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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 to 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 multipolar world whatever. And that seems like

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

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

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

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

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Speaker 1: So why don't you just frame that up for us first?

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Speaker 3: Yes, I mean at the level of great power is

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Speaker 3: great power competition, which is the era that we're in, Like,

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Speaker 3: competition is over what are the instruments that modern states

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Speaker 3: rely on to ac crue and project power. And in

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Speaker 3: the modern sort of technologically driven civilization that's basically predicated

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Speaker 3: on controlling capital flows, controlling supply chains, and controlling the

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Speaker 3: most advanced technologies and the networks that the world system

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Speaker 3: runs on. Right, So the world is now a wash

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Speaker 3: in networks, networks for finance, right, banking networks, networks for

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Speaker 3: data like the Internet that often you know, banking transactions

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Speaker 3: go over as well, networks of supply chains, trade relationships,

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Speaker 3: military alliances, and so network power is sort of what

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Speaker 3: people are competing over, and the dominant networks that determine

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Speaker 3: who is going to win or lose in those competition

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Speaker 3: is who has sort of the choke point and surveillance

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Speaker 3: control over those networks, and that is a sort of

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Speaker 3: an almost an all or no game, right, And so

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Speaker 3: the United States has been in a position post war

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Speaker 3: of building a globalized system where it had the dominant

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Speaker 3: role in those networks it had the keynodes, or it

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Speaker 3: had alliance networks that give it access to those keynodes,

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Speaker 3: whether it's surveillance over the global Internet, whether it's influence

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Speaker 3: over global trade policy, whether it's controlling of global shipping lanes.

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Speaker 3: And that's the world's system that we think about kind

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Speaker 3: of the hegemonic sort of unipolar era. It's sort of

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Speaker 3: defined by the United States control over these critical networks.

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Speaker 3: And so China has, you know, embarked on a strategic

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Speaker 3: effort of the past twenty you know plus years to

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Speaker 3: either displace those networks or to complete and replace it

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Speaker 3: with their own, or try to co opt and take

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Speaker 3: over US's or the G seven's sort of legacy position

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Speaker 3: in controlling the existing networks. That's like the macro frame

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Speaker 3: for the competition we see, and you can sort of

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Speaker 3: chunk that into kind of the financial dimension, the technology dimension,

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Speaker 3: the military dimension, et cetera.

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Speaker 1: Where does the information fit into that dimension?

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Speaker 3: I mean that is I mean this kind of a

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Speaker 3: cliche to say data is the new oil, but that

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Speaker 3: 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,

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Speaker 1: uh you know, from the globalist the world that coming

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Speaker 1: for 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. Would you put data and information in

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Speaker 1: there together?

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Speaker 3: I would say information in the sense of like consumable content. Yeah,

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Speaker 3: that human beings can and just understand is a subset

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Speaker 3: of all data. Right, So there's lots of packets going

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Speaker 3: across the internet, whether it's transactions for you know, just

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Speaker 3: sort of stock trades that are not human readable, and

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Speaker 3: so yeah, like competition and state interest in controlling say

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Speaker 3: another nation, ability to influence what your domestic population is

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Speaker 3: consuming as like you know information you know that determines

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Speaker 3: their political attitudes, their beliefs about say conflicts, who's responsible

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Speaker 3: or who isn't for particular foreign conflict to try to

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Speaker 3: shape attitudes and motivations at a domestic level. That's a

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Speaker 3: that's a capability that a lot of states have always

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Speaker 3: invested in and try to say, plant stories in a

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Speaker 3: foreign newspaper, but it took a lot of effort. You

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Speaker 3: had to like have an intelligence operation to recruit a

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Speaker 3: journalist in a foreign country and you know try to

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Speaker 3: do you know, strategic influence operations to shape kind of

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Speaker 3: policymaking or broader public perceptions. I think one of what

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Speaker 3: has been accelerated with the advent of sort of global

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Speaker 3: platforms for technology is that game is now playing out

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Speaker 3: at a much faster scale in a much more fine

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Speaker 3: tune manner where you can you can you can have

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Speaker 3: sort of active operations to influence perception across borders. So

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Speaker 3: global platforms, both the US based platforms as well as

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Speaker 3: you know foreign platforms for social media, for news, et cetera,

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Speaker 3: are 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 3: A global world where you know, know there warrant as

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Speaker 3: intense you know, state rivalries and competition over political influence

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Speaker 3: operations and you could kind of like let it simmer

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Speaker 3: in the background. Now we have acute tensions of play

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Speaker 3: now we have live, you know, issues where states are

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Speaker 3: trying to manipulate the ability of you know, other citizens

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Speaker 3: to perceive what you know is happening and what views

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Speaker 3: they should hold.

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Speaker 2: And that is where the.

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Speaker 3: Tension between open, free discourse and a civil society starts

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Speaker 3: to run up against consumer concerns about say, foreign influence

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Speaker 3: operations or deception by say, you know, parties that have

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Speaker 3: control over algorithms that aren't that aren't visible to the public.

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Speaker 3: That's that's seeing what feeds are generated. And yeah, this

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Speaker 3: is a that is a subset like the competition over information,

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Speaker 3: and it's really premised on the fact that we now

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Speaker 3: live in a global technological civilization that uses these platforms

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Speaker 3: to share information on a global scale.

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

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Speaker 1: the time is kind of these three converging cycles, and

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Speaker 1: it's the political cycle two and fred year political cycle,

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

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Speaker 1: And how when you look back through history, it's always

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Speaker 1: technology that changes the world the most because it changed

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Speaker 1: the way we organize, communicate, work, et cetera. And it's

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Speaker 1: almost like technology is just advancing way faster than our

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

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Speaker 1: you look back to the Industrial Revolution, which was obviously

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Speaker 1: a big technological revolution, and it really created this centralization,

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Speaker 1: and then it led into kind of Henry Ford with

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Speaker 1: the assembly line mass production. And then you had mass productions,

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Speaker 1: You had mass amounts of people working on the assembly lines,

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Speaker 1: and you had to come up with a management structure

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Speaker 1: that managed them 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. I guess those are kind of the

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Speaker 1: two options that we're running into.

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Speaker 3: Yeah, I think you're seeing this tension play out with AIS.

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Speaker 3: Like one particular example where the pace of change is

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Speaker 3: happening relatively faster than what let's say, the political institutions

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Speaker 3: and regulatory bodies can accommodate. And so there's essentially a

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Speaker 3: bargaining process that we're witnessing unfold between the political economy

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Speaker 3: of the sort of technical private sector actors that are

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Speaker 3: leading the development and deployment of these tools and the

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Speaker 3: regulators who are facing this challenge of do they let

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Speaker 3: it the horse off the leash or do they try

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Speaker 3: to harness it without you know, crushing its potential to

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Speaker 3: 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 3: And I think this is an age old version of

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Speaker 3: an old or new version of an age old question

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Speaker 3: of where's the balance between you know, adapting your institutions

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Speaker 3: to meet the pace of the of the technology change.

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Speaker 3: At what point, though, is the pace of that technology

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Speaker 3: change to sort of outstrip the capacity of those institutions

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Speaker 3: 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 3: Maybe well, it's interesting, I think you're seeing a reconfiguration

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Speaker 3: or reconceptualization of what sorts of political structures win or

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Speaker 3: lose in.

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

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Speaker 3: Right. So, China has a certain model of which you

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Speaker 3: might call it authoritarianism as a service or sort of

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Speaker 3: techno authoritarian governance, where they they're trying to leverage the

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Speaker 3: fact that widespread surveillance artificial intelligence tools connecting everyone's activities

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Speaker 3: and behaviors into you know, essentially into the state monitoring

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Speaker 3: system allows them to more efficiently manage essentially an authoritarian

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Speaker 3: structure right where it's a one party state rule.

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Speaker 2: And then they're sort of trying.

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Speaker 3: To test that thesis of can you actually have central

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Speaker 3: government run a complex society using technology to help, you know,

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Speaker 3: mitigate the you know, the legacy kind of Hyaki and

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Speaker 3: information problem, right like, can you act actually centrally you know,

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Speaker 3: compute all the relevant information that you need or to

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Speaker 3: maintain that centralized control. But it is an attractive proposition

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Speaker 3: that China is trying to sort of model for the

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Speaker 3: rest of the world, is saying, we can help bootstrap

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Speaker 3: your economies you know, into the digital age will but

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Speaker 3: will it'll come with these tight control knobs that allow

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Speaker 3: to kind of tune to make sure it doesn't spit

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Speaker 3: spin out of control. I think in the Western system

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Speaker 3: we're struggling with in a different way because it does empower,

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Speaker 3: you know, certain elements in the society, often at the

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Speaker 3: expense of might say like liberal democracy. Right, you get

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Speaker 3: a concentration of data in the hands of you know,

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Speaker 3: opaque you know, big tech firms and and and government

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Speaker 3: agencies that gives them insight that that the public doesn't

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Speaker 3: have necessarily, and so with that comes power, with with that,

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Speaker 3: with that asymmetry potentially challenges like the premise of kind

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Speaker 3: of you know, the the Detaqueville kind of democratic ideal

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Speaker 3: where like, you know, everyone is someone on an equal

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Speaker 3: playing field. They can have a participatory like a participatory

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Speaker 3: civic discourse. You know, we're all issues and debates in

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Speaker 3: the public square and then vote and you know, you know,

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Speaker 3: that's how it goes. But now we might be entering

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Speaker 3: air where technology fundamentally, you know, constrains that vision of

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Speaker 3: liberal democratic discourse upon which you know, you know, our

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Speaker 3: political institutions were, we were premised and I guess we'll see.

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Speaker 3: I mean, there's other technology forces that you know obviously

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Speaker 3: in bitcoin that sort of represent a different trend, right.

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Speaker 3: You know, there's technology trans lead to centralization of data

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Speaker 3: and access to sort of critical trick points. And there's

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Speaker 3: technology trans lead to uh, you know, desegregation decentralization of

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Speaker 3: those sorts of notes.

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Speaker 2: And I think that's the battle you're.

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Speaker 3: Seeing in the in the in the sort of the

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Speaker 3: the evolution of bitcoin in particular, where where that that

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Speaker 3: 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, which caused the form of government. But now

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Speaker 1: we have technology creating the opposite force, which is decentralization.

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Speaker 1: So we don't have giant corporations with people working them.

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Speaker 1: In the United States, we don't have railroad and steel

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Speaker 1: industries anymore, right, So we don't have these big operations.

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Speaker 1: Now we have small, independent people working all over the

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Speaker 1: world over the internet, right, And at the same time,

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Speaker 1: the governments have continued to get bigger and bigger and

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

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Speaker 1: more decentralized at the same time. So we have like

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Speaker 1: two opposite forces almost where government's getting bigger and more

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Speaker 1: centralizing to your point, centralizing all these data sources inside

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Speaker 1: hands of corporations, but at the same time you have

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Speaker 1: people that are decentralizing and moving apart and have all

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Speaker 1: different interests based off of their locale that they're in,

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Speaker 1: et cetera. And so I guess I kind of asked

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Speaker 1: that question, but do we kind of hit a wall?

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Speaker 1: And it sort of seems like we are. So it

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Speaker 1: seems like the governments want to continue the growth trajectory,

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Speaker 1: but then at the same time the technology is pushing

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Speaker 1: this decentralized decentralization technology. I guess we'll see how that

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Speaker 1: plays out. I don't know, it's just it's interesting to

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Speaker 1: watch that playout, and there's really this power struggle. But

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Speaker 1: jumping back into kind of this techno industrial war. So

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Speaker 1: before we kind of dive into that, I want to

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Speaker 1: dive in. You've already kind of mentioned China's role. So

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Speaker 1: I want to talk about that a little bit more,

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

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

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Speaker 1: the players at the board are, right, and so then

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Speaker 1: understand that each have their own regions and own interests, right,

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Speaker 1: So you know, I might look at it like we

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Speaker 1: kind of obviously have this war with Russia going on

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Speaker 1: right now, which seems to me like is kind of

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Speaker 1: like this stand against globalism almost where like NATO and

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

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

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Speaker 1: 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 1: are different players. But then maybe really Russia China working together,

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

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Speaker 1: the US and China. Like how do you kind of

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Speaker 1: view that game board?

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Speaker 3: I mean, it's mentally complex, and I think there's a

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Speaker 3: lot of different frames. I think one useful frame is

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Speaker 3: like a simple triangle where the three points of the

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Speaker 3: triangle are like credit, commodities, and production, and you look

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Speaker 3: at what are the geopolitical power blocks that are sort

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Speaker 3: of relatively dominant in each of those, like you know,

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Speaker 3: kind of key elements of the global system. Right, So

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Speaker 3: like credit or money is dominated by G seven, Right,

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Speaker 3: it's dominated by by the US, and it's G seven allies.

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Speaker 3: You know, those are the largest you know economies. They're

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Speaker 3: also you know, the dominant financial centers, right. And the

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Speaker 3: influence or the power that that part of the triangle

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Speaker 3: deploys is mainly through you know, control over the financial system, sanctions,

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Speaker 3: overall global regulation, kind of the rule of law that

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Speaker 3: that that defines kind of the global system that's been

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Speaker 3: constructed post forty five. The other leg of the other

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Speaker 3: sort of point of the triangle would be like the

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Speaker 3: commodity point, and that's interesting OPEC plus So that's basically

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Speaker 3: Saudi's in Russia, right, So that is they're providing the

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Speaker 3: dominant raw inputs into the global system, right, oil and

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Speaker 3: you know raw commod for the for the consumption of

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Speaker 3: of the of mostly the West. And then you have

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Speaker 3: a production which is mostly China, right, And so they're

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Speaker 3: the they're the they're the manufacturing engine in the world.

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Speaker 3: They're the largest trade partner for almost, you know, the

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Speaker 3: vast majority of of of the countries on the planet,

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Speaker 3: and they're increasingly using their roles in manufacturing powerhouse to

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Speaker 3: build up their military capacity.

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Speaker 2: So each of those kind of three points in.

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Speaker 3: The sort of global system, when they were kind of

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Speaker 3: in frenemy mode, that's how you got globalization. That's how

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Speaker 3: you got you know, the post Soviet collapse era sort

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Speaker 3: of unipolar hegemonic moment where everyone thought everyone just be

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Speaker 3: getting rich, China would join the wto Russia would eventually

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Speaker 3: sort of accommodate to more of like a you know,

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Speaker 3: a close relationship with Europe as their energy provider.

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Speaker 2: Middle East was always going to be maybe a little

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Speaker 2: bit of a other problem, but.

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Speaker 3: We had the oil supply secured with a good close

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Speaker 3: biolot of relationship between the US and the Saudi's, and

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Speaker 3: the kind of the world system would just kind of

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Speaker 3: churn along. And I think what we're seeing in the

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Speaker 3: past few years.

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Speaker 2: Is that that.

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Speaker 3: Frenemy mode relationship between those points of the system is

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Speaker 3: sort of starting to break down. Obviously, the The Ukraine

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Speaker 3: War is a good example of where like the relationship

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Speaker 3: between G seven capital and OPEK plus specifically Russia is broken, right,

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Speaker 3: Like that's the sanctions, that is the export restrictions, that's

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Speaker 3: the oil price cap, et cetera. On the other leg,

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Speaker 3: between SA G seven and China, you're seeing you know,

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Speaker 3: not as an extreme breakdown is between Russia and the

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Speaker 3: G seven over Ukraine, but you're seeing increasing tension export controls,

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Speaker 3: technology restrictions on China. We had the trade war under Trump,

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Speaker 3: the increasing you know, concerns and anxiety over Taiwan invasion

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Speaker 3: scenarios quote unquote decoupling or de risking among major multinationals

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Speaker 3: about their approach to China as a base of manufacturing operations.

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Speaker 2: Et cetera.

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Speaker 3: So that is like how I would views like the

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Speaker 3: main global players is like you know, money, commodities and production.

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Speaker 3: And then of course on top of all that, right,

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Speaker 3: you have like the syncratic kind of i'd say, like

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Speaker 3: structure that has developed in terms of.

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Speaker 2: Like just just money itself.

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Speaker 3: Right, there's the G seven as like a power structure

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Speaker 3: that's defined by like formal government institutions. But you've also

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Speaker 3: had just so much wealth generated in non government spaces.

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Speaker 3: That that has now and I think an increasingly relevant

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Speaker 3: like geopolitical effect. But those those that money doesn't really

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Speaker 3: to first order like carry a flag, right like Chinese

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Speaker 3: oligarchs and Russian oligarchs and Saudi oligarchs and oligarchs of

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Speaker 3: any other stripe around the world like to first order

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Speaker 3: their oligarchs, and they can be compelled or coerced by

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Speaker 3: their respective flags to you know, maybe seeing the patriotic

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Speaker 3: tune when push comes to show. But ultimately their their

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Speaker 3: actions in the global system are the fact that they

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Speaker 3: control massive amounts of capital and their first order, you

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Speaker 3: know motivation is to protect that capital and influence whatever

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Speaker 3: jurisdiction that capital's in to protect their interests. And so

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Speaker 3: that that that can involve, you know, corrupting Western democracies,

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Speaker 3: it can involve, you know, doing other things in the

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Speaker 3: global system that that oftentimes don't directly align with you know,

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Speaker 3: the state capital and their geopolitical progress. But that that's

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Speaker 3: like a new wrinkle between the basic structure of kind

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Speaker 3: of money production and commodities. And now you just have

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Speaker 3: a huge amount of private wealth and it's and it

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Speaker 3: now has a lot of influence.

