In this episode, I sit down with Peter Kogan to discuss the Ukraine crisis and why it's a good thing it happened. Peter's background is in economic development, he's worked at Stratfor for a long time, and he's a regular contributor to the New York Times and the Wall Street Journal. He's also the author of several books, including The Dark Side Of: The Ukraine Crisis, which is a book that explores the events leading up to Ukraine s conflict with Russia in 2014, and how they changed the course of history and the future of the Ukraine conflict. I think you're going to get a lot out of this episode if you're looking for a good piece of information about what happened in Ukraine, and why we should be proud of what happened there, and what it means for the rest of the world. If you haven't checked out Peter's book, you should definitely do so. It's a must-listen, and you'll get some insight into what's going on behind the scenes of the crisis and how it's going to affect the world in the near future. I'm sure you'll agree that it's one of the most complex and complex stories I've ever heard, and that's why I think it's so important to have someone like Peter on the show to talk about it. The Ukraine crisis is a great example of the power of people who are willing to fight for their country, not just for themselves, but for the world, and for their own country, and their country's future. I hope you enjoy this episode. -Jon Sorin this episode and that you'll be inspired by Peter's perspective on the Ukraine's story and perspective on what's happening in Ukraine and what's to come in the next few years. Thank you, Peter! -Timestamps: 3:00 - What's next? 4:30 - What will happen in Ukraine? 6:15 - What does Ukraine mean for Ukraine 7:00 8:40 - What is Ukraine's future? 9:30 11:10 - Why Ukraine's role in the Ukraine Crisis? 12:20 - How do we have a chance to win the war? 13:40 14: What are we going to win? 15:20 16:00 | What is the role of Ukraine in the conflict? 17:30 | What are our role?
00:00:36.000My background is in economic development.
00:00:37.000It's all about figuring out what works where and why and why if you try the same policies in the next town over, it's usually a disaster.
00:00:44.000And then I worked actually here in Austin at a company called Stratfor for 12 years, and I was their sole generalist.
00:00:51.000So it was my idea to kind of plug everything together and figure out what the map of the world looks like and have you pull a string on one side of the world, something changes on the other side.
00:01:28.000You expected this and you felt like this is inevitable and this is just something that was always going to happen and it's not going to just stop at Ukraine.
00:01:38.000The Russian space is among the worst farmland in the world and so they've never been able to generate enough income to have a road network.
00:02:06.000Unfortunately for Ukraine, there are two of those access points on the other side of Ukraine.
00:02:12.000So the Russians were always, always, always going to try to push through and retake that territory, territory that they had controlled for most of the last 350 years.
00:02:21.000Unfortunately for them, in the 30, 35 years since the Soviet system collapsed, the Ukrainians have developed an identity.
00:02:28.000And now they would like to be something other than a road bump.
00:02:33.000So one of the narratives that was going around was that the reason why Russia was pushing into Ukraine is because NATO was moving their arms closer to the border of Russia.
00:02:44.000There is something to be said for that.
00:02:47.000You just have to put it into context to really understand it.
00:03:03.000You have to sign over the future of Estonia, Latvia, Lithuania, Poland, Finland, the Czech Republic, Hungary, Slovakia, Romania, Belarus, Ukraine, oh let's go on, Azerbaijan, Armenia, Georgia,
00:04:03.000They couldn't put up any sort of resistance.
00:04:05.000Crimea fell in just a matter of a couple of days.
00:04:08.000And I think a lot of us who are in the security side of things thought that this was going to be to a degree a bit of repeat.
00:04:15.000Now, excuse me, I was probably one of the more optimistic people for Ukraine because I had seen them develop a culture and seen them arm and train and seen it be meaningful.
00:04:25.000But Ukraine is still a flat country and the Russians are still one of the largest militaries in the world.
00:04:30.000So even I was saying that within six months to a year, this was all going to be over.
00:04:35.000But the Ukrainians have surprised to the upside and probably most importantly, the Europeans didn't just roll over and let this happen like they did the last seven times that the Russians have gone on the warpath since 1999. And that's changed the game fundamentally.
00:04:51.000And when you look at it going forward, if people didn't anticipate that the Ukrainians were going to be able to fight back as well as they have, and then you look at it going forward, like, where does this go?
00:05:15.000Well, the Ukrainians are the underdog, but they're in the process of rapidly arming with more and more sophisticated equipment.
00:05:23.000And by the time we get to May, they will have been able to do a lot of deferred maintenance on the equipment they captured from the Russians, which was more equipment than they started the war with.
00:05:33.000And there will be 60,000 Ukrainian troops that have trained in NATO countries with more advanced equipment back in the field.
00:05:40.000So, you know, we get our Athens, if you will.
00:05:42.000On the other side, the Russians will finish their second mobilization, and they will have at least another half a million men in the field.
00:05:50.000Now, they will be badly trained and badly equipped and badly led with low morale, but troops like that have a technical term attached to them.
00:06:00.000There's nothing about this war that is unique in Russian history.
00:06:04.000The first year is always an absolute shit show.
00:06:07.000And then the Russians throw bodies at the problem until it goes away.
00:06:11.000And in half of those wars, the Russians ultimately win.
00:06:14.000So by the time we get to May and the mud season is over, we'll have a more advanced Ukrainian force fighting a much larger Russian force, and we will get our first real glimpse at how this is going to go, and we should know which way it's going to break.
00:06:29.000Because if the Russians are going to win, it's going to take them a year to overwhelm Ukrainian defenses, and then they have to occupy the country, and that's going to kill a couple million people.
00:06:37.000Or the Russians are going to be able to completely break the logistical supply chains that allow the Russian troops to even exist, and we'll have a half a million dead Russians, and the Ukrainians will be able to push the Russians out of Crimea in the east.
00:06:50.000And then we get to talk about the next stage, because this is just the opening phase of what is going to be a multi-year and perhaps even multi-decade conflict.
00:07:18.000When the Russians made it clear that they were going to do a second mobilization, that seemed to have broken the logjam in a lot of countries, most notably Germany.
00:07:25.000And we now have armored vehicles up to and including some light battle tanks, which I know all the tankies out there are going to hate that term.
00:07:32.000Anyway, armored vehicles that have some serious firepower are going to be coming now.
00:07:35.000The Bradleys from the United States specifically.
00:07:38.000And that is a tool that the Ukrainians have not had.
00:07:43.000So every time the Ukrainians have achieved a tactical breakthrough, they can only push as far as their infantry can run.
00:07:50.000Now their infantry is going to be mobile.
00:07:52.000And in a war of movement to this point, the Russians have proven that they're absolutely incompetent.
00:08:46.000And they've destroyed roughly 2,000, maybe 2,500 of them.
00:08:50.000And that has reduced the Russian military to going back to Russia, confiscating city buses and literally Scooby-Doo vans, and bringing them back to the front.
00:08:59.000And think of a Scooby-Doo van, now fill it full of artillery shells.
00:09:03.000You know, every time you hit a bump, and that is their primary ammo supply system now.
00:09:08.000Because the rail system into Crimea got blown up, the Kerch Bridge, and what's going into the east is all under artillery range, so they have to use truck and they're just not very good at it.
00:09:20.000Now, for a lot of people, the big fear is that if Russia starts really getting desperate, then they use nukes.
00:09:32.000I've not been as concerned about the nuclear question as some folks because there's really only four scenarios.
00:09:40.000Scenario one is the Russians consider throwing one against the United States.
00:09:43.000But we've made it very clear from our intercepts and our sharing of information with the media that we know exactly where Putin is at any time.
00:10:16.000There may have been a case last year for nuking Poland and Berlin and Stockholm in order to disrupt the weapons flows into Ukraine.
00:10:26.000But after the battles of Izium and Kyrson, the Ukrainians have more Russian gear now than they know what to do with.
00:10:32.000It's going to take them months to bring that all online.
00:10:34.000There's a lot of deferred maintenance that needs to be done.
