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Speaker 1: All right, Matthew Pines, director of Intelligence at Krebs Stamos,

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Speaker 1: so a national security fellow, You're pretty tied in on

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Speaker 1: the kind of global techno industrial war that's going on,

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Speaker 1: a term that you've kind of used, geopolitical, cyber all that. So, man,

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Speaker 1: there's so much we can jump in today. I'm excited

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Speaker 1: to have you. Thanks for joining me.

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Speaker 2: Yeah, thanks for having me.

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Speaker 1: So, you know, I know we had some conversations offline

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Speaker 1: kind of talking about this kind of global game of thrones.

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Speaker 1: When I was a kid, game my parents played was

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Speaker 1: this game of risk, which was like this board game,

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Speaker 1: you know, and if you think about it like that,

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Speaker 1: we're sort of seeing that where. You know, something I've

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Speaker 1: been talking about is this decentralized revolution. Now, the world

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Speaker 1: had been moving towards this globalism and kind of one

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Speaker 1: world government, you know, centralized world, and now it seems

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Speaker 1: to be kind of breaking apart back into whatever you

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Speaker 1: want to call it, multipolar world whatever, And that seems

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Speaker 1: like there's a lot of things, a lot of interest,

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Speaker 1: a lot of things going on there. You kind of

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Speaker 1: framed it up in this techno industrial war. I think

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Speaker 1: you kind of said there's a lot of arenas inside

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Speaker 1: of that.

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Speaker 3: So why don't you just frame that up for us first?

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Speaker 4: Yes, I mean at the level of great power is

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Speaker 4: great power competition, which is the era that we're in. Like,

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Speaker 4: competition is over what are the instruments that modern states

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Speaker 4: rely on to accrue and project power. And in the

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Speaker 4: modern sort of technologically driven civilization, that's basically predicated on

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Speaker 4: controlling capital flows, controlling supply chains, and controlling the most

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Speaker 4: advanced technologies and the networks that the world system runs on. Right,

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Speaker 4: So the world is now a wash in networks, networks

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Speaker 4: for finance, right, banking networks, networks for data like the

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Speaker 4: Internet that often you know, banking transactions go over as well,

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Speaker 4: networks of supply chains, trade relationships, military alliances, and so

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Speaker 4: network power is sort of what people are competing over,

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Speaker 4: and the dominant networks that determine who is going to

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Speaker 4: win or lose in those competition is who has sort

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Speaker 4: of the choke point and surveillance control over those networks.

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Speaker 4: And that is a sort of an almost an all

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Speaker 4: or nine game, right, And so the United States has

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Speaker 4: been in a position post war of building a globalized

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Speaker 4: system where it had the dominant role in those networks

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Speaker 4: it had the keynodes, or it had alliance networks that

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Speaker 4: give it access to those keynodes, whether it's surveillance over

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Speaker 4: the global Internet, whether it's influence over global trade policy,

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Speaker 4: whether it's controlling of global shipping lanes. And that's the

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Speaker 4: world's system that we think about kind of the hegemonic

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Speaker 4: sort of unipolar era. It's sort of defined by the

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Speaker 4: United States control over these critical networks. And so China has,

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Speaker 4: you know, embarked on a strategic effort of the past

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Speaker 4: twenty you know plus years to either displace those networks

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Speaker 4: or to complete and replace it with their own, or

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Speaker 4: try to co opt and take over US's or the

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Speaker 4: G seven's sort of legacy position in controlling the existing networks.

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Speaker 4: That's like the macro frame for the competition we see,

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Speaker 4: and you can sort of chunk that into kind of

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Speaker 4: the financial dimension, the technology dimension, the military dimension, et cetera.

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Speaker 3: Where does the information fit into that dimension?

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Speaker 4: I mean that is I mean this kind of a

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Speaker 4: cliche to say data is the new oil, but that

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Speaker 4: is increasingly a subject of intense geopolitical competition.

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Speaker 1: But would you separate data from from information? So when

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Speaker 1: I think about like all we're constantly hearing. Well we

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Speaker 1: already know to your point, China kind of had their

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Speaker 1: own network, so they had the great firewalls. They control

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Speaker 1: the information that comes in, so they don't want you know,

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Speaker 1: Western social media or Google to influence their people. And

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Speaker 1: now today we continue just pounding in our misinformation. Misinformation, uh,

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Speaker 1: you know, from the globalist the world that comic for

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Speaker 1: them all the way down to the Biden administration misinformation.

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Speaker 1: So it seems like the war is about controlling money

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Speaker 1: and controlling information.

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Speaker 3: Would you put data and information in there together?

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Speaker 4: I would say information in the sense of like consumable content. Yeah,

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Speaker 4: that human beings can and just understand is a subset

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Speaker 4: of all data. Right, So there's lots of packets going

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Speaker 4: across the internet, whether it's transactions for you know, just

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Speaker 4: sort of stock trades that are not human readable, and

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Speaker 4: so yeah, like competition and state interest in controlling say

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Speaker 4: another nation, ability to influence what your domestic population is

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Speaker 4: consuming as like you know information you know that determines

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Speaker 4: their political attitudes, their beliefs about say conflicts, who's responsible

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Speaker 4: or who isn't for particular foreign conflict to try to

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Speaker 4: shape attitudes and motivations at a domestic level. That's that's

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Speaker 4: a capability that a lot of states have always invested

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Speaker 4: in and try to say, plant stories in a foreign newspaper,

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Speaker 4: but it took a lot of effort. You had to

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Speaker 4: like have an intelligence operation to recruit a journalist in

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Speaker 4: a foreign country, and you know try to do you know,

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Speaker 4: strategic influence operations to shape kind of policymaking or broader

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Speaker 4: public perceptions. I think one of what has been accelerated

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Speaker 4: with the advent of sort of global platforms for technology

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Speaker 4: is that that game is now playing out at a

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Speaker 4: much faster scale in a much more fine tuned manner

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Speaker 4: where you can you can you can have sort of

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Speaker 4: active operations to influence perception across borders. So global platforms,

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Speaker 4: both the US based platforms as well as you know

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Speaker 4: foreign platforms for social media, for news, et cetera, are

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Speaker 4: are pervasive across multiple different jurisdictions.

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Speaker 2: And that is that when you're in.

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Speaker 4: A global world where you know there warn't as intense

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Speaker 4: you know, state rivalries and competition over political influence operations

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Speaker 4: and you could kind of like let it simmer in

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Speaker 4: the background. Now we have acute tensions of play now

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Speaker 4: we have live, you know, issues where states are trying

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Speaker 4: to manipulate the ability of you know, other citizens to

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Speaker 4: perceive what you know is happening and what views they

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Speaker 4: should hold.

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Speaker 2: And that is where the.

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Speaker 4: Tension between open, free discourse and a civil society starts

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Speaker 4: to run up against concerns about say, foreign influence operations

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Speaker 4: or deception by say, you know, parties that have control

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Speaker 4: over algorithms that aren't that aren't visible to the public.

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Speaker 4: That's that's seeing what feeds are generated. And yeah, this

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Speaker 4: is a that is a subset like the competition over information,

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Speaker 4: and it's really premised on the fact that we now

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Speaker 4: live in a global technological civilization that uses these platforms

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Speaker 4: to share information on a global scale.

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Speaker 3: Yeah.

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Speaker 1: Yeah, you know, one thing I talk about all the

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Speaker 1: time is kind of these three converging cycles, and it's

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Speaker 1: the political cycle, two and three year political cycle, eighty

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Speaker 1: year financial cycle, with a fifty year tech cycle. And

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Speaker 1: how when you look back history's always technology that changes

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Speaker 1: the world the most because it changed the way we organize, communicate, work.

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Speaker 3: Et cetera.

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Speaker 1: And it's almost like technology is just advancing way faster

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Speaker 1: than our civilization or really our political structures have advanced.

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Speaker 1: So if you look back to the Industrial Revolution, which

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Speaker 1: was obviously a big technological revolution, and it really created

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Speaker 1: this centralization and then it led into kind of you

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Speaker 1: Henry Ford with the assembly line mass production, and then

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Speaker 1: you had mass productions. You had mass amounts of people

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Speaker 1: working on the assembly lines, and you had to come

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Speaker 1: up with a management structure that managed them.

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Speaker 3: All like a cog and a wheel.

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Speaker 1: So even though you're way smarter than me, we work

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Speaker 1: on the assembly on line next to each other, we

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Speaker 1: do the exact same job, and so we come up

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Speaker 1: with mass management for managing the masses, and then you

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Speaker 1: kind of had this political structure that's set up on

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Speaker 1: top of that. But today, now we're in this information world,

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Speaker 1: we're no longer in that world, but the political structures

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Speaker 1: really haven't changed. It seems like, and I guess these

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Speaker 1: types of technologies are really going to try to either

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Speaker 1: we're going to force that change or they're going to

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Speaker 1: restrict the technologies.

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Speaker 3: I guess those are kind of the two options that

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Speaker 3: we're running into.

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Speaker 4: Yeah, I think you're seeing this tension play out with AIS.

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Speaker 4: Like one particular example where the pace of change is

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Speaker 4: happening relatively faster than what let's say, the political institutions

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Speaker 4: and regulatory bodies can accommodate. And so there's essentially a

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Speaker 4: bargaining process that we're witnessing unfold between the political economy

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Speaker 4: of the sort of technical private sector actors that are

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Speaker 4: leading the development and deployment of these tools and the

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Speaker 4: regulators who are facing this challenge of do they let

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Speaker 4: it the horse off the leash or do they try

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Speaker 4: to harness it without you know, crushing its potential to

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Speaker 4: you know, transform their economies.

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Speaker 2: And they're they're struggling with that right now.

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Speaker 4: And I think this is an age old version of

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Speaker 4: an old or new version of an age old question

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Speaker 4: of where's the balance between you know, adapting your institutions

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Speaker 4: to meet the pace of the of the technology change.

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Speaker 4: At what point, though, is the pace of that technology

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Speaker 4: change to sort of outstrip the capacity of those institutions

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Speaker 4: to reform themselves or adapt over time.

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Speaker 1: And not just not just outstrip them of their ability

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Speaker 1: to transform, but it sort of makes them all slete

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Speaker 1: in a sense where like that structure was set up

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Speaker 1: for the time when it was set up, but we're

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Speaker 1: not in that time anymore, and that structure doesn't really

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Speaker 1: make sense anymore either.

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Speaker 4: Maybe well, it's interesting, I think you're seeing a reconfiguration

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Speaker 4: or reconceptualization of what sorts of political structures win or

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Speaker 4: lose in.

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Speaker 2: This sort of maybe in this new world. Right.

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Speaker 4: So, China has a certain model of which you might

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Speaker 4: call it authoritarianism as a service or sort of techno

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Speaker 4: authoritarian governance, where they they're trying to leverage the fact

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Speaker 4: that widespread surveillance artificial intelligence tools connecting everyone's activities and

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Speaker 4: behaviors into you know, essentially into the state monitoring system

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Speaker 4: allows them to more efficiently manage essentially an authoritarian structure

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Speaker 4: right where it's a one party state rule.

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Speaker 2: And then they're sort of.

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Speaker 4: Trying to test that thesis of can you actually have

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Speaker 4: central government run a complex society using technology to help,

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Speaker 4: you know, mitigate the you know, the legacy kind of

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Speaker 4: Hyaki and information problem, right like, can you actually centrally,

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Speaker 4: you know, compute all the relevant information that you need

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Speaker 4: or to maintain that centralized control. But it is an

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Speaker 4: attractive proposition that China is trying to sort of model

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Speaker 4: for the rest of the world, is saying, we can

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Speaker 4: help bootstrap your economies. You know, into the digital age

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Speaker 4: will but will it'll come with these tight control knobs

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Speaker 4: that allow to kind of tune to make sure it

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Speaker 4: doesn't spit spin out of control. I think in the

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Speaker 4: Western system we're struggling with in a different way because

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Speaker 4: it does empower, you know, certain elements in the society,

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Speaker 4: often at the expense of might say like liberal democracy. Right,

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Speaker 4: you get a concentration of data in the hands of

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Speaker 4: you know, opaque you know, big tech firms and and

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Speaker 4: and government agencies that gives them insight that that the

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Speaker 4: public doesn't have necessarily, and so with that comes power,

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Speaker 4: with with that, with that asymmetry potentially challenges like the

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Speaker 4: premise of kind of you know, the the Detaqueville kind

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Speaker 4: of democratic ideal where like, you know, everyone is someone

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Speaker 4: on an equal playing field. They can have a participatory

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Speaker 4: like a participatory civic discourse you knows, all issues and

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Speaker 4: debates in the public square and then vote and you know,

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Speaker 4: you know, that's how it goes. But now we might

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Speaker 4: be entering air where technology fundamentally, you know, constrains that

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Speaker 4: vision of liberal democratic discourse upon which you know, you know,

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Speaker 4: our political institutions were we were premised and I guess

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Speaker 4: we'll see. I mean, there's other technology forces that you

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Speaker 4: know obviously in bitcoin that sort of represent a different trend, right,

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Speaker 4: you know, there's technology trans lead to centralization of data

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Speaker 4: and access to sort of critical trick points. And there's

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Speaker 4: technology trans lead to uh, you know, disegregation decentralization of

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Speaker 4: those sorts of notes. And I think that's the battle

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Speaker 4: you're seeing in the in the in the sort of

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Speaker 4: the the evolution of bitcoin in particular, where where that

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Speaker 4: that that debate is playing out in real time.

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Speaker 1: Yeah, I want to I want to pull on that

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Speaker 1: thread a little bit more. And I know, you know,

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Speaker 1: you get into a lot of this stuff, including philosophy,

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Speaker 1: so it'd be fun to kind of just game plan this.

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Speaker 1: But kind of back to what I was saying, which was,

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Speaker 1: you know, if if one form of government, if technology

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Speaker 1: caused centralization.

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Speaker 3: And which caused the form of government.

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Speaker 1: But now we have technology creating the opposite force, which

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Speaker 1: is decentralization. So we don't have giant corporations with people

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Speaker 1: working them. In the United States, we don't have railroad

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Speaker 1: and steel industries anymore, right, So we.

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Speaker 3: Don't have these bigger operations. Now we have small, independent people.

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Speaker 1: Working all over the world over the internet, right, And

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Speaker 1: at the same time, the governments have continued to get

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Speaker 1: bigger and bigger and bigger and more powerful, but people

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Speaker 1: have got more and more decentralized at the same time.

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Speaker 1: So we have like two opposite forces almost where government's

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Speaker 1: getting bigger and more centralizing to your point, centralizing all

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Speaker 1: these data sources inside hands of corporations, but at the

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Speaker 1: same time you have people that are decentralizing and moving

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Speaker 1: apart and have all different interests based off of their

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Speaker 1: locale that they're in, et cetera. And so I guess

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Speaker 1: I kind of asked that question, but do we kind

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Speaker 1: of hit a wall and it sort of seems like

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Speaker 1: we are. So it seems like the governments want to

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Speaker 1: continue the growth trajectory, but then at the same time

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Speaker 1: the technology is pushing this decentralized decentralization technology. I guess

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Speaker 1: we'll see how that plays out. I don't know, it's

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Speaker 1: just it's interesting to watch play out, and there's really

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Speaker 1: this power struggle. But jumping back into kind of this

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Speaker 1: techno industrial war. So before we kind of dive into that,

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Speaker 1: I want to dive in. You've already kind of mentioned

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Speaker 1: China's role. So I want to talk about a little

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Speaker 1: bit more, but before we do, if we just kind of,

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Speaker 1: like again like playing a game of risk, first identifying

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Speaker 1: who the players of the board are, right, and so

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Speaker 1: then understand that each have their own regions and own

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Speaker 1: interest right, So you know, I might look at it

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Speaker 1: like we kind of obviously have this war with Russia

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Speaker 1: going on right now, which seems to me like is

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Speaker 1: kind of like this stand against globalism almost where like

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Speaker 1: NATO and the WEF or whatever kind of going after that.

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Speaker 1: So you know, but now we have kind of China

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Speaker 1: that seems to sort of kind of be partnering with Russia.

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Speaker 1: So I don't know if there's like the US potentially

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Speaker 1: with you know, euro Davos, NATO, and then we have

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Speaker 1: kind of Russia, we have China, and then maybe we

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Speaker 1: have like the global South the bricks, and maybe those.

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Speaker 3: Are different players.

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Speaker 1: But then maybe really Russia China working together, Maybe China

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Speaker 1: is just the big goog and maybe it's the US

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Speaker 1: and China.

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Speaker 3: Like how do you kind of view that game board?

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Speaker 4: I mean, it's like complex, and I think there's a

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Speaker 4: lot of different frames. I think one useful frame is

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Speaker 4: like a simple triangle where the three points of the

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Speaker 4: triangle are like credit, commodities, and production, and you look

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Speaker 4: at what are the geopolitical power blocks that are sort

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Speaker 4: of relatively dominant in each of those, like you know,

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Speaker 4: kind of key elements of the global system.

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Speaker 2: Right.

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Speaker 4: So like credit or money is dominated by G seven, Right,

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Speaker 4: it's dominated by by the US, and it's G seven allies.

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Speaker 4: You know, those are the largest you know economies. They're

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Speaker 4: also you know, the dominant financial centers.

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Speaker 1: Right.

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Speaker 4: And the influence or the power that that part of

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Speaker 4: the triangle deploys is mainly through you know, control over

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Speaker 4: the financial system, sanctions, overall global regulation, kind of the

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Speaker 4: rule of law that that that defines kind of the

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Speaker 4: global system that's been constructed post forty five.

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Speaker 2: The other leg of the other sort of point of

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Speaker 2: the triangle would be like the commodity point.

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Speaker 4: And that's interesting OPEC plus So that's basically Saudi's in Russia, right,

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Speaker 4: So that is they're providing the dominant raw inputs into

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Speaker 4: the global system, right, oil and you know raw commodit

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Speaker 4: for the for the consumption of of the of mostly

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Speaker 4: the West. And then you have a production which is

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Speaker 4: mostly China, right, And So they're the they're the they're

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Speaker 4: the manufacturing engine in the world. They're the largest trade

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Speaker 4: partner for almost, you know, the vast majority of of

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Speaker 4: of the countries on the planet, and they're increasingly using

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Speaker 4: their roles in manufacturing powerhouse to build up their military capacity.