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Speaker 1: But it kind of fits within these three roles that

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Speaker 1: you said, credit, money, commodities, or production, and so most

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Speaker 1: of that wealth that these ol of our control would

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Speaker 1: actually fit under one of those buckets, under commodities or

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Speaker 1: under production to your point, right, if Chinese holigarchs it

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Speaker 1: fits under production, Russian holigarcs it fits under commodities kind

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Speaker 1: of a thing, right, so you could still and then

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Speaker 1: US holigarcs it fits under finance exactly.

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Speaker 2: Yeah.

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Speaker 3: And I think one of the tensions you're seeing is, like,

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Speaker 3: just to take one example as the Chinese, like the

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Speaker 3: US Klinna relationship and the political economy inside the United

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Speaker 3: States of what sort of stance the United States should

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Speaker 3: take towards China, as you know, their growing strategic challenge

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Speaker 3: is becoming more acute, and from like the perspective of

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Speaker 3: those inside the Washington d C that represent the Defense Department,

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Speaker 3: the Intelligence community, kind of the collaboratus, the Treasury Department.

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Speaker 3: You know, it's all about preparing to you know, meet

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Speaker 3: this threat. It's it's more of an antagonistic aggressive posture.

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Speaker 3: Technology controls, export controls, et cetera. If you're a venture

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Speaker 3: capital or private equity or wall Street manager. Right, your

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Speaker 3: your first order concern is I gotta I want to

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Speaker 3: keep you know, growing my my.

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Speaker 2: P and L.

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Speaker 3: I want to keep selling into this market. And you

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Speaker 3: don't necessarily want to break this trade relationship. You don't

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Speaker 3: want to break the bioloedical capital flows you're getting. You've

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Speaker 3: been you've been riding on this hog of globalization and

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Speaker 3: Chinese sort of asset recycling into Chinese surplus recycling into

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Speaker 3: Western assets that has really benefited uh.

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Speaker 2: You know, essentially Silicon Valley and Wall Street.

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Speaker 3: And now we're seeing this, you know, this tension play

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Speaker 3: out between the interests of that part of the political

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Speaker 3: economy the United States, and the national security interests coming

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Speaker 3: out of d C. And that that is a that

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Speaker 3: the version of that argument you're seeing also take place

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Speaker 3: in Sa Germany between you know, the folks inside Germany

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Speaker 3: to have a really strong interest in you know, trade

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Speaker 3: with China and those that you know are trying to

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Speaker 3: be pulled by the West into a more antagonistic relationship.

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Speaker 1: Yeah. Boy, what a tangled web that is. So it's

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Speaker 1: sort of like everybody kind of operated in this this

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

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Speaker 1: 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. Maybe we want to

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Speaker 1: be the superpower. And so now you sort of have

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

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

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Speaker 1: then everybody starts scrambling and then the whole thing kind

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Speaker 1: of falls apart. I guess is kind of where we're at.

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Speaker 1: So we have to this kind of increased pressure I

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Speaker 1: went through. I actually covered this on a recent video,

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Speaker 1: and really maybe it goes back to like Trump really

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Speaker 1: starting kind of this this trade war with China, the

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Speaker 1: tariffs things like that, starting to slap sanctions on their technologies,

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Speaker 1: specifically like going after Huawei kind of a thing like that.

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Speaker 1: And then it really acceleerate 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

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Speaker 1: abundantly clear after the pandemic that, like, because the US

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Speaker 1: has really outsourced so much production, we rely so much

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Speaker 1: on China, we really can't decouple, and so we start

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Speaker 1: getting to this kind of retaliate retaliatory war. But like

435
00:20:38,040 --> 00:20:39,800
Speaker 1: where does that lead? I mean, it's kind of like

436
00:20:39,880 --> 00:20:41,720
Speaker 1: mutually sure destruction almost, isn't it.

437
00:20:42,800 --> 00:20:45,200
Speaker 3: Yes, And I think that's the tit for tat that

438
00:20:45,240 --> 00:20:47,600
Speaker 3: we've been in Bark that we've been going through really

439
00:20:47,640 --> 00:20:52,159
Speaker 3: since Yeah, that October seventh Export Control Order that the

440
00:20:52,200 --> 00:20:57,679
Speaker 3: White House signed restricting China's access to leaning edge semiconductor

441
00:20:57,720 --> 00:21:01,200
Speaker 3: production equipment as well as sort of the actual sort

442
00:21:01,200 --> 00:21:03,920
Speaker 3: of Western talent, and they try to make that like

443
00:21:03,960 --> 00:21:06,560
Speaker 3: a multilateral restriction. So originally it was a US but

444
00:21:06,600 --> 00:21:09,600
Speaker 3: then really trying to get the other key players in

445
00:21:09,600 --> 00:21:12,639
Speaker 3: the global semi semi director of supply chain, principally the

446
00:21:12,680 --> 00:21:15,680
Speaker 3: Dutch to South Koreans and the Japanese to come on board.

447
00:21:16,040 --> 00:21:17,320
Speaker 2: And now that they have kind of.

448
00:21:17,240 --> 00:21:20,280
Speaker 3: Been able to get at least those key players to

449
00:21:20,760 --> 00:21:22,720
Speaker 3: tack in the direction of the United States with sort

450
00:21:22,720 --> 00:21:27,120
Speaker 3: of these plur these plurilateral multi latter export controls. China has,

451
00:21:27,520 --> 00:21:30,520
Speaker 3: you know, trying is trying to retaliate, right, and because

452
00:21:30,520 --> 00:21:33,360
Speaker 3: they're finamenting the weak position relative to that dimension of

453
00:21:33,400 --> 00:21:36,280
Speaker 3: the living technology, they're retalitying on their advantage, which is

454
00:21:36,320 --> 00:21:39,320
Speaker 3: on the raw commodity inputs to that to that high

455
00:21:39,320 --> 00:21:42,480
Speaker 3: technology supply chain. So so gallium and germanium is where

456
00:21:42,520 --> 00:21:46,560
Speaker 3: you know, to two critical commodity inputs that they have

457
00:21:46,720 --> 00:21:50,560
Speaker 3: the like the almost like the monopoly control over and

458
00:21:50,680 --> 00:21:53,520
Speaker 3: it was time just before Secretary Yellen is over there

459
00:21:53,560 --> 00:21:55,560
Speaker 3: now for a visit. So I think a lot of

460
00:21:55,600 --> 00:21:58,160
Speaker 3: this is about signaling, it's about tit for tat, it's

461
00:21:58,200 --> 00:22:02,280
Speaker 3: about posturing in this negotiation. You know, six months ago

462
00:22:02,320 --> 00:22:05,480
Speaker 3: people were really pessimistic on the direction of travel of

463
00:22:05,520 --> 00:22:07,480
Speaker 3: the US Chinnel relationship. It was ironically, it was the

464
00:22:07,520 --> 00:22:10,720
Speaker 3: balloon incident that was like the thing that really knocked

465
00:22:10,760 --> 00:22:14,080
Speaker 3: everything off off the rails. Secretary Blinking was supposed to

466
00:22:14,119 --> 00:22:15,679
Speaker 3: go there and it kind of helped smooth over at

467
00:22:15,720 --> 00:22:18,239
Speaker 3: least some of the fallout from the chip controls, but

468
00:22:18,359 --> 00:22:22,680
Speaker 3: that didn't happen. Instead, just things got much worse, And

469
00:22:22,760 --> 00:22:24,360
Speaker 3: I think there's a lot of back channeling, a lot

470
00:22:24,359 --> 00:22:27,840
Speaker 3: of like desire on both parties to at least structurally

471
00:22:27,880 --> 00:22:32,120
Speaker 3: shift the relationship up a bit now. I think stepping back,

472
00:22:32,359 --> 00:22:36,240
Speaker 3: everyone has interest in especially China because of their economics

473
00:22:36,280 --> 00:22:39,439
Speaker 3: sort of weakness right now is not to like aggravate things,

474
00:22:39,880 --> 00:22:41,920
Speaker 3: and I think everyone recognizes that when we shift into

475
00:22:41,960 --> 00:22:45,520
Speaker 3: twenty twenty four presdential campaign season that the ability to

476
00:22:45,560 --> 00:22:49,080
Speaker 3: any to do any sort of positive you know, biolaterals

477
00:22:49,119 --> 00:22:51,680
Speaker 3: anything is going to be impossible. So it's like, get

478
00:22:51,760 --> 00:22:54,840
Speaker 3: the relationship as back to an even keel as possible

479
00:22:54,880 --> 00:22:57,760
Speaker 3: this year, knowing that it's likely going to deteriorate again

480
00:22:57,880 --> 00:23:01,439
Speaker 3: next year. That's I think that's like the tactical stuff.

481
00:23:01,480 --> 00:23:05,280
Speaker 3: I think in general, there's a big debate happening about

482
00:23:05,320 --> 00:23:09,720
Speaker 3: whether fundamentally the relationship is like inevitably confrontational, right that

483
00:23:09,760 --> 00:23:13,800
Speaker 3: there's just the structural imperatives that are driving China's rise,

484
00:23:14,520 --> 00:23:17,359
Speaker 3: just the United States can't accommodate them into the global system.

485
00:23:17,640 --> 00:23:20,160
Speaker 3: It's like we have to make some fundamental trade offs

486
00:23:20,160 --> 00:23:22,600
Speaker 3: to the way we run the world order in order

487
00:23:22,640 --> 00:23:25,919
Speaker 3: to accommodate China's objectives. Like, you know, we can, we

488
00:23:25,920 --> 00:23:29,720
Speaker 3: can negotiate on any particular issue, but fundamentally they want

489
00:23:29,760 --> 00:23:31,520
Speaker 3: to have their own gew economic sphere of influence.

490
00:23:31,920 --> 00:23:34,199
Speaker 2: They don't want to feel sort of hemmed in in.

491
00:23:34,200 --> 00:23:36,919
Speaker 3: The first island chain and subject to the sort of

492
00:23:36,960 --> 00:23:42,199
Speaker 3: coursive power of the US monetary and military alliance system

493
00:23:42,520 --> 00:23:44,720
Speaker 3: and the security architecture in the Western Pacific. Like they

494
00:23:44,720 --> 00:23:47,760
Speaker 3: fundamentally want to change that. They want to, you know,

495
00:23:48,560 --> 00:23:51,119
Speaker 3: like peel us back from the Western Pacific, and we

496
00:23:51,119 --> 00:23:52,960
Speaker 3: don't want that to happen. So we can have these

497
00:23:52,960 --> 00:23:56,240
Speaker 3: sort of you know, we don't at any given tactical moment,

498
00:23:56,400 --> 00:23:58,919
Speaker 3: like no one wants everything to blow up. But the

499
00:23:58,960 --> 00:24:01,399
Speaker 3: relationship is a sort of seems to be in a

500
00:24:01,800 --> 00:24:03,719
Speaker 3: like a structural downtrend.

501
00:24:04,359 --> 00:24:06,320
Speaker 1: Because they want to rise and we want to hold

502
00:24:06,359 --> 00:24:08,760
Speaker 1: them back. And then those two things aren't those things

503
00:24:08,760 --> 00:24:11,280
Speaker 1: don't don't work together. They want to rise, we want

504
00:24:11,320 --> 00:24:12,679
Speaker 1: to hold them back, and at some point one of

505
00:24:12,760 --> 00:24:13,680
Speaker 1: somebody has to give.

506
00:24:14,119 --> 00:24:17,639
Speaker 3: It is it's it's you know, there's a mentality that's

507
00:24:17,760 --> 00:24:20,680
Speaker 3: I think on both sides of the Pacific that's somewhat

508
00:24:20,760 --> 00:24:24,440
Speaker 3: zero sum, and whether it's objectively true or not somewhat irrelevant.

509
00:24:24,480 --> 00:24:26,760
Speaker 3: If everyone thinks that zero sum, then that's what's going

510
00:24:26,800 --> 00:24:31,040
Speaker 3: to drive the dynamic, and especially on high technology. So

511
00:24:31,080 --> 00:24:33,960
Speaker 3: that's the thing that's made this I think more complicated

512
00:24:33,960 --> 00:24:38,439
Speaker 3: than just like territorial disputes or unification of Taiwan, is

513
00:24:38,480 --> 00:24:43,480
Speaker 3: that we have a perception among every other, every major

514
00:24:43,520 --> 00:24:46,320
Speaker 3: player in the global system that if you can't keep

515
00:24:46,400 --> 00:24:49,680
Speaker 3: up with the frontier of emergent technology, that you'll fundamentally,

516
00:24:49,880 --> 00:24:52,879
Speaker 3: like forever fall behind as a global power. And so

517
00:24:52,960 --> 00:24:56,199
Speaker 3: China is facing this like existential challenge. They see their

518
00:24:56,200 --> 00:24:59,840
Speaker 3: demographic situation in the next ten years really declining. They see,

519
00:25:00,080 --> 00:25:02,840
Speaker 3: you know, you know, they have dominance in global trade,

520
00:25:02,880 --> 00:25:05,160
Speaker 3: but they're trying to move up the value chain very

521
00:25:05,240 --> 00:25:08,480
Speaker 3: very quickly, and they're doing it from a position of

522
00:25:08,560 --> 00:25:11,760
Speaker 3: relative weakness, right They're trying to catch up. And now

523
00:25:11,800 --> 00:25:15,480
Speaker 3: the hedgemon is sort of relatedly turned its attention to

524
00:25:15,520 --> 00:25:17,760
Speaker 3: this rising challenger and is now pulling out all the

525
00:25:17,760 --> 00:25:20,560
Speaker 3: stops to try to keep its relative advantage as big

526
00:25:20,600 --> 00:25:22,880
Speaker 3: as possible, and is willing to do things that from

527
00:25:22,880 --> 00:25:26,640
Speaker 3: trans perspective sort of border on you know, economic war, right,

528
00:25:26,760 --> 00:25:28,480
Speaker 3: Like we're just we're just going to blanket, you know,

529
00:25:28,600 --> 00:25:31,800
Speaker 3: cut off your access to like, for example, like leading

530
00:25:31,880 --> 00:25:34,919
Speaker 3: Edge GPUs, which if everyone thinks AI is going to

531
00:25:34,920 --> 00:25:37,639
Speaker 3: be like the critical kind of general purpose technology the

532
00:25:37,640 --> 00:25:41,280
Speaker 3: next ten to twenty x years, they're trying to can't

533
00:25:41,640 --> 00:25:45,200
Speaker 3: get access to that technology. They're sort of fundamentally restricted

534
00:25:45,280 --> 00:25:48,760
Speaker 3: from developing their economy, and they view that as potentially

535
00:25:48,800 --> 00:25:50,920
Speaker 3: existential threat to them, right the whole premise of the

536
00:25:51,040 --> 00:25:55,600
Speaker 3: party's legitimacy and stabilities, they continue to deliver economic growth,

537
00:25:55,920 --> 00:25:56,760
Speaker 3: you know, year after year.

538
00:25:56,880 --> 00:25:58,320
Speaker 2: You know that's the that was the trade off.

539
00:25:58,440 --> 00:26:01,040
Speaker 3: Essentially, you have one party rule, but we give you know,

540
00:26:01,200 --> 00:26:03,560
Speaker 3: six percent GDP growth every year and you know, rising

541
00:26:03,600 --> 00:26:04,960
Speaker 3: liber standards and house prices they.

542
00:26:04,920 --> 00:26:05,479
Speaker 2: Keep going up.

543
00:26:05,680 --> 00:26:08,840
Speaker 1: How effective will the US be at at kneecapping them

544
00:26:08,880 --> 00:26:10,760
Speaker 1: with the technology? I mean a lot of people would

545
00:26:10,760 --> 00:26:12,520
Speaker 1: just say, well, they'll just develop their own chips they

546
00:26:12,520 --> 00:26:14,000
Speaker 1: don't need you know, they don't need us. They'll just

547
00:26:14,000 --> 00:26:15,520
Speaker 1: develop their own ships. They already have, They already have

548
00:26:15,560 --> 00:26:18,600
Speaker 1: high tech chips et cetera. So how effective are that

549
00:26:18,800 --> 00:26:21,040
Speaker 1: and how hard would it be in your opinion for

550
00:26:21,160 --> 00:26:24,240
Speaker 1: China to try to catch up without the US helping

551
00:26:24,600 --> 00:26:26,520
Speaker 1: or even even while the US is trying to hold

552
00:26:26,520 --> 00:26:26,880
Speaker 1: them back.

553
00:26:27,640 --> 00:26:30,560
Speaker 3: It's it's I mean, this is like the trillion dollar question.

554
00:26:30,560 --> 00:26:32,080
Speaker 3: I think it's a function of time. Like in the

555
00:26:32,080 --> 00:26:35,520
Speaker 3: near term, say three to five years, it there's really

556
00:26:35,680 --> 00:26:39,840
Speaker 3: little chance that China can, for example, recreate what the

557
00:26:40,359 --> 00:26:46,800
Speaker 3: Dutch lithography producer ASML has with their extreme ultraviolet lithography equipment.

558
00:26:47,760 --> 00:26:50,240
Speaker 3: That is, you know, that was like a thirty year

559
00:26:50,400 --> 00:26:53,399
Speaker 3: R and D project by you know, a multi multi

560
00:26:53,400 --> 00:26:56,000
Speaker 3: billion dollar firm that had like access to the most

561
00:26:56,040 --> 00:26:59,439
Speaker 3: advanced German optics and you know, just it was like

562
00:27:00,119 --> 00:27:03,040
Speaker 3: it was like it's the premier technology of human civilization.