00:10:36.000And so disrupting the weapons flows no longer is a critical issue because the weapons are already there.
00:10:41.000So the only scenario I can see where the Russians would seriously consider nukes is if Ukraine doesn't simply win, but decides to carry the fight across the border into Russia proper.
00:10:55.000In that scenario, where the very existence of the Russian government is threatened, that would probably change the math.
00:11:01.000But I don't find that likely without a significant shift in mindset in Washington, because we're not just providing the Ukrainians with the weaponry and the ammo.
00:11:10.000We're providing them with the intelligence and most of the steps of the kill chain.
00:11:15.000Without that, the weapons are of limited usefulness, especially at long range.
00:11:20.000And the Ukrainians have no desire to rupture that relationship.
00:11:23.000So we're talking about a theoretical that is at a minimum seven months away, probably further.
00:11:30.000This whole thing is such a terrifying conflict.
00:11:34.000Being that Russia is a nuclear superpower and the history of Russian wars, I mean, there's such a long history of sacrifice and death, and they have, it's like they're accustomed to it in a way.
00:12:34.000Well, the data exists on the other side of the front line.
00:12:38.000All we know are about what has happened in the territories that have been liberated.
00:12:41.000And if you think of things like Bucha and Izyum, German radio intercepts told us as far back as May that there were at least 70 places behind Russian lines that had suffered massacres like Izyum – I'm sorry, like Bucha.
00:12:57.000And when we've had additional liberation since then, it corroborates that general assessment.
00:13:06.000So, that's piece one you can be a little depressed about.
00:13:18.000But we now know that the Russians are fighting so badly.
00:13:21.000They're doing much worse than the Iraqis did in 1992. Really?
00:13:44.000So the primary reason why everyone in the West has gotten shoulder to shoulder on this is they know that if Ukraine falls and Poland's next, there will be a direct fight, the Russians will lose, and then there will be a general nuclear exchange.
00:14:01.000So there's plenty of really solid reasons to root for the Ukrainians on this one.
00:14:32.000The Russian position is that our demographic structure is in such diseased and aged and terminal decline that the Russian state will be turning the lights off sometimes between 2050 and 2070 anyway.
00:14:49.000They've had a series of big melon scoops out of their birth rate throughout the history.
00:14:54.000World War I, World War II, the collectivizations under Stalin, Brezhnev's mismanagement, Khrushchev's mismanagement, the post-Cold War collapse.
00:15:03.000And a lot of these stack on top of each other.
00:15:05.000And the biggest one stacked on top of the post-Cold War collapse.
00:15:08.000So there are more Russians in their 50s than their 40s and their 30s and their 20s than teens.
00:15:13.000And then they lie about the data of the teenagers on down.
00:15:17.000Which means that there aren't enough Russians that have been born in the last 30 years to carry the ethnicity forward much farther.
00:15:25.000And so they're thinking if they can forward position their military and plug those gaps now with their last generation of young people, then they can kind of die on their own terms 50 years from now.
00:15:36.000Have they really thought about this in that term?
00:15:40.000One way or another, this is the end of Russia.
00:15:43.000The question is whether it dies in the long term on their terms or in the shorter term when they're completely unmoored.
00:15:49.000Because if they fail to secure those borders, then they've got a 2,000-mile open border with countries they consider to be hostile.
00:15:56.000And they have no way of moving troops around in a way that would allow them to defend it.
00:16:00.000They'd just be waiting for somebody to come over and knock them over.
00:16:03.000You believe that they're aware of this, that they can't survive past 2050, 2070, whatever it is?
00:16:09.000I think that's what's been driving them because 2022 was the last year where they had a sufficient number of people in their 20s to even attempt this.
00:16:16.000So from my point of view, not only did the war always have to happen, it always had to happen by now.
00:16:25.000Now, is this just because of the nature of a dictatorship that's run by someone like Putin, that it's just completely mismanaged because he's just dominated the power structure and made sure that everybody falls in line with his ideology and his reign?
00:16:44.000What caused all this to be so poorly managed?
00:16:47.000Well, Russia has always been poorly managed and authoritarian.
00:16:51.000But under Putin, it's taken a much darker turn because of the nature of the end of the Cold War.
00:16:59.000If you remember back to 1982, there was a coup in the Soviet Union.
00:17:05.000And Chernomirdin and Andropov and Gorbachev were FSB, then KGB agents, who basically overthrew the old system of Brezhnev and took over.
00:17:15.000Because they were the only ones who really had a full understanding of what was going on.
00:17:20.000They were not able to save the system, and so it broke.
00:17:23.000And Putin is the successor to that legacy because he was also in the KGB. And we're now in an environment that between the terminal demographic structure of the Soviet slash Russian system And Putin's personal paranoia,
00:17:38.000so he's gone through and purged what was left of the KGB, FSB, of anyone who has personal ambitions to succeed him.
00:17:45.000We're left with an entire political elite of only about 130 people.
00:17:50.000And Putin has removed anyone who has leadership ambitions.
00:17:53.000Now, they all see the world the same way.
00:17:57.000They all kind of agree with Putin on what's at stake here.
00:18:00.000But it does mean that when this generation is gone...
00:18:50.000Oh yeah, you know, when it came to the Kyrson Offensive and it became clear that there was more going on than just NATO weapons, the Ukrainians actually knew what they were doing.
00:18:58.000They changed the line from that these are all Nazis to these are actually gay demons.
00:21:11.000And for someone who has been the shirtless horseback rider in the propaganda videos, that's a real problem.
00:21:18.000He's visibly wearing bulletproof or bullet-resistant vests even around his own propaganda people.
00:21:27.000There was this great piece that came out that I saw last week where it was all the propaganda shots that he's taking with the soldiers' mothers and on the front and with the tech people and in the intelligence.
00:21:39.000And it was like the same 12 people were in every single shot just in different outfits.
00:23:05.000We don't have any like real hard data that he's sick.
00:23:07.000Well, the folks in the intelligence world who are listening to his phone calls and reading his email might, but that has not been made public to my knowledge from the American side.
00:23:16.000So Ukrainian military intelligence chief claims Putin is very sick and a coup is underway.
00:23:22.000Yeah, but Donov has been saying that there's a coup underway since March.
00:23:26.000So he's kind of the Ukrainian propaganda guy.
00:24:16.000The Soviet period was kind of a relief because we actually had an institution that pushed their weird religion to the side and actually worked on technocracy and technology.
00:24:25.000And from the European point of view, that was a huge improvement.
00:24:28.000And the belief in the post-Soviet period was that they would start from that and move forward and modernize and maybe even democratize.
00:24:35.000And people believed that for far too long, even when it was clear that Russia was degenerating rather than advancing itself.
00:24:42.000Now, the title of your book is The End of the World is Just the Beginning.
00:24:47.000We are dealing with the end of the world that we know.
00:24:51.000Russia is more of a symptom of this than a cause.
00:24:54.000So, to go back a little bit, in the world before World War II, if you had coal, oil, food, and iron ore, you could industrialize and try to make something of yourself.
00:25:05.000But if you failed to have one of those, you were probably a colony.
00:25:11.000At the end of the war the Americans abolished the imperial system and patrolled the global oceans for everyone and as a result now you only needed one of those four and you could trade for the others and so for the first time in human history we were all on the same path you know from different starting points and going at different speeds but we were all industrializing and we were all urbanizing the problem well let's start with the opportunity When you urbanize,
00:25:36.000you move from the farm and into town to take an industrial job.
00:25:40.000When you live on the farm, you have a lot of kids because they're free labor.
00:25:44.000You move into the city, you have a lot fewer kids because kids are no longer free.
00:25:48.000They're really expensive and noisy and annoying and dirty pieces of furniture.
00:26:04.000But as you urbanize, your pyramid opens up into a column.
00:26:09.000Because you have fewer kids, but everyone's living longer.
00:26:13.000And as long as your population is a column, economic growth is spectacular.
