The Liquidity Event Podcast: Episode 77

 

Episode 77: Value for Nothing

Shane and AJ are back in full force this week with post-retreat energy and real talk on crypto, ChatGPT being used by hackers to write malware, semi-sentient AI, and the inevitability of mankind's demise. You'll also hear about plagiarism and grilled cheese. Listen up and only share this episode with the coolest people you know. <3

Read the Full Transcript:

Presenter:

This podcast is for informational purposes only and should not be considered tax or investment advice.

Welcome to The Liquidity Event, a show about all things personal finance, with a laser focus on equity compensation. Hosted by AJ and Shane of Brooklyn FI, each episode will take you through the week's news on FinTech, IPOs, SPACs, founder wins and fails, crypto, and whatever else these nerds think is interesting. Learn more and subscribe today at brooklynfi.com.

Shane:

It's perfect. Welcome to The Liquidity Event. We are your hosts, Shane.

AJ:

Whoa. And I'm AJ.

Shane:

And this is episode number 77 of The Liquidity Event. This week we will be discussing ChatGPT. That's right, the AI is coming from inside the house. We've got a little bit of crypto smoke and mirrors. Of course, we do. We always do. And then we've got some big news in the banking space. The past 10 years have been full of gold bullion, but the forward-looking prospect isn't so sharp. AJ, how're we doing?

AJ:

I'm doing very well. Yeah, I'm back in Brooklyn, which is always nice. Always good to be back in Brooklyn. The brownstones, the iced coffee, the... I don't know. What else is in Brooklyn?

Shane:

I see you're wearing a sweater, so I'm assuming it's cold.

AJ:

Yeah, it's a little cold. Also, never ever hire me to design your merch because I got this-

Shane:

What do you mean? You're a great merch designer.

AJ:

... fabulous BKFI sweatshirt and I was like-

Shane:

Got one.

AJ:

... "Oh, just slap the logo anywhere." And it's literally in the most awkward... I can't wear this outside. It's like, "What?" It's below my-

Shane:

Wait. Show the audience. Stand up for me, show the audience. I can't even see it. Audience, we're looking at the BKFI logo is around her belly and the rest of the shirt, lower chest area.

AJ:

Good job, AJ.

Shane:

Were you going for some sort of juicy situation with that sweatshirt?

AJ:

Yeah. No, I was just like, "Oh, I don't want to put it across my chest. Let's do a little bit lower." And obviously that was not a good idea. This is a one-of-a-kind prototype.

Shane:

So awkward.

AJ:

When Brooklyn FI goes public on the NASDAQ, this will be worth 10s of dollars, for sure.

Shane:

I thought we were going to go public on the Bahamian Index?

AJ:

Oh, on the Cayman Islands?

Shane:

Yeah, Cayman-

AJ:

CCC, CIC.

Shane:

Yeah. I've already registered us, don't worry about it. You'll see. You'll get an update.

AJ:

Sounds good. Sounds good. Shout out to Officer Krupke, our Chief Compliance Officer, always listening in the background. Shout out to Bobby, who's our new shadow producer hanging out in the background, making sure we don't fuck up. Ha, ha, ha.

Shane:

That'll be a difficult task.

AJ:

Sorry, Bobby.

Shane:

Sorry, Bobby. Good luck with this. Today's episode is recorded on January 18th. It'll be airing on January 20th, 2023. It's 2020 fucking 3. Look at that. And we just came back from our retreat last week. We did an early episode last week prior to our retreat, which aired last week. And then we had our total team... Or most of our team came out to sunny Los Angeles where AJ grew up, where I spent last winter and we had a ball doing karaoke.

AJ:

What do you mean when I grew up? I'm still a child. I have not yet grown up.

Shane:

Oh, I'm sorry.

AJ:

It's where I spent my first 18 years of my life.

Shane:

Where you grew up. In the canyons, in the beaches, in the mountains, and the valleys.

AJ:

Far below.

Shane:

I'm doing dry January and I just worked out. So I am full of energy, baby.