563
00:27:03,119 --> 00:27:05,000
Speaker 3: Like it's the most advanced thing the human beings have

564
00:27:05,040 --> 00:27:08,600
Speaker 3: ever created. China is very smart. China has a lot

565
00:27:08,640 --> 00:27:11,159
Speaker 3: of has a lot a lot of capability. They're putting

566
00:27:11,240 --> 00:27:14,320
Speaker 3: one hundred plus billion dollars a year into this, so

567
00:27:14,359 --> 00:27:17,159
Speaker 3: they could as a moonshot try to get there. I

568
00:27:17,160 --> 00:27:20,600
Speaker 3: think that's their objective. It's very hard to just like

569
00:27:20,920 --> 00:27:26,440
Speaker 3: semiconductors is sort of like the like the quintessential global product,

570
00:27:26,640 --> 00:27:28,040
Speaker 3: right like no single.

571
00:27:27,720 --> 00:27:30,160
Speaker 1: Country oil, right oil?

572
00:27:30,520 --> 00:27:34,000
Speaker 3: And one critical distinction with oil is like you can

573
00:27:34,080 --> 00:27:35,720
Speaker 3: just pump a way out of the ground. You don't

574
00:27:35,760 --> 00:27:40,360
Speaker 3: need twenty trade partners each producing a very specialized component

575
00:27:40,960 --> 00:27:44,760
Speaker 3: and in a highly configured, complex supply chain to generate

576
00:27:44,920 --> 00:27:46,960
Speaker 3: you know, a semiconductor that goes into your iPhone. Like

577
00:27:46,960 --> 00:27:50,639
Speaker 3: That's what the global system has has enabled is cross

578
00:27:50,640 --> 00:27:54,000
Speaker 3: border trade specialization, et cetera. And China was a part

579
00:27:54,000 --> 00:27:57,720
Speaker 3: of that integrated, very complex supply chain. So that system

580
00:27:57,720 --> 00:27:59,600
Speaker 3: breaks down, it's more likely that no one gets semi

581
00:27:59,600 --> 00:28:02,800
Speaker 3: conductor is then trying to get some conductors. So it's

582
00:28:02,840 --> 00:28:06,040
Speaker 3: more a function of does instead of trying to catching up,

583
00:28:06,240 --> 00:28:08,439
Speaker 3: do they just try to spoil the fun right like

584
00:28:08,520 --> 00:28:10,720
Speaker 3: if and this is the risk is that it kinda

585
00:28:10,760 --> 00:28:13,359
Speaker 3: feels that they can never get access to the technological

586
00:28:13,400 --> 00:28:16,800
Speaker 3: frontier and that every year that goes by means that

587
00:28:17,160 --> 00:28:19,040
Speaker 3: the advantage of the West is going to, you know,

588
00:28:19,040 --> 00:28:21,840
Speaker 3: steadily increase, and then it maybe in a few years

589
00:28:21,840 --> 00:28:26,000
Speaker 3: that technological advantage will translate into a more material military advantage.

590
00:28:26,359 --> 00:28:29,560
Speaker 3: Then China's ambitions to unify with Taiwan and carve out

591
00:28:29,560 --> 00:28:32,320
Speaker 3: a larger geo economics sphere of influence for themselves might

592
00:28:32,320 --> 00:28:35,240
Speaker 3: be forever foreclosed, and so this might actually precipitate more

593
00:28:36,920 --> 00:28:39,920
Speaker 3: aggressive action in the near term to just spoil the party.

594
00:28:40,080 --> 00:28:41,640
Speaker 1: Well, if I can't have it, nobody can have it

595
00:28:41,720 --> 00:28:42,160
Speaker 1: kind of a thing.

596
00:28:42,280 --> 00:28:44,560
Speaker 3: Yeah, yeah, and say, okay, like, if you're going to

597
00:28:44,600 --> 00:28:47,080
Speaker 3: try to block us from access to this technology, we'll

598
00:28:47,080 --> 00:28:48,040
Speaker 3: just make sure no one can have it.

599
00:28:48,120 --> 00:28:50,520
Speaker 1: Yeah, Which, what about what do you think? I mean,

600
00:28:50,600 --> 00:28:53,240
Speaker 1: this is more of a political, maybe even philosophical question,

601
00:28:53,320 --> 00:28:56,920
Speaker 1: but you know, China being a communist country and the

602
00:28:56,960 --> 00:28:59,080
Speaker 1: amount of control they have, you know, I would believe

603
00:28:59,120 --> 00:29:03,480
Speaker 1: that that limits the creativity and uh motivations that and

604
00:29:03,520 --> 00:29:05,880
Speaker 1: desires that the people have. And it seems like maybe

605
00:29:05,880 --> 00:29:07,760
Speaker 1: that's one reason why we still have so much creativity.

606
00:29:07,800 --> 00:29:09,440
Speaker 1: We have so much of this new development happening in

607
00:29:09,440 --> 00:29:12,080
Speaker 1: the United States in you know, a free country. So

608
00:29:12,160 --> 00:29:14,280
Speaker 1: even if China puts all the money towards it, do

609
00:29:14,320 --> 00:29:17,760
Speaker 1: they have the people necessary, does the does their culture,

610
00:29:17,800 --> 00:29:21,560
Speaker 1: does their political structure cultivate that type of creativity to

611
00:29:21,760 --> 00:29:22,640
Speaker 1: develop those things?

612
00:29:23,560 --> 00:29:26,240
Speaker 3: It's interesting, I mean, that's a yeah, it sounds like

613
00:29:25,920 --> 00:29:28,080
Speaker 3: a cultural question.

614
00:29:28,200 --> 00:29:30,520
Speaker 1: You kind of have to political.

615
00:29:30,480 --> 00:29:32,680
Speaker 3: Yeah, political question because I mean, for example, there's one

616
00:29:32,720 --> 00:29:34,640
Speaker 3: study I forget who did it. It was a few

617
00:29:34,640 --> 00:29:38,720
Speaker 3: months ago where they looked at I forget the exact deals,

618
00:29:38,840 --> 00:29:40,480
Speaker 3: but they're looking at like patents. So if you look

619
00:29:40,520 --> 00:29:44,840
Speaker 3: by patents, uh, like in high technology China, especially like

620
00:29:44,880 --> 00:29:47,920
Speaker 3: an AI for example, or quantum information sciences, I feel

621
00:29:47,920 --> 00:29:52,560
Speaker 3: like like the production of new ideas, which patents might represent,

622
00:29:52,800 --> 00:29:55,320
Speaker 3: China has actually climbed pretty dramatically to.

623
00:29:55,280 --> 00:29:56,760
Speaker 2: The top ranks of the global system.

624
00:29:57,040 --> 00:30:00,920
Speaker 3: Where they have struggled is in translating say those raw

625
00:30:01,080 --> 00:30:04,360
Speaker 3: sort of technology insights or ground or sort of scientific

626
00:30:05,560 --> 00:30:09,760
Speaker 3: results into commercial products because they don't have like a

627
00:30:09,760 --> 00:30:11,920
Speaker 3: as much of an open free market and the domestic

628
00:30:12,000 --> 00:30:15,080
Speaker 3: system they don't, you know, especially with posts the jackmaw,

629
00:30:15,280 --> 00:30:19,520
Speaker 3: you know, interrogation. Like entrepreneurship has a cap right, Like

630
00:30:19,720 --> 00:30:21,480
Speaker 3: there's a you know, in the United States, you can

631
00:30:21,520 --> 00:30:23,800
Speaker 3: start you can found a startup, become a unicorn naked

632
00:30:23,840 --> 00:30:27,520
Speaker 3: billion dollars in a few years. In China, like you're

633
00:30:27,520 --> 00:30:30,080
Speaker 3: gonna quickly hit into a political wall if you if

634
00:30:30,120 --> 00:30:32,680
Speaker 3: you ever get if you ever get that successful, and

635
00:30:32,760 --> 00:30:35,800
Speaker 3: so that that does kind of impose a fundamental constraint

636
00:30:35,840 --> 00:30:38,920
Speaker 3: on their innovation capacity as a society. Potentially where they

637
00:30:38,920 --> 00:30:41,080
Speaker 3: can generate a lot of state directed R and D,

638
00:30:41,520 --> 00:30:43,480
Speaker 3: they can generate a lot of you know, research labs

639
00:30:43,520 --> 00:30:45,920
Speaker 3: to crank out like all the high end optical blah

640
00:30:45,920 --> 00:30:49,880
Speaker 3: blah blah blah quantum stuff. But turning that into like

641
00:30:49,960 --> 00:30:54,959
Speaker 3: a market you know, delivered product and service that can

642
00:30:55,000 --> 00:30:56,720
Speaker 3: turn to a multi billion dollar business.

643
00:30:57,080 --> 00:30:57,560
Speaker 2: That's the thing.

644
00:30:57,560 --> 00:30:59,600
Speaker 3: The United States has historically been the best in the

645
00:30:59,600 --> 00:31:03,480
Speaker 3: world apt of problems, yeah, and and commercializing those and

646
00:31:03,480 --> 00:31:05,800
Speaker 3: then and then you know, turning them into world leading businesses.

647
00:31:05,840 --> 00:31:08,720
Speaker 3: And so that is that is an interesting challenge. But

648
00:31:08,840 --> 00:31:11,200
Speaker 3: I mean, China's objectives, at least in the near term,

649
00:31:11,240 --> 00:31:13,920
Speaker 3: may not be to be Google and Apple of the world.

650
00:31:14,120 --> 00:31:17,080
Speaker 3: It maybe they just need to have enough d F sixteens,

651
00:31:17,120 --> 00:31:22,520
Speaker 3: DF seventeens, d F twenty one's, you know, frigates. You know,

652
00:31:22,600 --> 00:31:24,880
Speaker 3: they basically just need to build enough missiles and have

653
00:31:25,000 --> 00:31:30,080
Speaker 3: enough satellite capacity to prosecute victorious you know operation that

654
00:31:30,120 --> 00:31:32,080
Speaker 3: this out trying to see, so like they might be

655
00:31:32,280 --> 00:31:35,040
Speaker 3: like structurally hindered from say seizing the commanding heights of

656
00:31:35,080 --> 00:31:37,080
Speaker 3: the Fifth Industrial Revolution. Or whatever it is that they

657
00:31:37,160 --> 00:31:40,760
Speaker 3: write in their their their party strategy. But tactically speaking,

658
00:31:41,320 --> 00:31:44,240
Speaker 3: that may not prevent them from a from accruing the

659
00:31:44,320 --> 00:31:48,480
Speaker 3: relevant military capacity in the in the near term to

660
00:31:48,520 --> 00:31:51,840
Speaker 3: displace the United States in a tactical conflict scenario. Because

661
00:31:51,960 --> 00:31:54,760
Speaker 3: while we have like a really i say, strong structural advantage,

662
00:31:54,760 --> 00:31:57,680
Speaker 3: cultural advantage when it comes to innovation, capital markets, et cetera,

663
00:31:58,480 --> 00:32:01,640
Speaker 3: like our military capacity or our sort of shipbuilding capacity,

664
00:32:01,680 --> 00:32:05,120
Speaker 3: our defense industrial base, the fact that we're spread around

665
00:32:05,120 --> 00:32:07,920
Speaker 3: the whole global system try to you know, secure global

666
00:32:07,920 --> 00:32:10,840
Speaker 3: trade routes, et cetera, you know, makes us vulnerable potentially,

667
00:32:10,960 --> 00:32:13,160
Speaker 3: especially in the next you know, three to five years

668
00:32:13,320 --> 00:32:16,400
Speaker 3: sort of the acute sort of window of danger where

669
00:32:16,760 --> 00:32:20,800
Speaker 3: the deteriorating sort of US military sort of hard power capacity,

670
00:32:21,120 --> 00:32:23,640
Speaker 3: you know, might run up against China is really aggressive

671
00:32:23,760 --> 00:32:27,240
Speaker 3: ramping up and building ships, missiles, et cetera. So that's

672
00:32:27,280 --> 00:32:29,000
Speaker 3: that's the danger zone is if we get to this

673
00:32:29,040 --> 00:32:31,560
Speaker 3: period where you know, China feels they have to go

674
00:32:31,640 --> 00:32:33,560
Speaker 3: for it before the window closes.

675
00:32:36,360 --> 00:32:39,520
Speaker 1: Yeah, uh, pulling on that thread a little bit more.

676
00:32:40,800 --> 00:32:42,640
Speaker 1: And and I guess if if we really frame it

677
00:32:42,680 --> 00:32:44,200
Speaker 1: up with these these these are the two, you know,

678
00:32:44,400 --> 00:32:46,800
Speaker 1: the the two big superpowers that are kind of coming

679
00:32:46,840 --> 00:32:49,840
Speaker 1: into conflict. I'd asked you about when we had the

680
00:32:49,880 --> 00:32:53,560
Speaker 1: conversation previously getting under this call about you know, i'd

681
00:32:53,600 --> 00:32:57,320
Speaker 1: read this article talking about these uh, these g SIP

682
00:32:57,400 --> 00:32:59,760
Speaker 1: banks and potentially even like the four largest banks and

683
00:32:59,760 --> 00:33:02,640
Speaker 1: the world bank accounts in the world are Chinese owned banks.

684
00:33:03,200 --> 00:33:06,200
Speaker 1: Trillions of dollars sitting in offhore bank accounts, and how

685
00:33:06,320 --> 00:33:07,960
Speaker 1: really what we've seen with the bank runs happy in

686
00:33:08,000 --> 00:33:10,479
Speaker 1: the United States, we're just triggered by people taking their

687
00:33:10,520 --> 00:33:12,160
Speaker 1: money out of the bank, and they just take their

688
00:33:12,160 --> 00:33:13,800
Speaker 1: money out of one bank and put into bank number two.

689
00:33:13,840 --> 00:33:15,960
Speaker 1: Just push a button, doesn't cause that personal problem, but

690
00:33:16,000 --> 00:33:18,680
Speaker 1: the bank goes down. And it basically talked about how

691
00:33:18,760 --> 00:33:20,800
Speaker 1: like the largest bank of the United States being JP Morgan,

692
00:33:20,840 --> 00:33:23,600
Speaker 1: had like eight hundred and sixty million I'm sorry, eight

693
00:33:23,640 --> 00:33:26,200
Speaker 1: hundred and sixty billion dollars on its books or whatever,

694
00:33:26,720 --> 00:33:29,080
Speaker 1: and they're like, these accounts have trillions of dollars and

695
00:33:29,120 --> 00:33:31,000
Speaker 1: all I gotta do is just transfer from account eight

696
00:33:31,040 --> 00:33:33,120
Speaker 1: account B and just whack them all. Just bank drop,

697
00:33:33,120 --> 00:33:36,680
Speaker 1: but drop up up DRUP. I understand that. I mean

698
00:33:36,720 --> 00:33:39,160
Speaker 1: as big as that is we also have other oligarchs,

699
00:33:39,160 --> 00:33:42,240
Speaker 1: and we have the whole euro dollar system potentially as well.

700
00:33:42,320 --> 00:33:44,640
Speaker 1: But it seems like very easily there could be a

701
00:33:44,680 --> 00:33:48,360
Speaker 1: financial attack as well, which of course back to mutually

702
00:33:48,400 --> 00:33:50,560
Speaker 1: deserved destruction. I mean they're sitting on all these treasuries.

703
00:33:50,560 --> 00:33:52,560
Speaker 1: I mean, they don't want to ruin the financial system either,

704
00:33:52,960 --> 00:33:54,920
Speaker 1: but I guess they have that weapon. Do you see

705
00:33:54,920 --> 00:33:57,560
Speaker 1: that as something that's a that's a legit threat out there?

706
00:33:58,880 --> 00:34:01,120
Speaker 3: I do, And it gets it gets very complicated because

707
00:34:01,160 --> 00:34:04,680
Speaker 3: like any other conflict scenario, right, there's never there's never like.

708
00:34:04,640 --> 00:34:05,920
Speaker 2: A zero cost attack.

709
00:34:06,040 --> 00:34:06,200
Speaker 1: Right.

710
00:34:06,680 --> 00:34:11,520
Speaker 3: Every attack that you know, someone decides to execute is

711
00:34:11,520 --> 00:34:13,600
Speaker 3: going to come with some cost. Right, So there's just

712
00:34:13,640 --> 00:34:16,040
Speaker 3: like you know, a military attack, you might lose you know,

713
00:34:16,080 --> 00:34:18,759
Speaker 3: a bunch of people of your forces, so you need

714
00:34:18,800 --> 00:34:20,080
Speaker 3: to apply But that doesn't mean they're not going to

715
00:34:20,120 --> 00:34:22,719
Speaker 3: launch the attack, right, it's whether it's strategically justified or

716
00:34:22,880 --> 00:34:25,560
Speaker 3: they think they have a high chance of like strategic victory.

717
00:34:25,680 --> 00:34:27,160
Speaker 3: So I think you need to apply the same logic

718
00:34:27,200 --> 00:34:29,759
Speaker 3: to sort of financial warfare as you do to you know,

719
00:34:30,080 --> 00:34:34,040
Speaker 3: actual warfare. And I think you need to analyze the

720
00:34:34,080 --> 00:34:37,520
Speaker 3: position that you know that the Chinese government. In Chinese

721
00:34:37,640 --> 00:34:40,880
Speaker 3: say private sector proxies have accrued over the past twenty

722
00:34:40,960 --> 00:34:44,800
Speaker 3: years as the sort of globalized system has like really

723
00:34:44,840 --> 00:34:49,839
Speaker 3: accelerated the capital recycling from Chinese surpluses into Western assets, right,

724
00:34:49,840 --> 00:34:54,320
Speaker 3: trillions of dollars that Chinese entities have a crude like

725
00:34:54,360 --> 00:34:56,759
Speaker 3: the basic recycling mechanism have kind of gone through like

726
00:34:57,040 --> 00:35:00,279
Speaker 3: two routes. There's like the official route of you know,

727
00:35:00,440 --> 00:35:04,000
Speaker 3: government sector dollars surpluses, foreign exchange reserves going into dollar

728
00:35:04,040 --> 00:35:07,200
Speaker 3: based assets, principally US treasury securities held on the books

729
00:35:07,200 --> 00:35:09,840
Speaker 3: of either you know, the Central Bank safe like the

730
00:35:10,120 --> 00:35:13,200
Speaker 3: State Administration of Foreign Exchange, which.