00:26:17.000Because you don't have to spend a lot of money on your kids.
00:26:20.000You're not old enough that you have a lot of retirees.
00:26:22.000But you got a lot of people in their 20s and 30s to build things and buy things.
00:26:26.000And then a lot of people in their 40s and 50s to do the investing.
00:26:29.000And the rich world was a population column from 1945 to 1992. And with the end of the Cold War, the developing world became a column in 1992 until now.
00:26:41.000The problem is that this is all temporary because birth rate keeps dropping, people keep living older, and your column eventually inverts into an open pyramid upside down.
00:26:54.000You no longer have a replacement generation at all.
00:26:57.000And there aren't enough people in their 20s and 30s to buy everything.
00:27:00.000And there aren't enough people in their 40s and 50s to pay for the retirees.
00:27:04.000So this decade was always going to be the decade that most of the advanced world moves into mass retirement and the economic model collapses.
00:27:12.000And next decade was always going to be the decade that that happened to the developing world.
00:27:17.000And we find out recently that the Chinese have jumped the ship and this is their last decade too.
00:27:22.000So all of the globalized connections and consumptions that create the world we know, we are at the end of it.
00:27:31.000And we have to go back to a world where trade is more focused on the countries that have a better demographic and security infrastructure because the Americans are no longer patrolling the global oceans anymore.
00:27:42.000So we're losing the security ramifications of an open system.
00:27:46.000At the same time, we're losing the demographic capacity to support it in the first place.
00:27:59.000Well, we now know that they've lied about their population statistics and they over-counted their population by over 100 million people, all of whom would have been born since the one-child policy was adopted.
00:28:09.000So this is one of those places where they've got more people in their 60s and their 50s and their 40s and their 30s and their 20s.
00:28:14.000What was the logic behind the one child?
00:28:18.000Mao was concerned that as the country was modernizing, the birth rate wasn't dropping fast enough and that the young generation was literally going to eat the country alive.
00:28:27.000So they went through a breakneck urbanization program, which destroyed the birth rate.
00:28:32.000At the same time, they penalized anyone who wanted to have kids.
00:28:35.000And both of those at the same time have generated the demographic collapse we're in now.
00:28:39.000And the problem with that also was that they wanted male children.
00:28:43.000Yeah, there's a cultural aspect to that too and obviously men can't have kids on their own.
00:28:47.000And what is the like ratio to men to women in the younger people in China now?
00:28:54.000Before the data revision with the last set of lies it was about 1 to 1.2.
00:28:59.000It was the most distorted in the world even more than Sri Lanka where there had been a civil war for 30 years.
00:29:05.000Since then we don't have good sex by sex data, but it's undoubtedly worse.
00:29:11.000And so what are the other problems that they're encountering that leads you to believe that they only have 10 years left?
00:29:17.000Well, without young people, we've seen their labor costs increase by a factor of 14 since the year 2000. So, Mexican labor is now one-third the cost of Chinese labor.
00:29:26.000Their educational system focuses on memorization over skills.
00:29:31.000So, despite a trillion dollars of investment in a bottomless supply of intellectual property theft, they really haven't advanced technologically in the last 15 years.
00:29:39.000Mexican labor is probably about twice as skilled as Chinese labor now, even though it's one-third the cost.
00:29:46.000They've consolidated into an ethnic-based, paranoid, nationalistic cult of personality, and it's very difficult for the Xi administration to even run it because it's not an administration anymore.
00:29:58.000No one wants to bring Xi information on anything.
00:30:02.000So, like, Putin lied to his face, for example, last February about the war, saying, you know, why would I invade Ukraine?
00:30:08.000And you can see in some of the presses, the defense guys in the back of the room, like, I didn't want to say anything because Xi has a history of shooting people he doesn't like.
00:30:18.000And so the Chinese were the only country that was caught with their pants down when this all went down.
00:30:25.000The Biden administration is basically taking the trade policy of Donald Trump and running it through a grammar checker and putting it into institutions.
00:30:32.000So we now have tech barricades that prevent the Chinese from buying the equipment, the tools, or the software that's necessary to make semiconductors.
00:30:41.000In fact, he went so far as to say any Americans working in the sector have to either quit or give up their American citizenship.
00:30:47.000Every single one of them either quit or was transferred abroad within 24 hours.
00:30:54.000They don't have the young people to go consumption-led.
00:30:57.000They're completely dependent on the US Navy to access international trade.
00:31:00.000They are the most vulnerable country in the world right now.
00:31:04.000And based on how things go with Russia, we're looking at a significant amount of raw materials falling off the map, specifically food and energy.
00:31:14.000And the Chinese are the world's largest importer of both of those things.
00:31:17.000So there's no version of this where China comes through looking good.
00:31:22.000And the challenge for the rest of us is to figure out how do we...
00:31:27.000In as smooth and quick as a process as possible, figure out how we can get along without them.
00:31:55.000Like, if we impose the kind of sanctions that we've imposed on Russia, if China decides to invade Taiwan and the world stands up and the world imposes sanctions on China, how does that go?
00:32:16.000But it's a massive producer and exporter of food and energy.
00:32:20.000You put the sanctions that are on the Russians on Beijing, and you get a deindustrialization collapse and a famine that kills 500 million people in under a year.
00:32:53.000And even if they take every single one of those semiconductor fab facilities intact, they don't know how to operate them because they can't operate their own.
00:33:01.000And their own are among the worst in the world, not the best.
00:33:07.000The only reason, in my opinion, to be concerned about a Taiwan war is because Xi is so isolated himself that when one person is making all the decisions and that one person refuses to access information to make the decisions, strange stuff happens.
00:33:24.000And when you say refuses to access, what do you mean by that?
00:33:27.000He does not have normal information flows anymore.
00:33:31.000Even at the height of the Trump administration, when Trump was basically isolating himself from the entire intelligence community, he was still getting the daily briefing.
00:33:41.000There was still information being put in front of him.
00:33:46.000He doesn't want to hear anything except for what he wants to hear.
00:33:49.000And since no one knows what the status of the conversation with the voices in his head in on any given day, no one wants to bring him anything unless they're ordered to.
00:33:58.000Because there's no one to listen to anymore.
00:34:00.000That's one of the fun things about Russia versus China right now is that the Russian information security is so poor that American intelligence is literally listening in on everything.
00:34:08.000But in China, we can hear into the office, but there are no conversations happening.
00:35:01.000If you know that the economic situation is going to go to pot, then you have a couple of options.
00:35:07.000Option one is you try to cut a deal with a country that can help you out, but the only country that could do that is the United States.
00:35:14.000And the sort of strategic surrender that the Americans would require is not something that the Chinese would accept.
00:35:22.000So think about Germany in 1946. That's the scale of support and control that the Americans would insist upon for giving the Chinese a lease on life.
00:35:34.000But if you go with nationalism, give people a non-economic reason to support the state.
00:35:39.000So even if you lose your job, even if you can't feed your family, I'm Chinese, I'm Han, that's enough.
00:35:44.000That has been the strategy for the last couple of years.
00:35:47.000Will it be enough to preserve the CCP? Too soon to know.
00:35:52.000And they're in the middle of the worst aspect of the pandemic for them ever, which is very strange for us because we're on the other end of it, right?
00:36:27.000And then third, in part because of Xi, when you're a one-man state, All policy and all authority starts and stops with you.
00:36:36.000And unless you're providing very clear guidance on everything, which is impossible for one person to do for a whole country, especially one the size of China, the bureaucracy either goes into automatic or does nothing.
00:37:48.000They did not have vaccines and they didn't develop natural immunity.
00:37:52.000And now everyone's getting hit all at once with a virus that has at least 50% more communicability than the measles.
00:37:59.000And their overall health Is worse than ours.
00:38:04.000Diabetes as a percentage of the population is higher.
00:38:07.000They don't have a critical care system like we have.
00:38:10.000And their hospitals are really their only line of defense.