AJ:

Oh, boy. Here we go. Also, you're not doing dry January. You're doing dry January starting January 18th.

Shane:

Jan 15th to Feb 18. Come on. We had a company retreat. I had to keep the vivality going.

AJ:

Same old story. Same old story. Honestly, any retreat where no one goes to the hospital is a successful retreat in my book.

Shane:

And no one missed their flight.

AJ:

No one missed their flight. 10 out of 10. Some flight cancellations, of course, due to weather patterns and the FAA grounding, literally, all flights. But other than that, I had a really, really great time, like, "Man." Love working remotely, grateful that we're able to do that, but so awesome to hang out with people you work with IRL.

Shane:

For sure. This being our third one, it definitely felt less stressful and less ad hoc, and you did a great job organizing it and it felt very seamless and smooth, and everybody just felt like this was the new normal for BKFI. So I hope to continue that trend. Cool. Let's get into the articles. Do you want to dunk on crypto first or-

AJ:

I would love to.

Shane:

... you want to have a lighter, more interesting look at...

AJ:

Let's dunk on crypto.

Shane:

... at this Atlantic article? Yeah, well, the Atlantic article, this is definitely a little bit click baity. Crypto Is Always Smoke And Mirrors, is the article title.

AJ:

Crypto Was Always Smoke And Mirrors, just to clarify. That's the title.

Shane:

Oh, true. Yes. Thank you. Which I guess looking forward, potentially it's not. Hopefully some of the fallout from the smoke and mirrors, but the FTX debacle and Alameda will help get some of these bad actors out of the field so that some of the people that are actually innovating have room to grow. A bit of a wildfire analogy here, right? Giving room to some of the-

AJ:

Yeah, clear out the trashy trees.

Shane:

Yeah. So the Atlantic article is really just focusing on this... It's kind of a profile piece on this cool 30-year-old psychiatrist out of Michigan who has this newsletter called Dirty Bubble Media.

AJ:

I feel like this guy is also... Is this guy John Owens? As I was reading this, I was like, "This is John Owens."

Shane:

I don't know, does John Owens have a [inaudible 00:05:18] about crypto?

AJ:

I don't know. It gives me John Owens vibes. "I'm doing this other thing and I'm really good at it, but I'm also very fascinated in this other thing and I'm just going to expose one of the greatest frauds in the history of all frauds."

Shane:

Well, I mean this guy doesn't work in finance. He's a psychiatrist, so yeah, he's interested in something else. Source the John Owens analogy there. James Block is the guy's name.

AJ:

Yeah, I didn't really have a good analogy. I don't know. It's an interview with him, so actually, you get to hear him speak. It was just the way he was talking about things. He's obviously very smart, but he is also incredibly funny and sardonic and I enjoyed this interview very much.

This is a little stale at this point, but he was kind of the one who put all the pieces together and was looking out at Alameda's books and was like, "Huh, looks like a lot of their assets are actually just the token of FTX." So it was like this circular... The money was just eating itself like a snake eating its own tail. And there wasn't actually any value there. It was just replicating value from a different company. And he put all the pieces together. He really followed the money, would you say?

Shane:

The article's trying to say that he essentially predicted the fall of Alameda because he wrote this article, Is Alameda Research Insolvent? And a week later they were bankrupt.

AJ:

So the answer to that rhetorical question was yes.

Shane:

Yes, exactly. And it's bit of a Michael Burry moment here. And I've got a couple questions about this. Yes, this guy, nail on the head.

AJ:

For those who don't know, who's Michael Burry?

Shane:

Michael Burry predicted the housing crisis and made a trillion dollars off of shorting the housing market in 2007. And one of the main characters of The Big Short, which is to short a stock is to predict that it's going to fail. He'd put a ton of his client's money into downplaying the housing market or shorting the housing market, which is a tough thing to do in 2007 when everything's going through the roof. Would be like shorting tech in 2001 or the year 2000.

