The Joe Rogan Experience - Joe Rogan Experience #1921 - Peter Zeihan

00:00:12.000 Hello, Peter.

00:00:13.000 What's going on, man?

00:00:14.000 Nice to meet you.

00:00:15.000 Right back at you.

00:00:16.000 It has been a crazy year.

00:00:18.000 Yeah, it's been a crazy year for everything, right?

00:00:21.000 Yeah, it's one thing when you talk about how the world's going to be coming to an end.

00:00:24.000 It's quite another when it's like here and now.

00:00:26.000 Yeah.

00:00:27.000 Well, you've been working on this type of material, this subject matter for quite a long time.

00:00:33.000 So tell everybody your background.

00:00:35.000 Let's see.

00:00:36.000 My background is in economic development.

00:00:37.000 It'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.

00:00:44.000 And then I worked actually here in Austin at a company called Stratfor for 12 years, and I was their sole generalist.

00:00:51.000 So 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.

00:00:59.000 Well, your perspective on...

00:01:09.000 I don't know.

00:01:19.000 I don't know.

00:01:24.000 I don't know.

00:01:28.000 You 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.

00:01:37.000 No, not even remotely.

00:01:38.000 The 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.

00:01:47.000 Everything has to be moved by rail.

00:01:48.000 I think we're good to go.

00:02:06.000 Unfortunately for Ukraine, there are two of those access points on the other side of Ukraine.

00:02:12.000 So 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.

00:02:21.000 Unfortunately for them, in the 30, 35 years since the Soviet system collapsed, the Ukrainians have developed an identity.

00:02:28.000 And now they would like to be something other than a road bump.

00:02:33.000 So 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.

00:02:44.000 There is something to be said for that.

00:02:47.000 You just have to put it into context to really understand it.

00:03:03.000 You 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,

00:03:19.000 Kazakhstan, all the stands.

00:03:21.000 Basically, the Russians, in order to feel safe, they have to be able to occupy total populations that are twice of their own. 0.97

00:03:28.000 And I'm sorry, but that's just not feasible.

00:03:30.000 So, you know, technically, the people who claim that NATO provoked this are correct.

00:03:34.000 NATO can't have what it wants in order for Russia to feel safe.

00:03:38.000 But for Russia to feel safe, they've got to occupy over 180 million people. 0.75

00:03:45.000 And that was never part of the game.

00:03:48.000 So what do you think they anticipated was going to happen when they started the war?

00:03:53.000 Well, I don't think it was just the Russians who anticipated it.

00:03:56.000 Ukraine, the last war in 2014, basically rolled over.

00:04:00.000 They proved to be militarily incompetent. 0.98

00:04:02.000 They were corrupt. 0.99

00:04:03.000 They couldn't put up any sort of resistance. 0.96

00:04:05.000 Crimea fell in just a matter of a couple of days.

00:04:08.000 And 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.

00:04:15.000 Now, 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.

00:04:25.000 But Ukraine is still a flat country and the Russians are still one of the largest militaries in the world.

00:04:30.000 So even I was saying that within six months to a year, this was all going to be over.

00:04:35.000 But 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.

00:04:51.000 And 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?

00:05:05.000 Well, there's two paths here.

00:05:07.000 And the problem is we haven't seen either side fight in their full glory yet.

00:05:11.000 And until we have that fight, we really can't judge.

00:05:14.000 In their full glory, like meaning?

00:05:15.000 Well, the Ukrainians are the underdog, but they're in the process of rapidly arming with more and more sophisticated equipment.

00:05:23.000 And 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.

00:05:33.000 And there will be 60,000 Ukrainian troops that have trained in NATO countries with more advanced equipment back in the field.

00:05:40.000 So, you know, we get our Athens, if you will.

00:05:42.000 On the other side, the Russians will finish their second mobilization, and they will have at least another half a million men in the field.

00:05:50.000 Now, 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.

00:05:59.000 Russian.

00:06:00.000 There's nothing about this war that is unique in Russian history. 1.00

00:06:04.000 The first year is always an absolute shit show. 0.99

00:06:07.000 And then the Russians throw bodies at the problem until it goes away. 1.00

00:06:11.000 And in half of those wars, the Russians ultimately win.

00:06:14.000 So 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. 0.85

00:06:27.000 Now, it'll still take time.

00:06:29.000 Because 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. 0.87

00:06:37.000 Or 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.

00:06:50.000 And 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.

00:06:59.000 Jesus.

00:07:01.000 Yeah.

00:07:02.000 Welcome to Russia. 0.95

00:07:05.000 So, how do you think it goes when May rolls around?

00:07:09.000 Yeah, ask me again in May.

00:07:11.000 Right now, the balance of forces clearly are edging more and more towards the Ukrainians.

00:07:16.000 They've proven to be more adaptable.

00:07:18.000 When 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.

00:07:25.000 And 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.

00:07:32.000 Anyway, armored vehicles that have some serious firepower are going to be coming now.

00:07:35.000 The Bradleys from the United States specifically.

00:07:38.000 And that is a tool that the Ukrainians have not had.

00:07:43.000 So every time the Ukrainians have achieved a tactical breakthrough, they can only push as far as their infantry can run. 0.77

00:07:50.000 Now their infantry is going to be mobile.

00:07:52.000 And in a war of movement to this point, the Russians have proven that they're absolutely incompetent. 0.95

00:07:59.000 And why is that? 0.76

00:08:02.000 Part of it's graft.

00:08:03.000 The guy who is the defense minister, Shoigu, he's arguably one of the least competent people on the planet.

00:08:10.000 But he's a friend of Putin, and so he's been able to milk the Defense Department for everything.

00:08:15.000 Best guess is that he has taken a third of the budget himself for procurement, and his flunkies have taken another third.

00:08:21.000 So very little gets to the military itself.

00:08:23.000 So it's corruption.

00:08:24.000 Huge corruption.

00:08:25.000 And that means no training.

00:08:27.000 Or if there is training, it's basically a parade.

00:08:29.000 And when you're using a force that can only supply by rail, you're completely dependent upon trucks for local distribution.

00:08:38.000 And that's why the Ukrainians went after the trucks with all the javelins that they got early in the war. 0.89

00:08:44.000 They didn't really go after tanks.

00:08:45.000 They went after the trucks.

00:08:46.000 And they've destroyed roughly 2,000, maybe 2,500 of them.

00:08:50.000 And 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.

00:08:59.000 And think of a Scooby-Doo van, now fill it full of artillery shells.

00:09:03.000 You know, every time you hit a bump, and that is their primary ammo supply system now.

00:09:08.000 Because 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.

00:09:20.000 Now, for a lot of people, the big fear is that if Russia starts really getting desperate, then they use nukes.

00:09:28.000 Sure.

00:09:28.000 And it would have to be very desperate.

00:09:30.000 I have never...

00:09:32.000 I've not been as concerned about the nuclear question as some folks because there's really only four scenarios.

00:09:40.000 Scenario one is the Russians consider throwing one against the United States.

00:09:43.000 But 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.

00:09:51.000 We're listening to his phone calls.

00:09:52.000 We're reading his emails.

00:09:53.000 And so he now knows very clearly that if he throws a nuke at the United States, we're going to throw one not at Russia.

00:09:59.000 We're going to throw one at him.

00:10:04.000 We're good to go.

00:10:16.000 There may have been a case last year for nuking Poland and Berlin and Stockholm in order to disrupt the weapons flows into Ukraine.

00:10:26.000 But after the battles of Izium and Kyrson, the Ukrainians have more Russian gear now than they know what to do with.

00:10:32.000 It's going to take them months to bring that all online.

00:10:34.000 There's a lot of deferred maintenance that needs to be done.

00:10:36.000 And so disrupting the weapons flows no longer is a critical issue because the weapons are already there.

00:10:41.000 So 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.

00:10:55.000 In that scenario, where the very existence of the Russian government is threatened, that would probably change the math.

00:11:01.000 But 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.

00:11:10.000 We're providing them with the intelligence and most of the steps of the kill chain.

00:11:15.000 Without that, the weapons are of limited usefulness, especially at long range.

00:11:20.000 And the Ukrainians have no desire to rupture that relationship.

00:11:23.000 So we're talking about a theoretical that is at a minimum seven months away, probably further.

00:11:30.000 This whole thing is such a terrifying conflict.

00:11:34.000 Being 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. 0.71

00:11:50.000 Oh, we can do better than that.

00:11:51.000 We can make you a lot more depressed.

00:11:52.000 Okay.

00:11:52.000 So let me give you two things.

00:11:54.000 Number one, the Russians are relatively casualty immune. 0.99

00:11:58.000 They fight in an area where they fight with numbers.

00:12:00.000 They've never been technologically advanced versus their peers.

00:12:03.000 They've always just thrown bodies at it.

00:12:05.000 So there has never been a conflict in Russian history where they have backed out without first losing a half a million men.

00:12:12.000 We're at about 100,000 now.

00:12:14.000 We have a long way to go before the Russian military breaks.

00:12:17.000 So the Russians have lost roughly 100,000?

00:12:20.000 That's the best guess.

00:12:21.000 How many Ukrainians have been lost?

00:12:23.000 Probably about a third of that.

00:12:24.000 But that is a third in terms of military forces.

00:12:28.000 In terms of civilians, we really don't know.

00:12:30.000 It could be as much as 250,000 at this point.

00:12:33.000 We just don't know.

00:12:33.000 Really?

00:12:34.000 Well, the data exists on the other side of the front line.

00:12:38.000 All we know are about what has happened in the territories that have been liberated.

00:12:41.000 And 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.

00:12:57.000 And when we've had additional liberation since then, it corroborates that general assessment.

00:13:06.000 So, that's piece one you can be a little depressed about.

00:13:08.000 Piece two.

00:13:09.000 The Russians see this as an existential fight for their survival.

00:13:13.000 They feel if they don't get those blocking positions, they're doomed.

00:13:15.000 And they're probably right.

00:13:18.000 But we now know that the Russians are fighting so badly.

00:13:21.000 They're doing much worse than the Iraqis did in 1992. Really? 1.00

00:13:44.000 So 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.

00:14:01.000 So there's plenty of really solid reasons to root for the Ukrainians on this one. 0.69

00:14:07.000 Jesus Christ.

00:14:08.000 Now, when this whole thing broke out, what do you think the Russians expected Ukraine to just give up?

00:14:18.000 Absolutely.

00:14:19.000 That's what happened in 2014 for the most part.

00:14:21.000 And what are the possible scenarios for Russia?

00:14:25.000 I mean, it seems like they're completely committed to this.

00:14:29.000 They are.

00:14:30.000 And if they don't win it?

00:14:32.000 The 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.

00:14:47.000 Anyway?

00:14:48.000 Yeah.

00:14:49.000 They've had a series of big melon scoops out of their birth rate throughout the history.

00:14:54.000 World War I, World War II, the collectivizations under Stalin, Brezhnev's mismanagement, Khrushchev's mismanagement, the post-Cold War collapse.

00:15:03.000 And a lot of these stack on top of each other.

00:15:05.000 And the biggest one stacked on top of the post-Cold War collapse.

00:15:08.000 So there are more Russians in their 50s than their 40s and their 30s and their 20s than teens.

00:15:13.000 And then they lie about the data of the teenagers on down.

00:15:17.000 Which means that there aren't enough Russians that have been born in the last 30 years to carry the ethnicity forward much farther.

00:15:25.000 And 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.

00:15:36.000 Have they really thought about this in that term?

00:15:38.000 Yeah.

00:15:40.000 One way or another, this is the end of Russia. 0.92

00:15:43.000 The question is whether it dies in the long term on their terms or in the shorter term when they're completely unmoored.

00:15:49.000 Because if they fail to secure those borders, then they've got a 2,000-mile open border with countries they consider to be hostile.

00:15:56.000 And they have no way of moving troops around in a way that would allow them to defend it.

00:16:00.000 They'd just be waiting for somebody to come over and knock them over. 0.74

00:16:03.000 You believe that they're aware of this, that they can't survive past 2050, 2070, whatever it is?

00:16:09.000 I 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.

00:16:16.000 So from my point of view, not only did the war always have to happen, it always had to happen by now.

00:16:24.000 Jesus.

00:16:25.000 Now, 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?

00:16:44.000 What caused all this to be so poorly managed?

00:16:47.000 Well, Russia has always been poorly managed and authoritarian.

00:16:51.000 But under Putin, it's taken a much darker turn because of the nature of the end of the Cold War.

00:16:59.000 If you remember back to 1982, there was a coup in the Soviet Union.

00:17:05.000 And Chernomirdin and Andropov and Gorbachev were FSB, then KGB agents, who basically overthrew the old system of Brezhnev and took over.

00:17:15.000 Because they were the only ones who really had a full understanding of what was going on.