00:38:13.000They don't have a clinic and a doctor system in the towns like we do.
00:38:16.000And what about nutrition education and the understanding of...
00:38:22.000When you industrialize very, very quickly, especially in a culture like China where food is considered a sign of wealth, getting fat is the thing to do.
00:38:31.000So we've got a lot of diabetes, a lot of hypertension, a lot of overweight people, and over two-thirds of the population lives in the metro region and their air quality sucks too.
00:38:40.000So we're kind of seeing like the worst aspects of the Indian system and the American system all in one.
00:38:48.000So obviously the United States government is aware of all these things, correct?
00:38:52.000Well, let's not oversell it, but broadly.
00:39:20.000I'm happy to say that I am doing some work with the Defense Department.
00:39:23.000I can't talk about the details, obviously, but I think it's good to give credit where it's due.
00:39:30.000One of the many, many things about the war on terror that reshaped the US government Is that we focus all of our intelligence apparatus on supporting the troops, which is reasonable.
00:39:40.000So instead of thinking, you know, it's 2045 and you're thinking over the horizon, who's our foe going to be and what kind of tank are they going to use so that we can start preparing, which is what we used to do.
00:39:49.000It instead became there's someone in the other side of this door and the third floor of this building at the edge of town in Fallujah.
00:39:58.000What side of the door the hinges are, because we need to know if we need to blow it off the hinges or kick it in.
00:40:03.000So we focused all on that second thing for 20 years, which meant not only did we lose all the analysts who knew how to think forward, we lost all the people who trained them.
00:40:17.000So even if everyone in DOD or the intelligence community disagrees with everything I have to say, and I have some friends, I have some colleagues, I have some non-friends who listen, the fact that they're trying to rebuild that capacity is a really good sign.
00:40:34.000And the fact that they started rebuilding that capacity so soon after the war on terror ended means that they recognize the hole in the system.
00:40:47.000If you play out China's collapse, how do you anticipate that that goes?
00:40:54.000First of all, what do you think is like the first piece to drop?
00:40:59.000Well, Chinese history is rich with examples of how it all falls apart in a short period of time.
00:41:05.000If I were a betting man, I think that the two most vulnerable parts of the international system right now are energy transport and food production.
00:41:14.000About 80% of the calories that humans produce are produced with at least one imported input, whether it's pesticide, fertilizer, fuel, tractors, whatever.
00:41:26.000And with the Chinese, it's more like 90%.
00:41:35.000And 90% of the calories they produce are dependent upon a foreign support system.
00:41:40.000In the United States, it's less than 10. We produce most of what we need locally, and most of the rest comes from Canada.
00:41:46.000But you interrupt the food supply chain in any meaningful way, and China's only one of a host of countries that has some very real problems.
00:41:53.000Now, China faces the biggest one in absolute terms because of the size of their population.
00:41:59.000But with the Russians having their problems, the Russian space is the world's largest single supplier fertilizer of all types.
00:42:06.000So we are already knee-deep in a fertilizer crisis globally.
00:42:12.000And we're seeing industrial accidents in the Russian space that are so big you can see them from orbit.
00:42:17.000Because, you know, a lot of petroleum stuff explodes if it doesn't go right.
00:42:20.000And the Russian facility has been held together with duct tape and Western tech for a while now.
00:42:27.000So China being kind of the last man in line to get a lot of this stuff is in a very vulnerable position.
00:42:34.000We're probably going to see about a million barrels a day of Russian crude fall offline within the next few weeks as part of the price cap that the Europeans are putting into place.
00:42:43.000But more important, all the insurance firms have said they're not going to deal with Russia anymore.
00:42:48.000So you're not supposed to sail at all with your ship if you don't have an insurance policy.
00:42:53.000So countries like China and India are stepping in and offering sovereign indemnifications, but that's something they've never done before.
00:43:00.000And so if there's ever a case where a ship, for whatever reason, needs to file a claim, it's going to immediately go to international arbitration because they have no method for the payout.
00:43:08.000As soon as that happens, no one's going to take an Indian insurance policy again.
00:43:12.000That's another million to two million barrels a day that goes offline.
00:43:16.000And then all the crude that the Chinese get from Eastern Siberia is from fields that the Russians never developed themselves.
00:43:24.000So we don't know how long the Russians can keep it operating, but we know it's going to go to zero.
00:43:29.000We just don't know how long it's going to take.
00:43:30.000And the Chinese are the last in line for all of this stuff.
00:43:35.000And if you have a food or an energy crisis, or God forbid, both at the same time, on top of a health crisis, on top of government incompetence, there is no way a central government holds together in that sort of environment.
00:43:47.000Now, like I said, Chinese history is rich with ways that can all fall apart.
00:43:52.000Oftentimes, it's based on having this hyper-centralization and an incompetent leader.
00:43:56.000Or an incompetent leader cadre, maybe, is a better way to phrase that.
00:44:20.000And then the cities of the coast in the south, your Shanghai, your Fujian, your Guangzhou, your Hong Kong, they basically become independent city-states and integrate with foreign powers primarily in order to get food.
00:44:34.000And if you look back at the last 14 centuries, for almost that entire period until 1945, the city-states have been dependent upon foreigners to keep themselves alive.
00:44:44.000So we're really just reverting to a historical mean here.
00:44:50.000Now, one of the things that's really disturbing to the West is watching what's happened to Hong Kong.
00:44:55.000That Hong Kong has essentially been taken over by the CCP and they've imposed their rule of law on people that had existed in more or less a westernized democracy.
00:45:33.000Did they have an understanding of this collapse or is it just because of Xi's power over everyone that none of this gets discussed so there's no planning?
00:45:41.000This is one of the beautiful things about authoritarianism is they start telling stories and eventually they believe them.
00:45:50.000Chinese academics as recently as 10 years ago were very, very aware of this and it shaped government policy.
00:45:58.000They wanted to make sure that the Democrats, little d, in Hong Kong didn't get too uppity.
00:46:05.000They tried to make sure that there were people from the South on the Politburo.
00:46:08.000But as we've gotten into a more ossified and centralized decision-making system, all of the lessons of the past are going away, and it's all about central control.
00:46:16.000And once again, because this is another trend that pops up in China over and over again, they're forgetting their own history.
00:46:23.000But China has always been thought of as a country, at least the narrative has always been that they plan long game.
00:47:02.000That's as good as it's going to get because there is no trade option out of this without the United States.
00:47:08.000What do you think the world looks like in 10 years?
00:47:11.000I think we'll have a system of regional trade where you've got certain regional powers who have actually benefit from the environment.
00:47:21.000So one of the fun things about the United States is that we've got more navigable waterways than everyone else in the world put together, about 13,000 miles.
00:47:28.000And it's about one-tenth the cost to move things by water as it is to move it by truck.
00:47:33.000So, with that sort of environment and ocean moats, the United States is an economic power, whoever is in charge.
00:47:40.000I mean, we've had decades of bipartisan effort to try to screw this up, and we haven't pulled it off yet.
00:48:30.000And then Japan is kind of a consolation prize because they've managed to cut a deal with both the American right and the American left and get themselves invited into kind of an American friends and family plan.
00:48:41.000So you get these spheres of influence that don't necessarily cooperate or compete with one another but are kind of in their own little worlds.
00:48:50.000And anything outside of those spheres of influence is probably a territory that is not very economically viable, and most of them don't have demographic structures that are sustainable at all.
00:49:16.000So what happens to them if they don't?
00:49:18.000Well, I mean, this is one of the wild things and the hard parts of my job is we have never faced a demographic collapse that wasn't caused by war.
00:49:29.000The closest would be the Black Plague.
00:49:30.000But the Chinese are going to lose a greater percentage of their population in the next 20 years than Europe did during the Black Plague.
00:50:49.000You're selling to locals, and your supply chains are simpler and safer and shorter, and you're largely become immune to shocks beyond the horizon.