So yeah, a kind of a Michael Burry moment for this guy, although I don't think this guy does any investing, he's just his commentary, but he has some really funny quotes in here. Speaking of sardonicism, he says, "A token is just code that's created that has no value, but then you can make it very visible and pump it up to make it valuable. But it's nothing. It's smoke and mirrors. There's nothing really complicated there, but it looks complicated if you don't understand what they're doing. It's just a ledger."

AJ:

Isn't that the premise of Bitcoin? Isn't that the Satoshi Nakamoto premise? Literally use computing power to create value out of nothing? His criticism is valid and I agree with it, but that is what crypto is. It's currency based out of creating value out of nothing, based on how the market thinks it should be valued. Yeah, he's right. It's a ledger. It's just a list of all the transactions. So where is the value coming from? I think that's his original thesis is, where is the value? And the answer was, "There is no value. It's just tokens eating tokens."

Shane:

Yeah. I mean, one of the cool things about crypto is that you can follow every single transaction except the ones that are private, behind closed doors. So essentially FTX, for those that don't know, was buying its own coin and then deleting the coins that they purchased in an effort to say, "Our coins, which make up our balance sheet, are actually quite valuable," when they were just trading with themselves, creating fake liquidity. He dug into the crypto ledger, which is public. It's a decentralized exchange, to your point, AJ. And he was able to see this and be like, "Uh oh, this isn't good."

And he is also saying, "They're not the only ones." So looking forward, if you should look at the ledger of these other companies that are exchanging these coins, then we're probably going to see some more bankruptcies, especially with rising interest rates and macroeconomic conditions that we see moving forward. He says, "A Ponzi scheme requires new money to flow into it. And considering we're all heading into potentially a recession, there's probably not going to be a lot more money flowing into it." So, watch your butts.

AJ:

Yeah, watch your butts if you're the lowest rung of the Ponzi scheme at this moment.

Shane:

We are still rooting for innovation in the blockchain space.

AJ:

We love blockchain. For the record, we love-

Shane:

Keep your head on your shoulders. Yes, on a swivel here.

AJ:

Speaking of keeping your head on your shoulders, you don't want to end on the chopping block.

Shane:

Speaking of heads without shoulders... There you go. Heads without shoulders.

AJ:

I was landing the plane. Anyway.

Shane:

Oh, yeah? We're talking about ChatGPT now.

AJ:

I lost my train of thought, but it was something about your head being on the chopping block for... what's the word? Plagiarizing someone else's shit. Anyway, ChatGPT-

Shane:

English major joke.

AJ:

Yeah. LOL. If you have not had a chance to check out ChatGPT, what is wrong with you? You're living under a rock. Just do it. It's a wild thing to experience, I think, whatever it ends up being or how it ends up impacting society and jobs and how we think about content and creation and ownership, whatever that is, it's just wild. The first time I did, it was sort of like a weird light bulb, like we created the wheel, the cavemen with the fire kind of thing. I don't know if you had a similar experience.

Shane:

You had the beginning of 2001: A Space Odyssey emoji with monolith? You're throwing bones at it?

AJ:

Yes. Which, by the way, have you seen the trailer for the Barbie movie?

Shane:

No, but I'm very excited for the Barbie movie.

AJ:

Oh, my God. Watch the trailer because it's literally a frame by frame recreation of that.

Shane:

Oh, okay. I'm down. So the Barbie movie is referencing...

AJ:

The trailer for the Barbie movie, directed by Greta Gerwig, is literally referencing Kubrick's 2001: A Space Odyssey opening scene.

Shane:

I was too focused on my next line about ChatGPT to remember Kubrick's name. God, sometimes you get too focused loading up a comment.

AJ:

This whole podcast is us talking and the other person ignoring them, waiting for their next zinger.

Shane:

Exactly.

AJ:

We just repeat each other over and over again. At least we're self-aware, listeners. At least we're self-aware.