00:17:18.000 They controlled the information.

00:17:20.000 They were not able to save the system, and so it broke.

00:17:23.000 And 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,

00:17:38.000 so he's gone through and purged what was left of the KGB, FSB, of anyone who has personal ambitions to succeed him.

00:17:45.000 We're left with an entire political elite of only about 130 people.

00:17:50.000 And Putin has removed anyone who has leadership ambitions.

00:17:53.000 Now, they all see the world the same way.

00:17:57.000 They all kind of agree with Putin on what's at stake here.

00:18:00.000 But it does mean that when this generation is gone...

00:18:04.000 This is it.

00:18:05.000 This is all the leadership talent that the country has.

00:18:09.000 So because of his sort of top-down approach, he's eliminated all the possibility of future leaders in some way.

00:18:18.000 Even if Russia did have a replacement generation coming up and it doesn't, he's taken steps to make sure that they can't challenge him. 0.94

00:18:25.000 And so any sort of leadership talent has left or been killed.

00:18:29.000 What do they hope happens?

00:18:32.000 I mean, when everything's going so poorly, what do we know about how they're assessing things?

00:18:39.000 Well, they're obviously not thrilled with the way that things are.

00:18:41.000 They're using one bit of propaganda after another to justify it, saying that we're fighting all of NATO or demons are involved.

00:18:48.000 That was my personal favorite.

00:18:49.000 Demons?

00:18:50.000 Oh 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. 0.99

00:18:58.000 They changed the line from that these are all Nazis to these are actually gay demons. 0.98

00:19:03.000 Gay? 1.00

00:19:03.000 Gay demons, yes. 1.00

00:19:05.000 What? 1.00

00:19:05.000 Yeah, Russian propaganda is a hoot. 1.00

00:19:08.000 Please explain the gay demons. 1.00

00:19:09.000 Oh, I don't know if I can explain it. 0.97

00:19:11.000 I'm just saying that this is the official line right now, that we have homosexual demons fighting us in Ukraine. 0.99

00:19:17.000 But why gay demons? 1.00

00:19:19.000 Is there a mythology to that? 0.93

00:19:22.000 Not really.

00:19:24.000 The guy who's in charge of the Orthodox Church is a Putin crony. 0.80

00:19:30.000 Kirill is his name.

00:19:32.000 He's kind of like the Eastern Orthodox Pope, if you will.

00:19:35.000 And he has been a partner with organized crime and with Putin since the beginning.

00:19:39.000 And so he is coming up with ever more creative approaches to the propaganda.

00:19:46.000 And so this is a way of how can I say this without pissing off half of the people listening?

00:19:55.000 Imagine Trump using his influence with evangelical Christians to come up with a theological reason why something didn't go his way.

00:20:03.000 It's kind of the equivalent of that. 0.98

00:20:06.000 And so gay demons is what he came up with. 1.00

00:20:08.000 Gay demons. 1.00

00:20:09.000 Yes. 0.99

00:20:09.000 And they ran with it. 0.99

00:20:10.000 So that's on state propaganda now.

00:20:11.000 Really?

00:20:12.000 Yeah.

00:20:12.000 It's wild.

00:20:13.000 And what's the epicenter of the gay demons? 1.00

00:20:16.000 Oh, Kiev, obviously. 0.99

00:20:17.000 Kiev.

00:20:17.000 Yeah.

00:20:17.000 So we've got a Jewish Nazi gay demon.

00:20:23.000 Wow. 1.00

00:20:24.000 Yeah.

00:20:25.000 And...

00:20:25.000 Truth is always weirder than fiction.

00:20:27.000 And the scary rumor is that Putin has cancer.

00:20:29.000 And that...

00:20:30.000 Or Parkinson's is one I've heard as well.

00:20:32.000 Oh, really?

00:20:33.000 Yeah.

00:20:33.000 I don't know what it is.

00:20:34.000 He's clearly on steroids, but, you know, that could mean a whole lot of things.

00:20:38.000 Like prednisone or something along those lines.

00:20:41.000 And you say that because of his appearance?

00:20:43.000 Yeah.

00:20:43.000 He looks very, not just flushed, but puffy.

00:20:46.000 Yeah.

00:20:46.000 And that's kind of a classic too many steroids in your system issue.

00:20:50.000 Yeah.

00:20:50.000 And this puffiness, these steroids are to battle this cancer somehow?

00:20:57.000 In theory.

00:20:58.000 You know, steroids keep you going in a time when you should probably be laying down is really kind of the bottom line.

00:21:03.000 Whether he's medicated, over-medicated, or medicated because of medical reasons, we really don't know.

00:21:09.000 He's not in great health.

00:21:10.000 That is obvious.

00:21:11.000 And for someone who has been the shirtless horseback rider in the propaganda videos, that's a real problem.

00:21:18.000 He's visibly wearing bulletproof or bullet-resistant vests even around his own propaganda people.

00:21:27.000 There 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.

00:21:39.000 And it was like the same 12 people were in every single shot just in different outfits.

00:21:44.000 Mm-hmm.

00:21:45.000 And even with those people, he's wearing his ballistic vest.

00:21:49.000 Trevor Burrus Now, when you say – when you talk about his appearance, he's clearly unhealthy.

00:21:52.000 Is there – can you demonstrate that?

00:21:55.000 Are there images that show him a couple of years ago versus now where you can see his appearance?

00:22:01.000 Yeah, it's not much of a reach.

00:22:02.000 Like I said, he likes to pose shirtless on horseback to show how virile he is.

00:22:07.000 Trevor Burrus He didn't look good on shirtless on horseback.

00:22:09.000 Yeah, I know.

00:22:10.000 You got to look at it from the Russian point of view.

00:22:12.000 I mean the standards are a little different.

00:22:14.000 Are they?

00:22:14.000 Oh, yeah.

00:22:15.000 And he's got the shakes.

00:22:17.000 That's one of the reasons why the Parkinson's analysis, I guess, has come out.

00:22:22.000 I've never seen any of this.

00:22:24.000 So there's video of him shaking?

00:22:26.000 See if you can find any of that, Jim.

00:22:28.000 See if you can find a comparison.

00:22:30.000 Yeah, I got an article on a timeline of his health.

00:22:33.000 Here's the shakes part.

00:22:36.000 He used to be a fairly animated speaker.

00:22:41.000 Boy, he does look puffy.

00:22:43.000 Now, whether or not he's actually sick or not, I have no idea.

00:22:47.000 Could it just be that he's just drinking a lot?

00:22:50.000 Technically, he says he's a teetotaler.

00:22:52.000 Really?

00:22:53.000 Which is pretty rare in Russian society, but, you know, he's still alive, and a lot of Russians make it to his age.

00:22:59.000 How old is he now?

00:23:00.000 Mid-60s.

00:23:03.000 And so it's just an appearance thing.

00:23:05.000 We don't have any like real hard data that he's sick.

00:23:07.000 Well, 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.

00:23:16.000 So Ukrainian military intelligence chief claims Putin is very sick and a coup is underway.

00:23:22.000 Yeah, but Donov has been saying that there's a coup underway since March.

00:23:26.000 So he's kind of the Ukrainian propaganda guy.

00:23:29.000 I wouldn't put too much.

00:23:30.000 And how would that?

00:23:32.000 But what would even happen there?

00:23:33.000 What if like?

00:23:34.000 A coup did take place.

00:23:35.000 Putin has so thoroughly purged what's left of the intelligentsia.

00:23:41.000 There's only 130 of them and there's probably only one of them who would have the guts to throw a coup.

00:23:45.000 That's the Rosneft CEO. Rosneft is their oil monopoly.

00:23:50.000 Igor Sechin is his name.

00:23:51.000 He used to be a gun runner during the Soviet period.

00:23:53.000 He's got the guts to pull it off. 1.00

00:23:55.000 But if there's anything that the other 129 agree is that Sechin's an asshole and he should be shot on sight if he kills Putin. 1.00

00:24:01.000 So there's no immediate pretender to the throne here. 1.00

00:24:05.000 What a fucked up situation. 0.98

00:24:07.000 Well, for the Europeans who have been dealing with the Russians for three centuries, this is kind of par for the course. 0.99

00:24:14.000 It's just a modern version of it.

00:24:16.000 Yeah.

00:24:16.000 The 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.

00:24:25.000 And from the European point of view, that was a huge improvement.

00:24:28.000 And the belief in the post-Soviet period was that they would start from that and move forward and modernize and maybe even democratize.

00:24:35.000 And people believed that for far too long, even when it was clear that Russia was degenerating rather than advancing itself.

00:24:42.000 Now, the title of your book is The End of the World is Just the Beginning.

00:24:45.000 That's the one.

00:24:46.000 Why that?

00:24:47.000 We are dealing with the end of the world that we know.

00:24:51.000 Russia is more of a symptom of this than a cause. 0.94

00:24:54.000 So, 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.

00:25:05.000 But if you failed to have one of those, you were probably a colony.

00:25:11.000 At 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,

00:25:36.000 you move from the farm and into town to take an industrial job.

00:25:40.000 When you live on the farm, you have a lot of kids because they're free labor.

00:25:44.000 You move into the city, you have a lot fewer kids because kids are no longer free.

00:25:48.000 They're really expensive and noisy and annoying and dirty pieces of furniture.

00:25:53.000 And you have fewer of them.

00:25:55.000 And so your population starts to shift.

00:25:57.000 It used to be that you have loads of children, a few young adults, fewer retirees.

00:26:02.000 It's kind of a pyramid.

00:26:04.000 But as you urbanize, your pyramid opens up into a column.

00:26:09.000 Because you have fewer kids, but everyone's living longer.

00:26:13.000 And as long as your population is a column, economic growth is spectacular. 1.00

00:26:17.000 Because you don't have to spend a lot of money on your kids.

00:26:20.000 You're not old enough that you have a lot of retirees. 0.95

00:26:22.000 But you got a lot of people in their 20s and 30s to build things and buy things.

00:26:26.000 And then a lot of people in their 40s and 50s to do the investing.

00:26:29.000 And 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.

00:26:41.000 The 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.

00:26:52.000 And now you no longer have children.

00:26:54.000 You no longer have a replacement generation at all.

00:26:57.000 And there aren't enough people in their 20s and 30s to buy everything.

00:27:00.000 And there aren't enough people in their 40s and 50s to pay for the retirees.

00:27:04.000 So this decade was always going to be the decade that most of the advanced world moves into mass retirement and the economic model collapses.

00:27:12.000 And next decade was always going to be the decade that that happened to the developing world. 0.99

00:27:17.000 And we find out recently that the Chinese have jumped the ship and this is their last decade too. 0.99

00:27:22.000 So all of the globalized connections and consumptions that create the world we know, we are at the end of it.

00:27:31.000 And 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. 0.58

00:27:42.000 So we're losing the security ramifications of an open system.

00:27:46.000 At the same time, we're losing the demographic capacity to support it in the first place.

00:27:51.000 And that's all going down right now.

00:27:53.000 So when you're saying that China has 10 years to go...

00:27:57.000 At most.

00:27:58.000 What do you mean by that?

00:27:59.000 Well, 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.

00:28:09.000 So 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.

00:28:14.000 What was the logic behind the one child?

00:28:16.000 Was it that they were overpopulating?

00:28:18.000 Mao 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. 0.97

00:28:27.000 So they went through a breakneck urbanization program, which destroyed the birth rate.

00:28:32.000 At the same time, they penalized anyone who wanted to have kids.

00:28:35.000 And both of those at the same time have generated the demographic collapse we're in now.

00:28:39.000 And the problem with that also was that they wanted male children.

00:28:43.000 Yeah, there's a cultural aspect to that too and obviously men can't have kids on their own.

00:28:47.000 And what is the like ratio to men to women in the younger people in China now?

00:28:54.000 Before the data revision with the last set of lies it was about 1 to 1.2.

00:28:59.000 It was the most distorted in the world even more than Sri Lanka where there had been a civil war for 30 years.

00:29:05.000 Since then we don't have good sex by sex data, but it's undoubtedly worse.

00:29:11.000 And so what are the other problems that they're encountering that leads you to believe that they only have 10 years left?

00:29:17.000 Well, 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. 0.64

00:29:26.000 Their educational system focuses on memorization over skills.

00:29:31.000 So, 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.

00:29:39.000 Mexican labor is probably about twice as skilled as Chinese labor now, even though it's one-third the cost.

00:29:46.000 They'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. 0.78

00:29:58.000 No one wants to bring Xi information on anything.

00:30:02.000 So, like, Putin lied to his face, for example, last February about the war, saying, you know, why would I invade Ukraine?

00:30:08.000 And 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.

00:30:18.000 And so the Chinese were the only country that was caught with their pants down when this all went down. 0.70

00:30:25.000 The Biden administration is basically taking the trade policy of Donald Trump and running it through a grammar checker and putting it into institutions.