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Speaker 4: So each of those kind of three points in the

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Speaker 4: sort of global system, when they were kind of in

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Speaker 4: frenemy mode, that's how you got globalization. That's how you

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Speaker 4: got you know, the post Soviet collapse era sort of

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Speaker 4: unipolar hegemonic moment where everyone thought everyone just begintting rich,

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Speaker 4: China would join the wto Russia would eventually sort of

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Speaker 4: accommodate to more of like a you know, a close

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Speaker 4: relationship with Europe as their energy provider. Middle East was

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Speaker 4: always going to be maybe a little bit of a

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Speaker 4: other problem, but we had the oil supply secured with

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Speaker 4: a good close biolot of relationship between the US and

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Speaker 4: the Saudi's, and the kind of the world system would

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Speaker 4: just kind of churn along. And I think what we're

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Speaker 4: seeing in the past few years is that that that

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Speaker 4: frenemy mode relationship between those points of the system is

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Speaker 4: sort of starting to break down, right Obviously, the the

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Speaker 4: Ukraine War is a good example of where like the

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Speaker 4: relationship between G seven capital and OPEK plus specifically Russia

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Speaker 4: is broken, right, Like that's the sanctions, that is the

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Speaker 4: export restrictions, that's the oil price cap, et cetera. On

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Speaker 4: the other leg, between SA G seven and China, you're

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Speaker 4: seeing you know, not as an extreme breakdown is between

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Speaker 4: Russia and the G seven over Ukraine, but you're seeing

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Speaker 4: increasing tension export controls, technology restrictions on China. We had

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Speaker 4: the trade war under Trump, the increasing you know, concerns

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Speaker 4: and anxiety over Taiwan invasion scenarios, quote unquote decoupling or

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Speaker 4: de risking among major multinationals about their approach to China

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Speaker 4: as a base of manufacturing operations.

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Speaker 2: Et cetera.

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Speaker 4: So that is like how I would views like the

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Speaker 4: main global players is like you know, money, commodities and production.

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Speaker 2: And then of course on top of all that, right,

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Speaker 2: you have like the.

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Speaker 4: Syncratic kind of i'd say, like structure that has developed

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Speaker 4: in terms of uh, like just just money itself. Right,

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Speaker 4: there's the G seven as like a power structure that's

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Speaker 4: defined by like formal government institutions. But you've also had

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Speaker 4: just so much wealth generated in non government spaces that

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Speaker 4: that has now and I think an increasingly relevant like

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Speaker 4: geopolitical effect. But those those that money doesn't really to

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Speaker 4: first order, like carry a flag, right like Chinese oligarchs

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Speaker 4: and Russian oligarchs and Saudi oligarchs and oligarchs of any

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Speaker 4: other stripe around the world like to first order their oligarchs,

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Speaker 4: and they can be compelled or coerced by their respective

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Speaker 4: flags to you know, maybe seeing the patriotic tune when

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Speaker 4: push comes to show. But ultimately their their actions in

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Speaker 4: the global system are the fact that they control massive

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Speaker 4: amounts of capital and their first order, you know, motivation

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Speaker 4: is to protect that capital and influence whatever jurisdiction that

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Speaker 4: capital's in to protect their interests. And so that that

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Speaker 4: that can involve, you know, corrupting Western democracies, it can involve,

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Speaker 4: you know, doing other things in the global system that

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Speaker 4: that oftentimes don't directly align with you know, the state

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Speaker 4: capital and their geopolitical progress. But that that's like a

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Speaker 4: new wrinkle between the basic structure of kind of money

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Speaker 4: production and commodities. And now you just have a huge

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Speaker 4: amount of private wealth and it's and it now has

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Speaker 4: a lot of influence, but it.

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Speaker 1: Kind of fits within these three roles that you said, credit, money, commodities,

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Speaker 1: or production, and so most of that wealth that these

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Speaker 1: ol of our control would actually fit under one of

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Speaker 1: those buckets, under commodities or under production to your point, right,

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Speaker 1: if Chinese holigarchs it fits under production, Russian holigarcs it

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Speaker 1: fits under commodities kind of a thing, right, so you

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Speaker 1: could still and then US holigarks it fits under finance exactly.

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Speaker 2: Yeah.

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Speaker 4: And I think one of the tensions you're seeing is, like,

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Speaker 4: just to take one example, as the Chinese, like the

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Speaker 4: US China relationship and the political economy inside the United

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Speaker 4: States of what sort of stance the United States should

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Speaker 4: take towards China, as you know, their growing strategic challenge

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Speaker 4: is becoming more acute, and from like the perspective of

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Speaker 4: those inside the Washington d C that represent the Defense Department,

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Speaker 4: the intelligence community, kind of the political collaboratus, the Treasury Department.

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Speaker 4: You know, it's all about preparing to you know, meet

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Speaker 4: this threat. It's it's more of an antagonistic aggressive posture.

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Speaker 4: Technology controls, export controls, et cetera. If you're a venture

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Speaker 4: capital or private equity or Wall Street manager. Right, your

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Speaker 4: your first order concern is I gotta I want to

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Speaker 4: keep you know, growing my my P and L. I

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Speaker 4: want to keep selling into this market. And you don't

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Speaker 4: necessarily want to break this trade relationship. You don't want

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Speaker 4: to break the bioloedical capital flows you're getting. You've been

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Speaker 4: you've been riding on this hog of globalization and Chinese

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Speaker 4: sort of asset recycling into Chinese surplus recycling into Western

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Speaker 4: assets that has really benefited uh, you.

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Speaker 2: Know, essentially Silicon Valley and Wall Street.

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Speaker 4: And now we're seeing this, you know, this tension play

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Speaker 4: out between the interests of that part of the political

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Speaker 4: economy the United States and the national security interests coming

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Speaker 4: out of d C. And that that is a that

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Speaker 4: the version of that argument you're seeing also take place

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Speaker 4: in say Germany between you know, the folks inside Germany

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Speaker 4: to have a really strong interest in you know, trade

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Speaker 4: with China and those that you know are trying to

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Speaker 4: be pulled by the West into a more antagonistic relationship.

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Speaker 2: Yeah.

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Speaker 3: Boy, what a tangled web that is.

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Speaker 1: So it's sort of like everybody kind of operated in

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Speaker 1: this this three parts of the triangle and this symbiotic relationship,

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Speaker 1: and now it's gotten to the point where it's like, well,

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Speaker 1: now each person sort of has their own interests or

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Speaker 1: maybe wants to move a little bit further up, like China,

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Speaker 1: maybe we want a little bit more than just being

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Speaker 1: the manufacturing hub of the world.

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Speaker 3: Maybe we want to be the superpower.

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Speaker 1: And so now you sort of have these these these

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Speaker 1: different competing people wanting to get more. Unfortunately, then that

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Speaker 1: starts to upset the balance of power, and then everybody

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Speaker 1: starts scrambling and then the whole thing kind of falls apart.

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Speaker 3: I guess is kind of where we're at.

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Speaker 2: So we have.

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Speaker 1: To this kind of increased pressure I went through. I

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Speaker 1: actually covered this on a recent video, and really maybe

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Speaker 1: it goes back to like Trump really starting kind of

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Speaker 1: this this trade war with China, the tariffs things like that,

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Speaker 1: starting to slap sanctions on their technologies, specifically like going

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Speaker 1: after Huawei kind of a.

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Speaker 3: Thing like that.

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Speaker 1: And then it really acceleerates with Biden putting down this

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Speaker 1: chip mandate where we can no longer supply any parts

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Speaker 1: or even production equipment to China for like level two

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Speaker 1: three chips, things like that, and now we're seeing China

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Speaker 1: retaliate saying that they're going to hold back gallium and gypsum,

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Speaker 1: I think, two different kind of rare earth elements that

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Speaker 1: we need. So now we're seeing the war escalate, and

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Speaker 1: of course it does. That's how things work, right, they

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Speaker 1: always escalate. But it seems like maybe it was made

438
00:20:26,680 --> 00:20:29,640
Speaker 1: abundantly clear after the pandemic that, like, because the US

439
00:20:29,720 --> 00:20:32,040
Speaker 1: has really outsourced so much production, we rely so much

440
00:20:32,119 --> 00:20:35,080
Speaker 1: on China, we really can't decouple, and so we start

441
00:20:35,119 --> 00:20:37,480
Speaker 1: getting to this kind of retaliate retaliatory war.

442
00:20:37,640 --> 00:20:39,600
Speaker 3: But like where does that lead? I mean, it's kind

443
00:20:39,600 --> 00:20:41,560
Speaker 3: of like mutually sure destruction almost, isn't it.

444
00:20:42,760 --> 00:20:45,040
Speaker 4: Yes, And I think that's the tit for tat that

445
00:20:45,200 --> 00:20:47,520
Speaker 4: we've been in Bark that we've been going through really

446
00:20:47,600 --> 00:20:52,080
Speaker 4: since Yeah, that October seventh Export Control Order that the

447
00:20:52,160 --> 00:20:57,520
Speaker 4: White House signed restricting China's access to leaning edge semiconductor

448
00:20:57,680 --> 00:21:01,160
Speaker 4: production equipment as well as sort of the actual sort

449
00:21:01,160 --> 00:21:03,879
Speaker 4: of Western talent, and they try to make that like

450
00:21:03,920 --> 00:21:05,000
Speaker 4: a multilateral restriction.

451
00:21:05,119 --> 00:21:05,800
Speaker 2: So originally it was a.

452
00:21:05,840 --> 00:21:08,440
Speaker 4: US but then really trying to get the other key

453
00:21:09,119 --> 00:21:11,440
Speaker 4: players in the global semi semi director of supply chain,

454
00:21:12,080 --> 00:21:14,960
Speaker 4: principally the Dutch of South Koreans and the Japanese to

455
00:21:15,000 --> 00:21:17,159
Speaker 4: come on board. And now that they have kind of

456
00:21:17,200 --> 00:21:20,200
Speaker 4: been able to get at least those key players to

457
00:21:20,720 --> 00:21:22,680
Speaker 4: tack in the direction of the United States with sort

458
00:21:22,680 --> 00:21:26,880
Speaker 4: of these plur these plurilateral multi latter export controls. China has,

459
00:21:27,440 --> 00:21:30,440
Speaker 4: you know, trying is trying to retaliate, right, and because

460
00:21:30,480 --> 00:21:33,159
Speaker 4: they're finamentaling the weak position relative to that dimension of

461
00:21:33,359 --> 00:21:36,119
Speaker 4: the living technology, they're retalitying on their advantage, which is

462
00:21:36,280 --> 00:21:39,200
Speaker 4: on the raw commodity inputs to that to that high

463
00:21:39,280 --> 00:21:42,440
Speaker 4: technology supply chain. So so gallium and germanium is where

464
00:21:42,440 --> 00:21:46,480
Speaker 4: you know, to two critical commodity inputs that they have

465
00:21:46,680 --> 00:21:50,480
Speaker 4: the like the almost like the monopoly control over. And

466
00:21:50,640 --> 00:21:53,480
Speaker 4: it was time just before Secretary Yellen is over there

467
00:21:53,520 --> 00:21:55,480
Speaker 4: now for a visit. So I think a lot of

468
00:21:55,520 --> 00:21:58,120
Speaker 4: this is about signaling, it's about tit for tat, it's

469
00:21:58,119 --> 00:22:02,200
Speaker 4: about posturing in this negotiation. You know, six months ago

470
00:22:02,280 --> 00:22:05,399
Speaker 4: people were really pessimistic on the direction of travel of

471
00:22:05,440 --> 00:22:07,399
Speaker 4: the US Chinel relationship. It was ironically, it was the

472
00:22:07,440 --> 00:22:11,280
Speaker 4: balloon incident that was like the thing that really knocked everything.

473
00:22:11,040 --> 00:22:12,439
Speaker 2: Off off the rails.

474
00:22:12,720 --> 00:22:14,719
Speaker 4: Secretary Blinking was supposed to go there and it kind

475
00:22:14,760 --> 00:22:16,600
Speaker 4: of helped smooth over at least some of the fallout

476
00:22:16,600 --> 00:22:18,960
Speaker 4: from the chip controls, but that didn't happen.

477
00:22:19,040 --> 00:22:21,399
Speaker 2: Instead, just things got much worse.

478
00:22:22,320 --> 00:22:24,119
Speaker 4: And I think there's a lot of back channeling, a

479
00:22:24,160 --> 00:22:26,560
Speaker 4: lot of like desire on both parties to at least

480
00:22:27,160 --> 00:22:31,200
Speaker 4: structurally shift the relationship up a bit now. I think

481
00:22:31,440 --> 00:22:35,520
Speaker 4: stepping back, everyone has interest in especially China because of

482
00:22:35,520 --> 00:22:37,960
Speaker 4: their economic sort of weakness right now, is not to

483
00:22:38,119 --> 00:22:41,320
Speaker 4: like aggravate things, and I think everyone recognizes that when

484
00:22:41,359 --> 00:22:44,399
Speaker 4: we shift into twenty twenty four presdential campaign season that

485
00:22:44,640 --> 00:22:47,080
Speaker 4: the ability to any to do any sort of positive

486
00:22:47,680 --> 00:22:50,840
Speaker 4: you know, biolaterals anything is going to be impossible. So

487
00:22:50,920 --> 00:22:53,760
Speaker 4: it's like, get the relationship as back to an even

488
00:22:53,840 --> 00:22:56,600
Speaker 4: keel as possible this year, knowing that it's likely going

489
00:22:56,640 --> 00:22:58,320
Speaker 4: to deteriorate again next year.

490
00:22:59,280 --> 00:23:01,359
Speaker 2: That's I think that's like the tactical stuff.

491
00:23:01,440 --> 00:23:05,200
Speaker 4: I think in general, there's a big debate happening about

492
00:23:05,280 --> 00:23:09,520
Speaker 4: whether fundamentally the relationship is like inevitably confrontational, right that

493
00:23:09,720 --> 00:23:13,720
Speaker 4: there's just the structural imperatives that are driving China's rise,

494
00:23:14,480 --> 00:23:17,280
Speaker 4: just the United States can't accommodate them into the global system.

495
00:23:17,560 --> 00:23:20,080
Speaker 4: It's like we have to make some fundamental trade offs

496
00:23:20,119 --> 00:23:22,520
Speaker 4: to the way we run the world order in order

497
00:23:22,560 --> 00:23:24,760
Speaker 4: to accommodate China's objectives.

498
00:23:24,880 --> 00:23:27,320
Speaker 2: Like, you know, we can we can negotiate on any.

499
00:23:27,160 --> 00:23:30,159
Speaker 4: Particular issue, but fundamentally they want to have their own

500
00:23:30,160 --> 00:23:33,040
Speaker 4: geo economic sphere of influence. They don't want to feel

501
00:23:33,400 --> 00:23:35,520
Speaker 4: sort of hemmed in in the first island chain and

502
00:23:35,640 --> 00:23:38,680
Speaker 4: subject to the sort of coursive power of the US

503
00:23:38,920 --> 00:23:43,639
Speaker 4: monetary and military alliance system and the security architecture in

504
00:23:43,640 --> 00:23:46,280
Speaker 4: the Western Pacific. Like they fundamentally want to change that.

505
00:23:46,440 --> 00:23:50,240
Speaker 4: They want to, you know, like peel us back from

506
00:23:50,240 --> 00:23:51,840
Speaker 4: the Western Pacific, and we don't want that to happen.

507
00:23:52,160 --> 00:23:54,080
Speaker 4: So we can have these sort of you know, we

508
00:23:54,200 --> 00:23:57,000
Speaker 4: don't at any given tactical moment, like no one wants

509
00:23:57,040 --> 00:23:59,760
Speaker 4: everything to blow up. But the relationship is a sort

510
00:23:59,800 --> 00:24:03,679
Speaker 4: of seems to be in a like a structural downtrend.

511
00:24:04,320 --> 00:24:06,280
Speaker 1: Because they want to rise and we want to hold

512
00:24:06,320 --> 00:24:08,680
Speaker 1: them back. And then those two things aren't those things

513
00:24:08,720 --> 00:24:11,240
Speaker 1: don't don't work together. They want to rise, we want

514
00:24:11,240 --> 00:24:12,520
Speaker 1: to hold them back, and at some point one of

515
00:24:12,720 --> 00:24:13,560
Speaker 1: somebody has to give.

516
00:24:14,080 --> 00:24:17,520
Speaker 4: It is it's it's you know, there's a mentality that's

517
00:24:17,680 --> 00:24:20,600
Speaker 4: i think on both sides of the Pacific that's somewhat

518
00:24:20,720 --> 00:24:24,400
Speaker 4: zero sum, and whether it's objectively true or not somewhat irrelevant.

519
00:24:24,440 --> 00:24:26,719
Speaker 4: If everyone thinks that zero sum, then that's what's going

520
00:24:26,760 --> 00:24:30,960
Speaker 4: to drive the dynamic, and especially on high technology. So

521
00:24:31,040 --> 00:24:33,879
Speaker 4: that's the thing that's made this i think more complicated

522
00:24:33,920 --> 00:24:38,359
Speaker 4: than just like territorial disputes or unification of Taiwan, is

523
00:24:38,440 --> 00:24:43,440
Speaker 4: that we have a perception among every other, every major

524
00:24:43,440 --> 00:24:46,240
Speaker 4: player in the global system that if you can't keep

525
00:24:46,359 --> 00:24:49,560
Speaker 4: up with the frontier of emergent technology, that you'll fundamentally,

526
00:24:49,840 --> 00:24:52,760
Speaker 4: like forever fall behind as a global power. And so

527
00:24:52,920 --> 00:24:56,119
Speaker 4: China is facing this like existential challenge. They see their

528
00:24:56,160 --> 00:24:59,760
Speaker 4: demographic situation in the next ten years really declining. They see,

529
00:25:00,000 --> 00:25:02,760
Speaker 4: you know, you know, they have dominance in global trade,

530
00:25:02,840 --> 00:25:05,080
Speaker 4: but they're trying to move up the value chain very

531
00:25:05,200 --> 00:25:08,440
Speaker 4: very quickly, and they're doing it from a position of

532
00:25:08,520 --> 00:25:11,640
Speaker 4: relative weakness, right They're trying to catch up. And now

533
00:25:11,760 --> 00:25:15,359
Speaker 4: the hedgemon is sort of relatedly turned its attention to

534
00:25:15,480 --> 00:25:17,680
Speaker 4: this rising challenger and is now pulling out all the

535
00:25:17,720 --> 00:25:20,480
Speaker 4: stops to try to keep its relative advantage as big

536
00:25:20,520 --> 00:25:22,800
Speaker 4: as possible and is willing to do things that from

537
00:25:22,840 --> 00:25:26,520
Speaker 4: trans perspective sort of border on you know, economic war, right,

538
00:25:26,720 --> 00:25:28,399
Speaker 4: Like we're just we're just going to blanket, you know,

539
00:25:28,560 --> 00:25:31,720
Speaker 4: cut off your access to like, for example, like leading

540
00:25:31,840 --> 00:25:34,840
Speaker 4: Edge GPUs, which if everyone thinks AI is going to

541
00:25:34,880 --> 00:25:37,520
Speaker 4: be like the critical kind of general purpose technology the

542
00:25:37,600 --> 00:25:41,080
Speaker 4: next ten to twenty x years, they're trying to can't

543
00:25:41,600 --> 00:25:45,119
Speaker 4: get access to that technology. They're sort of fundamentally restricted

544
00:25:45,240 --> 00:25:48,720
Speaker 4: from developing their economy, and they view that as potentially

545
00:25:48,720 --> 00:25:50,760
Speaker 4: existential threat to them. Right the whole premise of the

546
00:25:51,000 --> 00:25:55,480
Speaker 4: party's legitimacy and stabilities, they continue to deliver economic growth,

547
00:25:55,880 --> 00:25:56,720
Speaker 4: you know, year after year.