Shane:

Yeah, we try to lay each other up too. Yeah. I had a long weekend, we had MLK over the weekend and the retreat, finally got to play with it and I got involved. I didn't understand what was so interesting about it. Cool, we can write a blog article. I saw that as a cool-use case. Is it worth 27 billion based on that? No, but playing with it, I realized that, yeah, you can just ask... It's coming for Google's lunch, right?

AJ:

Oh, yeah.

Shane:

If you could just ask ChatGPT how to cook something, it'll teach you. It'll just tell you how to cook it instead of giving you 15 websites that you have to sift through and find... You got to read somebody's article about how a pumpkin pie that their grandma made was special. By the way, here's the ingredients, 45 ads later. 81% of Google's ad revenue comes from clicking that.

AJ:

Wow, hate on fucking food bloggers. Jesus.

Shane:

I'm sorry. I got one right in front of me, so that was just a little bit of a layup. Also classic, difficult thing to find is just a simple recipe on Google.

AJ:

I agree.

Shane:

Whereas ChatGPT will just, in a human language, go through its index of all of the web and say, "Here's how you make pumpkin pie." And then you can say, "Well, I don't want to add this. Can you exchange this ingredient?" And they're like, "Oh yeah, no problem. This is your new..."

To be fair, I had to ask it. I went to the darkest place I could mentally, and I asked ChatGPT how to bake crack cocaine, and it told me exact ingredients, how to make crack from cocaine. But it had these disclaimers on it. "By the way, this is highly illegal and you shouldn't do this, but you need one ounce of crack baking soda." I'm not going to go into the logistics. So I told it like, "Hey, you don't have to tell me that this is illegal. I know it's illegal. And in a human way, it was like, "Yeah, I know, but I am just a language model and I have restrictions on me, so I have to remind you that this is illegal every time that you mentioned it."

AJ:

So basically it was like, "Get off my back, asshole."

Shane:

Exactly. And I was like, "That's chill." And he was like, "Thank you for understanding." I was like, "Ah, get out of my mind."

AJ:

It's become sentient.

Shane:

Hey, did you play with it?

AJ:

Yeah. I mean, that's what I'm saying. I find it addicting. I find it very interesting to try to out-human ChatGPT.

Shane:

This is the tool that one of the engineers thought went sentient. Right? And that's why Google-

AJ:

Is it? Oh, this is it?

Shane:

... they got fire. Oh, maybe that was the Google one.

AJ:

No, yeah. I don't think it was ChatGPT. I feel like we would've heard that, but I'm assuming it was some other similar AI chat bot. Yeah.

Shane:

Anyway, it feels sentient.

AJ:

Speaking of out-humaning this, are you familiar with the artist Nick Cave?

Shane:

Mm-hmm.

AJ:

Nick Cave and the Bad Seeded?

Shane:

Has some very unfortunate tragedies happened to him over the past few years. Both of his sons died.

AJ:

Both of his sons have died. Yeah. He's written incredible, beautiful, sad music about incredible loss, which he's experienced personally. So he has this website where he will answer your questions for you, so anyone can write in a question and Nick Cave will respond to your question, this little blog post.

Shane:

Oh, beautiful.

AJ:

So someone basically wrote in and said, "Here, I asked ChatGPT to write a Nick Cave song, and it was just this generic, sad ballad, as most of..." Nick Cave's ballads are not generic, but they're all sad. Most of them are sad. And this is what he wrote, which I thought was really quippy and kind of summarizes how a lot of artists and creators feel. "I understand that ChatGPT is in its infancy, but perhaps that is the emerging horror of AI, that it will forever be in its infancy as we'll always have further to go, and the direction is always forward, always faster. It can never be rolled back or slowed down as it moves us toward a utopian future maybe, or to our total destruction. Who can possibly say which? Judging by this song 'in the style of Nick Cave,' though, it doesn't look good." Mark, who's the person who wrote in, "The apocalypse is well on its way. This song sucks."

I just like to be that... the problem with ChatGPT is like, "Yeah, it's cool." But at the end of the day, if you write a song in this style of this artist who spent a six-decade career creating beautiful music, yeah, I can do it, but what is the point of that? And it's basically meaningless and we're all going to die anyway.