00:30:32.000 So we now have tech barricades that prevent the Chinese from buying the equipment, the tools, or the software that's necessary to make semiconductors.

00:30:41.000 In fact, he went so far as to say any Americans working in the sector have to either quit or give up their American citizenship.

00:30:47.000 Every single one of them either quit or was transferred abroad within 24 hours.

00:30:52.000 So the tech system is stalled.

00:30:54.000 They don't have the young people to go consumption-led.

00:30:57.000 They're completely dependent on the US Navy to access international trade.

00:31:00.000 They are the most vulnerable country in the world right now.

00:31:04.000 And 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.

00:31:14.000 And the Chinese are the world's largest importer of both of those things.

00:31:17.000 So there's no version of this where China comes through looking good. 0.94

00:31:22.000 And the challenge for the rest of us is to figure out how do we...

00:31:27.000 In as smooth and quick as a process as possible, figure out how we can get along without them.

00:31:33.000 Because they are going away.

00:31:35.000 And they're going away this decade for certain.

00:31:38.000 Well, if you say they're going away, clearly they're not just going to lay down.

00:31:42.000 No, they're going to try to adjust.

00:31:44.000 Yeah, they'll die.

00:31:46.000 But how so?

00:31:47.000 Do you think this is because, like, what is...

00:31:50.000 Other than—well, here would be a big problem, right?

00:31:53.000 Taiwan.

00:31:55.000 Like, 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?

00:32:08.000 Very ugly for the Chinese. 1.00

00:32:10.000 So, you know, say what you will about the Russian economy. 1.00

00:32:12.000 It's corrupt. 0.96

00:32:13.000 It's inefficient.

00:32:14.000 It's not very high-value-add.

00:32:16.000 But it's a massive producer and exporter of food and energy.

00:32:20.000 You 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.

00:32:30.000 And the Chinese know this.

00:32:31.000 They can only push so hard.

00:32:34.000 Also, you know, you can make the argument that if the Russians succeed, they actually solve or at least address some of their problems.

00:32:44.000 Even if the Chinese were able to capture Taiwan without firing a shot, it doesn't solve anything for them. 0.99

00:32:49.000 They're still food importers.

00:32:50.000 They're still dependent upon the United States.

00:32:51.000 They're still energy importers.

00:32:53.000 And 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.

00:33:01.000 And their own are among the worst in the world, not the best.

00:33:07.000 The 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.

00:33:24.000 And when you say refuses to access, what do you mean by that?

00:33:27.000 He does not have normal information flows anymore.

00:33:31.000 Even 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.

00:33:41.000 There was still information being put in front of him.

00:33:44.000 But Xi is so isolated himself.

00:33:46.000 He doesn't want to hear anything except for what he wants to hear.

00:33:49.000 And 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.

00:33:56.000 How do we know this about him?

00:33:58.000 Because there's no one to listen to anymore.

00:34:00.000 That'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.

00:34:08.000 But in China, we can hear into the office, but there are no conversations happening.

00:34:14.000 What do you mean by that?

00:34:15.000 So no one talks to him about anything?

00:34:17.000 Anything.

00:34:18.000 So he's just terrifying to people.

00:34:20.000 Yeah, exactly.

00:34:21.000 Because he murders dissidents, he murders anybody that...

00:34:25.000 He doesn't murder everyone, but there's a lot of people in prison.

00:34:28.000 Well, there's also a lot of billionaires that got disappeared, right?

00:34:31.000 And any dissent.

00:34:33.000 Yeah.

00:34:34.000 You're either executed or exiled, intimidated into silence.

00:34:38.000 There's a variety of options.

00:34:39.000 And if you look at the third-party Congress that we had late last year, that's when they select the Politburo.

00:34:45.000 Everyone on the Politburo now is a personal flunky.

00:34:47.000 There is no one from a different faction.

00:34:49.000 There is no one that has a history of being incompetent.

00:34:53.000 Whew.

00:34:54.000 And what is their plan?

00:34:55.000 The Chinese? 0.97

00:34:56.000 Yeah.

00:34:56.000 Do we have any idea of what their plan to get out of this is?

00:35:00.000 Nationalism.

00:35:01.000 If you know that the economic situation is going to go to pot, then you have a couple of options.

00:35:07.000 Option 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.

00:35:14.000 And the sort of strategic surrender that the Americans would require is not something that the Chinese would accept.

00:35:22.000 So 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.

00:35:34.000 But if you go with nationalism, give people a non-economic reason to support the state.

00:35:39.000 So even if you lose your job, even if you can't feed your family, I'm Chinese, I'm Han, that's enough.

00:35:44.000 That has been the strategy for the last couple of years.

00:35:47.000 Will it be enough to preserve the CCP? Too soon to know.

00:35:52.000 And 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?

00:36:03.000 So what happened over there?

00:36:04.000 Well, let me start by saying I think it's safe to say that no country has really figured out how to handle this well.

00:36:12.000 Second, I will say there are seven different variants circulated in Beijing right now or in China right now.

00:36:17.000 Three of them did not exist two or three months ago.

00:36:21.000 And it takes about six months of data for you to get good information on the R-naught and the lethality. 0.99

00:36:25.000 So we just don't know.

00:36:27.000 And then third, in part because of Xi, when you're a one-man state, All policy and all authority starts and stops with you.

00:36:36.000 And 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.

00:36:47.000 Well, right now it's doing nothing.

00:36:49.000 So the data decisions in China are not to gather data and figure out what we can do.

00:36:54.000 It's to, instead of gathering data and lying about it, we're just not going to gather any data at all.

00:37:00.000 So we're not going to know how bad these strains are until they get out of China and circulate in the rest of the world for six months.

00:37:08.000 So the lowest fatality estimate that I have seen that I consider credible is that they're going to lose a million and a half people.

00:37:17.000 Just from COVID. Just from COVID. That assumes no broader breakdown in the health system, which we are already seeing.

00:37:22.000 And is this because they don't have natural immunity because of the rigid lockdowns that they encountered?

00:37:27.000 Yeah.

00:37:27.000 You know, from a plus point of view, they did keep the virus out of the population for almost three years.

00:37:32.000 So no one has natural immunity.

00:37:34.000 But we also know that their domestically generated vaccines aren't great.

00:37:39.000 And most of the countries that used them in order to get their kind of first batch then moved on to a Western model that worked better.

00:37:46.000 So they had a two-fold problem.

00:37:48.000 They did not have vaccines and they didn't develop natural immunity.

00:37:52.000 And now everyone's getting hit all at once with a virus that has at least 50% more communicability than the measles.

00:37:59.000 And their overall health Is worse than ours.

00:38:04.000 Diabetes as a percentage of the population is higher.

00:38:07.000 They don't have a critical care system like we have.

00:38:10.000 And their hospitals are really their only line of defense.

00:38:13.000 They don't have a clinic and a doctor system in the towns like we do.

00:38:16.000 And what about nutrition education and the understanding of...

00:38:22.000 When 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.

00:38:31.000 So 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.

00:38:40.000 So we're kind of seeing like the worst aspects of the Indian system and the American system all in one. 1.00

00:38:48.000 So obviously the United States government is aware of all these things, correct?

00:38:52.000 Well, let's not oversell it, but broadly.

00:39:20.000 I'm happy to say that I am doing some work with the Defense Department.

00:39:23.000 I can't talk about the details, obviously, but I think it's good to give credit where it's due.

00:39:30.000 One 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.

00:39:40.000 So 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.

00:39:49.000 It 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.

00:39:58.000 What 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.

00:40:03.000 So 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.

00:40:15.000 20 years is a long time.

00:40:17.000 So 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.

00:40:34.000 And 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.

00:40:42.000 This is a good sign.

00:40:47.000 If you play out China's collapse, how do you anticipate that that goes?

00:40:54.000 First of all, what do you think is like the first piece to drop?

00:40:59.000 Well, Chinese history is rich with examples of how it all falls apart in a short period of time.

00:41:05.000 If 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.

00:41:14.000 About 80% of the calories that humans produce are produced with at least one imported input, whether it's pesticide, fertilizer, fuel, tractors, whatever.

00:41:26.000 And with the Chinese, it's more like 90%. 1.00

00:41:29.000 90% is imported.

00:41:31.000 Yeah.

00:41:32.000 Well, no, not their food is imported, the inputs.

00:41:34.000 The inputs.

00:41:34.000 The inputs strain.

00:41:35.000 And 90% of the calories they produce are dependent upon a foreign support system.

00:41:40.000 In the United States, it's less than 10. We produce most of what we need locally, and most of the rest comes from Canada.

00:41:46.000 But 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.

00:41:53.000 Now, China faces the biggest one in absolute terms because of the size of their population.

00:41:59.000 But with the Russians having their problems, the Russian space is the world's largest single supplier fertilizer of all types. 0.97

00:42:06.000 So we are already knee-deep in a fertilizer crisis globally.

00:42:12.000 And we're seeing industrial accidents in the Russian space that are so big you can see them from orbit.

00:42:17.000 Because, you know, a lot of petroleum stuff explodes if it doesn't go right.

00:42:20.000 And the Russian facility has been held together with duct tape and Western tech for a while now.

00:42:25.000 That's all gone now.

00:42:27.000 So China being kind of the last man in line to get a lot of this stuff is in a very vulnerable position.

00:42:34.000 We'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.

00:42:43.000 But more important, all the insurance firms have said they're not going to deal with Russia anymore.

00:42:48.000 So you're not supposed to sail at all with your ship if you don't have an insurance policy.

00:42:53.000 So countries like China and India are stepping in and offering sovereign indemnifications, but that's something they've never done before.

00:43:00.000 And 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.

00:43:08.000 As soon as that happens, no one's going to take an Indian insurance policy again.

00:43:12.000 That's another million to two million barrels a day that goes offline.

00:43:16.000 And then all the crude that the Chinese get from Eastern Siberia is from fields that the Russians never developed themselves. 0.97

00:43:21.000 That was all BP. BP's gone.

00:43:24.000 So we don't know how long the Russians can keep it operating, but we know it's going to go to zero. 0.92

00:43:29.000 We just don't know how long it's going to take.

00:43:30.000 And the Chinese are the last in line for all of this stuff. 1.00

00:43:35.000 And 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.

00:43:47.000 Now, like I said, Chinese history is rich with ways that can all fall apart. 1.00

00:43:52.000 Oftentimes, it's based on having this hyper-centralization and an incompetent leader.

00:43:56.000 Or an incompetent leader cadre, maybe, is a better way to phrase that.

00:44:00.000 But how it usually goes.

00:44:02.000 The North falls in on itself.

00:44:05.000 It falls into famine.

00:44:07.000 It falls into tyranny.

00:44:08.000 You get hundreds of millions of people suffering from malnutrition and then ultimately dying.

00:44:14.000 The coast goes one way.

00:44:17.000 The interior breaks off and shatters.

00:44:20.000 And 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.

00:44:34.000 And 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. 0.75

00:44:44.000 So we're really just reverting to a historical mean here.

00:44:50.000 Now, one of the things that's really disturbing to the West is watching what's happened to Hong Kong.

00:44:54.000 Sure.

00:44:55.000 That 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.

00:45:06.000 Right.

00:45:07.000 Like, how do they control that?

00:45:10.000 The Chinese? 0.97

00:45:11.000 Yeah, I mean- Then the southern cities are going to bolt.

00:45:32.000 Now what does China think about?

00:45:33.000 Did 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?

00:45:41.000 This is one of the beautiful things about authoritarianism is they start telling stories and eventually they believe them.

00:45:48.000 It happened in Russia.

00:45:49.000 It's happening in China.

00:45:50.000 Chinese academics as recently as 10 years ago were very, very aware of this and it shaped government policy.

00:45:58.000 They wanted to make sure that the Democrats, little d, in Hong Kong didn't get too uppity.

00:46:05.000 They tried to make sure that there were people from the South on the Politburo.

00:46:08.000 But 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.

00:46:16.000 And once again, because this is another trend that pops up in China over and over again, they're forgetting their own history. 0.65

00:46:23.000 But China has always been thought of as a country, at least the narrative has always been that they plan long game. 1.00

00:46:29.000 Yeah, it's a bunch of crap. 1.00

00:46:30.000 Is it? 1.00

00:46:31.000 Yeah. 0.98

00:46:31.000 No, the Chinese are just as bad as everyone when it comes to ideological blinders and short-term decision-making. 0.98

00:46:38.000 And the more isolated and concentrated the tools of power become, the more problematic that becomes.

00:46:46.000 So what is their plan on getting through what you think is a 10-year timeline for their demise?

00:46:53.000 Beat the nationalist drum so that when the food and the energy run out, everyone is banding together simply because they're Han Chinese. 0.78

00:47:01.000 That's it?