548
00:25:56,840 --> 00:25:58,280
Speaker 2: You know that's the that was the trade off.

549
00:25:58,359 --> 00:26:00,280
Speaker 4: Essentially, you have one party rule, but we give you

550
00:26:00,280 --> 00:26:03,119
Speaker 4: you know, six percent GDP growth every year and you know,

551
00:26:03,240 --> 00:26:05,399
Speaker 4: rising liber standards and house prices they keep going up.

552
00:26:05,640 --> 00:26:08,760
Speaker 1: How effective will the US be at at kneecapping them

553
00:26:08,840 --> 00:26:10,720
Speaker 1: with the technology? I mean a lot of people would

554
00:26:10,720 --> 00:26:12,479
Speaker 1: just say, well, they'll just develop their own chips. They

555
00:26:12,480 --> 00:26:13,960
Speaker 1: don't need you know, they don't need us. They'll just

556
00:26:13,960 --> 00:26:15,440
Speaker 1: develop their own ships. The already have, they already have

557
00:26:15,520 --> 00:26:18,520
Speaker 1: high tech chips et cetera. So how effective are that

558
00:26:18,720 --> 00:26:20,920
Speaker 1: and how hard would it be in your opinion for

559
00:26:21,119 --> 00:26:24,160
Speaker 1: China to try to catch up without the US helping

560
00:26:24,560 --> 00:26:26,440
Speaker 1: or even even while the US is trying to hold

561
00:26:26,480 --> 00:26:26,800
Speaker 1: them back.

562
00:26:27,600 --> 00:26:30,480
Speaker 4: It's it's I mean, this is like the trillion dollar question.

563
00:26:30,520 --> 00:26:31,960
Speaker 4: I think it's a function of time. Like in the

564
00:26:32,040 --> 00:26:35,480
Speaker 4: near term, say three to five years, it there's really

565
00:26:35,640 --> 00:26:39,800
Speaker 4: little chance that China can, for example, recreate what the

566
00:26:40,320 --> 00:26:46,720
Speaker 4: Dutch lithography producer ASML has with their extreme ultraviolet lithography equipment.

567
00:26:47,720 --> 00:26:50,160
Speaker 4: That is, you know, that was like a thirty year

568
00:26:50,359 --> 00:26:53,280
Speaker 4: R and D project by you know, a multi multi

569
00:26:53,359 --> 00:26:55,920
Speaker 4: billion dollar firm that had like access to the most

570
00:26:56,000 --> 00:26:59,359
Speaker 4: advanced German optics and you know, just it was like

571
00:27:00,080 --> 00:27:02,960
Speaker 4: it was like it's the premier technology of human civilization.

572
00:27:03,080 --> 00:27:04,920
Speaker 4: Like it's the most advanced thing the human beings have

573
00:27:05,000 --> 00:27:08,560
Speaker 4: ever created. China is very smart. China has a lot

574
00:27:08,600 --> 00:27:11,080
Speaker 4: of has a lot a lot of capability. They're putting

575
00:27:11,200 --> 00:27:14,159
Speaker 4: one hundred plus billion dollars a year into this, so

576
00:27:14,320 --> 00:27:17,040
Speaker 4: they could as a moonshot try to get there. I

577
00:27:17,119 --> 00:27:20,480
Speaker 4: think that's their objective. It's very hard to just like

578
00:27:20,840 --> 00:27:26,760
Speaker 4: semiconductors is sort of like the like the quintessential global product, right,

579
00:27:26,840 --> 00:27:28,480
Speaker 4: like no single country.

580
00:27:28,800 --> 00:27:30,080
Speaker 3: Oil, right oil?

581
00:27:30,480 --> 00:27:33,919
Speaker 4: And one critical distinction with oil is like you can

582
00:27:34,040 --> 00:27:35,560
Speaker 4: just pump a way out of the ground. You don't

583
00:27:35,720 --> 00:27:40,280
Speaker 4: need twenty trade partners each producing a very specialized component

584
00:27:40,920 --> 00:27:44,639
Speaker 4: and in a highly configured, complex supply chain to generate

585
00:27:44,840 --> 00:27:46,879
Speaker 4: you know, a semiconductor that goes into your iPhone. Like

586
00:27:46,920 --> 00:27:50,560
Speaker 4: That's what the global system has has enabled is cross

587
00:27:50,600 --> 00:27:52,639
Speaker 4: border trade specialization.

588
00:27:52,119 --> 00:27:52,560
Speaker 2: Et cetera.

589
00:27:53,160 --> 00:27:55,760
Speaker 4: And China was a part of that integrated, very complex

590
00:27:55,800 --> 00:27:58,719
Speaker 4: supply chain. So that system breaks down, it's more likely

591
00:27:58,800 --> 00:28:01,480
Speaker 4: that no one gets semiconductor then trying to get some conductors.

592
00:28:02,040 --> 00:28:05,280
Speaker 4: So it's more a function of does instead of trying

593
00:28:05,320 --> 00:28:07,600
Speaker 4: to catching up, do they just try to spoil the fun?

594
00:28:08,000 --> 00:28:09,920
Speaker 4: Right Like if and this is the risk is that

595
00:28:10,280 --> 00:28:12,600
Speaker 4: if kinda feels that they can never get access to

596
00:28:12,640 --> 00:28:15,560
Speaker 4: the technological frontier, and that every year that goes by

597
00:28:16,200 --> 00:28:18,720
Speaker 4: means that the advantage of the West is going to,

598
00:28:18,800 --> 00:28:21,320
Speaker 4: you know, steadily increase, and then it maybe in a

599
00:28:21,400 --> 00:28:24,240
Speaker 4: few years that technological advantage will translate into a more

600
00:28:24,280 --> 00:28:28,680
Speaker 4: material military advantage. Then China's ambitions to unify with Taiwan

601
00:28:29,000 --> 00:28:31,120
Speaker 4: and carve out a larger geo economics sphere of influence

602
00:28:31,440 --> 00:28:33,879
Speaker 4: for themselves might be forever foreclosed, and so this might

603
00:28:33,960 --> 00:28:38,800
Speaker 4: actually precipitate more aggressive action in the near term to

604
00:28:38,960 --> 00:28:39,840
Speaker 4: just spoil the party.

605
00:28:40,040 --> 00:28:41,560
Speaker 3: Well, if I can't have it, nobody can have it

606
00:28:41,680 --> 00:28:42,080
Speaker 3: kind of a thing.

607
00:28:42,240 --> 00:28:44,520
Speaker 4: Yeah, yeah, and say, okay, like, if you're going to

608
00:28:44,560 --> 00:28:47,000
Speaker 4: try to block us from access to this technology, we'll

609
00:28:47,040 --> 00:28:47,960
Speaker 4: just make sure no one can have it.

610
00:28:48,080 --> 00:28:50,160
Speaker 3: Yeah, Which, what about what do you think?

611
00:28:50,200 --> 00:28:52,200
Speaker 1: I mean, this is more of a political maybe even

612
00:28:52,200 --> 00:28:56,160
Speaker 1: philosophical question, but you know, China being a communist country

613
00:28:56,600 --> 00:28:58,440
Speaker 1: and the amount of control they have, you know, I

614
00:28:58,520 --> 00:29:03,080
Speaker 1: would believe that that limits the creativity and uh motivations

615
00:29:03,160 --> 00:29:05,520
Speaker 1: that and desires that the people have. And it seems

616
00:29:05,560 --> 00:29:06,960
Speaker 1: like maybe that's one reason why we still have so

617
00:29:07,040 --> 00:29:09,040
Speaker 1: much creativity. We have so much of this new development

618
00:29:09,080 --> 00:29:11,320
Speaker 1: happening in the United States in you know, a free country.

619
00:29:11,920 --> 00:29:14,080
Speaker 1: So even if China puts all the money towards it,

620
00:29:14,160 --> 00:29:17,680
Speaker 1: do they have the people necessary, does the does their culture,

621
00:29:17,760 --> 00:29:21,480
Speaker 1: does their political structure cultivate that type of creativity to

622
00:29:21,720 --> 00:29:22,520
Speaker 1: develop those things?

623
00:29:23,520 --> 00:29:25,840
Speaker 4: It's interesting, I mean, that's a yeah, it feels like

624
00:29:26,240 --> 00:29:27,959
Speaker 4: a cultural question.

625
00:29:28,120 --> 00:29:30,760
Speaker 3: You kind of have to political yeah.

626
00:29:30,680 --> 00:29:33,000
Speaker 4: Political question because I mean, for example, there's one study

627
00:29:33,240 --> 00:29:34,800
Speaker 4: I forget who did it. It was a few months

628
00:29:34,840 --> 00:29:38,680
Speaker 4: ago where they looked at I forget the exact deals,

629
00:29:38,800 --> 00:29:40,400
Speaker 4: but they're looking at like patents. So if you look

630
00:29:40,480 --> 00:29:44,800
Speaker 4: by patents, uh, like in high technology China, especially like

631
00:29:44,840 --> 00:29:47,880
Speaker 4: an AI for example, or quantum information sciences, I feel

632
00:29:47,880 --> 00:29:52,520
Speaker 4: like like the production of new ideas, which patents might represent,

633
00:29:52,760 --> 00:29:55,800
Speaker 4: China has actually climbed pretty dramatically to the top ranks

634
00:29:55,840 --> 00:29:58,920
Speaker 4: of the global system. Where they have struggled is in

635
00:29:59,080 --> 00:30:03,280
Speaker 4: translating say those raw sort of technology insights or ground

636
00:30:03,360 --> 00:30:08,760
Speaker 4: or sort of scientific results into commercial products because they

637
00:30:08,760 --> 00:30:10,840
Speaker 4: don't have like a as much of an open free

638
00:30:10,880 --> 00:30:13,959
Speaker 4: market and the domestic system they don't, you know, especially

639
00:30:13,960 --> 00:30:18,280
Speaker 4: with posts the jackmaw, you know, interrogation. Like entrepreneurship has

640
00:30:18,320 --> 00:30:20,720
Speaker 4: a cap right, Like there's a you know, in the

641
00:30:20,800 --> 00:30:22,680
Speaker 4: United States, you can start you can found a startup,

642
00:30:22,720 --> 00:30:25,200
Speaker 4: become a unicorn naked billion dollars in a few years.

643
00:30:26,000 --> 00:30:29,000
Speaker 4: In China, like you're gonna quickly hit into a political

644
00:30:29,040 --> 00:30:31,160
Speaker 4: wall if you if you ever get if you ever

645
00:30:31,240 --> 00:30:33,800
Speaker 4: get that successful, and so that that does kind of

646
00:30:33,840 --> 00:30:38,160
Speaker 4: impose a fundamental constraint on their innovation capacity as a society.

647
00:30:38,200 --> 00:30:40,600
Speaker 4: Potentially where they can generate a lot of state directed

648
00:30:40,720 --> 00:30:42,600
Speaker 4: R and D, they can generate a lot of you know,

649
00:30:42,680 --> 00:30:45,160
Speaker 4: research labs to crank out like all the high end

650
00:30:45,240 --> 00:30:48,720
Speaker 4: optical blah blah blah blah quantum stuff. But turning that

651
00:30:48,840 --> 00:30:54,280
Speaker 4: into like a market you know, delivered product and service

652
00:30:54,680 --> 00:30:56,560
Speaker 4: that can turn to a multi billion dollar business.

653
00:30:57,040 --> 00:30:59,200
Speaker 2: That's the thing. The United States has historically been the.

654
00:30:59,200 --> 00:31:03,080
Speaker 4: Best in the world at problems, yeah, and and commercializing

655
00:31:03,120 --> 00:31:04,760
Speaker 4: those and then and then you know, turning them into

656
00:31:04,800 --> 00:31:07,080
Speaker 4: world leading businesses. And so that is that is an

657
00:31:07,080 --> 00:31:10,640
Speaker 4: interesting challenge. But I mean, China's objectives, at least in

658
00:31:10,640 --> 00:31:11,400
Speaker 4: the near term, may.

659
00:31:11,320 --> 00:31:13,800
Speaker 2: Not be to be Google and Apple of the world.

660
00:31:14,080 --> 00:31:17,040
Speaker 4: It maybe they just need to have enough d F sixteens,

661
00:31:17,080 --> 00:31:21,680
Speaker 4: DF seventeens, d F twenty one's you know, uh frigates.

662
00:31:22,360 --> 00:31:24,240
Speaker 4: You know, they basically just need to build enough missiles

663
00:31:24,400 --> 00:31:28,760
Speaker 4: and have enough satellite capacity to prosecute victorious you know

664
00:31:29,520 --> 00:31:31,600
Speaker 4: operation that this out trying to see, so like they

665
00:31:31,680 --> 00:31:34,640
Speaker 4: might be like structurally hindered from say seizing the commanding

666
00:31:34,680 --> 00:31:36,840
Speaker 4: heights of the Fifth Industrial Revolution or whatever it is

667
00:31:36,880 --> 00:31:39,240
Speaker 4: that they write in their their their party strategy.

668
00:31:39,520 --> 00:31:41,360
Speaker 2: But tactically speaking, that.

669
00:31:41,520 --> 00:31:44,640
Speaker 4: May not prevent them from a from accruing the relevant

670
00:31:44,680 --> 00:31:48,840
Speaker 4: military capacity in the in the near term to displace

671
00:31:48,880 --> 00:31:52,120
Speaker 4: the United States in a tactical conflict scenario. Because while

672
00:31:52,120 --> 00:31:54,720
Speaker 4: we have like a really i say, strong structural advantage,

673
00:31:54,720 --> 00:31:57,640
Speaker 4: cultural advantage when it comes to innovation, capital markets, et cetera,

674
00:31:58,440 --> 00:32:01,560
Speaker 4: like our military capacity or our sort of shipbuilding capacity,

675
00:32:01,640 --> 00:32:05,080
Speaker 4: our defense industrial base, the fact that we're spread around

676
00:32:05,080 --> 00:32:07,880
Speaker 4: the whole global system try to you know, secure global

677
00:32:07,880 --> 00:32:10,800
Speaker 4: trade routes, et cetera, you know, makes us vulnerable potentially,

678
00:32:10,920 --> 00:32:12,920
Speaker 4: especially in the next you know, three to five years

679
00:32:13,280 --> 00:32:16,280
Speaker 4: sort of the acute sort of window of danger where

680
00:32:16,720 --> 00:32:19,960
Speaker 4: the deteriorating sort of US military sort of hard power

681
00:32:20,080 --> 00:32:23,000
Speaker 4: capacity you know, might run up against China is really

682
00:32:23,080 --> 00:32:26,720
Speaker 4: aggressive ramping up and building ships, missiles, et cetera.

683
00:32:26,840 --> 00:32:28,120
Speaker 2: So that's that's the danger zone.

684
00:32:28,240 --> 00:32:30,280
Speaker 4: Is if we get to this period where you know,

685
00:32:30,520 --> 00:32:32,200
Speaker 4: krying of feels they have to go for it before

686
00:32:32,240 --> 00:32:33,480
Speaker 4: the window closes.

687
00:32:36,320 --> 00:32:39,400
Speaker 3: Yeah, uh, pulling on that thread a little bit more.

688
00:32:40,760 --> 00:32:42,560
Speaker 1: And and I guess if if we really frame it

689
00:32:42,640 --> 00:32:44,040
Speaker 1: up with these these these are the two you know,

690
00:32:44,360 --> 00:32:46,760
Speaker 1: these the two big superpowers that are kind of coming

691
00:32:46,800 --> 00:32:47,360
Speaker 1: into conflict.

692
00:32:48,200 --> 00:32:49,520
Speaker 3: I'd asked you about.

693
00:32:49,280 --> 00:32:51,959
Speaker 1: When we had the conversation previously getting under this call

694
00:32:52,840 --> 00:32:56,400
Speaker 1: about you know, i'd read this article talking about these uh,

695
00:32:56,640 --> 00:32:59,000
Speaker 1: these g SIP banks and potentially even like the four

696
00:32:59,120 --> 00:33:01,360
Speaker 1: largest banks and the world bank accounts in the world

697
00:33:01,400 --> 00:33:04,480
Speaker 1: are Chinese owned banks. Trillions of dollars sitting in offshore

698
00:33:04,480 --> 00:33:07,240
Speaker 1: bank accounts, and how really what we've seen with the

699
00:33:07,240 --> 00:33:09,680
Speaker 1: bank runs happen in the United States. We're just triggered

700
00:33:09,680 --> 00:33:11,440
Speaker 1: by people taking their money out of the bank, and

701
00:33:11,640 --> 00:33:12,800
Speaker 1: they just take their money out of one bank and

702
00:33:12,840 --> 00:33:14,720
Speaker 1: put into bank number two. Just push a button, doesn't

703
00:33:14,840 --> 00:33:17,320
Speaker 1: cause that personal problem, but the bank goes down. And

704
00:33:17,440 --> 00:33:19,400
Speaker 1: it basically talked about how like the largest bank of

705
00:33:19,400 --> 00:33:22,000
Speaker 1: the United States being JP Morgan, had like eight hundred

706
00:33:22,000 --> 00:33:24,400
Speaker 1: and sixty million I'm sorry, eight hundred and sixty billion

707
00:33:24,400 --> 00:33:27,600
Speaker 1: dollars on its books or whatever, and they're like, these

708
00:33:27,640 --> 00:33:29,560
Speaker 1: accounts have trillions of dollars and all I gotta do

709
00:33:29,680 --> 00:33:31,440
Speaker 1: is just transfer from account eight account B.