00:51:06.000Well, one of the things that came up during COVID was our understanding, really for the first time, of the supply chain and what happens when it gets cut off.
00:51:16.000When medicine, so much medicine is produced in China, so many computer chips, so many different things are made over there, that there's been a real conversation about the need to have all that stuff here and for the United States to be self-sustaining.
00:51:33.000With the inflation—I mean, I don't want to come across as a partisan here, but the Inflation Reduction Act, while from an inflation point of view, is ridiculous.
00:51:41.000There's nothing about that that addresses inflation.
00:51:43.000It did put together a nationalist economic policy that we probably did need in terms of pushing the re-industrialization on some specific sectors.
00:51:52.000It'll probably be the first of a series of things that are coming.
00:51:56.000And a lot of this stuff is not particularly complicated.
00:53:12.000To be perfectly blunt, for that, we've got Mexico, and they're great at it.
00:53:17.000The American-Mexican trade relationship is already the largest in the world, and they're going to be our largest trading partner moving forward for at least the next 30 years, probably a lot more.
00:53:55.000This is not something I'm an expert at.
00:53:56.000But most of the people that I've seen who have done the assessments suggest that any gain in terms of law enforcement and criminal activity would be lost in terms of work days and sickness.
00:54:06.000So from a purely economic point of view, at best it looks like it might be a wash.
00:54:11.000So the legalization of cocaine, in your opinion, would cause more use and more problems?
00:54:39.000Like cocaine, fentanyl deaths are very high.
00:54:41.000Well, then you're talking about a regulatory issue.
00:54:43.000And just keep in mind that whenever you move something in from an illegal to a regulatory point of view, there is a, how should we call this, an adjustment process.
00:54:50.000So I live in Colorado now, which was the first state to legalize pot.
00:54:54.000And what we discovered was that, yes, you solve some problems and you bring a lot of money in for the government.
00:55:01.000But it has criminalized a lot of economic activity in Colorado because think about what happened with pot.
00:55:08.000It's still controlled from a financial point of view at the federal level.
00:55:25.000So what we're going to do is we're going to Hire out a bunch of armored cars and trucks, and we're going to send these to these pot dispensaries after hours.
00:55:34.000And with armored guards, we're going to come in and we're going to take all your cash.
00:55:36.000We're going to spray a lot of Febreze on it.
00:55:38.000We're going to take it back to the Federal Reserve building.
00:55:40.000We're going to count it and give you a digital deposit.
00:55:44.000The Sinaloa cartel is like, whoa, whoa, whoa, whoa, whoa.
00:55:57.000And so now they are laundering their money through the pot industry of Colorado.
00:56:03.000And it's generated just a different problem.
00:56:06.000This is a gentleman named John Norris, and he started out his career as a game warden, a guy who checks fishing licenses and stuff.
00:56:14.000And along the way, he discovered that because of the legalization of marijuana in California, they decriminalize it to the point where growing it is a misdemeanor.
00:56:25.000And so people are growing it on federal land, on state land.
00:56:29.000And so these state forests In federal forests in California are filled with cartels.
00:58:50.000So do you anticipate that happening with Mexico?
00:58:53.000Mexico is, to be perfectly honest, really early in this process.
00:58:57.000The challenge we're seeing in Mexico right now is that the, air quotes, good cartel, the one that saw drugs as a business, is being broken up.
00:59:37.000The guy who died or got captured yesterday was his son, one of the Los Chapitos.
00:59:41.000And his cartel as a result is fracturing because his leadership's gone.
00:59:46.000The replacement cartel is Jalisco New Generation.
00:59:50.000They're led by a former Mexican military officer who thinks that rather than don't shit where you sleep so that the people on your side, whenever you move into a town, you shoot it up.
01:00:26.000El Chapo and the Sinaloa became the largest drug trafficking organization in America under the Obama administration.
01:00:33.000And one of the reasons our birth rate went down so far so fast is they basically either co-opted or killed American gangs.
01:00:41.000So they killed the people who were doing the killing.
01:00:43.000Not a lot of Americans got killed after that.
01:00:48.000All of the other cartels control the access points in the United States, but Jalisco New Generation now is challenging every single one of them, trying to break through.
01:00:55.000And if they do, and they bring their business acumen, if you will, north of the border, they're going to start killing white chicks named Sheila in Phoenix, and then we're going to have a very different conversation in this country about the drug war and about trade with Mexico.
01:01:09.000So when you say that they've killed the gangs, like in what way?
01:01:13.000Because that is an interesting thing that you don't hear a lot about American gangs anymore.
01:01:18.000Well, that's because they're not there to the same degree.
01:01:20.000So the Sinaloa, they co-opted the Hispanic gangs, especially the Mexican gangs, because there wasn't a language barrier there.
01:01:27.000And they really targeted and gutted a lot of the African-American gangs.
01:01:31.000They took over drug smuggling and distribution from them to deny them income, and then they just shot a lot of people.
01:02:34.000He used to work for the government in Mexico to fight off the cartels, and now he's made his way to America, and he does a great job of highlighting all this stuff.
01:02:46.000One of the things he was showing is they were using.50 caliber rifles to try to shoot down planes yesterday.
01:02:54.000I mean, what the fuck is going on over there?
01:02:56.000I mean, it seems like we concentrate so much on these conflicts that are happening all around the world, and there's a massive one happening in a place where we could walk to.
01:03:06.000It's the disintegration of the Sinaloa cartel.
01:03:09.000So back in 2019, the Los Chapitos, I can't remember his name.
01:03:14.000I keep on a St. Octavia, and that's not it because that's a girl's name.
01:03:16.000Anyway, it begins with an L. He was captured in 2019 and they weren't able to get him out of town fast enough.
01:03:25.000So all of his homies basically got together with assault weapons and descended upon the police units that did it and they were forced to let the guy go.
01:05:25.000And so that is where Amlo seems to be focusing his efforts.
01:05:29.000And then you've got what's left of the Zetas and the Gulf cartels, which is a very Twilight 2000 dog-eat-dog world out in eastern Mexico, which everyone's just kind of ignoring because it's not strategic.
01:05:42.000But it appears—and I don't want to oversell this because Amelow's clearly making this up as he goes— It appears that they think if they can put a pinch in the income, that maybe they can turn Sinaloa into the next Zetas and just break it apart.
01:05:58.000I don't think that's a very good plan, but it's better than what they've been doing for the last two and a half years.
01:06:03.000And what's worst case scenario with Mexico?
01:06:05.000Worst case scenario would be if Jalisco new generation penetrates north of the border and it changes our political discussion to be very anti-Mexico.
01:06:14.000One of the great achievements in my opinion of the Trump administration is convincing America's hard right that Mexicans are part of the family.
01:06:23.000And taking one of the biggest looming racial issues in the United States and just dissolving it.
01:06:28.000If Americans start to think of Mexicans as drug runners again, regardless of why, that damages our most productive trading relationship and our most brilliant opportunity for our future right out of the gate.
01:06:41.000But what is the worst case scenario in terms of the cartels overwhelming the Mexican military?
01:06:48.000Because it does seem they have unlimited- You're asking all the fun, cheery questions.
01:06:56.000Our advantage with Mexico so far is because they haven't had to fight a war in a long time, that the military is not particularly competent, but it's still armed.
01:07:04.000And so when you bring it into the system, they hit with a punch that compared to the normal local security services is really impressive.
01:07:11.000But every time an armed group of the state has been brought into the fight, the cartels have found a way to corrupt it.
01:07:19.000And if you do that to the military, we could have a very real problem here.
01:07:25.000Think Chicago at the height of Al Capone, but on a national scale.
01:07:32.000We're not there yet, but that would be the concern.
01:07:35.000Now, how much effort is the United States putting to mitigate this and how, I mean, how much policy is directed towards trying to steer this in the right direction?
