E130: DeSantis's Twitter Spaces, debt ceiling, Nvidia rips, state of VC, startup failure & more

Chamath predicted that during the 2023 debt ceiling standoff, President Joe Biden would invoke the 14th Amendment and unilaterally pass a budget via executive order to avoid default.

What actually happened:

• The 2023 debt ceiling crisis was resolved through legislation, not unilateral executive action. On June 3, 2023, Biden signed the Fiscal Responsibility Act of 2023, a bipartisan bill passed by both the House and Senate, which suspended the debt ceiling until January 1, 2025.
• Biden and his administration discussed the 14th Amendment as a potential legal theory, and Biden said he believed he had the authority, but he also explicitly noted this route would be legally contested and time-consuming. There is no record of him invoking the 14th Amendment to resolve the standoff. (This is widely reported across major outlets and legal analyses.)
• No executive order was issued that unilaterally “passed a budget” or raised/suspended the debt ceiling; instead, Treasury’s X-date pressure led to a negotiated legislative deal.

Because the crisis was resolved via normal congressional legislation and Biden did not invoke the 14th Amendment nor pass a budget via executive order, the prediction did not come true.

The prediction was that the 2023 U.S. debt ceiling negotiations—reported as being about $72 billion apart—would be resolved with a bipartisan agreement before an actual default.

What happened:

• On June 3, 2023, President Biden signed the Fiscal Responsibility Act of 2023 into law after it passed both the House and Senate with bipartisan support, suspending the debt ceiling until January 1, 2025.
• The Treasury Department had warned of a potential default around June 5, 2023 if the limit were not raised/suspended, but no default occurred; U.S. obligations continued to be paid on time.

Thus, the 2023 debt ceiling standoff was indeed resolved with a bipartisan agreement before any actual default, matching Friedberg’s forecast.

So the prediction is right.

It is too early to determine whether this prediction is right or wrong.

The prediction is explicitly about the situation five years after the May 2023 discussion ("in five years") and "around 2028". Five years after 2023 is 2028, which has not yet occurred as of November 30, 2025 (2023 + 5 = 2028).

We can observe that, so far, the U.S. still has large federal deficits and a rising debt‑to‑GDP ratio, and no sweeping structural fiscal reform has been passed that clearly locks in a very different long‑term debt path. However, because the prediction concerns the state of affairs by around 2028, and future policy and economic developments between late 2025 and 2028 are unknown, we cannot yet conclusively say that the 2028 endpoint condition has been met or not.

Therefore, the correct status today is inconclusive (too early), even though the trajectory so far appears broadly consistent with the scenario Chamath described.

Chamath’s prediction has two parts:

1. "A few quarters, maybe a few years" of hype and focus on Nvidia/AI chips.
   From mid‑2023 through late‑2025, Nvidia and AI chips have remained at the very center of the AI trade. Nvidia passed a $1T valuation in 2023 and then became the first company to reach $4T and later $5T in 2025, with these gains explicitly attributed to surging demand for AI/data‑center hardware. (en.wikipedia.org) Industry commentary describes an ongoing “AI supercycle” in which advanced chips and HBM memory are the main growth engine for semiconductors through at least 2025–26. (stocks.observer-reporter.com) That strongly supports the first part: the hype and outsized investor focus on Nvidia/AI chips have indeed persisted for multiple quarters and into multiple years after May 2023.

2. "Then the smart money will probably figure out where the next lily pad is" and rotate capital to the next part of the AI stack.
   As of late 2025, there is some broadening of AI enthusiasm (e.g., Alphabet’s surge toward a multi‑trillion valuation on AI and its own chips, plus interest in software, cloud, data centers, and power infrastructure), but Nvidia remains the clear centerpiece of the AI trade and a dominant weight in major indexes. (reuters.com) Many analysts still project Nvidia to lead AI hardware and infrastructure well into the late 2020s, and discussions of rotation are mostly framed as future risk or early bearish positioning by some investors rather than a completed, broad smart‑money shift away from Nvidia and AI chips. (businessinsider.com)

Because the first part (sustained multi‑quarter/years hype around Nvidia and AI chips) has clearly been correct so far, but the second, longer‑horizon part (a substantial smart‑money rotation to the “next lily pad” in the AI value chain) has not yet clearly occurred and may not be expected until further years out, the overall prediction cannot yet be judged fully right or wrong.

Hence, the status is inconclusive (too early): one component has played out as described, but the key forward‑looking rotation piece is still unresolved.

The prediction explicitly concerns where long‑term economic value will accrue 5–7 years after the start of the AI cycle around 2023—i.e., roughly in 2028–2030. As of today (November 30, 2025), we are only about two years into that window. Even though AI hardware companies like Nvidia have captured enormous value so far (e.g., Nvidia’s market cap and revenue explosion driven by AI chips), it is still too early to determine whether, by 2028–2030, the majority of long‑term economic value will instead be captured by software and services built on top of AI. Because the prediction’s evaluation period has not yet arrived, it cannot be judged now.

Therefore, the correct status is: it’s too early to tell whether this prediction will be right or wrong.

By mid‑2024, neither the official U.S. business‑cycle arbiters nor the broad community of professional economists had concluded that a new recession was underway, let alone one that had already begun in mid‑2023.