710
00:33:31,600 --> 00:33:33,360
Speaker 3: And just whack them all. Just bank drop, but drop

711
00:33:33,520 --> 00:33:36,080
Speaker 3: up rup drup. I understand that.

712
00:33:36,400 --> 00:33:37,960
Speaker 1: I mean, as big as that is we also have

713
00:33:38,400 --> 00:33:40,440
Speaker 1: other oligarchs, and we have the whole euro dollar system

714
00:33:40,520 --> 00:33:44,200
Speaker 1: potentially as well. But it seems like very easily there

715
00:33:44,240 --> 00:33:47,280
Speaker 1: could be a financial attack as well, which of course

716
00:33:47,720 --> 00:33:49,760
Speaker 1: back to mutually deserved destruction. I mean they're sitting on

717
00:33:49,760 --> 00:33:51,400
Speaker 1: all these treasuries. I mean they don't want to ruin

718
00:33:51,440 --> 00:33:54,320
Speaker 1: the financial system either, but I guess they have that weapon.

719
00:33:54,400 --> 00:33:56,280
Speaker 1: Do you see that as something that's a that's a

720
00:33:56,400 --> 00:33:57,440
Speaker 1: legit threat out there?

721
00:33:58,840 --> 00:34:01,080
Speaker 4: I do, And it gets it gets very complicated because

722
00:34:01,080 --> 00:34:04,200
Speaker 4: like any other conflict scenario, right, there's never there's never

723
00:34:04,480 --> 00:34:05,840
Speaker 4: like a zero cost attack.

724
00:34:06,000 --> 00:34:06,120
Speaker 2: Right.

725
00:34:06,640 --> 00:34:11,480
Speaker 4: Every attack that you know, someone decides to execute is

726
00:34:11,480 --> 00:34:13,480
Speaker 4: going to come with some cost. Right, So there's just

727
00:34:13,600 --> 00:34:15,960
Speaker 4: like you know, a military attack, you might lose you know,

728
00:34:16,000 --> 00:34:18,680
Speaker 4: a bunch of people of your forces, so you need

729
00:34:18,719 --> 00:34:20,000
Speaker 4: to apply But that doesn't mean they're not going to

730
00:34:20,080 --> 00:34:22,839
Speaker 4: launch the attack, right, it's whether it's strategically justified orhere

731
00:34:22,840 --> 00:34:25,480
Speaker 4: they think they have a high chance of like strategic victory.

732
00:34:25,640 --> 00:34:27,080
Speaker 4: So I think you need to apply the same logic

733
00:34:27,160 --> 00:34:29,680
Speaker 4: to sort of financial warfare as you do to you know,

734
00:34:30,040 --> 00:34:33,960
Speaker 4: actual warfare. And I think you need to analyze the

735
00:34:34,040 --> 00:34:37,400
Speaker 4: position that you know that the Chinese government. In Chinese

736
00:34:37,600 --> 00:34:40,799
Speaker 4: say private sector proxies have accrued over the past twenty

737
00:34:40,880 --> 00:34:44,680
Speaker 4: years as the sort of globalized system has like really

738
00:34:44,800 --> 00:34:49,719
Speaker 4: accelerated the capital recycling from Chinese surpluses into Western assets, right,

739
00:34:49,800 --> 00:34:54,279
Speaker 4: trillions of dollars that Chinese entities have a crude like

740
00:34:54,320 --> 00:34:56,640
Speaker 4: the basic recycling mechanism have kind of gone through like

741
00:34:57,000 --> 00:35:00,160
Speaker 4: two routes. There's like the official route of you know,

742
00:35:00,400 --> 00:35:03,879
Speaker 4: government sector dollars surpluses foreign exchange reserves going into dollar

743
00:35:04,000 --> 00:35:07,120
Speaker 4: based assets, principally US treasury securities held on the books

744
00:35:07,160 --> 00:35:09,800
Speaker 4: of either you know, the Central Bank safe like the

745
00:35:10,080 --> 00:35:12,560
Speaker 4: State Administration of Foreign Exchange.

746
00:35:12,719 --> 00:35:15,080
Speaker 2: Which is the PBOC Sovereign Wealth Fund.

747
00:35:15,600 --> 00:35:17,600
Speaker 4: There's a whole book being written that was just written

748
00:35:17,680 --> 00:35:20,879
Speaker 4: by someone from the Council on Formulations that analyzes kind

749
00:35:20,880 --> 00:35:23,440
Speaker 4: of this network of sovereign wealth funds or even what

750
00:35:23,520 --> 00:35:26,239
Speaker 4: they called sovereign leverage funds that China has created to

751
00:35:26,520 --> 00:35:31,440
Speaker 4: redirect those dollars surpluses away from say dollar treasury securities

752
00:35:31,560 --> 00:35:33,400
Speaker 4: into like the dealt road mission right to try to

753
00:35:33,480 --> 00:35:37,560
Speaker 4: secure strategic influence in the global South, buy up assets, ports,

754
00:35:37,600 --> 00:35:40,440
Speaker 4: et cetera. And that was that's kind of like on

755
00:35:40,520 --> 00:35:43,400
Speaker 4: the official side, right, these are official actors recycling surpluses

756
00:35:43,480 --> 00:35:46,960
Speaker 4: and you know, getting strategic influence. This more like covert

757
00:35:47,160 --> 00:35:50,120
Speaker 4: recycling mechanism is probably potentially much more dangerous, which is

758
00:35:51,000 --> 00:35:53,480
Speaker 4: trillions of dollars that go through sort of a hop

759
00:35:53,560 --> 00:35:57,000
Speaker 4: of of of shell companies, right a Hong Kong LLC

760
00:35:57,440 --> 00:36:01,160
Speaker 4: to a Cayman Allen's LLC or Luxembourg LLC, a multi LC,

761
00:36:01,560 --> 00:36:05,080
Speaker 4: et cetera, that ends up investing in a US hedge fund,

762
00:36:05,160 --> 00:36:08,080
Speaker 4: a pension fund, an I p O, et cetera.

763
00:36:08,640 --> 00:36:09,800
Speaker 2: Just a regularistate equity.

764
00:36:10,719 --> 00:36:13,840
Speaker 4: You know, accruing large stakes and with large stakes in

765
00:36:13,880 --> 00:36:16,719
Speaker 4: Western assets comes influence. Right, So before you press the

766
00:36:16,760 --> 00:36:19,520
Speaker 4: sell button, which is like the nuclear button, you actually

767
00:36:19,520 --> 00:36:21,480
Speaker 4: have a lot of influence you can get. Maybe you

768
00:36:21,560 --> 00:36:23,200
Speaker 4: get a seat on the board of that public or

769
00:36:23,239 --> 00:36:25,759
Speaker 4: private company. Maybe that buys you a seat at the

770
00:36:25,800 --> 00:36:27,719
Speaker 4: fundraising dinner for that politician.

771
00:36:28,320 --> 00:36:29,799
Speaker 2: Maybe it allows you to.

772
00:36:29,880 --> 00:36:32,080
Speaker 4: Do things with money in our political system that allows

773
00:36:32,120 --> 00:36:37,040
Speaker 4: you to exert lots of lots of influence and Chinese entities,

774
00:36:37,160 --> 00:36:40,240
Speaker 4: whether it's oligarchs or other affiliated group sort of United

775
00:36:40,239 --> 00:36:48,160
Speaker 4: frontwork department, you say, like agency of influence have leveraged

776
00:36:48,200 --> 00:36:52,600
Speaker 4: that money and capital to influence Western democracies and sort

777
00:36:52,600 --> 00:36:55,400
Speaker 4: of corrupt our processes. That that does give them a

778
00:36:55,440 --> 00:36:58,160
Speaker 4: position potentially of having you know, I think that that

779
00:36:58,280 --> 00:37:00,719
Speaker 4: particular article you talk about kind of the stream case

780
00:37:00,840 --> 00:37:03,879
Speaker 4: of that influence being well, a lot of these Western

781
00:37:03,920 --> 00:37:08,000
Speaker 4: fans stitutions have pretty thin sort of sort of cover

782
00:37:08,320 --> 00:37:11,160
Speaker 4: on their on their outflows. So if ten billion dollars

783
00:37:11,200 --> 00:37:13,680
Speaker 4: of depositors decided to leave one day, they have got

784
00:37:13,719 --> 00:37:16,320
Speaker 4: to cover that by selling assets because they're allowed to

785
00:37:16,360 --> 00:37:19,560
Speaker 4: hold like very little liquid capital. And that is what

786
00:37:19,640 --> 00:37:21,920
Speaker 4: we saw this look on Valley Bank right where basically

787
00:37:22,239 --> 00:37:24,400
Speaker 4: within a day or two, like forty billion dollars of

788
00:37:24,520 --> 00:37:27,440
Speaker 4: depositors just left and that basically killed the bank. The

789
00:37:27,560 --> 00:37:30,120
Speaker 4: FDIC had to come in and make those depositors whole.

790
00:37:30,200 --> 00:37:31,920
Speaker 4: And if I think they even made that public that

791
00:37:32,200 --> 00:37:35,920
Speaker 4: some of the largest depositors were Chinese investors, were Chinese

792
00:37:36,719 --> 00:37:39,480
Speaker 4: entities that had billions of dollars in deposits that were

793
00:37:39,520 --> 00:37:43,800
Speaker 4: effectively backed up by the FDIC, and that is and

794
00:37:43,880 --> 00:37:45,920
Speaker 4: that was like official, like it was a Chinese company.

795
00:37:46,600 --> 00:37:48,920
Speaker 4: There's you know, probably a lot more that's not like

796
00:37:49,120 --> 00:37:51,640
Speaker 4: obviously a Chinese company. That's just an entity that if

797
00:37:51,680 --> 00:37:53,840
Speaker 4: you traced all those hops back, would probably be tied to,

798
00:37:54,440 --> 00:37:56,920
Speaker 4: you know, some some entity that has you know, that

799
00:37:57,120 --> 00:37:59,080
Speaker 4: is in control of those Chinese surpluses that have been

800
00:37:59,120 --> 00:38:01,800
Speaker 4: routed in the off short dollar system. And that is

801
00:38:01,840 --> 00:38:05,839
Speaker 4: a it's an underappreciated, acute kind of vulnerability in our

802
00:38:06,280 --> 00:38:09,120
Speaker 4: in our in our financial system that we've just sort

803
00:38:09,160 --> 00:38:12,239
Speaker 4: of exposed ourselves to by virtue of the do the

804
00:38:12,280 --> 00:38:15,000
Speaker 4: status of the dollar being global reserve currency, by being

805
00:38:15,080 --> 00:38:18,120
Speaker 4: the economy that has to run these structural deficits that

806
00:38:18,239 --> 00:38:21,839
Speaker 4: we have to absorb global surpluses. We have to sell

807
00:38:21,880 --> 00:38:25,279
Speaker 4: off at you know, our our our desirable assets, our

808
00:38:25,320 --> 00:38:29,320
Speaker 4: real estate, our equities, et cetera, to foreign surpluses, and

809
00:38:29,400 --> 00:38:32,080
Speaker 4: those are principally now our gipolitic leavissriies, right, it is.

810
00:38:32,400 --> 00:38:34,920
Speaker 4: It is the Russians, the Chinese, it's the it's the GCC,

811
00:38:35,440 --> 00:38:39,080
Speaker 4: it's sort of the Sanghai Cooperation Organization sort of block

812
00:38:39,400 --> 00:38:42,560
Speaker 4: that has those those dollar surpluses, that controls most of

813
00:38:42,600 --> 00:38:45,360
Speaker 4: those Western assets. That's not a very it's not a

814
00:38:45,400 --> 00:38:48,640
Speaker 4: position of relative strength to go into a financial and

815
00:38:48,680 --> 00:38:51,759
Speaker 4: economic war with those individuals. I think it's a I

816
00:38:51,800 --> 00:38:52,560
Speaker 4: think it's a problem.

817
00:38:53,120 --> 00:38:55,919
Speaker 3: Yeah, yeah, big problem.

818
00:38:55,960 --> 00:38:58,160
Speaker 1: What do you think FED now, the launch of fed

819
00:38:58,320 --> 00:39:01,680
Speaker 1: now will help that or will that make it worse?

820
00:39:03,719 --> 00:39:05,400
Speaker 4: Then it was a little bit different. I think what

821
00:39:05,960 --> 00:39:09,920
Speaker 4: what was maybe a stopgap measure was the BTFP, the

822
00:39:10,280 --> 00:39:12,800
Speaker 4: bank term funding program that they put in after the

823
00:39:13,320 --> 00:39:15,600
Speaker 4: that initial panic and you had credits week going down.

824
00:39:15,960 --> 00:39:18,439
Speaker 1: So I think I just mean, like, if it's able

825
00:39:18,520 --> 00:39:21,319
Speaker 1: to move money faster, right, because that's what the FED

826
00:39:21,400 --> 00:39:23,799
Speaker 1: now system is, allows money to move between banks faster.

827
00:39:23,920 --> 00:39:25,960
Speaker 1: So if the Chinese did want to move money from

828
00:39:26,000 --> 00:39:28,759
Speaker 1: one bank to the next to cause bank runs, does

829
00:39:28,840 --> 00:39:31,600
Speaker 1: that speed that process up? Or does FED now have

830
00:39:31,800 --> 00:39:33,880
Speaker 1: like gates put in where they could say, hey, I

831
00:39:34,000 --> 00:39:35,600
Speaker 1: saw you know you can't move more than one hundred

832
00:39:35,600 --> 00:39:38,200
Speaker 1: thousand at a time, so we you know, we don't

833
00:39:38,200 --> 00:39:40,000
Speaker 1: allow them to move ten billion at a time kind

834
00:39:40,040 --> 00:39:40,319
Speaker 1: of thing.

835
00:39:41,000 --> 00:39:42,880
Speaker 4: I mean, I know what other funningly changes because bank

836
00:39:42,920 --> 00:39:47,319
Speaker 4: runs are fundamentally driven by driven by psychology, less by

837
00:39:47,440 --> 00:39:50,240
Speaker 4: like the plumbing. Right, because if everyone shows up tomorrow

838
00:39:50,280 --> 00:39:51,320
Speaker 4: and wants to take their money.

839
00:39:51,160 --> 00:39:52,880
Speaker 1: Out, right, But we're not talking about everybody showing up.

840
00:39:52,880 --> 00:39:55,719
Speaker 1: We're talking about we're talking about you know, some sort

841
00:39:55,760 --> 00:39:58,640
Speaker 1: of a Chinese a Chinese arm saying, hey, just move

842
00:39:58,880 --> 00:40:00,759
Speaker 1: a hundred billion from this acount that account, and now

843
00:40:00,800 --> 00:40:01,759
Speaker 1: that bank just shuts down.

844
00:40:04,960 --> 00:40:06,840
Speaker 4: It could make it easier to have like yeah, like

845
00:40:06,880 --> 00:40:08,920
Speaker 4: if you did it a Friday, it doesn't happen until Monday,

846
00:40:09,040 --> 00:40:11,800
Speaker 4: but now it can happen pretty quickly. I think it

847
00:40:12,080 --> 00:40:14,920
Speaker 4: maybe on the margin, it helps, you know, anytime that

848
00:40:15,000 --> 00:40:18,680
Speaker 4: makes like deposits move more efficiently out of the bank.

849
00:40:19,080 --> 00:40:22,239
Speaker 4: If those banks are fundamentally fragile, that raises this risk

850
00:40:22,360 --> 00:40:24,200
Speaker 4: and then someone can you know, if someone has mal

851
00:40:24,239 --> 00:40:27,239
Speaker 4: intent and has the capital and the willingness to deploy it.

852
00:40:27,480 --> 00:40:30,480
Speaker 4: You know, maybe it makes it, you know, on the margin,

853
00:40:30,520 --> 00:40:31,120
Speaker 4: more vulnerable.

854
00:40:31,800 --> 00:40:32,879
Speaker 2: I think the Fed's.

855
00:40:32,600 --> 00:40:35,800
Speaker 4: Actions were to try to mitigate that because the premise

856
00:40:35,840 --> 00:40:38,160
Speaker 4: of this attack isn't just your own deposits. You're trying

857
00:40:38,200 --> 00:40:41,480
Speaker 4: to trigger a bank run. You're trying to trigger like

858
00:40:41,600 --> 00:40:44,000
Speaker 4: multiples of your own deposits to flee at the same time,

859
00:40:44,400 --> 00:40:47,000
Speaker 4: because you probably don't have enough on your own to.

860
00:40:47,160 --> 00:40:49,400
Speaker 3: Just do these Chinese accounts.

861
00:40:49,040 --> 00:40:50,040
Speaker 2: Do they may?

862
00:40:50,280 --> 00:40:51,680
Speaker 4: But maybe, I mean, but that's also a lot of

863
00:40:51,680 --> 00:40:53,000
Speaker 4: your own equity to put it, like you'd want to

864
00:40:53,000 --> 00:40:54,960
Speaker 4: get a multiplier effect. Right, if you had a ten

865
00:40:55,040 --> 00:40:57,600
Speaker 4: billion dollars, you want that to cause fifty billion dollars

866
00:40:57,640 --> 00:40:59,400
Speaker 4: to move out, right, Just you want that's what you

867
00:40:59,440 --> 00:41:01,160
Speaker 4: would want to You want to have a multiplier on

868
00:41:01,239 --> 00:41:02,400
Speaker 4: your on your effects.

869
00:41:02,440 --> 00:41:05,200
Speaker 1: So a little bit of propaganda and the media and

870
00:41:05,280 --> 00:41:06,560
Speaker 1: then some big transfers.

871
00:41:07,600 --> 00:41:09,040
Speaker 4: Yeah, you want to try to do everything you can

872
00:41:09,880 --> 00:41:12,759
Speaker 4: to amplify your your actions, right, you don't want to

873
00:41:12,880 --> 00:41:15,640
Speaker 4: just be the pure mechanics of of your own your

874
00:41:15,680 --> 00:41:17,600
Speaker 4: own action. You want it to be amplified by its

875
00:41:17,600 --> 00:41:21,000
Speaker 4: effect that everyone else. And so I think, I mean, funnily,

876
00:41:21,080 --> 00:41:23,120
Speaker 4: though this is just a banking system is an issue.