00:47:02.000 That's as good as it's going to get because there is no trade option out of this without the United States.

00:47:08.000 What do you think the world looks like in 10 years?

00:47:11.000 I think we'll have a system of regional trade where you've got certain regional powers who have actually benefit from the environment.

00:47:21.000 So 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.

00:47:28.000 And it's about one-tenth the cost to move things by water as it is to move it by truck.

00:47:33.000 So, with that sort of environment and ocean moats, the United States is an economic power, whoever is in charge.

00:47:40.000 I mean, we've had decades of bipartisan effort to try to screw this up, and we haven't pulled it off yet.

00:47:44.000 We're not going to do it under Biden.

00:47:45.000 He doesn't have the energy.

00:47:48.000 Which means that globalization from our point of view, from an economic point of view, was a problem.

00:47:53.000 Because we had one of the world's best geographies.

00:47:56.000 And we deliberately sublimated that in order to support our allies against the Soviets in the Cold War.

00:48:02.000 We basically paid people with globalization to be on our side.

00:48:05.000 And it worked.

00:48:07.000 We're good to go.

00:48:27.000 Argentina looks really good.

00:48:29.000 France and Turkey look great.

00:48:30.000 And 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.

00:48:41.000 So 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.

00:48:50.000 And 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.

00:49:01.000 This really is the end of the world.

00:49:02.000 The end of the world we understand, yeah.

00:49:04.000 We're going back to something that's a lot more similar to the world as it existed in the early 1900s.

00:49:11.000 Whew.

00:49:12.000 How does China come through this, though?

00:49:15.000 They don't.

00:49:16.000 So what happens to them if they don't?

00:49:18.000 Well, 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.

00:49:29.000 The closest would be the Black Plague.

00:49:30.000 But the Chinese are going to lose a greater percentage of their population in the next 20 years than Europe did during the Black Plague.

00:49:36.000 And you think by famine?

00:49:38.000 This assumes no famine.

00:49:39.000 This is just aging.

00:49:41.000 Just aging.

00:49:41.000 Yeah.

00:49:42.000 If you have an energy breakdown or a food breakdown, it happens a lot faster.

00:49:46.000 And they have energy issues and they have food issues.

00:49:49.000 They are the world's largest importer of energy, about 14 million barrels a day.

00:49:53.000 Remember, we're a net exporter.

00:49:55.000 And they are the world's largest importer of food and food inputs.

00:49:59.000 And are we the only major superpower that can generate its own natural resources in terms of natural gas, shale oil?

00:50:08.000 We're the only ones that can do it at scale.

00:50:10.000 I would argue that Argentina can do a pretty good job of it by Argentine standards.

00:50:16.000 So we're fairly safe in that regard?

00:50:19.000 Yeah.

00:50:19.000 I mean, we'll always find things to stress about.

00:50:22.000 I don't mean to suggest that the next five years are just going to be a picnic.

00:50:25.000 We're going to have to double the size of the industrial plant as the Chinese system and the German system both fall offline.

00:50:31.000 But that's an opportunity.

00:50:35.000 You double the size of the industrial plant.

00:50:38.000 Obviously, that's inflationary.

00:50:40.000 But at the other side, you're building things at home using local resources and local workers.

00:50:46.000 You're using less energy and less water.

00:50:48.000 It's cleaner.

00:50:49.000 You'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.

00:50:59.000 This is a good challenge.

00:51:01.000 It won't be easy, but to be perfectly blunt, we've done it before.

00:51:05.000 We can do it again.

00:51:06.000 Well, 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.

00:51:16.000 When 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.

00:51:33.000 With 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.

00:51:41.000 There's nothing about that that addresses inflation.

00:51:43.000 It did put together a nationalist economic policy that we probably did need in terms of pushing the re-industrialization on some specific sectors.

00:51:52.000 It'll probably be the first of a series of things that are coming.

00:51:56.000 And a lot of this stuff is not particularly complicated.

00:52:00.000 So take the medication issue.

00:52:02.000 It's 1950s technology for the most part.

00:52:05.000 The medicines that we import from China and India are not the biologics or the cutting edge stuff or the cancer drugs.

00:52:11.000 They're the day-to-day maintenance things that a lot of us use.

00:52:16.000 And it is not particularly expensive or time consuming to build out the capacity here.

00:52:20.000 It's basic chemistry.

00:52:21.000 But there has not been an economic incentive to do it yet.

00:52:25.000 We're good to go.

00:52:43.000 At the very high end, whether it's semiconductors or vehicles or machinery or software.

00:52:50.000 But we're also a world leader on the low end if it's input intensive.

00:52:56.000 So energy products and food products, fuel, processed foods.

00:53:01.000 Our problem is in the middle.

00:53:04.000 Places where it's not the natural bounty of North America that helps us out.

00:53:07.000 And it's not the ingenuity and the skill of the American workforce that helps us out.

00:53:11.000 The stuff in the middle.

00:53:12.000 To be perfectly blunt, for that, we've got Mexico, and they're great at it.

00:53:17.000 The 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.

00:53:28.000 Are there hiccups?

00:53:29.000 Oh yeah, plenty of hiccups.

00:53:31.000 Well, I'm sure you're paying attention to the cartel wars that are going on right now.

00:53:34.000 Yeah, it would be so much better if Americans did not like cocaine.

00:53:39.000 I would just solve half of this overnight.

00:53:41.000 Or if cocaine was legal.

00:53:44.000 The health studies that I have seen suggest that that is not the way forward.

00:53:49.000 But do you really think that it would change the consumption?

00:53:53.000 Oh, it would definitely alter the consumption.

00:53:54.000 How?

00:53:54.000 I don't know.

00:53:55.000 This is not something I'm an expert at.

00:53:56.000 But 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.

00:54:06.000 So from a purely economic point of view, at best it looks like it might be a wash.

00:54:11.000 So the legalization of cocaine, in your opinion, would cause more use and more problems?

00:54:18.000 Probably.

00:54:18.000 Just different ones.

00:54:20.000 But wouldn't it stop all these fentanyl overdose?

00:54:22.000 Because this is an issue with the illegalization.

00:54:26.000 See, that's the problem.

00:54:28.000 We ask people why they're taking what drug.

00:54:30.000 To say that if cocaine was immediately available that they'd stop taking fentanyl, I don't know.

00:54:34.000 But they're not taking fentanyl on purpose.

00:54:36.000 Oh, you're talking about the stuff that's cut in.

00:54:38.000 A lot of the fentanyl deaths is cut.

00:54:39.000 Like cocaine, fentanyl deaths are very high.

00:54:41.000 Well, then you're talking about a regulatory issue.

00:54:43.000 And 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.

00:54:50.000 So I live in Colorado now, which was the first state to legalize pot.

00:54:54.000 And what we discovered was that, yes, you solve some problems and you bring a lot of money in for the government.

00:55:01.000 But it has criminalized a lot of economic activity in Colorado because think about what happened with pot.

00:55:08.000 It's still controlled from a financial point of view at the federal level.

00:55:12.000 So banks won't touch it.

00:55:14.000 So all the pot dispensaries have a walk-in safe where they keep all the cash.

00:55:19.000 So the Federal Reserve is like, this is a theft issue.

00:55:22.000 This is a security issue.

00:55:24.000 We can't allow this to happen.

00:55:25.000 So 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. 0.53

00:55:34.000 And with armored guards, we're going to come in and we're going to take all your cash.

00:55:36.000 We're going to spray a lot of Febreze on it.

00:55:38.000 We're going to take it back to the Federal Reserve building.

00:55:40.000 We're going to count it and give you a digital deposit.

00:55:44.000 The Sinaloa cartel is like, whoa, whoa, whoa, whoa, whoa.

00:55:47.000 Let me get this right.

00:55:49.000 The Federal Reserve of the United States of America is now in the business of money laundering.

00:55:55.000 Count us in.

00:55:57.000 And so now they are laundering their money through the pot industry of Colorado.

00:56:03.000 And it's generated just a different problem.

00:56:06.000 This is a gentleman named John Norris, and he started out his career as a game warden, a guy who checks fishing licenses and stuff.

00:56:14.000 And 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.

00:56:25.000 And so people are growing it on federal land, on state land.

00:56:29.000 And so these state forests In federal forests in California are filled with cartels.

00:56:35.000 They're growing marijuana.

00:56:36.000 So he had to form a tactical unit to combat these cartels.

00:56:42.000 So they're wearing tactical gear.

00:56:45.000 And this guy was a game warden. 1.00

00:56:47.000 And now they've got Belgian Malinois and fucking machine guns. 0.99

00:56:52.000 And they're going in there and they're fighting off cartels. 0.99

00:56:55.000 And he wrote this book called Hidden Wars. 0.99

00:56:57.000 It's fucking crazy. 0.99

00:56:59.000 There's rarely a silver bullet, unfortunately. 0.99

00:57:02.000 But this is the problem that you have when you have it illegal.

00:57:06.000 I mean this is literally what propped up organized crime during the prohibition.

00:57:11.000 This is what funded the mafia.

00:57:13.000 They ran booze illegally because it was illegal.

00:57:17.000 So criminals are going to be in charge of things that there's a demand for.

00:57:23.000 When there's an enormous economic incentive.

00:57:26.000 I think the mafia is a great example for why you shouldn't look for the silver bullet.

00:57:31.000 Because yes, that in the 1920s during prohibition was one of the big reasons it got going.

00:57:37.000 But the mafia didn't waste any time in diversifying and neither of the cartels.

00:57:42.000 So one of the many problems in Mexico today is that the cartels have diversified.

00:57:47.000 They've gotten into cargo theft and kidnapping and avocados and limes and real estate and local government.

00:57:53.000 And criminality is always going to exist.

00:57:57.000 Now, the attractiveness of gutting them of some of their primary income, should we look at that?

00:58:03.000 Of course.

00:58:05.000 But it's not so simple as removing one and it just all stops.

00:58:09.000 Because of the limes and avocados and all these other things.

00:58:12.000 Because, I mean, these are things that are obviously legal.

00:58:14.000 Right.

00:58:14.000 But the cartels have found a way to take it over and make it their own.

00:58:17.000 But isn't that – the problem was initially because of illegal drugs.

00:58:21.000 So that's where they got their enormous resources.

00:58:24.000 Well, I would say – I'd say the problem was lack of rule of law.

00:58:31.000 And that goes to Chicago as well.

00:58:33.000 And the way we ultimately got past that is after prohibition ended, it still took 20 to 30 years to kind of ground down the mob.

00:58:43.000 And we welcomed them into politics to normalize it.

00:58:47.000 So careful what you wish for.

00:58:50.000 So do you anticipate that happening with Mexico?

00:58:53.000 Mexico is, to be perfectly honest, really early in this process.

00:58:57.000 The 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.

00:59:05.000 If you remember El Chapo.

00:59:06.000 That's the good cartel?

00:59:08.000 Yeah.

00:59:08.000 Remember El Chapo, Sinaloa cartel?

00:59:10.000 Yeah.

00:59:10.000 He thought of himself as a Korean conglomerate president.

00:59:15.000 So it's like we smuggle drugs.

00:59:17.000 That's our business.

00:59:18.000 You don't mess with things that mess with the business.

00:59:20.000 So you don't trip the old lady. 0.98

00:59:22.000 You don't steal her purse.

00:59:23.000 You don't shoot at the cops.

00:59:24.000 These are people who live where we operate.

00:59:26.000 We want them to be on our side.

00:59:27.000 So maybe even throw a party every once in a while.

00:59:31.000 You focus on the business.

00:59:34.000 We got El Chapo.

00:59:35.000 We removed him from circulation.

00:59:37.000 The guy who died or got captured yesterday was his son, one of the Los Chapitos.

00:59:41.000 And his cartel as a result is fracturing because his leadership's gone.

00:59:46.000 The replacement cartel is Jalisco New Generation. 0.98

00:59:50.000 They'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. 0.99

01:00:01.000 You do kick over the old lady. 1.00

01:00:03.000 You do take her purse.

01:00:05.000 You make the people scared of you.

01:00:06.000 That's the point of this.

01:00:08.000 Drug running is a side gig.

01:00:11.000 We are here to be powerful.

01:00:14.000 And drug running is just one of the ways we make that happen.

01:00:16.000 And he has taken the fight to every cartel and the Mexican government.

01:00:20.000 And they're in the process of trying to break into the United States. 0.63

01:00:23.000 Break in what?

01:00:25.000 Economically?

01:00:26.000 Yeah.

01:00:26.000 El Chapo and the Sinaloa became the largest drug trafficking organization in America under the Obama administration.

01:00:33.000 And one of the reasons our birth rate went down so far so fast is they basically either co-opted or killed American gangs.