01:07:46.000This is one of those where being a border country is a negative because, you know, we may be great trading partners and to a degree friends and integrated economically and demographically, but we're always going to be titchy about the other one telling us what to do.
01:08:02.000Trump and AMLO got along great because Trump really never asked anything of AMLO. He said, like, as long as you take steps to limit Central American immigration into the United States, I'm going to be hands off on everything else.
01:08:23.000And AMLO is like a really, really angry Trump.
01:08:31.000And he sees this all as unnecessary challenges to him personally.
01:08:35.000So the relationship between Biden and AMLO is really poor.
01:08:42.000And in that sort of environment, it's been very, very difficult for anyone in the U.S. bureaucracy to have a productive relationship with anyone south of the border.
01:08:52.000So most drug extraditions have stopped.
01:08:54.000Most law enforcement cooperation has stopped.
01:08:57.000Most intelligence sharing has stopped.
01:09:00.000So we're just leaving that and watching it play out?
01:09:03.000Well, because the Mexicans shut the door on us.
01:10:57.000We're going to emerge from this in 10 years in so much of a better place.
01:11:00.000And we're hopefully, within 10 years, it'll probably be more like 15 or 20, be able to then go back and reintegrate with the world and share what we've learned and remake the human condition.
01:11:12.000This is a once, not in a generation, this is a once-in-a-century opportunity to overhaul what being human means.
01:11:21.000And I'm really excited about where this leads us.
01:11:24.000I just wish we could bring more countries with us along.
01:11:27.000Now, is there any possibility of regime change in China that would facilitate this in a more peaceful way?
01:11:36.000I mean, when you've got a one-man government, you're talking a popular uprising with leaders that don't exist to displace an old paranoid guy who has all the guns.
01:11:49.000And how strong is his control over there?
01:11:52.000I mean, how much dissent is there against Xi?
01:11:56.000There's definitely a lot of unhappiness with the system, but because Xi has systematically removed everyone with an opinion or competence, if Xi were to die tomorrow, I don't think there is a replacement system in the wings.
01:12:10.000So if you look back to what happened after Mao died, you had the Gang of Four and you had a period of just absolute chaos until Deng Xiaoping took over.
01:12:17.000But Ding Xiaoping was part of the system.
01:12:20.000Xi is far more paranoid and far more isolated and far more consolidated than Mao ever was.
01:13:02.000And as long as he stays alive, he will maintain power.
01:13:06.000And he will be constantly surrounded by cronies.
01:13:09.000And he has insulated himself from any criticism or any bad news.
01:13:13.000We've been going this way for a while.
01:13:15.000So when Ding took over, he realized that one-man government was awful.
01:13:18.000So he worked out a series of secession in 10-year increments that different parts of the country, different factions would have time in government and rule.
01:13:27.000And then when they were not the ones who were making the big decisions, they'd still be in the Politburo.
01:13:32.000So we got our third generation and our fourth generation in the form of Jiang Zemin and Hu Jintao.
01:13:39.000But Ding realized when he'd set the system up around 1980 that he wasn't going to be there forever and he wasn't going to be able to predict what was going to happen in the 2000s.
01:13:47.000So he told these two factions, you then have to pick a compromise candidate for who comes next.
01:13:54.000And they went with Xi because he's from the south, but his family is with the Maoists, and he had a foot in all camps.
01:14:01.000Well, Xi spent his first five years purging the system of all the other factions.
01:14:07.000And then the second five years of his reign in making sure that everyone realized it was him and him only who was in charge.
01:14:15.000After 10 years of that, there's no one left.
01:14:17.000And so there is no secession plan post Xi.
01:15:35.000How much pushback do you have about these ideas?
01:15:38.000Do you think people think you're full of shit?
01:15:40.000All kinds of people think I'm full of shit.
01:15:44.000I am very sector and goal agnostic in my work, which means I don't really care what your investment strategy is.
01:15:53.000If it doesn't play against demography and geography in a comprehensive way, at best you're hoping that everyone just kind of sways in your general direction.
01:16:01.000And so there's no shortage of people in the room when I'm speaking who get really upset because they have an investment thesis or maybe they've bet their company on something that I just see as a non-issue.
01:16:12.000So, you know, obviously the folks in the crypto world have never liked me and I dropped a video last night about how EVs are just a disaster that aren't going to be with us very much longer and I got some I've gotten some interesting communications because of that one.
01:16:26.000Things like this happen with me with almost every presentation, and last year I gave 179 presentations.
01:17:36.000So how does the government, say of California, justify these mandates when they're saying something like, by 2035, all combustion vehicles must stop being sold in the state of California?
01:17:49.000Let's put the ideology to the side, because I'm not even going to try to explain that.
01:17:54.000I will give a little bit of defense for California, though, because I do consider myself a green.
01:18:00.000I just think of myself as a green who can do math so I don't get invited to any of the parties.
01:18:07.000California's state legislature gives a lot of authority to their state bureaucracy.
01:18:11.000So the bureaucracy will set the goalposts.
01:18:14.000No ICEs by 2035. Knowing that the technology doesn't exist, knowing that the supply chains don't exist, but they will set the goalposts.
01:18:24.000If we get closer to that date, say 2027, and it's apparent that the technology is not proceeding at a pace that will allow that target to be reached, they have the authority already to move the goalposts.
01:18:59.000Yeah, and there's going to be, well, there is a fascinating discussion happening in the environmental community right now because they're being confronted with reality.
01:19:06.000So California and Germany have very similar green tech policies, but the Germans have spent three times as much as California, but are only getting about a fifth as much power.
01:19:17.000Because I don't know if you've ever been to Germany, but the sun doesn't shine in Germany.
01:19:20.000And now with the Russians on the warpath and their clean-ish energy from natural gas going away, they're going back to lignite coal in force.
01:19:29.000It was already their number one source of power.
01:19:31.000The idea that Germany is green is ridiculous because they rely on really, really dirty coal now especially.
01:19:38.000But there's now a conversation going on between the German environmentalists and the Californian environmentalists about why California in relative terms is doing so well at this while Germany is not.
01:19:49.000And the answer is simple geography, but that's never been part of the conversation in the environmental community before.
01:19:56.000They should have had this conversation 15, 20 years ago, but they're having it now.
01:20:01.000And as soon as they come to the conclusion, unwillingly, but they'll get there, that we have to choose where we put our copper and our lithium and our nickel, EVs are not going to make the cut at all.
01:20:14.000Where will the copper and the nickel and where will all that go?
01:20:18.000It'll be focused on the green techs that actually work in the geographic areas where it can be applied.
01:20:26.000So you put solar panels outside of Tucson.
01:20:29.000You put wind turbines outside of Tulsa.
01:20:31.000That works with the technology we have now.
01:20:33.000You do not put solar panels in Connecticut.
01:22:18.000So one of the many, many, many aspects of modernization is that people become more connected but live in smaller units.
01:22:27.000Because as you urbanize, you have fewer kids.
01:22:29.000And that means that people are looking for other ways to belong because the old traditional methods of family and farm aren't as tight as they used to be.
01:22:38.000And so this is much more further advanced in places like Japan or Europe than it is in the United States.
01:22:43.000And when you're looking for social opportunities, politics are a way that can reach across the geographic distances no matter where you happen to be.
01:22:52.000And you can use social media and tech to communicate with people who have a belief system that you find attractive for whatever reason.
01:23:04.000If less informed is exactly the same thing that brought Donald Trump to power because you got people who felt like they were on the outside of a society who all of a sudden could link into one another.
01:23:14.000It's a technology conversation from my point of view.
01:25:01.000It could provide gas alternative amid EV push.
01:25:05.000Porsche said Tuesday that a pilot plant in Chile started production of an alternative fuel as it aims to produce millions of gallons by mid-decade.
01:25:14.000Officials say e-fuels act like gasoline, allowing vehicle owners a more environmentally friendly way to drive.
01:25:21.000Porsche officials celebrated the beginning of the e-fuel production with the filling of a Porsche 911 with the first synthetic fuel produced at the site.