877
00:41:23,160 --> 00:41:25,399
Speaker 4: I mean there's probably similar issues you could you could

878
00:41:25,680 --> 00:41:27,839
Speaker 4: imagine in the shadow banking system that aren't aren't as

879
00:41:28,120 --> 00:41:32,560
Speaker 4: like obvious. I think the fed's actions is, funnily, is

880
00:41:32,640 --> 00:41:36,759
Speaker 4: just to like agree to bail everyone out if need be, right,

881
00:41:36,840 --> 00:41:39,160
Speaker 4: Like that's their only hope. Like that's was the BTFB.

882
00:41:39,480 --> 00:41:41,359
Speaker 4: That was what the swap lines were about for credit

883
00:41:41,400 --> 00:41:44,960
Speaker 4: sweet Like it was okay, like yes, a few may die,

884
00:41:45,400 --> 00:41:47,120
Speaker 4: but we're going to stand here and we're going to

885
00:41:47,200 --> 00:41:49,040
Speaker 4: tell you, like wherever you need it we'll give you

886
00:41:49,120 --> 00:41:51,640
Speaker 4: dollars if you need it, right, and that that potentially

887
00:41:51,719 --> 00:41:54,080
Speaker 4: mitigates this attack because then it says, okay, you can

888
00:41:54,120 --> 00:41:55,879
Speaker 4: take your ten billion dollars out, but if that bank

889
00:41:55,960 --> 00:41:58,160
Speaker 4: ever gets in trouble because of that, we're gonna bail

890
00:41:58,160 --> 00:41:59,920
Speaker 4: it out. We're not gonna let it fail. Yeah, and

891
00:42:00,600 --> 00:42:02,600
Speaker 4: you know that's what we did. Now we have ETFp.

892
00:42:02,760 --> 00:42:04,160
Speaker 4: Now you know swap lines are and.

893
00:42:04,160 --> 00:42:05,799
Speaker 1: There's no reason for consumers to pull their money up

894
00:42:05,800 --> 00:42:07,560
Speaker 1: because we're going to backstop all that money as well.

895
00:42:07,760 --> 00:42:10,919
Speaker 3: So yeah, my hasshole with transferring money, we just will

896
00:42:10,920 --> 00:42:11,400
Speaker 3: take care of it.

897
00:42:12,000 --> 00:42:15,160
Speaker 4: Yeah, So that that attack may may have may have

898
00:42:16,000 --> 00:42:19,040
Speaker 4: particular mechanism, but at the cost of now changing kind

899
00:42:19,080 --> 00:42:20,760
Speaker 4: of the structure of our deposits.

900
00:42:20,760 --> 00:42:23,160
Speaker 1: Do you think do you think from an adversarial now

901
00:42:23,200 --> 00:42:24,840
Speaker 1: that we've sort of framed this up this way, do

902
00:42:24,880 --> 00:42:28,640
Speaker 1: you think Jerome Powell's actions might be potentially to bring

903
00:42:28,800 --> 00:42:32,359
Speaker 1: these olive arch gesib Euro dollar markets come to heal

904
00:42:32,520 --> 00:42:33,640
Speaker 1: come back to daddy.

905
00:42:33,640 --> 00:42:34,120
Speaker 3: So to speak.

906
00:42:34,120 --> 00:42:37,400
Speaker 1: Maybe they've gotten so big, uh and uh if he

907
00:42:38,080 --> 00:42:40,960
Speaker 1: raises interest rates you know, five x he it's obviously

908
00:42:41,040 --> 00:42:42,360
Speaker 1: works to your point in multiples.

909
00:42:42,600 --> 00:42:45,080
Speaker 3: So they're all levered up. It works to them multiples

910
00:42:45,080 --> 00:42:45,440
Speaker 3: as well.

911
00:42:45,520 --> 00:42:47,960
Speaker 1: And so maybe what Jerome Powell is doing, you know,

912
00:42:48,040 --> 00:42:50,120
Speaker 1: as a as a bitcoiner, what we always hear is

913
00:42:50,160 --> 00:42:53,000
Speaker 1: that they will never give control over money because they

914
00:42:53,120 --> 00:42:54,640
Speaker 1: you know, they don't they want to let bigoin to

915
00:42:54,680 --> 00:42:56,480
Speaker 1: succeed because they don't want to give up control over money. Well,

916
00:42:56,520 --> 00:42:58,479
Speaker 1: who doesn't want to give up control over money?

917
00:42:59,239 --> 00:43:01,120
Speaker 3: Does? Does Jamie Diamond?

918
00:43:01,400 --> 00:43:01,839
Speaker 2: J Powell?

919
00:43:01,920 --> 00:43:02,560
Speaker 3: The New York Fed?

920
00:43:02,600 --> 00:43:04,080
Speaker 1: Do they want to give up control over the dollar

921
00:43:04,160 --> 00:43:07,080
Speaker 1: to the ECB, the Euro, the PBOC, be whatever.

922
00:43:07,200 --> 00:43:09,200
Speaker 3: So like they're all they all want to gain control.

923
00:43:09,760 --> 00:43:12,600
Speaker 1: And so anyway back to the question, Uh, do you

924
00:43:12,680 --> 00:43:15,319
Speaker 1: think that potentially what Jerome Powell's doing is really trying

925
00:43:15,360 --> 00:43:18,279
Speaker 1: to secure the dollar for dollars sake, not really the

926
00:43:18,400 --> 00:43:21,799
Speaker 1: US economy, but the dollar, and by raising rates as fast,

927
00:43:21,880 --> 00:43:24,000
Speaker 1: it's sort of draining a lot of that liquidity or

928
00:43:24,040 --> 00:43:25,239
Speaker 1: that leverage those accounts have.

929
00:43:26,800 --> 00:43:29,919
Speaker 4: I mean, he's probably got multiple motives, and it's whether

930
00:43:30,000 --> 00:43:32,759
Speaker 4: it's you know him as an individual, or whether it's

931
00:43:32,760 --> 00:43:34,880
Speaker 4: like the structural incentives of the institution.

932
00:43:35,200 --> 00:43:36,400
Speaker 2: Those might be slightly different.

933
00:43:37,080 --> 00:43:39,040
Speaker 4: I think one very one like that's like a very

934
00:43:39,080 --> 00:43:41,439
Speaker 4: broadcread like one case study maybe to examine that could

935
00:43:41,880 --> 00:43:44,719
Speaker 4: that's like maybe an indicator of of this is this

936
00:43:44,840 --> 00:43:47,480
Speaker 4: shift to sofer from liber right. Because the lesson of

937
00:43:47,480 --> 00:43:51,600
Speaker 4: the financial crisis was that even when things were going

938
00:43:51,680 --> 00:43:54,279
Speaker 4: pear shaped and the FED was aggressively trying to cut

939
00:43:54,320 --> 00:43:57,240
Speaker 4: the FED funds rate, liber was stubbornly high. And because

940
00:43:57,320 --> 00:44:01,840
Speaker 4: most of like US flowvoting rates were premised on liber

941
00:44:02,120 --> 00:44:04,880
Speaker 4: like most of the rates that actually inform economic decision making,

942
00:44:05,080 --> 00:44:08,640
Speaker 4: like credit cards and household loans and car loans were

943
00:44:08,640 --> 00:44:11,200
Speaker 4: premised on liber that even though the FED was trying

944
00:44:11,239 --> 00:44:13,440
Speaker 4: to cut rates, LIBR was stuck high because it was

945
00:44:13,480 --> 00:44:16,440
Speaker 4: controlled in London and it was controlled by consortium of

946
00:44:16,480 --> 00:44:18,520
Speaker 4: bankers that were just texting each other right like that

947
00:44:18,600 --> 00:44:21,400
Speaker 4: we could control and it took a political intervention to

948
00:44:21,800 --> 00:44:24,760
Speaker 4: basically by the FED to talk to the politicians essentially

949
00:44:24,880 --> 00:44:27,920
Speaker 4: running in London that talked to the Bank of England,

950
00:44:27,960 --> 00:44:29,279
Speaker 4: that talked to the Bank that said you have to

951
00:44:29,320 --> 00:44:32,200
Speaker 4: cut LIBR. Now, I think I think the number two

952
00:44:32,280 --> 00:44:34,480
Speaker 4: at the time of the Bank of England, his name

953
00:44:34,560 --> 00:44:36,200
Speaker 4: is Paul Tucker. He recently came out and told this

954
00:44:36,360 --> 00:44:39,080
Speaker 4: this anecdote basically where you know, the phones are ringing

955
00:44:39,080 --> 00:44:42,480
Speaker 4: off the hook from from from DC and New York

956
00:44:42,520 --> 00:44:44,879
Speaker 4: FED saying like you have to like bring the rates down.

957
00:44:44,920 --> 00:44:47,040
Speaker 4: So this was that was a that's an example of

958
00:44:47,080 --> 00:44:50,520
Speaker 4: where they now they felt that, oh, like US interest

959
00:44:50,600 --> 00:44:53,719
Speaker 4: rate policy transmission was a function of some offshore foreign

960
00:44:53,800 --> 00:44:55,920
Speaker 4: banking cartel that we don't control, Like, we're not going

961
00:44:56,000 --> 00:44:58,359
Speaker 4: to have that. We're not gonna, we're not gonna, we're

962
00:44:58,400 --> 00:44:59,960
Speaker 4: not going to stand by, right, so they're going to

963
00:45:00,000 --> 00:45:01,600
Speaker 4: shit everything to sofer which.

964
00:45:01,640 --> 00:45:03,879
Speaker 3: Lead someone else set the price of money. We're gonna

965
00:45:03,880 --> 00:45:04,879
Speaker 3: do it, and we're going.

966
00:45:04,880 --> 00:45:06,480
Speaker 4: To control it, and we're gonna have the ability to

967
00:45:06,560 --> 00:45:10,560
Speaker 4: influence the you know, the full money markets much more

968
00:45:10,600 --> 00:45:13,960
Speaker 4: tightly from DC and from the New York FED. And

969
00:45:14,080 --> 00:45:18,919
Speaker 4: that's like now a strategic comparative. And I think COVID

970
00:45:18,960 --> 00:45:21,480
Speaker 4: accelerated this as well. And so this is where I

971
00:45:21,520 --> 00:45:25,600
Speaker 4: think just one example, I think the zoom out there's

972
00:45:25,640 --> 00:45:27,400
Speaker 4: like lots of people have told the complex story of

973
00:45:27,400 --> 00:45:29,960
Speaker 4: the euro dollar system and the FED sort of love

974
00:45:30,000 --> 00:45:32,439
Speaker 4: hate relationship with it right over different periods of time

975
00:45:32,480 --> 00:45:36,160
Speaker 4: where they felt maybe in certain historical moments it was

976
00:45:36,360 --> 00:45:39,319
Speaker 4: strategic benefit to sort of let the European banks kind

977
00:45:39,360 --> 00:45:40,880
Speaker 4: of go crazy and do what they wanted to do,

978
00:45:41,600 --> 00:45:43,360
Speaker 4: because that would help internationalize a dollar.

979
00:45:43,239 --> 00:45:46,480
Speaker 2: System, create more liquidity for usher sort of dollar bonds.

980
00:45:46,840 --> 00:45:48,800
Speaker 4: This would you know, provide more liquidity to say, for

981
00:45:48,880 --> 00:45:51,560
Speaker 4: the Saudis to invest in you know, et cetera. That

982
00:45:51,680 --> 00:45:54,400
Speaker 4: this would all sort of be a geopolitical advantage to us.

983
00:45:54,760 --> 00:45:57,080
Speaker 4: But like everything else, it also gets to certain moments

984
00:45:57,080 --> 00:45:59,400
Speaker 4: where oh, they would they go too far, and now

985
00:45:59,440 --> 00:46:01,200
Speaker 4: we have to bail them out. And now we're bailing

986
00:46:01,239 --> 00:46:03,120
Speaker 4: out European banks, just like we did in two thousand

987
00:46:03,120 --> 00:46:05,279
Speaker 4: and eight, where we had to spend way more money

988
00:46:05,560 --> 00:46:06,960
Speaker 4: bailing out European banks.

989
00:46:06,719 --> 00:46:07,600
Speaker 2: Than any US bank.

990
00:46:08,480 --> 00:46:11,839
Speaker 4: And you know, geopolitically, when you're when you're in front

991
00:46:11,840 --> 00:46:13,759
Speaker 4: of you mode, maybe you bail out your friends, but

992
00:46:14,040 --> 00:46:16,040
Speaker 4: you know, us in the Europeans, we're kind of getting

993
00:46:16,040 --> 00:46:19,360
Speaker 4: a little bit frosty with you know, data regulations and

994
00:46:19,680 --> 00:46:22,279
Speaker 4: you know, you know, investment subsidies.

995
00:46:21,760 --> 00:46:25,000
Speaker 2: On renewable energy liqunatural gas, you know.

996
00:46:25,440 --> 00:46:28,520
Speaker 4: Policy about NATO VERSUS Russia, trying to like, you know,

997
00:46:28,600 --> 00:46:30,799
Speaker 4: it's not as easy as a simple relationship. Just you're

998
00:46:30,840 --> 00:46:33,000
Speaker 4: in the dollar orbit and therefore we're going to bail

999
00:46:33,000 --> 00:46:36,200
Speaker 4: you out. It does get I mean, the funnel like

1000
00:46:36,440 --> 00:46:38,840
Speaker 4: point is that the money system is funnelly geopolitical.

1001
00:46:39,120 --> 00:46:39,239
Speaker 3: Right.

1002
00:46:39,320 --> 00:46:42,160
Speaker 4: People can think that it's just you know, it's just

1003
00:46:42,239 --> 00:46:45,400
Speaker 4: the neutral, technocratic administration of the economy, but it is.

1004
00:46:45,520 --> 00:46:47,799
Speaker 2: It is ultimately a geopolitical.

1005
00:46:49,200 --> 00:46:51,520
Speaker 1: The fact that they would like this euro dollar market

1006
00:46:51,560 --> 00:46:53,319
Speaker 1: to grow just so they continue to push the dollar,

1007
00:46:53,480 --> 00:46:55,920
Speaker 1: you know, dollar market, dollar markets across the globe. Then

1008
00:46:56,040 --> 00:46:58,280
Speaker 1: if you look at like US dollar back stable coins,

1009
00:46:58,320 --> 00:47:00,480
Speaker 1: I mean, isn't that effectively a similar thing where the

1010
00:47:00,600 --> 00:47:04,160
Speaker 1: US dollar has really grown across the globe through stable coins,

1011
00:47:04,200 --> 00:47:07,720
Speaker 1: specifically in you know, areas like Africa, et cetera, Central America.

1012
00:47:08,320 --> 00:47:11,920
Speaker 3: But yet the administration seems to be very unfriendly to

1013
00:47:11,960 --> 00:47:12,680
Speaker 3: stable coins.

1014
00:47:13,640 --> 00:47:17,600
Speaker 1: And do you think that's more of like Biden admin

1015
00:47:17,840 --> 00:47:20,880
Speaker 1: with a Warren Gensler And that's different than the interest

1016
00:47:20,960 --> 00:47:22,560
Speaker 1: that might Jerome Powell and the FED have.

1017
00:47:24,239 --> 00:47:24,840
Speaker 2: Yeah, it is.

1018
00:47:25,040 --> 00:47:28,560
Speaker 4: It is a really interesting emerging policy area, and I

1019
00:47:28,680 --> 00:47:31,280
Speaker 4: think a lot of it comes down to fundamental ignorance,

1020
00:47:31,360 --> 00:47:34,440
Speaker 4: Like it's it's relatively new, and the DC policy apparatus

1021
00:47:34,480 --> 00:47:37,840
Speaker 4: and bureaucratic machinery just is not quite fully up to

1022
00:47:37,920 --> 00:47:40,920
Speaker 4: speed and all the sort of future developments here. But

1023
00:47:40,960 --> 00:47:43,239
Speaker 4: I think it's also prettic on the fact that, like

1024
00:47:43,400 --> 00:47:45,960
Speaker 4: the legacy development of those standa coins was mainly to

1025
00:47:46,040 --> 00:47:49,160
Speaker 4: help you know, Chinese evade capital controls, like that's you know,

1026
00:47:49,480 --> 00:47:50,040
Speaker 4: like that's.

1027
00:47:49,920 --> 00:47:52,120
Speaker 1: What it was for, right, But and so that was

1028
00:47:52,160 --> 00:47:53,880
Speaker 1: where I know, if that's what it was for, it

1029
00:47:53,960 --> 00:47:55,960
Speaker 1: was because that's where I wanted to try cryptocurrencies and

1030
00:47:56,000 --> 00:47:57,480
Speaker 1: couldn't get dollars onto the platform.

1031
00:47:57,520 --> 00:47:59,920
Speaker 4: So they may have I mean yeah, I mean most

1032
00:48:00,320 --> 00:48:02,919
Speaker 4: mostly jurisdictions give you onramps and off ramps, except for China,

1033
00:48:03,000 --> 00:48:03,520
Speaker 4: like very hard to.

1034
00:48:03,520 --> 00:48:06,239
Speaker 1: Get not in twenty sixteen, twenty seventeen, there weren't really

1035
00:48:06,239 --> 00:48:08,239
Speaker 1: on an off ramps, not to tree cryptocurrencies. I mean

1036
00:48:08,280 --> 00:48:10,400
Speaker 1: you could go buy bitcoin and coinbase and then transferred

1037
00:48:10,440 --> 00:48:12,880
Speaker 1: over to one of these crypto exchanges, but there was

1038
00:48:12,960 --> 00:48:14,239
Speaker 1: no dollars on them, right.

1039
00:48:15,160 --> 00:48:17,160
Speaker 4: No, I mean this is why the dollar base stable

1040
00:48:17,200 --> 00:48:20,440
Speaker 4: coins were a great invention, right they met a market need.