01:00:41.000 So they killed the people who were doing the killing.

01:00:43.000 Not a lot of Americans got killed after that.

01:00:48.000 All 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. 0.94

01:00:55.000 And 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.

01:01:09.000 So when you say that they've killed the gangs, like in what way?

01:01:13.000 Because that is an interesting thing that you don't hear a lot about American gangs anymore.

01:01:18.000 Well, that's because they're not there to the same degree.

01:01:20.000 So the Sinaloa, they co-opted the Hispanic gangs, especially the Mexican gangs, because there wasn't a language barrier there.

01:01:27.000 And they really targeted and gutted a lot of the African-American gangs.

01:01:31.000 They took over drug smuggling and distribution from them to deny them income, and then they just shot a lot of people.

01:01:38.000 And when did this take place?

01:01:39.000 That happened during the 2000s.

01:01:42.000 It was pretty much completed by the time we got to 2013. But we weren't really kind of – this narrative didn't really go around.

01:01:49.000 This is not something that I've heard before.

01:01:51.000 Oh, yeah.

01:01:51.000 Look at the murder.

01:01:52.000 It's making sense when you're saying it?

01:01:53.000 Look at the violent crime rates in the United States.

01:01:55.000 They've been trending down really significantly since about 2004. And the drop from 2004 to roughly 2014 was amazing.

01:02:05.000 That's largely Sinaloa.

01:02:07.000 So they have silently sort of invaded and taken over the distribution and taken over the gang activities.

01:02:15.000 Right.

01:02:15.000 And this is El Chapo's cartel that is now getting broken up.

01:02:19.000 And as soon as you have more players, more violence is going to happen, especially against one another.

01:02:24.000 And that's one of the reasons that the murder rate in Mexico has skyrocketed in the last three years.

01:02:28.000 Do you know who Ed Calderon?

01:02:31.000 Have you ever followed Ed Manifesto on Instagram?

01:02:34.000 I have not.

01:02:34.000 He 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.

01:02:46.000 One of the things he was showing is they were using.50 caliber rifles to try to shoot down planes yesterday.

01:02:51.000 Yeah.

01:02:51.000 Have you seen that?

01:02:52.000 I have. 0.99

01:02:54.000 I mean, what the fuck is going on over there? 0.96

01:02:56.000 I 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. 0.99

01:03:06.000 It's the disintegration of the Sinaloa cartel.

01:03:09.000 So back in 2019, the Los Chapitos, I can't remember his name.

01:03:14.000 I keep on a St. Octavia, and that's not it because that's a girl's name.

01:03:16.000 Anyway, it begins with an L. He was captured in 2019 and they weren't able to get him out of town fast enough. 0.99

01:03:25.000 So 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. 0.95

01:03:33.000 Yeah, I remember that.

01:03:34.000 This time they were able to get him to the airport fast enough and he's already in Mexico City.

01:03:39.000 So there was a clash but not nearly to the degree that we had a couple years back.

01:03:44.000 Look at this here.

01:03:45.000 Oh yeah. 0.99

01:03:50.000 This is a guy shooting at airplanes, which is fucking bonkers. 0.99

01:03:55.000 I mean, what kind of airplanes are those? 0.99

01:03:57.000 Those are probably civilian.

01:03:58.000 And why is he doing this?

01:04:02.000 We're seeing a change in heart of the administration in Mexico.

01:04:07.000 Lopez Obrador, for the first couple of years of his presidency, followed what he called hugs, not drugs.

01:04:14.000 The idea that if we don't bother the cartels, they'll just be nice.

01:04:18.000 Yeah, so that didn't work out.

01:04:19.000 And now he's taken a much more direct approach.

01:04:22.000 And since most of the security services at the local level have been infiltrated by the cartels, he's tapped the military to do it.

01:04:29.000 So the military is now taking active steps against the cartels.

01:04:32.000 And if you are in a cartel, that means you need heavier weaponry to fight back.

01:04:37.000 And that's why the.50 cals and things like them are starting to pop up a lot more.

01:04:40.000 And so what is the Mexican strategy in terms of utilizing the military and dealing with the cartels?

01:04:46.000 What are they trying to do?

01:04:48.000 I would argue that the AMLO administration isn't to the point yet that they have a strategy.

01:04:53.000 But they realize that the murder rate has reached the point that Hugs Not Drugs is no longer a viable option.

01:04:59.000 And so they're trying to militarize the equation in the hopes that the Mexican military is more capable than this or that cartel.

01:05:07.000 You can kind of break the cartel world into three groups.

01:05:11.000 You've got Jalisco New Generation, the hyper-violent ones. 1.00

01:05:15.000 You've got the Los Chapitos and the associated groups that are what's left of Sinaloa. 0.57

01:05:21.000 They're the most capable ones for smuggling drugs.

01:05:24.000 That's where the money is.

01:05:25.000 And so that is where Amlo seems to be focusing his efforts.

01:05:29.000 And 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.

01:05:40.000 It's just violent.

01:05:42.000 But 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.

01:05:58.000 I 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.

01:06:03.000 And what's worst case scenario with Mexico? 1.00

01:06:05.000 Worst case scenario would be if Jalisco new generation penetrates north of the border and it changes our political discussion to be very anti-Mexico. 0.99

01:06:14.000 One of the great achievements in my opinion of the Trump administration is convincing America's hard right that Mexicans are part of the family.

01:06:23.000 And taking one of the biggest looming racial issues in the United States and just dissolving it.

01:06:28.000 If 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.

01:06:41.000 But what is the worst case scenario in terms of the cartels overwhelming the Mexican military?

01:06:48.000 Because it does seem they have unlimited- You're asking all the fun, cheery questions.

01:06:53.000 Well, that's why you're here, bro.

01:06:55.000 I'm here to get freaked out.

01:06:56.000 Our 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.

01:07:04.000 And so when you bring it into the system, they hit with a punch that compared to the normal local security services is really impressive.

01:07:11.000 But every time an armed group of the state has been brought into the fight, the cartels have found a way to corrupt it.

01:07:19.000 And if you do that to the military, we could have a very real problem here.

01:07:25.000 Think Chicago at the height of Al Capone, but on a national scale.

01:07:30.000 Jesus Christ.

01:07:32.000 We're not there yet, but that would be the concern.

01:07:35.000 Now, 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?

01:07:46.000 This 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. 0.98

01:08:02.000 Trump 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.

01:08:13.000 And so relations were pretty warm.

01:08:15.000 Biden comes in and takes a much more traditional American approach.

01:08:18.000 So it's about immigration.

01:08:19.000 It's about drugs.

01:08:21.000 It's about rule of law.

01:08:22.000 It's about investment.

01:08:23.000 And AMLO is like a really, really angry Trump.

01:08:31.000 And he sees this all as unnecessary challenges to him personally.

01:08:35.000 So the relationship between Biden and AMLO is really poor.

01:08:42.000 And 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.

01:08:52.000 So most drug extraditions have stopped.

01:08:54.000 Most law enforcement cooperation has stopped.

01:08:57.000 Most intelligence sharing has stopped.

01:09:00.000 So we're just leaving that and watching it play out?

01:09:03.000 Well, because the Mexicans shut the door on us. 1.00

01:09:04.000 Yeah.

01:09:05.000 Well, AMLO specifically.

01:09:06.000 I don't want to put credit for that anywhere but on him.

01:09:09.000 What's the best case scenario?

01:09:10.000 Well, there's term limits in Mexico.

01:09:13.000 AMLO will be gone in a year and a half.

01:09:16.000 So we will get a new person.

01:09:17.000 Now, who will that person be?

01:09:19.000 Way too soon to know.

01:09:21.000 But you can only serve for five years as president of Mexico.

01:09:24.000 That's it?

01:09:25.000 Yeah.

01:09:25.000 So they've got a very, very bad one right now.

01:09:27.000 We'll see who's next.

01:09:29.000 Oh, Jesus.

01:09:31.000 And that's right there?

01:09:32.000 Yep. 0.99

01:09:33.000 So the whole world's fucked? 0.99

01:09:34.000 Yeah, that's a bit of an overstatement, but we've got some challenges. 0.99

01:09:38.000 But it's making me more optimistic about America.

01:09:42.000 Yeah.

01:09:42.000 I mean, our economic system is broadly positive.

01:09:44.000 We've got a great partner for the most part.

01:09:47.000 Energy, there's- A great partner?

01:09:49.000 Mexico's got our largest trading partner and they have what we need.

01:09:52.000 So, I mean, this is a relationship of partners that's facing challenges.

01:09:56.000 I think we'll get through this.

01:09:58.000 Remember that one in every six Americans now has genetic links into Mexico.

01:10:02.000 So, this is a family argument.

01:10:04.000 This is a good argument, believe it or not.

01:10:07.000 We're never going to have a food crisis.

01:10:08.000 We're the world's largest food exporter.

01:10:10.000 We're never going to have an energy crisis.

01:10:11.000 We're the world's largest energy producer.

01:10:13.000 And we're bit by bit by bit bringing in countries to our kind of a friends and family plan.

01:10:19.000 So Japan is already on board.

01:10:21.000 Hopefully the Brits will be there before long.

01:10:23.000 How do you sleep at night?

01:10:25.000 Easily.

01:10:25.000 But do you really?

01:10:27.000 With all this information, I would imagine that this would keep me up.

01:10:30.000 I imagine it'll keep me up tonight.

01:10:33.000 Yeah, just thinking about...

01:10:35.000 If you focus on the negative, you're never going to sleep.

01:10:38.000 How do you manage to...

01:10:40.000 Are you medicated?

01:10:41.000 How do you...

01:10:41.000 Oh, well, I get migraines.

01:10:42.000 There's no doubt there.

01:10:43.000 But I focus on the fact that we've got the greatest opportunity for economic expansion in the history of our country.

01:10:50.000 And it's not just us.

01:10:52.000 It's Canada and it's Mexico as well.

01:10:55.000 This is going to be a great story.

01:10:57.000 We're going to emerge from this in 10 years in so much of a better place.

01:11:00.000 And 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.

01:11:12.000 This is a once, not in a generation, this is a once-in-a-century opportunity to overhaul what being human means.

01:11:21.000 And I'm really excited about where this leads us.

01:11:24.000 I just wish we could bring more countries with us along.

01:11:27.000 Now, is there any possibility of regime change in China that would facilitate this in a more peaceful way?

01:11:36.000 I 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.

01:11:47.000 That's a tall order.

01:11:48.000 I don't think so.

01:11:49.000 And how strong is his control over there?

01:11:52.000 I mean, how much dissent is there against Xi?

01:11:56.000 There'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.

01:12:08.000 It's basically a system of cronies.

01:12:10.000 So 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.

01:12:17.000 But Ding Xiaoping was part of the system.

01:12:20.000 Xi is far more paranoid and far more isolated and far more consolidated than Mao ever was.

01:12:29.000 Jesus.

01:12:30.000 So, how old is Xi now?

01:12:34.000 He's also late 60s, I believe.

01:12:37.000 Yeah, most of the people in the New Polar Bureau technically aren't supposed to serve because they're too old.

01:12:43.000 He waived that rule.

01:12:45.000 What is their requirement before that?

01:12:48.000 I'm not positive.

01:12:49.000 I want to say it was 66. And so he is at the...

01:12:53.000 He's right at that age, I believe.

01:12:56.000 And there's no threat to his reign?

01:12:59.000 None.

01:13:00.000 Well, none within the system.

01:13:02.000 And as long as he stays alive, he will maintain power.

01:13:06.000 And he will be constantly surrounded by cronies.

01:13:09.000 And he has insulated himself from any criticism or any bad news.

01:13:13.000 We've been going this way for a while.

01:13:15.000 So when Ding took over, he realized that one-man government was awful.

01:13:18.000 So 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.

01:13:27.000 And then when they were not the ones who were making the big decisions, they'd still be in the Politburo.

01:13:32.000 So we got our third generation and our fourth generation in the form of Jiang Zemin and Hu Jintao.

01:13:39.000 But 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.

01:13:47.000 So he told these two factions, you then have to pick a compromise candidate for who comes next.

01:13:54.000 And 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. 0.68

01:14:01.000 Well, Xi spent his first five years purging the system of all the other factions.

01:14:07.000 And then the second five years of his reign in making sure that everyone realized it was him and him only who was in charge.

01:14:15.000 After 10 years of that, there's no one left.

01:14:17.000 And so there is no secession plan post Xi.

01:14:19.000 There is no one waiting in the wings.

01:14:21.000 And the old factions that they once existed have basically been sledgehammered.

01:14:25.000 This is such a wild perspective on world economics and international relations.

01:14:31.000 Welcome to my world.

01:14:32.000 But do you feel isolated in that?

01:14:35.000 You're the guy who's like explaining it this way?