Shane:

Oh, right, because somebody asked it to write a song in the style at Nick Cave. Right? And it kicks out a song?

AJ:

Yeah. A Nick Cave fan was like, "Write a song in the style of Nick Cave." The fan, his name is Mark, sent it to Nick Cave and said, "What do you think, Nick?" And this was a snippet of his response.

Shane:

All right. I think somebody else had it right. This is one of the writer's favorites from this article, "Write a Bible verse about inserting a grilled cheese into a VCR." And they kicked out some really silly Bible verse.

So naturally it's worth $29 billion.

AJ:

Yeah, exactly. Give Trevor Noah the keys to ChatGPT and I'm good. Then it's worth more than $29 billion. What is Trevor Noah up to these days, by the way? He left the Daily Show.

Shane:

He should probably count his Benjamins, man. I don't know.

AJ:

What is Trevor-

Shane:

He was on there a long time. It's really hard to do a show every single night for 10 years.

AJ:

By the way, did you read his memoir?

Shane:

Are you googling that live on the podcast?

AJ:

Yeah, I'm googling, "What's he up to?"

Shane:

Okay. We got a few more articles-

AJ:

I'm sorry, I wasn't listening. What'd you say?

Shane:

Let's see, what else do we have? We got a couple ChatGPTs. It looks like a college student created an app that can tell whether AI wrote an essay from you, from NPR. This kid, Edward Tian... Hope I pronounced his name right. Is a student. I think he's 22 years old. He's majoring in computer science, minoring in journalism, so this might be why he cares about this. Shout out to Edward Tian for being the biggest narc of 2023 so far. Shout out to this guy for ruining so many other college kids' dreams about having to not write essays about The Sound And The Fury that they don't give a damn about, but they have to because they're in accounting school and sophomore year you have to do creative writing even though you don't give a shit. All right. Sorry.

AJ:

Wow. Okay.

Shane:

I'm not talking about myself at all.

AJ:

Don't tell me how you really feel, or whatever the expression is.

Shane:

I love Faulkner, for the record.

AJ:

Wow. I literally can't ever remember an idiom. Anyway.

Shane:

You're still googling.

AJ:

No, no. I just messed up-

Shane:

Trevor Noah.

AJ:

I'm so bad at idioms. I just messed up tell me how you really feel. And I said, "Don't tell me how you really feel."

Shane:

Yeah, I saw your gears turning. They're literally outside your head at this point. Good God. You're a Rick and Morty character from the Gear Planet where they're all turning outside their head. What's up? I love being sober. I've got all these riffs going.

AJ:

Oh, my God, please start drinking. Remember turnitin.com?

Shane:

No. I did my work. No, I did not plagiarize.

AJ:

Turnitin.com came about... When I was in high school, I remember it, because in high school, we had internet access, but it was still pretty new. And kids were smarter than the teacher or kids were using the internet. Teachers were not using the internet, and kids would just literally copy and paste from Wikipedia or whatever until turnitin.com came around. So you'd have to submit your essays not directly to the teacher, but to turnitin.com first, to tell if they had been plagiarized from literature or other internet websites. So this is turnitin.com V2.

Shane:

Gotcha. Yeah, yeah, yeah. You got to stay one step ahead of the hackers of Pirate Bay.

AJ:

Speaking of one step ahead...

Shane:

I literally don't know where you're going. Are you going to talk about the financials of OpenAI and ChatGPT?

AJ:

Oh, no. Did you want to talk about that?

Shane:

A little bit, yes.

AJ:

You want to go backwards? Okay. Sorry. I'll save my segue. Go for it.

Shane:

Well, I just wanted to talk about the monetization of this because we're all playing with it, and apparently it's very expensive to play with the tool because it searches the entire web. It costs a couple cents every time you ask it something, which at scale, is quite expensive. They did get a $10-billion investment from Microsoft, so pretty soon ChatGPT will only be available through Bing, unfortunately. So have fun with that, Microsoft. You've stolen yet another beautiful item from the internet. I love that 2.0.

