. He says Trump is deliberately resetting that: trillions of dollars of wealth have already been taken out of the asset markets, he expects trillions more to be taken, and there is no political sympathy for asset holders while it happens. He frames the fall in asset prices as desirable policy that will not be quickly reversed, and as the first of two shoes to drop before housing is repriced.
US home prices to fall 30-40%
Chamath says housing is the next market after equities to be deliberately deflated, and that this is where hope gets restored for ordinary Americans. He argues that mortgage support programs which got out of control under the Biden administration, together with Fannie Mae and Freddie Mac being held in conservatorship so that taxpayer dollars effectively wrap the guarantees that keep the mortgage market functioning, artificially inflate home prices across the country and lock people out of the first purchase that makes them feel they are winning. Getting those two agencies out of conservatorship, combined with lower federal borrowing costs pulling mortgage rates down, would let home prices be whacked 30 to 40 percent and give 50 to 60 million people a realistic shot at entering the housing market.
US home prices to fall 30-40%
Chamath says housing is the next market after equities to be deliberately deflated, and that this is where hope gets restored for ordinary Americans. He argues that mortgage support programs which got out of control under the Biden administration, together with Fannie Mae and Freddie Mac being held in conservatorship so that taxpayer dollars effectively wrap the guarantees that keep the mortgage market functioning, artificially inflate home prices across the country and lock people out of the first purchase that makes them feel they are winning. Getting those two agencies out of conservatorship, combined with lower federal borrowing costs pulling mortgage rates down, would let home prices be whacked 30 to 40 percent and give 50 to 60 million people a realistic shot at entering the housing market.
Prefer broad index funds over crypto
Schulz argues that ordinary Americans buy crypto, which he calls a giant scam, only because it feels like the one accessible way to get a piece of the American dream, the same way a microphone is the only thing a comedian needs. He says he would rather they were invested in a Vanguard style account in the entire market instead, and he backs the Invest America concept of putting a thousand dollars into an account for every American at birth, because more than twenty years of compounding and an emotional stake in the success of American industry changes how people feel about the country and about capitalism itself.
Social Security should own S&P 500
Friedberg presents his own analysis of the Social Security OASDI trust fund: it is invested in exactly one thing, US Treasuries, which have returned about 4.8 percent a year since the program began, while the S&P 500 has compounded at about 11 percent. Had the fund been invested in the S&P 500 since 1971 it would be worth roughly 15 trillion dollars today, about one third of the entire index, jointly owned by all Americans; instead it holds 2.7 trillion and goes bankrupt around 2032, which means benefit cuts or a great deal of money printing. Since the government will print to backstop Social Security either way, he argues for putting roughly 500 billion dollars into the fund now and investing it in the S&P 500 at an assumed 10.5 percent, which would make it permanently solvent, create the world's largest sovereign wealth fund, and end the inequity in which the wealthy captured equity returns while everyone else was forced into bond yields.
Own the S&P 500 index
Chamath says owning the S&P 500 index requires no sophistication to justify: of the more than 20,000 companies in the world that earn over a billion dollars a year, the S&P 500 is simply the 500 best, continuously reselected, so an index of the best businesses operating at any given point in time was always going to go up. He uses this to argue that the Ivy League trained managers who kept Social Security money in Treasuries on risk model grounds were wrong, and that practical thinking says Americans should hold long run equity index exposure.
Households own far too much housing
Friedberg argues American households are structurally misallocated: about 60 percent of middle class net worth sits in the home and only about 10 percent in S&P 500 index funds or retirement accounts. Federal housing loan programs, and rules such as the California law letting heirs keep a parent's property tax basis, have inflated home prices and frozen turnover, creating a destructive housing bubble that parks household wealth in an unproductive asset instead of in the ownership of productive businesses. He says a proper investor level analysis suggests roughly 20 percent of net worth in US real estate rather than 60 percent, and warns that the system now has to keep pumping house values for people to feel they are getting ahead, until homes become unaffordable, which is where the country is today.
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