01:14:38.000 Eh, I'm adopted.

01:14:39.000 That's not new.

01:14:43.000 What led you down this road to sort of developing this comprehensive view of the future of the world?

01:14:53.000 Well, I'm adopted, so I really have always been on the outside looking in.

01:14:58.000 That is definitely a part of my worldview.

01:15:00.000 But my background is in economic development.

01:15:02.000 So, you know, figuring out what works where and why.

01:15:04.000 And once you kind of get the ideology out of it, you can look for patterns.

01:15:09.000 And that took me to Stratfor and that took me to geography.

01:15:11.000 And so just kind of combining the data patterns with the American strategy for World War II and beyond...

01:15:18.000 With the demographic developments that have happened because of that strategy, it leads you to some pretty unavoidable conclusions.

01:15:25.000 And then it's merely an issue of filling in the blanks.

01:15:29.000 And most of my career now has been filling in the blanks for the last 10 years.

01:15:34.000 Do you have dissenters?

01:15:35.000 How much pushback do you have about these ideas? 1.00

01:15:38.000 Do you think people think you're full of shit? 1.00

01:15:40.000 All kinds of people think I'm full of shit. 1.00

01:15:44.000 I am very sector and goal agnostic in my work, which means I don't really care what your investment strategy is. 0.99

01:15:53.000 If 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.

01:16:01.000 And 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.

01:16:12.000 So, 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.

01:16:26.000 Things like this happen with me with almost every presentation, and last year I gave 179 presentations.

01:16:32.000 What is your perspective on EVs?

01:16:35.000 They're not nearly as good on carbon as people think.

01:16:38.000 Most of the data that exists doesn't take into the fact that most of this stuff is processed in China where it's all coal-driven.

01:16:45.000 And it does not take into account the fact that most grids that they run on are also majority fossil fuels.

01:16:53.000 And that extends the break-even time for carbon from one year to either five or ten based on what model you're talking about.

01:16:59.000 Cybertruck's far worse than EVs.

01:17:03.000 But the bigger problems, we're just not going to be able to make them much longer.

01:17:06.000 If we really do want to electrify everything, that doesn't just mean EVs, that means the entire system that feeds into the EVs.

01:17:14.000 We need twice as much copper and four times as much chromium and four times as much nickel and ten times as much lithium and so on.

01:17:21.000 We have never, ever, in any decade in human history, Doubled the amount of a mainline material production in 10 years, ever.

01:17:30.000 And we need all of this by 2030?

01:17:32.000 No.

01:17:33.000 It's just not technically possible.

01:17:36.000 So 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?

01:17:49.000 Let's put the ideology to the side, because I'm not even going to try to explain that.

01:17:54.000 I will give a little bit of defense for California, though, because I do consider myself a green.

01:18:00.000 I just think of myself as a green who can do math so I don't get invited to any of the parties.

01:18:07.000 California's state legislature gives a lot of authority to their state bureaucracy.

01:18:11.000 So the bureaucracy will set the goalposts. 0.96

01:18:14.000 No ICEs by 2035. Knowing that the technology doesn't exist, knowing that the supply chains don't exist, but they will set the goalposts.

01:18:24.000 If 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.

01:18:36.000 And they do this on clean air issues.

01:18:38.000 They do this on toxicity.

01:18:40.000 They've done it on nuclear power.

01:18:42.000 They undoubtedly will end up doing it on EVs.

01:18:44.000 So do you think it's one of those things where there's a bunch of green people who don't do the math? 1.00

01:18:48.000 Oh yeah.

01:18:49.000 And it just sounds great.

01:18:51.000 It falls in line with the progressive ideology.

01:18:54.000 We need to, you know, carbon neutral.

01:18:56.000 We can do this.

01:18:57.000 Everyone go electric.

01:18:59.000 Yeah, 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.

01:19:06.000 So 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.

01:19:17.000 Because I don't know if you've ever been to Germany, but the sun doesn't shine in Germany.

01:19:20.000 And 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. 0.67

01:19:29.000 It was already their number one source of power.

01:19:31.000 The idea that Germany is green is ridiculous because they rely on really, really dirty coal now especially.

01:19:38.000 But 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.

01:19:49.000 And the answer is simple geography, but that's never been part of the conversation in the environmental community before.

01:19:56.000 Now it is.

01:19:56.000 They should have had this conversation 15, 20 years ago, but they're having it now.

01:20:01.000 And 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.

01:20:14.000 Where will the copper and the nickel and where will all that go?

01:20:18.000 It'll be focused on the green techs that actually work in the geographic areas where it can be applied.

01:20:26.000 So you put solar panels outside of Tucson.

01:20:29.000 You put wind turbines outside of Tulsa.

01:20:31.000 That works with the technology we have now.

01:20:33.000 You do not put solar panels in Connecticut. 1.00

01:20:36.000 That's stupid. 1.00

01:20:37.000 That actually increases your carbon footprint. 1.00

01:20:40.000 Because there's no sun.

01:20:41.000 There's not enough sun to generate enough electricity to pay down the carbon debt that it took to build the stuff in the first place.

01:20:46.000 There's an ideology in this country that is we must act against climate change or we will die.

01:20:53.000 And there's a lot of people that haven't done the research and haven't really looked into this and really don't know what the numbers are.

01:21:00.000 And they repeat that over and over again like it's a mantra.

01:21:03.000 It's become a new religion.

01:21:05.000 Yeah.

01:21:07.000 Like I said, I'm a green, so I broadly believe in the science.

01:21:10.000 When you say you're a green, what do you mean by that?

01:21:12.000 Well, I believe that climate change is real, and I believe it's caused by human action.

01:21:17.000 Some of it, right?

01:21:19.000 The bulk of it.

01:21:20.000 The bulk?

01:21:20.000 Oh, yeah.

01:21:21.000 The bulk of climate change you think is caused by humans?

01:21:24.000 Yeah, I know.

01:21:24.000 I mean, the science of it was settled in the 1890s.

01:21:27.000 It's not particularly crazy.

01:21:29.000 Different gases have different albedos and absorption rates.

01:21:32.000 Now, to think that we can predict on a local level what that looks like, we don't have the math for that.

01:21:38.000 We don't have the case studies for that.

01:21:40.000 We do have weather data going back 130 years, which shows some pretty clear trends.

01:21:44.000 We've heated up by about 1.1 degrees Celsius over that time frame.

01:21:48.000 But that has different impacts based on where you are.

01:21:51.000 If you're in the upper Midwest, it's extended growing seasons and gotten rid of some frost.

01:21:56.000 So pretty soon we're going to be double cropping.

01:21:58.000 But if you're in a drier climate like, say, Phoenix or Australia, it's led to wildfires and a breakdown of the agricultural system.

01:22:05.000 So climate change is change.

01:22:07.000 It's not a disaster.

01:22:08.000 It depends on where you are.

01:22:09.000 So why do you think this ideology has been so pervasive, this ideology that it is a disaster, we're all going to die?

01:22:16.000 Well, now we're getting into cultural debates.

01:22:18.000 Yeah.

01:22:18.000 So one of the many, many, many aspects of modernization is that people become more connected but live in smaller units.

01:22:27.000 Because as you urbanize, you have fewer kids.

01:22:29.000 And 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.

01:22:38.000 And so this is much more further advanced in places like Japan or Europe than it is in the United States.

01:22:42.000 But it's happening here too.

01:22:43.000 And 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.

01:22:52.000 And you can use social media and tech to communicate with people who have a belief system that you find attractive for whatever reason.

01:23:04.000 If 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.

01:23:14.000 It's a technology conversation from my point of view.

01:23:18.000 Whew.

01:23:20.000 So, do you drive an electric vehicle?

01:23:23.000 No.

01:23:23.000 God, no.

01:23:24.000 I live at 7,500 feet in Colorado.

01:23:25.000 That would be suicide.

01:23:27.000 Why is it bad up there at 7,500 feet?

01:23:29.000 They don't deal well with inclement weather.

01:23:32.000 They don't deal well with cold.

01:23:33.000 Right.

01:23:34.000 Yeah.

01:23:35.000 It's fun to drive, though.

01:23:36.000 No.

01:23:37.000 For people who enjoy it, for the driving experience, go for it.

01:23:41.000 Just don't pretend that you're being an environmentalist.

01:23:43.000 What do you think?

01:23:43.000 Have you paid attention to Porsches, what they're trying to do now with hydrogen?

01:23:49.000 They're trying to build a new type of carbon neutral fuel?

01:23:54.000 I don't want to condemn any technology that has not been through its development process.

01:23:59.000 But what I have seen from hydrogen at the moment suggests that it is far dirtier than gasoline.

01:24:05.000 In what way?

01:24:06.000 You have to get the hydrogen from somewhere.

01:24:09.000 And right now we plug it from natural gas.

01:24:11.000 So you've got a carbon input there.

01:24:13.000 Then you have to build out a transmission system for it.

01:24:17.000 And the hydrogen molecules are tiny.

01:24:19.000 They're the smallest molecules that we have.

01:24:20.000 And the seals have to be perfect.

01:24:22.000 Otherwise you're just hemorrhaging the stuff.

01:24:24.000 So you're generating something from fossil fuels and they're hemorrhaging it all along the way.

01:24:28.000 And I got to say, if they don't do it right, a car accident where hydrogen is involved is really exciting.

01:24:34.000 Oh, Jesus.

01:24:35.000 You got a Hindenburg type situation.

01:24:37.000 Yeah.

01:24:37.000 No, I'm not saying they can't make it work.

01:24:40.000 I'm saying they haven't made it work.

01:24:41.000 Is that what Porsche's using?

01:24:42.000 Do they have some sort of experimental fuel that they have in production?

01:24:49.000 It might be a cell.

01:24:50.000 I don't know.

01:24:50.000 But I know that obviously they've created electric vehicles.

01:24:56.000 They call it e-fuel.

01:24:58.000 Act like gasoline.

01:25:01.000 It could provide gas alternative amid EV push.

01:25:05.000 Porsche 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.

01:25:14.000 Officials say e-fuels act like gasoline, allowing vehicle owners a more environmentally friendly way to drive.

01:25:21.000 Porsche 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.

01:25:30.000 I am unfamiliar with the chemistry for this one.

01:25:33.000 Porsche and several partners have started production of a climate neutral.

01:25:37.000 Do you believe that?

01:25:38.000 Not really.

01:25:40.000 E-fuel aimed at replacing gasoline in vehicles with traditional internal combustion engines.

01:25:46.000 The German automaker, owned by Volkswagen, said Tuesday that a pilot plant in Chile started commercial production of the alternative fuel by mid-decade.

01:25:55.000 Porsche is planning on producing millions of gallons.

01:25:57.000 We already said that.

01:25:58.000 Yeah, yeah.

01:25:59.000 So...

01:26:00.000 Yeah, there are some versions of this technology where they're hoping they can get...

01:26:04.000 Yeah, so e-fuels are a type of synthetic methanol produced by a complex process using water, hydrogen, and carbon dioxide.

01:26:14.000 Companies say they enable the nearly CO2 neutral operation of a gas powered engine.

01:26:21.000 Vehicles would still need to use oil to lubricate the engine.

01:26:25.000 In the pilot phase, Porsche expects to produce around 130,000 liters of e-fuel.

01:26:32.000 Plans are to expand that to almost 55 million liters by mid-decade.

01:26:36.000 Around 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,

01:26:53.000 highly innovative fuels, renewable energies.

01:26:56.000 Let me slap some science on that real quick. 0.56

01:26:59.000 The three base materials, water, carbon dioxide, and oxygen are three of the most stable molecules in the natural world.

01:27:07.000 And so to break them apart with electricity to make something else is a massive power suck.

01:27:13.000 If 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.

01:27:22.000 The 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.

01:27:35.000 That's a lot of solar power.

01:27:37.000 And all of that to get, in their best case scenario, 550 million gallons.

01:27:43.000 We use almost 10 million barrels of liquid fuels in just the United States every day.

01:27:50.000 So you need to expand that by a factor of a couple hundred.

01:27:54.000 What about nuclear?

01:27:56.000 I am broadly pro-nuclear.

01:27:59.000 The problem is time frame.

01:28:01.000 If there were no regulations at all, it takes seven years to build one of those suckers.

01:28:06.000 We don't have that kind of time, honestly.

01:28:09.000 And if we start right now, we won't see first output this decade.

01:28:13.000 There are small modular reactors that look really promising.

01:28:18.000 You can basically put them on the back of a semi-flatbed.

01:28:21.000 But they don't exist yet.

01:28:22.000 And 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.

01:28:30.000 But wouldn't it be wise to start moving in that direction now if you're broadly pro-nuclear?

01:28:36.000 The issue is until we solve the fuel problem.

01:28:48.000 It's relatively inexpensive.