01:25:30.000I am unfamiliar with the chemistry for this one.
01:25:33.000Porsche and several partners have started production of a climate neutral.
01:25:40.000E-fuel aimed at replacing gasoline in vehicles with traditional internal combustion engines.
01:25:46.000The German automaker, owned by Volkswagen, said Tuesday that a pilot plant in Chile started commercial production of the alternative fuel by mid-decade.
01:25:55.000Porsche is planning on producing millions of gallons.
01:26:00.000Yeah, there are some versions of this technology where they're hoping they can get...
01:26:04.000Yeah, so e-fuels are a type of synthetic methanol produced by a complex process using water, hydrogen, and carbon dioxide.
01:26:14.000Companies say they enable the nearly CO2 neutral operation of a gas powered engine.
01:26:21.000Vehicles would still need to use oil to lubricate the engine.
01:26:25.000In the pilot phase, Porsche expects to produce around 130,000 liters of e-fuel.
01:26:32.000Plans are to expand that to almost 55 million liters by mid-decade.
01:26:36.000Around 550 million liters, roughly two years later, the Chilean plant was initially announced with Porsche in late 2020 when the automaker said it would invest $24 million in the development of the plant and the e-fuels partners include Chilean operating company,
01:26:56.000Let me slap some science on that real quick.
01:26:59.000The three base materials, water, carbon dioxide, and oxygen are three of the most stable molecules in the natural world.
01:27:07.000And so to break them apart with electricity to make something else is a massive power suck.
01:27:13.000If you're going to do that with a conventional fuel system like we have in pretty much every part of the world, you're talking about a carbon footprint that does at least triple what we do with gasoline right now.
01:27:22.000The idea would be that if we can do it with green tech, solar in Chile, for example, that maybe we can make that footprint carbon free, or at least carbon neutral, and then use the electricity to generate this stuff in a relatively green way.
01:28:22.000And once we build one of those, then it's probably a 10-year process to build out the manufacturing supply chain to produce them in volume.
01:28:30.000But wouldn't it be wise to start moving in that direction now if you're broadly pro-nuclear?
01:28:36.000The issue is until we solve the fuel problem.
01:29:27.000So is it just that they don't know how to do it or do they have theories on how to do it?
01:29:33.000You have to basically take the rod, you go through a chelating dissolving chemistry process and you separate out the various isotopes of uranium from the plutonium.
01:29:45.000But then what do you do with the plutonium because you have now purified it because of this process.
01:30:22.000I think solar and wind, especially wind, are great in the places where they work.
01:30:26.000Here it says, radioactive waste can be recycled to create diamond batteries.
01:30:29.000Scientists involved an American startup for the development of nanodiamond batteries Are trying to turn radioactive waste into batteries.
01:30:37.000NDB is a perpetual green self-charging battery made from recycled nuclear waste isotope combined with layers of nano diamonds in a battery cell.
01:30:46.000Extremely good thermal conductivity of micro diamonds causes heat removal from radioactive isotopes so the process of generating electricity is fast.
01:30:56.000NDB generates electricity similar to that obtained from solar panels, but uses radioactive decay energy instead of sunlight.
01:31:04.000An NDB battery usually consists of three main components, an isotope, a converter, and a storage unit.
01:31:10.000Due to the delay, decay rather, isotope radiation is transformed into electrical energy in the converter.
01:31:17.000The storage unit accumulates energy for future use.
01:32:46.000I mean, if you were really well-versed in this technology, do you think this is possible?
01:32:53.000There's always a chance that if you prevent me with the facts, I'm going to change my mind, but radioactive decay is not something you fuck with.
01:32:59.000You're certainly not going to have it on your person.
01:33:01.000So you think this is all just pipe dreams?
01:33:03.000I think in that interpretation it's a pipe dream.
01:33:06.000Because think about what would happen if this is real.
01:33:09.000And you can get a sizable one of these like for a car.
01:33:11.000All it takes is a pickaxe and all of a sudden somebody has a dirty bomb.
01:34:03.000I'm an equal opportunity bubble popper.
01:34:06.000You must be a real problem at parties.
01:34:08.000When someone starts talking out of school.
01:34:09.000I bring the burb and everybody gets over it.
01:34:15.000So if you were the king of the world, how would you navigate us out of the situation?
01:34:21.000Oh, like the whole thing, not just the nuclear waste issue?
01:34:24.000Well, let's start with the nuclear waste issue.
01:34:26.000We need a central repository where the stuff can be processed and the plutonium can be disposed of or at least incarcerated forever.
01:34:33.000That is the idea behind Yucca Mountain.
01:34:35.000But because the U.S. is a federal system with the state and the local authorities having as much power as the federal, it's been locked up in courts ever since it started.
01:34:43.000Because nobody wants that stuff in their neighborhood.
01:35:10.000I'm just saying that's the easy solution.
01:35:12.000Really, we need a place like Northern Nevada that the federal government just buys and shoves it through.
01:35:19.000And if they did that, do you think that's feasible?
01:35:22.000I think that's what other countries who have experienced this problem have done.
01:35:27.000There aren't a lot of them because most of the nuclear industries of the world are linked into the American system when we don't allow it because we don't want the plutonium processing.
01:35:46.000And it would probably take Congress literally ramming it through the courts.
01:35:50.000They'd have to change the law so that the states can't fight it and that triggers a legal fight, which in the United States, as we all know, we love to do.
01:35:56.000But the conversation about nuclear has not been very positive in this country.
01:36:25.000But as you go higher and higher and higher, you can spread that out.
01:36:29.000And I would argue a third of the population of the United States can get at least a third of their electricity from wind if it's done at scale.
01:36:47.000The big problem with solar is not just the efficiency though, it's the timing.
01:36:52.000Peak demand for electricity in most places is after sunset in the winter.
01:36:58.000And solar will never be part of that solution.
01:37:01.000Right, because sun's not out at night.
01:37:03.000So we need a lot of money into tertiary education and research grants to find a better battery than lithium.
01:37:10.000Because we don't want something that can store power for an hour, two, three, four hours.
01:37:13.000We need something that can store power for a week, a month.
01:37:18.000We're never going to do that with lithium.
01:37:19.000And is there anything on the horizon that holds promise in that regard?
01:37:23.000There's nothing that at this point is promising that has reached the prototype stage.
01:37:28.000There are things like flow batteries and iron batteries that, you know, the chemistry looks intriguing, but none of it's been tested out in a meaningful way yet.
01:37:36.000So if you were going to guide our energy policy...
01:37:40.000I would say let's invest a trillion dollars in material science solutions before we start applying them at scale when we know already that they don't work.
01:38:05.000Spending it on that, at least you have the promise of possibly coming up with some sort of a feasible solution.
01:38:12.000I'd rather see us spend a trillion dollars on figuring out what might work rather than us spending a trillion dollars on things that we know already don't work.
01:38:29.000Don't we have a problem with our topsoil, where there's only like 60 seasons left of the topsoil?
01:38:34.000Yeah, I've been hearing that for 40 years, and it hasn't happened yet.
01:38:37.000I don't mean to suggest that soil fertility isn't an issue, but when it comes to crop rotation and the fact that your fertilizer is made within North America, It's a manageable issue.
01:38:46.000I mean, we're not Brazil where there's zero soil fertility.
01:38:49.000And if something happens to one season of fertilizer supply, you just don't grow anything.
01:38:57.000So they have to basically rip out the vegetation, poison the land with lime to get rid of the acid, and you get left with something like beach sand, and then you just throw fertilizer on it.
01:39:06.000And without the fertilizer, nothing grows.
01:39:07.000Now, with the fertilizer, you can get two, maybe even three crops.
01:39:10.000So it's not a horrible business model, or at least it hasn't been to this point.
01:39:14.000But that was before the Ukraine war and Ukraine is where we get a lot of our federal Russia specific Russia So what would you advise us to do about that?