731
00:35:13,040 --> 00:35:15,160
Speaker 2: Is the PBOC Sovereign Wealth Fund.

732
00:35:15,680 --> 00:35:17,720
Speaker 3: There's a whole book being written that was just written

733
00:35:17,719 --> 00:35:20,960
Speaker 3: by someone for the Council on Formulations that analyzes kind

734
00:35:20,960 --> 00:35:23,520
Speaker 3: of this network of sovereign wealth funds or even what

735
00:35:23,560 --> 00:35:26,319
Speaker 3: they call sovereign leverage funds that China has created to

736
00:35:26,560 --> 00:35:31,560
Speaker 3: redirect those dollars surpluses away from say dollar treasury securities

737
00:35:31,600 --> 00:35:33,480
Speaker 3: into like the dealt road mission right to try to

738
00:35:33,520 --> 00:35:37,640
Speaker 3: secure strategic influence in the global South, buy up assets, ports,

739
00:35:37,640 --> 00:35:40,520
Speaker 3: et cetera. And that was that's kind of like on

740
00:35:40,560 --> 00:35:43,480
Speaker 3: the official side, right, these are official actors recycling surpluses

741
00:35:43,520 --> 00:35:47,080
Speaker 3: and you know, getting strategic influence. This more like covert

742
00:35:47,239 --> 00:35:50,239
Speaker 3: recycling mechanism is probably potentially much more dangerous, which is

743
00:35:51,040 --> 00:35:53,560
Speaker 3: trillions of dollars that go through sort of a hop

744
00:35:53,600 --> 00:35:57,040
Speaker 3: of of of shell companies, right a Hong Kong LLC

745
00:35:57,480 --> 00:36:01,200
Speaker 3: to a Cayman Allen's LLC or Luxembourg LLC, a multi LLC,

746
00:36:01,600 --> 00:36:05,160
Speaker 3: et cetera that ends up investing in a US hedge fund,

747
00:36:05,200 --> 00:36:08,759
Speaker 3: a pension fund, an I p O, et cetera, just

748
00:36:08,800 --> 00:36:13,239
Speaker 3: a regularistate equity. You know, accruing large stakes and with

749
00:36:13,360 --> 00:36:16,360
Speaker 3: large stakes in Western assets comes influence. Right, So before

750
00:36:16,360 --> 00:36:18,560
Speaker 3: you press the sell button, which is like the nuclear button,

751
00:36:19,160 --> 00:36:21,279
Speaker 3: you actually have a lot of influence you can get.

752
00:36:21,280 --> 00:36:22,719
Speaker 3: Maybe you get a seat on the board of that

753
00:36:22,800 --> 00:36:25,640
Speaker 3: public or private company. Maybe that buys you a seat

754
00:36:25,640 --> 00:36:27,759
Speaker 3: at the fundraising dinner for that politician.

755
00:36:28,360 --> 00:36:30,240
Speaker 2: Maybe it allows you to do.

756
00:36:30,120 --> 00:36:32,239
Speaker 3: Things with money in our political system that allows you

757
00:36:32,280 --> 00:36:37,120
Speaker 3: to exert lots of lots of influence and Chinese entities,

758
00:36:37,200 --> 00:36:40,280
Speaker 3: whether it's oligarchs or other affiliated group sort of United

759
00:36:40,320 --> 00:36:48,240
Speaker 3: frontwork department, you say, like agency of influence have leveraged

760
00:36:48,239 --> 00:36:52,640
Speaker 3: that money and capital to influence Western democracies and sort

761
00:36:52,680 --> 00:36:55,480
Speaker 3: of corrupt our processes. That that does give them a

762
00:36:55,480 --> 00:36:58,279
Speaker 3: position potentially of having you know, I think that that

763
00:36:58,320 --> 00:37:00,800
Speaker 3: particular article you talks about kind of the extreme case

764
00:37:00,880 --> 00:37:03,960
Speaker 3: of that influence being well, a lot of these Western

765
00:37:03,960 --> 00:37:08,120
Speaker 3: fans stitutions have pretty thin sort of sort of cover

766
00:37:08,360 --> 00:37:11,200
Speaker 3: on their on their outflows. So if ten billion dollars

767
00:37:11,239 --> 00:37:13,759
Speaker 3: of depositors decided to leave one day, they have got

768
00:37:13,760 --> 00:37:16,400
Speaker 3: to cover that by selling assets because they're allowed to

769
00:37:16,400 --> 00:37:19,680
Speaker 3: hold like very little liquid capital. And that is what

770
00:37:19,680 --> 00:37:22,080
Speaker 3: we saw this look on Valley Bank right where basically

771
00:37:22,280 --> 00:37:24,480
Speaker 3: within a day or two, like forty billion dollars of

772
00:37:24,560 --> 00:37:27,560
Speaker 3: depositors just left and that basically killed the bank. The

773
00:37:27,600 --> 00:37:30,200
Speaker 3: FDIC had to come in and make those depositors whole.

774
00:37:30,239 --> 00:37:32,000
Speaker 3: And if I think they even made that public that

775
00:37:32,239 --> 00:37:35,960
Speaker 3: some of the largest depositors were Chinese investors, were Chinese

776
00:37:36,760 --> 00:37:39,560
Speaker 3: entities that had billions of dollars in deposits that were

777
00:37:39,560 --> 00:37:43,880
Speaker 3: effectively backed up by the FDIC, and that is and

778
00:37:43,920 --> 00:37:46,000
Speaker 3: that was like official, like it was just a Chinese company.

779
00:37:46,680 --> 00:37:49,040
Speaker 3: There's you know, probably a lot more that's not like

780
00:37:49,200 --> 00:37:51,719
Speaker 3: obviously a Chinese company. That's just an entity that if

781
00:37:51,719 --> 00:37:53,920
Speaker 3: you traced all those hops back, would probably be tied to,

782
00:37:54,480 --> 00:37:57,040
Speaker 3: you know, some some entity that has you know, that

783
00:37:57,160 --> 00:37:59,120
Speaker 3: is in control of those Chinese surpluses that have been

784
00:37:59,200 --> 00:38:01,960
Speaker 3: routed and the offshore dollar system. And that is a

785
00:38:02,040 --> 00:38:06,400
Speaker 3: it's an unappreciated, acute kind of vulnerability in our in

786
00:38:06,440 --> 00:38:09,319
Speaker 3: our in our financial system that we've just sort of

787
00:38:09,719 --> 00:38:12,640
Speaker 3: exposed ourselves to by virtue of the dog the status

788
00:38:12,680 --> 00:38:15,200
Speaker 3: of the dollar being global reserve currency, by being the

789
00:38:15,239 --> 00:38:18,360
Speaker 3: economy that has to run these structural deficits that we

790
00:38:18,480 --> 00:38:22,160
Speaker 3: have to absorb global surpluses, we have to sell off

791
00:38:22,239 --> 00:38:25,839
Speaker 3: at you know, our our our desirable assets, our real estate,

792
00:38:25,880 --> 00:38:29,759
Speaker 3: our equities, et cetera, to foreign surpluses. And those are

793
00:38:29,800 --> 00:38:32,640
Speaker 3: principally now our gipolitic leavisriies, right, it is. It is

794
00:38:32,640 --> 00:38:35,640
Speaker 3: the Russians, the Chinese, it's the it's the GCC, it's

795
00:38:35,680 --> 00:38:39,560
Speaker 3: sort of the Sanghai Cooperation Organization sort of block that

796
00:38:39,640 --> 00:38:42,799
Speaker 3: has those those dollar surpluses, that controls most of those

797
00:38:42,800 --> 00:38:45,800
Speaker 3: Western assets. That's not a very it's not a position

798
00:38:45,840 --> 00:38:49,120
Speaker 3: of relative strength to go into a financial and economic

799
00:38:49,239 --> 00:38:52,000
Speaker 3: war with those individuals. I think it's a I think

800
00:38:52,000 --> 00:38:52,640
Speaker 3: it's a problem.

801
00:38:53,160 --> 00:38:57,239
Speaker 1: Yeah, yeah, big problem. What do you think FED now,

802
00:38:57,320 --> 00:39:00,799
Speaker 1: the launch of FED now will help that or will

803
00:39:00,840 --> 00:39:01,760
Speaker 1: that make it worse?

804
00:39:03,760 --> 00:39:04,840
Speaker 2: Then it was a little bit different.

805
00:39:04,880 --> 00:39:08,279
Speaker 3: I think what what was maybe a stopgap measure was

806
00:39:08,280 --> 00:39:12,200
Speaker 3: the BTFP, the bank term funding program that they put

807
00:39:12,239 --> 00:39:14,880
Speaker 3: in after the that initial panic and you had credits

808
00:39:14,880 --> 00:39:15,680
Speaker 3: w week going down.

809
00:39:16,000 --> 00:39:18,520
Speaker 1: So I think I just mean, like, if it's able

810
00:39:18,560 --> 00:39:21,439
Speaker 1: to move money faster, right, because that's what the FED

811
00:39:21,440 --> 00:39:23,839
Speaker 1: now system is, allows money to move between banks faster.

812
00:39:23,960 --> 00:39:26,000
Speaker 1: So if the Chinese did want to move money from

813
00:39:26,040 --> 00:39:28,839
Speaker 1: one bank to the next to cause bank runs, does

814
00:39:28,880 --> 00:39:31,759
Speaker 1: that speed that process up? Or does FED now have

815
00:39:31,880 --> 00:39:34,000
Speaker 1: like gates put in where they could say, hey, I

816
00:39:34,040 --> 00:39:35,640
Speaker 1: saw you know you can't move more than one hundred

817
00:39:35,640 --> 00:39:38,239
Speaker 1: thousand at a time, so we you know, we don't

818
00:39:38,280 --> 00:39:39,920
Speaker 1: allow them to move ten billion at a time.

819
00:39:39,920 --> 00:39:40,399
Speaker 2: Kind of thing.

820
00:39:41,040 --> 00:39:42,920
Speaker 3: I mean, I know what other funningly changes because bank

821
00:39:42,960 --> 00:39:47,399
Speaker 3: runs are fundamentally driven by driven by psychology, less by

822
00:39:47,480 --> 00:39:50,280
Speaker 3: like the plumbing, right, because if everyone shows up tomorrow

823
00:39:50,320 --> 00:39:51,360
Speaker 3: and wants to take their money.

824
00:39:51,200 --> 00:39:52,920
Speaker 1: Out, right, but we're not talking about everybody showing up,

825
00:39:52,920 --> 00:39:55,799
Speaker 1: we're talking about we're talking about you know, some sort

826
00:39:55,840 --> 00:39:58,719
Speaker 1: of a Chinese a Chinese arm saying hey, just move

827
00:39:58,920 --> 00:40:00,680
Speaker 1: a hundred billion from this kind to that account, and

828
00:40:00,719 --> 00:40:01,839
Speaker 1: now that bank just shuts down.

829
00:40:05,000 --> 00:40:06,920
Speaker 3: It could make it easier to have like yeah, like

830
00:40:06,960 --> 00:40:09,000
Speaker 3: if you did it a Friday, it doesn't happen until Monday,

831
00:40:09,080 --> 00:40:11,840
Speaker 3: but now it can happen pretty quickly. I think it

832
00:40:12,160 --> 00:40:14,960
Speaker 3: maybe on the margin, it helps, you know, anytime that

833
00:40:15,040 --> 00:40:18,760
Speaker 3: makes like deposits move more efficiently out of the bank.

834
00:40:19,120 --> 00:40:22,319
Speaker 3: If those banks are fundamentally fragile, that raises this risk

835
00:40:22,400 --> 00:40:24,279
Speaker 3: and then someone can you know, if someone has mal

836
00:40:24,280 --> 00:40:27,359
Speaker 3: intent and has the capital and the willingness to deploy it,

837
00:40:27,520 --> 00:40:28,960
Speaker 3: you know, maybe it makes.

838
00:40:28,800 --> 00:40:31,200
Speaker 2: It, you know, on the margin, more vulnerable.

839
00:40:31,880 --> 00:40:34,960
Speaker 3: I think the fed's actions were to try to mitigate

840
00:40:35,000 --> 00:40:37,120
Speaker 3: that because the premise of this attack isn't just your

841
00:40:37,120 --> 00:40:40,440
Speaker 3: own deposits. You're trying to trigger a bank run. You're

842
00:40:40,440 --> 00:40:43,120
Speaker 3: trying to trigger like multiples of your own deposits to

843
00:40:43,160 --> 00:40:45,600
Speaker 3: flee at the same time, because you probably don't have

844
00:40:45,719 --> 00:40:47,120
Speaker 3: enough on your own to.

845
00:40:47,200 --> 00:40:49,239
Speaker 1: Just do these Chinese accounts do.

846
00:40:49,719 --> 00:40:51,520
Speaker 3: They may but maybe, I mean, but that's also a

847
00:40:51,520 --> 00:40:52,879
Speaker 3: lot of your own equity to put it, like, you'd

848
00:40:52,880 --> 00:40:54,719
Speaker 3: want to get a multiplier effect. Right, if you had

849
00:40:54,719 --> 00:40:57,080
Speaker 3: a ten billion dollars, you want that to cause fifty

850
00:40:57,080 --> 00:40:59,359
Speaker 3: billion dollars to move out, right, Just you want that's

851
00:40:59,360 --> 00:41:00,560
Speaker 3: what you would want to You want to have a

852
00:41:00,600 --> 00:41:02,759
Speaker 3: multiplier on your on your effects.

853
00:41:02,480 --> 00:41:05,279
Speaker 1: So a little bit of propaganda in the media and

854
00:41:05,320 --> 00:41:06,640
Speaker 1: then some big transfers.

855
00:41:07,640 --> 00:41:09,120
Speaker 3: Yeah, you want to try to do everything you can

856
00:41:09,920 --> 00:41:12,880
Speaker 3: to amplify your your actions, right, you don't want to

857
00:41:12,920 --> 00:41:15,680
Speaker 3: just be the pure mechanics of of your own your

858
00:41:15,719 --> 00:41:17,640
Speaker 3: own action. You want it to be amplified by its

859
00:41:17,680 --> 00:41:21,040
Speaker 3: effect that everyone else. And so I think, I mean, funnily,

860
00:41:21,120 --> 00:41:23,200
Speaker 3: though this is just a banking system is an issue.

861
00:41:23,200 --> 00:41:26,120
Speaker 3: I mean there's probably similar issues could you could imagine

862
00:41:26,120 --> 00:41:28,840
Speaker 3: in the shadow banking system that aren't aren't as like obvious.

863
00:41:30,280 --> 00:41:32,880
Speaker 3: I think the fed's actions is funnily is just to

864
00:41:33,000 --> 00:41:36,839
Speaker 3: like agree to bail everyone out if need be, right,

865
00:41:36,880 --> 00:41:39,200
Speaker 3: Like that's their only hope. Like that's was the BTFB.

866
00:41:39,520 --> 00:41:41,760
Speaker 3: That was what the swap lines were about for credit sweez,

867
00:41:41,960 --> 00:41:45,320
Speaker 3: Like it was okay, like, yes, a few may die,

868
00:41:45,480 --> 00:41:47,160
Speaker 3: but we're going to stand here and we're going to

869
00:41:47,239 --> 00:41:49,120
Speaker 3: tell you, like wherever you need it, We'll give you

870
00:41:49,160 --> 00:41:51,680
Speaker 3: dollars if you need it, right, and that that potentially

871
00:41:51,760 --> 00:41:54,160
Speaker 3: mitigates this attack because then it says, okay, you can

872
00:41:54,160 --> 00:41:55,960
Speaker 3: take your ten billion dollars out, but if that bank

873
00:41:56,000 --> 00:41:58,200
Speaker 3: ever gets in trouble because of that, we're gonna bail

874
00:41:58,200 --> 00:42:00,080
Speaker 3: it out. We're not gonna let it fail. Yeah, and

875
00:42:00,640 --> 00:42:02,640
Speaker 3: you know that's what we did. Now we have ETFp.

876
00:42:02,800 --> 00:42:04,200
Speaker 3: Now you know swap lines are and.

877
00:42:04,200 --> 00:42:05,840
Speaker 1: There's no reason for consumers to pull their money up

878
00:42:05,840 --> 00:42:07,640
Speaker 1: because we're going to backstop all that money as well.

879
00:42:07,800 --> 00:42:10,960
Speaker 1: So yeah, my hasshole with transferring money, we just will

880
00:42:10,960 --> 00:42:11,480
Speaker 1: take care of it.

881
00:42:12,040 --> 00:42:15,279
Speaker 3: Yeah, So that that attack may may have may have

882
00:42:16,080 --> 00:42:19,080
Speaker 3: particular mechanism, but at the cost of now changing kind

883
00:42:19,120 --> 00:42:20,800
Speaker 3: of the structure of our deposits.