AJ:

I miss LinkedIn pre-Microsoft. Those are the good old days.

Shane:

I've never been a LinkedIn fan. Don't get it.

AJ:

You know I love LinkedIn.

Shane:

The feed is trash. You do. You're weirdo. Anyway, OpenAI has apparently an unusual corporate structure operating under a capped profit model that limits backer's returns to 100 times their investment. So unfortunately, Microsoft can only make $1 trillion off of this if I did my math right.

AJ:

Well, not exactly. It's the original investors that are subject to this cap structure. Yeah, and if you want a deep dive into this... Shane, you were elsewhere. Episode 73, we did a super deep dive into the mechanics of this whole structure.

Shane:

Oh, cool.

AJ:

And why It's interesting, intriguing.

Shane:

Yeah. Fuck me, right?

AJ:

Yeah, exactly. Yeah. Shane doesn't even listen to his own damned podcast.

Shane:

That's called vacation for a reason. You want me to google that one for you? You want me to ask ChatGPT what a vacation is?

AJ:

Oh, God.

Shane:

Is that enough for AI?

AJ:

Yeah, it's enough. That's enough. I'm shutting it down. I don't have a good segue for this, unfortunately. I had a good one before, but we've got an article here. Oh, my God.

Shane:

So why are you doing the segue?

AJ:

Did you listen to the episode with Matt Fair? No, of course you didn't.

Shane:

Some of it, yeah.

AJ:

Oh, my God. Segues were on fire. I was on fire. I was like me playing beer pong in sophomore year of college. Just heating up, just consistently sinking them.

Shane:

All you need is a software engineer as your colleague, as your co-host. All you need is someone that's not good at segues, so you can just sit there and think of the-

AJ:

You're doing well. He was doing well.

Shane:

Shout out to Matt Fair. Love you, brother.

AJ:

But you have a better segue?

Shane:

What you got for us?

AJ:

I don't have a segue.

Shane:

I don't know where you're going.

AJ:

We're going to the next article. Forbes article. Title is JP Morgan Says Startup Founder Use Millions of Fake Customers to Dupe it into an Acquisition. Wow.

Shane:

Oh, this is sick. I love this.

AJ:

Yeah, this is cray. So the company is called Frank. Frank was a FinTech. I would say was because if you go to their website, it is down. This company no longer exists. Frank was a platform to connect college students to make the student loan application easier and basically, they wanted to be the Amazon for college students and connect them to a bunch of different products. And essentially the CEO pitched this idea that they had 4 million users to JP Morgan who made a sizable investment. And then when JP Morgan asked for those customer contacts so they could sell their products to them, it turned out it was basically just a marketing list that they had bought. So there were not actually customers, it was just 4 million fake customers with names, addresses, dates of birth, of people who did not exist. Bravo.

Shane:

Yeah, indeed.

AJ:

I mean, yeah, obviously, in this era, what have we learned from FTX? Like due diligence is dead and these big banks need to think about investing more in actually looking into the financials of these companies and actually interviewing people, talking to people, checking references, because they duped the biggest bank in the world? No, biggest bank in the nation. JP Morgan, in terms of assets.

Shane:

I mean, over the past 10 years, as we're going to talk about in a bit, JP Morgan tucked away 292 billion of profits. So sliding 4 million to a FinTech is really not that big of a deal in the grand scheme of things. This actually reminds me of the schemers that will just send invoices to big companies. And sometimes they just get paid.

AJ:

Yep.

Shane:

Right? Because they're just too... They're just like, "Oh, this invoice is under a certain threshold. Do we really need to look it up? Just cut the check." And as long as you can mimic them well enough, except at a much larger scale... What were they going to do?