01:39:26.000There's not a lot we can do about that.
01:39:29.000There are things that you can do with genomics and with precision agriculture to more target the inputs to each individual plant.
01:39:40.000It probably can't work with wheat because, you know, if you see a corn stalk, you do a digital photo of it, the computer decides whether it's hungry or thirsty or has bugs and it squirts it appropriately.
01:40:57.000But the reason that these parts of the world weren't in the first round wasn't just ideology, it was that their geography isn't as good.
01:41:04.000So Brazil's land sucks without fertilizer.
01:41:06.000The Russian territories has very low productivity, and China has some of the worst land in the world.
01:41:11.000It took globalization and the access to all of the resources of the globalized world in order to make these places do very well from an agricultural point of view.
01:41:40.000If we do start a significant build out of the fertilizer system, it takes about three years to bring new nitrogen or phosphate systems online, but it takes like 10 years for potash.
01:41:50.000Now, the Canadians, after the Russians, are the world's leader, and they have started.
01:41:55.000They've seen the writing on the wall, and they're trying to speed it up however they can, but they still think they're going to need seven years.
01:42:02.000Potash is a mineral that you mine, and I'm grossly oversimplifying here, but you basically crush it and dissolve a little bit of acid and turn it into a pellet form that you can distribute on a field.
01:42:19.000Potash is potassium, and then phosphate and nitrogen.
01:42:22.000Nitrogen, as a rule, is made out of natural gas, and the United States is the world's largest producer of natural gas, and we're in the process of building out our nitrogen capacity in part because of this.
01:42:32.000And when you say winners and losers, what do you anticipate happens to the losers?
01:42:37.000Well, I mean, if you only have enough fertilizer to support a half a billion people, that means you get to choose who gets it.
01:43:23.000We can't support our current population without industrialized inputs for agriculture.
01:43:29.000And without those inputs, on average, yields will drop by more than half.
01:43:33.000And, like, what kind of timeframe are we talking about until this global collapse?
01:43:38.000That, of course, is the billion-dollar question.
01:43:42.000Because of what's going on in China, we don't know, because the decision-making process has become so opaque.
01:43:47.000But the United States is pushing the trade dispute issue to the hilt, which is a really big problem if you're concerned about global stability.
01:43:54.000But if you think it was all going to break down anyway, there's something to be said for pulling the cord earlier.
01:44:00.000The Russian system could break tomorrow or at that point.
01:44:05.000And that is not just wheat, that is barley, that is potash, that is nitrogen, that is ammonia, that is lithium, that is nickel, that is copper.
01:44:18.000And the risk here is that something will fall out that will then domino.
01:44:25.000And I think the issue to watch for that this coming year is the energy question.
01:44:31.000Because now that we have insurance companies saying just no, we're not going anywhere near the Russian space at all.
01:44:36.000It doesn't take much imagination for someone to think that something's going to go wrong in a war zone where energy has already been weaponized.
01:44:44.000And once Russian stuff goes offline for whatever reason, pressure builds up back into the pipe all the way to Siberia, and then the wells freeze shut and you have to re-drill them.
01:44:52.000And the last time it took the Russians 30 years to re-drill everything.
01:44:56.000So when we lose Russian crude this time, it's gone for good.
01:45:04.000And so if you look ahead 25 years from now, how do you see the world?
01:45:10.00025 years from now, we're going to be on the other side of this.
01:45:13.000So we're going to see a significant breakdown in a lot of systems over the course of this decade into NEXT. But after that, my bet is we're going to see a number of technological advantages be developed in the United States and within its group that allow us to do more with less and which transform the economy into a more sustainable footing.
01:45:33.000We'll also have had 30 years, 25 years, for this demographic situation to play out, and we will find out what is next.
01:45:40.000One of the big mysteries right now is we've never, ever in any era had a country with more retirees than working age population.
01:45:48.000We don't know really what that leads to.
01:46:32.000And I've heard you talk about the generations that are upcoming in this country and not with a very rosy perspective.
01:46:41.000You have a lot of concern about just the temperament, the ideology, the way these kids have been raised that doesn't lead itself well to adapt to this looming future.
01:46:55.000Well, I'm a Gen Xer, so I'm always going to belittle and look down on the millennials, mostly because they deserve it.
01:47:01.000My big concern moving forward, though, is not so much the millennials, because the millennials exist in large number.
01:47:07.000They're providing the consumption ballast of today, the investment ballast of tomorrow.
01:47:11.000They're, to be perfectly blunt, going to save us all.
01:47:14.000My concern is with the Zoomers, the younger kids, kids 22 and under.
01:47:32.000Well, their parents were Gen X. We were a small generation, too.
01:47:35.000So a small generation generates a small generation, and they were raised in an era of digitization.
01:47:41.000So an iPad was part of their childhood experience, which means they're a little bit more socially awkward, and they date less, and they are less comfortable around other people.
01:47:51.000So they are likely to also generate very few children.
01:47:55.000Now, this is something that the Germans and the Chinese and the Italians have been dealing with for 70 years, smaller and smaller generations, but this is new for us.
01:48:47.000And as we have seen, if you want it decentralized and not under government control, it is a haven for fraudsters.
01:48:53.000And now it is in the process of going to...
01:48:55.000Zero, except for Bitcoin, which will probably go negative, because if we're moving into a world with carbon taxes, you have to take into account the energy that it took to produce it in the first place.
01:49:07.000Well, that's certainly playing out with FTX, where you're finding out that it's a house of cards.
01:49:14.000Do you feel like that's just sort of opened the door for people to examine all of crypto now?
01:49:58.000Well, the people who really like crypto are convinced that it's the currency of the future, and that a decentralized ledger is the way to go, and that anything that is controlled by a government entity is by definition a negative, and if it's done by the private sector freely, it will be better.
01:50:14.000And that's just not how currency works.
01:50:16.000Currency is a method of exchange and a store of value.
01:50:19.000And for that, there has to be a degree of trust and you have to have it managed in terms of volume.
01:50:25.000One of the craziest things about Bitcoin is that there will never be more than X number of units of Bitcoin.
01:50:32.000Well, by default, that means it can't be used for trade, because the whole idea of economic activity is that there's expansion, which means you need more currency to lubricate and manage that expansion.
01:50:44.000If currency is locked into a specific number, you get monetary inflation, and that is one of the fastest ways to destroy an economic model.
01:50:52.000So because of the lack of Bitcoin, because there's a certain controlled number, the only thing that can happen is Bitcoin becomes more expensive.
01:51:07.000The alternative is you have some private dude out there who generates the coins on a whim.
01:51:12.000How is that different from the monetary reserve or the monetary authorities that we have at the Federal Reserve, except for the point that there's no accountability?
01:51:47.000No, I was reading, like, mainstream articles about the United States confirming that they're trying to develop a centralized digital currency.
01:51:53.000Now, if you're talking about a digital exchange system, then I can see that.
01:51:58.000See if you can find something like that.
01:51:59.000But something separate from the USD? No.
01:52:04.000I only looked at the headlines of it because someone was sending it around and I didn't have the time because it was yesterday.
01:52:10.000But this idea of a centralized digital currency is something that Maxine Waters talked about.
01:52:16.000She said that we have to do that in order to compete with China.
01:52:19.000Maxine Waters is not exactly the brightest person in Congress.
01:52:24.000Yeah, I know it's a low bar, but she passes it.
01:52:26.000I'm just pulling up to see if this is what you're talking about.
01:52:30.000Digital dollar is something that makes sense.
01:52:32.000The idea of smoothing the connections within the plumbing of the financial system or moving beyond a physical currency at all, that all makes sense.
01:54:20.000For those who thought the United States was behind the digital currency space race, the news was welcome.
01:54:25.000And a subsequent white paper on the project named Project Cedar, the New York Fed, explained that it has already completed stage one of testing and proved that international currency transactions can be done both quickly and safely through the blockchain.