884
00:42:20,800 --> 00:42:23,239
Speaker 1: Do you think do you think from an adversarial now

885
00:42:23,239 --> 00:42:24,920
Speaker 1: that we've sort of framed this up this way, do

886
00:42:24,960 --> 00:42:28,720
Speaker 1: you think Jerome Powell's actions might be potentially to bring

887
00:42:28,840 --> 00:42:32,759
Speaker 1: these oligarchic gesib Euro dollar markets come to heal come

888
00:42:32,800 --> 00:42:35,480
Speaker 1: back to Daddy, so to speak. Maybe they've gotten so big,

889
00:42:35,960 --> 00:42:39,360
Speaker 1: uh and uh if he raises interest rates you know,

890
00:42:39,480 --> 00:42:42,560
Speaker 1: five x he it's obviously works to your point, in multiples,

891
00:42:42,640 --> 00:42:45,160
Speaker 1: so they're all levered up. It works to them multiples

892
00:42:45,160 --> 00:42:47,839
Speaker 1: as well. And so maybe what Jerome Powell is doing,

893
00:42:47,840 --> 00:42:49,840
Speaker 1: you know, as a as a bitcoiner, what we always

894
00:42:49,880 --> 00:42:52,600
Speaker 1: hear is that they will never give control over money

895
00:42:52,600 --> 00:42:54,400
Speaker 1: because they you know, they don't they want to let

896
00:42:54,400 --> 00:42:55,719
Speaker 1: big coin to succeed because they don't want to give

897
00:42:55,760 --> 00:42:57,520
Speaker 1: up control over money. Well, who doesn't want to give

898
00:42:57,600 --> 00:43:01,879
Speaker 1: up control over money? Does? Does Jamie Diamond? J? Powell?

899
00:43:01,960 --> 00:43:03,360
Speaker 1: The New York Fed? Do they want to give up

900
00:43:03,400 --> 00:43:06,120
Speaker 1: control over the dollar to the ECB, the Euro, the PBOC,

901
00:43:06,400 --> 00:43:08,640
Speaker 1: be whatever. So like they're all they all want to

902
00:43:08,640 --> 00:43:11,799
Speaker 1: gain control. And so anyway back to the question, Uh,

903
00:43:12,440 --> 00:43:14,960
Speaker 1: do you think that potentially what Jerome Powell's doing is

904
00:43:14,960 --> 00:43:18,040
Speaker 1: really trying to secure the dollar for dollars sake, not

905
00:43:18,080 --> 00:43:21,040
Speaker 1: really the US economy, but the dollar, and by raising

906
00:43:21,120 --> 00:43:23,360
Speaker 1: rates as fast, it's sort of draining a lot of

907
00:43:23,360 --> 00:43:25,360
Speaker 1: that liquidity or that leverage those accounts have.

908
00:43:26,880 --> 00:43:30,000
Speaker 3: I mean, he's probably got multiple motives, and it's whether

909
00:43:30,040 --> 00:43:32,799
Speaker 3: it's you know him as an individual, or whether it's

910
00:43:32,840 --> 00:43:34,960
Speaker 3: like the structural incentives of the institution.

911
00:43:35,239 --> 00:43:36,480
Speaker 2: Those might be slightly different.

912
00:43:37,120 --> 00:43:39,120
Speaker 3: I think one very one like that's like a very

913
00:43:39,120 --> 00:43:41,480
Speaker 3: broadcread like one case study maybe to examine that could

914
00:43:41,920 --> 00:43:44,799
Speaker 3: that's like maybe an indicator of of this is this

915
00:43:44,880 --> 00:43:47,520
Speaker 3: shift to sofer from liber right, because the lesson of

916
00:43:47,520 --> 00:43:51,680
Speaker 3: the financial crisis was that even when things were going

917
00:43:51,719 --> 00:43:54,359
Speaker 3: pear shaped and the FED was aggressively trying to cut

918
00:43:54,360 --> 00:43:57,320
Speaker 3: the FED funds rate, liber was stubbornly high. And because

919
00:43:57,360 --> 00:44:01,440
Speaker 3: most of like US flow voting rates were premised on

920
00:44:01,560 --> 00:44:04,200
Speaker 3: liber like most of the rates that actually inform economic

921
00:44:04,280 --> 00:44:08,200
Speaker 3: decision making, like credit cards and household loans and car

922
00:44:08,280 --> 00:44:10,879
Speaker 3: loans were premised on liber that even though the FED

923
00:44:10,960 --> 00:44:13,319
Speaker 3: was trying to cut rates, LIBR was stuck high because

924
00:44:13,320 --> 00:44:15,960
Speaker 3: it was controlled in London and it was controlled by

925
00:44:15,960 --> 00:44:18,239
Speaker 3: consortium of bankers that were just texting each other, right

926
00:44:18,400 --> 00:44:20,440
Speaker 3: like that we could control and it took a political

927
00:44:20,440 --> 00:44:23,640
Speaker 3: intervention to basically by the FED to talk to the

928
00:44:23,680 --> 00:44:27,520
Speaker 3: politicians essentially running in London that talked to the Bank

929
00:44:27,560 --> 00:44:29,080
Speaker 3: of England, that talked to the Bank that said you

930
00:44:29,120 --> 00:44:31,800
Speaker 3: have to cut LIBR. Now, I think I think the

931
00:44:31,880 --> 00:44:34,160
Speaker 3: number two at the time of the Bank of England,

932
00:44:34,280 --> 00:44:35,960
Speaker 3: his name is Paul Tucker. He recently came out and

933
00:44:35,960 --> 00:44:38,800
Speaker 3: told this this anecdote basically where you know, the phones

934
00:44:38,800 --> 00:44:42,120
Speaker 3: are ringing off the hook from from from DC and

935
00:44:42,160 --> 00:44:44,399
Speaker 3: New York FED saying like you have to like bring

936
00:44:44,400 --> 00:44:46,520
Speaker 3: the rates down. So this was that was a that's

937
00:44:46,560 --> 00:44:49,520
Speaker 3: an example of where they now they felt that, oh,

938
00:44:49,640 --> 00:44:52,719
Speaker 3: like US interest rate policy transmission was a function of

939
00:44:52,760 --> 00:44:55,600
Speaker 3: some offshore foreign banking cartel that we don't control, Like

940
00:44:55,600 --> 00:44:57,160
Speaker 3: we're not going to have that. We're not gonna, we're

941
00:44:57,160 --> 00:44:59,560
Speaker 3: not gonna we're not going to stand by, right, so

942
00:44:59,600 --> 00:45:01,959
Speaker 3: they're going to ship everything to Sofer, which lead.

943
00:45:01,960 --> 00:45:03,560
Speaker 1: Someone else set the price of money.

944
00:45:03,560 --> 00:45:05,360
Speaker 3: We're gonna do it, and we're going to control it,

945
00:45:05,400 --> 00:45:07,640
Speaker 3: and we're gonna have the ability to influence the you know,

946
00:45:07,719 --> 00:45:12,440
Speaker 3: the full money markets much more tightly from DC and

947
00:45:12,440 --> 00:45:15,120
Speaker 3: from the New York FED. And that's like now a

948
00:45:15,160 --> 00:45:20,120
Speaker 3: strategic comparative. And I think COVID accelerated this as well.

949
00:45:20,840 --> 00:45:22,760
Speaker 3: And so this is where I think just one example,

950
00:45:23,800 --> 00:45:26,279
Speaker 3: I think the zoom out there's like lots of people

951
00:45:26,320 --> 00:45:28,480
Speaker 3: have told the complex story of the euro dollar system

952
00:45:28,880 --> 00:45:31,080
Speaker 3: and the FED sort of love hate relationship with it

953
00:45:31,160 --> 00:45:34,000
Speaker 3: right over different periods of time where they felt maybe

954
00:45:34,000 --> 00:45:37,600
Speaker 3: in certain historical moments it was strategic benefit to sort

955
00:45:37,640 --> 00:45:40,120
Speaker 3: of let the European banks kind of go crazy and

956
00:45:40,120 --> 00:45:42,319
Speaker 3: do what they wanted to do, because that would help

957
00:45:42,360 --> 00:45:45,680
Speaker 3: internationalize a dollar system, create more liquidity for usher sort

958
00:45:45,719 --> 00:45:48,520
Speaker 3: of dollar bonds. This would you know, provide more liquidity

959
00:45:48,560 --> 00:45:50,680
Speaker 3: to say, for the Saudis to invest in you know,

960
00:45:50,800 --> 00:45:52,719
Speaker 3: et cetera. That this would all sort of be a

961
00:45:52,760 --> 00:45:56,200
Speaker 3: geopolitical advantage to us. But like everything else, it also

962
00:45:56,239 --> 00:45:58,719
Speaker 3: gets to certain moments where, oh, they would they go

963
00:45:58,760 --> 00:46:00,439
Speaker 3: too far, and now we have to build them out.

964
00:46:00,480 --> 00:46:02,560
Speaker 3: And now we're bailing out European banks, just like we

965
00:46:02,600 --> 00:46:04,360
Speaker 3: did in two thousand and eight, where we had to

966
00:46:04,360 --> 00:46:07,080
Speaker 3: spend way more money bailing out European banks than any

967
00:46:07,160 --> 00:46:11,600
Speaker 3: US bank. And you know, geopolitically, when you're when you're

968
00:46:11,600 --> 00:46:13,400
Speaker 3: in front of you mode, maybe you bail out your friends,

969
00:46:13,760 --> 00:46:15,800
Speaker 3: but you know, us in the Europeans, we're kind of

970
00:46:15,800 --> 00:46:19,280
Speaker 3: getting a little bit frosty with you know, data regulations

971
00:46:19,360 --> 00:46:22,800
Speaker 3: and you know, you know, investment subsidies on renewable energy

972
00:46:23,360 --> 00:46:27,520
Speaker 3: liqunatural gas, you know, policy about NATO VERSUS Russia, trying

973
00:46:27,560 --> 00:46:29,480
Speaker 3: to like, you know, it's not as easy as a

974
00:46:29,480 --> 00:46:30,120
Speaker 3: simple relationship.

975
00:46:30,280 --> 00:46:32,719
Speaker 2: Just you're in the dollar orbit and therefore we're going

976
00:46:32,760 --> 00:46:33,399
Speaker 2: to bail you out.

977
00:46:34,440 --> 00:46:36,880
Speaker 3: It does get I mean, the funnel like point is

978
00:46:36,920 --> 00:46:38,920
Speaker 3: that the money system is funnelly geopolitical.

979
00:46:39,160 --> 00:46:39,359
Speaker 2: Right.

980
00:46:39,400 --> 00:46:42,239
Speaker 3: People can think that it's just you know, it's just

981
00:46:42,280 --> 00:46:45,560
Speaker 3: the neutral, technocratic administration of the economy.

982
00:46:45,080 --> 00:46:47,919
Speaker 2: But it is. It is ultimately a geopolitical.

983
00:46:49,239 --> 00:46:51,600
Speaker 1: The fact that they would like this euro dollar market

984
00:46:51,600 --> 00:46:53,440
Speaker 1: to grow just so they continue to push the dollar,

985
00:46:53,560 --> 00:46:56,000
Speaker 1: you know, dollar market, dollar markets across the globe. Then

986
00:46:56,080 --> 00:46:58,360
Speaker 1: if you look at like US dollar back stable coins,

987
00:46:58,360 --> 00:47:00,799
Speaker 1: I mean, is that effectively soon thing where the US

988
00:47:00,920 --> 00:47:04,240
Speaker 1: dollar has really grown across the globe through stable coins,

989
00:47:04,239 --> 00:47:07,880
Speaker 1: specifically in you know areas like Africa, et cetera, Central America.

990
00:47:08,400 --> 00:47:12,000
Speaker 1: But yet the administration seems to be very unfriendly to

991
00:47:12,040 --> 00:47:14,799
Speaker 1: stable coins. And do you think that's more of like

992
00:47:16,239 --> 00:47:20,400
Speaker 1: Biden admin with a Warren Gensler And that's different than

993
00:47:20,440 --> 00:47:22,640
Speaker 1: the interest that might Jerome Powell and the FED have.

994
00:47:24,280 --> 00:47:25,000
Speaker 2: Yeah, it is.

995
00:47:25,080 --> 00:47:28,680
Speaker 3: It is a really interesting emerging policy area, and I

996
00:47:28,719 --> 00:47:31,360
Speaker 3: think a lot of it comes down to fundamental ignorance,

997
00:47:31,400 --> 00:47:34,520
Speaker 3: Like it's it's relatively new, and the DC policy apparatus

998
00:47:34,520 --> 00:47:37,920
Speaker 3: and bureaucratic machinery just is not quite fully up to

999
00:47:37,960 --> 00:47:41,000
Speaker 3: speed and all the sort of future developments here. But

1000
00:47:41,040 --> 00:47:43,359
Speaker 3: I think it's also prettic on the fact that, like

1001
00:47:43,440 --> 00:47:45,920
Speaker 3: the legacy development of those stand up coins was mainly

1002
00:47:45,960 --> 00:47:48,959
Speaker 3: to help you know, Chinese evade capital controls, like that's

1003
00:47:49,040 --> 00:47:50,239
Speaker 3: you know, like that's what it.

1004
00:47:50,239 --> 00:47:52,880
Speaker 1: Was for, right, But and so that was where I know,

1005
00:47:52,920 --> 00:47:54,560
Speaker 1: if that's what it was for, it was because that's

1006
00:47:54,560 --> 00:47:56,840
Speaker 1: where I wanted to try cryptocurrencies and couldn't get dollars

1007
00:47:56,840 --> 00:47:57,560
Speaker 1: onto the platform.

1008
00:47:57,600 --> 00:48:00,240
Speaker 3: So they may have I mean yeah, I mean most

1009
00:48:00,000 --> 00:48:03,000
Speaker 3: mostly jurisdictions give you onramps and off ramps, except for China,

1010
00:48:03,040 --> 00:48:03,640
Speaker 3: like very hard.

1011
00:48:03,520 --> 00:48:06,120
Speaker 1: To get not in twenty sixteen, twenty seventeen, there weren't

1012
00:48:06,160 --> 00:48:08,160
Speaker 1: really on an off ramps not to trade cryptocurrencies. I

1013
00:48:08,160 --> 00:48:10,000
Speaker 1: mean you could go buy bitcoin at coinbase and then

1014
00:48:10,040 --> 00:48:12,839
Speaker 1: transferred over to one of these crypto exchanges, but there

1015
00:48:12,880 --> 00:48:14,359
Speaker 1: was no dollars on them, right.

1016
00:48:15,200 --> 00:48:17,200
Speaker 3: No, I mean this is why the dollar base stable

1017
00:48:17,239 --> 00:48:20,600
Speaker 3: coins were a great invention, right, They met a market need.

1018
00:48:20,880 --> 00:48:22,000
Speaker 3: I one think it was a good or bad thing

1019
00:48:22,040 --> 00:48:23,680
Speaker 3: of just saying like there's a large amount of liquidity

1020
00:48:23,680 --> 00:48:26,640
Speaker 3: that was pent, that was trapped, and this was like

1021
00:48:26,800 --> 00:48:29,480
Speaker 3: you know, like relatively the easiest way to get access

1022
00:48:29,520 --> 00:48:32,000
Speaker 3: to these markets, and so that's how it incubuated. But

1023
00:48:32,040 --> 00:48:33,880
Speaker 3: a lot of like so this is where the US

1024
00:48:33,920 --> 00:48:35,759
Speaker 3: government's kind of approached to dollar based table coins, I

1025
00:48:35,760 --> 00:48:37,279
Speaker 3: think is going through a little bit of a transformation,

1026
00:48:37,360 --> 00:48:40,680
Speaker 3: where originally it was like one of suspicion because all

1027
00:48:40,680 --> 00:48:42,640
Speaker 3: the people inside of the government that had like been

1028
00:48:42,680 --> 00:48:45,960
Speaker 3: tapped with like the cryptocurrency portfolio were all from like

1029
00:48:46,040 --> 00:48:48,400
Speaker 3: law enforcement intelligence community, and it was all through the

1030
00:48:48,480 --> 00:48:51,880
Speaker 3: lens of sanctions evasion or going after dark web markets,

1031
00:48:51,920 --> 00:48:53,719
Speaker 3: you know, so like their mental models all are bad

1032
00:48:53,719 --> 00:48:55,920
Speaker 3: guys are doing bad things with this thing, Therefore this

1033
00:48:55,960 --> 00:48:59,040
Speaker 3: thing is bad. I think only recently has there been

1034
00:48:59,080 --> 00:49:01,160
Speaker 3: like a growing recognition of actually, there's a lot more

1035
00:49:01,200 --> 00:49:04,080
Speaker 3: good people doing good things with this thing then the

1036
00:49:04,080 --> 00:49:06,160
Speaker 3: bad people doing bad things with this thing, and so

1037
00:49:06,200 --> 00:49:09,080
Speaker 3: maybe you should reappraise like your net evaluation of the

1038
00:49:09,120 --> 00:49:10,280
Speaker 3: moral balance.

1039
00:49:09,840 --> 00:49:13,440
Speaker 2: Of this thing, right, And I think that from a geopolitical.