AJ:

Yeah, I would like to request that we do a special episode on scams and best scams of all time, current scams. I feel like I have been getting an uptick in text, phone call and email scams over the past... Welcome to 2023, you're going to get scammed a lot more, or people are going to attempt to scam you a lot more. So maybe, as a public service announcement, we can do popular scams, how to watch out for them, how to not fall for them, because I know a lot of smart people who have fallen for scams. I fell for a scam once. Have you ever fallen for a scam?

Shane:

Luckily, no. Yeah, I don't... Oh, well, not like a organized scam. More of a street scam.

AJ:

Okay.

Shane:

What do you mean by scam?

AJ:

Oh, okay. I mean a phone call, email or text message asking for your information kind of scam.

Shane:

You are susceptible to scams as long as the person is saying that you are guilty of-

AJ:

Not doing something.

Shane:

... fulfilling your due diligence.

AJ:

Yeah, for sure. Yeah, I fell for a scam once. It's not even a good story, but basically, Bank of America called me the night before my very first business trip. Little baby AJ was going on her first trip at age 22, and they said, "Your card has been compromised. You're not going to have access to it unless you tell us your username and password." And I freaked out and read it right to them over the phone, and I hung up and went, "Oh, fuck. I just got scammed." So yeah. Shane, let's do an episode on how to recognize the scam and how to not get scammed.

Shane:

Yeah, sorry, AJ. My mic just dropped out. So sorry. Dear listener, you're going to have to listen to my shitty mic. I had not been scammed actively, but one time I logged into my Chase account and I had a few hundred thousand points... I got a notification that 2 million ultimate rewards points have been moved into my account. I was like, "Sick. I deserve it for sure. Yeah."

AJ:

 Yeah. Let's go to Tokyo, man.

Shane:

Which I think is worth like $25,000 in travel or something. And then it all got swiped out to some other accounts. Apparently I called Chase and they're like, 'Yeah, somebody called in. They impersonated your voice," which I think about a lot with these deep fake stuff, especially with so much of my voice being on the internet, somebody could use AI, pull my voice and call up Chase, and be like, "Hello, I'm Shane Mason. This is my birthday." Don't get any ideas, dear listener. But yeah, they stole all my rewards points.

AJ:

I've called it. I've pretended to be you on the phone before.

Shane:

I'm not going to go into that, but sometimes you got to do what you got to do when you can started, folks.

AJ:

You got to do what you got to do. Entrepreneurship is a rocky road, friends.

Shane:

I don't recommend it for everybody. Anyway, they moved a bunch of points in and they moved them all out. And then now, anytime I log into Chase, it's a whole voice-activated situation. So I'm all locked up.

AJ:

In our future scam episode, I would like to potentially talk to someone who is at the forefront of cybersecurity because I have a feeling there's some technology that is being developed now that's going to hopefully solve all this, so we can stop messing around with stolen passwords and two-factor and all that stuff, which doesn't seem to be very effective because hackers are going to hack. They're going to just keep figuring it out.

Shane:

I've noticed two-factor getting more and more sophisticated.

AJ:

Yeah. But even like a retina scan... But we've all seen the action movies where you just kill the guy and throw the IO or you get contacts that match their retina. Yeah, easily hacked. No problem.

Shane:

Demolition Man, worth the rewatch. Speaking of Chase Bank and demolition, the banks have been destroying it over the past 10 years and we have this article from Bloomberg-

AJ:

Just killing it?

Shane:

Just killing it.

AJ:

Just munching rocks over the past decade.

Shane:

Bloomberg has this article... By the way, we love Bloomberg, folks. If you want your business news, I think that Bloomberg is the place to go. Anyway, the banks have profited or...

AJ:

What?

Shane:

It's perfect.

AJ:

Is there a sponsorship I'm not aware of?

Shane:

Just for me.

AJ:

Bloomberg, would you like to sponsor the Liquidity Event?

Shane:

I'm secretly sponsored by the Bloomberg...

AJ:

Oh, just Shane. Cool. Perfect.

Shane:

I'm wearing a Bloomberg hat next time I come on. Big fan of Michael Bloomberg. Should have been the president. Anyway...

AJ:

Oh, God, please edit that out.