01:28:52.000 It's relatively easy.

01:28:54.000 But it has a side effect of producing weapons-grade plutonium.

01:29:00.000 So to do this at scale, we have to produce a civilian weapons quality plutonium disposal and management system.

01:29:14.000 We haven't figured out how to do that.

01:29:17.000 What do they do with it now?

01:29:18.000 They don't process it.

01:29:20.000 They just leave it in the spent fuel rods and they put it into a pond until the end of time.

01:29:24.000 Oh boy.

01:29:26.000 No silver bullets.

01:29:27.000 So is it just that they don't know how to do it or do they have theories on how to do it?

01:29:33.000 You 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.

01:29:45.000 But then what do you do with the plutonium because you have now purified it because of this process.

01:29:50.000 What do they do?

01:29:51.000 They just put it in a pond.

01:29:52.000 They don't even separate it.

01:29:54.000 I was reading about some technology where they think they could take nuclear waste and convert it into batteries.

01:29:59.000 I have not heard that one.

01:30:00.000 See if you can find that.

01:30:02.000 There was a process of processing nuclear waste and converting it into a renewable resource.

01:30:11.000 It's a nice thought.

01:30:13.000 Great thought.

01:30:14.000 If the aliens could come down and give us some new tech.

01:30:17.000 But as of what we have right now, you're not aware of anything that could do that.

01:30:21.000 No, no.

01:30:21.000 I mean, don't get me wrong.

01:30:22.000 I think solar and wind, especially wind, are great in the places where they work.

01:30:26.000 Here it says, radioactive waste can be recycled to create diamond batteries.

01:30:29.000 Scientists involved an American startup for the development of nanodiamond batteries Are trying to turn radioactive waste into batteries.

01:30:37.000 NDB is a perpetual green self-charging battery made from recycled nuclear waste isotope combined with layers of nano diamonds in a battery cell.

01:30:46.000 Extremely good thermal conductivity of micro diamonds causes heat removal from radioactive isotopes so the process of generating electricity is fast.

01:30:56.000 NDB generates electricity similar to that obtained from solar panels, but uses radioactive decay energy instead of sunlight.

01:31:04.000 An NDB battery usually consists of three main components, an isotope, a converter, and a storage unit.

01:31:10.000 Due to the delay, decay rather, isotope radiation is transformed into electrical energy in the converter.

01:31:17.000 The storage unit accumulates energy for future use.

01:31:21.000 We're problem solved, bro!

01:31:22.000 Yeah, just keep in mind that this is radioactive decay and that's what turns you into goo.

01:31:26.000 So you're not going to put this in your watch.

01:31:28.000 You're not going to have it in your car.

01:31:29.000 You're going to have it at a fixed, secured location.

01:31:32.000 Now, will that be like a power plant?

01:31:35.000 Maybe, but wow, I hope nothing goes wrong.

01:31:40.000 So these radioactive diamonds?

01:31:42.000 It's a diamond layer over the waste, and then the waste is decaying, and then they conduct the heat somehow.

01:31:48.000 So the decay is inside the diamond as long as the diamond doesn't get broken.

01:31:54.000 I'm guessing that the diamond is there to absorb things like beta and gamma radiation.

01:31:58.000 Hmm.

01:31:59.000 But this, you believe, also very dangerous.

01:32:02.000 Well, it would require some very serious security issues, but at least from a chemical point of view, it sounds theoretically possible.

01:32:08.000 The patented NDB Universal self-charging battery provides a charge of up to 28,000 years of battery life.

01:32:15.000 No more worried about your phones, bro.

01:32:17.000 The life, the half-life of most of this stuff is in the thousands of years, so yeah, I guess technically that's true.

01:32:34.000 I'm going to go with a hard no on that one.

01:32:36.000 Really?

01:32:37.000 Why?

01:32:37.000 You're going to put something that is powered by radioactive decay in your ear?

01:32:43.000 But is this an oversimplification?

01:32:46.000 I mean, if you were really well-versed in this technology, do you think this is possible? 0.99

01:32:53.000 There'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. 0.97

01:32:59.000 You're certainly not going to have it on your person. 0.99

01:33:01.000 So you think this is all just pipe dreams?

01:33:03.000 I think in that interpretation it's a pipe dream.

01:33:06.000 Because think about what would happen if this is real.

01:33:09.000 And you can get a sizable one of these like for a car.

01:33:11.000 All it takes is a pickaxe and all of a sudden somebody has a dirty bomb.

01:33:17.000 Jesus.

01:33:19.000 Having it in a secured location where it provides energy to a grid?

01:33:22.000 Maybe.

01:33:23.000 Maybe.

01:33:24.000 Have a good security system.

01:33:26.000 Yeah, but you don't – so you're not a believer.

01:33:28.000 But are you just basing this on your instincts?

01:33:31.000 I mean do you think that you should maybe reserve judgment?

01:33:34.000 That's fair.

01:33:35.000 But they did say specifically powered by radioactive decay of spent nuclear fuel.

01:33:40.000 Right.

01:33:41.000 That's what turns you to goo. 0.99

01:33:43.000 And so you just think just because it's encased, this presents all sorts of damage if the case is broken.

01:33:48.000 If the case is broken, anyone locally is screwed.

01:33:51.000 Yeah, so if you drop your smartphone and it starts leaking radioactive decay in your pocket.

01:33:56.000 We all know that smartphones are indestructible, so I'm not worried about that.

01:34:01.000 Jesus, Peter.

01:34:03.000 I'm an equal opportunity bubble popper.

01:34:06.000 You must be a real problem at parties.

01:34:08.000 When someone starts talking out of school.

01:34:09.000 I bring the burb and everybody gets over it.

01:34:15.000 So if you were the king of the world, how would you navigate us out of the situation?

01:34:21.000 Oh, like the whole thing, not just the nuclear waste issue?

01:34:24.000 Well, let's start with the nuclear waste issue.

01:34:26.000 We need a central repository where the stuff can be processed and the plutonium can be disposed of or at least incarcerated forever.

01:34:33.000 That is the idea behind Yucca Mountain.

01:34:35.000 But 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.

01:34:43.000 Because nobody wants that stuff in their neighborhood.

01:34:45.000 Right.

01:34:46.000 Which is why we want to put it in Nevada because aside from Vegas, there's nobody in Nevada.

01:34:49.000 Sorry, Reno.

01:34:51.000 Sorry, Reno.

01:34:52.000 So when you – it was like if you did – if somebody said, hey, Peter, how do we handle this?

01:34:59.000 What would be your steps?

01:35:01.000 Well, if you want to look at American history, we'd probably put it someplace like Guantanamo, where American federal law doesn't apply.

01:35:08.000 I'm not saying I recommend that.

01:35:10.000 I'm just saying that's the easy solution.

01:35:12.000 Really, we need a place like Northern Nevada that the federal government just buys and shoves it through.

01:35:19.000 And if they did that, do you think that's feasible?

01:35:22.000 I think that's what other countries who have experienced this problem have done.

01:35:27.000 There 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.

01:35:37.000 So that's not really, right?

01:35:39.000 That would be the best approach if you want nuclear power to be a meaningful part of our future.

01:35:44.000 But it would take a radical restructuring of the law.

01:35:46.000 Right.

01:35:46.000 And it would probably take Congress literally ramming it through the courts.

01:35:50.000 They'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.

01:35:56.000 But the conversation about nuclear has not been very positive in this country.

01:36:00.000 No, it's not.

01:36:01.000 We've only built one new facility in the last 45 years.

01:36:07.000 So outside of that, how do you think we should handle it?

01:36:10.000 Wind, wind, wind.

01:36:11.000 Wind, really?

01:36:25.000 But as you go higher and higher and higher, you can spread that out.

01:36:29.000 And 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.

01:36:37.000 And we're moving that direction.

01:36:38.000 And it's not with subsidies.

01:36:40.000 It's just that the economics of the turbines as they go up get better and better.

01:36:43.000 What about the possibility of solar getting more efficient?

01:36:47.000 It can.

01:36:47.000 The big problem with solar is not just the efficiency though, it's the timing.

01:36:52.000 Peak demand for electricity in most places is after sunset in the winter.

01:36:58.000 And solar will never be part of that solution.

01:37:01.000 Right, because sun's not out at night.

01:37:03.000 So we need a lot of money into tertiary education and research grants to find a better battery than lithium.

01:37:10.000 Because we don't want something that can store power for an hour, two, three, four hours.

01:37:13.000 We need something that can store power for a week, a month.

01:37:18.000 We're never going to do that with lithium.

01:37:19.000 And is there anything on the horizon that holds promise in that regard?

01:37:23.000 There's nothing that at this point is promising that has reached the prototype stage.

01:37:28.000 There 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.

01:37:36.000 So if you were going to guide our energy policy...

01:37:40.000 I 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.

01:37:48.000 And would that be effective?

01:37:50.000 I mean, even if you just throw a lot of money at it?

01:37:52.000 Do you think that...

01:37:53.000 Until we have the material science breakthroughs, the rest of it is kind of just spinning in the mud.

01:37:57.000 So you think that an approach in that regard would be wise because we're spending a lot of money on a lot of things anyway.

01:38:05.000 Right.

01:38:05.000 Spending it on that, at least you have the promise of possibly coming up with some sort of a feasible solution.

01:38:12.000 I'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.

01:38:22.000 Okay, so that's our energy problem.

01:38:24.000 What about our food problem?

01:38:26.000 In the United States, we don't have one.

01:38:28.000 We don't?

01:38:28.000 No.

01:38:29.000 Don't we have a problem with our topsoil, where there's only like 60 seasons left of the topsoil?

01:38:34.000 Yeah, I've been hearing that for 40 years, and it hasn't happened yet.

01:38:37.000 I 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.

01:38:46.000 I mean, we're not Brazil where there's zero soil fertility.

01:38:49.000 And if something happens to one season of fertilizer supply, you just don't grow anything.

01:38:53.000 They have zero soil fertility?

01:38:55.000 Yeah, it's all reclaimed tropics.

01:38:57.000 So 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.

01:39:06.000 And without the fertilizer, nothing grows.

01:39:07.000 Now, with the fertilizer, you can get two, maybe even three crops.

01:39:10.000 So it's not a horrible business model, or at least it hasn't been to this point.

01:39:14.000 But 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?

01:39:26.000 There's not a lot we can do about that.

01:39:29.000 There are things that you can do with genomics and with precision agriculture to more target the inputs to each individual plant.

01:39:38.000 That can work with corn and soy.

01:39:40.000 It 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.

01:39:51.000 Stock, stock, stock, stock.

01:39:53.000 But wheat is just a maze of tiny, tiny little plants.

01:39:57.000 There are too many of them for you to economically treat each individual one differently.

01:40:01.000 And unfortunately, wheat is our number one crop in terms of calories.

01:40:07.000 So it's genomics or nothing for wheat.

01:40:12.000 And we're better off than a lot of other countries.

01:40:14.000 We're the world's largest food producer and exporter.

01:40:16.000 We are not going to starve.

01:40:18.000 We might have some problems with out-of-season avocados, but I think we can live with that.

01:40:21.000 But the rest of the world, it seems like, according to your model, is in real dire straits.

01:40:27.000 Over half of the world's population is food threatened now.

01:40:32.000 And that's before we have fertilizer shortages.

01:40:35.000 And what was the cause of this?

01:40:38.000 Like, why has there been so...

01:40:40.000 Runaway success.

01:40:43.000 Since the Cold War ended, we've brought huge new swaths of humanity into the globalized system.

01:40:50.000 And the integration of Russia and China and Brazil, that is the story of the post-World War.

01:40:54.000 I'm sorry, of the post-Cold War era.

01:40:57.000 But 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. 0.86

01:41:04.000 So Brazil's land sucks without fertilizer.

01:41:06.000 The Russian territories has very low productivity, and China has some of the worst land in the world.

01:41:11.000 It 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.

01:41:22.000 We're now seeing that unwind.

01:41:24.000 We're only in the very early stages of this.

01:41:26.000 And as it unwinds, What can be done to mitigate this oncoming crisis that you're describing?

01:41:34.000 Because it sounds quite terrifying.

01:41:36.000 We're going to have to pick winners and losers, unfortunately.

01:41:39.000 There's just not enough.

01:41:40.000 If 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.

01:41:50.000 Now, the Canadians, after the Russians, are the world's leader, and they have started.

01:41:55.000 They'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.

01:42:00.000 And what is potash?

01:42:02.000 Potash 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.

01:42:12.000 It's potassium fertilizer.

01:42:15.000 And this is...

01:42:17.000 It's one of the three.

01:42:19.000 Potash is potassium, and then phosphate and nitrogen.

01:42:22.000 Nitrogen, 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.

01:42:32.000 And when you say winners and losers, what do you anticipate happens to the losers?