1040
00:49:12,920 --> 00:49:17,200
Speaker 3: Perspective, the the argument for the positive effects of dollar

1041
00:49:17,239 --> 00:49:21,280
Speaker 3: based table coins helping to dollarize parts of the world

1042
00:49:21,680 --> 00:49:25,239
Speaker 3: that are very underdollarized now is and help you know,

1043
00:49:25,320 --> 00:49:29,120
Speaker 3: essentially spread the sort of the geopolitical influence the dollar,

1044
00:49:29,880 --> 00:49:32,439
Speaker 3: you know that's coming on the backs of dollar based

1045
00:49:32,440 --> 00:49:35,640
Speaker 3: table coins, right, and if you really the opposition that's

1046
00:49:35,800 --> 00:49:39,000
Speaker 3: interesting to draw is between China's ambitions with the digital

1047
00:49:39,080 --> 00:49:41,879
Speaker 3: you want, they want to try to bring in more

1048
00:49:41,880 --> 00:49:44,480
Speaker 3: of the global South and their geoeconomic kind of trade

1049
00:49:45,920 --> 00:49:52,080
Speaker 3: partners into a technology system that they are designing from

1050
00:49:52,080 --> 00:49:54,960
Speaker 3: the ground up. Right, So it's the Huawei routers, the

1051
00:49:55,080 --> 00:49:58,920
Speaker 3: CTE surveillance systems, and you get the digital currency controls

1052
00:49:58,960 --> 00:50:02,120
Speaker 3: as well, and these a cross bridged kind of CBDCs.

1053
00:50:02,160 --> 00:50:03,520
Speaker 3: This is kind of like the part of the Sultan

1054
00:50:03,600 --> 00:50:06,160
Speaker 3: the Post and Ar thesis about trying to strategy with

1055
00:50:06,200 --> 00:50:09,879
Speaker 3: the CBDCs is to create a dollar clearing or sorry,

1056
00:50:09,880 --> 00:50:12,920
Speaker 3: a non dollar clearing and settlement system that doesn't try

1057
00:50:12,920 --> 00:50:15,800
Speaker 3: to replicate the offshore kind of correspondent banking system that

1058
00:50:15,800 --> 00:50:17,680
Speaker 3: took one hundred years for the US to create, but

1059
00:50:17,840 --> 00:50:19,839
Speaker 3: is a sort of central bank, essential bank and then

1060
00:50:19,840 --> 00:50:22,600
Speaker 3: critical state banks with each other and that are using

1061
00:50:22,920 --> 00:50:26,640
Speaker 3: essentially the same APIs that China is developing for their

1062
00:50:26,719 --> 00:50:30,840
Speaker 3: digital yuan to allow like atomic settlement of their currencies

1063
00:50:30,840 --> 00:50:33,160
Speaker 3: and their trade over this network that doesn't go through

1064
00:50:33,160 --> 00:50:33,839
Speaker 3: New York at all.

1065
00:50:34,320 --> 00:50:37,480
Speaker 1: This is the BIS project Mbridge.

1066
00:50:37,280 --> 00:50:40,640
Speaker 3: Project Mbridge is one kind of really paradigm example of

1067
00:50:40,680 --> 00:50:42,480
Speaker 3: this is where you have you know, es central banks

1068
00:50:42,600 --> 00:50:47,160
Speaker 3: essentially be the key key nodes in a CBDC architecture

1069
00:50:47,520 --> 00:50:49,800
Speaker 3: that doesn't need to go through private capital markets. You

1070
00:50:49,800 --> 00:50:52,480
Speaker 3: don't need to have an offshore system developed liquidity. You

1071
00:50:52,520 --> 00:50:54,759
Speaker 3: just have the central bank be the market maker for

1072
00:50:54,880 --> 00:50:58,880
Speaker 3: every for for trade, finance, for for for all, for.

1073
00:50:59,400 --> 00:51:01,560
Speaker 1: The sort of like in the US, the Internet grew

1074
00:51:01,600 --> 00:51:03,640
Speaker 1: fast because we had wired phone lines, and so the

1075
00:51:03,680 --> 00:51:05,080
Speaker 1: internet grew over the wired phone lines, and then you

1076
00:51:05,080 --> 00:51:07,520
Speaker 1: saw Africa kind of leapfrog pass that directly to wireless.

1077
00:51:07,520 --> 00:51:08,839
Speaker 1: And so a lot of people say the dollar can't

1078
00:51:08,880 --> 00:51:11,520
Speaker 1: lose its position because of the deep capital markets, because

1079
00:51:11,560 --> 00:51:14,560
Speaker 1: the correspondent banks, you know, the swift system, et cetera.

1080
00:51:14,719 --> 00:51:17,000
Speaker 1: But this is like just bypassing that whole thing and

1081
00:51:17,040 --> 00:51:18,600
Speaker 1: then starting a whole new system, sort of like a

1082
00:51:18,680 --> 00:51:19,400
Speaker 1: leap frog moment.

1083
00:51:19,880 --> 00:51:20,080
Speaker 2: Yeah.

1084
00:51:20,120 --> 00:51:22,760
Speaker 3: I mean, the Chinese strategy over like many different domains

1085
00:51:22,840 --> 00:51:25,239
Speaker 3: is kind of a block build expand right.

1086
00:51:25,280 --> 00:51:27,320
Speaker 2: First, they want to block the ability of say.

1087
00:51:27,120 --> 00:51:30,360
Speaker 3: A competing system like the you know, dollar system to

1088
00:51:30,520 --> 00:51:32,719
Speaker 3: coerce them, so they want to be more resistant. They

1089
00:51:32,719 --> 00:51:34,480
Speaker 3: want to be more resilient. Then they want to build

1090
00:51:34,560 --> 00:51:37,000
Speaker 3: an alternative again, but building it doesn't mean it's ready

1091
00:51:37,040 --> 00:51:39,280
Speaker 3: to fully deploy. And that's what they're in the stage

1092
00:51:39,320 --> 00:51:41,680
Speaker 3: right now, is they're trying to build these alternative systems

1093
00:51:42,040 --> 00:51:44,920
Speaker 3: as like a backup plan, but their long term ambition

1094
00:51:45,080 --> 00:51:48,239
Speaker 3: is to expand them to now move more liquidity, more

1095
00:51:48,360 --> 00:51:51,839
Speaker 3: settlement to those rails. And it's kind of a nonlinear process, right,

1096
00:51:51,880 --> 00:51:54,040
Speaker 3: It's hard to get network effects until they're there.

1097
00:51:54,080 --> 00:51:55,879
Speaker 2: It's like, you know, Zuckerberg with.

1098
00:51:55,840 --> 00:51:58,600
Speaker 3: The threads, right, Like you can imagine like many other

1099
00:51:58,760 --> 00:52:03,080
Speaker 3: like social media kind of competitors to Twitter just didn't

1100
00:52:03,080 --> 00:52:05,320
Speaker 3: have the social graph. So it's very hard to bootstrap

1101
00:52:05,360 --> 00:52:07,680
Speaker 3: a network. You might say the same argument for China.

1102
00:52:08,160 --> 00:52:10,759
Speaker 3: China doesn't have the same depth of liquidity that the

1103
00:52:10,840 --> 00:52:13,480
Speaker 3: US dollar system has in foreign exchange, YadA, YadA.

1104
00:52:13,960 --> 00:52:15,600
Speaker 2: I guess what they do have is a different graph.

1105
00:52:15,640 --> 00:52:18,279
Speaker 2: They have the trade relationship, they have the political relationships.

1106
00:52:18,600 --> 00:52:20,719
Speaker 3: So their strategy, just like Zuckerberg, is like we have

1107
00:52:20,800 --> 00:52:23,840
Speaker 3: the Instagram network, we can sort of bootstrap a social

1108
00:52:24,040 --> 00:52:25,600
Speaker 3: social network with the Instagram network.

1109
00:52:25,920 --> 00:52:26,480
Speaker 2: China strategy.

1110
00:52:26,520 --> 00:52:29,360
Speaker 3: We're going to boostrap our CBDC network with our trade network.

1111
00:52:30,080 --> 00:52:31,759
Speaker 3: Maybe it works, maybe it doesn't, right, No one knows

1112
00:52:31,840 --> 00:52:34,440
Speaker 3: right until you try it. But I think it's premature

1113
00:52:34,480 --> 00:52:38,480
Speaker 3: to count it out as a legitimate threat. And then

1114
00:52:38,520 --> 00:52:41,240
Speaker 3: that's at the state level. What's interesting about the bitcoin

1115
00:52:41,280 --> 00:52:43,400
Speaker 3: dollar bay stable coin interplay is this is sort of

1116
00:52:43,400 --> 00:52:45,320
Speaker 3: the bottom up right that the citizens in those in

1117
00:52:45,360 --> 00:52:47,799
Speaker 3: those countries in the Global South, like they don't want

1118
00:52:47,840 --> 00:52:50,319
Speaker 3: the digital do you want or the digital naira, right,

1119
00:52:50,400 --> 00:52:53,200
Speaker 3: Like they don't want to just you know, offload their

1120
00:52:53,239 --> 00:52:54,600
Speaker 3: sovereignty to a corrupt government.

1121
00:52:54,719 --> 00:52:57,680
Speaker 1: Rights and they've been vocal about that in Nigeria too. Yeah,

1122
00:52:57,719 --> 00:52:59,319
Speaker 1: well we take the unira. It's the same thing as

1123
00:52:59,320 --> 00:53:01,200
Speaker 1: the regular nira los value.

1124
00:53:01,560 --> 00:53:05,120
Speaker 3: And yet like like the US, US like if we

1125
00:53:05,120 --> 00:53:08,200
Speaker 3: were like, oh, no, sign up to our surveiled CBDC,

1126
00:53:08,800 --> 00:53:14,080
Speaker 3: like what's the actual you know, compelling sort of value proposition, right,

1127
00:53:14,120 --> 00:53:16,160
Speaker 3: Whereas if it's like, hey, the US government's actually in

1128
00:53:16,200 --> 00:53:19,160
Speaker 3: favor of bitcoin dollar by staple coins, that's a much

1129
00:53:19,160 --> 00:53:21,120
Speaker 3: more attractive proposition to a lot of these countries in

1130
00:53:21,160 --> 00:53:23,759
Speaker 3: emerging markets. And it just so I also happened to

1131
00:53:23,800 --> 00:53:25,640
Speaker 3: be aligned with our value system, which is, hey, we're

1132
00:53:25,680 --> 00:53:26,400
Speaker 3: not going to control it.

1133
00:53:26,400 --> 00:53:28,000
Speaker 2: We're not going to control you. We're going to let

1134
00:53:28,040 --> 00:53:28,600
Speaker 2: you do what.

1135
00:53:28,480 --> 00:53:30,000
Speaker 3: You want to do with your money and help you,

1136
00:53:30,040 --> 00:53:32,239
Speaker 3: like live a better life and you know, not be

1137
00:53:32,719 --> 00:53:35,520
Speaker 3: expropriated by some corrupt central government and.

1138
00:53:35,560 --> 00:53:37,480
Speaker 1: Have that dollar token as a bare instrument like like

1139
00:53:37,560 --> 00:53:39,680
Speaker 1: cash is supposed to be, and you could rapidly expand.

1140
00:53:39,719 --> 00:53:44,600
Speaker 1: It seems to your point in line with original founding

1141
00:53:44,719 --> 00:53:47,719
Speaker 1: American ideals. I don't know if if it's the expanding

1142
00:53:47,760 --> 00:53:54,680
Speaker 1: the potential future, Yeah, the future ideals switch switching gears

1143
00:53:54,680 --> 00:53:56,799
Speaker 1: a little bit. I wanted to talk to you, I know,

1144
00:53:56,800 --> 00:53:58,000
Speaker 1: we're kind of run out of time. R I want

1145
00:53:58,000 --> 00:53:59,480
Speaker 1: to talk about one more topic, and this one's maybe

1146
00:53:59,480 --> 00:54:02,000
Speaker 1: fits a little bit more to your wheelhouse, and that's

1147
00:54:02,000 --> 00:54:06,080
Speaker 1: about cybersecurity and potentially the threats of a cyber pandemic.

1148
00:54:07,120 --> 00:54:11,040
Speaker 1: And so what we've seen is of course continued increasing

1149
00:54:11,160 --> 00:54:15,319
Speaker 1: rhetoric about the depending cyber pandemic. It's coming, you know,

1150
00:54:15,400 --> 00:54:17,760
Speaker 1: Klaus Schwab, the WEF, they pushed this and it seems

1151
00:54:17,800 --> 00:54:20,000
Speaker 1: to be really picking up steam. Whitney Web has done

1152
00:54:20,000 --> 00:54:23,000
Speaker 1: a lot of research into this and even just recently

1153
00:54:23,040 --> 00:54:27,560
Speaker 1: we saw well both the who wants to control all

1154
00:54:27,560 --> 00:54:29,239
Speaker 1: health for the world, the US wants to lay it

1155
00:54:29,239 --> 00:54:30,880
Speaker 1: on a sovereignty. In that manner, they say, under a

1156
00:54:30,880 --> 00:54:35,440
Speaker 1: health emergency, we can control everything, including the Internet, communications, etc.

1157
00:54:36,400 --> 00:54:39,720
Speaker 1: Now there's a resolution hasn't been signed, but a resolution

1158
00:54:39,840 --> 00:54:42,959
Speaker 1: to now allow the UN to take over the power

1159
00:54:42,960 --> 00:54:44,800
Speaker 1: of the United States in case of any emergency. And

1160
00:54:44,840 --> 00:54:49,680
Speaker 1: they defined emergencies as numerous things, including currency crisis, including

1161
00:54:50,680 --> 00:54:53,359
Speaker 1: information or data crisis would be an emergency that would

1162
00:54:53,400 --> 00:54:56,239
Speaker 1: give them power. So we see this happening. I think

1163
00:54:56,280 --> 00:55:00,239
Speaker 1: it was Klaus Schwab maybe said, you know, we will

1164
00:55:00,239 --> 00:55:02,520
Speaker 1: have a cyber pandemic in the next twenty four months

1165
00:55:03,200 --> 00:55:05,239
Speaker 1: or two years or whatever it was before twenty twenty four.

1166
00:55:05,640 --> 00:55:07,879
Speaker 1: So what's your take on that. I know that's maybe

1167
00:55:07,880 --> 00:55:10,960
Speaker 1: a little bit more in your wheelhouse. Do you see

1168
00:55:10,960 --> 00:55:13,600
Speaker 1: that increasing rhetoric? Do you think there's something coming? Do

1169
00:55:13,640 --> 00:55:16,239
Speaker 1: you think this could be used as just another way

1170
00:55:16,280 --> 00:55:18,759
Speaker 1: to kind of move us into whatever system they want

1171
00:55:18,760 --> 00:55:20,200
Speaker 1: to digital, like the E system, et cetera.

1172
00:55:22,080 --> 00:55:25,400
Speaker 3: Well, I mean, Klaus Schwab is not like a cyber expert.

1173
00:55:25,400 --> 00:55:27,319
Speaker 3: I think they put on these Davos panels, and they

1174
00:55:27,360 --> 00:55:30,239
Speaker 3: sort of pick the topics JR. And they like they're

1175
00:55:30,239 --> 00:55:32,319
Speaker 3: trying to draw attention to themselves, so they create some

1176
00:55:32,400 --> 00:55:35,680
Speaker 3: fantastical scenario and it gets everyone in its dizzy. And

1177
00:55:35,719 --> 00:55:38,480
Speaker 3: the term cyber pandemic is like like not a technical

1178
00:55:38,560 --> 00:55:43,200
Speaker 3: term in like a cybersecurity field, and so it's it's

1179
00:55:43,239 --> 00:55:45,640
Speaker 3: a bit of a it's you know, it's a bit.

1180
00:55:45,480 --> 00:55:48,760
Speaker 2: Of a I don't know, like but I guess.

1181
00:55:48,920 --> 00:55:51,800
Speaker 3: The final point is like our global systems are fundamently

1182
00:55:51,800 --> 00:55:54,400
Speaker 3: digital systems, and our modern life relies on these systems

1183
00:55:54,400 --> 00:55:54,880
Speaker 3: to function.

1184
00:55:55,239 --> 00:55:59,360
Speaker 2: And like most code is just bad code, and.

1185
00:55:59,239 --> 00:56:02,120
Speaker 3: If you want to do things and you're relatively capable,

1186
00:56:02,400 --> 00:56:04,560
Speaker 3: you can figure out how to like you know, do

1187
00:56:04,680 --> 00:56:06,400
Speaker 3: bad things with most digital systems.

1188
00:56:07,000 --> 00:56:08,600
Speaker 1: And this is like a year or two ago, there

1189
00:56:08,640 --> 00:56:11,080
Speaker 1: was that big hack. This was it Solar winds or.

1190
00:56:11,680 --> 00:56:13,560
Speaker 2: Yes, I mean every every year we got one of

1191
00:56:13,600 --> 00:56:14,080
Speaker 2: these big ones.