1041
00:48:20,840 --> 00:48:22,000
Speaker 4: I think it was a good or bad thing of

1042
00:48:22,120 --> 00:48:23,680
Speaker 4: just saying like there's a large amount of liquidity that

1043
00:48:23,760 --> 00:48:26,920
Speaker 4: was pent, that was trapped, and this was like you know,

1044
00:48:27,120 --> 00:48:30,200
Speaker 4: like relatively the easiest way to get access to these markets,

1045
00:48:30,760 --> 00:48:32,279
Speaker 4: and so that's how it incubuated. But a lot of

1046
00:48:32,680 --> 00:48:34,440
Speaker 4: like so this is where the US government's kind of

1047
00:48:34,440 --> 00:48:35,960
Speaker 4: approached to dollar based table coins. I think it is

1048
00:48:35,960 --> 00:48:38,920
Speaker 4: going through a little bit of a transformation, where originally

1049
00:48:39,000 --> 00:48:40,919
Speaker 4: it was like one of suspicion because all the people

1050
00:48:40,920 --> 00:48:43,040
Speaker 4: inside of the government that had like been tapped with

1051
00:48:43,200 --> 00:48:46,560
Speaker 4: like the cryptocurrency portfolio were all from like law enforcement

1052
00:48:46,600 --> 00:48:48,800
Speaker 4: intelligence community, and it was all through the lens of

1053
00:48:49,200 --> 00:48:52,000
Speaker 4: sanctions evasion or going after dark web markets, you know,

1054
00:48:52,080 --> 00:48:54,080
Speaker 4: so like their mental models all are bad guys are

1055
00:48:54,120 --> 00:48:56,439
Speaker 4: doing bad things with this thing, Therefore this thing is bad.

1056
00:48:56,840 --> 00:48:59,560
Speaker 4: I think only recently has there been like a growing

1057
00:48:59,560 --> 00:49:01,960
Speaker 4: recognition of actually, there's a lot more good people doing

1058
00:49:02,000 --> 00:49:04,799
Speaker 4: good things with this thing then the bad people doing

1059
00:49:04,880 --> 00:49:06,680
Speaker 4: bad things with this thing, and so maybe you should

1060
00:49:06,680 --> 00:49:09,840
Speaker 4: reappraise like your net evaluation of the moral balance of

1061
00:49:09,920 --> 00:49:13,360
Speaker 4: this thing, right, And I think that from a geopolitical perspective,

1062
00:49:13,719 --> 00:49:17,399
Speaker 4: the the argument for the positive effects of dollar based

1063
00:49:17,400 --> 00:49:21,680
Speaker 4: table coins helping to dollarize parts of the world that

1064
00:49:22,080 --> 00:49:25,600
Speaker 4: are very underdollarized now is and help you know, essentially

1065
00:49:25,680 --> 00:49:29,960
Speaker 4: spread the sort of the geopolitical influence the dollar. You know,

1066
00:49:30,160 --> 00:49:33,160
Speaker 4: that's that's coming on the backs of dollar based table coins, right,

1067
00:49:33,600 --> 00:49:36,480
Speaker 4: and if you really the opposition that's interesting to draw

1068
00:49:36,640 --> 00:49:40,200
Speaker 4: is between China's ambitions with the digital you want, they

1069
00:49:40,320 --> 00:49:42,400
Speaker 4: want to try to bring in more of the global

1070
00:49:42,480 --> 00:49:47,840
Speaker 4: South and their geoeconomic kind of trade partners into a

1071
00:49:47,960 --> 00:49:52,719
Speaker 4: technology system that they are designing from the ground up. Right,

1072
00:49:52,760 --> 00:49:56,880
Speaker 4: So it's the Huawei routers, the CTE surveillance systems, and

1073
00:49:57,000 --> 00:49:59,839
Speaker 4: you get the digital currency controls as well, and these

1074
00:49:59,840 --> 00:50:02,520
Speaker 4: are cross bridged kind of CBDCs. This is kind of

1075
00:50:02,560 --> 00:50:04,080
Speaker 4: like the part of the Sultan the Post and Ar

1076
00:50:04,160 --> 00:50:07,320
Speaker 4: thesis about trying to strategy with the CBDCs is to

1077
00:50:07,520 --> 00:50:10,680
Speaker 4: create a dollar clearing or sorry, a non dollar clearing

1078
00:50:10,719 --> 00:50:13,920
Speaker 4: and settlement system that doesn't try to replicate the offshore

1079
00:50:14,360 --> 00:50:16,480
Speaker 4: kind of correspondent banking system that took one hundred years

1080
00:50:16,480 --> 00:50:18,279
Speaker 4: for the US to create, but is a sort of

1081
00:50:18,360 --> 00:50:20,800
Speaker 4: central bank, essential bank and then critical state banks with

1082
00:50:20,880 --> 00:50:24,920
Speaker 4: each other and that are using essentially the same APIs

1083
00:50:24,960 --> 00:50:28,360
Speaker 4: that China is developing for their digital yuan to allow

1084
00:50:28,480 --> 00:50:31,680
Speaker 4: like atomic settlement of their currencies and their trade over

1085
00:50:31,760 --> 00:50:33,759
Speaker 4: this network that doesn't go through New York at all.

1086
00:50:34,280 --> 00:50:36,320
Speaker 3: This is the BIS project.

1087
00:50:36,440 --> 00:50:40,480
Speaker 4: Mbridge project Mbridge is one kind of really paradigm example

1088
00:50:40,520 --> 00:50:42,440
Speaker 4: of this is where you have you know, central banks

1089
00:50:42,560 --> 00:50:47,080
Speaker 4: essentially be the key key nodes in a CBDC architecture

1090
00:50:47,440 --> 00:50:49,719
Speaker 4: that doesn't need to go through private capital markets. You

1091
00:50:49,760 --> 00:50:52,400
Speaker 4: don't need to have an offshore system developed liquidity. You

1092
00:50:52,480 --> 00:50:54,680
Speaker 4: just have the central bank be the market maker for

1093
00:50:54,840 --> 00:50:58,800
Speaker 4: every for for trade, finance, for for for all, for

1094
00:50:59,360 --> 00:51:00,239
Speaker 4: the sort of like in.

1095
00:51:00,280 --> 00:51:02,800
Speaker 1: The US, the Internet grew fast because we had wired

1096
00:51:02,840 --> 00:51:04,440
Speaker 1: phone lines, and so the internet grew over the wired

1097
00:51:04,480 --> 00:51:06,200
Speaker 1: phone lines, and then you saw Africa kind of leapfrog

1098
00:51:06,239 --> 00:51:07,840
Speaker 1: pass that directly to wireless. And so a lot of

1099
00:51:07,880 --> 00:51:09,840
Speaker 1: people say the dollar can't lose its position because of

1100
00:51:09,880 --> 00:51:13,239
Speaker 1: the deep capital markets, because the correspondent banks, you know,

1101
00:51:13,400 --> 00:51:15,360
Speaker 1: the swift system, et cetera. But this is like just

1102
00:51:15,480 --> 00:51:18,160
Speaker 1: bypassing that whole thing and then starting a whole new system,

1103
00:51:18,200 --> 00:51:19,319
Speaker 1: sort of like a leap frog moment.

1104
00:51:19,840 --> 00:51:20,040
Speaker 2: Yeah.

1105
00:51:20,080 --> 00:51:22,720
Speaker 4: I mean, the Chinese strategy over like many different domains

1106
00:51:22,800 --> 00:51:25,520
Speaker 4: is kind of a block build expand right. First, they

1107
00:51:25,560 --> 00:51:27,880
Speaker 4: want to block the ability of say a competing system

1108
00:51:28,040 --> 00:51:31,360
Speaker 4: like the you know, dollar system to coerce them, so

1109
00:51:31,400 --> 00:51:32,520
Speaker 4: they want to be more resistant.

1110
00:51:32,560 --> 00:51:33,520
Speaker 2: They want to be more resilient.

1111
00:51:33,600 --> 00:51:36,040
Speaker 4: Then they want to build an alternative again, but building

1112
00:51:36,080 --> 00:51:38,520
Speaker 4: it doesn't mean it's ready to fully deploy. And that's

1113
00:51:38,520 --> 00:51:40,040
Speaker 4: what they're in the stage right now, is they're trying

1114
00:51:40,080 --> 00:51:43,120
Speaker 4: to build these alternative systems as like a backup plan,

1115
00:51:43,520 --> 00:51:45,960
Speaker 4: but their long term ambition is to expand them to

1116
00:51:46,080 --> 00:51:50,239
Speaker 4: now move more liquidity, more settlement to those rails. And

1117
00:51:50,280 --> 00:51:52,520
Speaker 4: it's kind of a nonlinear process, right, It's hard to

1118
00:51:52,520 --> 00:51:54,960
Speaker 4: get network effects until they're there. It's like, you know,

1119
00:51:55,080 --> 00:51:57,680
Speaker 4: Zuckerberg with the threads, right, Like you can imagine like

1120
00:51:58,080 --> 00:52:02,560
Speaker 4: many other like social media kind of competitors to Twitter

1121
00:52:02,719 --> 00:52:04,759
Speaker 4: just didn't have the social graph. So it's very hard

1122
00:52:04,760 --> 00:52:07,239
Speaker 4: to bootstrap a network. You might say the same argument

1123
00:52:07,280 --> 00:52:10,480
Speaker 4: for China. China doesn't have the same depth of liquidity

1124
00:52:10,560 --> 00:52:13,239
Speaker 4: that the US dollar system has in foreign exchange, YadA, YadA.

1125
00:52:13,920 --> 00:52:15,520
Speaker 4: I guess what they do have is a different graph.

1126
00:52:15,560 --> 00:52:18,200
Speaker 4: They have the trade relationship, they have the political relationships.

1127
00:52:18,560 --> 00:52:20,640
Speaker 4: So their strategy, just like Zuckerberg, is like we have

1128
00:52:20,760 --> 00:52:23,760
Speaker 4: the Instagram network, we can sort of bootstrap a social

1129
00:52:24,000 --> 00:52:26,719
Speaker 4: social network with the Instagram network. China strategy. We're going

1130
00:52:26,760 --> 00:52:30,239
Speaker 4: to boostrap our CBDC network with our trade network. Maybe

1131
00:52:30,280 --> 00:52:31,920
Speaker 4: it works, maybe it doesn't, right, No one knows right

1132
00:52:32,120 --> 00:52:34,480
Speaker 4: until you try it. But I think it's premature to

1133
00:52:34,840 --> 00:52:37,479
Speaker 4: count it out as a legitimate threat.

1134
00:52:38,200 --> 00:52:40,000
Speaker 2: And then that's at the state level.

1135
00:52:40,080 --> 00:52:42,760
Speaker 4: What's interesting about the bitcoin dollar bay stable coin interplay

1136
00:52:42,840 --> 00:52:44,200
Speaker 4: is this is sort of the bottom up right that

1137
00:52:44,320 --> 00:52:46,520
Speaker 4: the citizens in those in those countries in the Global South,

1138
00:52:47,120 --> 00:52:48,880
Speaker 4: like they don't want the digital do you want or

1139
00:52:48,920 --> 00:52:51,480
Speaker 4: the digital naira, right, Like they don't want to just

1140
00:52:51,640 --> 00:52:53,279
Speaker 4: you know, offload their.

1141
00:52:53,200 --> 00:52:54,520
Speaker 2: Sovereignty to a corrupt government.

1142
00:52:54,680 --> 00:52:57,640
Speaker 1: Rights and they've been vocal about that in Nigeria too. Yeah,

1143
00:52:57,680 --> 00:52:59,279
Speaker 1: well we take the unira. It's the same thing as

1144
00:52:59,280 --> 00:53:00,920
Speaker 1: the regular nira los value.

1145
00:53:01,520 --> 00:53:05,000
Speaker 4: And yet like like the US, US like if we

1146
00:53:05,080 --> 00:53:08,160
Speaker 4: were like, oh, no, sign up to our surveiled CBDC,

1147
00:53:08,760 --> 00:53:14,040
Speaker 4: like what's the actual you know, compelling sort of value proposition, right,

1148
00:53:14,080 --> 00:53:16,080
Speaker 4: Whereas if it's like, hey, the US government's actually in

1149
00:53:16,120 --> 00:53:19,080
Speaker 4: favor of bitcoin dollar by staple coins, that's a much

1150
00:53:19,120 --> 00:53:21,080
Speaker 4: more attractive proposition to a lot of these countries in

1151
00:53:21,120 --> 00:53:23,719
Speaker 4: emerging markets. And it just so I also happened to

1152
00:53:23,760 --> 00:53:25,600
Speaker 4: be aligned with our value system, which is, hey, we're

1153
00:53:25,640 --> 00:53:27,200
Speaker 4: not going to control it. We're not going to control you.

1154
00:53:27,360 --> 00:53:28,759
Speaker 4: We're going to let you do what you want to

1155
00:53:28,800 --> 00:53:30,320
Speaker 4: do with your money and help you, like live a

1156
00:53:30,360 --> 00:53:33,719
Speaker 4: better life and you know, not be expropriated by some

1157
00:53:33,840 --> 00:53:35,360
Speaker 4: corrupt central government and.

1158
00:53:35,520 --> 00:53:37,400
Speaker 1: Have that dollar token as a bare instrument like like

1159
00:53:37,520 --> 00:53:39,640
Speaker 1: cash is supposed to be. And they could rapidly expand.

1160
00:53:39,680 --> 00:53:44,480
Speaker 1: It seems to your point in line with original founding

1161
00:53:44,680 --> 00:53:47,640
Speaker 1: American ideals. I don't know if if it's the expanding

1162
00:53:47,719 --> 00:53:54,600
Speaker 1: the potential future, Yeah, the future ideals. Switch switching gears

1163
00:53:54,640 --> 00:53:56,719
Speaker 1: a little bit. I wanted to talk to you, I know,

1164
00:53:56,760 --> 00:53:57,960
Speaker 1: we're kind of run out of time. R I want

1165
00:53:57,960 --> 00:53:59,440
Speaker 1: to talk about one more topic, and this one's maybe

1166
00:53:59,480 --> 00:54:02,240
Speaker 1: fits a little bit onto your wheelhouse, and that's about

1167
00:54:02,600 --> 00:54:07,120
Speaker 1: cybersecurity and potentially the threats of a cyber pandemic. And

1168
00:54:07,280 --> 00:54:11,520
Speaker 1: so what we've seen is of course continued increasing rhetoric

1169
00:54:11,760 --> 00:54:15,920
Speaker 1: about the depending cyber pandemic. It's coming, you know, Klaus Schwab,

1170
00:54:15,960 --> 00:54:17,880
Speaker 1: the WEF, they pushed this and it seems to be

1171
00:54:17,920 --> 00:54:20,160
Speaker 1: really picking up steam. Whitney Web has done a lot

1172
00:54:20,200 --> 00:54:23,359
Speaker 1: of research into this and even just recently we saw

1173
00:54:24,840 --> 00:54:27,800
Speaker 1: well both the who wants to control all health for

1174
00:54:27,920 --> 00:54:29,720
Speaker 1: the world, the US wants to lay on a sovereignty

1175
00:54:29,719 --> 00:54:30,120
Speaker 1: in that manner.

1176
00:54:30,160 --> 00:54:32,000
Speaker 3: They say, under a health emergency.

1177
00:54:31,600 --> 00:54:35,640
Speaker 1: We can control everything, including the Internet, communications, et cetera.

1178
00:54:36,360 --> 00:54:39,640
Speaker 1: Now there's a resolution hasn't been signed, but a resolution

1179
00:54:39,800 --> 00:54:42,879
Speaker 1: to now allow the UN to take over the power

1180
00:54:42,920 --> 00:54:43,080
Speaker 1: of the.

1181
00:54:43,120 --> 00:54:44,680
Speaker 3: United States in case of any emergency.

1182
00:54:44,719 --> 00:54:49,080
Speaker 1: And they defined emergencies as numerous things, including currency crisis,

1183
00:54:49,160 --> 00:54:53,080
Speaker 1: including information or data crisis would be an emergency that

1184
00:54:53,120 --> 00:54:53,839
Speaker 1: would give them power.

1185
00:54:54,040 --> 00:54:55,520
Speaker 3: So we see this happening.

1186
00:54:55,800 --> 00:54:59,239
Speaker 1: I think it was Klaus Schwab maybe said, you know,

1187
00:54:59,600 --> 00:55:01,600
Speaker 1: we will will have a cyber pandemic in the next

1188
00:55:01,640 --> 00:55:04,279
Speaker 1: twenty four months or two years or whatever it was

1189
00:55:04,320 --> 00:55:07,040
Speaker 1: before twenty nine four. So what's your take on that.

1190
00:55:07,200 --> 00:55:09,480
Speaker 1: I know that's maybe a little bit more in your wheelhouse.

1191
00:55:10,320 --> 00:55:12,879
Speaker 1: Do you see that increasing rhetoric? Do you think there's

1192
00:55:12,880 --> 00:55:15,399
Speaker 1: something coming? Do you think this could be used as

1193
00:55:15,520 --> 00:55:17,960
Speaker 1: just another way to kind of move us into whatever

1194
00:55:18,120 --> 00:55:20,160
Speaker 1: system they want to digital, like the E system, et cetera.

1195
00:55:22,040 --> 00:55:25,320
Speaker 4: Well, I mean, Klaus Schwab is not like a cyber expert.

1196
00:55:25,360 --> 00:55:27,239
Speaker 4: I think they put on these Davos panels, and they

1197
00:55:27,320 --> 00:55:30,200
Speaker 4: sort of pick the topics jr. And they like they're

1198
00:55:30,200 --> 00:55:32,239
Speaker 4: trying to draw attention to themselves, so they create some

1199
00:55:32,360 --> 00:55:35,600
Speaker 4: fantastical scenario and it gets everyone in its dizzy. And

1200
00:55:35,680 --> 00:55:38,400
Speaker 4: the term cyber pandemic is like like not a technical

1201
00:55:38,520 --> 00:55:43,160
Speaker 4: term in like the cybersecurity field, and so it's it's

1202
00:55:43,200 --> 00:55:43,520
Speaker 4: a bit.

1203
00:55:43,480 --> 00:55:45,600
Speaker 2: Of a it's you know, it's a bit of a

1204
00:55:45,760 --> 00:55:48,640
Speaker 2: I don't know, like but I guess.

1205
00:55:49,040 --> 00:55:51,720
Speaker 4: The Finnel point is like, our global systems are fundamently

1206
00:55:51,760 --> 00:55:54,320
Speaker 4: digital systems, and our modern life relies on these systems

1207
00:55:54,360 --> 00:55:58,640
Speaker 4: to function, and like most code is just bad code,

1208
00:55:59,000 --> 00:56:02,040
Speaker 4: and if you want to do things and you're relatively capable,

1209
00:56:02,360 --> 00:56:04,480
Speaker 4: you can figure out how to like you know, do

1210
00:56:04,600 --> 00:56:06,320
Speaker 4: bad things with most digital systems.