01:42:37.000 Well, I mean, if you only have enough fertilizer to support a half a billion people, that means you get to choose who gets it.

01:42:45.000 We're good to go.

01:43:20.000 It's really that hard.

01:43:22.000 Yeah.

01:43:23.000 We can't support our current population without industrialized inputs for agriculture.

01:43:29.000 And without those inputs, on average, yields will drop by more than half.

01:43:33.000 And, like, what kind of timeframe are we talking about until this global collapse?

01:43:38.000 That, of course, is the billion-dollar question.

01:43:42.000 Because of what's going on in China, we don't know, because the decision-making process has become so opaque.

01:43:47.000 But 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.

01:43:54.000 But if you think it was all going to break down anyway, there's something to be said for pulling the cord earlier.

01:44:00.000 The Russian system could break tomorrow or at that point.

01:44:05.000 And 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.

01:44:16.000 Pieces are falling out.

01:44:18.000 And the risk here is that something will fall out that will then domino.

01:44:25.000 And I think the issue to watch for that this coming year is the energy question.

01:44:31.000 Because now that we have insurance companies saying just no, we're not going anywhere near the Russian space at all.

01:44:36.000 It 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.

01:44:44.000 And 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.

01:44:52.000 And the last time it took the Russians 30 years to re-drill everything. 1.00

01:44:56.000 So when we lose Russian crude this time, it's gone for good. 0.99

01:45:00.000 Holy shit, dude. 0.98

01:45:04.000 And so if you look ahead 25 years from now, how do you see the world? 0.99

01:45:10.000 25 years from now, we're going to be on the other side of this.

01:45:13.000 So 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.

01:45:33.000 We'll also have had 30 years, 25 years, for this demographic situation to play out, and we will find out what is next.

01:45:40.000 One of the big mysteries right now is we've never, ever in any era had a country with more retirees than working age population.

01:45:48.000 We don't know really what that leads to.

01:45:51.000 We know they're not growing food.

01:45:53.000 We know they're not producing goods.

01:45:54.000 But 25 years from now, that big retiree class is mostly gone. 0.97

01:45:59.000 And then we get to see, after 25 years of experimentation, what sort of economic model might replace that.

01:46:05.000 Now, hopefully for the United States and Mexico and Canada, we're going to learn something from all these experimentations.

01:46:11.000 Because the Germans are probably going to be at the leading edge of this. 0.99

01:46:14.000 And they're not going to go quietly into that good night.

01:46:16.000 They're going to try to survive.

01:46:18.000 Some countries are going to pull it off.

01:46:21.000 But I don't think anyone has an idea of what that system looks like because N equals zero.

01:46:28.000 We've never been through this before.

01:46:30.000 We're making it up as we go.

01:46:32.000 And I've heard you talk about the generations that are upcoming in this country and not with a very rosy perspective.

01:46:41.000 You 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.

01:46:55.000 Well, I'm a Gen Xer, so I'm always going to belittle and look down on the millennials, mostly because they deserve it. 1.00

01:47:01.000 My big concern moving forward, though, is not so much the millennials, because the millennials exist in large number.

01:47:07.000 They're providing the consumption ballast of today, the investment ballast of tomorrow.

01:47:11.000 They're, to be perfectly blunt, going to save us all.

01:47:14.000 My concern is with the Zoomers, the younger kids, kids 22 and under. 1.00

01:47:19.000 There aren't a lot of them.

01:47:20.000 They're our smallest generation ever. 0.95

01:47:23.000 By what factor?

01:47:24.000 There are about 30% fewer of them than there were millennials at the same age.

01:47:30.000 And what do you attribute that to?

01:47:32.000 Well, their parents were Gen X. We were a small generation, too.

01:47:35.000 So a small generation generates a small generation, and they were raised in an era of digitization.

01:47:41.000 So 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.

01:47:51.000 So they are likely to also generate very few children.

01:47:55.000 Now, 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. 0.90

01:48:03.000 How do you see that playing out?

01:48:06.000 The technology changes.

01:48:08.000 It changes you.

01:48:09.000 You change it.

01:48:10.000 And the Zoomers are the generation who's going to decide what all this interconnectivity means. 1.00

01:48:15.000 And if they can figure out how to do that and still have families, we'll be fine.

01:48:19.000 And if they can't, we are starting down the German path. 0.98

01:48:23.000 Now, worst case scenario, we still have another 60 years.

01:48:32.000 Yeah, it was always a hot dumpster fire.

01:48:35.000 Always?

01:48:36.000 Yeah, I'm not going to say that it was all fraud.

01:48:38.000 Some of it was a pyramid scheme.

01:48:40.000 There's never been anything there.

01:48:43.000 It serves no purpose.

01:48:45.000 It's not a store of value.

01:48:46.000 It's not a medium of exchange.

01:48:47.000 And as we have seen, if you want it decentralized and not under government control, it is a haven for fraudsters.

01:48:53.000 And now it is in the process of going to...

01:48:55.000 Zero, 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.

01:49:07.000 Well, that's certainly playing out with FTX, where you're finding out that it's a house of cards.

01:49:14.000 Do you feel like that's just sort of opened the door for people to examine all of crypto now?

01:49:19.000 Oh yeah, absolutely.

01:49:20.000 It's like as soon as you have one of the big ones go down, it's just a matter of- And just go down catastrophically within a week.

01:49:26.000 Yeah, I mean, there's no intrinsic value to this asset.

01:49:30.000 And now it's starting to be priced appropriately.

01:49:32.000 So it has a, you know, what's Bitcoin at?

01:49:34.000 16,000?

01:49:35.000 It has another 17,000 to go down.

01:49:38.000 Really?

01:49:39.000 Yeah.

01:49:39.000 There's no intrinsic value to this product.

01:49:42.000 And do you think that people just inherently lost faith in the idea behind crypto because of FTX? Well, it became an ideology.

01:49:51.000 And whenever you invest based on an ideology, you're going to make some decisions that are a little divorced from math.

01:49:56.000 And what do you mean by ideology?

01:49:58.000 Well, 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.

01:50:14.000 And that's just not how currency works.

01:50:16.000 Currency is a method of exchange and a store of value.

01:50:19.000 And for that, there has to be a degree of trust and you have to have it managed in terms of volume.

01:50:25.000 One of the craziest things about Bitcoin is that there will never be more than X number of units of Bitcoin.

01:50:32.000 Well, 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.

01:50:44.000 If currency is locked into a specific number, you get monetary inflation, and that is one of the fastest ways to destroy an economic model.

01:50:52.000 So because of the lack of Bitcoin, because there's a certain controlled number, the only thing that can happen is Bitcoin becomes more expensive.

01:51:00.000 Right.

01:51:00.000 And that means that the people who hold it are the ones that make the money, but everyone else suffers.

01:51:04.000 I'm sorry, that's not viable.

01:51:07.000 The alternative is you have some private dude out there who generates the coins on a whim.

01:51:12.000 How 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?

01:51:19.000 No.

01:51:20.000 No.

01:51:22.000 Now, a lot of people have concern that the United States is trying to generate a centralized digital currency that they will control.

01:51:28.000 The Federal Reserve disagrees with that statement.

01:51:31.000 What do you mean?

01:51:31.000 Well, they don't see a purpose.

01:51:33.000 They don't see what need it fills.

01:51:36.000 So there may, may be an argument for the Chinese doing a digital yuan so they can monitor each and every transaction.

01:51:44.000 You know, conspiracy theorists are going to conspiracy.

01:51:46.000 That's just what they do.

01:51:47.000 No, I was reading, like, mainstream articles about the United States confirming that they're trying to develop a centralized digital currency.

01:51:53.000 Now, if you're talking about a digital exchange system, then I can see that.

01:51:58.000 See if you can find something like that.

01:51:59.000 But something separate from the USD? No.

01:52:04.000 I only looked at the headlines of it because someone was sending it around and I didn't have the time because it was yesterday.

01:52:10.000 But this idea of a centralized digital currency is something that Maxine Waters talked about.

01:52:16.000 She said that we have to do that in order to compete with China.

01:52:19.000 Maxine Waters is not exactly the brightest person in Congress.

01:52:23.000 That's not saying a lot.

01:52:24.000 Yeah, I know it's a low bar, but she passes it. 0.72

01:52:26.000 I'm just pulling up to see if this is what you're talking about.

01:52:30.000 Digital dollar is something that makes sense.

01:52:32.000 The idea of smoothing the connections within the plumbing of the financial system or moving beyond a physical currency at all, that all makes sense.

01:52:40.000 That's kind of like the next step.

01:52:42.000 But a separate currency where everything is mitigated or managed by the Fed, that's not something the Federal Reserve has an interest in.

01:52:50.000 Let me go to Tim Kennedy's Instagram because he was the one who posted it a couple of days ago.

01:52:56.000 White House releases first ever comprehensive framework for responsible development of digital assets.

01:53:03.000 Yeah, this happened right after Bitcoin really started a nosedive.

01:53:08.000 And the question is how do you bring crypto into the regulatory environment?

01:53:14.000 But this is a framework for responsible development of digital assets.

01:53:18.000 It doesn't mean a centralized digital currency the United States creates.

01:53:21.000 If you just go to Tim Kennedy's, there's an article that describes it and he's talking about the dangers of this.

01:53:31.000 Yeah.

01:53:32.000 You gotta go?

01:53:33.000 Yeah, sorry.

01:53:34.000 This is fun, though.

01:53:35.000 It's been a lot of fun.

01:53:36.000 You scared the shit out of me, buddy.

01:53:37.000 You're welcome. 0.89

01:53:38.000 But you're used to that, huh?

01:53:40.000 Yeah, you throw some bourbon in me, I get really lively.

01:53:42.000 It's official the United States is developing a bank-to-bank digital currency.

01:53:49.000 Take that headline and just Google that headline and find out what that means.

01:53:54.000 The United States is developing a bank-to-bank digital currency.

01:53:58.000 I'm concerned with the United States having that along with a social credit score system.

01:54:03.000 No, we don't have the math for that.

01:54:05.000 We don't have the math for that.

01:54:07.000 Well, the Chinese have proven that their social credit score system broke. 1.00

01:54:10.000 They didn't have the processing capacity to keep track of it.

01:54:13.000 And that is with a near-bottomless supply of resources and full control of the political system.

01:54:18.000 So we certainly don't.

01:54:20.000 For those who thought the United States was behind the digital currency space race, the news was welcome.

01:54:25.000 And 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.

01:54:41.000 Yeah, I'm oversimplified.

01:54:42.000 The technical details was a revealing line on the ambitions of the project.

01:54:46.000 The goal of the new network is to reduce settlement risk in cross-border, cross-currency transactions.

01:54:54.000 The message, we see what the world is doing with CBDCS and the United States is not going to be left behind.

01:55:02.000 So the way trade finance works is if you're in Korea and you want to sell something to Chile, you sell it in won.

01:55:09.000 It's transferred into U.S. dollars, and then the U.S. dollars are transferred into pesos.

01:55:14.000 There's a three-step process, and each of those requires a transaction.

01:55:18.000 But if you can digitize it, then it's click-click, and you're done.

01:55:22.000 That's what that's talking about.

01:55:24.000 So you don't think that the fear of a centralized digital currency that the United States controls, you're not worried about that?

01:55:31.000 I mean, honestly, the Federal Reserve, that's not what they're good at.

01:55:35.000 And that's not what they're trying to do.

01:55:36.000 And it's not what they have an interest in doing.

01:55:38.000 If they were to inject themselves into each individual transaction, that would be a nightmare for them.

01:55:43.000 Well, Peter, I appreciate your time.

01:55:45.000 I know that you have to get out of here to catch a flight. 0.71

01:55:47.000 And I appreciate you scaring the shit out of everybody.

01:55:50.000 And this view of the world and what you've laid out is not that nice. 0.97

01:55:55.000 Well, I'll bring some diapers next time.

01:55:57.000 How about that?

01:55:57.000 I don't think that's going to help.

01:55:59.000 But I appreciate all of your research and your time and your insight.

01:56:03.000 It was very interesting.

01:56:05.000 I'm glad you enjoyed yourself.

01:56:06.000 I know I did.

01:56:06.000 If people want to find out more about your stuff, what is your social media if you have it?

01:56:11.000 Sure.

01:56:12.000 On Twitter, I'm at Peter Zion.

01:56:14.000 That's Z-E-I-H-A-N. Or you can go to ZEIHAN.com and sign up for the newsletter, which is free and will always be free. 0.99

01:56:21.000 Well, thank you very much.

01:56:22.000 I really appreciate your time.

01:56:23.000 My pleasure.

01:56:24.000 Bye, everybody.

The Joe Rogan Experience - January 07, 2023

Joe Rogan Experience #1921 - Peter Zeihan

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