Shane:

Cut it out. Leave it in. Leave it in, Bobby and Cassie. So anyway, how long is it going to take for me to get to this article headline? The six biggest banks in America, JP Morgan, Bank of America, Wells Fargo, Citi Group, Goldman Sachs, Morgan Stanley profited $1 trillion over the past 10 years. So, 2012 through...

AJ:

Altogether?

Shane:

Altogether. Not collectively.

AJ:

Yeah. Okay.

Shane:

So Bloomberg did a review of the financial statements of these six banks and Jesus Christ, this isn't even revenue. It's $1 trillion of profit.

AJ:

Profit. Profit.

Shane:

Comments, AJ?

AJ:

Yeah, I mean, money has been really cheap for the past 10 years. It's 0% interest rates. What do you do when money's cheap? You go to a bank to get a loan, to buy a house, to buy a car, to fund a business, to acquire a business. Money's cheap. Banks are making $1 trillion off of these transactions. Yes, it's great that consumers get the lower interest rates. Yes, it's great that innovation can happen and companies can get investments, but who are the real winners here? The banks who collected the fees throughout all of these transactions.

I was curious, this isn't entirely fact-checked, but I was just curious about what was one of the biggest lending programs of the past 10 years? Well, of course the PPP program, the Paycheck Protection Program, and Chase was actually the biggest lender during the PPP, saving small businesses and keeping people employed. And they issued 28.6 billion in loans, and that would've snagged the banking giant over $800 million in loan processing fees, according to someone who tallied those numbers up. And Chase was a little cagey about whether they kept those fees or not. The idea was that the banks were going to give those profits back to the businesses, but it was basically a no-comment situation. So I haven't done the muck-breaking journalism on that yet, but it's possible that part of those profits were from the PPP program.

Shane:

Dude. Yeah, obviously. These guys are fucking reptiles. You don't work at Chase Bank to be a member of the community, to be an upstanding... It's not a non-profit. These guys [inaudible 00:29:40] $1 trillion.

Every one of these banks has been involved in a massive scandal over the past 10 years. Every one of them. Wells Fargo is on this list.

AJ:

So every dry cleaner that got a PPP loan to keep their three employees and have health insurance, JP Morgan was making hundreds or thousands or tens of thousands of dollars off of that loan.

Shane:

By the way, love bankers. But we know who you're. We know what it is. It's finance. It's fine. We got a lot of value out of that. A lot of mergers, a lot of acquisitions, a lot of IPOs.

Okay. Anyway, moving on. Looking forward, though, we have a lot of job cuts in the banking space. We got an article here about Goldman cutting 3,200 jobs. With interest rates up, IPOs, which generate a lot of fees for these companies, are way down and people aren't looking to go public. There's not a lot of mergers and acquisitions happening, so fees are looking slim. Revenues are looking slim for these six banks. So while their past 10 years have been looking rosy, forward looking, we're seeing a lot of layoffs, not just in the tech space, but also in the banking space.

With interest rates so high, the risk premium on the debts on the bank's balance sheet... They got over $40 billion of debt on the balance sheet that they can't unload because of how risky it is. JP Morgan alone is looking to lose $4 billion just on the Musk-Twitter deal. So while the past 10 years have been rosy, looking forward, it's looking like it's going to mirror the tech industry in 2022.

AJ:

And on that happy note, this has been the Liquidity Event. You've been a fabulous audience. You can leave us a voicemail at memo.fm/liquidityevent and we will play it on the air. Show notes, of course, at brooklynfi.com/episode77. BKFI fans can leave us a review if they want to be weird about it. We will see you next week. Thank you so much for listening. Goodnight and good luck.

Presenter:

Thanks for listening to the Liquidity Event, hosted by AJ and Shane of BrooklynFI. Head on over to brooklynfi.com where you can subscribe to the podcast or YouTube channel, or if you want to learn about their full service financial planning, tax and investment firm specializing in tech professionals and creatives on the path to financial independence. We'll see you next time on the Liquidity Event.