1192
00:56:14,080 --> 00:56:16,680
Speaker 3: So solar wins was a classic supply chain attack where

1193
00:56:16,719 --> 00:56:21,560
Speaker 3: the Russians SVR introduced like a vulnerability into a software

1194
00:56:21,640 --> 00:56:23,719
Speaker 3: update that went into like hundreds and hundreds of different

1195
00:56:23,760 --> 00:56:26,880
Speaker 3: companies as like you know, critical software to like everything

1196
00:56:26,960 --> 00:56:29,239
Speaker 3: included in the US Treasury I think right, oh yeah,

1197
00:56:29,239 --> 00:56:32,719
Speaker 3: it went it was It was a huge mess. And

1198
00:56:32,920 --> 00:56:34,680
Speaker 3: you know, this is a this is a classic example

1199
00:56:34,719 --> 00:56:37,720
Speaker 3: of where you know, the the opacity of the private

1200
00:56:37,760 --> 00:56:41,000
Speaker 3: sector supply chains, like digital supply chains creating software can

1201
00:56:41,000 --> 00:56:44,880
Speaker 3: create acute strategic vulnerabilities for countries around the world. Like

1202
00:56:45,040 --> 00:56:47,359
Speaker 3: for example, like the not Petia virus that took down

1203
00:56:48,320 --> 00:56:50,560
Speaker 3: Marisk was an accident. It was actually meant meant to

1204
00:56:50,560 --> 00:56:53,520
Speaker 3: take down Ukraine power grid and it just sort of

1205
00:56:53,520 --> 00:56:55,520
Speaker 3: got into the wild, and it was written in such

1206
00:56:55,520 --> 00:56:57,520
Speaker 3: a way that it compromised like a pretty general piece

1207
00:56:57,560 --> 00:57:02,560
Speaker 3: of industrial software, and Mariss, the global shipping entity, basically

1208
00:57:02,560 --> 00:57:05,959
Speaker 3: had almost all their servers worldwide wrecked except for one.

1209
00:57:05,920 --> 00:57:07,279
Speaker 1: Just happened to get into the wild.

1210
00:57:07,960 --> 00:57:09,960
Speaker 2: Yeah, I mean, well that's these things happen sort of

1211
00:57:10,000 --> 00:57:10,359
Speaker 2: sort of.

1212
00:57:10,320 --> 00:57:12,719
Speaker 1: Like when you develop these weapons and tools, somehow they

1213
00:57:12,800 --> 00:57:14,400
Speaker 1: just could put to take it out there. Why do

1214
00:57:14,480 --> 00:57:16,320
Speaker 1: we develop like a gain of function study, Like what

1215
00:57:16,360 --> 00:57:17,000
Speaker 1: do we do with that?

1216
00:57:17,240 --> 00:57:20,720
Speaker 3: Yeah, sometimes it's unintentionally, but oftentimes it's just just you know, funnily,

1217
00:57:20,760 --> 00:57:24,440
Speaker 3: these are like leaky systems, like and they're oftentimes the

1218
00:57:24,520 --> 00:57:26,400
Speaker 3: effectiveness of the weapon is designed like you want to

1219
00:57:26,400 --> 00:57:28,960
Speaker 3: get into one network, and it's its function is to

1220
00:57:29,000 --> 00:57:31,080
Speaker 3: spread throughout that network, and so they're really good at

1221
00:57:31,120 --> 00:57:31,640
Speaker 3: spreading to.

1222
00:57:31,560 --> 00:57:32,960
Speaker 2: Get to the systems you actually want to hit.

1223
00:57:33,400 --> 00:57:36,320
Speaker 3: But the malware maybe doesn't know different between like that

1224
00:57:36,360 --> 00:57:38,320
Speaker 3: network and another network, and then once it gets there,

1225
00:57:38,320 --> 00:57:40,560
Speaker 3: it just goes worldwide. And so those are examples just

1226
00:57:40,600 --> 00:57:44,000
Speaker 3: where our systems are really vulnerable. There's you know, like

1227
00:57:44,040 --> 00:57:46,520
Speaker 3: different thread actors, is like financially motivated thread actors that

1228
00:57:46,560 --> 00:57:49,040
Speaker 3: are just trying to like you know, extract ransomware ransoms.

1229
00:57:49,040 --> 00:57:50,160
Speaker 2: But those aren't necessarily going to.

1230
00:57:50,200 --> 00:57:52,160
Speaker 1: Take down or still data or whatever.

1231
00:57:52,200 --> 00:57:54,680
Speaker 2: Yeah, they still data, they blackmail you whatever.

1232
00:57:54,760 --> 00:57:56,680
Speaker 3: It's like that's a whole business now, Like ransomware as

1233
00:57:56,720 --> 00:57:58,520
Speaker 3: a service is like as a as a major thing.

1234
00:57:58,800 --> 00:58:02,000
Speaker 3: And sometimes there's incentially moon lighting, uh, you know, intelligence

1235
00:58:02,000 --> 00:58:04,840
Speaker 3: officers they are just like deploying their skills for criminal

1236
00:58:04,880 --> 00:58:07,880
Speaker 3: groups to make more money or vice versa. It's like

1237
00:58:08,000 --> 00:58:11,160
Speaker 3: often the same the real like strategic threats at the

1238
00:58:11,240 --> 00:58:14,600
Speaker 3: level of like you know, you know, a catastrophic event,

1239
00:58:15,160 --> 00:58:18,000
Speaker 3: uh is like would be mostly a nation state motivated, right,

1240
00:58:18,000 --> 00:58:20,440
Speaker 3: and this would usually come in the context of like

1241
00:58:20,440 --> 00:58:22,720
Speaker 3: like a tense like war like like US trying to

1242
00:58:23,160 --> 00:58:25,320
Speaker 3: conflict of US. Now, China City would likely have a

1243
00:58:25,320 --> 00:58:28,000
Speaker 3: cyber component. I spent all we spent a lot of

1244
00:58:28,040 --> 00:58:30,360
Speaker 3: time thinking about what that looks like, what that manifests.

1245
00:58:30,360 --> 00:58:33,880
Speaker 3: There's a huge amount of thought going into the deterrence

1246
00:58:35,320 --> 00:58:38,600
Speaker 3: kind of concepts that play out in cyber war, which

1247
00:58:38,640 --> 00:58:41,080
Speaker 3: are very different than other forms of kind of you know,

1248
00:58:41,280 --> 00:58:45,760
Speaker 3: established military norms, like what's what's appropriate when you're attacking

1249
00:58:45,760 --> 00:58:49,920
Speaker 3: critical infrastructure. What's a like a nuisance attack can quickly

1250
00:58:49,920 --> 00:58:53,480
Speaker 3: turn into a like strategic attack, and it's often very

1251
00:58:53,480 --> 00:58:54,240
Speaker 3: hard to calibrate.

1252
00:58:54,320 --> 00:58:56,600
Speaker 2: Oh, I'm just going to take down you know, one

1253
00:58:56,760 --> 00:58:59,240
Speaker 2: little piece of a train system here, but.

1254
00:58:59,240 --> 00:59:01,880
Speaker 3: It turns out that actually spreads to all the trains

1255
00:59:02,240 --> 00:59:06,520
Speaker 3: in that entire Northeast corridor, and now like you know,

1256
00:59:06,600 --> 00:59:09,600
Speaker 3: the economy is collapsing because no one can travel, Goods

1257
00:59:09,600 --> 00:59:13,040
Speaker 3: stop flowing, et cetera. Or one example, the Colonial pipeline

1258
00:59:13,760 --> 00:59:18,480
Speaker 3: critical you know pipeline for you know, energy in the Northeast,

1259
00:59:18,600 --> 00:59:21,400
Speaker 3: and it was actually you know, an error. Supposedly it

1260
00:59:21,440 --> 00:59:23,840
Speaker 3: was like someone just like you know, left their account,

1261
00:59:24,160 --> 00:59:27,400
Speaker 3: but yeah, and it got ransomware it and it became

1262
00:59:27,760 --> 00:59:29,960
Speaker 3: like the National security council's meeting about this thing. Right, Like,

1263
00:59:30,040 --> 00:59:33,040
Speaker 3: this is where we are as a civilization, and you know,

1264
00:59:33,520 --> 00:59:35,240
Speaker 3: you can you can you can describe a lot of

1265
00:59:35,320 --> 00:59:38,120
Speaker 3: like paranoia to like, oh, someone's planning the big event

1266
00:59:38,160 --> 00:59:40,440
Speaker 3: that's going to take down everything. What actually scares me

1267
00:59:40,560 --> 00:59:42,920
Speaker 3: more is not that there's some secret you know entity

1268
00:59:42,920 --> 00:59:46,560
Speaker 3: that wants to you know, spring spring load the big event.

1269
00:59:46,640 --> 00:59:49,600
Speaker 3: It's just our systems are so fragile just by design,

1270
00:59:50,120 --> 00:59:53,000
Speaker 3: that it doesn't take you know, some big, you know,

1271
00:59:53,600 --> 00:59:55,160
Speaker 3: secret group to take it down.

1272
00:59:55,200 --> 00:59:58,040
Speaker 2: It could just fall apart by itself, right, Like the systems.

1273
00:59:57,680 --> 01:00:01,000
Speaker 3: We've created are just inherently fragile and vulnerable, and they're

1274
01:00:01,040 --> 01:00:03,880
Speaker 3: just constantly being duct taped together. Right, a new zero

1275
01:00:03,920 --> 01:00:06,440
Speaker 3: day get gets released into the wild and everyone's rushing

1276
01:00:06,480 --> 01:00:09,040
Speaker 3: to patch this. A new supply chaining cact that gets

1277
01:00:09,040 --> 01:00:11,920
Speaker 3: discovered that affects half the fortune five hundred. Like this

1278
01:00:11,960 --> 01:00:14,440
Speaker 3: happens like every few months, and this is just the

1279
01:00:14,480 --> 01:00:18,560
Speaker 3: way of the world, and it's an increasing strategic challenges

1280
01:00:18,640 --> 01:00:23,000
Speaker 3: to the you know, our vulnerabilities. Right. It's like the

1281
01:00:23,040 --> 01:00:25,440
Speaker 3: last point I'll say this is like you know what

1282
01:00:25,480 --> 01:00:28,120
Speaker 3: this means in the context of say state competition. Is

1283
01:00:28,160 --> 01:00:32,000
Speaker 3: it like closes the virtual distance and you know, we

1284
01:00:32,040 --> 01:00:36,280
Speaker 3: are protected by Pacific and Atlantic oceans for invasion. But

1285
01:00:36,560 --> 01:00:39,480
Speaker 3: China can do a lot with you know, just their

1286
01:00:40,040 --> 01:00:45,600
Speaker 3: extremely capable and vastly numerous cyber army, and they're they're

1287
01:00:45,720 --> 01:00:48,480
Speaker 3: very patient, they're very persistent, and they're investing huge amounts

1288
01:00:48,480 --> 01:00:51,520
Speaker 3: of resources. Not it's just like steel actual property, you

1289
01:00:51,520 --> 01:00:54,400
Speaker 3: know what they've done for years, but to establish persistence

1290
01:00:54,520 --> 01:00:57,240
Speaker 3: in the advance of a potential military conflict. I mean,

1291
01:00:57,360 --> 01:00:59,840
Speaker 3: one big story was the volt Typhoon, a group that

1292
01:01:00,120 --> 01:01:03,840
Speaker 3: is just you know, you know, named by Microsoft, you know,

1293
01:01:03,920 --> 01:01:07,240
Speaker 3: getting into networks in the Navy, throughout Guam, multiple critical

1294
01:01:07,280 --> 01:01:12,080
Speaker 3: infrastructure of firms the United States, you know, basically in

1295
01:01:12,240 --> 01:01:14,360
Speaker 3: just in case there's a war and we need to

1296
01:01:15,400 --> 01:01:19,600
Speaker 3: flip off telecommunications systems, we need to shut down satellite communications,

1297
01:01:19,640 --> 01:01:22,600
Speaker 3: we want to flip off you know, other aspects of

1298
01:01:22,640 --> 01:01:25,480
Speaker 3: critical infrastructure. Like this is a this is a constant

1299
01:01:25,520 --> 01:01:28,320
Speaker 3: battle that's happening behind the scenes. Is the defense of

1300
01:01:28,360 --> 01:01:32,840
Speaker 3: critical infrastructure against nation state attacks. And it's yeah, I

1301
01:01:32,840 --> 01:01:34,440
Speaker 3: don't think anyone just like flipped the lights off for

1302
01:01:34,480 --> 01:01:37,400
Speaker 3: no reason, right like, because if it's really catastrophic that

1303
01:01:37,480 --> 01:01:41,880
Speaker 3: would be perceived potentially as up to and including you know,

1304
01:01:42,040 --> 01:01:44,760
Speaker 3: like an active war, if not strategic threat.

1305
01:01:44,840 --> 01:01:48,120
Speaker 1: So the US is I'm sorry, China is like heavily

1306
01:01:48,160 --> 01:01:50,240
Speaker 1: investing into this area to build this kind of army.

1307
01:01:50,280 --> 01:01:53,520
Speaker 1: You mentioned Russia with their bots so forth. Is the

1308
01:01:53,600 --> 01:01:55,520
Speaker 1: US also heavily investing into this area?

1309
01:01:55,920 --> 01:01:58,240
Speaker 3: Oh yeah, I mean this is this is the I

1310
01:01:58,240 --> 01:02:02,560
Speaker 3: mean space and cyber are the two domains of warfare

1311
01:02:02,600 --> 01:02:06,000
Speaker 3: that any modern state is investing like leaps and downs

1312
01:02:06,040 --> 01:02:09,000
Speaker 3: to try to attain astgig advantage. I mean, we probably

1313
01:02:09,000 --> 01:02:12,200
Speaker 3: have the most exquisite like technical capabilities to get into

1314
01:02:12,200 --> 01:02:15,440
Speaker 3: the most hard systems, but fundamentally it comes down to

1315
01:02:15,520 --> 01:02:19,240
Speaker 3: like numbers of people and trained hackers that can actually

1316
01:02:19,240 --> 01:02:21,120
Speaker 3: sit at a computer eight hours a day and have

1317
01:02:21,200 --> 01:02:23,800
Speaker 3: a particular target. And China just has lots of lots

1318
01:02:23,840 --> 01:02:26,320
Speaker 3: of people like you know, there's anecdotes that you know,

1319
01:02:26,320 --> 01:02:27,960
Speaker 3: you might think you're a fifty or one hundred person

1320
01:02:28,080 --> 01:02:32,120
Speaker 3: startup with some cool aerospace defense technology, and you might

1321
01:02:32,160 --> 01:02:33,760
Speaker 3: think you're too small to be on the radar of

1322
01:02:33,840 --> 01:02:36,360
Speaker 3: Chinese hackers trying to might have a dedicated team five

1323
01:02:36,360 --> 01:02:38,400
Speaker 3: to eight guys whose sole job it is is to

1324
01:02:38,480 --> 01:02:41,200
Speaker 3: like get inside your networks and live there. And they

1325
01:02:41,240 --> 01:02:43,600
Speaker 3: just have enough people where they can do that, you know,

1326
01:02:43,800 --> 01:02:45,640
Speaker 3: FBI director said, it is probably a fifty to one

1327
01:02:46,600 --> 01:02:49,720
Speaker 3: ratio of kind of offensive defense. We have our own

1328
01:02:49,760 --> 01:02:52,400
Speaker 3: cyber command that you know, does offensive cyber operations, whether

1329
01:02:52,400 --> 01:02:55,560
Speaker 3: they call persistent engagement or hunt forward, to get our

1330
01:02:55,600 --> 01:02:57,760
Speaker 3: own access into the Chinese systems, get access to the

1331
01:02:57,800 --> 01:03:00,320
Speaker 3: Russian systems, et cetera, to create a bit of like

1332
01:03:00,360 --> 01:03:02,360
Speaker 3: a mutually started destruction thing. It's like, well, if you

1333
01:03:02,400 --> 01:03:03,760
Speaker 3: hit me, I can hit you.

1334
01:03:04,320 --> 01:03:06,560
Speaker 2: Uh. It is a yeah, And.

1335
01:03:06,520 --> 01:03:08,040
Speaker 3: We saw a little bit of this with Ukraine, but

1336
01:03:08,080 --> 01:03:11,760
Speaker 3: it was it was it wasn't a full scale conflict

1337
01:03:12,240 --> 01:03:14,320
Speaker 3: and it was really just sing a Ukraine like the

1338
01:03:14,560 --> 01:03:18,440
Speaker 3: back to the techno industrial war. Like Ukraine basically offloaded

1339
01:03:18,520 --> 01:03:21,160
Speaker 3: their entire government, which is right. You think about a

1340
01:03:21,200 --> 01:03:24,640
Speaker 3: digital services and information your citizen's data, pass information, tax data,

1341
01:03:25,400 --> 01:03:29,040
Speaker 3: you know, health payments, at social security, everything sits on

1342
01:03:29,280 --> 01:03:29,720
Speaker 3: sits on.

1343
01:03:29,680 --> 01:03:31,200
Speaker 2: Servers in some government building.

1344
01:03:31,480 --> 01:03:33,640
Speaker 3: They basically took all those and they put them into

1345
01:03:33,640 --> 01:03:37,520
Speaker 3: a Microsoft server run by you know, on on Microsoft

1346
01:03:37,520 --> 01:03:40,160
Speaker 3: Asia and data centers in England. So it's like this

1347
01:03:40,160 --> 01:03:42,360
Speaker 3: is an example where you can have like digital exile, right,

1348
01:03:42,400 --> 01:03:43,480
Speaker 3: digital governments.

1349
01:03:43,120 --> 01:03:46,400
Speaker 2: In exile being run uh, you know.

1350
01:03:46,400 --> 01:03:49,120
Speaker 3: On private infrastructure. And I think this is like a

1351
01:03:49,200 --> 01:03:52,720
Speaker 3: different way to think about warfare now, is it's not

1352
01:03:52,760 --> 01:03:55,720
Speaker 3: just invading capital cities, but it's also competing over like, well,

1353
01:03:55,760 --> 01:03:58,160
Speaker 3: how does that system of government still run? Right if

1354
01:03:58,160 --> 01:03:59,560
Speaker 3: it's being run on data centers. If you built the

1355
01:03:59,640 --> 01:04:01,400
Speaker 3: data center, it's maybe the government can't run. So it's

1356
01:04:01,400 --> 01:04:04,520
Speaker 3: like a strategic it's a strategic defense maneuver to take

1357
01:04:04,520 --> 01:04:06,720
Speaker 3: the government servers and be able to move them out

1358
01:04:06,760 --> 01:04:08,520
Speaker 3: of the country and still have the government. You know,

1359
01:04:08,560 --> 01:04:12,280
Speaker 3: that government still deliver its functions right, still, tax payments,

1360
01:04:12,280 --> 01:04:14,720
Speaker 3: et cetera. So it's a fascinating kind of new dimension

1361
01:04:14,720 --> 01:04:15,840
Speaker 3: of warfare that we're seeing in full.