• The National Bureau of Economic Research (NBER), which is the standard reference for dating U.S. recessions, still listed the last recession as running from February–April 2020; its expansions‑and‑contractions table shows no new peak or recession start after that date as of its latest update, meaning no 2022–2023 recession has been officially dated. (nber.org)
• Data for 2023 show solid economic performance rather than recessionary conditions: real GDP grew about 2.5% in 2023, unemployment averaged a very low 3.6%, employment hit record highs, and real wages rose slightly after inflation. (en.wikipedia.org)
• Entering and through early‑to‑mid 2024, major forecasts and official outlooks commonly described a likely or ongoing soft landing—slower growth but no recession. The Congressional Budget Office projected a soft landing in 2024 with continued (albeit slower) growth and disinflation rather than a downturn. (axios.com) Federal Reserve officials similarly grew more confident that the economy would avoid recession. (investopedia.com)
• Ratings agencies and large forecasters revised earlier recession calls to “no recession” or low odds of recession in 2024, again implying that they did not view a recession as already in progress dating back to 2023. (forbes.com)
• More broadly, commentary in early 2024 characterized the U.S. as a standout case of reducing inflation while maintaining growth—often explicitly framed as achieving or nearing a soft landing rather than being in a recession that had begun the prior year. (en.wikipedia.org)

While a few dissenting voices claimed the U.S. was in a “soft” or “rolling” recession, the mainstream professional and official view by mid‑2024 was that the U.S. had not entered a new recession in 2023. Therefore, Sacks’s prediction that economists a year later would say “the recession had already begun” is best judged wrong.

Evidence since the 2022–2023 tightening strongly supports Sacks’s prediction of a large subsequent wave of company failures and bankruptcies.

• Sharp monetary tightening and liquidity withdrawal. Between March 2022 and July 2023 the Fed raised the federal funds rate from near 0% to 5.25–5.50%, the fastest and largest hiking cycle in decades, after years of near‑zero rates and quantitative easing.(forbes.com) This is the “money being sucked out of the system” backdrop Sacks was referring to.

• Corporate bankruptcies rose to post‑GFC highs.

  • In 2023, U.S. corporate bankruptcy filings (public + certain large private firms) jumped from the unusually low 2021–2022 levels and were already described as the highest since around 2010, driven largely by higher interest rates.(spglobal.com)
  • In 2024, filings reached 694–695, explicitly noted by S&P Global and other outlets as the highest annual total since 2010, with elevated interest rates and strained consumer finances cited as the main causes.(spglobal.com)
  • In 2025, the trend continued: by October there were already 655 filings, and S&P/Reuters reported that 2025 was on pace to hit the highest level of U.S. corporate bankruptcies in about 15 years.(investing.com)

• Startup and VC‑backed failures surged.

  • Carta data show startup shutdowns rose from 467 in 2022 to 770 in 2023, the highest number since Carta began tracking, with analysts calling 2023 “the most fatal year for startups,” driven by a hostile funding climate after the 2021–22 boom.(forbes.com)
  • By Q1 2024, 254 venture‑backed U.S. startups had already failed, a 58% year‑over‑year increase and the highest quarterly total of the decade; the rise is attributed to companies running out of cash as venture funding and venture debt tightened.(techmonitor.ai)
  • One 2025 review estimates 966 U.S. startups shut down in 2024, up ~26% from 769 in 2023, describing a continuing “wave of shutdowns” linked to overfunding in 2020–21 and subsequent funding scarcity.(founderstoday.news)

Across both large corporates and venture‑backed startups, failures and bankruptcies have climbed to their highest levels since the aftermath of the Great Recession, clearly above the calm period that preceded the 2022–2023 tightening. While not on the scale of 2008–2009, the data show a broad, multi‑year spike in distress that matches Sacks’s qualitative prediction of a big post‑tightening “tsunami” of failures within the 1–3 year window he suggested.

Available full‑year sales data after the May 2023 episode show that the Tesla Model Y has not yet been the best‑selling vehicle in the United States, but the prediction didn’t include a clear time limit, so it could still become true in a future year.

2023 U.S. sales: Multiple industry summaries using Automotive News/Cox data report that the Ford F‑Series remained America’s best‑selling vehicle in 2023, extending a decades‑long streak. The Tesla Model Y was high on the charts (around 5th place), with estimated U.S. sales in the mid‑380k range, but it did not surpass the F‑Series or other top trucks. (motortrend.com)

2024 U.S. sales: For full‑year 2024, rankings again show the Ford F‑Series as the best‑selling vehicle in America, with roughly 730k–760k units sold, while the Model Y sits several spots lower (typically 4th–6th) with ~370k–410k units. (motor1.com) Other analyses and state‑level breakdowns likewise show the Model Y leading in some states (e.g., California, Nevada, New Jersey, Washington) but not nationally. (visualcapitalist.com) Globally, the Model Y did become the world’s best‑selling car in 2023, but that is a different claim than being #1 in the U.S. market. (kbb.com)

Because Chamath’s statement was open‑ended ("going to be the best selling car in America") and was not explicitly tied to a specific year like 2023 or 2024, it is still possible—though currently unrealized—that a later full year (e.g., 2026 or beyond) could satisfy it. As of late 2025, we can say the prediction has not yet come true, but we cannot definitively say it will never do so. Therefore the fairest status is inconclusive (too early) rather than clearly right or wrong.