1211
00:56:06,960 --> 00:56:08,520
Speaker 1: And this is like a year or two ago there

1212
00:56:08,600 --> 00:56:12,200
Speaker 1: was that big hack. This's was it Solar winds or yes, I.

1213
00:56:12,239 --> 00:56:14,000
Speaker 2: Mean every every year we get one of these big ones.

1214
00:56:14,040 --> 00:56:16,600
Speaker 4: So solar wins was a classic supply chain attack where

1215
00:56:16,680 --> 00:56:21,520
Speaker 4: the Russians SVR introduced like a vulnerability into a software

1216
00:56:21,560 --> 00:56:23,680
Speaker 4: update that went into like hundreds and hundreds of different

1217
00:56:23,719 --> 00:56:27,120
Speaker 4: companies as like you know, critical software to like everything.

1218
00:56:26,920 --> 00:56:29,160
Speaker 3: Included in the US Treasury. I think right, oh yeah,

1219
00:56:29,200 --> 00:56:30,279
Speaker 3: it went it was it.

1220
00:56:30,400 --> 00:56:31,279
Speaker 2: Was a huge mess.

1221
00:56:32,560 --> 00:56:34,280
Speaker 4: And you know, this is a this is a classic

1222
00:56:34,280 --> 00:56:37,040
Speaker 4: example of where, you know, the the opacity of the

1223
00:56:37,280 --> 00:56:40,520
Speaker 4: private sector supply chains, like digital supply chains creating software

1224
00:56:40,800 --> 00:56:44,680
Speaker 4: can create acute strategic vulnerabilities for countries around the world.

1225
00:56:44,719 --> 00:56:47,000
Speaker 4: Like for example, like the not Petia virus that took

1226
00:56:47,080 --> 00:56:50,399
Speaker 4: down Marisk was an accident. It was actually meant meant

1227
00:56:50,440 --> 00:56:53,399
Speaker 4: to take down Ukraine power grid and it just sort

1228
00:56:53,400 --> 00:56:55,279
Speaker 4: of got into the wild, and it was written in

1229
00:56:55,320 --> 00:56:57,080
Speaker 4: such a way that it compromised like a pretty general

1230
00:56:57,200 --> 00:57:02,040
Speaker 4: piece of industrial software, and Marisk, the global shipping entity,

1231
00:57:02,160 --> 00:57:05,919
Speaker 4: basically had almost all their servers worldwide wrecked except for one.

1232
00:57:05,880 --> 00:57:07,239
Speaker 3: Just happened to get into the wild.

1233
00:57:07,920 --> 00:57:09,920
Speaker 2: Yeah. I mean, well that's these things happen sort of.

1234
00:57:09,960 --> 00:57:12,080
Speaker 1: Sort of like when you develop these weapons and tools,

1235
00:57:12,160 --> 00:57:13,560
Speaker 1: somehow they just could put to.

1236
00:57:13,560 --> 00:57:14,920
Speaker 3: Take it out there. Why do we develop like a

1237
00:57:15,000 --> 00:57:16,920
Speaker 3: gain of function study, Like what do we do with that?

1238
00:57:17,200 --> 00:57:20,680
Speaker 4: Yeah, sometimes it's unintentionally, but oftentimes it's just just you know, funnily,

1239
00:57:20,720 --> 00:57:23,960
Speaker 4: these are like leaky systems, like and they're oftentimes the

1240
00:57:24,480 --> 00:57:26,360
Speaker 4: effectiveness of the weapon is designed like you want to

1241
00:57:26,360 --> 00:57:28,880
Speaker 4: get into one network, and it's its function is to

1242
00:57:28,960 --> 00:57:31,000
Speaker 4: spread throughout that network, and so they're really good at

1243
00:57:31,040 --> 00:57:32,880
Speaker 4: spreading to get to the systems you actually want to hit.

1244
00:57:33,360 --> 00:57:36,200
Speaker 4: But the malware maybe doesn't know different between like that

1245
00:57:36,320 --> 00:57:38,240
Speaker 4: network and another network, and then once it gets there,

1246
00:57:38,280 --> 00:57:39,280
Speaker 4: it just goes worldwide.

1247
00:57:39,560 --> 00:57:41,280
Speaker 2: And so those are examples just where our systems are

1248
00:57:41,320 --> 00:57:41,960
Speaker 2: really vulnerable.

1249
00:57:42,840 --> 00:57:45,440
Speaker 4: There's you know, like different thread actors, is like financially

1250
00:57:45,480 --> 00:57:47,400
Speaker 4: motivated thread actors that are just trying to like you know,

1251
00:57:47,560 --> 00:57:48,960
Speaker 4: extract ransomware ransoms.

1252
00:57:49,000 --> 00:57:50,240
Speaker 2: But those aren't necessarily.

1253
00:57:49,920 --> 00:57:52,080
Speaker 3: Going to take down or still data or whatever.

1254
00:57:52,160 --> 00:57:54,920
Speaker 4: Yeah, they still data, they blackmail you whatever. It's like

1255
00:57:55,000 --> 00:57:57,040
Speaker 4: that's a whole business now, Like ransomware as a service

1256
00:57:57,160 --> 00:57:59,240
Speaker 4: is like as a as a major thing. And sometimes

1257
00:57:59,280 --> 00:58:02,480
Speaker 4: there's inentially moon lighting, uh, you know, intelligence officers they

1258
00:58:02,480 --> 00:58:05,160
Speaker 4: are just like deploying their skills for criminal groups to

1259
00:58:05,240 --> 00:58:08,320
Speaker 4: make more money or vice versa. It's like often the

1260
00:58:08,360 --> 00:58:11,520
Speaker 4: same the real like strategic threats at the level of

1261
00:58:11,680 --> 00:58:15,720
Speaker 4: like you know, you know, a catastrophic event, uh is

1262
00:58:15,840 --> 00:58:18,000
Speaker 4: like would be mostly a nation state motivated, right, And

1263
00:58:18,080 --> 00:58:20,440
Speaker 4: this would usually come in the context of like like

1264
00:58:20,600 --> 00:58:23,480
Speaker 4: a tense like war, like like US trying to conflict

1265
00:58:23,520 --> 00:58:26,040
Speaker 4: of US now China, see would likely have a cyber component.

1266
00:58:27,040 --> 00:58:28,360
Speaker 4: I spent all we spent a lot of time thinking

1267
00:58:28,400 --> 00:58:30,560
Speaker 4: about what that looks like, what that manifests. There's a

1268
00:58:30,640 --> 00:58:35,480
Speaker 4: huge amount of thought going into the deterrence kind of

1269
00:58:35,680 --> 00:58:38,920
Speaker 4: concepts that play out in cyber war, which are very

1270
00:58:38,960 --> 00:58:41,880
Speaker 4: different than other forms of kind of you know, established

1271
00:58:42,080 --> 00:58:46,720
Speaker 4: military norms, like what's what's appropriate when you're attacking critical infrastructure.

1272
00:58:47,160 --> 00:58:50,320
Speaker 4: What's a like a nuisance attack can quickly turn into

1273
00:58:50,560 --> 00:58:54,360
Speaker 4: a like strategic attack, and it's often very hard to calibrate. Oh,

1274
00:58:54,400 --> 00:58:56,959
Speaker 4: I'm just going to take down you know, one little

1275
00:58:57,000 --> 00:58:59,720
Speaker 4: piece of a train system here, but it turns out

1276
00:58:59,760 --> 00:59:03,000
Speaker 4: that actually spreads to all the trains in that entire

1277
00:59:03,080 --> 00:59:07,240
Speaker 4: Northeast corridor, and now like you know, the economy is

1278
00:59:07,280 --> 00:59:10,840
Speaker 4: collapsing because no one can travel, Goods stop flowing, et cetera.

1279
00:59:11,240 --> 00:59:15,600
Speaker 4: Or one example, the colonial pipeline critical you know pipeline

1280
00:59:15,760 --> 00:59:18,920
Speaker 4: for you know, energy in the Northeast, and it was

1281
00:59:18,960 --> 00:59:21,959
Speaker 4: actually you know, an error. Supposedly it was like someone

1282
00:59:22,120 --> 00:59:25,200
Speaker 4: just like you know, left their account, but yeah, and

1283
00:59:26,200 --> 00:59:28,080
Speaker 4: it got ransomware it and it became like the National

1284
00:59:28,120 --> 00:59:30,400
Speaker 4: Security Council's meeting about this thing. Right, Like, this is

1285
00:59:30,520 --> 00:59:33,520
Speaker 4: where we are as a civilization, and you know, you

1286
00:59:33,640 --> 00:59:35,280
Speaker 4: can you can you can describe a lot of like

1287
00:59:35,640 --> 00:59:38,280
Speaker 4: paranoia to like, oh, someone's planning the big event that's

1288
00:59:38,280 --> 00:59:40,680
Speaker 4: going to take down everything. What actually scares me more

1289
00:59:40,880 --> 00:59:42,920
Speaker 4: is not that there's some secret you know entity that

1290
00:59:43,080 --> 00:59:46,479
Speaker 4: wants to you know, spring spring load the big event.

1291
00:59:46,600 --> 00:59:49,520
Speaker 4: It's just our systems are so fragile just by design,

1292
00:59:50,080 --> 00:59:52,920
Speaker 4: that it doesn't take you know, some big, you know,

1293
00:59:53,560 --> 00:59:55,720
Speaker 4: secret group to take it down. It could just fall

1294
00:59:55,720 --> 00:59:58,160
Speaker 4: apart by itself. Right, Like the systems we've created are

1295
00:59:58,200 --> 01:00:01,680
Speaker 4: just inherently fragile and vulnerable, and they're just constantly being

1296
01:00:01,760 --> 01:00:04,560
Speaker 4: duct taped together. Right, a new zero day get gets

1297
01:00:04,640 --> 01:00:06,880
Speaker 4: released into the wild, and everyone's rushing to patch this.

1298
01:00:07,360 --> 01:00:09,840
Speaker 4: A new supply chaining cact that gets discovered that affects

1299
01:00:10,120 --> 01:00:12,600
Speaker 4: half the fortune five hundred, Like this happens like every

1300
01:00:12,640 --> 01:00:15,560
Speaker 4: few months, and this is just the way of the world,

1301
01:00:15,760 --> 01:00:19,360
Speaker 4: and it's an increasing strategic challenges to the.

1302
01:00:21,200 --> 01:00:22,560
Speaker 2: You know, our vulnerabilities.

1303
01:00:22,600 --> 01:00:23,920
Speaker 4: Right. It's like the last point I'll say this is

1304
01:00:23,960 --> 01:00:26,880
Speaker 4: like you know what this means in the context of

1305
01:00:27,040 --> 01:00:30,400
Speaker 4: say state competition. Is it like closes the virtual distance

1306
01:00:31,000 --> 01:00:34,080
Speaker 4: and you know, we are protected by Pacific and Atlantic

1307
01:00:34,120 --> 01:00:38,200
Speaker 4: oceans for invasion. But China can do a lot with

1308
01:00:38,600 --> 01:00:43,800
Speaker 4: you know, just their extremely capable and vastly numerous cyber army,

1309
01:00:44,560 --> 01:00:47,320
Speaker 4: and they're they're very patient, they're very persistent, and they're

1310
01:00:47,400 --> 01:00:50,400
Speaker 4: investing huge amounts of resources. Not it's just like steel

1311
01:00:50,440 --> 01:00:52,880
Speaker 4: actual property, you know what they've done for years, but

1312
01:00:53,000 --> 01:00:56,880
Speaker 4: to establish persistence in the advance of a potential military conflict.

1313
01:00:56,960 --> 01:00:59,400
Speaker 4: I mean one big story was the volt Typhoon, a

1314
01:00:59,480 --> 01:01:03,120
Speaker 4: group that was just you know, you know, named by Microsoft,

1315
01:01:03,600 --> 01:01:06,400
Speaker 4: you know, getting into networks in the Navy, throughout Guam,

1316
01:01:06,560 --> 01:01:10,960
Speaker 4: multiple critical infrastructure of firms the United States, you know,

1317
01:01:11,160 --> 01:01:13,920
Speaker 4: basically in just in case there's a war and we

1318
01:01:14,040 --> 01:01:18,280
Speaker 4: need to flip off telecommunications systems, we need to shut

1319
01:01:18,320 --> 01:01:21,720
Speaker 4: down satellite communications, we want to flip off you know,

1320
01:01:21,800 --> 01:01:24,680
Speaker 4: other aspects of critical infrastructure. Like this is a this

1321
01:01:24,800 --> 01:01:27,200
Speaker 4: is a constant battle that's happening behind the scenes. Is

1322
01:01:27,600 --> 01:01:30,360
Speaker 4: the defense of critical infrastructure against nation state attacks. And

1323
01:01:31,280 --> 01:01:33,960
Speaker 4: it's yeah, I don't think anyone just like flipped the

1324
01:01:34,000 --> 01:01:36,200
Speaker 4: lights off for no reason, right, Like, because if it's

1325
01:01:36,480 --> 01:01:40,440
Speaker 4: really catastrophic that would be perceived potentially as up to

1326
01:01:40,560 --> 01:01:43,000
Speaker 4: and including you know, like an active war, if not

1327
01:01:43,880 --> 01:01:44,720
Speaker 4: strategic threat.

1328
01:01:44,800 --> 01:01:48,040
Speaker 1: So the US is I'm sorry, China is like heavily

1329
01:01:48,120 --> 01:01:50,200
Speaker 1: investing into this area to build this kind of army.

1330
01:01:50,240 --> 01:01:53,440
Speaker 1: You mentioned Russia with their bots so forth. Is the

1331
01:01:53,560 --> 01:01:55,439
Speaker 1: US also heavily investing in this area?

1332
01:01:55,880 --> 01:01:58,120
Speaker 4: Oh yeah, I mean this is this is the I

1333
01:01:58,200 --> 01:02:01,880
Speaker 4: mean space and cyber are the two two domains of

1334
01:02:02,000 --> 01:02:05,600
Speaker 4: warfare that any modern state is investing like leaps and

1335
01:02:05,680 --> 01:02:08,480
Speaker 4: downs to try to attain astgig advantage. I mean, we

1336
01:02:08,640 --> 01:02:11,920
Speaker 4: probably have the most exquisite like technical capabilities to get

1337
01:02:11,960 --> 01:02:15,280
Speaker 4: into the most hard systems, but fundamentally it comes down

1338
01:02:15,320 --> 01:02:18,840
Speaker 4: to like numbers of people and trained hackers that can

1339
01:02:18,880 --> 01:02:20,920
Speaker 4: actually sit at a computer eight hours a day and

1340
01:02:21,040 --> 01:02:23,480
Speaker 4: have a particular target. And China just has lots of

1341
01:02:23,600 --> 01:02:26,240
Speaker 4: lots of people like you know, there's anecdotes that you know,

1342
01:02:26,280 --> 01:02:27,919
Speaker 4: you might think you're a fifty or one hundred person

1343
01:02:28,000 --> 01:02:32,080
Speaker 4: startup with some cool aerospace defense technology, and you might

1344
01:02:32,120 --> 01:02:33,680
Speaker 4: think you're too small to be on the radar of

1345
01:02:33,800 --> 01:02:36,280
Speaker 4: Chinese hackers trying to might have a dedicated team five

1346
01:02:36,320 --> 01:02:38,320
Speaker 4: to eight guys whose sole job it is is to

1347
01:02:38,440 --> 01:02:41,120
Speaker 4: like get inside your networks and live there. And they

1348
01:02:41,200 --> 01:02:43,520
Speaker 4: just have enough people where they can do that, you know.

1349
01:02:43,760 --> 01:02:45,560
Speaker 4: FBI director said, it is probably a fifty to one

1350
01:02:46,520 --> 01:02:49,680
Speaker 4: ratio of kind of offensive defense. We have our own

1351
01:02:49,720 --> 01:02:52,360
Speaker 4: cyber command that you know, does offensive cyber operations, whether

1352
01:02:52,360 --> 01:02:55,520
Speaker 4: they call persistent engagement or hunt forward, to get our

1353
01:02:55,560 --> 01:02:57,720
Speaker 4: own access into the Chinese systems, get access to the

1354
01:02:57,760 --> 01:03:00,280
Speaker 4: Russian systems, et cetera, to create a lit but like

1355
01:03:00,280 --> 01:03:01,400
Speaker 4: a mutually started destruction thing.

1356
01:03:01,400 --> 01:03:03,560
Speaker 2: It's like, well, if you hit me, I can hit you.

1357
01:03:04,240 --> 01:03:04,360
Speaker 1: Uh.

1358
01:03:05,080 --> 01:03:06,320
Speaker 2: It is a yeah.

1359
01:03:06,360 --> 01:03:07,840
Speaker 4: And we saw a little bit of this with Ukraine,

1360
01:03:07,920 --> 01:03:10,920
Speaker 4: but it was it was it wasn't a full scale

1361
01:03:11,200 --> 01:03:14,240
Speaker 4: conflict and it was really sing a Ukraine like the

1362
01:03:14,520 --> 01:03:18,360
Speaker 4: back to the techno industrial War. Like Ukraine basically offloaded

1363
01:03:18,480 --> 01:03:21,400
Speaker 4: their entire government, which is you think about a digital

1364
01:03:21,440 --> 01:03:24,560
Speaker 4: services and information, your citizen's data, pass information, tax data,

1365
01:03:25,360 --> 01:03:28,280
Speaker 4: you know, health payments, at social security, everything sits on

1366
01:03:29,240 --> 01:03:29,600
Speaker 4: sits on.

1367
01:03:29,640 --> 01:03:31,080
Speaker 2: Servers in some government building.

1368
01:03:31,440 --> 01:03:33,560
Speaker 4: They basically took all those and they put them into

1369
01:03:33,600 --> 01:03:37,440
Speaker 4: a Microsoft server run by you know, on on Microsoft

1370
01:03:37,440 --> 01:03:40,080
Speaker 4: Asia and data centers in England. So It's like this

1371
01:03:40,120 --> 01:03:42,280
Speaker 4: is an example where you can have like digital exile, right,

1372
01:03:42,360 --> 01:03:46,200
Speaker 4: digital governments in exile being run uh, you know.

1373
01:03:46,360 --> 01:03:47,560
Speaker 2: On private infrastructure.