1362
01:04:16,720 --> 01:04:20,920
Speaker 1: So what an insightful, long and very scary conversation to

1363
01:04:21,000 --> 01:04:22,960
Speaker 1: kind of frame of the world. And it's easy to

1364
01:04:22,960 --> 01:04:24,840
Speaker 1: see this power structure. And this is something like Ray

1365
01:04:24,920 --> 01:04:27,040
Speaker 1: Dalio has talked about extensively, you know, kind of the

1366
01:04:27,920 --> 01:04:32,840
Speaker 1: rising power meeting at the time of meeting the declining

1367
01:04:32,960 --> 01:04:36,080
Speaker 1: power as an agile problem, right, the sun growing up

1368
01:04:36,120 --> 01:04:38,680
Speaker 1: and overcoming the dad or whatever it is. Right, so

1369
01:04:39,040 --> 01:04:42,560
Speaker 1: we see that, and obviously we don't have a crystal ball,

1370
01:04:42,600 --> 01:04:44,240
Speaker 1: at least I don't have one. Maybe you do. But

1371
01:04:44,760 --> 01:04:47,360
Speaker 1: I'm curious where you think, you know, how you view

1372
01:04:47,400 --> 01:04:50,479
Speaker 1: this over the next couple of years, like maybe maybe

1373
01:04:50,520 --> 01:04:53,000
Speaker 1: through the next five years or the or the rest

1374
01:04:53,000 --> 01:04:55,280
Speaker 1: of this decade. You know, in my opinion, it seems

1375
01:04:55,280 --> 01:04:58,520
Speaker 1: like this continues to break apart, which leads to probably

1376
01:04:58,640 --> 01:05:03,200
Speaker 1: more supply chain disruption and breakdowns, you know, tit for tats,

1377
01:05:03,200 --> 01:05:09,320
Speaker 1: et cetera, which probably leads to higher inflation, potentially you know,

1378
01:05:09,440 --> 01:05:13,600
Speaker 1: less goods and services for us in certain sectors moving forward.

1379
01:05:14,000 --> 01:05:15,720
Speaker 1: I don't know, but what that's kind of how I'm

1380
01:05:15,760 --> 01:05:17,560
Speaker 1: reading this. How do you read it over the next

1381
01:05:17,560 --> 01:05:18,240
Speaker 1: several years?

1382
01:05:18,680 --> 01:05:20,800
Speaker 3: Yeah, I think I think in terms of scenarios and

1383
01:05:20,960 --> 01:05:23,760
Speaker 3: like the two like the biggest divergence in terms of

1384
01:05:23,760 --> 01:05:26,960
Speaker 3: possible snaries is like do we avoid war with China

1385
01:05:27,320 --> 01:05:29,400
Speaker 3: or do we have over China. It's like because those

1386
01:05:29,400 --> 01:05:31,680
Speaker 3: are kind of like those are very vastly different futures,

1387
01:05:31,760 --> 01:05:32,320
Speaker 3: right if we have.

1388
01:05:32,680 --> 01:05:34,680
Speaker 1: Do you think if we have war with so, let's

1389
01:05:34,680 --> 01:05:37,000
Speaker 1: say we have war with China, do you think it's

1390
01:05:37,080 --> 01:05:42,240
Speaker 1: really the you know, technological information, cyber financial war, or

1391
01:05:42,280 --> 01:05:45,160
Speaker 1: do you think there's a chance that we would go

1392
01:05:45,200 --> 01:05:45,840
Speaker 1: into a hot war.

1393
01:05:47,480 --> 01:05:48,880
Speaker 3: I mean this is where the branch of the branch

1394
01:05:48,920 --> 01:05:52,320
Speaker 3: of the scenario is, like, you know, one scenario that's

1395
01:05:52,320 --> 01:05:56,120
Speaker 3: plausible is China thinks they can basically do a crippling

1396
01:05:56,280 --> 01:05:58,800
Speaker 3: first strike to sort of take out all of our

1397
01:05:58,840 --> 01:06:01,400
Speaker 3: military forces and all of Taiwan's forces in like a

1398
01:06:01,400 --> 01:06:04,680
Speaker 3: matter of hours. Have have the Taiwanese sue for peace

1399
01:06:05,160 --> 01:06:07,400
Speaker 3: and then basically think that US doesn't have the political

1400
01:06:07,400 --> 01:06:09,560
Speaker 3: will to mobilize and fight our way back into the

1401
01:06:09,560 --> 01:06:12,000
Speaker 3: first island chain and you know them kick them out

1402
01:06:12,040 --> 01:06:14,880
Speaker 3: of Taiwan. That's like one scenario that maybe China's banking

1403
01:06:14,920 --> 01:06:18,880
Speaker 3: on where they they engage in military conflict, but we

1404
01:06:19,080 --> 01:06:21,800
Speaker 3: essentially give up, We essentially retreat, and there's a new

1405
01:06:21,800 --> 01:06:26,360
Speaker 3: re architecting of the Pacific security sort of structure. One

1406
01:06:26,440 --> 01:06:29,400
Speaker 3: is what we do, fight and we win and we

1407
01:06:29,480 --> 01:06:31,200
Speaker 3: get the Hedgemont it gets a new lease on life,

1408
01:06:31,240 --> 01:06:35,360
Speaker 3: and China basically is probably you know, knocked back for decades.

1409
01:06:36,760 --> 01:06:38,160
Speaker 2: So that's like the strategic.

1410
01:06:37,760 --> 01:06:40,520
Speaker 3: Stakes of if you actually get into conflict, it's who

1411
01:06:40,520 --> 01:06:43,600
Speaker 3: gets the decisive victory determines you know, really the branching

1412
01:06:43,600 --> 01:06:43,720
Speaker 3: of it.

1413
01:06:43,800 --> 01:06:46,440
Speaker 1: But either of those outcomes probably leads to supply chains

1414
01:06:46,440 --> 01:06:47,040
Speaker 1: breaking down.

1415
01:06:47,120 --> 01:06:49,720
Speaker 3: Oh yeah, I mean in any scenario where there's missiles flying,

1416
01:06:50,120 --> 01:06:52,560
Speaker 3: I mean, the world system is going to break in

1417
01:06:52,600 --> 01:06:55,160
Speaker 3: some critical ways, right, Like the FED is going to

1418
01:06:55,200 --> 01:06:57,800
Speaker 3: have to monetize ten more trillion dollars in sovereign debt.

1419
01:06:57,960 --> 01:07:00,720
Speaker 3: There's going to be probably price control will be inflation,

1420
01:07:00,800 --> 01:07:03,880
Speaker 3: but it'll be price controls, it'll be capital controls, it'll

1421
01:07:03,920 --> 01:07:06,840
Speaker 3: be you know, a very different world, world environment, right.

1422
01:07:06,720 --> 01:07:09,000
Speaker 1: In either outcome, But just get into that event, that's

1423
01:07:09,040 --> 01:07:09,439
Speaker 1: what that means.

1424
01:07:09,520 --> 01:07:11,400
Speaker 3: Yeah, if you get in any sort of shooting shooting war,

1425
01:07:11,440 --> 01:07:15,200
Speaker 3: whether it's you know, anything that basically breaks global supply chains,

1426
01:07:15,320 --> 01:07:16,800
Speaker 3: is going to be immensely disrupted.

1427
01:07:16,800 --> 01:07:18,920
Speaker 1: You know, unless China moved hard on Taiwan and the

1428
01:07:18,960 --> 01:07:20,920
Speaker 1: US just basically rolled over and said, fine, let's just

1429
01:07:21,000 --> 01:07:21,760
Speaker 1: keep moving forward.

1430
01:07:22,200 --> 01:07:24,600
Speaker 3: Yeah, I mean, that's like the optimistic scenario where we

1431
01:07:24,680 --> 01:07:26,479
Speaker 3: just sort of give up Taiwan, but then we sort

1432
01:07:26,480 --> 01:07:29,960
Speaker 3: of you know, reinforce our sort of quasi nuclear you know,

1433
01:07:30,320 --> 01:07:32,840
Speaker 3: uh winking a nod to Japan and South Korea, and

1434
01:07:32,840 --> 01:07:34,560
Speaker 3: then we saw hold the line. Now a lot of

1435
01:07:34,560 --> 01:07:36,920
Speaker 3: people would say it'smpossible to hold the line. Maybe you can,

1436
01:07:37,040 --> 01:07:37,520
Speaker 3: maybe you can't.

1437
01:07:37,520 --> 01:07:37,920
Speaker 1: I don't know.

1438
01:07:38,000 --> 01:07:39,640
Speaker 2: I mean, you don't know until you get there.

1439
01:07:39,640 --> 01:07:41,720
Speaker 3: But that would be the optive scenario where actually, you know,

1440
01:07:41,760 --> 01:07:43,920
Speaker 3: t SMC still functions. We just have to pay it,

1441
01:07:44,040 --> 01:07:46,800
Speaker 3: you know, additional tax essentially to the Chinese to get

1442
01:07:46,800 --> 01:07:49,680
Speaker 3: our chips and things have become much and more expensive,

1443
01:07:49,720 --> 01:07:52,480
Speaker 3: and you know, US powers and as dominant around the world.

1444
01:07:53,160 --> 01:07:55,280
Speaker 3: That's like so that's like where the China dominant question

1445
01:07:55,360 --> 01:07:56,720
Speaker 3: comes in, is like, can we get through the next

1446
01:07:56,760 --> 01:07:59,960
Speaker 3: three to five years without that sort of acute conflict scenario.

1447
01:08:00,560 --> 01:08:02,720
Speaker 3: Even if we avoid that, then I still think you're

1448
01:08:02,760 --> 01:08:05,840
Speaker 3: in a world where just the structural factors of embedded

1449
01:08:05,880 --> 01:08:09,920
Speaker 3: growth obligations in the West, retiring boomers, the you know,

1450
01:08:09,960 --> 01:08:13,120
Speaker 3: potential declining energy return on energy investment from you know,

1451
01:08:13,160 --> 01:08:15,560
Speaker 3: legacy fossil fuels is going to be hard to sort

1452
01:08:15,560 --> 01:08:17,920
Speaker 3: of keep powering the growth that we need to service

1453
01:08:17,960 --> 01:08:20,120
Speaker 3: these embedded growth obligations. You're going to have to sort of,

1454
01:08:20,479 --> 01:08:24,040
Speaker 3: you know, start to transfer money from the boomers to

1455
01:08:24,080 --> 01:08:27,160
Speaker 3: the millennials, whether it's through you know, the devaluation of

1456
01:08:27,200 --> 01:08:31,080
Speaker 3: their savings, the you know outright direction of capital, tax distribution,

1457
01:08:31,160 --> 01:08:33,360
Speaker 3: et cetera. So you're going to see some major political

1458
01:08:33,720 --> 01:08:35,559
Speaker 3: dynamics unfold in the next five or ten years. They

1459
01:08:35,680 --> 01:08:40,960
Speaker 3: just function of generational distributions of wealth, incoming inequality, energy.

1460
01:08:40,680 --> 01:08:41,559
Speaker 2: Issues, et cetera.

1461
01:08:41,720 --> 01:08:43,840
Speaker 3: I mean, so I think even then you're in for

1462
01:08:44,920 --> 01:08:48,519
Speaker 3: you know, a pretty like dynamic decade. Right, This is

1463
01:08:48,520 --> 01:08:49,600
Speaker 3: going to be the decade to where a lot of

1464
01:08:49,640 --> 01:08:52,200
Speaker 3: these imbalances that have just sort of just stayed in

1465
01:08:52,200 --> 01:08:55,000
Speaker 3: the global system for the past at least forty years

1466
01:08:55,040 --> 01:08:58,519
Speaker 3: fifty years have to be resolved. Whether you can you know,

1467
01:08:58,880 --> 01:09:03,880
Speaker 3: stretch that resolution and rebalancing out like over many many years,

1468
01:09:03,920 --> 01:09:06,920
Speaker 3: Like if you can do the forties playbook of have

1469
01:09:07,000 --> 01:09:09,400
Speaker 3: a little bit of inflation right to the sort of devalue,

1470
01:09:09,400 --> 01:09:11,240
Speaker 3: but then before everything breaks you bring it back down.

1471
01:09:11,240 --> 01:09:12,080
Speaker 2: Then you do a little bit more.

1472
01:09:12,200 --> 01:09:14,200
Speaker 3: It's kind of the you know, like Lynn Alden has

1473
01:09:14,240 --> 01:09:16,479
Speaker 3: done that chart, right, you can play that over ten

1474
01:09:16,560 --> 01:09:18,720
Speaker 3: or fifteen years, and that's maybe a way you could

1475
01:09:18,760 --> 01:09:20,479
Speaker 3: play it. Maybe that's what you're seeing now, right. We

1476
01:09:20,520 --> 01:09:23,040
Speaker 3: did the first wave, and maybe there's gonna be another wave.

1477
01:09:23,120 --> 01:09:24,880
Speaker 3: Maybe there's another wave after that, and then you can

1478
01:09:25,000 --> 01:09:27,960
Speaker 3: you know, stretch the pain out without having an acute

1479
01:09:28,000 --> 01:09:28,799
Speaker 3: crisis situation.

1480
01:09:30,000 --> 01:09:31,479
Speaker 2: Yeah, I mean I don't have that crystal ball.

1481
01:09:32,000 --> 01:09:35,160
Speaker 1: But either way, this conflict is here. There's multiple ways

1482
01:09:35,200 --> 01:09:37,760
Speaker 1: it could play out. But almost regardless of how it

1483
01:09:37,800 --> 01:09:43,400
Speaker 1: plays out, it means probably supply chains of disruptions and

1484
01:09:43,479 --> 01:09:46,919
Speaker 1: more inflation and more fed monetary debasement.

1485
01:09:47,840 --> 01:09:48,080
Speaker 2: Yeah.

1486
01:09:48,080 --> 01:09:49,920
Speaker 3: I mean, there's always wild cards, so I always pay

1487
01:09:49,960 --> 01:09:52,120
Speaker 3: attention to like tail risks. Right, There's always things that

1488
01:09:52,200 --> 01:09:55,000
Speaker 3: can be weird that you didn't anticipate, and so I'd

1489
01:09:55,040 --> 01:09:58,200
Speaker 3: always pay attention to, like stuff can happen.

1490
01:09:58,240 --> 01:10:02,040
Speaker 1: That's everything's possible. Well, we have to think about what's probable, right.

1491
01:10:02,120 --> 01:10:06,439
Speaker 3: Yeah, yeah, I mean you know, Russian invasion, pandemic, you know,

1492
01:10:06,600 --> 01:10:08,880
Speaker 3: China war, these like you might call it gray like

1493
01:10:09,000 --> 01:10:11,280
Speaker 3: gray rhinos, like they were possible, but that you never

1494
01:10:11,320 --> 01:10:13,559
Speaker 3: thought they would happen like next year, and so you

1495
01:10:13,560 --> 01:10:15,800
Speaker 3: didn't really bake it into your forecast, and then they happen,

1496
01:10:15,840 --> 01:10:18,439
Speaker 3: and then you've got to radically readjust your distribution of

1497
01:10:18,600 --> 01:10:21,519
Speaker 3: of future scenarios. Now that you know you've taken a

1498
01:10:21,520 --> 01:10:23,639
Speaker 3: different branch of the timeline yeah.

1499
01:10:23,680 --> 01:10:26,960
Speaker 1: Wow, well there's a lot to think about. Super insightful

1500
01:10:26,960 --> 01:10:30,120
Speaker 1: for me. I really appreciate that. Man, what amazing conversation.

1501
01:10:30,240 --> 01:10:32,080
Speaker 1: A little scary, A little scary, I have to say.

1502
01:10:34,560 --> 01:10:37,519
Speaker 1: You know, I know, I know you. You work in

1503
01:10:37,520 --> 01:10:40,400
Speaker 1: the kind of the cybersecurity and policy area. We'll link

1504
01:10:40,439 --> 01:10:42,880
Speaker 1: to all your stuff down below. Definitely give him Matt

1505
01:10:42,920 --> 01:10:45,400
Speaker 1: a follow. He is a wealth of information, so we'll

1506
01:10:45,400 --> 01:10:47,000
Speaker 1: link to that down below. Anything else you want to

1507
01:10:47,240 --> 01:10:48,960
Speaker 1: bring attention to or shout out or anything like that.

1508
01:10:49,680 --> 01:10:52,559
Speaker 3: Now, I appreciate you have me on these are These

1509
01:10:52,560 --> 01:10:54,840
Speaker 3: are all very tricky, complicated questions and I'm just trying

1510
01:10:54,880 --> 01:10:56,920
Speaker 3: to get, you know, at least the best handle I

1511
01:10:56,920 --> 01:10:59,640
Speaker 3: can on them. Then a yeah, thinking in public is

1512
01:10:59,680 --> 01:11:02,160
Speaker 3: what I do on Twitter. So happy to engage.

1513
01:11:02,400 --> 01:11:04,439
Speaker 1: All right, thanks so much, thanks for having me.