1374
01:03:48,280 --> 01:03:50,120
Speaker 4: And I think this is like a different way to

1375
01:03:50,160 --> 01:03:54,080
Speaker 4: think about warfare now, is it's not just invading capital cities,

1376
01:03:54,120 --> 01:03:56,040
Speaker 4: but it's also competing over like, well, how does that

1377
01:03:56,240 --> 01:03:58,560
Speaker 4: system of government still run? Right if it's being run

1378
01:03:58,560 --> 01:04:00,240
Speaker 4: on data centers. If you built the data center, maybe

1379
01:04:00,240 --> 01:04:02,800
Speaker 4: the government can't run. So it's like a strategic it's

1380
01:04:02,840 --> 01:04:05,800
Speaker 4: a strategic defense maneuver to take the government servers and

1381
01:04:05,920 --> 01:04:07,240
Speaker 4: be able to move them out of the country and

1382
01:04:07,280 --> 01:04:09,800
Speaker 4: still have the government. You know, that government still deliver

1383
01:04:09,920 --> 01:04:13,440
Speaker 4: its functions right, still tax payments, etc. So it's a

1384
01:04:13,480 --> 01:04:15,520
Speaker 4: fascinating kind of new dimension of warfare that we're seeing

1385
01:04:15,520 --> 01:04:15,800
Speaker 4: in full.

1386
01:04:16,680 --> 01:04:20,880
Speaker 1: So what an insightful, long and very scary conversation to

1387
01:04:20,960 --> 01:04:21,840
Speaker 1: kind of frame of the world.

1388
01:04:21,920 --> 01:04:24,120
Speaker 3: And it's easy to see this power structure. And this

1389
01:04:24,240 --> 01:04:24,880
Speaker 3: is something like Ray.

1390
01:04:24,880 --> 01:04:27,000
Speaker 1: Dalio has talked about extensively, you know, kind of the

1391
01:04:27,880 --> 01:04:32,760
Speaker 1: rising power meeting at the time of meeting the declining

1392
01:04:32,920 --> 01:04:36,000
Speaker 1: power as an agile problem, right, the sun growing up

1393
01:04:36,080 --> 01:04:38,640
Speaker 1: and overcoming the dad or whatever it is. Right, So

1394
01:04:39,000 --> 01:04:42,520
Speaker 1: we see that, and obviously we don't have a crystal ball,

1395
01:04:42,520 --> 01:04:43,560
Speaker 1: at least I don't have one.

1396
01:04:43,600 --> 01:04:44,000
Speaker 3: Maybe you do.

1397
01:04:44,120 --> 01:04:47,040
Speaker 1: But I'm curious where you think, you know, how you

1398
01:04:47,160 --> 01:04:50,080
Speaker 1: view this over the next couple of years, like maybe

1399
01:04:50,200 --> 01:04:52,720
Speaker 1: maybe through the next five years or the or the

1400
01:04:52,760 --> 01:04:54,840
Speaker 1: rest of this decade. You know, in my opinion, it

1401
01:04:54,920 --> 01:04:57,960
Speaker 1: seems like this continues to break apart, which leads to

1402
01:04:58,120 --> 01:05:03,120
Speaker 1: probably more supply chain disruption breakdowns, you know, tit for tats,

1403
01:05:03,160 --> 01:05:09,240
Speaker 1: et cetera, which probably leads to higher inflation, potentially you know,

1404
01:05:09,400 --> 01:05:12,360
Speaker 1: less goods and services for us in certain sectors moving forward.

1405
01:05:13,960 --> 01:05:15,640
Speaker 1: I don't know, but what that's kind of how I'm

1406
01:05:15,720 --> 01:05:17,520
Speaker 1: reading this. How do you read it over the next

1407
01:05:17,520 --> 01:05:18,000
Speaker 1: several years?

1408
01:05:18,640 --> 01:05:20,560
Speaker 4: Yeah, I think I think in terms of scenarios and

1409
01:05:20,920 --> 01:05:23,640
Speaker 4: like the two like the biggest divergence in terms of

1410
01:05:23,720 --> 01:05:26,880
Speaker 4: possible snaries is like do we avoid war with China

1411
01:05:27,280 --> 01:05:29,320
Speaker 4: or do we have over China. It's like because those

1412
01:05:29,360 --> 01:05:31,959
Speaker 4: are kind of like those are very vastly different futures, right.

1413
01:05:31,880 --> 01:05:33,800
Speaker 1: If we have do you think if we have war

1414
01:05:33,880 --> 01:05:36,360
Speaker 1: with so, let's say we have war with China, do

1415
01:05:36,400 --> 01:05:40,240
Speaker 1: you think it's really the you know, technological information cyber

1416
01:05:40,760 --> 01:05:44,640
Speaker 1: financial war or do you think there's a chance that

1417
01:05:44,720 --> 01:05:45,760
Speaker 1: we would go into a hot war.

1418
01:05:47,400 --> 01:05:48,800
Speaker 4: I mean, this is why the branch of the branch

1419
01:05:48,880 --> 01:05:52,160
Speaker 4: of the scenario is, like, you know, one scenario that's

1420
01:05:52,280 --> 01:05:56,040
Speaker 4: plausible is China thinks they can basically do a crippling

1421
01:05:56,240 --> 01:05:58,720
Speaker 4: first strike to sort of take out all of our

1422
01:05:58,800 --> 01:06:01,320
Speaker 4: military forces and all of Taiwan's forces in like a

1423
01:06:01,360 --> 01:06:04,600
Speaker 4: matter of hours. Have have the Taiwanese sue for peace

1424
01:06:05,120 --> 01:06:07,320
Speaker 4: and then basically think that US doesn't have the political

1425
01:06:07,360 --> 01:06:09,480
Speaker 4: will to mobilize and fight our way back into the

1426
01:06:09,520 --> 01:06:11,960
Speaker 4: first island chain and you know them kick them out

1427
01:06:11,960 --> 01:06:14,800
Speaker 4: of Taiwan. That's like one scenario that maybe China's banking

1428
01:06:14,880 --> 01:06:18,760
Speaker 4: on where they they engage in military conflict, but we

1429
01:06:19,000 --> 01:06:21,720
Speaker 4: essentially give up, We essentially retreat, and there's a new

1430
01:06:21,760 --> 01:06:26,280
Speaker 4: re architecting of the Pacific security sort of structure. One

1431
01:06:26,400 --> 01:06:29,320
Speaker 4: is what we do, fight and we win and we

1432
01:06:29,440 --> 01:06:31,120
Speaker 4: get the Hedgemond, it gets a new lease on life,

1433
01:06:31,200 --> 01:06:35,280
Speaker 4: and China basically is probably you know, knocked back for decades.

1434
01:06:36,720 --> 01:06:38,680
Speaker 4: So that's like the strategic stakes of if you actually

1435
01:06:38,720 --> 01:06:42,440
Speaker 4: get into conflict, it's who gets the decisive victory determines

1436
01:06:42,560 --> 01:06:43,680
Speaker 4: you know, really the branching of it.

1437
01:06:43,720 --> 01:06:46,360
Speaker 1: But either of those outcomes probably leads to supply chains

1438
01:06:46,400 --> 01:06:46,960
Speaker 1: breaking down.

1439
01:06:47,040 --> 01:06:49,640
Speaker 2: Oh yeah, I mean in any scenario where there's missiles.

1440
01:06:49,320 --> 01:06:52,360
Speaker 4: Flying, I mean, the world system is going to break

1441
01:06:52,400 --> 01:06:55,040
Speaker 4: in some critical ways, right, Like the FED is going

1442
01:06:55,080 --> 01:06:57,720
Speaker 4: to have to monetize ten more trillion dollars in sovereign debt.

1443
01:06:57,920 --> 01:07:00,800
Speaker 4: There's going to be probably price control, be inflation, but

1444
01:07:00,800 --> 01:07:03,920
Speaker 4: it'll be price controls, it'll be capital controls, it'll be

1445
01:07:04,120 --> 01:07:06,800
Speaker 4: you know, a very different world, world environment.

1446
01:07:06,480 --> 01:07:08,720
Speaker 3: Right in either outcome, But just get into that event,

1447
01:07:08,800 --> 01:07:09,360
Speaker 3: that's what that means.

1448
01:07:09,480 --> 01:07:11,320
Speaker 4: Yeah, if you get in any sort of shooting shooting war,

1449
01:07:11,360 --> 01:07:15,120
Speaker 4: whether it's you know, anything that basically breaks global supply chains,

1450
01:07:15,280 --> 01:07:16,720
Speaker 4: is going to be immensely disrupted.

1451
01:07:16,760 --> 01:07:18,840
Speaker 1: You know, unless China moved hard on Taiwan and the

1452
01:07:18,920 --> 01:07:20,840
Speaker 1: US just basically rolled over and said, fine, let's just

1453
01:07:20,960 --> 01:07:21,680
Speaker 1: keep moving forward.

1454
01:07:22,160 --> 01:07:24,520
Speaker 4: Yeah, I mean, that's like the optimistic scenario where we

1455
01:07:24,640 --> 01:07:26,400
Speaker 4: just sort of give up Taiwan, but then we sort

1456
01:07:26,400 --> 01:07:29,840
Speaker 4: of you know, reinforce our sort of quasi nuclear you know,

1457
01:07:30,280 --> 01:07:32,760
Speaker 4: uh winking a nod to Japan and South Korea, and

1458
01:07:32,800 --> 01:07:34,520
Speaker 4: then we saw hold the line. Now, a lot of

1459
01:07:34,520 --> 01:07:36,880
Speaker 4: people would say it'smpossible to hold the line. Maybe you can,

1460
01:07:36,960 --> 01:07:37,439
Speaker 4: maybe you can't.

1461
01:07:37,480 --> 01:07:37,800
Speaker 2: I don't know.

1462
01:07:37,960 --> 01:07:39,640
Speaker 4: I mean, you don't know until you get there. But

1463
01:07:39,640 --> 01:07:41,640
Speaker 4: that would be the optive scenario where actually, you know

1464
01:07:41,720 --> 01:07:43,840
Speaker 4: t SMC still functions. We just have to pay it,

1465
01:07:44,000 --> 01:07:46,720
Speaker 4: you know, additional tax essentially to the Chinese to get

1466
01:07:46,760 --> 01:07:49,600
Speaker 4: our chips and things have become much and more expensive,

1467
01:07:49,680 --> 01:07:52,360
Speaker 4: and you know, US powers and as dominant around the world.

1468
01:07:53,120 --> 01:07:55,160
Speaker 4: That's like so that's like where the China dominant question

1469
01:07:55,320 --> 01:07:56,680
Speaker 4: comes in, is like, can we get through the next

1470
01:07:56,720 --> 01:07:59,960
Speaker 4: three to five years without that sort of acute conflict scenario.

1471
01:08:00,520 --> 01:08:02,680
Speaker 2: Even if we avoid that, then I still think you're

1472
01:08:02,720 --> 01:08:04,560
Speaker 2: in a world where just the structural.

1473
01:08:04,240 --> 01:08:08,280
Speaker 4: Factors of embedded growth obligations in the West, retiring boomers,

1474
01:08:09,400 --> 01:08:12,520
Speaker 4: the you know, potential declining energy return on energy investment

1475
01:08:12,560 --> 01:08:14,600
Speaker 4: from you know, legacy fossil fuels is going to be

1476
01:08:14,640 --> 01:08:16,800
Speaker 4: hard to sort of keep powering the growth that we

1477
01:08:16,920 --> 01:08:19,519
Speaker 4: need to service these embedded growth obligations. You're going to

1478
01:08:19,600 --> 01:08:21,960
Speaker 4: have to sort of, you know, start to transfer money

1479
01:08:22,000 --> 01:08:26,200
Speaker 4: from the boomers to the millennials, whether it's through you know,

1480
01:08:26,360 --> 01:08:29,360
Speaker 4: the devaluation of their savings, the you know outright direction

1481
01:08:29,479 --> 01:08:32,240
Speaker 4: of capital, tax distribution, et cetera. So you're going to

1482
01:08:32,280 --> 01:08:34,920
Speaker 4: see some major political dynamics unfold in the next five

1483
01:08:35,000 --> 01:08:38,200
Speaker 4: or ten years. They just function of generational distributions of wealth,

1484
01:08:38,560 --> 01:08:42,800
Speaker 4: incoming inequality, energy issues, et cetera. I mean, so I

1485
01:08:42,840 --> 01:08:45,599
Speaker 4: think even then you're in for you know, a pretty

1486
01:08:47,040 --> 01:08:48,800
Speaker 4: like dynamic decade. Right, this is going to be the

1487
01:08:48,840 --> 01:08:51,000
Speaker 4: decade to where a lot of these imbalances that have

1488
01:08:51,120 --> 01:08:52,920
Speaker 4: just sort of just stayed in the global system for

1489
01:08:52,960 --> 01:08:56,320
Speaker 4: the past at least forty years fifty years have to

1490
01:08:56,360 --> 01:09:00,479
Speaker 4: be resolved. Whether you can you know, stretch that resolution

1491
01:09:00,760 --> 01:09:04,360
Speaker 4: and rebalancing out like over many many years, Like if

1492
01:09:04,400 --> 01:09:07,000
Speaker 4: you can do the the forties playbook of have a

1493
01:09:07,040 --> 01:09:09,320
Speaker 4: little bit of inflation right to the sort of devalue,

1494
01:09:09,360 --> 01:09:11,160
Speaker 4: but then before everything breaks you bring it back down.

1495
01:09:11,200 --> 01:09:12,040
Speaker 2: Then you do a little bit more.

1496
01:09:12,160 --> 01:09:14,120
Speaker 4: It's kind of the you know, like Lynn Alden has

1497
01:09:14,160 --> 01:09:16,439
Speaker 4: done that chart, right, you can play that over ten

1498
01:09:16,520 --> 01:09:18,680
Speaker 4: or fifteen years, and that's maybe a way you could

1499
01:09:18,720 --> 01:09:18,920
Speaker 4: play it.

1500
01:09:19,080 --> 01:09:20,680
Speaker 2: Maybe that's what you're seeing now, right. We did the

1501
01:09:20,720 --> 01:09:22,960
Speaker 2: first wave, and maybe there's gonna be another wave.

1502
01:09:23,080 --> 01:09:24,800
Speaker 4: Maybe there's another wave after that, and then you can

1503
01:09:24,960 --> 01:09:27,920
Speaker 4: you know, stretch the pain out without having an acute

1504
01:09:27,960 --> 01:09:28,719
Speaker 4: crisis situation.

1505
01:09:29,960 --> 01:09:31,439
Speaker 2: Yeah, I mean I don't have that crystal ball.

1506
01:09:31,960 --> 01:09:35,120
Speaker 1: But either way, this conflict is here. There's multiple ways

1507
01:09:35,160 --> 01:09:37,680
Speaker 1: it could play out. But almost regardless of how it

1508
01:09:37,760 --> 01:09:43,280
Speaker 1: plays out, it means probably supply chains of disruptions and

1509
01:09:43,439 --> 01:09:46,839
Speaker 1: more inflation and more fed monetary debasement.

1510
01:09:47,800 --> 01:09:48,000
Speaker 2: Yeah.

1511
01:09:48,040 --> 01:09:49,880
Speaker 4: I mean, there's always wild cards, so I always pay

1512
01:09:49,880 --> 01:09:52,040
Speaker 4: attention to like tail risks, right, there's always things that

1513
01:09:52,160 --> 01:09:54,920
Speaker 4: can be weird that you didn't anticipate, and so I'd

1514
01:09:54,960 --> 01:09:58,120
Speaker 4: always pay attention to, like stuff can happen.

1515
01:09:58,200 --> 01:10:02,479
Speaker 1: That's everything's possible. Well, we have to think about what's probable, right, Yeah.

1516
01:10:02,600 --> 01:10:06,360
Speaker 4: Yeah, I mean you know, Russian invasion, pandemic, you know,

1517
01:10:06,560 --> 01:10:08,280
Speaker 4: China war. These are like you might call it gray

1518
01:10:08,760 --> 01:10:11,000
Speaker 4: like gray rhinos, like they were possible, but that you

1519
01:10:11,120 --> 01:10:13,360
Speaker 4: never thought they would happen like next year, and so

1520
01:10:13,439 --> 01:10:15,360
Speaker 4: you didn't really bake it into your forecast, and then

1521
01:10:15,360 --> 01:10:17,720
Speaker 4: they happen, and then you've got to radically readjust your

1522
01:10:17,760 --> 01:10:21,400
Speaker 4: distribution of future scenarios now that you know you've taken

1523
01:10:21,400 --> 01:10:22,639
Speaker 4: a different branch of the timeline.

1524
01:10:23,080 --> 01:10:23,280
Speaker 3: Yeah.

1525
01:10:23,640 --> 01:10:26,879
Speaker 1: Wow, Well there's a lot to think about. Super insightful

1526
01:10:26,920 --> 01:10:30,040
Speaker 1: for me. I really appreciate that. Man, what amazing conversation.

1527
01:10:30,160 --> 01:10:31,960
Speaker 1: A little scary, A little scary, I have to say.

1528
01:10:34,520 --> 01:10:36,240
Speaker 3: You know, I know, I know you.

1529
01:10:36,479 --> 01:10:39,960
Speaker 1: You work in the kind of the cybersecurity and policy area.

1530
01:10:40,040 --> 01:10:42,439
Speaker 1: We'll link to all your stuff down below. Definitely give

1531
01:10:42,479 --> 01:10:44,679
Speaker 1: him Matt a follow. He is a wealth of information,

1532
01:10:45,120 --> 01:10:46,600
Speaker 1: so we'll link to that down below. Anything else you

1533
01:10:46,640 --> 01:10:48,679
Speaker 1: want to bring attention to or shout out or anything

1534
01:10:48,680 --> 01:10:48,800
Speaker 1: like that.

1535
01:10:49,640 --> 01:10:52,519
Speaker 4: Now, I appreciate you have me on these are These

1536
01:10:52,520 --> 01:10:54,800
Speaker 4: are all very tricky, complicated questions and I'm just trying

1537
01:10:54,840 --> 01:10:56,840
Speaker 4: to get, you know, at least the best handle I

1538
01:10:56,880 --> 01:10:59,560
Speaker 4: can on them. In a yeah, thinking in public is

1539
01:10:59,600 --> 01:11:02,080
Speaker 4: what I do on Twitter. So happy to engage.

1540
01:11:02,320 --> 01:11:04,280
Speaker 2: All right, thanks so much, thanks for having me